Phoenix Rental Market Heats Up!

Signs of a U.S. economic recovery are everywhere except the housing market.  New-home sales fell to their lowest level in five months according to data released last week, while home prices appear to be losing their momentum.  Also, higher mortgage rates and rapidly rising home prices have also kept buyers away.  These buyers are continuing to rent allowing the rental market to heat up and causing properties to rent in as fast as 24 hours and driving rental prices up. If your home is currently on the sales market you may want to consider renting instead for at least 12 - 24 months.

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Monitor your ads, Avoid online scams

As a Phoenix Property Manager we monitor all of our rental listing daily. As an owner you may not realize the importance of monitoring your property listing. We have found that online predators will clone rental listing in effort to scam unsuspecting potential tenants. The cloned adds will look just like the original ad however they change the contact information so that they are receiving call on your property instead of you. The bogus ad my offer a reduced cost or move-in incentives in order to entice tenants to contact them for a quick "hassle free" move. We have had tenants arrive in Phoenix and go to what they thought was there new rental, only to find our  "FOR RENT" sign at the home and realize that they had been scammed. It is unfortunate that this does occur in the Phoenix rental market so it is important to take the extra steps to secure your investment. Monitor all of your online rental ads and check on your property during the vacancy period. 

What is the Right Approach to providing Appliances for Your Phoenix Rental Property?

In the Phoenix rental market, providing appliances for your tenants is necessary and listing the house without will put your property at a competitive disadvantage.  As a Phoenix property owner, being responsible for the appliances is unfortunate because appliance repair and replacement is expensive and most tenants will not treat the appliances like they would if they owned them.  However, there are some strategies that can be utilized to help minimize the expenses involved with these items.

One of the things that you can do is make the tenant responsible for repair of the "optional" appliances such as fridge, washer and dryer.  If you opt for this than you must be sure that all are in good working order at move in.  Also, if you need to buy an appliance at one of your Phoenix rental properties, it is best that you buy a new one versus used however keep the new one simple and "frill free".  For example, when buying a microwave, don't buy one with a revolving plate as that is an "extra" that can break and is not needed for the overall functioning of heating food.  Another example, is buying a fridge without an automatic ice maker or a water dispenser on the door.  Again these are all examples of items that aren't needed to keep food refrigerated/frozen but can break at anytime.  Lastly, if you are short on funds for appliances remember that washer and dryers are more optional whereas a fridge is really a must have.

Phoenix Property Rent Statistics

ARMLS (Arizona Regional Multiple Listing Service, Inc), publishes monthly rental statistics for the Phoenix Rental Property Metro area based on all leasing activity through MLS (Multiple Listing Services).  For February 2014, closed rental units was 3625 so down slightly from 3690 for February 2013.  The median lease price was $1095 and the average days on market was 49.  Although the median lease price was the same as January 2014, the average days on market dropped slightly from 53 in January and should continue to remain strong through March and April when the Phoenix weather is often times at its' best.  Additionally, the median lease price dropped from $1237 in January to $1210 in February.  It is important to keep in mind that these numbers are actually higher since they do not include landlords who advertise in other mediums and do not use MLS.  

3 Biggest Mistakes You Can Make with Abandoned Rentals

It is now the 5th of the month and you are going through your rent collections for your Phoenix rental properties and notice one payment is missing.  "That's odd", you think to your self - this tenant is never late plus you just spoke to them two weeks ago about an HOA violation and it seemed as if they were going to bring the property into HOA compliance.

You wait another day to see if the rent comes in.  You receive nothing so you call and text but there is no answer so you try again and in day or two and now their phone is no longer in service.  So, you assume they are gone, go to the property and make mistake #1 - you enter the property without proper notice and change the locks.  If your tenant is still living there you have now opened yourself up to litigation.  Even if you think the tenant has abandoned you still must go through the proper procedures of posting notice and waiting the legal time frame before taking back possession.  

After you change the locks you walk through the property and see some of the tenant items still in the home so you decide to package them up and take them to the dumpster - after all they didn't pay rent so the least they can do is clean up after themselves.  Well, you've just committed mistake #2 & 3 - AFTER you get legal possession of the property back you must store the tenant items for the legal time frame and then sell all possessions and apply any monies to the tenant's outstanding balance.

Are you overpricing your Phoenix rental property?

This is a very simple concept that many owners miss - if the market rent is $1000 you are not magically going to rent it for $1200 AND the longer the property sits vacant over priced the less actual monthly rent will receive. In Phoenix, listing your rental property for a price at market or even a tad below market will increase the odds of getting the property rented quickly and the value of getting the home rented fast far exceeds getting a nominal amount over market rent.

Let's take a look at the following example of a similar rental home in Phoenix in which market rent is $1000. 

Mr. Myhouserocks is in love with his house.  He is convinced it is worth a rent of $1200 a month (even though the house across the street rents for $1000 and it is the same model) and as such lists it for $1200 on January 1.

On the other hand, Mr. Rentitiquick lists his vacant Phoenix rental at $975 on January 1 which is a bit below the $1000 market rent.

New tenants sign a lease for Mr. Rentitquick's house in January and move in February 1 with a first rent collection paid on that day.  Mr. Rentitquick's total rent collected for the 12 month lease is $11700 and his actual rent per month for the full 13 months is $900/month.

Now, back to Mr. Myhouserocks, January and February go by with very little interested in his home so finally March 1st he reluctantly lowers the price to $1100.00.  March goes by with still little interest and finally April 1st he lowers the price to $1050.  New tenant's sign a lease in April with a May 1st move in and Mr. Myhouserocks thinks he "won" because he is getting $50 over market rent.  His total rent collected for the 12 month lease is $12600 however his actual rent per month for the full 16 months is $787.50  which is more than $100 less than Mr. Rentitquick.  Also, Myhouserocks had to pay utility bills for three more months than Mr. Rentitiquick and by April Phoenix is starting to get hot!

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Phoenix Property Management - Partial Payments

Under Arizona law a landlord is not required to accept a short or partial rent payment. However, per A.R.S. &33-1371 "if the landlord does accept the lesser amount (than full rent), the landlord loses their right to seek eviction of the resident".  Keep in mind that this does include scheduled semi-monthly payment plans, where residents are regularly permitted to pay the rent on the 1st and the 15th without penalty. Acceptance of half the rent at the beginning of the month is an automatic bar to evicting the resident even if they do not make the second payment on the 15th.

The graver problem, however is when landlords hold onto payments from tenants to see if they can come up with the remainder of the funds.  Unfortunately even if you do not deposit the payment from the tenant, the Courts can and will rule that you have accepted it.  Acceptance can occur even without a specific action, because holding onto the money deprives the resident from its use.  When the resident is deprived of its use by the landlord, then the landlord functionally has accepted it.

You can preserve your rights to enforce the lease (and evict) if you enter into a partial-payment (or promise-to-pay) non-waiver agreement.  This specialized legal notice lists three crucial elements to preserve a landlord's rights: a) the short payment is identified and credited to the account; b) the remaining balance is scheduled for payment; and (c) a declaration is made that the landlord is not waiving the right to terminate the resident for paying less than the full amount due. Good agreements also include the language of the non-payment Five Day Notice (A.R.S. & 33-1368(B)) in order to avoid issuing a new notice if the scheduled payments are missed.

When it comes to rent collections it is often best to have a Phoenix Property Manager such as RPM West Valley Phoenix being the ones collecting.  With management services you don't have to worry about being "too nice" and giving the tenant extra time to pay often times forgetting that a tenant who pays late this month most likely won't have the funds to pay on time next month and the cycle will continue.