We still have plenty of townhouses and condos on the market in St. Paul, and they are still selling at a slower pace than all other types of single family home. On average they take 36% longer to sell.
Some of the sellers have given up for now and are renting their units, others try to rent them out while they are on the market. As a Realtor who has been through this more than a few times there are some pitfalls to having renters in the unit while it is on the market.
1. There is the messy renter, the place is never in good shape for showings.
2. The uncooperative renter. There is never a good time to show the place. I understand this and I know I wouldn't want to pay rent and then have to have people traipsing through the place and disturbing my day.
3. The surly renter. I won't even explain that one, but sometimes renters get involved when there are people seeing the home and they say all sorts of things.
The up side to renting out a condo is that the seller has a way of making the mortgage payment and can move on and wait awhile to sell it.
There is another issue with renting out condos or townhouses and that is that in some buildings and developments the percentage of owner occupied units is so low that units no longer qualify for FHA financing. This is becoming a big problem These days FHA financing is very popular for first time home buyers and units that can not be financed through FHA are hard to sell.
There are no easy answers and it is a vicious circle. Would be sellers end up renting because it takes so long to sell or they owe more on the unit than they can get for it, and can not afford to sell it. Rented units are harder to sell and your rental unit may be killing your neighbors chance of selling their unit to the growing number of buyers who are using FHA.
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So true, having a low owner to investor ratio puts one more difficulty into the mix. Hopefully this to shall pass…soon.
kk
p.s. I have a deja vu feeling looking at the picture in the post. How could that be?
I need one of those disclaimers that says that resemblance to real characters or places is a coincidence.
No worries, I won’t tell.
The FHA ratio requirements are a killer. Note that you can check for FHA approved complexes at https://entp.hud.gov/idapp/html/condlook.cfm
But even there it is sometimes misleading in the current market when ratios are changing so quickly. Condo owners should really consider the impact that the owner-occupancy ratio has upon the value of their home before they decide to rent it out. Thanks for your post.