Beware the renter
The Wall Street Journal is out today with a great story (hi Ben!).
In another manifestation of the housing slump, thousands of property owners across the country are now renting out homes they cannot sell. As a result, developments and condos that once were largely owner-occupied are filling up with renters who some neighbors say are less engaged in their communities and less concerned about maintenance.
The problem? Often, renters take less care of their properties, so these buildings end up getting lots of wear and tear. There’s also a lot more transients, so expect to be sharing the elevator with moving guys, every weekend.
What you often see is not only are other owners renting out there units, but so are developers of new condo and housing developments.
RCG Properties has a habit of doing this. They put a couple renters into at least one of their buildings in Lynn, and have done the same at the Derby Lofts, in Salem.
According to the Journal story:
In fact, about a third of the 54 units in the Salem condo building haven’t sold, leaving the developer, RCG LLC, little choice but to market them as rentals. RCG principal Matthew Picarsic says the developer has tried to find renters who might become buyers, and he screens tenants carefully. Owners in the building say the renters haven’t caused many problems (although Ms. McMurren-Riggs acknowledges she’s received a few noise complaints about her tenants), but some say they are worried about what having too many renters will do to property values.
I question the use of the words “little choice”.
But, whatever.
It’s something to be very concerned about, if you’re buying in a new development. (The other thing you need to be concerned about is these developers doing an even worse thing - dumping their remaining units onto the market, at discount prices.)
You need to pay close attention to this. Read the condo documents, have your attorney read the condo docs, and if there’s any confusion, get the developer to explain it all to you.
If you are left with any lingering doubts, don’t buy.
More: The Invasion of the Renters - By Ben Casselman, The Wall Street Journal