28
Oct

Are AZ Landlords Negotiating With Renters?

HomeLovers had an interesting interview with Arizona Republic real estate reporter Catherine Reagor recently on renter trends and issues – real life examples of what’s going on in the rental market with tenants right now.

One of her questions was the current renter market – are landlords negotiating with renters or bargaining? Are they settling for lesser tenants out of sheer desperation to end a vacancy?

For some investors, this is true.

For investors that purchased a home several years ago or longer – maybe not the ideal HomeLovers property, but still an investment they are stuck with – they are desperately trying to find tenants that will pay enough to cover their mortgage, instead of renting the home for current market value.

These desperate landlords are anxious to find a tenant. To compete with cheaper rentals priced at what the market will bear, they are accepting terms, negotiations and tenants that otherwise wouldn’t be in their best interests.

These investors might be in the tough position of trying to cover their costs, instead of running the investment as a business with temporary price adjustments based on the market.

It is very important to realize that if the investor has a mortgage for $1,400 a month, they may spend months chasing that rent instead of renting it quickly at the actual market value of $1,000.

Many fail to realize they lose less money renting a year at $1,100 (a $3,600 loss) than having a six-month vacancy because they are pursuing the full $1,400 (a $8,400 loss).

To get the full $1,400, those investors end up compromising, offering dangerous incentives or not thoroughly screening prospective tenants just to end the vacancy. (Read the HomeLovers article here on “How to select the right tenant.”)

Renters that find they are paying too much are the same angry renters that tend to strip or damage homes. They feel taken advantage of and take that out on the property.

It is important to realize that if a home is in rent-ready condition and priced right, there is a huge demand of good renters available.

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