In most cities, the real estate market is hot. Growth in places like Portland, Austin and Pittsburgh, paired with DIY reality tv, has income properties are a popular investment opportunity.
But what if you own in a condo building and other units are income properties that host short-term rentals? What does this mean for the investment of homeowners who are using the space as, well, a home?
Increased HOA Fees
A successful short-term rental will experience a high-volume of bookings. This success means a lot of traffic: guests, cleaners and contractors. When visiting a city a guest may come and go throughout the day and night. With each turnover a cleaning crew may be contracted to come in and flip the property for the next booking. There may even be more visitors or deliveries to stock the unit. This means more people coming and going, increased access, more keys and passcodes and general wear and tear. And this isn’t just for the building, it is for the common areas. The more usage a building has, or if security needs to be adjusted or passcodes reset, the HOA absorbs the cost. The HOA is not being sponsored by an invisible bank account, the HOA gets it funds from home owners. Funny how that works out. As costs and maintenance increases, so will HOA fees. An additional expense to your mortgage and cost of living.
When a building gets a reputation for having a lot of traffic, damage or transients buyers are less likely to lay down roots there. If HOA fees are too high, an agent may not even show the unit. If listings are on the market for too long, the price will drop. What does this all add up to? The value of your property may not grow. And homeownership is not a mild investment. It is one of the largest purchases in a person’s lifetime. Protecting and nurturing that investment is crucial.