Transform Your Starter Home into a Smart Investment
If you're a Carlsbad area landlord looking to turn your property into a money-making investment, there's a decent chance that the property in question is a townhome or condominium. While apartments represent about half of the rental market in the Carlsbad area, townhomes and condos represent a little under a quarter of the market and appeal to a similar set of potential tenants. Condos are great starter homes because they tend to be cheaper than single-family properties, and much of the heavy labor that goes into maintenance is a communal responsibility. This appeal means that you can easily find yourself as an accidental landlord when you decide to rent your condo rather than selling it. While condos bring a lot of the convenience of apartment living, they also contribute a touch more complexity to the rental process. We'll discuss a few of the challenges to be aware of if you decide that renting out your condo is the right step for you!
What Is a Condo, Anyway?
It can be helpful to settle on a common idea of what we mean when we use the word "Condominium." A dictionary definition of the word would give us the following description: "individual ownership of a unit in a multi-unit structure (such as an apartment building) or on land owned in common (such as a townhouse complex)." In other words, it's an arrangement where an individual owns a unit in a larger property and shares a set of common property with other owners. This mix of private and collective ownership generally allows owners more freedom to make changes to their units (as well as burdening them with the labor and costs of interior maintenance). However, significant amounts of exterior maintenance and certain shared utilities such as trash and water are handled by an association—or similar organization—and outsourced. Condos can be a little more challenging as rental properties because they are a communal living arrangement and fall under a governing board.
First, Know Your Options
If you want to rent your condo, your first step should be to familiarize yourself with your condominium or homeowners association governing documents. Individual associations have broad leeway to establish policies that may impact your ability to rent your unit. It is common to have a cap on the number of units that can be occupied by renters, and some associations may not allow renters at all; get to know your condo association's individual restrictions to make sure that your investment plan isn't dead in the water.
Keep in mind that bylaws, rules, and regulations are updated often and may have changed since you purchased your unit! Maybe the board imposed a residency requirement that only allows you to rent your property if you've lived there for a few years; perhaps they've lowered the ratio of allowable renter-occupied to owner-occupied units. Keep up with changes and make sure that your plans are still viable.
Renting a Condo Is Typically a "Process"
Remember that because of their fundamentally "communal" nature, you'll typically need to follow a specific process to rent your condo. At a minimum, the governing association will probably require you to ask permission to rent your unit and pay a fee of some type. As an occupant of your condo, you likely had to fill out some documents with information on who was occupying your property—the association will probably want you to keep them in the loop as to who is renting the property as well. Follow the process, stay on the board's good side, steer clear of violating any bylaws, and you should be clear to move forward.
Keep Your Tenants in the Loop
The burden of following all the regulations established by your association is going to fall on your tenants as occupants of your unit. As the owner, you'll be on the hook for ensuring that they know what these bylaws and rules are and that they are keeping to them. As renters, they may be uncomfortable getting involved with association politics or be unable to attend meetings. Keep them in the loop about any changes that may affect them. Some condo owners feel that renters are a source of friction or are less invested in the well-being of the community. This sentiment can be found even in single-family residential neighborhoods, but the close-quarters living on a condo complex can bring this feeling out a little more. Be sure to help your renters feel like they are a part of the community.
A Property Manager: The Big Difference for a Smaller Property
If done right, a condo can be a great investment property! Having to work with other tenants and an association board means that you'll generally have to maneuver more personal politics and a dabble in a bureaucratic process.
A good Carlsbad area property manager can often make a serious impact in this scenario: you may have less need for maintenance services, but you can benefit from having a property management company and their resources at your back when dealing with the acting board or navigating your association bylaws and regulations. Raintree Property Management can offer all this support—and more! Ready to see what your investment property has been missing? Get in touch with us online, by phone, or in person.
