rent or buy in Chandler? (Phoenix: sale, renters, mortgage)

[ReadyFreddy]

If you rent, then you'll have time to try to buy a short sale if you wish, because it can take up to 6 months to complete. If you are wanting to move in quickly, then you'll need to focus on bank owned and traditional sale homes.

I think this is the part that bugs me about renting. If they love it here and know within a month they want to buy, they have to wait out their year lease and then start house hunting, while they're month-to-month, and that's assuming their landlord let's them go month-to-month. If they start shopping for a short sale earlier and it's one like I and others here found that closes in a month, then their stuck with two houses for a long time.

but you want to own the right home.

All my homes are "the right home for the next 4-7 years".

[azriverfan.]

Originally Posted by ReadyFreddy

I think this is the part that bugs me about renting. If they love it here and know within a month they want to buy, they have to wait out their year lease and then start house hunting, while they're month-to-month, and that's assuming their landlord let's them go month-to-month. If they start shopping for a short sale earlier and it's one like I and others here found that closes in a month, then their stuck with two houses for a long time.

That is negotiable with the landlord. You are right in that most landlords will seek a minimum of 12 months. However, breaking a lease is something that can be negotiated with the landlord prior to renting. And I've never rented from someone that didn't have an escape clause and I would never be dumb enough to rent from a landlord that didn't have one. Usually, there will be a lease break penalty of 1-2 months rent and advance notice. It's really not that difficult to get out of a lease if there are open lines of communication. When I was younger, I rented homes all the time and it was never difficult to get out of a lease. If there are problems, it's usually the tenant's fault because he or she made assumptions and didn't clarify issues prior to renting the property. And most landlords are pretty understanding about people finding homes. As long as the tenant is honoring the terms of his or her lease, landlords could care less if you leave as long as you honor the stipulations in your lease and you took care of the property.

If you are purchasing a short sale and getting a good deal, paying a lease break penalty and/or an extra months worth of rent is a small price to pay versus rushing to purchase a property in a market you are unfamiliar with. A house is a big committment. Choosing to purchase a home when you haven't lived in the Valley is a big risk. I personally would never buy a home without living here for at least 12 months but at the minimum someone should spend 6 months here to get an idea about the Valley and where they can see themselves living in the foreseeable future. Again, it's not like the OP is working in Queen Creek, they are working at the airport which is accessible from several areas of the Valley. The Valley is so different and each area offers something different that people may think they want to settle in one area until they live here and realize another area is more suitable to them.

All my homes are "the right home for the next 4-7 years".

And that was the mentality of people during the bust. They thought "Oh home values are going up so what's the big deal, I'll buy a home and if I don't like it, I can turn around and sell it in 5 years for a profit." Awww, it's funny to see that mentality returning...it's kind of nostalgic to see those attitudes return. I guess it's true what they say in life that people are doomed to repeat their mistakes.

[ReadyFreddy]

I think a lot of us just don't really put down roots like others do. No matter what is going on with house values, I want to move every 4-7 years. It has nothing to do with speculating on R.E. I don't really even know anyone who would move more often in an up market.

I've never leased a house, only apts., and they had no flexibility. You paid the full lease, period. They didn't care if I bought a house. So I will defer to those of you with more experience, for sure. I suppose if I was renting out a house, a family like the OP might be a desirable one as renters, and I might give them a clause for an out on 60 days notice or something. I never had that. I'd rather spend that couple thou on transaction costs and be in the R.E. market than spend it on buying out a lease.

[azriverfan.]

Originally Posted by ReadyFreddy

I think a lot of us just don't really put down roots like others do. No matter what is going on with house values, I want to move every 4-7 years. It has nothing to do with speculating on R.E. I don't really even know anyone who would move more often in an up market.

If your intent is to move in 4-7 years then you really should take the time to research a home and area because if you are planning on moving then you need to find a home that you will be able to sell should you need to.

I've never leased a house, only apts., and they had no flexibility. You paid the full lease, period. They didn't care if I bought a house. So I will defer to those of you with more experience, for sure. I suppose if I was renting out a house, a family like the OP might be a desirable one as renters, and I might give them a clause for an out on 60 days notice or something. I never had that. I'd rather spend that couple thou on transaction costs and be in the R.E. market than spend it on buying out a lease.

That's odd because in my experience, apartments are the most straightforward about this. Most apartment companies will clearly detail what is involved in breaking their lease. The penalty is usually 1.5 to 2 months of rent.

I know there are good deals but is every deal going to be gone in 6 months or even in a year? I don't think so. And it's quite presumptive for someone to know where they want to live when they've never lived here. I don't think it's asking a lot for someone to rent a home for 6-12 months to learn about an area particularly schools and neighborhoods before deciding to make such as a large investment. Chandler is huge. There are so many different types of schools, neighborhoods, homes etc. Even if you know you like Chandler, it's going to take time to find the area of Chandler that you like best.

[Captain Bill]

For some people, renting first works best; for others buying first works best. I've spent a lot of time with both types of clients, helping some find a rental for a year, then helping them buy a home when they're ready; and helping people buy first, who would not consider renting.

Buying first or renting first is a very individual choice that only an individual family can make.

The OP seems to be wanting to make a decision based on what the market is doing. There are a couple of threads that discuss the market in depth. Take a few minutes to go through them. Here is one: Phoenix Real Estate Market Keeps Tanking

The market has changed drastically since last August. The supply in the <$150k range is all but depleted, and the average prices have increased 16% since August.

In August, REO's (bank owned homes) were 11.8% of Active Listings and 42.6% of sales. Today they are 6.6% of Active Listings and 22% of sales.

Because of the removal of the supply at the lower price ranges the Median price in the area moved up from $110,000 to $126,500.

Mike Orr of the Cromford Report said:

..."Since we still have nearly 6 months to go until September 15, 2012, what do we think the annual appreciation rate will be on that day? I'm going to leave that question hanging there"

Today there are 51 homes in Chandler priced from $200-250k, including 6 in the popular Ocotillo area with one of them being in a gated community. Here is that mls # 4712729. Of the rest of the 51, there are only a few that would be in what many would say is the least desirable area of Chandler near the downtown area.

Those 51 homes include short sales, and homes that may not fit your family. So there is not a total of 51 homes to choose from, and as the prices begin to trickle up, as is happening now, that supply will most likely dwindle.

There are also homes in desirable areas of Gilbert and NE Mesa. There are 3 listings in this price range in Las Sendas in NE Mesa by the 202 which gives fast access to the airport.

[coorsleftfield]

I rented when I first moved into town, and I wish I had just bought an inexpensive house that I could later rent out. That is exactly what I ended up doing, but it was a year later by the time I figured out that strategy, and the housing market had tightened up by then.

Buy something that will make a good rental and move into it. It's better than paying someone else rent.

[Jkgourmet]

Originally Posted by coorsleftfield

I rented when I first moved into town, and I wish I had just bought an inexpensive house that I could later rent out. That is exactly what I ended up doing, but it was a year later by the time I figured out that strategy, and the housing market had tightened up by then.

Buy something that will make a good rental and move into it. It's better than paying someone else rent.

Of course, you'll need to be quite sure that you can qualify for TWO mortgages if you follow this advice. Most people can't swing that.

In the old days, you only had to show a signed lease to "prove" that the first house was rented. Now, Mortgage companies will want to see proof of rental income for 6-12 months before they will include it in your ratios.

[Home Addict]

Originally Posted by Jkgourmet

Of course, you'll need to be quite sure that you can qualify for TWO mortgages if you follow this advice. Most people can't swing that.

In the old days, you only had to show a signed lease to "prove" that the first house was rented. Now, Mortgage companies will want to see proof of rental income for 6-12 months before they will include it in your ratios.

Proof of rental income for 2 years.

[azriverfan.]

Originally Posted by coorsleftfield

Buy something that will make a good rental and move into it. It's better than paying someone else rent.

How do you locate a home that will make a good rental when you don't know the area. A good rental home is one that is located in a safe area, near good schools and amenities and is constructed well. The only way you can find a home like this is to spend some time here and research neighborhoods and homes. You can't do that by talking to a realtor on the phone or searching the internet. You have to see these things in person and get a feel for the areas. This is particularly true for the Valley because everything looks great on the web and if you drive through them. The weather is great, homes are relatively new, the stucco cookie cutter homes all look great but people who live here and know the area can distinguish between genuinely nice areas and lackluster ones.

[shadow91]

My neighbors house went into foreclosure, someone bought it, flipped it and got 274,000 for it It is beautiful, 5 bedrooms, 3 baths, new kitchen, laundry room, 3 car garage, diving pool, etc. I thought that was reasonable for our neighborhood. All they had to do was paint and new carpet upstairs. Just keep looking, you will find something in a great neighborhood.