Can You Legally Rent Out a Condo That You Own?

Can You Legally Rent Out a Condo That You Own?

Last Updated: September 13, 2023 by Cameron Smith

You can rent out a condo that you own, provided that you follow the specific rules set forth by your COA, lender, insurance provider, and local government.

Why Should You Rent Out Your Condo?

The biggest benefits of renting out your condo include:

  • Affordability – Condos are generally more affordable than single-family homes. They are also usually less expensive to maintain
  • Access to Amenities – Condo amenities landlords can offer often include a pool, fitness center, clubhouse, or dog park.
  • Supplemental Income – Landlords have an opportunity to receive an additional stream of income by renting out their condo
  • Tax Benefits – Among other benefits, any repairs or upgrades you make to your condo can be deducted from your income on the property

Regulations for Renting Out a Condo That You Own

When getting ready to rent out your condo, be sure to check on these regulations first:

  • COA (Condominium Owners Association) Rules
  • Lender Requirements
  • Insurance Requirements
  • Local and State Laws

COA Rules

Each COA can set rules for their specific community (called “bylaws”), including whether owners can rent out their units. Even if the current rules don’t allow for rentals, the rule can be changed if enough owners vote for it.

In addition to the bylaws, be sure to check the condo association’s Declaration of Covenants, Conditions, and Restrictions (CC&R). These can lay out further restrictions and requirements for renting units. Even if the bylaws allow rentals, the CC&R could spell out what is and is not allowed for those rentals.

If you are planning to buy a condo as an investment, have your agent check the bylaws and CC&Rs beforehand. This way you’ll know if rentals are allowed and if there are restrictions that will limit your ability to run a profitable rental unit there.

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Lender Requirements

Before renting out your condo, be sure to consider lender requirements, such as:

  • Qualifying For a New Primary Residence – Talk to your lender about whether you qualify to purchase a new primary residence. This usually consists of credit score, down payment, and cash on hand to cover upkeep and vacancies on the rental unit. Keep in mind that you cannot have two FHA loans in place.
  • Meeting Government-Backed Loan Criteria – You must have lived for 12 months in the condo before moving and renting it out if you secured an FHA or VA loan.

Your lender may have other guidelines or limitations, so be sure to have a thorough conversation to make sure you’re in total compliance.

Insurance Requirements

There are no legally-mandated insurance requirements for a landlord to have when renting out a condo.

When you live in a property, your homeowner’s insurance policy covers damages and personal liability. However, that insurance no longer applies once you rent out the condo to someone else.

While not required by law, landlord insurance is highly recommended as it generally covers:

  • Property damage
  • Income lost due to a property being unlivable for a time
  • Liability protection

If you’re planning to use your property as a short-term rental, you’ll likely need a different type of coverage, so be sure to talk to your provider about any requirements.


While vacation rental sites like Airbnb or VRBO provide insurance, it’s fairly basic, and it’s best to look into a more comprehensive policy to protect your property.

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Local and State Laws

Some local and state laws will set specifics about whether you can rent out your unit. For example, many cities restrict vacation rentals through AirBNB or other services.

All 50 states have landlord-tenant rights, statutes, and tenant codes. You will want to get familiar with the specifics of your location, but some statues are pretty common to look out for.

For example, some states have a maximum year-to-year rental price increase. On the other hand, many states have no rent control at all.

Other important laws to check for include security deposits, rental applications, terms of the lease, and maintenance requests.

There are also federal laws all landlords must follow. Some of these rules include:

  • Fair Housing Act – Protects against discrimination for race, age, national origin, disability, or familial status
  • Fair Credit Reporting Act  Dictates how a landlord can use credit report information

Ensure that you’re willing and able to follow all of these rules before renting out your condo.

Other Limitations to Renting Out Your Condo

If you discover you can rent out your condo, you also have to consider other limiting factors you may face.

Can You Afford To Rent Out Your Condo?

In order to run a profitable rental property, make sure to consider all of the ongoing costs, such as:

  • Maintenance Costs   As a general rule, experts say maintenance will cost about 1% of the property value per year. So, if your unit is valued at $350,000, you should set aside approximately $300 a month.
  • COA Fees  COA fees generally cover common spaces, amenities, landscaping, and certain repairs. These fees vary, but range from $100 to $1,000 per month.
  • Surprise Expenses  Smart landlords plan for when unexpected events occur such as unplanned vacancies, marketing, or delayed repairs.
  • Property Management – Management companies take between 8 – 12% of the monthly rent collected. So, if you are charging $2,000 a month for rent, you can expect to pay between $160 – $240 a month.

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How Is The Market For Condo Rentals?

Before deciding to rent your condo, you will need to determine a fair price for renters. Check out a few rentals in your area and compare your unit to determine the current market value.

When pricing your unit, be sure to find other condos that are similar in:

  • Available amenities
  • Condition of the unit
  • Association fees

Be sure that you can get the rental price you need to pay your mortgage, insurance, ongoing maintenance, and other fees.

Do You Have the Time and Resources to Run a Rental?

Handling the tasks required of a landlord can take a lot of time, energy, and money. Be ready to take on advertising, vet tenants, complete background checks, keep up maintenance, collect rent, and deal with any issues. You will also have to stay in compliance with association regulations.

If this sounds like a lot to handle, you may want to consider using a property management company. A property management company takes care of the entire rental process. From finding the right tenant to staying in the good graces of your COA board of directors, a property manager handles it all. While they may take some of your profit, it may be worth it in the long run. Approximately 44% of all landlords use a property management service.

Consider your daily schedule and if you have time to handle issues with being a landlord.

Is Your Condo Rental Ready?

Take a quick look around your condo. Make an assessment and determine if you are prepared and willing to make the necessary repairs to put your condo on the market. For example, if the paint is peeling and the sink is broken, is it worth the time and money to fix these items?

Here is a brief list of things you need to consider before putting your condo on the rental market:

  • Inspection of all systems (water heater, AC, heater, plumbing)
  • Pest services
  • Smoke detectors
  • Fire extinguishers
  • Quality of flooring, counters, bathrooms, paint

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Will Finding a Good Tenant Be a Problem in Your Area?

Depending on your location, you will need to decide if condo rentals are in high demand. Here are a few questions to consider:

  • What is the quality of your neighborhood? For example, are there issues with crime or loud noises?
  • Is your condo in an industrial or commercial area?
  • Are there enough amenities to attract good tenants?
  • What is the makeup of your community? Are there primarily families who will want access to a park or yard?