Signs market maybe flattening out in most major Phoenix Metro Area.YOU DECIDE.

June 29 2013

Payam Raouf 
Designated Broker
Arizona Property Management & Investments
psraouf@aol.com
623-776-5774

Is it a good time to buy, sell or hold off? YOU DECIDE.

For those of you who are in the business day in, day out and watching the price changes, this is almost an old news. In the past 45 days, we have seen a large number of homes for sale on MLS with a substantial price reduction especially in Scottsdale, Chandler, Gilbert, N. Peoria and N. Phoenix. 

From October 2012 to mid May 2013 we have seen an unanticipated price increase as much as 40% in some Phoenix Metro Areas. This was mainly due a combination of things such as:

A)    Lenders not foreclosing. We have managed properties for Major financial institutions including Fannie Mae. Fannie Mae will do almost anything to keep the tenants in place.

B)  Institutional Investors: Almost 70 percent of purchases in the same time period have been done by institutional investors, Private Equity Funds and Forign Investors.

C)  New Buyers: There has been a surge of new buyers, the ones that did a BK, short sale or foreclosure a few years ago and are tired of renting. They re-qualify to buy an home using FHA loan. They are a small percentage and have not had much success competing against big investors but have been putting some crazy offers together with 3% cash back towards escrow fees.

D)  Low interest rate: this needs no explanation.

E) New home builder: Rising the prices to offer bigger incentives to lure buyers in. 

On the contrarily we are seeing the trend changing fast:

A)    Fannie Mae Owned Properties:  Regardless of the low rents, a lot of tenants are moving out of these rentals, mostly due to maintenance issues and lack of TLC. They have been tossed around to several property management companies in less than 3 years and tenants just want out. We have seen over 50 percent of them moving out in the past 90 days. These homes are not in the best condition and won't rent easily. So they are being put back on the market.

B)   Institutional Investors: Carrington Financial Services, a major player in the industry stopped purchasing residential renal properties about 3 weeks ago and a few others have followed suit since. (See the article below). Blackstone and Colony American have slowed down quite a bit, 50 percent of their rental inventory is sitting empty.  As the result, in most Phoenix Metro Areas rents have either stayed the same or even gone down comparing to this time last year.

C)  Canadian Investors: Canadian dollar has been falling steadily and we have seen a lot less of them buying properties down here in Phoenix lately.  I talked to two major title companies in the past two days and they both confirmed that they are more on the selling end of it now. They bough quite a few properties in the past 5 years and once this epidemic of selling spreads through out the market, it can get really ugly. They will all try to exit at once and inventory shoot up through the roof bringing the prices down.

D)  Buyers sitting on the side line: Recently, we have been receiving an unusual amount of rental applicants from applicants with steady jobs, good income and 700 to 800 plus FICO scores! When asked why they are not buying, they say, they are waiting for the market to level off and believe the prices are going to go back down (Perception is a reality). Plus the rents are so low that it beats the total monthly payments with all the expenses and headaches associated with home ownership.

E)   Rate increase: Mortgage rates have gone up by nearly 1% in the past 45 days pushing home buyers already in escrow to take variable loans which in a major way contributed to the whole housing boom and bust. On the contrary belief that a lot of buyers are going to jump on the ban wagon to take advantage of the yet lower rate before it goes any higher, there are still quite a few who are hesitate to take the plunge. Unemployment is still at 7.5% and the ones who are working are barely making the ends meet.

F)    The Musical Chair affect: : As more tenants hop from one rental to another for a better deal, the homeowners who are upside down in their mortgage are no longer able to hang on to these properties. They are throwing in the towel and putting their houses on the market either to short sale it or just getting barely getting from under them as well. We have been getting calls from these home owners to sell their properties once the tenants move out or even with a tenant in place. They seem to be fed up with the costs associated with rental properties and the cost of maintaining them as these homes are getting older needing additional maintenance. On the other hand, institutional investors are offering lower deposits and lower rents just to fill in their vacancies making it more difficult for the smaller investors or these home owners to compete with.

G)   Investors taking some money off the table: We are seeing investors are paying very close attention to these details. In the six months we must have at least sold 50 of these properties and just in the past 30 days we have received more calls from investors wanting to know what their properties are worth and what their options are.  It seems they are getting a bit concerned about the market.  Foreign investors specially the Canadians are getting really jittery.  

Luckily, we live in a county that is economically much more stable comparing to the rest of the world and our people have shown time and again they are more resilient to these market upheavals. However the world is now much more inter-connected than ever before and we need to pay closer attention at not only what is happening around us but about the globe.

It is hard for me to advise you what to do these days. YOU DECIDE.There is not such a thing as the "NORMAL" any more! To get a better insight of what is happening worldwide in the money market, I called a good buddy of mine Stan Serklew,  a seasoned financial Adviser in Scottsdale Arizona. In the past 8 years I have had the pleasure of knowing Stan, he has made some unparalleled predictions that have been right on the money. Seven years ago, in the heat of the real estate market, he told me that government is going end up paying people to stay in these properties, DOW is going to 16000 from 13000 just a few months ago when almost everyone else expected it to collapse, and gold to drop down to $1100 from $1600 an ounce a year ago and may many other solid predictions to motion here. I hope the information here helps you make a better financial decision. Please let me know how we can assist you.

Here is Stan.

Written by Stan Serklew . June 28, 2,013........Resident manager...'Private Equity Advisory Services' in Scottsdale, Az

As an aside, my comments are a disclaimer, as to the numerical processes, which seem to influence an overall residential market based price restructuring, however interest rates, as they influence derivatives option costs have had a nuclear effect in June, as the sudden decline of bond fund prices based on a furious drop in U.S. Treasuries. In the past week, generated a flurry of appearances and commentaries of a goodly number of Fed. Governors, who functioned to hit the brakes on Treasury prices, with a sudden increase and  decrease in yields. The struggle to lower rates has been a source of headaches for money managers, and their clients, who are having difficulty in determining, how effective the Fed's attempts to re balance, an accurate interpretation of Chairman, Bernanke intent in his most recent report on progress of 'recovery' in the U.S. economy, as it relates to the effectiveness of the QE 2,3, bond buying  process......Those of us who were paying attention to the efforts of the PBOC . (Peoples Bank Of China) to act quickly to extinguish the consistent increase in  bank over night lending rates, which reached 15% in the 1st. 5 months of the year, played into the massive selling  by institutions, as well as retail investors  of bond funds, approximately 44 billion this month, adding to an already jittery market, the sudden rate increases of U.S. credit instruments...........The battle continues, between the Central Banks of the world, and the bond vigilanties which appear with shark like attacks, in world wide debt markets., no doubt bear significant observation, as Dallas Fed Gov. Stanley Fisher commented this past week, with a somewhat stern admonition, that winning over the Fed is impossible......however, as we endure a slow recovery in the housing market, which is dependent on our domestic mortgage capabilities, there is no doubt, that the so called 'Perfect Storm'  has subsided in recent days...........And now comes the steepest decline in the price of Gold, in any period since 1920.. closing at 1,201. per oz......to days close wit an Aug. 13 futures in the 1,100  handle ......The traditional interpretation is the war on inflation domestically has been won, however, as everyone with consistency is grappling with this 'Phenomenon' referred to as the 'New Normal',  with sudden changes in pricing of all hard goods that are 'marked to the market' priced on the up and downside, and we certainly have to be alert to changes in price structure in the residential housing market......In short, buyers, and sellers have little margin of time to 'think it over'...The Caveat is 'act quickly'..for the retail buyer........More to come with vigor, as we progress to make U.S. housing, the  New Gold Standard  in our domestic market, for all who dwell in our Dynamic Country.
Please forward all your questions to psraouf@aol.com. Thank you and Happy investing. 

Carrington Stops Buying U.S. Rentals as Blackstone Adding

Arizona Property Management & Investments

"Best in Property Management in Phoenix" 2011/2012

Payam Raouf
Designated Broker

(888) 777-6664 ext 114

Get a Free Property Management Quote Here

Carrington Stops Buying U.S. Rentals as Blackstone Adding

By John Gittelsohn - May 29, 2013 1:36 PM MT

Hedge fund manager Bruce Rose was among the first investors to coax institutional money into the mom and pop business of single-family home rentals, raising $450 million last year from Oaktree Capital Group LLC. (OAK)
Now, with house prices climbing at the fastest pace in seven years and investors swamping the rental market, Rose says it no longer makes sense to be a buyer.

“We just don’t see the returns there that are adequate to incentivize us to continue to invest,” Rose, 55, chief executive officer of Carrington Holding Co. LLC, said in an interview at his Aliso Viejo, California office. “There’s a lot of -- bluntly -- stupid money that jumped into the trade without any infrastructure, without any real capabilities and a kind of build-it-as-you-go mentality that we think is somewhat irresponsible.”
Carrington, which started in 2003 as a mortgage investment fund and has managed almost 25,000 rental homes for itself and others, has been joined by hundreds of institutional and international investors buying single-family homes after prices plunged following the housing crash. The firms are building a new institutional real estate asset class from the 14 million leased single-family residences that are worth an estimated $2.8 trillion, according to Goldman Sachs Group Inc.
Even as demand for rentals rises amid a falling homeownership rate, yields are declining and companies formed to buy the homes that have gone public haven’t yet been profitable.

Rising Prices 

It’s also getting harder to buy properties cheaply, with purchase prices rising 11 percent in April from a year earlier to a median $192,800, according to the National Association of Realtors. Asking prices for rents rose just 2.4 percent in the 12-month period, according to Trulia Inc. (TRLA)

Funds are buying property now, including homes sold by Carrington, for rents that yield 6 percent to 8 percent a year, before costs such as insurance, taxes and vacancies, according to Rose. Carrington’s model called for mid-single digit net returns on annual rents on an unlevered basis, according to Rose. While returns would vary by market, they would generally be in the mid- to high teens over the duration of the holding period, with the profit from home price appreciation.
“We selected our capital for this trade, sourced from a level that’s just too expensive for what the market has morphed into,” Rose said. Oaktree, the Los Angeles-based investment firm founded by Howard Marks, declined to comment, said Alyssa Linn, a spokeswoman at Sard Verbinnen & Co.

Nonperforming Loans

Instead of acquiring rental homes, Carrington is buying nonperforming loans, including about $4 billion in 2012. While that’s a potential source of rental properties if the owners can’t pay the mortgages, Rose’s preferred outcome is to get the loans performing again by offering a modification that keeps the current owner in the house, he said.
Carrington also is buying mortgage servicing rights and expanding a loan origination business for borrowers who can’t qualify for prime loans because of low credit scores. Rose expects to issue securities backed by these loans as soon as the end of this year, he said.
“It’s all about control,” Rose said. “We learned the better loans would be created for us to invest in if they originated off of our own platform and then boarded onto our own servicer, where we could control the performance longer term rather than leaving it in someone else’s hands.”

DEA Pilot

That desire for control is reflected in Rose’s life outside the office. He got a pilot’s license at age 17 and worked as a commercial aviator, including a stint flying for the U.S. Drug Enforcement Agency, before moving to Wall Street. He still enjoys taking the helm of Carrington’s two Dassault Falcon jets when he visits the company’s properties around the country.
Another investor that has stopped putting money into rental homes is Och-Ziff Capital Management Group LLC (OZM), a $31 billion hedge fund managed by Daniel Och, which cut its stake last year in 643 Capital Management LLC, a single-family rental operator with almost 2,000 homes in California, Florida, Nevada and Texas. Gregor Watson, managing partner at San Francisco-based 643 Capital, declined to comment on the Och-Ziff relationship. In general, the single-family rental business has matured to a lower-risk, lower-return investment as more funds get a track record, he said.
“It’s gone from an opportunistic business to a value-add one in terms of returns,” Watson said in a telephone interview. “We and other groups have proved you can manage these at scale.”

Blackstone Buying

Blackstone Group LP (BX), the largest investor in single-family rentals, has spent $4.5 billion to amass more than 26,000 homes and continues to buy, according to Eric Elder, a spokesman for Invitation Homes, the rental housing division of the world’s largest private equity firm.
“We’re continuing to purchase homes where they fit into our business plan,” Elder said.
Blackstone’s net yields on its occupied houses are about 6 percent to 6.5 percent, Jonathan Gray, the firm’s global head of real estate, said during a May 3 conference call with investors. That’s before using leverage from a $2.1 billion line of credit the private-equity giant arranged in March from a lending syndicate headed by Deutsche Bank AG. (DBK)
While about 85 percent of Blackstone’s renovated homes were leased, Gray said, “we’ve got an awful lot of homes to continue renovating.”

Losses Reported

Companies that release financial results for single-family rental investments have reported losses as they acquired homes faster than they can renovate and find tenants.
Colony American Homes Inc (0773189D)., a division of Thomas Barrack Jr.’s Colony Capital LLC, has found tenants for only 51 percent of the 9,931 homes it bought for $1.4 billion, according to a filing yesterday with the U.S. Securities and Exchange Commission.
American Residential Properties Inc. (ARPI), a Scottsdale, Arizona-based real estate investment trust, and Silver Bay Realty Trust Inc., a New York-based single-family REIT, both reported losses in the quarter ending March 31. Owen Blicksilver, a spokesman for Colony Capital, declined to comment. Silver Bay CEO David Miller was unavailable to comment, according to Tricia Ross, a spokeswoman at Financial Profiles Inc. American Residential CEO Steve Schmitz and President Laurie Hawkes didn’t reply to e-mails seeking comment.
Silver Bay declined 2.6 percent today in New York to $18.24 and has lost 4.4 percent this month. The company sold shares to the public in December for $18.50.

Defaults Soaring

Rose worked in the mortgage department at Salomon Brothers from 1991 until 2003, after it had been acquired by Citigroup Inc. He started Carrington in Greenwich, Connecticut, as a securitizer of mortgages originated by subprime lenders such as New Century Financial Corp., Fremont General Corp. and H&R Block Inc.’s Option One Mortgage Corp.
In 2007, as defaults began to soar and the lenders were collapsing, Rose sought to gain more control over the trusts that admistered the loans. He paid $188 million for the servicing business of then-bankrupt New Century’s mortgages.
When Carrington foreclosed on the homes in its portfolio, Rose calculated it often made more sense to keep the houses as cash-flowing rentals rather than sell them into a weak market. By 2009, Carrington had expanded from being an asset manager to a loan servicer and property manager, overseeing its own holdings plus more than 3,000 rental homes that Fannie Mae had repossessed.

Housing Exposure

With home prices about one-third below peak at the time, Rose saw the opportunity to buy and manage thousands of properties as a way to make money on rents while betting on a long-term real estate recovery.
“This was the purest way to get pure housing exposure,” he said. “You can’t do it through banks or builders or mortgage companies or anyone else.”
Rose initially found it hard to find backers.
“There wasn’t a domestic investor at the time that had the foresight to see what the value of the product was,” he said. “Universally we got back: Oooh, housing. Really scary. It’ll never go back up.”
By the time Oaktree invested with Carrington, the housing market had begun to turn around in markets like Phoenix and California, where funds had started to buy thousands of residences for rentals.
While Rose isn’t buying now, Carrington’s 3,000 employees’ experience in renovation and rental management are a resource available to other investors entering the market, Chief Operating Officer David Gordon said during an interview.

‘Gold Rush’

“All the people who made money during the gold rush in California, they were selling the buckets and shovels,” Gordon said. “I think there is gold in them there hills, but you’re going to have to dig deep. And hopefully you’re going to need more than one shovel.”
Carrington may start buying rental homes again when other large investors decide to sell after learning they can’t make returns that justify the prices they paid, Rose said.
“We’ll sit back in the weeds for a while and wait for a couple of blowups,” he said. “There’ll be a point in time when we’ll be happy to get back into the market at levels that make more sense.”

Investors buying homes in metro Phoenix at slower pace

Payam Raouf
Designated Broker
Arizona Property Management & Investments

(888) 777 6664 ext 114

CONTACT US

TO RECEIVE A FREE PROPERTY MANAGEMENT QUOTE PLEASE CLICK ON THIS LINK.

 

Home values have been on the rise at the fastest pace since the housing boom in 2005 in the tune of almost 40% in most desirable areas of Phoenix Metro within the past 16 months. We are getting closer to reaching a plateau in home prices in most Phoenix Metro Area. In some areas such as West Wing Mountain in Peoria, home prices have climbed close to what they sold on the top in 2005 and 2006!!!

 

We are receiving more purchase inquires in North Scottsdale Area in the $400,000 to $600,000 price ranges. Many investors who purchased lower end homes are selling to either institutional investors or first time home buyers and replacing those with higher end homes in more desirable areas.

 

It seems, Homes in Ahwatukee, Chandler, Gilbert, N Peoria, North Phoenix and Scottsdale have seen the most increase in prices and  it seems the prices would continue to climb as demand surpasses the supply by far.

 

Surprise might have reached it plateau, Queen Creek, Coolidge, Casa Grande, Buckeye have seen a 20% increase and there is still some room but rents continue to decline as homes are more affordable to purchase than to rent. 

 

City of Maricopa has seen a substantial increase in prices and I think prices will continue to rise as more end users are buying homes and household income and education level is much higher than most cities in Phoenix Metro as well as the well designed master planned communites in this city.

 

For more information about the market condition please contact me directly at info@azezrentals.com or (888) 777-6664 ext 114.

Thank you,

Payam Raouf

Designated Broker

 

Investors buying homes in metro Phoenix at slower pace

 

By Catherine Reagor The Republic | azcentral.com Fri Mar 29, 2013 2:13 PM

 

Wall 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 complted 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?

Home buyers paying cash declining in metro Phoenix

Posted on April 12, 2013 3:53 pm by Catherine Reagor

 

Homebuyers using conventional mortgages outnumbered cash purchasers in metro Phoenix during March.

It’s the first time in four years that cash buyers haven’t dominated the region’s homebuying market, according to the latest Wilcox Report.

Last month, 2,188 houses were purchased with home loans, compared with 2,144 bought with cash.

Fletcher Wilcox, real-estate analyst with Grand Canyon Title Agency, said the gap between cash purchases and conventional-loan purchases had been narrowing in recent months. Most cash buyers are investors, and investment activity has been slowing as metro Phoenix’s foreclosures fall and home prices climb.

In March 2013, 36 percent of Valley home purchases were all-cash deals, compared to 41.5percent in March 2012. Early in the housing crash, during March 2008, 16 percent of the home sales were paid for with cash. At the start of the housing boom in March 2004, 14 percent of all sales were cash transactions.

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

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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