Can I Buy a 55+ Home to Rent It Out?
Explore the complexities of owning and renting out properties in 55+ communities, understanding their unique rules and limitations.
55+ communities offer unique lifestyle options, catering to adults with specific amenities and social opportunities. Beyond personal residence, some individuals consider them for investment, particularly for rental income. Understanding the specific regulations and characteristics of these communities is important for anyone considering such an investment.
Understanding 55 Plus Communities
A 55+ community is a residential development intended for older persons, distinct from assisted living facilities. These communities gain age-restricted status through the Housing for Older Persons Act (HOPA) of 1995, which exempts them from certain anti-discrimination provisions of the Fair Housing Act. To qualify under HOPA, at least 80% of occupied units must have at least one resident aged 55 or older. This 80/20 rule allows up to 20% of units to be inhabited by residents under 55.
These communities are designed to support an active adult lifestyle, often featuring amenities such as clubhouses, fitness centers, pools, and social programs. Their purpose is to create a living environment tailored to the interests and needs of older adults. Homeowners Associations (HOAs) govern these communities, establishing and enforcing rules to maintain their character and ensure HOPA compliance. HOAs publish and adhere to policies demonstrating their intent to operate as housing for older persons and must comply with age verification procedures, often re-surveying residents every two years.
Ownership and Occupancy Rules
Distinguishing between owning a property and occupying it within a 55+ community is important. An individual under 55 can often purchase a home, but the rules primarily focus on who resides there. While a younger person might hold the title, the primary resident or a specified percentage of residents must meet the age requirement.
There are common exceptions to the age requirement for occupants, which vary by community. Spouses or partners of the age-qualified resident may reside in the home even if younger than 55. Some communities also allow caregivers or adult dependent children, typically aged 18 or older, to live with the age-qualified resident. These exceptions are outlined in the community’s governing documents and contribute to the 20% allowance for under-55 residents under HOPA. These rules maintain the community’s age demographic and ensure its continued qualification under federal housing laws.
Rental Policies and Limitations
Many 55+ communities implement specific rules regarding rentals to preserve their character and comply with age-restriction laws. These policies often include minimum lease terms, typically six months to a year or longer. This approach aims to deter short-term rentals, which could disrupt the community’s social fabric and quiet environment, helping maintain stability and a consistent resident base.
Communities frequently impose caps on the percentage of units that can be rented out, often ranging from 10% to 20% of total homes. These rental caps ensure a majority of units remain owner-occupied, fostering greater community involvement and property maintenance. A higher proportion of owner-occupied homes often leads to higher property values and fewer disruptions. Additionally, many communities require that tenants themselves meet the 55+ age requirement, or at least one tenant in the household must.
Homeowners Associations (HOAs) typically require a formal approval process for prospective tenants. This process often involves submitting an application, undergoing background checks, and potentially an interview with HOA representatives. This allows the HOA to ensure potential renters understand and agree to abide by all community rules. Lease agreements are usually required to be registered with the HOA, providing a record of all rental properties and their occupants, further ensuring compliance with HOPA and community standards.
Evaluating Rental Opportunities
Considering a purchase in a 55+ community with the intent to rent requires a thorough review of the community’s specific governing documents. These documents, including the Covenants, Conditions, and Restrictions (CC&Rs), bylaws, and rules, outline all restrictions on ownership, occupancy, and rentals. It is essential to obtain and meticulously read these documents before making any financial commitment, as they detail limitations on lease terms, rental caps, and tenant age requirements. Failure to understand these can lead to significant financial and legal complications.
Consulting a real estate attorney or a real estate agent specializing in 55+ communities is advisable. These professionals can help interpret complex legal language within the governing documents and identify potential pitfalls or hidden restrictions. They can also provide insights into the community’s history of enforcing its rental policies. Finding age-qualified tenants who meet the community’s specific requirements can present a unique challenge, as the pool of eligible renters is narrower than in general housing markets.
Effective marketing strategies for rental properties in these communities might focus on amenities and lifestyle benefits attractive to the 55+ demographic. Once a property is rented, strict adherence to all HOA rules by both the owner and the tenant is mandatory. The HOA has the authority to enforce these rules, and violations can result in fines, legal action, or even the loss of rental privileges. Owners are responsible for their tenants’ compliance, making careful selection and clear communication of community rules paramount for a successful rental investment.