How is the rental Market in Arizona? April 1st 2023. Market is moving fast.

 Get a free Quote

A+ rating with BBB

Payam H. Raouf
Designated Broker
Arizona Property Management & Investments

As I had predicted in the last blog, buyers are back and both the new homes and resales are selling faster than ever! Inventory has gone up a bit but so are the number of homes under contract. New home builders are offering unheard of incentives some over 20% to lure the buyers back in. Incentives are so aggressive that even investors are getting back into the game. I just negotiated an additional $4000 discount on top of the $63000 incentive a new home builder was offering. Deals are to be had. Resales have to compete with new home builders, some are slashing prices by up to 10%, some are offering incentives towards closing costs and buying the rates down.

Tenants are out there buying homes. All they have to do is walk into a new home builders show room, they come out with a signed contract putting their notices in to move out. New homes builders are running out of spec homes.

If you are an investor, it is time to move. Cash here is not trash. It gets you a ton of discounts. Just make sure the builder will allow rentals in that community, some exclude rental for a year some other don’t allow rentals below 6 months.

At the same time, investor friendly resale homes with 3 to 4 bed rooms, 2 baths, 2 car garage, 1700-2300 sq ft, year 2000 and newer and no pool between 350,000 to $400,000 are selling fast. It’s the new home buyers' dream home but again cash talks here too. Cities like Surprise, Peoria, Avondale, Good Year, Glendale, some parts of Phoenix in the west valley are the most desirable areas to buy a house as an owner occupied or investments. Rents in $1800-$2400 are the most desirable rentals. You can get decent tenants who will stay for a few years before they can qualify to buy their own.

We are seeing multiple credit applications on our rentals again. What you have to watch out for is not the credit scores as much as the debt-to-income ratio and the job stability.

Pets are the victim of the rental market. We encourage our investors to buy pet friendly properties. You can charge either extra deposit or more rent per month or both as them leaving a member of their family behind excludes some of your best renters.

If you are buying a new house make sure to look at the taxes and other charges. Even if they impos a special assessment, take that into consideration in the overall picture of how it is going to affect your bottom line.

(what is Improvement District tax? An Improvement District (ID) is a means to provide financing of infrastructure improvements (i.e, water and sewer lines, pavement, sidewalks) by imposing a special assessment on each property within the former district. The process can be initiated by property owners or developers.)

As we speak today 4/2/23, the number of active homes on Realtor's Multiple Listing Services (MLS) between $350,000 to $600,000 is 5,227 and 3,904 are under contract.

Back to rentals: tenants are staying put renewing their leases for one more year waiting for the buying opportunity. Landlords are either reducing the rents by a small margin or keeping them the same and if increase only by less than 3%.

Mortage rates are going down. You are going to see more sellers put their homes on the market as it is bringing the buyers back out. There are so many new spec homes to be had, they will run out fast and we will be back at the resale market shortage again. 

Falling dollar and collapsing banks one after another is another subject for another time. Things don’t look that promising in short. Watch a few clips on youtube you get the idea.  For the time being, it seems investing in real estate is a better option. 

I will keep you posted again by the middle of the April as things are progressing daily! Thank you for reading my blog. 

READERS MUST DO THIER OWN DUE DELIGENCE. THIS IS STRICTLY MY PERSONAL OBSEVATION AND OPINION. 

 

 Get a free Quote

A+ rating with BBB

How is the real estate and rental market in Arizona?

 Payam Raouf
Designated Broker
2/15/23

The Current Real Estate and Rental Market Conditions in the Phoenix Metro Area in February 2023

You don’t have to watch hundreds of videos on YouTube to understand the housing market in the Phoenix Metro area. Just take a look around your neighborhood to get a sense of it. There are not many “For Sale” signs,  just a few here and there, unlike 2008-2011 when nearly every other house had a for sale sign in front of it. 

Whether you are a renter or a landlord, you’re likely feeling the pain of the market. Rent has gone up significantly, so has the cost of acquiring and maintaining a rental property. Most renters are struggling to keep up with inflation, while landlords are passing on their increased costs to tenants, who are working two jobs to make ends meet.

This vicious economic cycle, where everyone is passing the buck continues as the Fed prints more money, causing more inflation and robbing Peter to pay Paul and vice versa. Home prices have come down slightly, but there is less inventory available. Homeowners are comfortable with their mortgage payments and reluctant to sell, while investors are unwilling to sell as they can’t replace it with another tangible asset to hedge against the hyperinflation. 

Qualified tenants, who are fed up with the rent increase are now buying homes, even if it costs a bit more. Three- to four-bedroom homes under $450,000 in desirable neighborhoods are selling quickly, sometimes with multiple offers, as sellers offer incentives to buyers to buy the rate down to lower their payments. As of February 9th, 2023, there are only 6,300 single-family homes in the entire Phoenix Metro area, and just 370 single-family homes between $350,000 and $450,000 with three to four bedrooms and between 1700-2200 square feet available for sale!

On the rental side, evictions are at an all-time high, rental applications are not looking that great, with most applicants disqualified due to high debt-to-income ratios, recent evictions, bankruptcies, and other issues. Landlords are keeping rents consistent or just slightly raising them to keep good tenants in place, as it’s hard to replace them in this market. Homes are also getting older and requiring more maintenance, which has become more expensive, both in terms of material and labor. 

Investors are sitting on the sideline with a lot of cash and with a falling dollar, buying a rental property is starting to make more sense. Investors are keeping a close eye on the market and are likely to get back in soon once prices level off, likely in the 3rd and 4th quarter of 2023. 

My bottom line: whether you’re a renter or an investor, it’s time to buy a house. You won’t regret it in the future. it’s important to do your due diligence before buying a house, especially as schools are becoming crowded and quality of life and crime may be affected in areas where there’s a lot of new construction.  

We offer services to help investors buy, rent, manage, and sell investment rental properties throughout the Phoenix Metro area. If you would like to learn more about our services, please click on the link and let us know. Thank you. 

Get a free Quote

How is the rental market in Arizona? Ask a Property Manager.

Get a free Quote

By : Payam Raouf
Designated Broker/Owner

If you want to know the state of the economy, talk to a property manager. We see it all: Who is coming, who is going, where they are coming from, where they are going to, what they do, how much they make, what car they drive, how much they owe, who is paying on time and who is falling behind, and on and on and on. 

That’s just what you see on the surface. If you look a bit deeper, it really makes you wonder! How do tenants deal with these sudden rent increases recently? For example, a 3 bed, 2 bath, 1,500 sq ft house in an average income neighborhood in Glendale rents for about $1,800 to $1,900 these days when just a couple years ago the same home would have rented for about $1,200 to $1,300.

The other day I was in-between appointments and had 20 minutes to kill so I thought I’d grab something quick to eat. I walked into a McDonald’s and ordered a quarter pounder. The clerk combo-ed me at $10.75. I sat to eat, opened the box, closed it immediately, picked up the tray, took it back to the cashier, and said, “I think I picked up the wrong order. This is the One-Dollar Burger”. She looked at me, looked at the burger, and said, “That is a quarter pounder, the prices have gone up. If you want another patty it is $2.25 more”. Then she asked, “Do you want another patty?”, to which I said, “No”. I went back to my seat, ate disappointedly, and left to my appointment. Who was I going to argue with, the cashier? She probably has plenty of her own worries to think about already.  

That evening on the way home, I thought I am “the cashier” myself! When the owner instructs us to raise the rent $600 and the tenant reacts in confusion, “$600?!”,  I say, “Yes, the owner says prices have gone up”.

According to Google: ”The salaries of Fast Food Cashiers in the US range from $16,570 to $27,324”. Let’s say the cashier makes $27,324/yr. That’s about $600 gross per week. The month is one week short of covering her rent.

After a couple of days delay in response, one tenant in a similar situation told us, “I don’t want to but I don’t have the moving funds. I will take it for another year.”

Another tenant, after seeing a $400 rent increase message on their portal, called us and said, “I work for the post office. I only received a $300 raise this year. I cannot afford a $400 rent increase”.

These days, people could be using their vacation time and sick leaves to drive for Uber and DoorDash to make the end's meet. And yes, that tenant ended up signing up for another year too.

A retired tenant on fixed income keeps calling us wanting to know if the owner is selling the house or renewing the lease. The lease is not even up for another three months.

Another tenant renewed their lease with a $500 increase per month just to buy enough time to find another place for less then packed up and moved two months later breaking their lease.

Some seek help from charity organizations and local governments to pay their rent for a month or two until they can figure out how they can stand on their own. On occasion, a few tenants decide to surrender their keys by choice or through legal means. 

Who is out there looking for a property manager these days?

1. Some individuals or companies are getting out of the property management business. Either themselves or the investors call to see if they can find a good fit to manage their properties for them.
2. Some homeowners call to gather information to see if it is better to rent or sell their home. They want to see what their options are.  Some have already had their property for sale for a couple of months, dropped the price once or twice but it is still not selling. 
3. Some owners, who purchased a new build a year ago and just closed on it now, want to know if renting is a good option. Sometimes it’s their only option if the builder doesn’t allow them to sell it for a year or two after they close. 
4. A few are still fishing for deals knowing they are late to the game. At 6% interest rate even with 25% down, how can you break even when your rental proceeds do not even cover all your costs.  If you have money to pay cash, there are deals to be had. Some stressed  selling is going on.
5. People moving in together to reduce their living expenses. They rent one house and move in with each other. They call to see what they can get for their house and if it makes sense.
6. Some homeowners have been renting their home on their own. Either they have not raised the rent for a long time or the tenant is not paying them on time or have fallen behind. They need a new face to contact them and make things right.
7. Inheritance. Those who have inherited a property will either sell it right away or rent it out for a year or two to see how it works before they decide. 
8. Parents buying a home and renting it to their kids hire a property management company to collect the rent and manage it for them.
9. Owners that are retiring and want to travel or no longer want to deal with the day to day business of taking care of their rentals.  

I still get calls from buyer’s agents, “Would you like to receive a cash offer on your house?” Many of the houses they buy will eventually end up on the rental market too.

It is going to get tougher for a lot of renters out there to pay the rent. Many have already run though their savings and some are in danger of losing their jobs. Credit bureaus, per an online search, show many have maxed out their credit limits already.

Experienced investors hire a management company that market their properties on the Multiple Listing Services (MLS) as well. The more applications you get, the better the chances are you’ll get the right tenant. Happy tenants will stay longer, are more likely to pay rent on time and take care of your property. 

Less repair and less vacancy means more in your pocket.

We are about to witness thousands of trendy new apartments with tons of amenities, pool and all, hit the market soon. Once they put their management and maintenance teams in place, they are ready to lease them out. You are going to see all sorts of move-in specials.

Rental inventory on MLS shows it is ticking up but it will be accelerating as more properties hit the market. The right marketing approach and having a strong team behind you is crucial to help you maneuver through these choppy waters.

The market went up way too fast but it is working its way down one step at a time. That’s what the Fed Chairman, Jerome Powell, is referring to: A “soft landing” doesn’t mean home prices and rents going back down at once. It’s a period of adjustment for both the landlords and the tenants. I don’t think this time around is going to be as bad as in 2008-2011.

Right now, the dollar is holding up pretty strong. But should it fall, what better place to invest in than Real Estate? Cash is trash, you might have heard it lately. At best we are heading towards stagflation; A time of slow growth, high unemployment, and rising prices.

I am not a financial advisor nor have a crystal ball. I tell you the way I see it from in the trenches and following some financial videos online.

If you want one-on-one time to discuss a particular situation you may have or want to invest in a rental property in the Phoenix Metro area, please Click Here to let me know how I can assist you. I will personally contact you to discuss your options. 

Get a free Quote

Call For a Free Property Management Quote: 888-777-6664

How I see it in the trenches here on the front lines. Arizona Real Estate/Rental Market Update.

 Call For a Free Property Management Quote: 888-777-6664

Click Here

Payam Raouf
Designated Broker

11/26/2021

I have come to the conclusion that the market will peak off again after a short pause. That’s at least how I see it in the trenches here on the front lines.

 

I have been in the midst of it all since 2003!  I flew into Phoenix with two other brokers from Vegas in May of 2003 after the market started showing signs of cooling off there.

 

I picked Surprise, they picked Queen Creek. In Queen Creek, we drove through some rough muddy roads on the way to a new home subdivision that turned me kind of off. I had seen a drawing of what is now the post office complex on Bell Rd by Sun City Grand in Surprise and the hotels and shopping center at a developer office in Las Vegas prior to flying in.

 

I think that day I put my name on 20 to be built houses by Pulte  at Cotton Farms in Surprise. When I went back to Vegas, we immediately transferred those to the investors and the journey had just begun! Picking up one to three investors at the Phoenix Sky Harbor airport daily, taking them to a subdivisions, signing them up for a few properties here and there, and kept doing it for a good one and half year mostly in the west and northwest valley area. 

What a ride it has been since. Two BIG ups and one BIG down so far and everything in between. 

 

What’s next?

 

The game is changing. There is more competition for the same product, affordable single-family homes for the purpose of turning them into rentals. Not all homes make the best rentals. Unfortunately, that’s not what we see happening out there! Buying a desirable rental property is the key to your success and not all agents are in tune with that market.

 

Don’t expect any exceptional deals! Inflation has already got the best of it and is not going anywhere anytime soon! Not quite yet, but soon, you maybe able to find what you are looking for at slightly lower price than todays values. This window of opportunity is a very small and possibly towards the second and the third quarter of 2022. If you find the right one between now and then, take it.

 

If you are looking for immediate cash flow it is definitely not the right market for the time being. The return is not that great but with the right down payment it keeps you afloat for the first couple of years before it goes up the 3 to 5 usual percentage. At long as it appreciates at the same rate of inflation and above, it should be ok. With all the new money put into the circulation there’s only way it could go back down like in 2008; a natural disaster of some sort or an event somewhere in the world that is going to affect us directly. Riots and Chaos is short lived.

 

Everywhere you look they are building multifamily housing of some sort with many towards completion. Currently a lot of families and friends are moving in together to afford the rents. Once they move out into these units, it relieves some pressure from the SFR rental market, that is more like a year from now or so. It is expected that some of the other iBuyers like Zillow are going to stop or slow down their purchases substantially as the Fed is tapering down their asset purchase.  

 

What the cash iBuyers have been buying in 2020-2021 are mostly 4 bed room, 2000 and newer, properties around $350-425K that rent for $2,000 to $2,500, just like in 2010 and 2011 when they were buying almost every property at the auction at over the market value. Look at them now! What did they know?

 

It's simple. There will more people renting in the future than buying. Renting is not necessarily cheaper but you can work remotely from anywhere. Why tie yourself down to one place or another for too long?

 

They are moving a lot of distribution centers to Phoenix metro as well as some high-tech industries. Once we pass through this hurdle, market should get back to its normalcy. It would take a few years maybe three to even four.  

 

There will be a place to live for everybody across the board.

The influx of population to Phoenix is slowing down a bit for now. We used to have more out of state applicants in management position applying for our properties. Now a days, it is mostly the folks who come here to work at these facilities. 

In about five years Phoenix Metro may become one of the main tech hubs in the country as fast as they are are moving in ; Intet, Taiwanese microchip manufacturing facilities, Microsoft in addition to what we already have. 

So, expect a short pause before the prices go back up to the next level.

Yes, you should invest for the long run. Speculation is what got us where we were in 2006. This time is different; Yet, don’t get too excited to pay over asking price on the wrong type of rental investment. There is NO rush in this market. Do your due diligence first.  

 

Please Click Here and tell us what you are considering buying. We will do a FREE rental analysis for you! 

If you have a rental property and you want us to rent and manage it, please Click Here.  

Thank you.

 Call For a Free Property Management Quote: 888-777-6664

Click Here

Sad but true. “I kill myself if I don’t find a place to live … !”

By: Payam Raouf
Designated Broker

Sad but true. “I kill myself if I don’t find a place to live … !”

“I kill myself if I don’t find a place to live because we are going to be on the street!” That’s what an applicant told me over the phone when his applications kept being turned down over a previous eviction. Some applicants are paying in access of $1200 application fees for various rentals.

Almost everyone tells me the reason they have to move is “the owner is selling.” Do you blame them? For sale inventory is going up by leaps and bounds. Since mid August 2021 number of single family homes for sale has gone up by a surplus of  about 100 per day.

For almost a year we have been hovering around 4000 SFH for sales at any given time. Now we are over 6000 as of today 9/19/21.

There is no waiting list at new home builders and spec homes are piling up again. A few builders have already started offering bigger incentives to get rid of their existing inventory. 

Well, that reminds of me of about the end of 2005 to mid-2006. For those of you who have been around don’t you see similar trends?

To top that off, everywhere I turned my head I see rental apartments being build. Some are almost done, some will be completed in less than 6 months. Well, that’s good news for the buyers and renters and may be bad news for some sellers and landlords.

Well my friend I told him, “Calm down and have faith, fix your credit and wait another 6 to 12 months meanwhile let me see what I can do for you”.

A large number of applicants write down on their application the reason they are moving is, “OWNER IS SELLING”. They also tell me they just need a few more months, they have already applied for these apartments and been accepted but they won’t be able to move in for another two to three months.  

The way it is going we should see the inventory for sale increase to 10,000 by the end of this year and around 20,000 by July 2022. Lot of renters has already renewed their leases for another 12 months and even if they were going to buy, they have to wait till their lease is up. I see builders or sellers offering to pay off their lease as an incentive to get them buy their homes. Why not?

Of course, the bigger the supply, the less rents and prices. They eventually come down even if the fed slows or even stops buying these inflated mortgage bonds and keep printing more money.  

So:

If you are a buyer you might want to wait a bit longer even if you risk the rate going up even a point. Prices should adjust to it, pretty much same payment but at least you will be able to find the right home, negotiate a better price and posed for higher future gains adjusted to the financial climate. Being upside down locks you in place for a while even if your life circumstances change. That’s a tough position to be. It’s like being in a bad relationship you want out but you cannot.

If you are a renter, renew your lease for a year. Rental inventory will be going up. The writing is on the wall. Just look around. A lot of these cash buyers have to rent them on top of all the condos being build, the higher the inventory the better your chances of finding a more desirable home and a better deal.

If you are considering selling, you should take advantage of these cash buyers unless you have a unique property in a desirable location. It may not be affected as much. I am considering doing the same.

Now folks in the long run once everyone gets adjusted to the “New Normal” find the right job, you are going to see the hyperinflation kick in again. You will be able to make more and afford more. I encourage you highly to be a home owner because going forward; rent will always be running ahead of your income. If socialism is what you are looking forward to, that may be your only option.

If you own rentals and going long why even consider selling? Even if the prices come down in the short time, you are going to have buying and selling costs of about 15 percent plus loss of rent and possibly paying a lots of taxes if you don’t find a good place to reinvest your money. What a better place than real estate.

Here is my two cents. You may see it different. This is just my personal opinion you have to do what you think is right for you.

Best wishes to all.

Call For a Free Property Management Quote: 888-777-6664

Click Here

How is the rental market in Arizona? There is a silver lining in the market, take advantage of it.

By Payam Raouf

Owner/Designated Broker

IF IT IS MEANT TO BE, IT’S UP TO ME. JUST DO IT.

 

There is no excuse for not making money hand over fist these days in real estate. You listened to all naysayers on Youtube and now you are on this page!

 

Welcome! Since 2008, when I first started this blog, and 120,000 readers later, I have been able to predict what is coming next at least 6 months in advance. 

Except this time it is a no brainer. Yes, Yes, Yes, and Yes. There are some indicators that the market is going to make a short term ADJUSTMENT or at least go sideways for a very short time ( The silver lining in the market you have been waiting for) until everyone gets used to the NEW NORMAL.

 

Ok, let’s see: How come I see on most of rental applications the incomes have almost doubled in the last 10 years?

 

Remember a time not too long ago in 2011 when you could buy a house for 150K in Phoenix Metro? Now, it’s practically $400K. Imagine if this house becomes $800K in 10 years’ time. What’s wrong with that?! Then, you were making $3,000 a month. Now you are making $6,000 and in 10 more years maybe $12,000? Hyperinflexion is here to stay.

An older friend of mine said he used to own a house in Hollywood Hills that he paid $25,000 for 50 years ago and now it’s well over $2 million. Ask your grandparents, they’ll tell you.

 

In the last 5000 years rates have never been so low!!! Home prices are off the chart. It seems as if banks don’t care about the appraisal anymore. Then why should you?

 

Rents have gone up so high. I couldn’t believe when I heard a landlord asked us to raise the rent $1,000 a month, the tenant said, they would do $750 if the landlord agrees to renew it for two more years!!! An eighty year old man asked if we could only raise his rent $250 a month or he has to move in with the kids, a great tenant and a greeat Landlord, they agreed on $125. Every renter knows what I am talking about and seem to have no problem with the substantial rent increases. 

 

Either buy or rent, you have to roll with the punches. Make lemonade out of lemons as they say. Get up and go to work. Try to catch the train at the next station and if you are thinking the train is backing up to get you, dream on. Home prices are NOT going down like they did in 2010.

 

Another thing I am noticing on rental applications are more and more people are going into business for themselves, having a 9-5 job for the benefits and driving Uber or streaming videos on the side. Almost the whole country is back on selling something. How many calls do you get a day or are you making yourself to buy or sell something? Who are the losers? We all know. If ALL you are counting on is waiting for the stimulus check and government handouts to arrive stay where you are, this is a blog is not for you. Yes, There are some people that need the stimulus money like some elderly, single parents, sick and handicap to make the ends meet, the rest are free loaders if you ask me. Some don’t deny it either. “It’s free money and the landlord can wait for his rent” one tenant applying for rental assistance told me to my face in my office. He lived in a gated community in Scottsdale, drove a $125,000 BMW and got in excess of $20,000 in rental assistance. He has gone to lives in Newport Beach. 

 

Listen folks, I could have, should have, would have doesn’t work and never did. Set your goal to become a homeowner. Don’t let the institutional investors scare you off. Take advantage of the times. There is a silver lining in the market. It is short lived. JUST DO IT, Go house hunting today. Because, IF IT IS MEANT TO BE, IT’S UP TO ME. 

And if you are a real estate investor, you already doing it. Best wishes to you all. 

Please do your own due diligent. I don't have a crystal ball. Please leave your comments below. 

Call For a Free Property Management Quote: 888-777-6664

Click Here