Wednesday, March 9, 2011

There is a crisis brewing in the rental market in Phoenix Metro.

Payam Raouf
President
Arizona property Management and Investments
888-777-6664 ext 111
info@azezrentals.com

There is a crisis brewing in the rental market in Phoenix Metro. There seems to be 4 applicants for every rental home out there on mls. Our phones are ringing off the hooks like never before. It prompted me to check the inventory on mls and there you go, as of today March 8th 2011, there are 18,644 active, active with contingency and pending short sale and pre-foreclosure homes on mls and only 2547 single family rental home listings with three bed rooms or more.

Many home owners in the process of short sale or foreclosure are starting to look for a rental property already. They don't care what the bank wants to do with their home any more because, a) they want to move on with their lives, b) they want to get what they want and don't want to settle for ANY rental home, c) They can not afford any higher rent.

Many of them have pets. Most owners of rental homes do not accept large dogs and specially cats. A prospective rental applicant who has three pit bulls told me yesterday, he can give two away and is looking for a shelter to accept the third. No wonder I see so many ads from animal shelters lately!

Banks are refusing to foreclose on these properties. We’ve entered a new era in global financial markets where the U.S. is intentionally devaluing the dollar. With that in mind it is disadvantageous for financial institutions to foreclose on these properties anytime soon. They will benefit from riding it out in several ways, a) they don't have to write it off their books right now upsetting their shareholders, b) they don't have to pay the taxes and HOA fees and insurance, c) they have home keepers (current owners) taking care of their homes instead of leaving it empty - most insurance companies will not insure an unoccupied property - d) make a ton of money when the dollar is devaluated over the years, estimated time maybe within 5 years, yet holding the owners feet to the fire to pay up the unpaid mortgages in addition to the balance of the loan in case the dollar devaluates so far as to produce value in excess of the loan amount.

I saw on the news "3 on your side" last night, this home owner begging the bank for foreclose on hers. She moved out a year ago and the bank still has not foreclose on her house. In this case, they may go ahead and do it soon because it is too costly -vandalism - for it to sit empty.

The shortness in the rental market is already driving the rents up. Specially homes in the $1500 to $2000. We see a lot affluent people wanting to rent now. $3000 rentals move even faster!!!!

There is less than 5782 foreclosures in the market, 3/4 of them don't meet today's savvy investors criteria to buy. Fannie Mae does not sell to investors for the first 15 days, so all the good homes are gone before they get a chance to buy. 2/3 of the short sales are not closing like they used to. Banks would rather foreclose on them because they make more money in the process and they are not even doing that because they don't have the reserve to cover their losses.

It is going to get really ugly soon with the summer around the corner and more families wanting to move. Banks need to come up with a solution soon. Maybe they can lease these homes back to the owners with a 5 or 10 year option to buy - doubt they will or can. On the other hand, private investors can get in on this and really made some serious dough if they are smart. They are many ways to do it. State of Arizona is working with some private investors to help some upside down homeowners to stay put and in the process both the state and private investors reaping the benefits.

There is another way to get on this and that is through a) buying real estate for your own individual portfolio or if you don't have enough to buy the right product, put your money into a pool with others (make sure you get on the deed), b)if you don't want to deal with managing your portfolio yourself, do your due diligence and buy shares in a holding that invests in such ventures to get a reasonable dividend ( 6 to 7 percent ) in short run and hedge your money against hyperinflation as the result of dollar devaluation in the long run.

I have heard it all, buy gold, silver, copper,other commodities etc. OK, gold reaches $5000 an ounce, who is going to NEED it to buy it at that? Real estate on the other hand, a tangible asset is NEEDED AT ALL TIMES, people need roof over their heads and there you go. If you have any common sense, you will pile up on your real estate portfolio in Arizona and Nevada right now --- Even though, prices are going up on good inventory in desirable areas ( location, location, location)and there is a shortage due to bank keeping them for themselves, you can still steal some at 30 to 40 percent below builders original cost --- and retire on it and leave some to your kids.

If you are an investor wanting to buy rental investment properties in Phoenix Metro Area, we do it all, please give me, Payam Raouf a call at 888-777-6664 ext 111 or info@azezrentals.com. Time is of the Essence. We are on top of the market and can give you the kind of input needed to fill up your pockets with a lots of treasures.

Remember, The Richest Man in Babylon, the book by George Samuel Clason which says, ...Seek wise counsel....Let their wisdom protect thy treasure from unsafe investments.