Sunday, April 7, 2013

How to market your rental homes in a competitive rental market in Arizona

Payam Raouf
President/Designated Broker
Arizona Property Management & Investments

Hello everyone. I do not want to be repetitive, please read the  post below (Investor home-buying update for metro Phoenix) to better understand the rental market condition in Phoenix Metropolitan Area. 

Institutional investors have dominated the market competing against each other renting their homes. If you own one or several renal properties you must be aware of the changes in the renal market to market your home right or it sits there for months without a tenant.

We manage homes for several institutional investors. A) their homes are rent ready, completely renovated. B) they require less initial deposits C) they rent it up to 20% below the current market rent. D) their standards to lease are a lot easier than most landlords. E) they are very generous when it comes to paying a commission to agents to rent their homes quickly, they pay the first month's rent or at least 75% of the gross rent amount.

Fannie Mae and several other institutional investors go as far as keeping the current tenants in place with very favorable terms and no deposits!

Investor home-buying update for metro Phoenix

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Street funds and other large well-funded investors continue to buy houses in metro Phoenix, even though the pace has slowed as sales prices have jumped.
Some of the early investors, who bought in 2009, have flipped the houses for a quick profit, but most of these buyers are holding on to the properties and turning them into long-term rentals.
David Bignoli, president of real estate data research firm Netvaluecentral Inc., recently completed a report on metro Phoenix’s biggest investors.
Currently, THR Phoenix, also known as Treehouse LLC, owns more than 6,000 houses in metro Phoenix. THR’s house purchases are funded by New York-based international investor Blackstone Group.
Since early 2012, Blackstone has been on a house-buying spree in Phoenix and other markets hit by the foreclosure crisis, including Atlanta, cities in Florida and California since early 2012.
Most of the big residential investors in metro Phoenix are buying in these other markets as well.
Scottsdale-based American Residential Properties ranks no. 2 for house ownership in the Valley with more than 2,700 houses. The firm was started by some former executives of Franchise Finance Corp.
Empire Residential owns almost 1,700 houses in the Phoenix-area. The Scottsdale-based investment group has been around for several years and is led by Richard Felker and Geoffrey Jacob.
The fourth-largest holder of houses in the region is Santa Monica, Calif.-based Colony Capital. The well-known investment group has set up a Scottsdale headquarters for its residential activity. Colony owns more than 1,600 metro Phoenix houses.
Most of these investors rent their houses out, and say they plan to hold them for the long-term and make money on stable rents.
A few plan to package rental houses into publicly traded real estate investment funds sold to other investors.
Another interesting fact to note about many of metro Phoenix’s biggest investors: about half of their houses are listed in property records as owner-occupied.
It will be telling to see what these investment numbers look like in six months. Will these investors stop purchasing metro Phoenix houses in the next six months because of rising prices? Or will some sell their houses in the area because of rising prices?