What Makes a Good Phoenix Rental Property?

As a newbie to the rental property business, you may be nervous about making that first purchase of your phoenix investment property home. Do you know what things to consider to attract renters? If you have ever rented a home yourself, then you have experience in what home renters are looking for. Most homes are renting to families who are happy with the less burdened renter lifestyle, or who are new to an area and checking out that area before they buy a home. As in every part of the Phoenix property management process, your Phoenix property management team can help answer any questions you may have during the purchasing phase and represent you in the sale. Here are few suggestions from the pros:

1) Look for homes no older than 15 years. This will help keep down maintenance costs and save you money long term.

2) Look for homes that are not located on busy streets.

3) Rental properties should have at least 3 bedrooms and 2 bathrooms, and be located in neighborhoods where home values are appreciating. This allows you as the owner to charge a higher rent.

4) Consider the proximity of the property to things people need and/or want such as shopping and dining.

5) If the home is in a HOA, there may be fees for violations and signage and parking rules. Be sure to identify what the HOA codes are and how you will enforce them with your tenants.

Remember that the decisions you are making in the purchasing process are ones that will affect you long term. The property type you choose will affect what type of potential tenants you attract, and how long the home stays vacant. These are all things to consider as you begin your journey into the rental property industry. By making smart decisions today, you and your Phoenix property management team will be pleased with your future results. 

RPMWV Phx offers full real estate services including the representation of buyers and sellers in the real estate transaction process as well as full service and tenant placement property management.  For additional information please call 623-748-7800

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Multi-family vs. Single-family Phoenix Rental Property Investment

WHAT YOU NEED TO KNOW ABOUT MULTI-FAMILY VS. SINGLE-FAMILY RENTAL PROPERTIES BUT WERE AFRAID TO ASK

For a new real estate investor, the question of whether to buy a Multi-Family Residence (MFR) or a Single Family Residence (SFR) can be a tough question. Like most things in life, there are pros and cons to each. You simply have to decide what is best for you in either case after knowing a few facts. Investing in real estate, either an MRF or an SFR, is a good investment. As long as you have a long-term plan in mind, you can make it successful.

Why Invest in a Multi-Family Residence? 4 Reasons to Consider....

At first glance, investing in a multi-family residence seems to bring the most cash flow. After all, more units to rent means more money, right? Well, that depends on your long-term goals. Here are 4 reasons consider investing in an MFR.

Property Cost

While it’s true that the overall cost of an MFR will outstrip an SFR every time, the per unit cost will be far less. Additionally, your cost to maintain that unit and even property manage that unit will be far less on a per unit basis. Let’s say you owned 2 SFRs and 1 MFR with 2 units. The MFR enjoys economies of scale for things like repairs and maintenance. If you need to replace the plumbing in the MFR, you can do one big job on both units, whereas with the SFRs, you’ll have two completely different plumbing jobs and that will mean higher cost. In addition, your state may require an onsite employee if the MFR is over a certain number of units.

Financing

The main difference you may not know about property financing is that even with best credit, banks will limit the number of mortgages you can hold—usually to 10. But, if you finance 10 MFRs with 5 units each, that’s 50 units you can call your own. And you can enjoy the cash flow of all those tenants.

Vacancy Expenses

This is a no-brainer. If your SFR remains empty, that means the cost for that unit is going to come right out of your pocket. On the flip side, if you have an MFR that’s only partially rented, you can offset some, if not all of the cost with the rent of the other units that are leased.

 Cash Flow

This has been mentioned before, but it’s worth bringing up separately; typically with MFRs, you’ll generate a positive cash flow quicker, especially with new units. That said, as MFRs age, and they typically don’t age as well, more of that initial cash flow will be eaten up by maintenance and upkeep costs, so be sure to keep that in mind as you consider where to invest your resources.

Why Invest in a Single-Family Residence...5 Things to Consider

So with all of the above reasons, why would someone consider investing in an SFR instead of an MFR. Again it depends on your long-term goal. If you’re looking to invest in a property and see a greater return on your investment in the long-run, SFRs might be the best option.  Here are 5 reasons to consider a SFR.

Location

Typically, an SFR is located in a nicer locale than an MFR. Consider a quiet neighborhood and its typical location compared to where apartments are located. Good property locations can make a unit easier to rent.  After all, location, location, location still matters in real estate.

Tenant Quality

Most property management companies will tell you that tenants in SFRs are usually more conscientious about their property than tenants in an MFR. That’s usually because they’re looking for a home rather than just a place to live. Tenants that choose a SFR can have more long term residential goals.

Tenant Turnover

Phoenix property management team RPMWV Phx says that tenant turnover is the single largest cost for real estate investors. That’s why SFRs are often a better play. Longer renting tenants means you won’t have to constantly advertise, show, and re-lease your property.

Appreciation

The Phoenix area is a booming housing market and for Phoenix property management, there is ample opportunity to get a good return on your investment. SFRs usually go up in value over time and so the opportunity to make money just by owning a property can be significant.

Exit Strategy

Here is where we talk about long term goals. With an SFR, you should have a goal to sell the house and pocket the investment once the property is paid off or go for a 1031 exchange. If you handle it correctly, you can have a big payday at the end of your investment which can fund a retirement or other investments.

So, which is right for you? That depends on your personal goals and situation. Rental property investing requires time and patience, and with a really good partner like RPMWV Phx you can be successful.

RPMWV Phx offers tenant & full service property management throughout the Phoenix metro area.  Call today for information on local specials. 623-748-7800

Are You Renting to A “Hoarder”? 5 Strategies to Handle the Issue

Because hoarding is recognized as a disability, your first reaction should not be to evict the tenant. Whether you handle the situation on your own or with the help of a professional Phoenix property manager, here are the top strategies to employ when dealing with a hoarder:

• Know the difference between a hoarder and a bad housekeeper. While some tenants may not clean up after themselves and have a mess, a hoarder oftentimes has piles of what may appear to you as junk, but is significant in some way to them. People who hoard things will typically leave little walking room in their space with things piled high up the walls. You will probably need to get an official evaluation.
• Make a house call. Whether you do this step on your own or delegate it to your Phoenix property manager, someone needs to visit the home for a first hand report and determine the implications of the habit. Documentation should be made especially if the hoarding is causing direct damage to the property, blocking emergency exits, or interfering with sprinkler systems or ventilation. A non-economic breach may be happening if the tenant is hoarding materials that are hazardous, or are perishable goods that can attract rodents and/or mold, or housing animals in a way that breaks the law or lease agreement. If extra documentation is needed, a city official may need to assess the home to confirm violations.
• Conduct a tenant strategy session. After determining that hoarding is happening at the property, it’s time to have a talk with the tenant. Since this is a delicate situation, you need to be respectful at all times and discuss a strategy for bringing things back up to code. Give the tenant a reasonable time frame to remedy the problem and create a notice in writing to be signed by both parties.
•  Enforce the lease agreement. If, after the allotted amount of time, the problems have not been fixed, eviction can be considered. If the hoarding habits are damaging the property or violating local codes, it is in effect breaking the lease and is grounds for eviction. Your Phoenix property manager will be able to assist you in this if necessary.
• Be proactive in conducting regular inspections. Even if the tenant was able to comply with the changes, protect yourself and your property by ensuring the tenant does not revert to old habits and conduct regular inspections of the property.

RPMWV Phx offers full service property management throughout the metro Phoenix area.  Contact us today for your free 3 months of management fees!!!!  602-281-2884

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Insurance for your Phoenix Rental Property: Top 3 Areas to Consider

Being Phoenix property managers, we always have Phoenix property owners asking us about the best option for property insurance for a rental property.  Of course when you live in the home, you have owner occupied insurance which often times gets paid by your mortgage company as part of your escrow fees.  But once you decide to rent the property out what insurance changes do you need to make?  Here are the top 3 things to consider:

1. Contact your insurance company to confirm they offer non-owner occupied policies because some of the very large discount carriers such as Geiko and Travelers may not offer the coverage in your area.

2. Ask your agent how long you have with your owner occupied policy to place a tenant - most companies only give you thirty days.  This means that if you vacate the home and in thirty days you haven't placed a tenant and your AC gets stolen your insurance company won't cover the claim.  Although vacant insurance coverage is pricier than owner or non-owner occupied it may be a good short term option to insure that your property is properly covered when vacant.  Then, when you find a tenant you can change the coverage to non-owner occupied (keep this in mind in between tenants as well).

3. Consider adding an umbrella policy to your other insurance plans.  Carefully review the total value of all of your assets and keep in mind that if you face a lawsuit with your rental, you can be sued on a personal level meaning that all of your assets may be compromised. However, an umbrella policy can offer you coverage beyong what your homeowner's offers. For example, if you have a $500K limit on your homeowner's and someone sues you for $1M, the difference of $500K can be levied against you personally whereas if you have a $1M umbrella policy your total possible insurance coverage is $1.5M.  Depending on your total net worth an umbrella policy might be a must have.

In conclusion, be sure that you have a good insurance agent who can provide you estimates for all options and discuss what plan is bet for your financial situation.


RPMWV Phx offer full service property management to property owners within the Phoenix Metro area.  Preparation for rental such as proper insurance coverage is all part of our full services.  Contact us today for your first 3 months for  FREE!!! 602-281-2884

DIY Property Management in Phoenix, AZ Creating Headaches for Local Neighborhoods

Investing in real estate over the last 50 years has usually been a safe bet. While it has had its ups and downs, for most investors, Phoenix, AZ real estate is something that can be counted on.

However, with the rise of more investors comes a similar set of do it yourself ("DIY") property owners. The downside of these DIY property owners is that they often don’t have the time or the resources to properly manage a rental property. That results in tenants who are poorly screened, inconsistent maintenance being performed on the property, and a host of other issues. The result is then problems to home values in the neighborhoods of the unit.

“The opportunity for real estate investment in the Phoenix market remains strong,” says Mark Joseph, Phoenix Realtor. “The problem that we’re facing now in real estate and Phoenix property investment is so many DIY property owners who don’t realize that by not hiring a good property management company, they’re sentencing their property to an early breakdown. It’s time that we educate these DIY property owners on the true value of having a property management company.”

Whether you need full or partial service to help with the managing, the idea is to find the company that will be the best partner for your investing needs.

“Most long term investors in real estate say you can’t realize a good return on your property without a good property management team,” Mark Joseph “They’re not just invaluable, they are necessary for a successful investment.”

As the market continues to provide a seemingly endless supply of renters, the trick will be to find the right kind of Phoenix property management firm to partner with.

About Real Property Management WV Phoenix

Real Property Management assists Phoenix property owners in finding the right rental properties, setting rent rates, advertising the property, screening tenant applications, leasing the property, maintaining and inspecting the property, and even assisting through the eviction process when necessary. The company is a full-service Phoenix property management company and has nearly 30 years of industry experience. For more information on how you can benefit from their services, visit www.rpmwvphx.com.

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Phoenix Property Management Contracts

Back before Phoenix property management companies were so prevalent, almost every property management contract had a clause for earlier termination and with it usually came a penalty fee.  The penalty fee was in place because companies didn't want to do all of the hard work to place a tenant just to have the owner cancel right after the tenant moved in. Additionally, some companies viewed the  penalty fee as revenue to the management company.  Over the past few years however, Phoenix property management has grown exponentially.  As a result, companies are fighting for business by offering what appear to be very low monthly costs and property management contracts that can be terminated at any time with "no penalty".  As the consumer however you need to keep in mind that property management isn't a non-profit industry and therefore the property management companies need to recoup the fees that they used to gain from the early termination of contracts. As a result, the companies without early termination fees you will notice have far greater marketing and leasing fees - this way they gain the revenue up front so they don't care if terminate services and therefore have no incentive to keep your business.  

We will look at the following example referring to the first property management company Phoenix property management and they don't have an early termination fee and the second company we will refer to as Peoria property management with an early termination fee (both companies are actual property management companies in the Phoenix metro area but we are not using their real company name). Phoenix property management charges $199 marketing fee, $499 leasing fee and a $75 monthly fee.  Peoria property management charges $0.00 marketing fee, $398 tenant placement fee and a $78 monthly fee.  For the purpose of this example we will assume that you as the client stays with each company for six months.  Your total cost with Phoenix property management is $1148.00 and you "save" the early termination fee.  Your total cost with Peoria property management including the early termination fee is $1100.00 so you saved $48.00 WITH the early termination fee.  Now let's say you still with each company for 12 months so you then you do not have an early termination fee with either company.  In this example your total cost with Phoenix property management is $1598 versus a total cost of $1334 with Peoria property management which equates to a total savings of $264.00 bu choosing Peoria property management.

In conclusion, be sure when shopping for a property management company that you review the contracts for the companies you are considering.  Also be sure to take pencil, paper & calculator when looking at total costs to be sure that a company marketing technique doesn't cloud your financial decision.

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Is a Pet Friendly Rental Property Still a Good Investment?

Is a Pet Friendly Rental Property Still a Good Investment?

Often landlords feel that their Phoenix rental property values will lower if pets are allowed in the units. They also worry that increased maintenance from animal-caused damage will hurt cash flow. Studies have shown that with fewer property vacancy days, added premium pet deposits and minimum actual damage to property, having a pet friendly rental property can in reality increase your investment’s cash flow. Allowing pets will make the rental property more attractive to potential tenants.

Pet Friendly Rental Property has Decreased Vacancy Days

Some studies show that 62% of Americans are pet owners. Pets are seen as valued members of the family. These feelings towards the family pet can actually influence a family’s choice of where to live. Right away you can see that a pet-friendly lease option influences a faster renting time and decreased vacancy days. Once tenants know they are in a comfortable pet friendly home, they will more likely want to stay for a while, further decreasing vacancy days which increases steady cash flow.

Pets Don’t Cause Greater Damage Risk

A major concern for an investment property owner is animal related damage and the cost of those repairs. Studies show that the actual damage caused to property from pets isn’t much higher than normal damages caused by non-pet owning tenants, especially those with children. Pet deposits and fees can more than cover pet related damages, so a property owner’s financial risks for allowing pets are generally low.

Customize your Policies

If you are still concerned about increased costs from potential damage and increased insurance when you have a pet friendly rental property, discuss your concerns with RPMWV Phx. We can assist you in customizing a pet policy and pet agreements for your leasing situation. Real Property Management WV Phoenix is the Phoenix property management company that can take care of all your rental property needs and provide an environment that makes you, as a property owner, comfortable and makes your tenants feel at home.

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