Phoenix Area Real Estate Blog » Rentals

Phoenix rental market roars back to life

Steve Belt — Thu, 05 Mar 2009 00:55:00 +0000

In early January, I touched on the state of the Phoenix rental market, noting that the market had softened substantially beginning in November of 2008. During the final 2 months of 2008, I didn’t lease a single home, and as 2009 started I was still seeing no evidence that a turn around was on the horizon for the Phoenix rental market.

Fast forward 7 weeks to today, and the trend is certain: rental demand is back. I’m not quite ready to say it’s as strong as it was in the summer of 2008, when everything I put on the market seemed to rent in a week, but it’s certainly healthy once again. Personally, I don’t have a property vacancy that has been longer than 2 weeks, and I have only 2 vacancies. Requests for significant price reductions by tenant prospects have all but stopped, while at the same time, the quality of tenant prospects I am finding has once again improved.

Interestingly, I had the opportunity yesterday to talk to Alison of Key Management, a colleague I’ve had the pleasure of working with recently. After we finished talking about lock boxes, keys, and gate codes, I asked her what business was like for Key in late 2008. Key manages ~750 homes, so I figured with their size they would have great data to either confirm or deny my own experience. Alison echoed my results almost exactly, saying it was the worst she had seen in years.

Alison noted just what I felt was true, that around January 15, 2009, the rental market started to pick back up, and has continued to steadily pick up through February. Whatever kept tenants away in late 2008 has gone away, and while I don’t want to say business is booming, it at least looks normal again.

Phoenix rental market softens

Steve Belt — Thu, 08 Jan 2009 00:03:26 +0000

More recently, I’ve been steadily growing the number of properties I manage for clients as their property manager in Phoenix and Scottsdale. Throughout 2008, I averaged about one new managed home a week. And over the years, I’ve nearly always rented a vacant home within 6 weeks of taking the listing. In fact, until recently 6 weeks is all I have ever asked for, because my marketing methods were rock solid, which, combined with the right price, and a property in move-in ready condition, was nearly a guarantee I would successfully get the property rented in under 6 weeks.

All of my success changed suddenly some time this fall. I can’t pin a date specifically, but we’ll call it November 1. Since then, the rental market has softened substantially. I’ve actually evicted the first 2 tenants of my 5 year management career and a third is looming eminently. As well, in December, I had 4 more tenants move out without notice, or very short notice, creating unexpected vacancy.

Compounding that, finding tenants is substantially harder than just a few short months ago. I’ve shown this rental home in Scottsdale to more than 10 tenant prospects. Prior to this fall, if I showed a home to 3 prospects, that was a lot. The quality of the pictures, along with having the correct price, often rented the home for me before I arrived to open the door. Prospects were “sold” via the marketing, and were viewing the home to confirm a decision they had already made. Now prospects are looking at many homes, not settling for the first thing they see, and then negotiating the rental price/terms. The nerve of these tenant prospects….negotiating the rental price?

For the part of the valley that I serve (Scottsdale and central/north Phoenix), perhaps I’m a victim of small numbers (I don’t manage hundreds of properties) and/or some bad luck/coincidence, but I don’t think so. The majority of other property managers I’m talking to right now are giving me similar stories (for homes with rental rates below $1500/month). And clearly MLS stats don’t lie, which show me a recent decline in asking/sold rental rates.

For now, I’m not changing anything. I’m still marketing aggressively, still showing homes to anyone that calls and wants a look, and hopefully this trend will reverse itself with the new year. However, until I can get a few more homes rented, I’ve declined taking on new property management clients unless they are via referral. I don’t like to have more than 10 rental vacancies at once, and that’s where I am right now.

The Residences at City North

Steve Belt — Mon, 15 Dec 2008 22:04:18 +0000

I had a light lunch at Desert Ridge today (salmon salad…I’m on a mission to be the Biggest Loser!), and subsequently took the opportunity to swing by City North and check on the status of the luxury rentals they have at the Residences. Stacia Fox greeted me and then gave me a wonderful tour of what they have available with regard to rental units.

The second floor is currently available, with move-in nearly immediately, while the fourth floor won’t be ready until mid-January (still pretty soon). After discounts, prices on the second floor start as low as $1175 for a one bedroom, $1880 for a two bedroom, and $3125 for the large two bedroom plus den. Quoted rates are actually higher, but the first two months are free! There are actually 3 different one bedroom options and 4 different two bedroom options, so there’s decent variety to choose from.

Each unit will have granite countertops in the kitchen, quality cabinets, GE Profile stainless steel appliances, including fridge, washer, dryer, a mix of Italian tile flooring with Berber carpets, 10 foot ceilings, and 8 foot doorways. We toured the model for the E model, which was fully furnished and looked great.

Along with price and number of bedrooms, you probably want to know what else you get. Here are some of the perks:

One parking spot per bedroom leased. They are considering leasing additional spots for those in need.
Salt water swimming pool and spa.
There is a concierge. Unfortunately, the extent of the services weren’t available today, as that department was on vacation.
Homes range in size from 753 square feet to 1805 square feet.
A storage area for each unit is provided, which was approximately the same size as the laundry room, and certainly large enough to store a bicycle.
Residents get a discount from the stores/restaurants at City North. Details are available from the concierge.

Two small pets are allowed (dogs/cats), as long as they are less than 25 lbs. The association is paying for water/sewer/trash/gas for a flat monthly fee of either $65/mo for the one bedrooms or $90/mo for the two bedrooms for those utilities. Deposits are extremely reasonable at $700 combined ($200 of which is non-refundable) along with a $45 application fee.

Clearly City North is being aggressive with their pricing. If you are in the market for a new luxury rental in North Phoenix, call or email me. I’ll be happy to show you around.

Can you rent a home via Facebook?

Steve Belt — Wed, 25 Jun 2008 00:34:18 +0000

Today I had a listing appointment with my newest clients. They are a referral from a recent client (their former neighbor). The young couple is quite internet savvy and mentioned to me they had attempted to rent their home on their own via craigslist and facebook. The former I expected, but the latter surprised me. I had yet to hear of anyone attempt to sell anything (other than perhaps a service) via facebook.

They told me they had successfully sold some furniture via facebook, but there wasn’t much response to the rental listing on facebook. Now, I’m attempting to be as hip and internet savvy as anyone in Phoenix, with regard to the use of social media sites to market a home, so I’m asking all of my real estate colleagues, have any of you used facebook to market a home for sale or lease? If so, have you had any level of success? To be honest, even just a showing would be a good measure of success, whether the showing resulted in a closed deal or not.

I’ve said before, 60% of my inquiries regarding homes for rent come from my craigslist ads, and 90% of the time, the tenant that gets placed in a home, first found me via craigslist. Those are compelling statistics to be sure, but am I missing an opportunity with facebook? No matter what, I’ll be using facebook for their listing, as well as the next few listings. And this isn’t to appease them, they feel it was a waste, after all, but rather I would like to know personally how effective facebook can be. I’m looking forward to giving this new marketing approach a serious trial.

Water Softener Fails in Scottsdale Rental Home

Steve Belt — Mon, 19 May 2008 23:09:00 +0000

Last week a tenant called saying he had no water in the home. The city of Scottsdale had come out and verified there was water being delivered to the home and that there were no current delivery problems. The hose bib where city service enters the home was flowing water as usual, but no other faucet, toilet, etc., had water.

This home had a water softener, so I immediately assumed there was some type of blockage in the softener. I advised him to attempt to bypass the softener, which he did. That didn’t change anything. Lack of water is an emergency situation, even more so than lack of AC, so I called up my after hours plumber (it was 6pm), and headed over myself to meet the plumber and see what the problems was.

The plumber and I arrived within 2 minutes of each other. He too suspected the water softener, and suggested the cheapest and easiest solution would be to cut out the old water softener, and close up the loop, eliminating the blockage that seemed to be coming from the softener. The next day I could discuss with the landlord whether he’d like to put in a new softener. So the plumber cut it out and left this in place of the water softener.

We then re-checked the water supply in the home, but there was still no water. UGH. I was really hoping that we hadn’t just cut out a perfectly fine water softener, for no reason. That’s when we noticed resin was coming from the improperly terminated drain line for the softener. The green tube sticking up here is the same green tube going through the hole in the wall. This was found in the rocks beside the home, just 10 feet from the water softener location. That yellow stuff is resin, a somewhat sand-like substance that’s actually a synthetic. It’s not supposed to ever get out of the softener, as it’s used to attract the impurities a softener is designed to eliminate from the water. Apparently this particular softener had failed catastrophically.

Once the plumber saw the resin in the drain line, he knew it would also be in the pipes throughout the home. A quick inspection of some of the faucets in the house found this resin gumming up the faucets, preventing the flow of water. Considering the scope of the problem, my mind started racing, as I considered just how long the tenant might be without water.

Then the plumber had a very good, money saving idea. He suggested turning on the water at the far back hose spigot for the home. So we did. Initially, it didn’t seem like anything was coming out. But after a couple of minutes, a drip was developing, and we could clearly see resin was accumulating under the spigot. After 5 minutes, I snapped this photo. That was at about 8pm.

We watched this steady stream of resin come out of the hose bib for a good 15 minutes, when it finally “cleared” and water began flowing normally. At least one gallon of resin was sitting on the ground under this hose bib when it finally cleared. Putting my hand in the water, there was still a bunch of resin in the water, but we knew that the line would eventually flow clear and normal.

At this point, the plumber left, as this was too large a job to complete this late at night. I contacted my normal handyman, who came out the next morning and finished the job (at a 50% discount to what my emergency plumber quoted me). The fix was primarily a matter of going to each faucet/water supply and opening them up and letting them slowly clear. Bathtubs were the easiest to fix, toilets were the most difficult. All of the toilet floats needed to be replaced, and a couple of other fixtures were also replaced.

In the end, it took my handyman 10 hrs to get the whole house cleared of the resin from the failed water softener. Fortunately, the tenant was without water for less than 24 hrs, and was extremely supportive considering the impact.

As we were assessing the situation, the plumber told me that he had seen 40-50 of these failed water softeners. He added, that the ones that seem to fail are the “inexpensive” $400-$500 softeners. The softeners his company sells cost ~$1400, but come with a lifetime warranty against this problem. Should it ever fail in this way, they would stand behind any downstream impacts.

The softener that failed was a Kenmore brand. The landlord contacted Kenmore and they told him the failure was rare. They didn’t offer to pick any of the expenses he incurred from this rare failure, however. My advice from now on, to anyone considering the purchase of a water softener, is to investigate the warranty of the softener. Saving a few hundred dollars today, could cost you much, much more in the future. This particular Kenmore unit was just over 5 years old.

Using craigslist to Advertise Homes for Rent in Phoenix

Steve Belt — Tue, 29 Apr 2008 19:07:46 +0000

It wasn’t very long ago, when the best way to find a tenant for a rental home was to place a sign in the yard, and an ad in the newspaper. It wasn’t a great way to find a tenant, it was simply the best way. Using MLS has always been marginally effective, primarily because the compensation offered via co-brokerage makes it barely worth the cost of gas to the agent to tour around 5 or 10 rental homes. That’s a sad statement, but if the financials aren’t driving your business, what does?

A few years ago, craigslist burst onto the scene. I remember the first time I heard about craigslist. I had just sold a client a new home in North Phoenix, and she was hoping to find a roommate. She mentioned craigslist to me as something that folks in California were using.

Fast forward to today and my own marketing plan for managing homes for rent. Without a doubt, craigslist is the #1 most effective tool for me in finding a tenant to rent a home. My statistics in that regard tell me that 60% of all inquiries about a home for rent come from someone seeing my ads on craigslist, but over 90% of all tenants I have placed, were the direct result of craigslist. Let me repeat that: 90% of all tenants I have placed, found out about the home on craigslist.

Other than craigslist, I have co-broked a rental listing via MLS 1 time. That could have been avoided, but the terms of the co-broked tenant were too good to pass up. I have rented a home via the sign in the yard a couple of times. Every other time, the source of the successful lead was from craigslist.

Why does craigslist work?

I believe it works, because that’s where the majority of the inventory for rental homes in the greater Phoenix area is located. If you are looking for a rental home, you’ll find a very high percentage of all of the rental inventory in craigslist. People searching for a home for rent are going to search at the one place where they think they can find most, if not all, of the inventory. And inventory is king. Like content for a web site, inventory is paramount to a home listing source. The majority of the rental searching public has learned they can find homes on craigslist, so they search there.

To enhance my rental listings from the majority on craigslist, I use PostLets.com to create a virtual flyer, which I use as the ad on craigslist. That virtual flyer gets syndicated to other listing sites, like Google Base, HotPads, Trulia, etc., but I rarely get a response from those sites. On the rare occasions I do get a response, the home was rented long ago. The virtual flyer I make looks something like this when seen on craigslist:

While the typical “good” craigslist ad looks like this:

Which ad catches your eye better? Which do you think will get better results? There are a few people that will be put off by the commercialism of my ads, but overall, my response rate is too compelling for me to consider changing.

WordPress Statistics

The other thing I do in my craigslist ads, to gauge their effectiveness, is provide a link to my blog similar to:

Each time someone clicks I learn two things. 1) the person was interested enough by the craigslist ad, they wanted more info. 2) today, we had XYZ interested people.

Thanks to WordPress stats, I know exactly how many people click through to the blog:

If I’m not getting click throughs, the likely answer is the home is priced too high for the area, and thus there isn’t much interest in the home. Rental prices are extremely narrow in the precision with which we need to price them. It can be the case that being too high by $25/month can cause a rental listing to languish.

Craigslist just plain works in Phoenix. It may not work in every part of the US, but at least here, it’s hyper effective. I won’t go so far as to stop using a sign or stop using MLS, but for the foreseeable future, I’ll continue to use craigslist with each and every rental listing.

From PropertyQube: Is a 30-day notice needed at the conclusion of my lease?

Steve Belt — Wed, 27 Feb 2008 20:00:44 +0000

A user on PropertyQube asked a great question recently about what needs to happen near the conclusion of a lease. The question asked:

I gave notice on 2/5/08, that I would be moving out at the conclusion of my lease, set to end on 2/24/08. My landlord told me that a 30-day notice is required, and that I’ll need to pay through 3/5/08. Is that right?

Let me quote the recently revised Residential Lease Agreement for Arizona from AAR:

The lease shall begin on ____ and end on ____, at which time this Agreement shall automatically continue on a month-to-month basis, …, unless either party provides written notice to the other of their intention to terminate the Agreement. Notice to terminate the Agreement at the end of the original term shall be given on or prior to the last rental due date of the original term. Notice to terminate, if on a month-to-month basis, shall be given thirty days prior to the period rental date specified in the notice.

As you can see, for a typical lease is written today, which begins March 1, 2008 and runs through February 28, 2009, if the tenant has plans to vacate the property on February 28, 2009, the tenant is required, by the Agreement, to notify the landlord in writing of their intent to terminate the lease. Notice will need to be given no later than February 1 (assuming rent is due on the 1st of each month), which is a tad less than 30 days. If the tenant stays another year, on a month-to-month basis, then in 2010, to move out on February 28, the tenant will need to notify the landlord by January 29, 2010 to terminate the lease on February 28, 2010.

Landlord’s do vary their enforcement over the specifics within a lease (sometimes being more lenient). However, to protect yourself, if you are a tenant, it’s in your best interests to plan accordingly, and provide the written notice that is called for in the terms of the lease.

As a property manager, our calendar of events for every rental property includes a reminder to meet with the owner 45 days prior to the end of any lease, to discuss with the landlord what their plans are regarding the property. If they plan to sell, re-rent, renovate, etc., I know we need to give 30(ish) days notice to the tenant, so we make sure to have a touch point in time to accommodate accordingly

The Super Bowl comes to Phoenix (actually Glendale)

Steve Belt — Mon, 21 Jan 2008 17:32:23 +0000

Like a huge percentage of you, last night I watched the Patriots defeat the Charges, and then the Packers lose to the Giants. The first was expected. The second was a surprise (to me).

In a way, I feel cheated that the Packers aren’t going to the Super Bowl. The game itself is rarely that good, and so my theory is that the story leading up to the game may as well be interesting. And what could have been more interesting than if Favre, the ultimate gunslinger, was going up against the mighty Patriots.

To be honest, this match up probably gives us a better game, if week 17 of the regular season is any indication. But suffering through 2 weeks of hype, and not having Favre in the mix to make it more appealing is my only real complaint.

On the subject of real estate, we looked into house rentals for those considering last minute plans to come watch the game. I know a few of you, must be thinking, “hmmmm,” so to help you out, let me give you a rundown on what kind of prices you might be expecting:

For a multi-million dollar home that you want to rent, start in the 6 figure range for the week. Homes in North Scottsdale and Paradise Valley are commanding $100,000 for the week. That’s right, $100,000 for just one week. For $50,000 I saw a portfolio of 12 different homes that are available in North Scottsdale. These homes aren’t ultra-high end, but they are nice. Included with the home was either a Range Rover, Harley, or other premium car rental, along with super bowl tickets, concierge, daily maid service, and even FBR tickets. The homes also included an option for a completely catered super bowl party for up to 450 guests.

For $10,000 you can expect to rent a more “normal” home somewhere in the Valley. I have a client that let her home out for a mere $7,000 to the in-laws of a friend. They got quite the bargain. Imagine $7,000 being a bargain?
For tickets to the game itself, expect to pay $2000 to get in the door. Those won’t be great tickets, but they’ll be tickets. If you want great tickets, I know where to get them, but be prepared to crack open your wallet even further. If you don’t want to spend all of your money on the game itself, there is a large assortment of VIP parties going on. Playboy, Maxim, Pepsi, etc. are hosting extravagant VIP parties.

Oh, and don’t forget the FBR Open. General admission tickets are just $25/day. The Bird’s Nest is open nightly after the golf is over. Just be sure you have transportation set up in advance before you begin your partying.

I was fired yesterday

Steve Belt — Tue, 11 Dec 2007 22:10:31 +0000

Russell Shaw advertises on his radio ads that, “If you don’t like me, fire me.” I don’t advertise that same slogan, but I do believe in the philosophy. I know a listing contract is an agreement entered into by 2 consenting parties (seller and brokerage), and that for the contract to be terminated, it also needs 2 consenting parties. Thus the case that an owner cannot (typically) unilaterally cancel a listing agreement. That said, if an owner does desire to end a listing with me, I’m not going to put up a fight. I’ll learn what I can from the experience and move on. It’s happened before, and much as I hate to admit it, it will probably happen again.

Yesterday, as I was confirming a showing with a prospective tenant (to see my listing, as well as others in the area), I was informed that my services would not be needed. This was extra disappointing, because this was the first time a tenant prospect (we’ll call her Jill) had ever informed me (on her original phone call), that she was shopping for a REALTOR as much as she was gathering information about my listing. At the conclusion of this initial phone call (aka interview), I asked how I had done, and Jill answered favorably.

We spoke a couple of more times leading up to yesterday, and as far as a relationship built over the phone can go, I was optimistic a long term relationship was being developed. Yesterday morning I called around 9am to confirm what was supposed to be today’s 2pm appointment. The call lasted barely 5 seconds, as I was quickly dismissed. Ugh, I thought, that didn’t go well. Not knowing what line of work Jill was in, I decided I must have bothered her at work. 5pm rolls around, and Jill calls me back. This is when I get the bad news. Jill’s mom knows a friend, who knows someone with a house, and they’ll be renting that house. Apparently it’s too good a deal to pass up.

At this point, feeling a little depressed, but also still wondering about the nature of the phone call that morning, I ask Jill where she works. She replies with the name of a Gentleman’s club (I’ve never been in this club, but I did recognize the name). I won’t go into the details of which club, but I have to admit that I was speechless for a second or two. I don’t know why the knowledge of her profession (she described herself as a dancer, although I’m pretty sure it differs from the dancing that Kelley Koehler does) caused me to pause, but I have to admit that it did.

Long story short, or short story longer (not sure which here), I can’t help but feel an extra bit of disappointment with regard to this particular prospect. In my business I meet a lot of people from all walks of life, but for obvious reasons, this one intrigues me a tad more. I suppose the opportunity to learn a little more about the person versus the persona sums it up best. Although, feeling comfortable enough to pry into Jill’s personal life seems quite unlikely the more I think about it.

North Phoenix home for rent

Steve Belt — Fri, 07 Dec 2007 18:15:16 +0000

We’ve just listed for rent the home at 2330 West Gambit Trail in the North Phoenix community of Dynamite Mountain Ranch for only $1150/month. This single story, 3 bedroom, 2 bath home is near I-17 and Happy Valley Rd. It’s also close to a Harkins Theatre that’s scheduled to open soon in the Shops at Norterra shopping center, along with being near USAA, Lowes, Walmart, and perhaps best of all, Shane’s Rib Shack.