Saturday, February 8, 2014


Arizona Property Management & Investments
(888) 777 6664
Las Vegas Property Management &; Investments
(855) 855 8182


Payam Raouf
Arizona Property Management & Investments
Designated Broker

According to Arizona Multiple Listing Services (MLS) as of today Feb 8, 2014, there were over 6000 rental homes that have either been rented or are up for rent in the city of Surprise between January 1 2011 and January 1 2014. There is easily another 3000 to 5000 rentals in this area that are not included in this report since a lot of landlords and property management companies do not utilize MLS to market their homes.

It is difficult to know the exact number of investment properties in a given area since many were mortgaged as owner occupied initially then turned into rental. Simply based on the numbers above, it is fair to estimate that there are somewhere between 9000 to 11000 rental homes in Surprise.

According to 2010 census the population of surprise was 117,517. If there were only 4 individuals living in each property, there should be somewhere around 30,000 homes in the city of Surprise. Therefore one out of three homes in Surprise is a rental property.

Since 2011, when RealtyTrac began tracking the data, institutional landlords have amassed roughly 500,000 homes nationwide, including nearly 31,000 in metro Phoenix.

The concentration of most of these purchases was in the North West Valley, Surprise, Peoria and Glendale as well as South West Valley in Avondale, Goodyear and Laveen. 

Based on this information, it is safe to assume that almost 25% of homes in Surprise are owned by Institutional Inventors. In addition, over 1500 rental homes in Surprise are owned by Canadian, Chinese and Australian Investors and when you throw that into the mix, over 30% of rental homes in Surprise are owned by foreign and institutional investors.

Over Supply of Rental Homes in Phoenix Metro:

Institutional investors have flooded the market by their rent ready properties, new paint, carpet, appliances etc. They offer lower rents and in many instances they do not require any security or pet deposits in addition to offering Realtors a huge incentive to rent their properties first.

More renters are re-qualifying to buy homes and are moving out of the rentals and quite a few of them are renewing their leases waiting to re-qualify to buy within the next year or two. 

There are only a few bank owned properties on the market. Banks are selling directly to institutional investors so tenants do not need to move any more like they used to between 2007 and 2011.

According to MLS, average days on the market for rental homes are over 90 days in most areas.

According to Bloomberg, private-equity firms are now planning to sell bonds backed by lease payments, the latest step in turning a small business into a mature industry. They have the money to maintain and renovate these properties and the holding power to keep them for as long as they want.  

What should a homeowner who has one or a couple homes do  in such a competitive environment? What are your financials like? Most rental home owners I know are on very tight budget.

Here are a few suggestions, please do your own due diligence:

Either sell it NOW or keep it for the next 5 to 10 years. Don’t procrastinate! Most analysts think the next exit point that makes the most financial sense is sometime from 2019 to 2023.

If you can not keep it that long, then you might want to consider doing one of these:

A) Sell NOW if you can! We see more home owners who have one or a few rental properties in the valley have either already sold or are putting their homes on the market to sell. According to MLS, the inventory of homes for sale has increase from 8000 last year this time to approximately 28000 today. It is estimated that this number will go up to 35000 by the years end. Over supply means more competition resulting in lower prices.

B) If you slightly owe more than what your property is worth: Either sell NOW and pay the difference to save your credit or renew your current lease with your tenant at all costs. 

C) Consider a 2 to 5 year lease with option to buy with the tenant being responsible for most of the repairs! We specialize in that.

D) If you still owe a lot more than your house is worth after the huge spike we have had in the prices in the past 14 months, consult with a financial adviser or your attorney to see if short sale is an option. Banks have been very accommodating lately. Also talk to your financial institution; they might even consider lowering your mortgage.

I hope this information helps you make a better decision. Some of these predictions are based on my personal observation of the market. I am a hand on owner and designated broker of Arizona Property Management & Investments, one of the top ten property management companies in Phoenix Metro as well as a business partner at Global Real Estate Investments where we do most of our sales and acquisitions. We also use Arizona Handyman and Remodeling Services LLC dba to take care of our maintenance and remodeling business to save our investors a substantial amount of money.

If you are interested in knowing what the true value of your house is these days, Please let me know and I will do a comprehensive research to help you make an informed decision. I don’t just rely on comps on mls. I am very familiar with almost every floor plan, community and the desirability of properties in Surprise. I follow all market trends on a daily basis  to give you a better knowledge of what your property is worth. This is a complimentary service with no obligations. Please fill out this form and I will get back to you within 24 hours.

If you would like to speak with me directly, please call (888) 777-6664 ext 114 and I will be happy to answer your questions.

Payam Raouf

Thank you for reading my blog.

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