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It's not a bad idea, in a renters market, to likewise ask for a credit check of the landlord. I never thought of that. We should even ask for a credit check of prospective real estate agents. Why not? Someone with nothing to hide should have no problem with such a request, while denial tells you everything you want to know.
Your dilemna is one I can sympathize with. I am a huge supporter of this website and of renting for now in general, but you are absolutely 100% correct in saying that really good, correctly priced rentals are extremely rare. The reason for this is twofold...landlords do not like to have terms dictated to them, and while there are alot of savvy renters out there, there are also alot of moron renters out there too. Renters who will succumb to any terms that the landlord wants. So you are correct, for good rentals priced right, well, you are probably going to have to just take a leap of faith with the credit check thing. As far as the buyout, you are probably going to have to get lucky. I have been successful in getting this type of provision but it wasn't on the most ideal of houses I was renting. My old landlord went into foreclosure and as soon as I found out I demanded to cancel the lease and get my security deposit back. The landlord agreed but the realtor didn't. I had an attorney draft a letter to the agent, (cost me $300) and they relented. That's just the mentality that agents and landlords have with renters. They THINK they are smarter than you, and when you start acting like you are in control they don't respond well to it. Be prepared to do alot of walking away houses. You'd be amazed at the looks I got from realtors when asking for credit checks from landlords and wanting foreclosure provisions in the lease after my last experience. Another funny thing is trying to negotiate price. It's like they (the landlords) have no idea sometimes. One example is asking for a $50 reduction in rent if I moved in today compared to the end of the month. This would be on a house that rented for $1200/mo. $50/mo. for a year lease would be $600 for the year. If I moved in today, I would pay a pro-rated amount of $600 for half-months rent. In the end, I would pay the same amount, and the landlord would get the same amount. But for some reason I was told by more than one landlord that they would rather wait until the first of the month and no rent reduction. If I do sign the lease, they make out even, but they are risking me walking away, then the rental sitting (at a loss of $600 for this half month plus any more vacant time, lets say one month, another $1200) all because they didn't want to lower the rent $50 a month. The house is still for The moral of the story is unfortunately, not everyone is as smart as you are. That would be fine but the real frustrating thing is that these people aren't even smart enough to act in their own best interest and are too stubborn and proud to allow someone else to explain what their best interest might be.
elliemae
2009 Nov 12, 10:33pm
Keep looking for the right rental, it'll happen. And remember that there are no guarantees in life. I'd say that the best purchase price will be a home in short sale or foreclosure, rather than someone who isn't desperate.
It's amazing how often people will step over dollars to pick up pennies. But on the other hand, if they're not negotiable on price and you like the place, you're kind of screwing yourself...
doubleup
2011 Jan 29, 11:35pm
Epilogue:
I ended up buying a home this summer via a traditional sale. In doing so, I avoided any further renting which was very welcome. I was willing to continue renting but I preferred to buy if I could find the right house. Over time I learned that far fewer houses have any chance at being the right house that I originally might have guessed.
The home I bought is 25-years old but smartly re-modeled during the past few years. It was also well-maintained so it literally doesn't need a dime invested in it. It fit our living requirements perfectly and my commute is about eight miles a day round trip including dropping the kids off at school. The home was extremely well-tailored to our situation so I offered an amount that was materially close to their asking price which I deemed was around the market clearing price. I remain confident that housing prices will continue to fall slowly over time so I'd be upside down if I tried to sell any time in the foreseeable future. But this house should be a good fit for at least twelve years until my kids go to college which would be the first time I could argue that relocating would be at all necessary.
I spent a long time on the sidelines doing my homework before acting. In my opinion, the long wait on the sideline really helped me narrow down the market place. I got to the point where I ruled out newly available houses quickly and I knew the neighborhoods I wanted like the back of my hand. It seems to me that the housing market is still a dangerous place and I would encourage any potential buyers to take their time. I doubt prices are going up any time soon so you'll definitely want to buy only if you can live with the decision for a long time.
I'm interested in buying a home. But I think for the next few years that housing prices are more likely to go down than go up or even remain flat. Buying when prices are going down doesn't seem like an attractive proposition. I believe it is entirely possible to buy home with 20% down right now and still end up upside down if the need to sell were to arise in the next five years. Yet continuing to be a renter has unattractive aspects as related to making enhancements to the livability of a home. There are lots of things (paint, flooring, fixtures) that I would be up for enhancing with a simple trip to Lowe's or Home Depot which would make any home a nicer place to live. Most of the home improvements are pointless to make while living in a rental.
In my particular case, I sold my upstairs condo when my wife and I had twins. We could have managed one child there but one of us alone contending with two babies, the outside staircase and the heat of summer was clearly going to be unsafe. I sold the condo and found a suitable townhouse for us to rent. I would have bought a house but it was unusually difficult to find one in the summer of 2004 when the housing market (read as easy credit bubble) started to really take off. New listings were getting snapped up above the asking price before I could even see them with a realtor. Despite our best efforts we didn’t just want anyplace, we wanted a home we would be comfortable living in for a long time. So I elected to rent for a year or two until things calmed down and the choices improved. Things were pretty chaotic with the babies and not worrying about buying a house was probably for the best anyway. Of course, 2005, 2006 and 2007 were marked by what I considered an obvious speculative frenzy so we just stayed in the rental. I ignored any suggestion from people that we were "missing out" as it was clear that it would have been foolish to buy into such a hot market. My wife was not always happy about staying in the rental but I knew we would be far more miserable if we bought then so I held firm. Catching the downswing would be far worse than missing the upswing. Unfortunately, my wife died last year. So much for our dreams of living happily ever after together…
At this point, I don't enjoy living in the same house anymore. I've tried for a year and that's enough. I need to move forward with my life and finding another place to live is part of doing so. Yet I'm still faced with this dilemma about what to do relative to renting or buying. I am apprehensive about buying as I expect prices to continue falling for some time. But I am tired of being a renter and unable to make meaningful home improvements. A by-product of our one-year rental going on its sixth year is that I've kept an eye on the market for years. The good folks a Zip Realty have provided an amazing tool for searching listings. I've seen six to thirty-six pictures of thousands of houses during the past few years. This additional study time has allowed me to better determine what is likely to be a nice home or a good neighborhood when I see it. (I can’t even imagine people used to see only 5-20 homes with a realtor and then buy one) Now I know my target neighborhoods about as well as possible for someone that is not a realtor. I am still willing to be patient in buying but I'm not willing to live in this particular rental anymore. And I am only willing to buy if I can find the right house at the right price.
Finding the right home at the right price hasn't proven to be so easy. My preferred zip code of 85284 in South Tempe isn't in the same disastrous conditions as the outlying areas. Although the average asking prices have come down they don't strike me as near their likely bottom yet. It also seems that a relatively high percentage of sellers cannot write the check for the difference between what the market currently bears for the home and their mortgage obligations so they list their houses at what the need. Some will probably get lucky too. I doubt that many short sellers will have much success convincing their lenders to take a significant write down. Some of the desperate sellers are actually listing their home well below market in hopes of finding a miracle buyer before foreclosure. I guess some of them will get lucky too. It seems to me that the ideal seller is someone who bought eight plus years ago or their heirs as the case may be. They are in a reasonable position to accept the current market price for their home if they want as long as it wasn't used as an ATM at any point. The other route to buying might be though an auction but it seems auctions are primarily economic propositions and I'm actually quite particular when it comes to looking for the "right" house for me and my kids. I fear that it is difficult to see homes beforehand and find out if you really want to live there. However, I haven’t explored the auction route just yet. Right now I think it's possible I could find the right house at the right price in the near future. It’s just a matter of checking out everything that comes up and hope a good deal appears on a house I feel we could make our home. But it is also possible that I might still have to wait a few years while for enough price deflation to occur before I can find the right place.
So I'm actively looking for another rental while I actively look for a home to buy. Unfortunately, the majority of rentals don't seem very nice and if there are problems such as ragged carpet I doubt the owner will readily replace it in order to attract me as a tenant. Rental prices seem to be based more on what the owner needs rather than in line with the current market so finding an attractive rental price isn't so easy either. Plus, I am concerned that I could find myself renting from someone in financial trouble who defaults on their mortgage. I would not be amused to find myself caught as a tenant in their foreclosure proceeding. All things considered I'll probably be able to find a suitable rental before I can find an attractive purchase price on what I consider to be a good home.
So I welcome suggestions on how to best achieve the following objectives:
The first objective is that I would like to find an alternative rental house to the one I have presently while still preserving my ability to buy a home when a good deal comes along. I expect that most people who are looking for tenants will probably want a minimum of a one-year lease. That sounds reasonable. Moving is going to cost me a couple thousand so I don't want to do it any more than needed anyway. In fact, I won't want to move again until I find a house to buy but I have no idea whether that will take three months or three years. So I'd like to find a way to construct a lease that gives me the option to be released from the full term of the lease agreement in the event I buy a home. I don't know how common this kind of provision is to request. Maybe it is easier to get than I anticipate but I don't know. My current thought is to ask for a clause that allows me to break the lease for a set penalty (maybe $3000) provided I contract to purchase a home. Maybe just a set penalty will do provided it is high enough. One of my concerns is that since there are so few nice rentals that I poison the waters by trying to negotiate a special term. In my experience nice rentals that are reasonably priced don’t last long. Thoughts on any of the above points are welcome.
The second objective is to protect myself from the landlord defaulting on their mortgage. I don't mind them running a credit check but I much more worried about their credit than mine. What kind of qualification should I put them through before leasing? What assurances can I ask them for so that I can expect they won't default? How do I best protect myself here? I anticipate the property manager for the landlord to be put off by my request to address any of my concerns. I guess so be it if they are put off. Any suggestions on how to approach this are welcome.
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