Arizona Rental Info

Renting vs Buying a Home

Deciding whether to rent or to a buy a home can be a challenging decision. Many weigh the aspect of “throwing” equity or potential future value away when renting a home. That said there are many other reasons to rent over buying a home and vice versa. Here are some considerations I would recommend when making this type of decision.

Renting a home

The pros of renting a home:

• As a renter you don’t assume any of the major responsibilities of owning a home. Of course you should keep the home in good order; however, you’re not required to replace the broken water heater or maintenance the AC. Your responsibility is to keep the home in good condition less wear and tear.
• Before our current economy no one thought of the values of homes declining, especially in such rapid form. Since this is now a certain possibility, as a home rentor you will not take this potential risk.
• By renting a home you can stay flexible by signing a leas for 6,9, or 12 months, based on your planned stay. At the end of the term you can always re-sign an extended lease or decide to depart to a new location.
• The monthly cost of renting a home can be substantially lower then owning a home, especially with the many home available at present

The cons of renting a home:

• The tax write-off one receives from owning a home can be significant. This is especially true if you just recently purchased your home as lenders front-load your load with interest. So in the beginning a majority of your monthly payment can be deducted. Additionally, your real estate taxes can be deducted from your taxes as well. This can lead to significant tax savings, in particular if you are in a high tax bracket.
• Your monthly payment is effectively locked for the next 15-30 years when you buy a home. As a renter you are subject to increases in your payment at the discretion of your landlord.
• You lose the opportunity to receive a potential increase in value by owning the home.

Buying a home

The pros of buying a home:

• I believe the single most reason people buy a home is because it’s “The American Dream.” There is a sense of emotional satisfaction when you can stand on a piece of your own real property.
• You can do almost whatever you want to your home. Of course you’ll need to make sure it meets your neighborhoods CC&Rs(codes covenants, and restrictions). I know you didn’t read it, neither do most, but as long as it doesn’t violate that or your city’s/town’s building code, go for it.
• Write it off. You know this is probably the 2nd most common reason for buying a home. You can write off every penny of interest and real estate taxes, which can lead to HUGE tax savings.
• Time has proven that your home will “most likely” gain value. This can lead to significant wealth and security; however, as we’ve recently seen this is not always true.

The cons of buying a home:

• You’re responsible to maintain your home, so when it breaks and you didn’t plan for it, you still have to fix it. Air conditions, water heaters, and many other potential issues can arise on a home and they can be very costly to fix.
• Closing costs are thousands of dollars in most cases, so budget accordingly, usually about 1% off of the home value.
• You’ll be forced to pay private mortgage insurance (PMI) if you don’t put 20% or more down.

I hope these help you with making your decision with whether to buy or rent. If you have questions or need to find a real estate professional in your area, please let me know.

You can reach me at lhasson@realestatearizona.com

Renting an Arizona Home

Many people are turning to either rent their home or rent a home while the dust settles in the Arizona Real Estate market. There are some things one should know when doing this, whether your planning on being a landlord or a tenant.

The Arizona Residential Landlord and Tenant Act(ARLTA) lays out some important guidelines and primarily is in place to protect the tenant. It focuses mainly on residential real estate rather than commercial tenancy.

The ARLTA states that a landlord…

• … cannot charge a security deposit of more than 1.5 times the monthly rent.
• … has to clarify what refundable and non-refundable amounts are included in the cleaning deposit
• … is not obligated to place the security deposit in an interest bearing account. This differs from earnest money in a real estate purchase, where a request to place the money in an interest bearing account can be made.
• … is obligated to provide “fit and safe premises”. This is to some degree relative, so should be discussed during the rental process.
• … must provide a tenant 48 hours notice to perform any improvements or construction on the property. Any major improvements should be made during vacancy.
• … must provided a signed copy of the lease to the tenant.
• … must provide a move-in form. This form is used to specify any existing damage. I would recommend scheduling a walk through to thoroughly review the home when both the landlord and tenant are present.
• … must provide written notice that the tenant may procure a free copy of the ARLTA from the Secretary of State’s Office. Click here to view it.

The ARLTA states that a tenant…

• … must use the unit as clarified in the lease agreement.
• … must follow the property rules and regulations.
• … must grant access to the landlord if the landlord has provided 2 days advance notice and the time is acceptable to the tenant.
• … must pay the rent when specified or the tenant can be charged a late fee. Typically, there is a 2 day grace period so that on the 4th day of the month the rent actually becomes past due and fees are assessed

These are just the basic important aspects of renting an Arizona home. You should always consutlt an Arizona Real Estate professional before entering into a rental agreement. Some important aspects I have not addressed include if the agreement is broken. I will follow up on this at a later time. If you have any questions about this or any other real estate related questions, please feel free to email me at lhasson@realestatearizona.com