As the housing market in many parts of the country has foundered, many developers have taken creative approaches to stanch the outward flow of cash. In many markets, this means opting to convert portions of developments originally intended as condo units into rental properties.
When a condo with no units sold converts to rental, it's not such a big deal, but when there are fully-vested owners who have purchased their units living side-by-side with rental tenants—or when unit owners rent out their apartments as income properties—the situation can become more complicated. Rental tenants simply do not have the same level of investment in the property as owners do, and this can be a source of friction between building residents, as well as board members and managers.
This results in an increasing number of renters in many New Jersey markets—and it’s not without turmoil. Thankfully, there are legal mechanisms in place to protect current condo owners, developers and landlords to make sure the transition is done as smoothly as possible.
Renting is Up
A December article in The Star Ledger, reported that more and more developments are built as rental properties, with several high-end luxury projects on the way along the Hudson River as well as in New Brunswick, Harrison, Morristown, Woodbridge and Lyndhurst. Real estate specialists note that renting is becoming a more popular route for home occupancy because of its freedom and flexibility: tenants don't have to obtain a mortgage or insurance, deal with maintenance and have the option of moving out after a year, or sooner. In a recovering yet still unstable market, renting has many perks over purchasing.
Cindy Petrenko, a property manager at Complete Property Manager Services in Vernon, says that renting has become an increasingly prominent practice in many condo and co-op communities, particularly in the sense of unit owners renting out their unit or a room as a form of supplemental income.