Condo Rental Caps: Economics and Equity

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Block E
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Joined: March 13th, 2018, 9:41 pm

Re: Condo Rental Caps: Economics and Equity

Postby mickey » March 15th, 2018, 7:59 pm

paul wrote:
February 20th, 2018, 10:55 am
Hello, This is my first StreetsMN post.

I’m on the board of a large downtown condo that is considering a rental cap. (A rule that limits the percentage of units that may be rented) This seems like a bad idea. It is anti-renter and I think it will hurt property value. What do people think? Has anyone seen economic research on rental caps?
When I sold my condo, that was one of the first questions I received. A lot of investors would have bought if they could rent, but they couldn't we had weird rules, like 6 month max, and only X% of the units could be rented at any point in time). If you are interested in research, plug terms into and read the abstracts. Here's one abstract: "WHAT DO YOU MEAN I CAN'T RENT MY CONDO?" ... Entry=true

Target Field
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Joined: September 14th, 2012, 8:50 am

Re: Condo Rental Caps: Economics and Equity

Postby QuietBlue » March 16th, 2018, 10:35 am

go4guy wrote:
March 15th, 2018, 7:34 pm
I think one big reason is lending. FHA isn't the only one that limits amount of rental units. FNMA also requires at least 51% owner occupied units in a project for the project to get CPM approval, which is a standard approval for FNMA. Since almost all loans are completed to FNMA guidelines, this is very hard to get around. Nobody wants to limit their buyer pool because they cannot get financing in that particular project.

On another point, someone wanting to live in a condo would want as many owner occupied units for the very obvious reasons and would prefer a rental cap. Where as someone owning investment properties would likely prefer a lack of rental caps.
Yep. There isn't a win-win solution here, because some potential buyers will be turned off either way; it's just a question of which ones the association cares more about attracting.

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