Rental Caps and What They Mean to You

There are a couple of reasons condos have rental caps.

One is that some homeowners feel that if the rental to owner occupied ratio gets too high the value of the building is diminished and therefore the value of the homeowner’s individual unit is diminished as well.

Also, and possibly more important to homeowner’s and buyers bottom line is that lenders look at the rental to owner occupied ratio and can make decisions about lending based on that since their choice to lend is based on the property as well as the borrower.

The appropriate ratio for the lender to lend based on the rental to homeowner occupied percentage is determined by several factors including age of building and the buyers ability to buy.  Of course if most lenders won’t lend on a building the ability for the homeowner to sell and the buyer’s ability to buy becomes problematic.

sparyd@johnlscott.com

 

 

 

Seattle, Condos, Lofts, Belltown, Pioneer Square