If you’re a condo owner you may have noticed a not-so-subtle change in your neighborhood lately. The pride of ownership, neighborliness and respect of your fellow HOA members may be slipping away. Why? Because as your neighbors short sell or lose their homes in foreclosure, the new owner is increasingly an absentee landlord.

This isn’t to say the tenant moving in next door won’t turn out to be your new bff, but we know from experience that complexes where the tenant to homeowner occupancy exceeds 50% become almost impossible to finance and hard to maintain.

San Diego like most forward-thinking cities has a general plan comprising of a number of community plans for specific areas. For-sale and rental housing stock is carefully balanced so that future population growth puts the smallest strain on transportation corridors and enhances the environment. Careful mixing of for-sale and rental complexes, plus retail spaces achieve optimal living conditions for all….at least that’s the idea.

One of the casualties of the current economy has been ready financing for condominiums. Big Bad Banking along with government entities such as FHA has imposed a de facto redlining of condominiums nationwide. In January, FHA decertified nearly all existing condominium projects, rendering them ineligible for what had become the loans of last resort. The formerly available FHA spot-approval program was eliminated and mortgage brokers, homebuyers and sellers are faced now with lengthy, expensive approval processes that encompass the entire complex and can take months.

The result of these shenanigans is that fewer and fewer owner occupants are able to purchase condos and they’re being readily picked up by cash buyers and syndicates for use as rental income property. Most REO (lender-owned) properties won’t accept purchase offers with an FHA loan attached.

As the occupancy ratios skew in favor of tenants the lendability of the complex decreases. You got to love this logic. FHA and Big Bad Banking want high owner occupancy levels in order to make loans in condo projects just as their own questionable guidelines make financing a condo impossible; almost guaranteeing the opposite outcome. Outrageous. We met with our local congressional office on this one year ago to no avail.

As turmoil in the economy has led to an explosion in the number of local short sales and foreclosures, the demand for rental housing has sharply increased. And as if people suffering through the loss of their home and their equity didn’t have enough tsouris, the internet exposes them to a host of rental scams.

Because the crooks are often smarter than us consumers here’s a list of do’s and don’ts to help you find the right rental and not be outsmarted by the bad guys you may encounter. Sadly, because there isn’t much money to be made in the leasing of individual homes and condos, the database Realtors use – the MLS – is nowhere near as useful or complete for rentals as it is when shopping for a home to buy. Landlords, agents and unfortunately criminals have flocked to websites like CraigsList.org as an inexpensive and efficient way to market rentals and snare unsuspecting tenants. The permutations on a rental scam are endless but they all have some of these basic commonalities:

1) Bargain Lease Price

2) Everyone involved is out of town

3) Demand for a large upfront “key” or “processing” fee

4) Demand for cash security deposit

5) Sense of urgency

How to protect yourself:

1) Beware of anonymous websites like Craigslist. They won’t be of much help once you’re a victim and they are fraught with outdated, fraudulent and incorrect information.

2) Ask the person who responds to your call for their contact information. If that person is acting on behalf of a property owner, a valid State of California Real Estate Broker or Salesperson’s license is required and the license number must appear on their business card. (In instances where the rental complex is 16 units or larger an unlicensed onsite sales manager is allowed.)

3) Hire a Realtor you trust to represent you. Commissions on leases vary, but an average amount your agent may be paid is 3% of the total value of the lease minus the amount split with his or her broker. For example if your monthly lease rate is $1500 X 12 months X 3% the gross commissions due your agent’s office is just $540.00. A similar amount is paid to the landlord’s agent. Smart Realtors see these small transactions as good opportunities to meet tenants who may someday become buyers or referral sources.

Shhhhhhh…..

Entry level condo on 11th floor of Meridian. 1200 sqft for unheard of $434,000!

Never park your own car or open a lobby door at downtown’s only full-service highrise community! Call Cameron at 619-550-6084. l