The Effect of Rental Houses on a Stable Subdivision

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Homeownership is part of the American dream, but since 2008, it’s been harder for some to become homeowners. They must rent and it’s important to understand how rental properties in your neighborhood will impact your home and your neighborhood. Here’s a quick look at how rental homes may have an impact on a stable subdivision.

Contradictory Studies

Some studies have shown rental properties have little to no impact on the value of homes in the neighborhood, while other studies have shown if there’s a high density of rental properties, it can cause homes in the area to drop in value.

In addition to property values, renters are less likely to participate in the community as they may not be planning to stay for the long term. They will turnover more often and rentals also tend to have a lower level of income compared to homeowners.

How Many Rentals is Too Many?

It’s certainly different with a subdivision, but banks and lenders prefer there to be no more than 20% to 30% rentals in a condo building in order to approve a mortgage for a buyer. While this formula doesn’t apply perfectly to a neighborhood or subdivision, there is such thing as too many rentals.

If there are too many rentals in the subdivision it can make buyers wary of buying a home in the area. They may shy away, which can make it harder to sell the property. A few rental homes will likely make very little difference, but as the number creeps closer to 20%, it will become more evident there are rentals in the neighborhood.

Are Landlords Forced to Maintain Their Properties?

While landlords may not be solely responsible for maintaining their property, somebody is responsible for it. This is a responsibility that can be partially passed off to the tenant when it comes to landscaping and lawn care. However, just as any homeowner in the neighborhood has to, the landlord will have to follow any HOA ordinances to ensure the property is kept up to the standards of the community.

While rental properties may cause some strife with homeowners in the neighborhood, they really don’t have a huge impact unless a large percentage of the subdivision becomes rental homes. As long as the property is maintained properly, you may not even notice if a couple of homes become rentals in your subdivision.

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