December 2014 Phoenix Rental Statistics

Each month ARMLS (Arizona Regional Multiple Listing Service, Inc.) compiles Phoenix rental market statistics based on Phoenix rental home listings through the MLS (multiple listing services).  Unfortunately it is not even close to a full number for the Phoenix housing market because it doesn't include all leasing activities done through other sources such as online advertising, signage and people leasing to friends/acquaintances.  In December 2014, 2,577 homes leased as compared to 2,911 in December 2013. Also, the median lease price of the Phoenix rental market properties was $1175 as compared to the average lease price of $1316.  The average days on the Phoenix rental market were 36 days.  For the entire year of 2014, February was the biggest month for Phoenix rental properties with over 3600 homes renting through MLS.  

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The Final Chapter of the Rental Cycle

This will be the final post in our tenant rental cycle series. The first post was on October 20, 2014 and gave you an overview of the process. The next 12 (including this one) give details on each significant step along the way. If you can implement the ideas presented in this series, you will be on your way to becoming a successful property manager.

The last thing that needs to be done occurs after the tenant moves out. You will need to compare the tenant move-in inspection with the tenant move-out inspection and determine what to do with the refundable part of the security deposit.

You need to determine what work needs to be done and who is responsible. If your move-in/move-out inspections are good, this step will be easier. 

Keep in mind, the two most common issues that need to be addressed involve the walls and the floors. With the walls, a room at the average rental property should last up to three years with a good coat of semi-gloss pant.  With carpet, a good rule of thumb is that carpet should last 5 years at a rental property.

After you determine what work needs to be done and who is responsible, you need to figure out how much this work will cost. Then, you will need to send out a disposition of deposit to the tenants within 14 business days (in Arizona). 

This disposition document will explain how much the tenant will get back from the deposit and how much you will be applying to work needed to repair damage and get the property rent ready that you determined was tenant responsibility.

Make sure you get receipts from all contractors that do the turnover work at your property. If you have these and good inspections, you will be prepared should the tenant dispute their disposition assessments and decide to challenge you in court.

9 Key Steps For A Successful Tenant Move Out

There will come a time when your tenants will move out and you will have to start the rental cycle all over again. We have a great deal experience in the move out procedure and have defined nine key steps you can use to conduct successful move out.

Step 1 – Make sure there is a 30 day written notice to vacate in the lease.

Step 2-  Send the tenant detailed instructions regarding the move out around the 15th of the month.

Step 3- Contact the utility companies to turn on services the day after the move out.

Step 4- Call tenant an hour before the move out to confirm important details regarding the move out.

Step 5- Make sure you bring a move out inspection form, your camera and for rent signs to the move out.

Step 6- Collect keys and remotes from tenant and advise the tenant to wait outside. This will allow you to focus with no distractions.

Step 7- Complete move out inspection using your detailed form and descriptive photos.

Step 8- Review the facts of move out and advise tenants of disposition process. Have tenants sign the move out form.

Step 9- Compare move out vs. move in to determine deposit disbursement.

Our move out video goes into more detail about each of the steps. This video and all of our videos are great resources to use to when setting up and executing your move outs and property rental plans.

3 Ways To Keep A Good Tenant

Over the last couple of months, we have gone over various components of a typical tenant rental cycle. Perhaps the most important part of the rental cycle is extending a good tenants occupancy for another 12 months.

There are several ways to increase the chances of extending the lease of a good tenant. The main thing to remember is to maintain an attractive price.

 The chances of retaining your current tenant is much greater if the price the current tenants are paying does not increase. Over the years, we have seen minor increases in rent (even as low as $50) chase tenants out.

At renewal time, remember the old adage of a bird in the hand being worth two in the bush. Keep in mind that losing a good tenant will mean lost rent during the vacancy time and turnover costs . Also, you are never guaranteed that the next tenant will be as good as the current one regardless of how many steps you take to qualify them.

If your current tenant is on the fence about whether to stay or go, you can offer an incentive for the first month. Usually, a $200 deduction off the first month's rent for a 12 month renewal will help to persuade the current tenant to stay.

Another option that will benefit both you and the tenant would be to offer a property upgrade such as professional carpet cleaning.  Doing something like this will not only help maintain the property, but will also show the tenant that you value their tenancy and care about the condition of your rental.

The Importance of Regular and Organized Property Inspections

The implementation of a regular inspection process during the tenancy is an item that many landlords overlook. However, this is an important part of the tenant cycle.

We conduct thorough and standard property inspections at our managed rentals throughout each tenants rent cycle. 

Doing this helps us a great deal in the overall management process of a property. Here are a couple of reasons the inspection is valuable and a few things you can do to have a successful inspection process.

A regular, in-tenancy property inspection is key for two reasons:

1) It keeps you fully informed of the property condition so you can anticipate needed repairs.
2) It shows the tenants that they will be held accountable for the properties condition during their tenancy.

There are many ways to handle the property inspection. We suggest you have a full inspection three times per year. It is best to conduct the in tenancy inspection the same way you would handle the move in.

By full inspection, we mean a detailed, logical, formal and consistent procedure. It is important that you establish a set time with the tenant and make sure that they know that you will be taking photos. Then, you basically handle the in-tenancy inspection the same way you would handle the move-in inspection.

For help regarding how to conduct the in-tenancy inspection, you can read our Move in Inspection  tips or check out the RPM YouTube Move In Video.

The Reward Time Of The Tenant Cycle

Over the last couple of months, we have covered several elements of the tenant cycle. We have reviewed tenant qualification, the lease signing, move-ins and the first month. At this point, you have done a great deal of work.

OK, so  the next part of the tenant cycle is the accept the rent check and smile part. Right?? Well, not exactly. While this is time the in the tenancy that should be easiest, there are a couple of steps we recommend you take.

The first step is to conduct regular inspections. We recommend having an inspection three times during a 12 month tenancy. We suggest taking pictures and completing a checklist to detail any issues you may see.

The main thing the property inspection does is give you a clear view of how the tenants are treating your property. With this information, you can anticipate repairs that will be needed, take action to fix a problem, or you can decide if you want to extend a lease renewal to the tenants when the time comes.

The regular inspection also sets up a form of accountability for the tenants. It is important that they know that you will be evaluating their performance as a tenant as much as you expect to be evaluated by them.

The next suggestion we will give you is to respond to your tenants requests and concerns in a timely manner. The goal is to keep a good tenant in your property as long as you can.  

If your tenant calls you because something is broken, attempt to have your vendor contact them within 24 hrs. If you are responsible for landscaping or pool services, make sure your guys are showing up and doing a good job.

If you implement the above suggestions and you have done a good job with the previous steps of the tenant cycle, this time should be smooth sailing.

Rent Collection Advice: Part 2

Last week, we went over some important aspects of rent collection.Today, we will go over three common situations we see regarding late paying tenants. We will also give you some strategies that you can take when faced with these situations.

Situation #1 - The tenant constantly pays late and won't change their behavior.

We mainly see this happen when we acquire a property and the owner's existing lease has low late penalties.

We have actually had tenants tell us that a $50 late fee is no big deal and they continue to pay late every month until they are required to sign a new lease.

The simple solution to avoid this problem is to set stiff late fees in the lease. We suggest 5% of the rent after it is deemed late and $20 per day each day after that. This step will eliminate most chronic late rent payers. Those that still miss the on time window because they are disorganized or can't remember will pay you a hefty late fee.

Situation #2 - A continually late paying tenant has not paid the current month's rent. This is the situation that is usually the worst for the owner. 

The solution here is as follows: make sure you communicate with these tenants immediately. If they don't answer at home or on the cell, call their work, references and stay on it. You can also call from a blocked number or your friends number so they will not dodge you.

The goal is to assess the situation and determine whether they have the funds or not. Interestingly, we have found that if the tenants do have the funds they will engage with us in with angry demeanor and give us a date when they will be in to pay.

If you determine that the tenants do not have the funds and have no chance of getting them, the goal is to get them out of the house as quickly as possible. We find that when the tenants fully understand the negative implications that an eviction will have on them, they will be cooperative about just turning the keys in and moving their stuff out.

As a landlord, if you can avoid going to eviction, you will save yourself a good deal of money, lessen your aggravation, and get your property back into the rental market sooner.

We have actually found that if the above situation is handled correctly, some tenants can be very agreeable. We have had tenants move out fast and when they got back on their feet, paid back the rent the landlord lost while the property was vacant.

Situation #3 - A routinely prompt paying tenant suddenly does not pay the rent.

Again, the key here is to talk with these tenants immediately. We have found that this situation is not as bad as situation #2. This situation usually happens because of a sudden job loss or other unusual financial issue.

In the past, we have had success with tenants in these situations by explaining ways they can get the money until they can find work again. We make suggestions to the tenants like taking a cash loan with their car as collateral or getting city assistance or asking for help from their family.   

In summary, when a tenant pays late, the main thing is to reach out quickly. When you make contact, get to the root of the problem and come up with a resolution that minimizes negative consequences for both parties.