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Selling Condo Impossible if Too Many Rent

Selling a condo is impossible if too many rent theirs

By George Gombossy

www.ctcondonews.com

As the result of the recession and the millions of foreclosures, renting is safer and more affordable than buying for many.

But be careful, if your complex is starting to approach the 50 percent mark, your association might want to consider putting a freeze on allowing more unit owners to rent their condos.

As MarketWatch's Lew Sichelman   explains "Fannie Mae, Freddie Mac and the Federal Housing Administration all shy away from backing mortgages in condo buildings where half or more of the units are not occupied by their owners. That could change, either up or down. But for now, those are their rules, and these days the primary lenders who fund new loans play by those rules, to the letter."

In answering a readers question, he wrote "For that reason alone, I would be in favor of the bylaw change, even if you are not interested in selling at the moment. But there are other reasons to limit rentals."

"One is that values tend to fall in buildings where the majority of occupants are renters. Well, perhaps not fall, but apartments certainly don’t rise in value at the same rate as those in buildings where owner-occupants predominate."

You can reach The Watchdog at george@ctwatchdog.com and he will answer for free as many emails as he can. Please check out his site, www.ctwatchdog.com for comprehensive consumer, health, finance, shopping, nutrition, elderly issues, media, internet, computer, travel, auto, and education tips. And check out www.CtCondoNews.com for condo consumer news in Connecticut.


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Kelly P July 22, 2012 at 08:38 AM
This article presents an overly simplistic view of the issue. A change to any association bylaws that result in some owners being treated differently than other owners raises the possibility of lawsuit. By changing the rules about renting, the association is taking away a right - the right to rent out and have the an investment ownership is removed. It's different if the bylaws always presented rental restriction. Changing midstream is not really a fair. Moreover, because such a restriction arguably affects the value of a unit, it may require approval by a two-thirds or more of all unit owners and in some cases such approvals may be required from mortgage holders too. Again, the issues are not nearly as simple as this article presents. Any association considering such a change should get good advice first - or risk paying a price later.
Brett Balisciano July 23, 2012 at 08:40 PM
With the housing market being the lowest in a long time, it is still by far smarter to buy then to rent. You can get a house well below market value and with rates being in the low 3's with no points banks are basically giving money away! I have been in the mortgage business for 7 years now and I can assure you that renting is not a good option! Rates will not be low like this for much longer so get out and start house shopping!
Kelly P July 23, 2012 at 11:48 PM
The comment by B. Balis. is essentially self-serving. There is no "giving away of money" when the sustainable value of what you are purchasing is unknown and you may be taking on debt that puts a strangle hold on your ability to move or change jobs. Get sound advice specific to your situation - whether your are a condo association or buyer scouting the market. Don't rely brief articles with even more superficial comments.
Brett Balisciano July 24, 2012 at 01:53 AM
I never said if your making 30k a year to go out a buy a 400k house!!! My point was why lock yourself into a rent for 1200 a month when home values are the lowest they ever been. Sorry for my opinion Kelly everyone should call you for advice......idiot
Brett Balisciano July 24, 2012 at 01:56 AM
Go write ur garbage some where else

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