Friday, September 18, 2009

Arizona Rental Investing

Investing in real estate in Arizona, much like any state, comes down to certain vital aspects such as location, convenience, amenities and the earning potential of the property. When considering any property make sure that you run through a checklist to ensure that the property in question will fulfill all of your requirements as an investor and the needs of your potential renters. The first thing that a smart investor should consider in a rental property is location.

The statement that real estate is all about location was made for good reason. The location of a rental property has a huge impact on the financial viability of an investment. If the home is located in a largely rural area it will not be as easy to rent on an ongoing basis as a property that is centrally located in a city or town. Also consider other major drawing points such as schools and colleges and major business centers. Try to keep your rental investments to areas where there is a big call for rental suites or homes in order to ensure that you are never without tenants, or income.

Earning potential of any property should be foremost in an investor’s mind. After all this is the whole point of the investment. Home quality is a big part of a home’s earning potential. Run-down homes that don’t offer much in terms of living quality may be easily rented; but at what cost? Try to keep in mind that the quality of a rental property will figure largely into the quality of renters. Good quality homes attract good quality long-term renters.

Finally, amenities that are included both in the home and by the community where the property is are important factors in the rental of a home. While things like laundry access, internet and cable and dishwashers speak volumes about the quality of the home, access to public transit, shopping and entertainment, education and recreation are the community aspects that draw renters in.

Payam Raouf is a REALTOR:® specializing in Phoenix residential real estate investment. Payam has extensive knowledge in the world of real estate investment and is dedicated to providing you with an elite level of service and information. For more info on Arizona homes and investment properties contact Payam at Payam@azezrentals.com or call 623-776-5774.

Wednesday, September 16, 2009

Valley resales, foreclosures down

Valley resales, foreclosures down
Numbers dropped from July to August, ASU figures show
by J. Craig Anderson - Sept. 15, 2009 12:00 AM
The Arizona Republic

The Phoenix-area housing market downshifted in August, with both home resales and foreclosures decreasing considerably compared with the previous month, according to a report from Arizona State University. Sales of existing single-family homes dipped to 5,995 in August from 7,300 in July.

Foreclosures also decreased to 3,085 from 4,200 the previous month. Still, August home resales were up from the 4,210 transactions recorded in August 2008.Foreclosure activity decreased by more than 200 from a year earlier, when there were 3,295 foreclosures recorded.

As expected, the median sale price for existing single-family homes was down significantly, about 29 percent, from a year earlier. The median price was $138,000, compared with $194,000 in August 2008. ASU realty studies Director Jay Butler said the year-over-year numbers indicate movement in the right direction.

However, with one foreclosure happening for every two home resales, Butler said, it's too early to say how significant those changes are. "A recovery cannot really be established until foreclosure activity drops to historical levels, which would be about one foreclosure for every 20 regular home sales," he said.

Butler added that real-estate investment is still the driving force propelling the housing market forward. That needs to change, too, before the housing market returns to anything resembling normal activity.

"The fundamental question is whether sales will stay strong, driven by the foreclosure-related market, or start to move down, which is traditional for the end of the year," he said. "If the latter occurs, it could represent a preliminary signal that the market is returning to normalcy."

Wednesday, September 2, 2009

Rental Market Condition in Arizona

Rental Market Condition in Arizona

By Payam Raouf

In August, residential rental units showing as “Active”, meaning that they are still available, have almost doubled in the valley from around 5,000 to 9,500 on Multiple Listing Services (MLS) and less than 300 show in the “Pending” status, meaning they are under contract. In addition to that, out of the available 200,000 apartment units almost 10,000 rentals are sitting vacant valley wide.

There are thousands of homes in the process of foreclosure where banks are allowing homeowners to live in their own home free of charge for long periods of time and so many others are in the process of re-modifying their loans.

Many first time home buyers have taken advantage of the huge buying incentives and have already moved out of their rentals and into their own homes.

Investors have purchased over 15,000 homes in the past few months and are putting them up for rent as soon as they finish remodeling them.

Apartment managers have been struggling for the past few months competing with investors' single family homes and are offering deals to prospective renter that are unheard of. They are practically taking a breath test and if renters fog the mirror, they will get to move in for free for months with no deposits, pets and all.

Going forward I see a gulch of rentals in the market both in single and multi family units valley wide.

Fortunately for us we have been renting our single family units in less than 15 days! In an effort to stay ahead of the market and rent our inventory quickly, we have signed multiple agreements with major on line rental marketing companies such as Rentals.com, Rentahouses.com, Buyrenter.com and nearly 40 other paid marketing websites.

We recommend if you are renting your house, make it market ready, price it competitively and work with your prospective renters on the terms and conditions.
4 bedrooms in centrally located areas with pool and extra amenities are renting faster and for more. Older units with 3 bedrooms are dime a dozen. You need to get aggressive on those.

In the following article you will learn more about the rental market condition. Please call me direct at 623-776-5774 or e mail me at info@azezrentals.com if you have any question.


Deals abound for bargain-hungry renters.
by J. Craig Anderson -

The Arizona Republic
Job losses and an explosion of foreclosure homes on the rental market have caused serious losses for Phoenix-area apartment communities, according to a new study.
Apartment complexes suffered severe declines in both occupancy rates and lease rates during the past year, with the average rent for all types of apartment and townhouse units declining by nearly 6 percent in 2008.

Those numbers don't account for concessions offered to new tenants, which experts say have cut renters' actual costs even more.

The occupancy rate declined by more than 2 percent from the previous year, with more than 2,000 apartments going vacant. Those losses were on top of the nearly 3,000 units vacated in 2007, according to the study by RealFacts, a rental-market analysis firm based in Novato, Calif.

Analysts and apartment-community managers said they don't expect a rebound this year unless layoffs, work furloughs and home foreclosures decrease.

"What drives it down, of course, is supply and demand," said Robert Hicks, Southwest regional vice president of Alliance Residential, a Phoenix-based property-management company. "That's the problem: We've got huge supply and very little demand."

Because it takes years of planning to build an apartment complex, there were units being built as late as 2008 despite declines in occupancy rates and average rent.
Almost 1,900 new apartment or townhome units came online in 2008, while nearly 2,200 new and previously occupied units went vacant, according to the study.

No segment of the rental business has suffered more than high-end apartment communities, according to Caroline Latham, RealFacts' co-founder and chief executive officer.

"It seems today's renter is looking for a bargain," Latham said in a news release. "There aren't enough high-income renters with good credit to commit to premium rents prevalent in high-end markets."

Hicks said bargains are exactly what apartment managers are offering. He has seen deals of up to four months' free rent for a long-term lease.

But it's unclear whether prospective tenants are more likely to respond favorably to upfront discounts or to guarantees that the rent won't go up in a year, he said.
"People want to know what their fixed costs are going to be," he said, adding that some communities are offering leases of unprecedented lengths, up to three years.
Competition for renters is as fierce as it has ever been in the Phoenix area, local experts said. Each month, thousands more foreclosure homes are bought and converted into rental properties.

The cities with the biggest declines in occupancy from June 2008 to June 2009 were Glendale (down 3.9 percent), Phoenix (down 2.7 percent) and Tempe (down 2.1 percent).
Still, Tempe had the highest overall occupancy rate in the Valley as of June and was the only city in which more than 90 percent of apartment and townhouse units were occupied.

The lowest occupancy rate of any Valley municipality covered by the RealFacts study was Peoria, where it was slightly more than 83 percent in June.
Hicks said it has been difficult for managers of the Phoenix area's nearly 200,000 apartment and townhome units to compete with foreclosure-home rentals because, in most cases, property owners simply continue to lower their asking prices until they get a bite.

In contrast, apartment and townhome communities have fixed costs that must be exceeded by rental income to stay in business.

Other challenges include more renters doubling or tripling up in the same house or apartment and recent college graduates staying or moving back into their parents' homes rather than striking out on their own.

The latter trend in particular has hurt management companies that specialize in trendy communities for young professionals, Hicks said.
Job losses and work furloughs also have contributed to the growing apartment-vacancy rate, RealFacts concluded.

Hicks said Sunday's news that the Bashas' grocery-store chain was in bankruptcy and closing 10 locations was just one more reason for apartment managers not to be too optimistic about the near future.
"Those (employees) are the renters of the world," he said