As you know, I am going to try to talk you out of renting if you have the option to buy. I realize that not everyone, but most people, has the option to buy a home. If you need time before you are qualified to buy, you still need a place to live, so you may be forced to rent for awhile. I wanted to go over some of the things to watch out for if you rent.
If rent is too cheap, it is most likely too good to be true. There is always a reason that someone would be asking a lot less than they can possibly ask for a rental. The property most likely needs a lot of hidden repairs or have a lot of major flaws. Ask yourself honestly, if you were to own a place and wish to rent it out, why wouldn’t you ask for market value? There would have to be a pretty good reason. Red flag is certainly when you find a rent that is not matching what it should. If you are the type of person that is handy, maybe talking to the owner and letting them know you are willing to do repairs while you live there, but they should be deducted from the rent. If the landlord is a reasonable person, this should be something they are interested in, if not, it is probably a good idea to not rent from them.
This should be a no-brainer, but what if you find the house you want to rent and it is within your budget, but… the landlord is asking higher than market value? What about a landlord wanting too much of a deposit up front? Once again, there has to be a reason. The most likely reason is that the landlord knows that they are going to have a hard time collecting rent from you if they aren’t on the up-and-up. With the large amount of foreclosures and defaulted loans in Southern California, a landlord can easily hide the fact that they are no longer the owner of a property after the bank has foreclosed on it. The bank does not immediately take possession in most cases so the landlord has time to put it up as a rental and collect a deposit and rent from possible tenants. This was pretty common about a year ago, but it is still out there. In this case, if you are willing to pay the rent, contact the County of the property and make sure that the person you are about to give money to is the rightful owner of the property.
The last red flag to discuss is that of the landlord ignoring safety concerns. In every city, there is a legal code that must be followed by landlords who intend to rent out a property. In most cases smoke detectors, self-closing garage doors, carbon monoxide detectors, and working furnaces must be installed in every rental. This is in addition to common sense safety issues like leaky roofs, bare floors, broken windows, exposed wires, and other obvious problems. If you are looking to rent a place, make sure your landlord cares about code and safety. If not now, they never will. Don’t be shy, these codes were put into place to save people from serious injury or death. If a landlord doesn’t comply, then you have to turn into a tattle-tale. Sounds immature but it is actually a very responsible thing to do. You could seriously be saving someone’s life.
Of course my conclusion is that buying a home is the way better option. Tax benefits, financial benefits, and pride of ownership are just a few benefits. In California, you are protected by several disclosures that cover all possible safety situations! With that said, I know you don’t always have the choice, so at least make sure you are getting the fair value of the home for the price you are paying and that the home is safe for you and your loved ones.