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Should Arizona Home Buyers Be Scared of Rental Homes ?

By
Real Estate Agent with HomeSmart Elite ADRE# BR627160000

Old Home

Over this past 7 years our real estate market has been the world’s craziest roller coaster. We have seen record low interest rates, “bubble bursting” home prices, exceptional buying/investment opportunities, a transfer of wealth (both positive and negative), and an explosion of institutional investing in single family rental properties (IE BlackStone and numerous REIT’s). This seemingly unprecedented roller coaster has understandably effected the way home buyers both perceive value in homes and select the neighborhoods they want to live in.

For years, Arizona home buyers have been weary of buying a home in a neighborhood where there is an above average amount of rental homes. In addition, many buyers perceive the value of a previous rental home to be less than an owner-occupied home of the same like-kind and quality. Our real estate roller coaster that created incredible investment opportunities has also caused an increase in these occurrences.

Why is this ?

To be short, when the inventory was inflated during the recession it provided incredible opportunities for large investment firms and personal investors. This in turn allowed the rental market to grow with the increasing amount of new tenants entering the markets due to foreclosures and short sales.  Arizona was one of the hardest hit areas in the United States which further explains why our single family home rental rates are so high. Often times home buyers associate rental homes with a lack of pride in home ownership since the owner of the property is often out of state or a corporate entity.

***News Flash - Rental homes should not scare home buyers. *** :)

In today’s real estate environment which includes tighter mortgage guidelines, some-what limited home inventory, unprecedented institutional investment in residential real-estate and soon to be rising interest rates; Arizona home buyers may want to focus more on other things such as school district, crime statistics (found on city/county websites), and geographic location as the amount of rental homes will not be changing any time soon since most investors are utilizing a long term investment strategy.

Keep in mind, Home Owner Associations (HOA) really do help maintain home values and aim to strengthen a community as the board is made up of elected individuals from the neighborhood they govern. In addition investors whether it be an individual investor or institutional investor are in the business to make money which also means they have to maintain the property to both HOA guidelines and tenant/landlord guidelines which in most cases are much more stringent than owner occupants are required to follow. This means that most rental homes meet or exceed the expectations of the community. Investors also want capture a return on their investment through appreciation which incentivizes them to maintain and update the property to current market expectations. Finally, while tenants in rental homes may change every 1-2 years, the average home owner only stays in a home 4-6 years. This means that the length a tenant or homeowner stays in a home does not differ much based on their ownership status (rent vs. own).

What does this all mean ?

Personally, I do not believe Arizona home buyers  should limit themselves by avoiding a community because of the number of rentals in it nor do I believe a home buyer should avoid buying a home that was a previous rental. I think that home buyers should start with researching community data such as school districts, crime statistics, and geographic location in addition to their standard search requirements. Also remember that home inspections are highly encouraged to alleviate any home quality concerns. This additional data should help weed out most concerns home buyers have with the stigma of rental homes. A quality real estate agent will always listen and acknowledge your needs/concerns while at the same time educating you throughout the process.

~Megan 

 

Posted by
 
Megan (Shaw) Williams
Realtor ~ Broker ~ Property Manager
 
Direct: (480) 299-1353
We are a full service brokerage for both Buyers and Sellers. In additoon we have extensive experience with New Construction Homes, Short Sales, Foreclosures, Investors, Property Management, Rentals, Condo/Townhomes, Snowbird, Vacation Homes and 2nd Homes.

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