Real Estate Reality: Buying vs. rentingPosted: Updated:
PHOENIX -- Just like it is for homebuyers, the market for rental properties is hot right now, but not without a few risks.
There are a couple of key things driving the ever-increasing demand for rentals, according to Heather MacLean of Realty Executives.
First, there are tougher rules in place for those seeking mortgages. Where it used to be relatively easy to get a loan, there are far more hoops to jump through now. Quite a bit in the way of documentation is required.
"The biggest thing is the federal changes that have occurred to mortgages, so the government went in a basically said no more stated income, verify everything, they want to know where they down payment comes from, no funny money," said local financing specialist Dean Wegner. “There is no more fast and easy,”
Second, there is intense competition from motivated buyers who are ready, willing and able to pay cash.
"It people can't buy a home because they are being beat out by three, four or five offers, people are kind of feeling discouraged," MacLean said.
Many of those people are opting to wait until things settle down a bit, which means renting for now.
If you're planning on renting, there are some questions you'll want answers first, like why the owner is renting. Is it because they can't sell? Is it an investment property? Will it be sold out from under when the owner can get a good price?
Make sure the title is clean. You don't want lien-holders coming after you.
One of the most important things you can do is buy renters' insurance.
"Renters' insurance isn't something that seems like a necessity but it is," MacLean said. "It's not a big number and it just protects you."
Finally, beware of scammers. The low inventory and high demand combine to create the perfect environment for them. Do your homework so you don't get caught up in a nightmare.
"There are so many scams and I've had so many people call me and tell me they've been a part of these scams," MacLean said. "It's very smartly done and they [scammers] can manipulate the system in a way that a lot of people wouldn't think they could fall for, but a lot of people are."
The market is so hot right now that homes in the FHA price point are being snatched up in a week or less. Things move so fast that MacLean advises her sellers to be sure that have someplace to go before putting their houses on the market.
3 on Your Side producer LiAna Gonzales contributed to this article.