Thinking about buying a condo in Cottage Grove to rent out? Great idea, but the fine print can make or break your plan. Between HOA rules, short-term rental licensing, financing limits and insurance gaps, surprising details can stop a rental strategy cold. In this guide, you’ll learn exactly what to check before you write an offer, with links to the rules that matter and a practical checklist you can use. Let’s dive in.
Start with HOA rental rules
Condominium associations can limit or even prohibit rentals through their declaration or bylaws. Wisconsin law allows use restrictions if properly adopted, so do not assume you can rent just because someone else is renting today. Review the governing documents to confirm whether rentals are allowed and whether rules could change under the association’s amendment process. See Wisconsin Statute 703.093 on use restrictions.
Wisconsin also requires you to give the association a copy of any written lease within five business days after you sign or renew it. This is in addition to requiring tenants to follow association rules. Review these obligations in Statute 703.315.
Sellers must provide buyers with a full condo disclosure package at least 15 days before closing. This includes the declaration, bylaws, rules, budget, insurance summary and recent minutes, which is your chance to verify rental permissions and the association’s financial health. See the disclosure list in 703.33.
What to confirm in the documents
- Whether rentals are allowed and any caps or waitlists.
- Minimum lease terms and rules on subleasing or short-term stays.
- Any board approval steps for leases and related fees.
- Enforcement and fine schedules in recent meeting minutes.
Short-term rentals in Cottage Grove
If you plan to host less than 30 days at a time, you are likely in short-term rental territory. Wisconsin’s Department of Agriculture, Trade and Consumer Protection (DATCP) regulates “tourist rooming houses,” which can require licensing and inspections. Start with the state’s guidance on tourist rooming houses.
The Village of Cottage Grove also treats short-term rentals as taxable lodging. The Village code imposes an 8 percent lodging tax on gross receipts and administers it through a tourism commission. Confirm current rates and registration steps with the Village Clerk, and review the code reference for Cottage Grove lodging tax. Your HOA may also limit or prohibit short-term rentals, so verify both.
Financing rules to precheck
Lenders look at your unit and the entire condo project. If you need FHA financing, the project generally must be FHA approved or qualify for a narrow single-unit approval. You can look up status with the HUD FHA condo search.
Conventional loans sold to Fannie Mae or Freddie Mac also require project eligibility. Issues like hotel-like operations, high investor concentration, inadequate insurance or litigation can derail conforming loans. Ask your lender to run the project through Fannie’s Condo Project Manager early. If the project is ineligible, you may need a larger down payment or a non-conforming loan.
Insurance: master vs. unit coverage
Associations must carry property and liability insurance for the building and common elements. Those master policies do not usually cover your interior finishes, contents, tenant damage or loss of rent. Plan for a landlord HO-6 or similar policy that fills those gaps and aligns with your lender’s requirements. Review the association’s obligations in 703.17, then confirm your master policy’s coverage and exclusions.
Wisconsin landlord basics
If you operate a long-term rental, you must follow Wisconsin landlord-tenant rules. Security deposits must be returned within 21 days after the tenancy ends, and only specific deductions are allowed. See Statute 704.28.
Notices and evictions must follow state timelines and procedures. Wisconsin prescribes specific 5-day, 14-day and 30-day notices depending on the situation. Use compliant forms and keep clean records to avoid delays.
Rents and operating costs
Cottage Grove is a smaller suburb east of Madison with commuter demand. Public listing indexes show average rents ranging from the mid 1,400s to around 1,800 dollars depending on unit size and listings. Use current local listings to price your specific unit and validate assumptions with the Cottage Grove rental trends page.
Budget for HOA dues, property taxes, insurance, vacancy, maintenance, any platform and cleaning fees for short-term stays, and property management if you will not self-manage. Review reserve studies and recent minutes for signs of special assessments.
Pre-offer checklist
- Documents: Request the declaration, bylaws, rules, budget, insurance summary, reserve study, management contract and 12 to 24 months of minutes. Use your statutory right to receive the full package at least 15 days before closing per 703.33.
- Rental permissions: Confirm whether long-term or short-term rentals are allowed, any caps, minimum lease terms and required approvals. See 703.093.
- Lease compliance: Plan to deliver each written lease to the association within five business days, and provide tenants with the rules. See 703.315.
- Project eligibility: Ask your lender to verify FHA status with the FHA condo search and run the project through Fannie’s CPM.
- Insurance: Get the master policy declarations and a quote for a landlord HO-6 with liability and loss-of-rent. Review 703.17.
- Short-term rental steps: If applicable, confirm DATCP licensing, Village lodging tax registration and remittance, and HOA permission. Start with DATCP’s TRH guidance and the Village lodging tax code.
- Cash flow: Build a conservative pro forma with rent, HOA dues, taxes, insurance, vacancy, maintenance and management. Cross-check rent with current local listings such as the market trends page.
- Contract protections: Include contingencies for association document review, rental use approval if required, and project financing eligibility.
Ready to move smart
Buying a Cottage Grove condo to rent can work well if you confirm the rules, financing and costs before you commit. Use the statute-backed checklist above, line up your lender and insurance, and verify short-term rental steps if you plan to host.
If you want local, practical guidance through the documents and deadlines, connect with Fred Van Buren. We will help you evaluate a specific condo, coordinate project checks with your lender and keep your offer aligned with your rental goals.
FAQs
Can an HOA stop rentals after I buy in Cottage Grove?
- Yes. Associations can adopt or amend use restrictions that limit or prohibit rentals if they follow their procedures and state law, so confirm current rules and how they can change in 703.093.
Do I have to give the HOA a copy of my lease?
- Yes. Wisconsin requires owners to deliver a copy of any written lease to the association within five business days after signing or renewing per 703.315.
What makes condo financing fall through for investors?
- Projects that are not FHA approved or that fail Fannie Mae or Freddie Mac project standards can block common loan options. Check status with the FHA condo search and Fannie’s CPM tool early.
Does the HOA’s insurance cover tenant damage inside my unit?
- Typically no. Master policies focus on the structure and common elements. You should carry a landlord HO-6 for interior finishes, contents, liability and loss of rent. Review the framework in 703.17.
How does Cottage Grove tax short-term rentals?
- The Village imposes an 8 percent lodging tax on gross receipts for taxable stays. Register, collect and remit according to the Village code and confirm current procedures with the Clerk. See the Cottage Grove lodging tax code.
