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!

What should you do? Can you afford keeping your house on the market for months paying your mortgage or not having any income? Most insurance companies cancel your insurance if your house sits empty after 30 days and so on.

Here are a few solutions: 

YOU WILL BE BETTER OFF TO SELL YOU HOUSE IF YOU CAN NOT AFFORD DOING THE FOLLOWINGS:

A) Make sure your house is rent ready. Today's tenants have too many choices. The fact that a few years back they were desperate and they had to hurry getting out of their home to rent yours is gone. Aside from Paint, Flooring, Appliances,  how does your front and back yard look? Would you live in it? 

B) Landlords use to require an initial security deposit equal to the first months rent plus a cleaning deposit. EX: If the rent was a $1000, SD was $1000 plus a $300 cleaning deposit. In most cases those days are gone. We recommend that initially you ask for less deposits on approved credit. Of course, after reviewing the tenant's application, you can adjust it to what makes more sense. In some cases you can ask up to 1 1/2 times of the rent amount if required.

C) Just because the prices have skyrocketed doesn't mean the rent have accordingly. Price you home right. The formula is rent equals to 7% to 8% of your today's market value. So if you bought your house a few years back for $110,000 and it rented it for $1100 and now it is worth $150,000, rent should be $1150 and not $1500.

D) A lot of tenants are re qualifying to buy homes these days. They are moving out. Who is moving in? the ones that have to wait a couple more years longer or so. So, they still have some credit issues. Some tenants are getting new jobs, some are moving in out of state, thanks to the economy improving in Arizona, However, we see a lot of government assisted tenants entering the market called section 8. It is a hit and miss thing with section 8 tenants but the rent is guaranteed. I would consider renting to them if you want to rent your house quicker. They still have to go through the same screening process and pay the deposits except they either get the whole rent or a good portion of it subsidized by the government. 

On the other note, we are seeing a lot of owners that their homes are paid off offering to carry the note back themselves with a reasonable down payment and around 7.5% interest rate, amortized over 30 years, due in 3 to the tenants who can qualify to refinance it in 3 years or so washing their hands off all the expenses related to home maintenance, insurance, hoa fees and taxes, coming ahead on the game. 

Consider lease with option to buy. 3 year lease with an option to buy, some of the expenses such as the normal maintenance fees such as landscaping and pool maintenance is passed on to the tenant, you receive a decent upfront deposit and worry less about the turn over and increase your bottom line.

Consider longer term leases at a reduced rent. If the rent is $1200 for 1 year reduce it to $1150 for two and $1100 for 3 year lease. 

Is your house pet friendly? Instead of collecting a large pet deposit up front, charge a monthly pet fee and add it to the rent. You increase your bottom line and making it easier to rent. You need to look at your insurance policy to see what breed of pets are excluded. Even in such cases, you maybe able to ask the tenants to get an additional pet insurance up to $100,000 coverage. If they really love their pet, they do.

Lower the rent but ask the tenant to pay for the pool service or the gardening or even the HOA fees in addition to the rent or exclude some of the maintenance issues that are not health and safety related and are allowed by law and ask the tenant to pay for it such as fixing the reverse osmosis, garbage disposal,  routine pest control etc.

E) This is a deal maker folks. Hire a professional leasing agent and pay them all the money to rent it quickly the first time. Sales market is heating up. It takes as much time and effort to lease a home to these fussy tenants as it takes to sell them one with as much or more paperwork. I know our leases are 32 pages long! The difference is they make $600 leasing and $6000 selling. What would you do if you were in their shoes?  Most leasing companies charge $695 to lease your home. Offer the agent an additional $300 to $500 incentive if they rent it within the first 30 days. See how quickly your house is rented!

The companies or agents that settle for less don't now how to market your house for rent so you risk the chances of leaving it abandoned for months and possibly vandalized in the process or keep getting notices and fines from your HOA or the city for grass over growing or trash left out etc.

Interview at least two leasing agents in the area. Tell them before you make a final decision you want them to write a complete marketing plan or a complete description of how they would be marketing your house on MLS or other sites. Once you pick the right agent, review the description, see if they left something out or if you want to add to it or fine tune it and send it to them.

Pictures are worth a thousand of words. Ask the agent to send you 30 marketing pictures. Choose 15 of them and if you do have some good pictures yourself go ahead send them to your agent as well. 

Ask your agent as part of the deal a) to send a link to all the marketing they do online, B)  they are to contact you twice a week preferably with a phone call or in an email,  to give you an update. If they don't call you, call them. If they do not answer, put it in the listing agreement that you have the option to cancel your listing if you are not 100% satisfied with their performance within 30 days from putting your house on the market.

DO NOT PUT YOUR HOUSE ON THE MARKET TILL YOU HAVE READ THE DESCRIPTION AND SEEN THE PICTURES. The first 10 days are crucial for renting your house. Otherwise it sits on line and counts days on the market that works against you. The longer you house shows on the market, the less showing, the longer it takes to rent.
 

The competition is very tight out there for homeowners to rent their homes.  The difference between you getting involved and not is crucial. THEN GET INVOLVED OR GET OUT OF THE GAME.

THE BOTTOM LINE: Treat your tenant the way you want to be treated if you were renting the house. A happy tenant takes care of your property better and stays longer reducing your overhead. They may even end up purchasing your home one day reducing most of the marketing and brokerage fees putting more money in your pocket at the end.

We are a full service Real Estate Company . We offer a broad spectrum of services including purchasing, sale, short sale, leasing and property management. You can contact me and I provide you with  a detailed market analysis for sale or rent of your property and give you an indept insight of what is going on in the market in your area.

Please fill out THIS FORM attention Payam Raouf, with your contact information, the address of your property and any questions you may have. I will contact you directly to answer all your questions. 

Thank you, 

Payam Raouf
President/Designated Broker
Arizona Property Management & Investments
CONTACT US

Investor home-buying update for metro Phoenix

Posted on April 1, 2013 2:06 pm by Catherine Reagor

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?

Blackstone Crowds Housing Market as Rental Gains Slowing

Arizona Property Management & Investments
Payam Raouf
President/Designated Broker
(888) 777-6664 EXT 114
info@azezrentals.com

WE HAVE BEEN TALKING ABOUT THESE ISSUES FOR THE PAST SIX MONTHS RIGHT HERE ON THIS BLOG. I WILL BE WRITING OUR QUARTERLY ASSESSMENT OF THE MARKET " FRONT LINE NEWS" ON 3/30/2013. YOU STILL HAVE TIME TO PICK UP SOME REALLY UNIQUE OPPORTUNITIES IN PHOENIX METRO. PAYAM RAOUF

For a Free Property Management Quote click here

Blackstone Crowds Housing Market as Rental Gains Slowing

Bloomberg,  By John Gittelsohn & Prashant Gopal - Mar 18, 2013 1:32 PM MT

Rents for single-family homes are rising slower than property prices as firms such as Blackstone Group LP (BX) flood the market with homes for lease, posing risks to investors betting billions on the burgeoning market.

Monthly payments for properties in Phoenix rose 1.3 percent in February from a year earlier, compared with a 25 percent jump in for-sale asking prices, according to Trulia Inc. (TRLA), which operates an online listing service. In Atlanta, asking prices climbed 14 percent as single family rents gained 0.5 percent, and in Las Vegas (SPCSLV) rents dropped 1.7 percent even as asking prices soared 18 percent.

While private-equity firms are helping real estate values recover from the worst slump since the 1930s by cutting the supply of foreclosures for sale, they’re also crowding the market with rentals. Leases for U.S. apartments rose 3.9 percent in February from a year earlier, more than quadruple the 0.9 percent increase for single-family homes, Trulia said.

“Investors are buying homes, in part, to rent them out, and that has added a lot of rental supply, and that’s preventing rents from rising,” Jed Kolko, San Francisco-based Trulia’s chief economist, said in a telephone interview. “It means some investors will start to think about selling those single-family rentals.”

20,000 Homes

Blackstone, based in New York and the world’s largest private-equity firm, has spent more than $3.5 billion to buy 20,000 single-family rentals, while Tom Barrack’s Santa Monica, California-based Colony Capital LLC has raised $2.2 billion. They rushed to buy houses after prices fell by a third from their July 2006 peak as more families opted to rent after failing to qualify for a mortgage or deciding not to own.

“Prices have increased off a very low base, and it’s growing increasingly competitive, but we are still finding opportunities to buy,” Devin Peterson, a Blackstone real estate associate overseeing the company’s housing initiative said in a telephone interview from New York. “We recognized that prices were moving faster than people expected. We’d rather be a few weeks behind in completing a rental process than missing out on a few points in home price appreciation.”

The firm last week expanded a credit line led by Deutsche Bank AG to $2.1 billion from $600 million to buy homes.

Changed Game

“The institutional people have definitely changed the game,” McGary said in a telephone interview.

Institutional investors in 2012 accounted for 30 percent of sales in Miami, 23 percent in Phoenix, 21 percent in Charlotte and 19 percent in Las Vegas, according to a report today by real estate information service CoreLogic Inc.

“The ripple effects are greatly impacting the broader market,” said the report by Sam Khater, CoreLogic’s deputy chief economist.

Investors flocked to Phoenix after home prices plunged 56 percent from their June 2006 peak to a September 2011 low, according to the S&P/Case-Shiller index of home values. Last year, Phoenix rose the most in the 20-city index, making it harder for investors to find bargains then profit from renting.

Pushing Prices

Prices paid by the largest buyers probably rose more than the broader market because they’re competing to buy similar homes -- typically three-bedroom houses built since 1990, said Oliver Chang, co-founder and managing director of Sylvan Road Capital LLC, an Atlanta-based single-family rental investor.

“They’re effectively pushing prices up on each other,” Chang, a former Morgan Stanley housing analyst, said in a telephone interview.

The median purchase price for a single-family home in Phoenix jumped 35 percent to $163,000 in January from a year earlier, according to a March 8 report by Center for Real Estate Theory at Arizona State University’s W.P. Carey School of Business. Median rents on a per-square-foot basis, meanwhile, dropped 3 percent in February from a year earlier after climbing 1.5 percent in the 12 months through February 2012 and 3 percent a year earlier, according to Fletcher Wilcox, a real estate analyst at Grand Canyon Title Agency in Phoenix.

Investors seeking deals in other cities also face shrinking yields after a jump in prices. Atlanta resale prices climbed 9.9 percent in the 12 months through December, the city’s biggest gain in Case-Shiller data going back to 1991, and Las Vegas prices jumped 13 percent.

Atlanta Leases

Rents on three-bedroom homes averaged 65 cents a square foot in Atlanta in last year’s fourth quarter, up 1.6 percent from the same period in 2011, while Las Vegas rents fell 4.1 percent to a median 70 cents a square foot over the same timeframe, according to RentRange LLC, a Westminster, Colorado- based single-family rental data provider.

Tina Africk, a Las Vegas broker who manages 60 single- family home rentals, said houses that might have rented in 30 days in the past can now take 60 to 90 days to fill, while rents have dropped about $100 a month from a year ago.

“The individual owners are going to feel the impact much more,” Africk said. “For an institutional investor, $100 here and there doesn’t mean that much.”

In Phoenix, competition among landlords is heating up as the flow of new renters who lost their homes to foreclosure has begun to slow, Wilcox said. Arizona, which has a relatively quick repossession process, has worked through many of its foreclosures, and distressed sales make up a shrinking portion of sales, Wilcox said.

Musical Chairs

“What we’re seeing is a game of musical chairs,” Wilcox said. “People lose homes to foreclosure and then rent a single- family home from an investor while another investor buys the foreclosure they just left.”

Slowing rents and rising purchase prices come as investment funds turn to public markets to raise capital and investors seek more opportunities to place bets on a housing recovery. Home values rose 6.8 percent last year, the biggest 12-month gain since July 2006, according to Case-Shiller data.

Prices may rise 7 percent this year and more than 14 percent through 2015, according to JPMorgan Chase & Co., as the Federal Reserve buys mortgage bonds to push down borrowing costs, investors seek ways to generate yield, and buyers compete for a dwindling pool of available homes.

Public Offerings

American Residential Properties Inc., a single-family rental operator based in Scottsdale, Arizona, plans to file for an initial public offering during the first quarter of this year, “subject to market conditions,” it said in December.

American Homes 4 Rent, headed by Public Storage founder B. Wayne Hughes, said on Feb. 27 that it plans to file for an IPO within 60 days. The Malibu, California-based company is the largest owner of single-family rentals after Blackstone with more than 10,000 homes.

Silver Bay Realty Trust Corp. (SBY), a Minnetonka, Minnesota- based firm, raised $263 million in December, when it became the first publicly traded real estate investment trust to invest only in single-family rentals. Shares in the company rose 0.5 percent today as of 4:15 p.m. in New York and have gained 4.2 percent since the offering.

The strategy is to reap the long-term benefits of both rising rents and climbing home values, by investing in cities with job and population growth prospects, Silver Bay Chief Executive Officer David Miller said.

Still Attractive

“We wouldn’t continue buying homes if we couldn’t get returns that our investors found attractive,” Miller, whose company owns more than 4,000 rental homes, said in a telephone interview. “We agree gross yields have been compressed somewhat, but we still find them attractive.”

Silver Bay, which owns rentals in 10 cities, had a net loss of $3.2 million on revenue of $2.8 million in its most recent quarter, the company reported on Feb. 28. Its gross yields, based on property costs and rents for 1,700 occupied homes, fell 2 percent from the previous quarter, the only comparison available for the company, whose shares began trading on Dec. 17.

Colony doubled the size of its portfolio during the quarter ended Dec. 31, to 5,405 homes, and has since increased the number to 7,000, Richard Saltzman, CEO of Colony Financial Inc. (CLNY), Barrack’s REIT, said on a March 7 earnings call.

Colony declined to comment further, said Owen Blicksilver, a spokesman for the company with Blicksilver Public Relations Inc.

Large Investors

In the fourth quarter, the number of homes Colony owned in Arizona, outside joint ventures, declined 1 percent from the previous quarter to 823 units, according to a regulatory filing.

“Colony came in with a bang and fizzled out once prices went up,” Michael Orr, director of the Center for Real Estate Theory, said in a telephone interview.

Orr estimated that large investors bought 8 percent of the Phoenix-area homes sold last year, peaking in July and August before tapering off as prices rose. Purchases by all investors dropped to almost 32 percent of transactions in January from more than 39 percent a year earlier, he said.

More than 5 million former U.S. owners have lost their properties to foreclosure or in a distressed sale since home prices peaked in 2006, data from RealtyTrac show. Last year, the total number of renter-occupied residences increased 1.1 million, while the number of owner-occupied households fell by 106,000, according to a Commerce Department report.

‘Rental Economics’

The apartment market has remained strong even as single- family home rental supply increases, in part, because the properties appeal to different tenants, said Greg Willett, vice president of MPF Research, a Carrollton, Texas-based apartment- data firm. While apartments attract young single people, houses draw in families, he said.

Over the last three decades, rents and home prices increased in parallel at an average annual rate of 3 percent, said Jade Rahmani, an analyst with Keefe Bruyette & Woods Inc. That may change temporarily as investors pour money into rentals.

“One of the risks is prices run up and therefore the rental economics don’t justify the business model,” Rahmani, who has an outperform rating on Silver Bay and Colony, the equivalent of a buy recommendation, said in a telephone interview from New York. “The problem could be that you would have assets that are up a lot in value, which isn’t the worst thing in the world. The risk would be that everybody goes to sell at the same time.”

Phoenix Supply

That hasn’t happened yet, according to Orr. The supply of for-sale homes has changed little in Phoenix since February 2012, he wrote in a March 8 report. What’s changed are the increased number of homes listed for more than $150,000, along with a 38 percent decline in listings of bank-owned homes and short sales, where the asking price is below the amount owed.

Added supply would be good for Phoenix, said Lawrence Yun, chief economist at the National Association of Realtors.

“It would be a welcome thing because, in Phoenix, they just don’t have inventory,” Yun said in a telephone interview.

Monthly leases in Phoenix’s west side, where investors bought the most rentals, fell by about $100 a month, or 10 percent, in 2012, said James Breitenstein, CEO of Landsmith, a San Francisco-based single-family rental firm that sold most of its 250 Phoenix rental houses last year. Rents also softened in Las Vegas and in Atlanta, where Landsmith acquired about 300 homes in the past six months, he said.

Major Funds

“All the major funds are piling into Atlanta,” said Breitenstein, who has been buying single-family rentals since 2008 and now aggregates small portfolios that he resells to large investors. “There’s a whole bunch of rental supply that’s coming on that used to be sitting empty in bank portfolios.”

There’s more to come. About half of Silver Bay’s homes weren’t leased yet as the company took time to evict residents, renovate properties and find new tenants, CEO Miller said. Colony’s occupancy rate was 53 percent “because acquisition pace has exceeded our leasing rate over the past few months,” Saltzman said during the earnings call.

Eric Gutshall, president of Haven Realty Capital, an El Segundo, California-based single-family investor backed with capital from Leon Black’s Apollo Global Management LLC (APO), said the major buyers of single-family rentals are concentrating on acquiring properties and filling them with tenants.

“The first step is to focus on stabilization,” Gutshall, whose company manages about 1,000 homes in California, Nevada and Illinois, said in a telephone interview. “The next phase is to focus on growing rents.”

For now, Phoenix landlords are lowering rents to fill units, said Cathy Svoboda, a leasing agent with Renters Warehouse, a property management and tenant placement company in Phoenix. Investors are competing with so-called reluctant landlords who are leasing their homes because they can’t afford the loan payments and have moved somewhere cheaper, she said.

“There are a lot of properties out there, so the competition to get your property rented is fierce,” Svoboda said. “Tenants are very savvy. If you’re overpriced by $25, they’ll let you know and go to another one around the corner.”

Home Prices in U.S. Increase More Than Forecast: Economy

Bloomberg.
By Michelle Jamrisko - Dec 26, 2012 2:27 PM MT

Home prices climbed more than forecast in October, indicating a rebounding real-estate market will bolster the U.S. economy for the first time in seven years.

 

The S&P/Case-Shiller index of property values in 20 cities increased 4.3 percent from October 2011, the biggest 12-month advance since May 2010, the group said today in New York. The median forecast of 30 economists in a Bloomberg survey projected a 4 percent gain. 

Property values will probably keep heading higher as record-low mortgage rates, a growing population and an improving economy spur demand for housing. The turnaround in real estate is buoying household confidence and wealth, one reason why consumer spending is improving even as concern mounts that lawmakers will fail to stave off looming tax increases.

“The housing market is definitely starting to recover,” said Ryan Wang, an economist with HSBC Securities USA Inc. in New York, who’s the second-best forecaster of the S&P/Case- Shiller index over the past two years, according to data compiled by Bloomberg. Higher property values have “added about a trillion dollars to household wealth just since the beginning of this year.”
The boost to household net worth “will provide an important benefit for consumers and for the broader economy,” Wang said.

Shares Drop

Stocks fell, sending the Standard & Poor’s 500 Index lower for a third day, as President Obama and Congress prepared to resume budget talks and retailers slumped after the Christmas holiday.
The S&P 500 dropped 0.5 percent to 1,419.83 at the close in New York. The S&P Supercomposite Retailing Index slumped 1.8 percent, while lumber futures surged to the highest level since 2005 on the continued signs of improvement in housing.

A sustained pickup in housing is a source of strength as the world’s largest economy struggles to overcome concern the so-called fiscal cliff, representing more than $600 billion in tax increases and federal government spending cuts slated to take effect next year should Congress fail to act, will slow the expansion.
Holiday sales grew at a slower pace this year after gridlock in Washington soured consumers’ moods and Hurricane Sandy disrupted shopping, a report yesterday from MasterCard Advisors SpendingPulse showed. Retail sales rose 0.7 percent from Oct. 28 through Dec. 24, the Purchase, New York, research firm said. The increase was less than half the 2 percent advance in the same period a year ago. SpendingPulse tracks total U.S. sales at stores and online via all payment forms.

Richmond Manufacturing

Manufacturing expanded for a second month in December in the area covered by the Federal Reserve Bank of Richmond, according to another report today. Nonetheless, the data showed sales and orders climbed at a slower pace than in November.

Estimates for the S&P/Case-Shiller index in the Bloomberg survey ranged from unchanged to a 4.9 percent gain.

The price increase accelerated from a 3 percent advance in the 12 months ended September. The Case-Shiller index is based on a three-month average, which means the October data were influenced by transactions in August and September.

Residential homebuilding has contributed 0.3 percentage point to gross domestic product on average in the first three quarters of 2012, according to Commerce Department data. The last time it added to growth for an entire year was in 2005, when it boosted the economy by 0.36 point.

Broad-Based Gain

Home prices adjusted for seasonal variations rose 0.7 percent in October from the prior month, with 17 of 20 cities showing gains, according to today’s report. Las Vegas showed the biggest gain with a 2.4 percent advance, followed by San Diego with a 1.7 percent increase.

Property values dropped the most in Chicago, which fell 0.7 percent over the month.
Unadjusted prices in the 20 cities dropped 0.1 percent in October from the prior month. Prices tend to decrease during this time of year, the group said.

The year-over-year gauge provides better indications of trends in prices, according to the S&P/Case-Shiller group. The panel includes Karl Case and Robert Shiller, the economists who created the index.
Eighteen of the 20 cities in the index showed a year-over- year increase, led by a 21.7 percent jump in Phoenix. Detroit followed with a 10 percent gain. Chicago and New York posted declines. Year-over-year records began in 2001.

‘Gathering Strength’

“It is clear that the housing recovery is gathering strength,” David Blitzer, chairman of the index committee, said in a statement. “Higher year-over-year price gains plus strong performances in the southwest and California, regions that suffered during the housing bust, confirm that housing is now contributing to the economy.”

Declining borrowing costs have underpinned demand for those able to get financing. The average rate on a 30-year, fixed mortgage was at 3.37 percent last week, close to the 3.31 percent from a month earlier that was the lowest in data going back to 1972, according to McLean, Virginia-based Freddie Mac.

“Record-low interest rates, attractive home prices, pent- up demand, a lower supply of existing homes for sale, improvement in the economy and employment, and greater optimism are all helping drive the housing recovery,” Ara Hovnanian, chief executive officer of homebuilder Hovnanian Enterprises Inc. (HOV), said on a Dec. 13 earnings call. “This is occurring in spite of the restrictive mortgage lending environment and the number of underwater existing home buyers.”

Home Sales

Americans bought previously owned homes in November at the fastest pace in three years, figures from the National Association of Realtors showed Dec. 20 in Washington.

The job market remains an area that is holding the world’s largest economy back from a more pronounced rebound, explaining why Federal Reserve policy makers this month said they would keep the benchmark interest rate near zero as long as unemployment remains above 6.5 percent, and if the Fed projects inflation of no more than 2.5 percent in one or two years.

In addition, if Washington lawmakers fail to reach a deal on averting tax increases and spending cuts set to take effect in January, subsequent declines in business and consumer spending may also drive down economic progress.

Should I buy in a seller's market?

It is definitely a buyers market!!! There are many homeowners in Phoenix Metro Area stuck in the exit for so long that are now able to sell their positions to larger investors with big horsepower!

We hit the rock bottom 3 years ago here and yes, if you bought Ford stocks at $1 then you would be paying ten times more for it today as well. However, we have only gone back up to 2004 home values in most Phoenix Metropolitan Areas. At 10% running inflation since we should have been back up to what they sold for at the height of the market in 2007 and that’s exactly why the big equity funds are fueling this current frenzy in the market expecting big returns in a few more years.

The bottom line is whether you are buying one to live in or increasing the size of your portfolio, you are sitting pretty. People who have money know how to play the game. Do what large Equity Funds are doing, buying in bulk from Fannie Mae, keeping the most desirable ones, banking on the future, 4 to 5 years from now.

OK. Time out! I only have $200,000 in the bank and I want to get on the game. What do I do? I get this question every single day. Well, here is what I would do. Get my finances in line, put 35% down and buy two $250,000 to $300,000 single family homes in most desirable areas.

This is not the time to play the penny stocks! The same rule works here in Phoenix Metro. It’s time to invest in APPLE and not how many sq ft you can buy in Katmandu.

How do I find these gems and who should I trust if I live 3000 miles away and have no clue what I am buying? Good Question. I get calls often from investors whose agent told them this house rents for this or that, a lot more than what the market bears and when we go look at it, yes, they sold them a pretty house in a town where we would recommend but all the way at the edge, next to a cow pasture. They were told it rents for $2500, we can barely get $1600 for and who wants to live out there anyway even when the market shoot back up? So, you just made an uniformed real estate investment decision and now you expect us to deal with it. 

We are hands on in the business every day, 16 hours of it 7 days a week, 366 days of the year. We are married to your investment till we hand over the keys to the next homeowner.

I run the investment part of the business and I have a well qualified staff to lease and mange your investments. I am your eyes and ears out here on the filed while you go play and my success is tied to yours.

90% of my listings are purchased by my own investors before the hit the market. I let other agents sell the other 10% not because I don’t have buyers for but they don’t meet my expectations.

Time is of the essence. No, it is not. I would rather see you pay a few thousand more waiting for the right opportunity and if you run across an old lady from Pasadena on your way, let me know, we married up on it.  

If you have got your money and finances together, please let me know what your agenda is. I can not tell you if 20 years from now a certain area is where you want to retire but what I can do is to give you an honest opinion what I know to help you with your due diligent. 

Owing an investment property may be fun if you own the one next to the one you live in. Otherwise; please leave it to the experts. 

I follow George Clason’s 7 basic principals of financial freedom:

The Richest Man in Babylon

1) Start thy purse to fattening
2) Control thy expenditures
3) Make thy gold multiply
4) Guard thy treasures from loss  
5) Make of thy dwelling a profitable investment
6) Insure a future income
7) Increase thy ability to earn

If you are on the same page with me, I am looking forward to hearing from you. Please let me know how I can help.

Thank you.

Payam H. Raouf
Owner/Designated Broker
Arizona Property Management & Investments
info@azezrentals.com
623-776-5774

Straight talk! Should I buy or should I sell?

Straight talk! Should I buy or should I sell?

BY:  Payam Raouf

President/Designated Broker

Arizona Property Managements & Investments

(888) 777 6664 ext 114

INFO@AZEZRENTALS.COM

It has been a while since I have given you my opinion on the market condition in Phoenix Metropolitan Area. I think it is time to have another straight talk with our investors. I don’t have a crystal ball to predict the future and I don’t claim to be right 100% of the time but if you look back at my posts through the past three years and read my predictions, you will see they have been right on the dot most of the time.

Here we go. It is time to sell if you have bought an undesirable property in Phoenix metro between mid 2009 to mid 2011. Had you followed our recommendations, you should be fine to exit at the next opportunity. Had you not and bought into the hype, let’s help you find a strategy to exit now and reinvest it into something else.

As we went through different phases, we recommended our investors to buy with a clear exit strategy in mind. It is useless now to go over that again as we have already gone through those phases. I will try to be more specific as to where we are going from here later on.

We have had a considerable spike in the market, somewhere between 15 to 30 percent in the past two months. It is time to sit down and do some hard core math. Is it a keeper or is it time to part with it?

Do I own a unique piece of real estate? It is a very difficult question to answer when you live thousands of miles away and in most cases bought in without even looking at all your options. The only consideration was, it was cheap to pass on. Most often cheap cost more in the long run. It may be time to get an expert’s opinion.

You have now owned it for some time and should have a really good idea what it has cost you. Should you take some money off the table here and reinvest it in something else with a better outlook or could you afford to keep up with it?

To give you more specifics, there will be a link to MY EMAIL below this post. Don’t be afraid to drop me a couple lines. Give me the address of the property you own and let my team go to work for you. It won’t cost you a dime. I review their findings and give you my opinion to help you make an informed decision. 

Part two:

If you bought a property in mid 2007 to mid 2009, you are most likely upside down but not by much specially after the recent price increase in the market. The bad news is, the rents haven’t caught up with the prices and even when they do, they won’t by much. You still have to cough up the difference between the rental proceeds and your monthly mortgage. Have you considered talking to your financial adviser or an attorney to see if you benefit by short selling it? If the answer is yes, why wait? We have investors who would make you a reasonable offer that is acceptable by most financial institutions. Please let us know if that is the case by FILLING OUT THIS FORM and we even help you with the entire short sale process.

Part three:

This is for you speculator investors! If you bought a property at the top of the market, from late 2004 to mid 2007, you are in it for the long haul, think 5 to 7 more years before you can break even. It is a tough call as many of you cannot afford to short sale it. The best you can do is to keep your carrying costs manageable. Our property management division understands how important it is to keep your expenses under control. We are proactive.  To compare our services and fees please click here and FILL OUT THIS FORM and one of our area managers will show you the savings.

There are a few other groups that we have not mentioned here such as the folks who bought homes for their retirement or the calculated investors with specific plan of action.

Who should be buying in this market you may wonder? Let’s first see who is doing most of the buying these days. I break them up into three groups. Believe it or not the tenants who sold their homes through a short sale process a few years ago are now qualifying to buy again. Last month 9 of our tenants with similar circumstances bough their own homes. The dilemma is, in most cases they need to come up with a larger down payment to qualify since they have to compete with their number one competitor, institutional investors with deep pockets.

Did I mention institutional investors? Oh yeah. Almost every cash offer we get on our listings these days are over the asking price with the proof of funds attached in excess of 3,000,000 and I have seen as high as $30,000,000. They are selective. For the right property, they pay as much as it takes especially one with a good tenant in place.

Did you know banks are now getting into rental business as well? They haven’t come up with the most attractive program yet but they will in time. Anything is better than nothing.

In addition to properties we manage on behalf of several banks and financial institutions, We were recently interviewed by a large hedge fund that purchased 2500 homes directly from Fannie Mae to rent out.

In the case of banks, financial institutions and hedge funds, they fix up the homes and rent it back to the tenants or the owners already in place with lower or no deposits. They have deep pockets to pay for major repairs when it is needed and can afford to keep up with the demand of today’s tenants. The other thing is, they most likely sell it back to the tenants sometimes down the road.

The number of homes for rent both on MLS and property management sites is increasing by the day. It is taking longer to rent them out to qualified tenants especially when they are asked to pay larger deposits. 

In addition to tenant’s moving out of rentals buying their own homes, more homes are being purchased by investment groups to be rented out. The question now is, are there still opportunities out there that make sense to average investors?

You bet they are and plenty of them if you ask me. I will be doing my investors injustice if I lay them all out here. Just a quick hint, remember, location, location, location and a 3 year exit strategy! Contact me and I can show you how.

We take pride in what we do, selective when it comes to picking our players and loyal to those who have confidence in our team. Whether you have been holding off for the right opportunity, or want to improve your position or simply exit the market, please email me at payam@azezrentals.com with your information and your request. It will be answered promptly to help you make an informed decision.

With Pleasure,
Payam Raouf

President/Designated Broker

Arizona Property Managements & Investments

Phoenix home prices surge higher in past year to lead nation

Phoenix Business Journal by Kristena Hansen, Reporter

Date: Tuesday, August 7, 2012, 10:50am MST

Home-values in both the metro Phoenix and Arizona markets eclipsed the rest of the nation once again in June -- and by a long shot.

The latest housing report released Tuesday by CoreLogic shows Phoenix-area home values, including distressed sales, surged nearly 17 percent year-over-year in June -- the fastest rate of any metropolitan area nationwide. Trailing far behind in second place was the Houston metro area’s 4.5 percent increase, followed by the 3.3 percent rise seen in the Washington D.C. market.

Home values across Arizona, including distressed sales, also posted the biggest year-over-year leap of any state in June at 13.8 percent, the report said. Idaho came in second with its 10.4 percent jump from a year ago, which was closely followed by South Dakota’s 10.1 percent hike.

Nationwide, home prices in June rose an average 2.5 percent year-over-year and were up 1.3 percent from May.

Only nine states saw declines for the month with Alabama posting the biggest drop at 4.8 percent, the report said.

CoreLogic economists said in the report that the widespread price appreciations are a response to the nation’s notable reductions in both visible and shadow inventories, meaning the number of homes currently listed and not yet listed on the market.

“At the halfway point, 2012 is increasingly looking like the year that the residential housing market may have turned the corner,” Anand Nallathambi, president and CEO of CoreLogic, said in the report. “While first-half gains have given way to second-half declines over the past three years, we see encouraging signs that modest price gains are supportable across the country in the second-half of 2012.”

To inquire about purchasing or managing an investment property in phoenix please contact Payam Raouf, Desiganted Broker at 8887776664 ext 109.