Bend Home Rentals In High Demand

Posted by Sedonia Darling on Monday, October 28th, 2013 at 2:10pm.

Bend Oregon Rental Housing Market

home for rent in downtown Bend

The tides have turned... Just a few years ago tenants were negotiating lower rents, and the Bend rental market had around a 12% vacancy rate (reported by local Bend news station KTVZ).  Today the vacancy rate is 1%.  Homes are rented within minutes, with multiple applications.  I had a client rent out a home near downtown over the weekend.  She advertised on Craigslist only, and said she'd be at the home taking applications for a 2 hour period. She had people waiting when she arrived, and took over 30 applications.  Needless to say she rented the home out for what she was asking the same day.

People in need of a house rental in Bend are having a rough go at finding a suitable home. Many are constantly searching online for rentals, filling out applications, and doing walk-throughs. But only one applicant lands in a rental.  Leaving the rest scrambling to find the next.  KTVZ reported that one rental recently had 125 applicants. Crazy!!!

Home Rental Prices

Along with the high demand in rentals, comes the spike in rental prices.  Rental prices in Bend have rose 20% in the past 2 years.  Meaning that a home that once rented for $1,000 a month, is now renting for $1,200.  Many landlords are asking for rent increases from their tenants that are on month to month contracts, and most tenants are paying up.  Those that can't afford the rent increase are having a tough time finding a similar home to rent.

Rent VS Buy

While there are definitely some circumstances where renting makes more sense than buying, most of the time it is the opposite.  If you plan on living in Bend for at least a few years, why not look into buying a home?  Many times tenants can buy a similar home and have a payment of right around what they are paying for rent, sometimes even much less expensive. Let's look at some of the pros and cons of renting and buying.

Renting Pros and Cons

Pros

  • You're mobile. A typical lease is for 1 year in Bend.  Tenants can pack up and leave after a year if they choose to.
  • The landlord fixes most problems maintains the systems like your furnace.
  • It's typically affordable to get into a rental.  Usually 1st and last month rent, plus a deposit. Many times under $5,000.
Cons
 
  • You don't own the home.  You usually can't make alterations or upgrades.
  • No tax write offs
  • If you're not in a lease, you can be given a 60 day notice to vacate the property at anytime.
  • Your rent money pays the landlords mortgage, and you won't get any of your rent money back.
  • Some rentals don't allow pets

Buying Pros and Cons

Pros

  • You own your home and can do with it what you'd like (as long as it's legal), including upgrades and alterations to make it your own.
  • Your interest is a tax write off.  This can save you lots of money come tax time.
  • Unless you quit paying your mortgage you won't be kicked out of your home at anytime.
  • There are programs available to buy a home without a downpayment, or as little as 3.5% down. (sometimes cheaper than getting into a rental)
  • You can sell your home and pocket the profit 
Cons
 
  • Depending on your credit and debt to income ratios, you may need a substantial downpayment.  But there are many zero-low down payment options available if you qualify.
  • You can't just give a notice and leave, as you have to sell your home before you quit paying the mortgage.
  • You have to pay to maintain the home yourself.

Mortgage costs compared to rent costs

Lets take a $165,000 home and compare the rent and buying costs.  Typical taxes on a home in this price range are around $1500 a year in Bend, so we'll use this number for taxes.  For an FHA loan, the downpayment would be 3.5%, or $5,775.  You'll also have closing costs associated with your new loan, but many times we can get the sellers to pay these closing costs for you.

The average mortgage interest rate is right around 4.5% right now.  This would put the Principal and Interest payment at  $806.77.  Since less than 20% is being put down as a downpayment, you'll be required to get FHA Private Mortgage Insurance (PMI).  This premium tends to run about $55 for every $100,000 financed (but depends on credit scores).  In this case it will roughly be an extra $87.57 a month.  Your taxes and insurance will most likely be included in your paymet as well.  Let's use the $1500 for taxes and $450 a year for insurance.  This comes to $162.50 a month.  So lets add it all up.

  • Principal and Interest $806.77
  • PMI $87.57
  • Taxes and Insurance $162.50
  • TOTAL MONTHLY PAYMENT= $1,056.84 

No lets look at renting the same home. Most 3 bedroom homes in the $165,000 price range are going to rent for $1,000-$1,200 a month in Bend.  At $1,000 a month, you'd barely be paying more a month to own your own home.  And if we add up a first and last month, plus a deposit for a $1,000 home with a $1,500 deposit, it comes to $3,500 to get into a similar rental.  

If you're having a hard time finding a rental, maybe it's time to start looking at buying a home instead.   I've worked with many first time buyers and would love the opportunity to talk with you about the "Rent VS Buy" scenerio in person. Contact me to set up an appointment.

 
 
 
 

 

 

Written by Sedonia Darling

Search. Connect. Love. Buy
BendRealEstateSearch.com

Berkshire Hathaway | The Darling Real Estate Group
404 SW Columbia St #110 | Bend, OR 97702
(541) 541-749-0509 

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