Renters, Not Owners, a New Trend in Condos

Posted by Teresa on August 4, 2009 under Housing Trends, Tenant Credit Checks, Tenant Screening & Background Checks | icon: commentBe the First to Comment

condo-building on tenant screening blogAs the housing market struggles to recover from its historic downturn, thousands of new condominiums remain unsold across the country. Many cash-strapped developers are turning to leasing unsold units—which can cause problems among residents who purchased theirs.

Condos are usually rented by their owners—not by the developers of a project. But when the majority of units have not sold, developers—and their lenders—get more creative.  Renting is one way to fill units and improve cash flow. And in this economy, cash is king!

But is renting to unknown tenants okay with the owners in the building?  Often, it depends on numbers. A few rented units, while a risk for the developer because they can no longer be sold as “new,” are usually not a problem with the owner-neighbors. But when a majority of units are rentals, it can hurt property values—and discourage potential buyers, too. Renting condo units can become a sure way to prevent selling units—an unending cycle.

However, even if condo owners don’t like buildings inhabited by renters, there is usually little they can do about it. Most developers will reserve the right to lease unsold units in the sales contract—and buyers have already agreed to it.

If you’re a developer with unsold condo inventory on your hands, you might consider renting units to quality, pre screened tenants. You can appease unit owners by assuring them the condos will be rented only to tenants who have passed background checks, including credit checks and criminal history screening. You’ll sleep better, too, when you properly screen tenant applicants!

Besides, condo owners might consider themselves lucky to not own a unit in a certain luxury building in New York City—where the owner is renting unsold units to a homeless shelter. Sometimes you do what you have to do—and at least the homeless are benefiting.