Re: Advice on renting (long) - Posted by Frank Chin
Posted by Frank Chin on July 13, 2003 at 07:13:39:
I’ve been landlording for over some 20 years.
You mention that:
1- The property is newly built property in a new rural development.
2- Most of the potential renters can barely make the rent.
3- Its 15 minutes from Phoenix.
Based on this, I have several observations:
A- With 5% rates, and almost zero percent down in many cases, most working folks who qualify would be buying a home.
B- Folks who usually rent are:
i) Have bad credit, and do not make enough to pay the mortgage. These are the ones you met so far.
ii) They’re in a situation where they cannot or do not want to own a home for the moment. These are usually recent grads, recently divorced, relocated folks not wanting to buy immediately. Then there are snowbirds from the colder climates.
C- The challenge for “low paid” rural folks in addition to housing is the lack of transportation. If they flip burgers at McDonalds, after paying $1000.00 rent, how can they make car payments and insurance.
D- Section 8 only helps with the rent. Low paid workers normally live where they can commute by public transit.
My suggestion is:
I) Find out what your competition is. How many rentals are out there, how much are they charging. I do that by researching the local papers, and calling up local realtors pretending to be a renter.
II) Try renting to Snowbirds trying out the Phoenix area. I have a friend , a former co-worker from NYC who bought a house in Florida, renting it out for a few years before moving down there from NYC. The Realtor found a retired couple from the Long Island NY area who spends a few months a year in Florida. My freind explained that with the low wages in the area, few working people can afford to live in the newer developments.
So find some realtors specializing in relocations.
III) I have rentals in Springfield MA, where there’s an abundance of Section 8 tenants. I’m told that rentals along the bus lines command a premium as the tenant can do with only one car, or no car at all, to go to work and shopping.
In other words, section 8 housing is OK if you can get to work and shopping. Is there a bus within walking distance that can get the tenant to downtown Pheonix to work??
In fact, a condo that I own has a bus stop right in front. While its a luxury condo, and I don’t offer it to Section 8, I have section 8 people looking to rent, in addition to folks who cannot or will not drive a car. One prospect says she enjoys fine dining, and rather spend the money on food rather on a car.
I have to say I never thought much about the realationship between transit and housing when I started landlording.