Interest Rates and Inflation: A Mystery

Jack Harty, with Harty Mortgage Advisors, here in the Boise area, shares more of his wit concerning the prediction of interest rates and inflation.  It's always a good, yet humorous read.  Enjoy!

 

Janet Yellen said at her 9-20-17 press conference that the failure of inflation, in a healthy job market, to rise to the Fed's target rate is a "mystery".  As a consequence, predicting interest rates is a mystery.  In contrast, predicting past rates is highly accurate.

Where's inflation?  Economists have been looking for it under all the usual rocks, to no avail.

Photo:  Economic researcher doing research

It seems that the early September dip in interest rates was a short term phenomenon.  

While it did not raise short-term interest rates, the Federal Reserve announced after its meeting on 9/20/17 that it was going to sell some of the bonds it acquired during its post-Crash "accommodation".  That just added momentum to the upward trend in bond yields that we've seen for the past couple of weeks.  See graph following.

10 Yr T Bond Yields - Past Six Months

We are back up to the rate level the prevailed for much of the spring and summer.  While initially saber-rattling towards North Korea caused investors to move into the safety of bonds, now even threatening to annihilate North Korea has not caused investors to seek haven in bonds.  

The Fed said they do anticipate raising rates in the future.  Current guessing is in December...but those are just guesses.  The tool show below is as reliable a predictor of interest rates as any other used by commentators.

However, some cognoscenti prefer to predict rates with the following tool:

(The fellow stroking the ball is a member of the Cognoscenti family

Employment trends have been good.  

August National Unemployment rate at 4.4% (U3 measure) is at low Pre-Crash level.  The more indicative Unemployment Rate of 8.6% per the U6 measure, is also at a Pre-Crash level.

Relevant Idaho August Unemployment rates are at historic lows:

                                            Ada County 2.3%

                                            City of Boise 2.3%

                                            Boise/Nampa MSA 2.6%

                                            State of Idaho 2.9%

National Labor Force Participation Rate is at an virtual 40 year low (see graph).  Is that affecting labor supply and pricing?

                                    Labor Force Participation Rate:  1975 - 2017

Jack Harty

HARTY MORTGAGE ADVISORS

121 N. 9th St. - Ste 402

Boise ID 83702

Direct:  208 514 4766

Main:   208 344 4141

Email:  jharty@harty.biz


Tony Drost, President, First Rate Property Management, Inc.

Tony Drost, Chairman
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Quarter 2 Vacancy Information

SW Idaho NARPM just released their 2nd quarter vacancy report for the Treasure Valley.  It is showing the average vacancy being at 3.5% which is still low compared to the last recorded national average which is at 7%.  Currently FRPM has a vacancy of 2.5%.  We are seeing the single family home vacancy going down from quarter 1 and the multi family has gone up slightly.  I feel that the time of year is the major factor in these changes from quarter 1.  Summer is a very popular time to move and all though it creates a slightly higher vacancy it is also the key time to get peak rents.  This report also shows that rents are still up and holding steady.  FRPM still considers this a win for investors because despite the slightly higher vacancy, properties are still getting pre-leased prior to tenant moving out and we are still getting great rent amounts. 

Read full report here: SW Idaho NARPM Quarter 2 Vacancy


Melissa Sharone

Melissa Sharone, President

First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

We're Calling it: Rental Market Softens

For weeks we've seen some signs that the rental market is softening to a more traditional rental market.  We're over a month away for SW Idaho's NARPM 2nd quarter rental market analysis report, but we suspect we'll see increased vacancies and lower rents.

We're seeing longer days on market which increases vacancy.  Rents are also being challenged and most landlords are opting to offer move-in credits over rent decreases.  Other than filling new construction, move-in-credits have been something in the past.  Move-in credits are the preferred approach as they protect the price point  for renewals and other similar units that were just rented months prior at the same or higher rent.  However, FRPM has done some testing and we are seeing a lower rent price point is converting better than the move-in specials.

For years Boise Landlords have been rewarded by being a bit aggressive with rents, but for the moment, FRPM is not recommending an aggressive approach.  This could change in a month or two, but for now, FRPM is recommending that Landlords focus on rents to reduce days-on-market and lost rent.


Tony Drost, President, First Rate Property Management, Inc.

Tony Drost, Chairman
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Procedures for Inherited Tenants

Please take a moment to read the article that was recently published by Kristen Curtis in the residential resource.  It features the importance of having good solid lease procedures when taking on inherited tenants. Kristen has done a great job of implementing these procedures here at First Rate and it definitely helps the transition of gaining inherited tenants go much smoother.

A must for Inherited tenants- New Lease Procedures


Kristen Curtis

Kristen Curtis, Leasing Teaem leader
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Swope Investment Properties Investor Newsletter

The most recent Swope Investment Properties Newsletter  has some great articles for property investors that I wanted to pass on to our blog readers.

Page One:  Stacy McBain provides a great summary of what to expect from the Ada County Assessor regarding value increases.  She also summarizes the process for appealing assessed property values as well as some of the factors used in assessing investment properties.

Page Two:  Eric Uhlenhoff describes how putting emphasis on "market" rents, could be the way to go due to a large disparity from actual rents to projected rents within MLS listings. So long as projected rents fall within market, this certainly is sound advice.

On the bottom of page two is an invitation to the AVID Investors Club.  This club has been growing and has proven to be a great resource for investors.  Members not only learn more about the real estate investment and rental market, but are also making great connections.  For example, an AVID member helps facilitate a hard money loan for a property owner.

Page Three:  I share an update to one of the metrics I track for Ada County 4 plexes showing how Gross Rent Multiplier has spiked and what this does to value.

Also on this page, Mary Nelson explains the advantage of working with a small brokerage who focuses on personal service.  I have worked the opposite side of real estate transactions where the other side is a team and I tend to view it as an assembly line process.  The product passes through several hands before final assembly, which works great when producing widgets.

To subscribe to these newsletters, please contact Shane Brown at brown.shane@me.com or 208-501-4000.


Tony Drost, President, First Rate Property Management, Inc.

Tony Drost, Chairman
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

FRPM 1st Quarter Vacancy

After posting the NARPM 1st quarter vacancy last week, we wanted to take a minute to share FRPM's 1st quarter vacancy results for 2017. 

The overall average for FRPM was .53%. This is for multifamily and single family homes.  This continues to be a record low for the past 5 years.  Below is a graph with the 1st quarter vacancy for 2013-2017. The orange line represents the vacancy for 2017. As you can see the trend of low vacancy is still going strong. 


Melissa Sharone

Melissa Sharone, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Property Rental markets in Boise and Idaho.



View Externally Here

1st Quarter Vacancy Results

The SW Idaho Chapter of NARPM (National Association of Residential Property Managers) just released their 1st quarter vacancy survey . The overall average vacancy is 3.7% which is considerably lower than the last recorded national average of 6.9%. 

The results that are graphed below break down the vacancy between counties in SW Idaho as well as multifamily compared to single family.  As you can see the multifamily for Ada county is currently sitting at 5% and the single family at 2.5%.  For Canyon county the rates are at 2.9% for multifamily and 3.5% for single family.  We are starting to see the vacancy rise slightly due to the time of year but these results as well as FRPM's vacancy are still at almost a record low for the past 3 years.  These numbers are still allowing rents to increase, which is keeping the market strong. 

To read full report click here. NARPM 1st quarter 2017 vacancy survey


Melissa Sharone

Melissa Sharone, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Property Rental markets in Boise and Idaho.



View Externally Here

Economist predict strong rental market

According to economists, the rental market will continue to grow and be strong for at least the next ten years.  The fastest growing segments of the US population (minorities, millennials, and singles) are choosing to rent.  Why?  Some point blame to the lack of consumer confidence following the crash of the real estate market. The amount of foreclosures depressed the home ownership rates.  Other contributors:

1.  Population segments that prefer to rent:

                - Minorities, which is the fastest growing segment of population

                -  Singles,  are fastest growing portion of households

                - Millennials, with high costs for advanced schooling, they are staying single and delaying homeownership

2.            Household growth:

                -  Long term:  We will add 13.6 million households by 2025 and an additionally 11.5 by 2035

                -  Minority growth rates higher than whites

                -  Advanced schooling and delayed marriage have delayed independence among young adults

                -  Millennials form 33 million household by 2035

3.            Homeownership rates

                -  Declined from 69.2% (2004)  to 63.7% (2015). 

                -  Declined from 69.3% to 58.5% for ages 25-44

                -   Projected to continue to decline with an average of 60.6% in year 2035

4.            Economic forecast

                -  Expect continuation of economic and employment growth with moderate interest rates and inflation

                -  Population changes and household formations should favor renting over home ownership into the near future.


Tony Drost, President, First Rate Property Management, Inc.

Tony Drost, Chairman
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Are we building too many apartments- UPDATE

This information is an update from the blog that was posted yesterday. 

Over the past few years we have frequently discussed the concerns of the growing number of apartments being built in the Boise and surrounding areas.  Severally years ago we were really concerned that the supply would not meet the demand.  We were additionally concerned that the rising rents were not sustainable.  First Rate Property Management does not mange in Nampa, Caldwell, Kuna, Garden City, or Star, so we can't really don't feel comfortable forecasting in those cities.  In Boise and Meridian, however, the population growth, increased jobs, and higher wages have contributed to the demand to rent, which has kept up with the increase in supply and rents.

Below is an update on projects that have been completed, are in progress now, and in the planning stages.   That’s a lot of units.  We believe it will continue to be important to watch the vacancy and rent statistics for any trends. 


Tony Drost, President, First Rate Property Management, Inc.

Tony Drost, Chairman
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Are we building too many apartments

Over the past few years we have frequently discussed the concerns of the growing number of apartments being built in the area.  Initially we expressed real concerns, not only with the number, but also the rents.  First Rate Property Management does not mange in Nampa, Kuna, Garden City, or Star, so we can't really comment on those areas.  In Boise and Meridian however, the growth of:  population, employment, and wages has proven that growth of the rental market is sustainable.  We continue to support this position because of the low vacancy rates and increasing rents.  Below is an update on some of the new projects under construction.


Tony Drost, President, First Rate Property Management, Inc.

Tony Drost, Chairman
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Vacancy Update

We just completed week 7 for our vacancy tracking in 2017 and things are looking great.  We are currently at a record low of .3% and the trend of low vacancy looks promising in the weeks to come.  The market continues to allow FRPM to raise rents with most renewals. The renewal increases are supporting even higher rent on a property that has been turned over.  FRPM is also keeping consistant with getting 90% of properties that are on notice re-rented with in 17 days, which is 13 days prior to them becing vacant.  The market continues to remain on the strong in the Boise Area. 

Our 2017 vacancy chart is below


Melissa Sharone

Melissa Sharone, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Property Rental markets in Boise and Idaho.



View Externally Here

FRPM Ranked #1

On a February 9th blog post, Park Place Property Management listed the top 5 management companies in the Boise area, which listed First Rate Property Management as #1.  As they explained in their opening paragraph, investors need to be well informed and educated when it comes to choosing the right property management company for them. FRPM can not agree more.  Investors need to interview property managers and choose the one that is the best fit for them. For example, FRPM only manages in the Boise, Meridian, and Eagle areas and an investor that we had been working with recently identified a single family rental in Kuna.  So we referred them to one of our fellow colleagues.

Its an honor to be ranked #1, but even greater, is to see the industry leaders acknowledging that with the growth of the Boise and Meridian areas, landlords have many options and should do their homework and select the right property manager.  We’ll take it even one more step and suggest that renters also do their own research before choosing a rental.  Below is the full blog post from PPPM.


Who Are The Best Property Managers?

Posted on February 9, 2017 by pppm

As Idaho’s largest, professional management company, we are continually expanding our portfolio of over 4,000 rental units throughout the Boise, Meridian, Nampa, Caldwell, and other surrounding areas, and are always excited to be meeting new real estate investors.

Our experience over the past decade managing properties throughout the Treasure Valley agentshas given us a unique perspective on the competitive landscape and has helped up work towards becoming the best property management company. We consider ourselves close friends with many of Southwest Idaho’s other leading property management companies. We want our potential clients to be as well informed and educated as possible when it comes to choosing the right property management company for them. We have the utmost respect for our local competitors/colleagues and we are happy to provide our own list of Southwest Idaho’s Top Property Management Companies:

1. First Rate Property Management:  Over 20 years, First Rate Property Management has become the Boise based property management company that it is today, all from referrals. Their largest source of referrals are from their very own clients. Why? Because unlike most other companies, they are investors too. Their client’s real estate investments perform well and because of that, they tell all of their friends and family to invest in Boise.

2. Realty Management Associates, Inc: Realty Management Associates, Inc., CRMC® (RMA) has been in the business of management of single-family homes and small apartment properties since 1980. RMA has maintained a history of solid, long-term client relationships throughout Boise, Nampa and surrounding areas.These relationships were built on sound property management skills, owner communication, tenant solicitation and screening, maintenance supervision, and comprehensive accounting practices.

3. Bolton Property Management: Bolton Property Management is a comprehensive property management company serving communities throughout Idaho and Utah. They are dedicated to providing superior services that consistently exceed client’s expectations through Industry, Integrity, and Innovation.

4. Chapman Properties: The Chapman family has devoted the last 20 years in developing their expertise in the business of managing people and property in the Ada and Canyon County areas. They focus on exceptional management of homes, condos, and townhomes. Chapman Properties is a family owned and operated business and plans to continue this legacy for many years to come.

5. Boise Property Management: Boise Property Management offers both landlords and residents a professional experienced staff with unrivaled quality and property management services in the Treasure Valley. Their services include property management for Residential Homes, Duplex, Tri-Plex, Four-Plex and Multi-family Apartment Communities. In addition to their property management services, they also have an exclusive property maintenance division dedicated to rentals maintenance and repair needs.

We commend all these great companies for being active members of NARPM (National Association of Residential Property Managers) and IREM (Institute of Real Estate Management).

If you are shopping elsewhere for the best property management companies to help with your investment needs in the Boise, Meridian, Nampa, and surrounding areas, consider getting quotes from any of these 5 great companies. We are always available to help you or your clients make the best decision for your investments.


Melissa Sharone

Melissa Sharone, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Property Rental markets in Boise and Idaho.



View Externally Here

2017 Real Estate Symposium

The Ada County Assessor's office recently hosted the 2017 Real Estate Symposium.  The panelist were Mike Turner with Front Street Brokers, Tony Drost who represented both First Rate Property Management and Swope Investment Properties, and Terry Heffner with Guild Mortgage.

FRPM has reported that the new generation of renters seem to prefer renting for a number of reasons, like flexibility and not having to do any maintenance.  One interesting point that Terry Heffner discussed in his presentation was that a number of college graduates with good paying jobs are having difficulty qualifying for a home loan due to large student loan debt.  That information helps us better understand why we are seeing young professionals who have good income, good credit, and cash reserves, are renting versus buying.

Tony's was asked to present on:  1)  2016 rental market trends, 2)  vacancy, expenses, concessions, and rental rates, and 3) Tony's predictions/corrections envisioned for 2017.  We wanted to share some of the information Tony presented.

Ada County Vacancy:

The below graph shows the average vacancy for single and multi-family units regardless of bedroom count.  Notice that single family vacancy is trending upward and multi-family had a spike in the 4th quarter of 2016.

Ada County Rents:

Overall, average single family rents increased by 16% from the 4th quarter of 2015 to the 4th quarter of 2016.  However, average single-family rents descended the last 3 quarters.  Multi-family rents increased by 14% in the same time period.  However, like the vacancy averages, these average rents were based on all rentals regardless of the number of bedrooms, which prompted the next graph showing average rents for 3 bdrm homes and 2 bdrm multi-family units

Average rents for 3 bedroom homes and 2 bedroom multi-family units:

In this graph, we only look at the rents of 3 bedroom homes and 2 bedroom multi-family units, since those are the most common. Unlike the prior two graphs, this graph actually shows a perfect rental cycle.  The Boise area is a true 4 season area.  Typically rents are strongest in the 2nd and 3 quarters.  Where the first two graph's suggest some concern with single family rental homes, this 3rd graph suggests that they are following the normal rental cycle for this area.

Ada County 4 plex Gross Rent Multiplier:

The average GRM was 127.

Average Cap Rate for Ada County 4 plexes:

Due to strong rents, cap rates have been stable.  This differs from the bubble of 2005 and 2006 where values increased where rents had not. 

Single family expense data:

As a percent of gross income.

Vacancy:                                              1.30%

Utilities:                                               0.94%

HOA Dues:                                          2.52%

Maintenance/Cleaning:                5.73%

Marketing:                                          0.65%

Taxes:                                                   13.99%

Insurance:                                           3.23%

Management                                    8.45%

                Operating Expenses       36.86%

Debt service                                      59.04%

Cash flow                                            4.1%

2017 Forecast

Single Family Rentals (SFR):

Some data suggests that the single family market is softening.  Other data shows that rents and vacancy are simply following the rental market cycle.  Initially, Tony felt that we might see the single family rentals continue to soften, but after hearing the other speakers and the other factors, such as increasing loan rates, increasing home prices, and scarcity of affordable homes, perhaps this is not the case. 

Multi-Family:

Outside the Q4 jump, vacancy has been impressive and rents increased by almost 14% since the 4th quarter of 2016.  If population and employment continue to grow, Tony doesn't see any indications that the multi-family rental market is slowing.  The amount of new construction scheduled and the timing of their completion may prove me wrong.


Tony Drost, President, First Rate Property Management, Inc.

Tony Drost, Chairman
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

2016 Performance Measures

Each department at First Rate Property Management tracks a number of metrics and we wanted to share a few.  Each department tracks these to identify potential issues and changing trends.  Most of what we track is for in-house use.  For example, accounting tracks the percentage of late pays.  Maintenance tracks the number of days to complete a turnover.  Leasing tracks average rents, etc.  So without further delay, here are four 2016 metrics that we wanted to share. 

 

      Average vacancy:  FRPM counts every property that is vacant, regardless if the tenants are paying rent or a lease has been signed. 

                                1.06%

      Average renewal rate:  This is not a retention rate, which would be in the high 90 percentile.  This number represents the percentage of tenants who renewed their lease.  It does not consider tenants who chose to stay, but only on a month-to-month basis, which is part of our retention rate.

                                76%

      Eviction rate:  This rate includes court ordered evictions and does not include where tenant's comply to a property owners request to terminate tenancy, or simply not renew.

                                0.08%.  Less than one tenth of 1 percent

      Average days-on-market:  FRPM begins advertising the moment the notice to vacate is processed.  Additionally, we coordinate with the current tenants to show the upcoming available unit to prospective applicants.  Therefore, on average, FRPM approves and selects new tenants on average 13 days prior to the current tenants even move out.  Today, many property managers don't even start advertising or showing upcoming vacancies until the property is vacant and/or the turnover is complete.  FRPM physically meets and shows our available properties, so for those property managers who allow tenants to access the property unaccompanied, it makes sense that they would have to wait until the property is vacant to even start showing it.


Tony Drost, President, First Rate Property Management, Inc.

Tony Drost, Chairman
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Rents soar for apartments and homes

The ascending rents continue to make the local news.  Below is a recent article from the Idaho Statesman.  The author cited the SW Idaho Chapter of NARPM's rent and vacancy numbers and quoted a local property manager who finds low cost housing for veterans.  As I mentioned in the article, If population and employment continue to grow, I don’t see any indications that the rental market will slow in 2017.  The amount of new construction scheduled and the timing of their completion may affect rents.  Even with an exceptional vacancy rate, newly constructed apartment complexes are 100% vacant and it is common to offer rent concessions to fill units quickly.   With the possibility of several new developments and hundreds or even a thousand new units completed around the same time, those rent concessions likely will soften rents at existing and competing rental units.

http://www.idahostatesman.com/news/business/business-insider/article123928679.html


Tony Drost, President, First Rate Property Management, Inc.

Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

2016’s Top 10

Social media is an amazing and unpredictable platform.  We never know what posts will go flat or actually go viral.  The FRPM Facebook page consists of highlights of our blog posts, shared relavant posts, and fun and more personal posts.  By far, the fun and personal posts get the most attention on Facebook.

Our blog focuses on relevant industry information but they too create some unique and interesting comments.  Recently it was suggested that we re-post our top ten blog posts.  The criteria we used to determine the top ten were the amount of views, shares, and comments.

10.          More on Deferred Maintenance

9.            Multifamily Rental Dynamics

8.            DIY Maintenance

7.            Consistent, Fair, and Compliant Deposit Return Process

6.            Ada County Rents Topped Out?

5.            The Future of Residential Property Management -part-2 - current-trends

4.            The Future of Residential Property Management - part-1 - the-past

3.            Ada County Rents Topped Out?

2.            Seize the Opportunity

1.            The Future of Residential Property Management - part-3- the-future 


Tony Drost, President, First Rate Property Management, Inc.

Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Maximizing Rents – Part 2 - What you should consider

In part 1 of this blog series, Melissa explained reported rents are not effective rents.  There could be back-end concession or other facts that overstate rents.  Landlords should always have their property manager provide a market analysis before considering changes.

In part 2, I want the property owner to determine what their goals are and some considerations and potential costs before looking to maximize rents.

Goals:  Most investment properties are intended to be held for a number of years and therefore decisions tend to support the long-term, such as maintaining market rents.  Maximizing rents by choosing rents at or above the very top of the market range tends to be more of a short term goal, like the example we used in part 1 with the builder selling the newly constructed multifamily building.

Considerations:

                Bad will:  Many landlords feel increasing rents at lease renewal should be expected and are not personal whatsoever.   I can tell you that a good portion of tenants take it personal.  They really do associate rent increases to poor performance, which is not the case.  Some get defensive.  Others fight back.

                Goodwill:  By showing a tenant what market rents are and offering a renewal lease within the middle of the market range, the landlord and/or their property manager can show some goodwill.  Additionally, by offering a renewal incentive like free carpet cleaning is a nice way of saying thank you.

                Tenant performance:  Do not increase rents because the tenant is regarded as a bad tenant.  If the tenant has a history of lease violations and other performance related issues that are of real concern, just give notice to terminate.  Then you can focus on maximizing rents once vacant.

                Market Data:  Know the actual market rent range and be able to identify differences between comparable rentals, to include amenities.  Know the market and current occupancy rates.

                Market Seasons:  Identify the peak and slow seasons and know that being aggressive in the slow seasons can result in extended vacancies.  With multi-family rentals, be consistent throughout your property.

                Improvements:  How recent and to what degree has the interior and exterior of the property been updated.  Additionally, what improvements have been made in the area that makes it a “destination” location?


Kristen Curtis

Kristen Curtis, Leasing Team Leader
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Property Rental markets in Boise and Idaho.



View Externally Here

Maximizing Rents- Part 1 - What You See May Not Be What You Get

Like many parts of the county, the Boise area is seeing record high rents and low vacancies.  Rents within our own management portfolio grew well over 10% on average this year.  At some point, the rental market should stabilize.  In the meantime, it is not unreasonable for landlords to want to maximize rents.

 However, it is advisable that Landlords determine if their goals for the property are short or long term, and understand the potential costs and considerations needed to make the best decision.   These costs and considerations are really important, but in part 1, I really want to address other factors that can miss-guide some landlords.

Over the next two blog posts, what we really try to communicate is that just because the media says rents are breaking records, doesn’t mean you should go raise rents to some inflated number.  Get the data, understand the pros and cons, and make a plan.

Rents:  When it comes to rents, what you see may not be what you get.  So just because you see some amazing rent being reported at a property, don’t take it as the gospel.  Reported rents may not be market rents and market rents rarely are the effective rent.  Effective rent, for the purpose of this post is:  gross rent, less vacancy, less any rent concessions, and less some expenses related to rent. 

Don’t assume that properties within close proximity of another should get the same rent.  In fact, FRPM manages 4 plexes in a community with multiple owners and managers where the buildings are exactly the same, but some landlords have their tenants pay water and sewer in addition to electric and gas, where others do not.  Anyone making decisions without knowing the differences could really cause themselves some issues.

Also, don’t forget, a landlord and even other property managers that have zero to very limited tenant screening criteria tend to get higher rents but their effective rent tends to be much lower.

Concessions?  Yes, even with record low vacancies, huge rent concessions still exist.   A large rent concession can help a builder who is selling a newly constructed multi-family building in several ways.  1) reduces the initial rent-up period, by reducing a tenant’s move-in costs and effective rent, 2)  the reported rents support the builder’s asking price, 3)  reported rents are safeguarded when it comes time to renew.  Another example of rent concessions still occurring today are when filling vacancies near colleges in the middle of a semester.

Vacancy:  Vacancy can affect perceived rents as well.   For example, some landlords are absolutely fine with an extended vacancy as long as they get the magic rent number.  So once again, the reported rent is not market rent and the effective rent could be 25% less than what is reported.

The cause of a vacancy will be one of the items on our list of considerations.  Vacancies can be the property owner’s largest expense when considering turnover costs, marketing, lost rent, and utility costs.  For these reasons, we recommend that our owners only consider maximizing rents for vacancies caused by force or by natural attrition.  Evictions and rehabs are examples of forced vacancies.  Examples of vacancies by natural attrition are:  tenant buys home, space requirements, or as the tenant’s needs change, such as location, budget, etc.  This now leaves us with vacancies caused by the landlord’s decision to legally change the terms of the lease, such as increasing the rent.   This really is the whole purpose of this blog series.  We want owners to determine their goals and understand the costs and other factors to consider before giving tenants notice to increase rents.


Melissa Sharone

Melissa Sharone, Operations Manager
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Property Rental markets in Boise and Idaho.



View Externally Here

Bowl Watch

Jack Harty is a Boise based commercial mortgage broker that every once in a while, shares his wit and humor by sending out market updates.  This month he timely ties it into the football bowl selection process and Boise State's selection for the Cactus Bowl.

 

While this is the season when bowls are the topic of interest among football fans, the words “interest” and “bowls” are also linked in matters that have nothing to do with football bowls.  The trend of interest rates suggests that at this holiday season, the cheap money punch bowl has been cancelled, i.e., it is being yanked off the table.

November 2016 was the worst month for Treasury bonds since December 2009.  December 2016 is starting off with the same upward momentum in 10 Yr T Yield.  As of mid-day 12/1/16 the 10 Yr T Yield traded as high as 2.49% and closed at 2.44%.  

In comparison, on Election Day (11/8/16) the 10 yr T was at 1.88%.

The historic low point for 10 Yr T Yield (by historic I mean the lowest yield ever offered since the First US Congress authorized issuance of bonds in 1790 to pay for the Revolutionary War) occurred recently (7/5/16) when the 10 yr T Yield dropped to 1.37%.

The following chart tells it all:

10 Yr T Yield - Past 6 Months

2_3050.html.gif

Anyone who locked [their] rate on any day prior to today is better off than had they locked [their] rate today.  Currently the 10 Yr T Yield is >100 basis points higher than its historic low point in July.  It is 56 basis points higher than where it stood on Election Day - a mere three weeks ago.

For those who long for a return to historically low interest rates, the best strategy is to pray for economic problems to be perceived by market participants as threatening in Europe, China or the rest of Asia.  If that occurs, then the US Treasury bond can re-assume its traditional role as the perceived “safe haven” to perceived economic problems elsewhere.  Pray for bad economic news if you intend to lock [your] rate in the near term.

Jack Harty

HARTY MORTGAGE ADVISORS

121 N. 9th St. - Ste 402

Boise ID 83702

Direct:  208 514 4766

Main:   208 344 4141

Email:  jharty@harty.biz


Tony Drost, President, First Rate Property Management, Inc.

Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Latest News From Swope Investment Properties

Below is the most recent copy of the Swope Investment Properties newsletter.  Their newsletter is all informative and full of good information regarding the residential investment market.  This month's newsletter included an article from First Rate Property Management's Maintenance Coordinator, Tara Pecora.  In sales, realtors put a lot of emphasis on the appearance of the front door.  In Tara's article, she too focuses on the front door, but in a tenant and property safety viewpoint.

Newsletter- The Treasure Valley’s Number One Investment Property Specialists Since 2003.

If you want to be added to the distribution list, please submit here.


Tony Drost, President, First Rate Property Management, Inc.

Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Boise Multifamily housing at the Tipping Point?

I have attached two articles related to multifamily housing.  The first article is from the Idaho Business Review.  That article confirms that the current demand to rent is high, but will the demand meet the supply?  I tend to agree that we are at least a year from knowing.

The second article, "Tipping Point:  Are apartments racing toward a peak or will the boom continue?" is from CCIM that addresses the concern on the national level.  Within the article, they provide some great data and charts.  One chart shows actual cap rates as well very low projected cap rates for 2016-2018.

Bottom line, I advise my clients to evaluate projects based on a conservative rents and vacancy.  I don't recommend buying based on "pie-in-the sky" numbers.  I suspect at some point, we will see a correction in rents when our record low vacancies start to climb.  I just don't know when.  Because of the length of time during the planning and construction, I do believe builders will continue to push through the tipping point.  The data that I analyze on a monthly and quarterly basis should help identify any changing data trends.  Meanwhile, the data continues to show strong rents and low vacancy.

Multi Family Housing in the Boise Market

Tipping Point


Tony Drost, President, First Rate Property Management, Inc.

Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Trump's Win Expected to Bring Tax Law Changes

Last week I attended a meeting where Arla A Kester, CPA with B.A. Harris, LLP was the speaker.  Below are links to the handouts which include:  The CPA Client Tax Letter, a Tax briefing outlining Trumps plans on tax law changes, and the 2016 tax rates, schedules, and contribution limits.  I found all of these to be very interesting and helpful.  

Some of Trump's tax plan include changes to:  individual income taxes, estate and gift tax, and childcare tax benefits.  Again, I found all of it to very interesting.

The CPA Client Tax Letter

Tax briefing outlining Trumps plans on tax law changes

2016 tax rates, schedules, and contribution limits


Tony Drost, President, First Rate Property Management, Inc.

Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.

 



View Externally Here

Is It Time to Hire a Property Manager

Stacy McBain who is an agent with Swope Investment Properties, sent us a link to this inforgraphic that was produced by Appfolio, who is a leader in cloud based property management software.  The infographic can help Landlords decide whether they should consider hiring a professional property manager to manage their rental property.  They state that it really depends on the property owner’s needs and expectations.  They admit, some Landlords manage their own properties without any stress, while others find it to be quite a headache.  Appfolio states, “One thing is for sure:  to successfully manage [rental] properties efficiently, time and energy are essential.  Do you have what it takes, or should you hire a pro?"


Tony Drost, President, First Rate Property Management, Inc.

Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Urban-Focused Public Apartment Trends

In a recent article that was recently written, The Z report by Zelman & Associates, it talks about the rental market trend and where they see the future of rental income housing. They forecast an increase of market rentals due to the fact that young adults are leaving the rental market and going towards new homes. They say there will be an increase of real estate investment properties almost triple from last year’s growth.  This new demand in rental housing will also drive a market rent that is higher than normal. Those renewing their leases will have the decision of paying rent or buying and moving to the newer homes that are being built.

They predict that over all there will be a steady growth in the availability of urban housing since the younger adults are leaving for single family housing. The housing that is on the market is selling quick, creating a void for the rental market pushing the urban living lifestyle to be more viable. If you are interested in owning or have rentals read this article and decide what the best option is for you. 

Full Article: Urban-Focused Public Apartment REITs Face Further Revenue Deceleration
 


Tyler

Tyler Brown, Operations Assistant
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Building Wealth with Rental Properties

Below is a link from  a blog posting from Mike Hambright with Flipnerd.com.  I found  the first few paragraphs  to be very good for those investing or looking to invest into rental properties.  After that, the article moves away from what I see with my clients and my own investment portfolio.

The author lists some pros and cons of owning rental properties.  He lists self-managing as a con and I got a chuckle when he stated, "I know some really good property managers, and even THEY don't like the management side".  It's true, even professional property managers have discouraging days.  Another con listed was the influence on changing laws and taxation relative to rental properties.

He also got into financing, but again, what he is describing doesn't fit my clientele as most have under ten rental homes and the others are using cash or commercial financing, which has completely different guidelines.

https://flipnerd.com/building-wealth-rental-properties/?inf_contact_key=9c69bb0da0215ec023778decca57d211e34b1753a40675f3f17b70b8ec530f2f


Tony Drost, President, First Rate Property Management, Inc.

Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Idaho Still in the Top, Ranking Third in the Nation for Over-the-Year Job Growth

In a news release dated October 21, 20146, The Idaho Department of Labor states that Idaho's seasonally adjusted unemployment rate held at 3.8 percent in September. Nationally the unemployment rate increased from 4.9 to 5 percent.

As the current business cycle's economic expansion matures, Idaho continued to produce large over-the-year job growth in September, ranking third nationally. Total nonfarm jobs had a net gain of 21,500, or 3.2 percent, with all sectors except natural resources experiencing over-the-year job growth. 3.8% for Third Month.  


Tony Drost, President, First Rate Property Management, Inc.

Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

The Washington Attorney Generals' Office says it's racially discriminatory to use a felony conviction against a potential tenant

Source:  http://mynorthwest.com/425356/attorney-general-follows-through-on-stiffer-landlord-restrictions/

We received the below from a concerned Landlord.  Additionally we have since learned that the WA State AG has offered a Consent Decree with a $15,000 fine.  Some may think $15K is outrageous, while others are saying it is nothing in comparison to the actual fees to fight this and therefore will likely be paid and therefore set a legal precedence for the future.

A recent court filing indicates that the Washington State Attorney General’s Office believes that denying a prospective tenant with a felony conviction is racially discriminatory.

A member of the Attorney General’s Civil Rights Unit served a Consent Decree on Dobler Management Company, a property management firm in Tacoma, after conducting a simulated test on whether the landlord was illegally discriminating against potential tenants.

According to the briefing sent to KTTH’s Todd Herman, in May, the state asked a tester to follow up on a rental property advertisement on Craigslist, which said the apartment complex would automatically deny renters with a felony record. The state’s tester confirmed that the unit was still available and asked if he could apply for the unit despite having a felony conviction. The leasing consultant responded via email that a “felony would be an automatic denial.”

“In denying the tester, the leasing consultant did not consider when the conviction occurred, what the underlying conduct entailed or what the tester had done since the conviction,” the state wrote in a consent decree filed in Pierce County Superior Court.

The state explains that there is a discriminatory link between criminal history and restriction of housing:

“In Washington, racial disparities exist in the criminal justice system. African Americans are arrested, convicted, and incarcerated at higher rates than non-African Americans. As a result, criminal history restrictions on housing justified by a legitimate nondiscriminatory interest and is tailored … a housing provider’s blanket policy prohibiting tenants based on criminal history discriminates based on race or color.”

According to a draft from the AG’s office and a briefing from the attorney representing the property owners, this explanation is based on a new theory called Disparate Impact, which was recently enshrined into law by the Supreme Court. He says that this leads to the assumption that if there are unequal outcomes between races, that tacit racism exists, even without any intent.

The AG’s decree comes on the heels of the Seattle City Council’s renter protection ordinance in August that made it so landlords can no longer choose which tenants they believe will be best. Seattle landlords instead have to choose the first applicant who qualifies. The goal is to prohibit discrimination against people with different forms of payment, such as vouchers and subsidies.

In the case of the State of Washington’s vs. the Pierce County property owner, the AG’s office seeks financial penalties and wants to force property owners into sensitivity training on the issue.

The attorney’s office representing the management company told Herman that there was “absolutely no engagement or outreach” by the AG or any housing regulator on this “novel” theory of liability, adding that the AG Ferguson’s office “began actively and aggressively ‘shopping’ for apartments under the guise that they had felony convictions.”

The defense says that the amended Washington RCW directs that a background check, including a prospective tenant’s “criminal history” is authorized.

Herman likened Ferguson’s standard as a form of blackmail. He says the logic is backward: “You can’t ban felons because there are more African-Americans who are felons. Therefore, if you don’t want felons living in your building, you are a stone-cold racist.”

Herman says the AG is using a “web of dictates” rather than looking to change the standards and deal with the real issues: Getting families back together, increasing graduation rates, etc.

“Is there any concern here in this state at all about why — Why more African-Americans are arrested and charged?” Herman asked. “Or is this the way we’re going to solve the problem, by not letting landlords screen out felons? Which one will solve the problem?”


Melissa Sharone

Melissa Sharone, Operations Manager
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Property Rental markets in Boise and Idaho.

 



View Externally Here

Single Family Rental Vacancies Increase by 58%

Below are the results of the SW Idaho NARPM Vacancy Report Q3 2016.  We identified two main points.

   1. Single family vacancy:

       The overall vacancy rate within Ada County remains about the same at 2.6%.  The big difference is that single family home rental vacancies increased from 2.8% to 3.7% in Ada County and  that they over doubled in Canyon County to 5.2%. These numbers support what we have always said, which is that "once school starts, rentals, especially single family homes, become harder to rent".  Rent for single family homes dropped very slightly and it is our prediction they will continue to drop until after winter.

    2.  Rents:

        Although single family rents decreased, multi-family rents continued to improve in both counties.  Everything indicates that rents will continue to climb, but we think these rents will stabilize for the winter.


See Full Report: SW Idaho NARPM Vacancy Report Q3 2016


Tony Drost, President, First Rate Property Management, Inc.

Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Boise Area Vacancy Fall Update

Below is FRPM's vacancy rate.  For the past month we have had less than 1% vacancy and our average for the year is currently 1.15%.  About this time every year we remind everyone that by design, we do everything we can so not to have leases expire during the winter months.  For now, the multi-family properties continue to fil up quickly.  We are seeing a little slow down on the single family.  The closer we get to the holidays the slower it gets.  So our leasing team will be watching and contacting owners if we see extended rent up times. Now is not the time to push aggressive rents on single family homes.


Tony Drost, President, First Rate Property Management, Inc.

Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Seize the Opportunity

First Rate Property Management's Leasing Team Leader, Kristen Curtis, recently wrote an article called Seize the Opportunity, This article was published in the Oct/Nov issue of the Residential Resource.  The Residential Resource is a trade magazine for professional residential property managers.  In a nutshell, Kristen's article advocates good customer service.  When a property owner decides to sell, many property managers have a knee-jerk reaction.  As a policy, many just flat out give notice to terminate management.  They don't want to be involved with the showings, notices, appraisals, inspections, tenant complaints, and pushy realtors.  Other Property Managers continue to manage, but choose not to be real cooperative.  So Kristen did a great job relaying that us at First Rate Property Management view this as an opportunity.  It's an opportunity to help our current clients successfully sell.  It's an opportunity for us to showcase our services to potential buyers and their real estate agents.  It's an opportunity for us to retain the property and actually gain other properties. 

What her article doesn't say is that this scenario has become my niche.  When I am asked to list properties within First Rate Property Management's portfolio, the deal tends to go very smooth.  I already have good working relationships with the sellers, tenants, and the other parties involved in the deal.  I know the history of the property and all of the data that is commonly asked is at my fingertips.  I am grateful for the opportunity and it is something I truly enjoy.  And when one of our clients already has a relationship with another agent, I understand and that is why I am so grateful that the FRPM team shares Kristen's view about how our company will go above and beyond.  Dominic Nation with Property Maintenance Plus says it best, "We appreciate the opportunity to be part of the solution, not the problem". 


 

Tony Drost, President, First Rate Property Management, Inc.

Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

How Home Owners and Tenants Can Avoid Locksmith Scams

Unlike many other states, Idaho has no law that pertains to locks and locksmiths for rental properties and as a result, many Idaho Landlords do not change the lock between tenants.  FRPM's policy is to change the locks after every tenant to ensure the safety of the new tenant and also protect the old tenant from any liability. 

Mr. Re-Key is a national Lock and key company and has built their business creating key systems that meet the different state laws.  In fact, they have expanded and now provide a 3rd party inspection of other tenant safety items such as smoke and CO detectors.  First Rate Property Management's blog caught their attention and they submitted an excellent link for us to post regarding locksmith scams.  We hope this benefits property owner and tenants alike.

All about locksmith scams: the process of locksmith scams


Melissa Sharone

Melissa Sharone, Operations Manager
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Property Rental markets in Boise and Idaho.

 



View Externally Here

Due Diligence in Real Estate Investing

The AVID Investor's Club is organized by Stacy McBain, who is an agent with Swope Investment Properties.  They meet monthly and typically have a guest speaker and time for networking.  The July speaker was Kelly Turpin who provided the attached checklist for Buyers to use when purchasing an investment property.  This checklist would also be good for Sellers to use when preparing to list an investment property.  The checklist is a good summary.  As Kelly points out, most agents that specialize in investment properties have very detailed checklist that go far more in-depth and they vary based on the property type.  For example a duplex may have 20 items, whereas an apartment building likely will have over 50 items.  One item on my checklist is to check the sex offender registry.  Sex offenders in or nearby a multi-family property can negatively impact rental amounts, due to decreased demand.  I hope all of our readers find this checklist helpful.


Tony Drost, President, First Rate Property Management, Inc.

Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Boise Area Vacancy Update

Summer remains the busiest for First Rate Property Management and other Boise area property managers.  See the graph below that showcases FRPM’s vacancy which has been below 3% even during peak moving times.  This is about 3.5% below the current national average which sits at 6.7%.  Looking back, our average vacancy for 2016 is at 2% which is a record low for FRPM over the past 8 years.  The market remains strong with high rents and very low vacancy. 



Melissa Sharone

Melissa Sharone, Operations Manager
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Property Rental markets in Boise and Idaho.



View Externally Here

Is your Boise Property Manager Selling?

Our 3 part series about the history, current trends, and the future of residential property management received the most views and comments than any other.  A good share of questions came from rental owners.  Some wanted to share their experience while others wanted advice on how to protect themselves from a company that is or maybe planning to sell.

I can think of a lot of issues property owners should perhaps be more concerned about, but when it comes to selling, it would appear that many property owners are feeling betrayed.  You asked for some flags and below are the few that I believe will help identify a property management company focused on growth and perhaps future sale value.

  1. Pressure to sign the management agreement immediately
  2. The answer is “yes” even before you have provided information about the rental or your expectations
  3. Getting your business is the goal
  4. Low entry fees with many add-on auxiliary fees
  5. Evasive answers
  6. Extraordinary claims and guarantees
  7. Marketing is heavily geared towards securing new clients and more properties

Some asked us “How can I protect myself if our property manager sells”.  I have no real experience with this, but if you are that concerned, then I recommend you consult an attorney.  An attorney may have a clause to add to the management agreement that requires the property manager to disclose the sale of the company and/or changes of the principal owners.  The only other suggestions I can think of, is not to hesitate to question your property manager about any sudden changes in practices, like software programs.


Tony Drost, President, First Rate Property Management, Inc.

Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Do YOU Wash the Rental Car Before Returning It?

This is part 3 of my blog posts that covered, preventative and deferred maintenance.  In 2006, FRPM President, Tony Drost, wrote an article titled,  "Do you Wash the Rental Car Before Returning It" which was published in a national property management trade magazine.  Property managers across the country have used this article to help owners of rental properties to consider some tenant's mind-set when it comes to renting a home or apartment.  Many used this article to set up property owner expectations.  More importantly, we believe it shows why it is important for landlords and property managers to help set up expectations for tenants so that the tenants better understand their responsibilities and what they should do to ensure the property is maintained.  Below is an updated version  of Tony's article.

When considering the below questions, I'd like you to think back at a time when you rented a car.

1.  Did you read your rental agreement?  I think most would agree that they were anxious and in a hurry and just signed the agreement and grabbed the keys so they could be on their way.  It’s a very similar situation with tenants and we know this, which is why we require them to watch a summary slide show and also provide a summary page of the rental agreement for quick reference.

2.  Did you purchase the rental car company's recommended insurance?  Most people do not.  Most tenants feel about the same with Renter's Insurance.  They think the likely hood they will need it is slim and not worth the money.  FRPM recommends Renter's Insurance and provides real life situations where at no fault of the tenant, something happened and their personal property was damaged and not covered.  Additionally we provide a list of insurance agents that specialize in Renter's Insurance.

3.  When you received the rental car, did you thoroughly inspect it and annotate all cleaning issues and damages of the provided form?  Way back when, FRPM did the same as the rental car people did, which was to provide a self-move-in form for the renters to complete.  Today, we require a joint move-in inspection where we inspect the property with the tenant and also orient them with the home or apartment, such as location and proper use of the sprinkler timer, location of water shut-off valves and circuit breaker panels, and demonstrate on how to change the furnace filters, etc.

4.  Prior to using the rental car, did you check all fluid levels and things like tire pressure and did you promptly report needed repairs?  I assume most do not check these things and I believe they are in the right to assume that the rental car company does this on a regular basis.  But what about the check engine light?  Did you stop using the car and report this alarm to the rental car company right away?  We want tenants to inspect important items and we don't want them ignoring alarms.  That is why FRPM and the tenant perform a joint move-in inspection.  Additionally, FRPM provides detailed information on tenant's responsibilities concerning maintenance issues, communications, and what to do if an alarm is sounded or displayed, like a check engine light.

 

5.  While driving the rental car, did you find yourself not treating the car as if it were your own?  Did you accelerate and brake more quickly?  Did you avoid road hazards?  It's just a rental, right?  Landlords and property managers need to do everything they can to help tenants understand that this a home or apartment that they have legal possession of and they have responsibilities, just like the landlord.  On average, a rental car is brought back for inspection in less than a week.  A home and apartment is a lot longer so tenants need to be aware of their inspection and reporting requirements.

6.  Before turning the rental car back in, did you wash it?  A lot of tenants assume that there cleaning and damage deposit is used for that, so they just move out without doing any cleaning.  So we spell out the tenants requirements upon move out and hope they strive to get as much of their deposit back as they can.

So knowing that a certain percentage of tenants will have a, "it's just a rental" mentality, supports my recommendations not to defer maintenance and have preventative maintenance/inspections performed.


Tara Pecora.

Tara Pecora, CMC, Maintenance Team Leader
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

NARPM Q2 Vacancy Survey Results

The below graphs from the SW Idaho NARPM Q2 Vacancy Survey Results show the average rents, average vacancies, and make up of single family and multi-family between Ada and Canyon Counties.  Vacancies are down from this same time last year, but up from Q1.  Its normal to see an increase in vacancy during this time of the year.  There are so many properties turning over, just the time to get them ready for the new tenant moves increases vacancy.  So no alarm there.  Rents remain strong.  We don't expect much of change in Q3.


Tony Drost, President, First Rate Property Management, Inc.

Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.






 



View Externally Here

Multifamily Rentals Dynamic

Harty Mortgage Advisors sent out the attached graphs that were created by Arbor Financial, a Fannie and Freddie lander.  The three charts reflect the state of multifamily rental demand and the drop in homeownership that is exacerbating the unmet demand for rentals.


Tony Drost, President, First Rate Property Management, Inc.

Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

The Future of Residential Property Management (Part 3 of 3) - The Future

Part 1 reviewed the history of residential property management.  Part 2 illustrated how the housing crash created the strongest rental market this country has ever seen and property management has become big business.  Some company owners are seizing the opportunity to exit the business.  Some begin to focus on company value and succession planning.  The remainder, I guess, stay the course.

I’ve always said that property owners, investors, and property managers need to choose each other based on the best fit.  A Ma and Pa very well could be the best fit.  A Big Box brand may resonate to others.  Regardless of a company’s attributes, such as size and technology, I really believe that owners of investment properties are going to pick the company that seems to best fit their needs.

In the future, I predict more consolidation of property management firms.  I believe we will continue to see companies choosing to cash-in while the demand and valuations are high.  The real estate market is hot and I believe that many of those part time property managers will sell their property management businesses and return to home sales exclusively.  Those of retirement age may sell and retire.

Also, as I eluded in Part 2, I believe we will see “Big Box” property management firms in Idaho.  Despite residential property management becoming big business, the fact is, the number of property management companies is decreasing.  Within the last month, the largest residential property management company in the Boise area sold, along with another company that had been serving the Boise area for 40 years.  This is the second time the latter company has sold in the past decade.

We don’t know what value a “Big Box” brand brings because we haven’t seen them here yet.  I believe the first franchise came to Boise about ten years ago and they have gone fairly unnoticed.  I predict that the “Big Box” will offer low entry level pricing for minimal service, knowing that a good portion of clients will purchase additional services.  Entry-level service may only include collecting rent, posting a statement, and dispersing funds.  Tenant placement, inspections, maintenance oversight, paying bills, etc will all be at an additional charge.  I see one of the franchises referred to a 1:1 ratio, which claims that for every dollar in management fees, they make another dollar in auxiliary fees.  Regardless of the pricing structure, I believe the “Big Box” marketing and proprietary systems will be considered of value and the residential property management industry will see further consolidation. 

Fortunately, Idaho legislatures have created a very good environment for small businesses.  Idaho has been noted as one of the top states for ease of starting a business.  As a result, we have a large number of PM companies within the Boise metro area.  This added competition allows investors and landlords the ability to shop and choose the company that is the best fit for them.  To compete against the “Big Box”, I envision companies will focus on their boutique like services, which the “Big Box” can’t easily provide.   They will fall back to how they started, which we described in Part 1; local, relationship built, no debt, experience, education, and technology.  The technology will be adequate but likely not as flashy as the “Big Box”.

Additionally, I predict a good portion of the owners that have or will sell their residential property management companies will return to the industry.  A fair amount of these owners are under the age of 50 and may return to property management once their non-compete expires.  Can you imagine a “Big Box” paying out millions of dollars, only to have that property manager return and earn back a good some of the business they sold?

I am not for or against the consolidation or “Big Box” brands.  I don’t see a bad guy here.  There is no ill will for those who have or are planning to sell.  However, if there is a downside to the consolidation, it’s the change or the fear of change that the clients of these sold companies have. When businesses sell, it’s reasonable to expect changes in processes, personnel, and even pricing.   What may have initially been a good fit may no longer be so.


Tony Drost, President, First Rate Property Management, Inc.

Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

The Future of Residential Property Management (Part 2 of 3) - Current Trends

Last week we reviewed the history of residential property management and saw how education and technology moved the industry from mostly "Ma and Pa's" to well-run companies capable of managing over 1,000 units.   Let's now discuss the current trends.

2010’s:

Residential property management becomes big business.  Following the housing crash, rental homes and property management companies flourished.  Banks hired property managers across the nation to manage the stockpiles of foreclosed properties.  Institutional Buyers bought bank owned homes that also needed management.  The banks and Institutional Buyers preferred larger sized property management companies with good technology.  Some property management firms doubled, tripled, and even quadrupled in size. When these companies approached FRPM, we politely declined.  Rapid growth has never been our goal.

With property managers across the nation working for them, Banks and Institutional Buyers were exposed to different management styles and practices and identified those they preferred.  Changes were made so that all of their properties were managed similarly.  New companies, some publically traded, were formed to specifically handle banks and institutional buyers and they bought out some of the companies that had previously handled these accounts.  It’s the first time I saw companies with OPM (Other People's Money) procuring management companies.

Within this decade, we see companies with five, ten, and fifteen thousand rental units in multiple states.  Big business requires more complex software and there has been an explosion of software and features.  The new software incorporates, organizes, and tracks the thousands of tasks involved in property management in a single package.  These companies have properties across the nation and need quick and easy access to the software from anywhere and anytime, so a web-based software seemed to be the logical choice.  Invention of new technology isn't cheap.  Many of these software companies are also small subsidiaries to big publically traded companies and like the new-age property management companies, there is little concern for debt or the use of OPM.  For the smaller property management firms the software is considered too expensive and of little benefit.  Additionally, small firms are concerned that because the web-based software is also subscription based, the property manager doesn't own the software, its data, and future pricing is unknown.

With some consolidation of property management firms beginning, we now see some company goals move their focus on the value of the company.  Growth for some companies is priority one and marketing for new accounts becomes their largest expense.  Gross revenue becomes more important than profit.  Debt is used to purchase more accounts and fund aggressive marketing plans.  It is said that companies who focus on company worth and its future sale "work on building the business" where others, "work in and on the business”. 

Within Parts 1 and 2 of this blog series, we have organized the evolution of residential property management by decades.  The current trends introduce some consolidation of property management companies.  What's the next decade going to look like?  In part 3 of this series I predict that emergence of big box property management companies, like Walmart is to retail.  I do not believe Idaho investors have anything to be concerned about.


Tony Drost, President, First Rate Property Management, Inc.

Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

The Future of Residential Property Management (Part 1 of 3) - The Past

Residential Fee Property Management is a relatively young profession that has evolved greatly in the past ten years; some think that the next ten years will hold the most dramatic changes.  This week's blog reviews the past.  Next weeks' will discuss the Present, which really shows the trends developing that start painting the picture for the future.

People in this country have been renting out their homes since shortly after the nation was formed.  However, these were likely all self-managed.  During WWII, efforts were shifted to manufacturing ammo, ships, and aircraft.  As these factories grew, so did the demand for housing.  During this time most were managed by government and commercial property managers, not residential property managers that manage homes and small multi-family buildings owned by others for a fee.  In my opinion, the professional residential property manager emerged in the 1980’s.

1980's:

The Fee Residential Property Manager.  High interest rates slowed construction and home sales, thus real estate sales agents found themselves renting out the homes they couldn't sell.  These sales agents often grew up within the community and eventually formed “Ma and Pa” type property management companies using the trust and relationships they had previously formed.  These fee managers didn’t have to invest in additional equipment, so there was no debt.

The 80’s were traumatic times for the commercial apartment industry.  In the early 80’s, the feds made some changes that made investing into real estate very advantageous.  The S&L crisis resulted in the foreclosure of thousands of apartments.  Perhaps it was these events that made investors consider single family homes as the less volatile investment.

It was the late 80's that I saw my first info-commercial on how to make it rich by investing in rentals.  I never bought the books or tapes and I never fell for the "pie-in-the-sky" marketing, but it did spark my interest and this is when I began my own research and financial analysis as I considered my first investment property.

1990's:

Residential Property Management becomes a profession.    Until the 90’s most of the real estate management education and software was created for commercial and apartment management.     In the 90’s we saw technology evolved from computers, to the internet, followed by websites, and software.  In the early 90’s computers became affordable enough that most homes and businesses had one.  This is also about the time that Al Gore says he invented the internet.  The internet helped spawn the creation of websites.  And finally, we saw software specific to residential property management along with other programs that helped with accounting, databases, and scheduling.

Also, most property management companies didn’t have employees and managed fewer than 100 rental units.  For those, like FRPM, who armed themselves with the education and technology available developed and grew into professional residential property management companies that began to outgrow the Ma and Pa managers.   Websites gave these new companies an advantage over competitors and self-managed Landlords.  The residential management software gave them the tools to be more organized and efficient.

2000's:

Companies and portfolios grow.  Professional residential property management companies continued to grow as they adopted technology and gain more education.  The part-time real estate sales agent was losing market share to people with formal business educations and experience.  When I graduated with my degree in Operations Management in 1993, I was already an investor, but had no idea I would become a professional property manager.  I couldn’t have asked for a better degree to prepare me for this industry.  My classes included Procurement Management, Accounting, Managerial Accounting, Finance, Organization Management, Personnel Management, Statistics, Quality Engineering, and Process Management.  I was able to use my education to standardize and streamline processes that improved quality and efficiency within my business.

Until this decade it was rare for a residential management company to be managing over 1,000 rental units.  Success began to be measured by the number of doors managed.  Some companies created sales forces dedicated to growth and securing more properties to manage.  I believe the first residential property management franchises were created in this decade.  With size and the ability to scale now playing an important role, companies began to incur debt.  Some companies obtained financing to buy-out some of the “Ma and Pa’ property managers.

FRPM continued to remain debt free and grew organically and never considered buying other companies.

Next week we review current market trends and how they are shaping the future.  Institutional investors know where the industry is headed, at least for them.  I think the typical residential investor has no idea what is going on and what it is leading to.  Thankfully, Idaho's culture is conducive to small business and I think we will differ from many states.


Tony Drost, President, First Rate Property Management, Inc.

Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Boise Increasing Rents Prove Sustainable

As rents have increased over the past few years, we have taken the position that Boise wages could not support these rents and that rents would stabilize or maybe even drop.   Idaho currently ranks 47th in the nation when it comes to median household income per capita and has ranked as low as 49th in recent years.  Simply put, income has not supported these higher rents.  It appears that the correction is not lower rents, rather it is higher wages.  We are seeing this first hand.  Wages have become very competitive and businesses are needing to raise their wages to procure and maintain good employees.  For now, it looks like rents will remain strong due to the population growth and higher wages.  The negative side of increased wages is that is is pushing up the costs for goods and services.

Speaking of increased wages, the Department of Labor Final White Collar Exemption Rule takes effect on December 1, 2016.  This new rule increases minimum annually salaried employees from $23,660 to $47,476.  While this Federal mandate likely will not affect many states, it certainly will have a huge impact on Idaho businesses.  Will the cost of doing business go up?  Employers with salaried supervisors and managers under this minimum amount will either have to increase salaries, or change these individuals to hourly.  Exempt employees work as long as it takes to get the work done, which many times is over 40 hours a week.  However, as exempt salaried employees, their pay remained unchanged.  If these salaried employees become hourly employees, they will be paid time and a half for anything over 40 hours.  In Idaho, due to being on the bottom of the wage ranking, I would suspect that some businesses that were already struggling or working on very low margins, may just close their doors.  Other businesses will have to pass on this added expense to their customers.  Some may choose to make their managers hourly, which may hurt customer service due to the reduce hours.


Tony Drost, President, First Rate Property Management, Inc.

Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Deferred Maintenance Continued

Last week I wrote about deferred property maintenance regarding rental properties and realized that not all of the deferred maintenance that I see is necessarily due to a property owner's decision to purposely defer it.  Preventative maintenance is a pro-active approach to prevent damage and more costly repairs.  Preventative Maintenance/Inspections can identify unknown or unreported repairs before they get worse.  Many years ago First Rate Property Management made preventative maintenance/inspections mandatory.  Many owners did not agree that the cost was worth the benefit and demanded that FRPM not require it.  FRPM  changed its policy and although we strongly recommended preventative maintenance/inspections, we allowed it to be optional with some exceptions addressed below.

Preventative maintenance/inspections cost money and sometimes no repairs are found.  Sometimes, no matter how often or recent preventative maintenance/inspection were performed, things still break.  But, in the long-term, we believe that preventative maintenance saves money.  Many of your FRPM Team Members are also Landlords and since we are in the business, we see pros and cons of preventative maintenance a thousand times more often than the average property owner.  We see the issues identified during preventative maintenance and we see expensive repairs that likely could have been avoided with preventative maintenance.  So all of us that are Landlords do pay the money to have preventative maintenance performed at our rentals.

Preventative maintenance/inspections are more important for rental homes and apartments because some tenants just don't feel the need to report items.  Some have the most sincere intentions and feel that they don't want to bug the Landlord or Property Manager or nickel and dime them.  Others simply can look at a leak and not even understand or consider that is something that needs addressed.  We'll have Tony re-issue his published article about washing the rental car, which is a great analogy about the similarities between rental cars and rental homes and apartments.

Below I have created 3 groups of preventative maintenance.

HVAC and water heaters

FRPM recommends that property owners have their water heaters and HVAC systems serviced and inspected at a minimum of once per year.  We recommend having the furnaces serviced in early fall before the heat is really needed and the A/C in early spring before the A/C it gets too hot outside.  As I mentioned above, FRPM does require some HVAC systems and configurations to be inspected at least annually, versus being optional.

Seasonal

Gutters:  Especially where tall and large trees are present, having gutters and roofs cleaned in the late fall and winter can prevent serious issues.  Once clogged; soffits, fascia, siding, and interiors can be damaged.  Long term damage will result in their replacement.

Parking lots:  I listed those last week for deferred maintenance, but preventative sweeping and seal coating will prolong the life of a parking lot.

Preventative Maintenance Inspections:

Each year FRPM contracts out to a maintenance company to perform preventative maintenance inspections.  They follow a checklist and they will:  1)  perform preventative maintenance where needed, such as caulking bathrooms and kitchens, 2) make any immediate repairs, and 3) make recommendations on anything else identified.  Repairs or maintenance that is done that is tenant caused or the tenant's responsibility is charged back to the tenant.  The checklist for preventative maintenance inspections include:

1.            A Visual inspection of the exterior:  They are looking for repairs or damage to the roof, siding, windows, yard, fencing, etc.  On apartments, they check exterior lighting and replace bulbs regardless if it is the tenants responsibility or not.  We want the properties to be well lit for safety reasons.

2.            Drywall:  As they walk through the interior of the home or apartment, they inspect the walls for any damage and the source.  If tenant related, FRPM is informed and takes action with the tenants.  Obviously if there is other damage, they will  seek the source and make the necessary repairs.

3.            Lights:  Generally they just make note if they find broken interior light fixtures, but if the fixtures  require a ladder, special tools, or have other issues, they will replace.

 4.            Smoke/CO detectors:  These are tested, batteries are replaced, as needed, and expired detectors  are replaced.

 5.            Furnace filters that are dirty or missing are replaced.

 6.            Caulking as needed.

 7.            Windows, window coverings, and window locks are inspected.  Broken window locks are  repaired/replaced.  Other damages are reported for FRPM to take necessary follow-up actions

 8.            Doors and door locks are checked.  If not already done, they will replace some of the hinge screws   and striker plate screws with 3" deck screws.  This helps provide tenant safety.  They also add a   door viewer for the tenant unless it is a custom door, in which FRPM will discuss options with the property owner.   Also, missing doorstops are replaced.  Many tenants remove them, but this $2 item   saves hundreds in door and wall repairs.

 9.            Water lines and valves are checked for leaks.

 10           Dryer ducts and dryer exterior vents are inspected and cleaned if needed.


Tara Pecora.

Tara Pecora, CMC, Maintenance Team Leader
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

More on Deferred Maintenance

As a Certified Maintenance Coordinator with First Rate Property Management, deferred maintenance is a common topic.  Actually the words "deferred maintenance" is never used.  I identify an issue and offer a recommendation for repair and the owner chooses to not make the repair.  They are choosing to defer the cost, which is completely their right, so long as the issue I am identifying is not a habitability or tenant safety issue.  Sometimes deferring maintenance makes sense, but like a traffic cop who sees the terrible consequences of texting and driving, I see the consequences for deferring different maintenance items.

Last year, Tony wrote a blog on deferred maintenance and I have provided a link here.  Tony shared two actual events where deferring maintenance issues ended up costing a lot more in repair costs, but also property value.  Also, after years of deferred maintenance one property started looking so bad, that it no longer attracted good tenants and rents suffered.  I wanted to provide a list of commonly deferred maintenance issues, but as I was making my list I realized that many of them are actually considered preventative maintenance.  So today, I will provide my list of deferred maintenance items and will follow up next week with my preventative maintenance recommendations.

Deferred Maintenance:

Trees and shrubs:  Frequent and aggressive pruning to keep trees and shrubs away from the building, carports, and roofs and trimmed below any window.  Another example is tree removal.  I had identified a tree that had roots that had just started to affect the patio slab.  The property owner didn't take immediate action and as of today, we are looking at removing the tree, replacing the entire patio, and there is minor damage to the building.  Maybe a few hundred dollars to cut that root would have saved over $1,000.

Paint:  Exterior paint is expensive, but if not kept up, appearance goes down as well as protection.

Roofs:  Replace missing shingles, seal exposed nails, and replace roofs before they are worn out.  Most want to get every last year out of their roofs.  The new roofs are 30 year plus shingles, so why take the risk by waiting too long, replace it now and not have to worry about it for a long time.

Windows:  Old aluminum windows that condensate can create moisture related damage.  Often Idaho Power offers to pay a portion of new windows.  They won't condensate, they will lower the tenant's energy bills, and they improve the appearance and value of the property.  I really prefer property owners to do everything they can to minimize interior moisture.

Parking lots:  Multi-family properties with parking lots need to be maintained.  Regular cleaning extends their life.  Often the landscapers will agree to blow the parking area off after mowing, but property owners really should consider hiring a sweeper to clean the parking lot at a minimum of once every quarter.  Crack sealing is actually very inexpensive and it is our recommendation that parking lots have their cracks sealed every fall before winter.  And lastly, the parking lot should be seal coated as needed.  Sometime it can go as long as 6 years.  I know that FRPM has had to replace a number of parking lots over the years and because of the expense, Tony seal coats our office parking lot every 3 years.  He doesn't want to ever have that huge expense of replacing.

Preventative maintenance and deferred maintenance can cross over.  Something I hear Tony tell property owners all the time, makes sense.  "When you make repairs or improvements that allow for a higher rent, realize that for every $10 increase in monthly rent increases value by about $1,300.  


Tara Pecora

Tara Pecora, CMC, Maintenance Team Leader
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Consistent, Fair & Compliant- Deposit Return Process

      Consistent, fair and compliant are the 3 key words Marie Swanson used to describe the Security deposit return process.  This very detailed article covers several helpful tips to follow when it comes to returning a tenants security deposit.   Some of the most important steps she talks about are being in compliance with your state and local laws, document move-in’s and move-outs, setting expatiations upfront and having a checklist in place to keep consistent.  FRPM has been using this process for several years now and it has created a very fair playing field for all tenants when it comes to expectations of the property condition upon moving out.  

Please click here to read the full article /security-deposit-return


 

Melissa Sharone

Melissa Sharone, Operations Manager
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Property Rental markets in Boise and Idaho.



View Externally Here

Steer Clear of Rental Scams

      With the prime rental season in full swing, the number of fraudulent or "scam" rental advertisements have increased.  It has been determined by researchers that 40%-47% of Craigslist advertisements are false advertisements used take money or personal information from prospective renters.  This causes a problem for reputable property managers and prospective renters for 2 main reasons.  First Property managers have to spend the time answering questions about false advertisements; and second the renter has to be extra diligent on verifying all advertised information.

      The scammers copy photos and details from legitimate advertisements, then they create the fraudulent advertisement with different, lower pricing and different contact information.  As the renter inquiries about the property, they are met with demands for a completed applications, application fees, credit card numbers, or deposits prior to scheduling a showing of the property.  For the unknowing prospective renter, they could be providing a large amount of money or personal information, but not realize they have been scammed until it is too late.

       All prospective renters must be mindful when searching for a rental on Craigslist to avoid becoming a victim of a rental scam. When looking at rental advertisements, the following information is helpful in determining if it is a fraudulent advertisement:

                1.    It sounds too good to be true.  The rent and deposit are well below market value for the area, all utilities are paid by the  landlord, and has every amenity imaginable that is included in the rent.  Fraudulent listings are meant to appeal to as many people as possible to increase the chances of a prospective renter falling victim to the scam.

                2.  Vague screening criteria.  Bad credit, a criminal record, or Evictions are no problem, are common in fraudulent listings. These details are meant to prey on the prospective renters who have been denied multiple times from other property managers.

                3.  No address or details of the location of the property.  Since most scammers are not located anywhere near the area the prospective renters are looking, they are unable to provide the general location of the property.  They will also not provide an actual address, so the scammer does not try to go to the property without the scammer knowing.  The scammer uses the excuse of having a policy to not release the address, as they have had issues with vandalism, or people harassing the current tenants. 

                4. Usually requires personal information, application, deposits, or money prior to scheduling a showing.  The scammer says they have to run the application or collect the deposit to assure that the prospective renter is actually interested in the property.  At times, they will have them click on a link where it re-directs them to an "online application." The prospective renters do not have to pay an application fee, but they do have to provide all their personal information such as a social security number or banking information.

       To help avoid fraudulent advertisements, it is common for property managers to watermark all of their photos they use for advertising.  Things such as logos, website addresses, or company names are watermarked onto the photos, so if scammers use them for an advertisement, it is easier for prospective renters to verify with the actual property management companies.  It is also highly suggested for prospective renters go directly through legitimate property managers, so they are getting accurate information for a property that is truly available to rent.  As it is unfortunate that people fall victim to these scams, it's even more important for prospective renters to do their research, and to be mindful about the ways scammers use to get money or personal information.  


Kristen Curtis, Leasing Team Leader, First Rate Property Management, Inc.

Kristen Curtis, Leasing Team Leader
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Property Rental markets in Boise and Idaho.



View Externally Here

RentTrack-New Online Payment Partner

We have exciting news...First Rate will now be partnered with RentTrack for all online payments.  As of July 1st, 2016 we will be 100% up and running with RentTrack. RentTrack allows tenants to pay their rent with their checking account or credit card, they can schedule recurring payments for the same day every month to ensure on time rent payments, it is quick, easy, and extremely convenient. With RentTrack tenants can build their credit by paying their rent on time every month! At First Rate Property Management we are incredibly familiar with collecting rent payments online, RentTrack is fully integrated with our software, therefore processing online rent payments is seamless. We are looking forward to this new sdventure with RentTrack beginning Summer 2016.  

Please contact Melissa, Mike or Marie at 208-321-1900 with any questions you may have in regards to this change. 


Marie Swanson

Marie Swanson, Accounting Team Leader
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about First Rate Property Management's accounting operations in Boise, Idaho.



View Externally Here

The Importance of Renters Insurance

            Benjamin Franklin once said, "By failing to prepare, you are preparing to fail."  For a renter, preparing to move into a new rental can be overwhelming, but there is one step that is a simple preparation for unexpected events, which is obtaining Renter's Insurance.  Renter's Insurance was created specifically to protect a renter's personal belongs during their tenancy, and coverage can be extended to cover the property owner's property in the event of loss or damage due to tenant negligence.

            For example, Miss Smith in apartment #201 overfills her washer, which causes the washer to overflow and saturate the carpet which then leaks into Mr. Jones’ apartment below.  The water leak from Miss Smith’s apartment causes damage to Mr. Jones’ TV, which has to be replaced.  Luckily for Miss Smith, she obtained Renter’s Insurance when she moved into the property, and has water damage coverage on her policy.  She immediately contacted her property manager to notify them of the incident, and provided her Renter’s Insurance information.  If Miss Smith did not have Renter’s Insurance, she would have to pay for the expense to clean up the water and make repairs out of her own pocket, which could have been over $1,000 depending on the extent of the damages.  Not to mention, she was able to include the expense of having to replace Mr. Jones’ TV on her insurance claim. 

            Most Insurance Companies have different policies available that protect the tenant's personal property from events such as:  Fire and smoke damage, theft and vandalism, and water damage.  Even though Renter's Insurance is not required, it is highly suggested, and the costs can be very minimal for extensive coverage. On average a standard renter’s insurance policy runs about $200 per year.  This is $16 a month that can save any renter thousands of dollars in the event of an unfortunate accident. 


Kristen Curtis, Leasing Team Leader, First Rate Property Management, Inc.
Kristen Curtis, Leasing Team Leader
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Property Rental markets in Boise and Idaho.



View Externally Here

National Real Estate Update

A client forwarded me an article that came from, Mike Kirby, the Branch Manager with Wells Fargo in Eagle, ID.  I was unable to find a direct link to the article, but I have pasted the information that was included.  Please keep in mind, these are national numbers.

·        Existing home sales rose 5.1% in March to 5.33 million units, following February’s 7.3% decline. The first-quarter average was 5.29 million units, 1.1% above the last year’s 5.23 million-unit sales rate. All data are shown as seasonally adjusted annual rates.1

·        The median price of existing homes sold in March was $222,700, 5.7% above the median price recorded in March 2014.1

·        Housing starts in the first quarter of 2016 virtually matched the pace set in the fourth quarter of 2015 at 1.133 million units at a seasonally adjusted annual rate. That’s up 15.9% from the 978,000-unit rate set in the fourth quarter of 2014.2

·        At 792,000 units, starts on single-family homes in the first quarter were up 4.7% from the fourth quarter of 2015 and up 23.2% from a year earlier.2

·        The yield on 10-year Treasury securities, a leading guidepost for pricing mortgages, averaged 1.89% in March, down from 2.24% in December. Through the first 19 days of April, it’s averaged 1.76%. Last year, it averaged 2.14%, with June’s 2.36% being the highest monthly average in 2015.3

·        Industrial production slipped by 0.6% for the second consecutive month in March. The index, which measures output at the nation’s factories, mines, and electric and gas utilities, has fallen by 2.0% since March 2015 and has registered 13 monthly declines in the last 16 months.4

·        The Consumer Price Index rose 0.1% in March. In the past year, the index has climbed 0.9%. The core CPI, which excludes the volatile food and energy sectors, also grew 0.1% in March and is up 2.2% in the past year.5

·        The average rate on 30-year fixed-rate mortgages in Freddie Mac’s survey was 3.59% during the week ending April 21, an increase of 1 basis point from the previous week. The March average was 3.69%. All rates quoted have fees and points averaging 0.5% to 0.7% of the loan amount.6

1. ?Existing-Home Sales Spring Ahead in March,? National Association of Realtors�, April 20, 2016. www.realtor.org/…/04/existing-home-sales-spring-ahead-in-ma…
2. ?New Residential Construction in March 2016,? Bureau of the Census, April 19, 2016. www.census.gov/construction/nrc/pdf/newresconst_201603.pdf
3. ?Selected Interest Rates, (Daily) ? H.15,? 10-year Treasury constant maturity series. Data through April 19, 2016. www.federalreserve.gov/releases/h15/data.htm
4. ?Industrial Production and Capacity Utilization,? Release G.17, Federal Reserve Board of Governors, April 15, 2016. 
www.federalreserve.gov/releases/g17/Current/g17.pdf
5. ?Consumer Price Index ? March 2016,? Bureau of Labor Statistics, April 14, 2016 
www.bls.gov/news.release/archives/cpi_04142016.pdf
6. Freddie Mac Primary Mortgage Market Survey, April 21, 2016. 
www.freddiemac.com/pmms/.
The Federal Reserve Bank of St Louis Economic Data system (FRED) was used to collect historical data on nonfarm payroll employment, the unemployment rate, and the CPI. 

Keeping Current is produced by the Sales & Service Systems Office of Wells Fargo Home Mortgage.


Tony Drost, President, First Rate Property Management, Inc.

Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Idaho Job Growth is #1 in Nation

               Like all of our subscribers who use our blog to keep them up to date on the Boise rental market, we too watch the other industries that influence the rental market.  Recently we saw some comments from a local lender who summarized “some impressive factoids form the Idaho Statesman” newspaper.

            According to the Federal Bureau of Labor Statistics, "Idaho has ranked number one in the nation for job growth in the past year”.  "The Gem State’s employment growth rate has dominated the ranking in the past year", says Jack Harty with Harty Capital, a Boise area mortgage advisor.  This isn’t Idaho’s first time at the top.  Idaho’s year-over-year growth rate ranked at the top of the US in October and December.

Article from Bureau of Labor Statistics: http://www.bls.gov/opub/ted/2016/idaho-has-largest-percentage-increase-in-employment-since-march-2015.htm

           We at FRPM see the growth.  We’ve seen the construction boom before, but its afferent right now.  There is a real need for housing.  The increasing rents and low vacancy are an indictor, but there are other factors, such as the large lines at DMV.  In the past, the job growth has been for lower paying jobs.  And that’s been our real concern and ultimately, it is what we believe will be the main factor that will cause rents to stabilize.

See full results from the Bureau of Labor Statistics here: http://www.bls.gov/opub/ted/2016/idaho-has-largest-percentage-increase-in-employment-since-march-2015.htm


Tony Drost, President, First Rate Property Management, Inc.

Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.

 

 



View Externally Here

Look for your tax assessment

Swope Investment Properties meets  with tax assessors annually to get an understanding of where they are seeing the market and assessed values.  Like appraisers, there are specialist that evaluate residential (1-4 units)  and apartments (5 and more units).  Regardless if the property is a single family home or an apartment complex, there are some common factors that are important to everyone.

                Assessed value:                            As of January 1, 2016

                Assessment Notices:                     End of May around the Memorial Day Holiday

                Appeal Deadline:                           June 27, 2016.  We recommend contacting the assessor as soon as                                                                               possible for any questions or potential appeals.

property tax pic

Apartments:

Every 5 years, the assessors perform a complete appraisal.  To determine value, they may contact the property owner and request operating statements.  They also review online sources to validate market rents.  Most values were based on a 6% cap rate, but in some cases, they went as low as a 5.5% cap.  After reviewing many operating statements, they have a very good idea of expense ratios to income and feel good with their ability to estimate Net Operating Income for those properties that don't supply operating statements.  Price per square foot is not used in determining value, but just as an interesting side note, the median assessed value comes in at about $90 psft.  And finally, the bottom line is that the median assessed values likely will see a median increase of 9-10%.  In extreme cases where properties have undergone substantial improvements, such as a rehab, which resulted in substantial increased rents could see as much as a 35% increase.

Residential:

The residential appraisers assesses 20% of the homes each year to determine a median change in value.  The Sales Comparison Approach is the largest factor used to determine value.  For multi-family (2-5 units) they will use Gross Rent Multiplier to validate value.  Adjustments are made, as the assessors look at the footprint of the property, condition, economic condition of the neighborhood, and square footage comparison.  Similar to the apartments, they too estimate a median assessed value increase of 8-10%.

Assessed Value versus Tax amounts:

An increased assessed value does not necessarily indicate an increase in property taxes.  In the fall the budgets are created and then they use the assessed values to divide up the funds needed.  Unfortunately we won't know the effect of until then.

If you question your assessed value, please forward Tony a copy of your assessment notice at Tony@BoiseInvestmentProperties.net

 

Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Boise Rents and Occupancy Remain Strong

The SW Idaho Chapter of the National Association of Residential Property Managers (NARPM) just published their 1st quarter rental rate and vacancy report.  As we have reported before, this survey information is a good guide to follow trends.  The sample size this quarter is a little low and First Rate Property Management believes that it could result in skewing some of the reports.  None the less, it is safe to say that the Boise area rental market continues to remain very strong.

Vacancy:  We believe that the vacancy percentages reported are representative of the market.  We assume that most companies are experiencing lower vacancies, like FRPM, and these numbers are a bit higher due to higher vacancy with companies taking on many of the newly built properties during the initial rent-up period.  On page two is a line graph that is not properly labeled.  Series1 (blue) represents multifamily rentals, Series 2 (red) represents single family home vacancies, and Series 3(green) represent the combined or overall vacancy in both Ada and Canyon Counties. 

Multi-family rents:  This is where we believe that  the small sample size is really showing the skewed numbers.  As you see, based on the data, NARPM is showing average rents to be higher in Canyon County for both 1 and 2 bedroom units.  Perhaps that is true, as these numbers only represent the average rent for vacant units but Ada County rents have always been stronger than Canyon County.  Additionally, the averages are much higher than market rents and we assume that is because of the vacant new construction is renting at much higher rent levels due to their upgraded finishes.

Single family rents:   Here we see the typical spread in average rents between the Boise area versus Canyon County.  Notice there were no reported vacant two bedroom single family homes in Canyon County.  The average 4 bedroom rental home within the Boise area seems a bit high, but perhaps reflected of some higher end homes.  The 2 and 3 bedroom homes rent averages seem inline to what FRPM is seeing in the market.


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.


Southwest Idaho NARPM Vacancy Report Q1

2016

Introduction

The purpose of this survey is to show vacancy and rental rate trends among single-family homes and multi-family units (2-15) in Ada and Canyon County. Survey results are displayed by type (single or multi-family) and bedrooms (1-5) for the respective county. Property status was surveyed for the 1st quarter of 2016.

The survey participants were property management companies affiliated with the SW Idaho Chapter of NARPM and are considered to the representative sample of the inventory of professionally managed rentals of less than 16 units.

Survey Respondents

Data from a total of 13 property management companies were included in the survey results, which accounted for a total of 5522 homes: 1787 single-family and 3735 multi-family. The accuracy and reliability of this survey is improved with an increased sampling.


 


Summary

Vacancy rates moved down slightly again to 2.6% for the 1st Quarter of 2016. This is a decrease of .3% from last quarter. The largest decrease in vacancy rates from last quarter was single family homes in Canyon County at 2.10%. Ada county single family had an increase of .6%.


Rental rates in Ada County increased on the average of $273 for single family homes. There was an overall increase of $101 in rental rates for multi-family homes, in Ada County. On the average Ada County showed a $198 increase in rental rates over last quarter. This large increase is based on the demand for inventory and the time of year.
Rental rates in Canyon County showed an average increase of $293 from last quarter. This number is in part due to the increase in rental rates for Canyon County from last quarter, high demand for inventory and the time of year. (Please note: there were no 3 bedroom multi-family units reported this quarter. Also the larger increase for Canyon County was due to lack of homes reported & averaged and included 2 large homes priced in the higher range.)
Both Ada and Canyon County experienced vacancy increases for the 1st Quarter in 2016 starting the year off on a very high note. Although both counties experienced the vacancy increase, Canyon County had the higher increase in vacancy rates by 22% last quarter.


We thank you for participating in this survey. Please educate more Professional Members about the importance of this survey. More participants in these surveys is the only way to provide the accuracy and reliability information for our local market.

 

Courtney Wolfe
agent@tpdpropertymanagement.com
208-949-3083


Find out more about Idaho's premier organization of residential property management professionals at www.swidaho.narpm.org

NARPM is the professional, educational, and ethical leader for the residential property management industry.

Learn more about the National Association of Residential Property Managers at www.narpm.org

Contact Courtney Wolfe at 208-949-3083 with any questions and to learn how you can contribute and benefit!



View Externally Here

Charity Update

American Stroke Foundation Update

Since February 2016 First Rate Property Management as well as its employees, owners, and vendors have actively participated in contributing to The American Stroke Foundation charity. First Rate Property Management announced that our goal was to receive $5000.00 in contributions by September 2016. As of April 2016 the contributions that First Rate Property Management has received is over $2000.00. We are well on our way to meeting our goal!

First Rate Property Management would like to personally thank our employees for their donations as well as our owners: Pamlea Gerbitz, Lee Pearson, Rosie Skoro, Keith Reed, Dina Curtis, Pat Carson, Aaron White, Mark Ames, Robert & Teresa Abbott, as well as Victor and Kay Simenc. First Rate would also like to thank our vendors: Capital Cleaning, Property Maintenance Plus, and Sublime Electric for making it possible get closer to reaching our goal.

The American Stroke Foundation is an important charity. The Next Step Program specifically helps stroke victims in improving their health and overall wellness. The areas in which The Next Program helps victims and their families are: Communication, Health Behaviors, Life After Stroke and Physical Fitness. To learn more information on how you can help and participate please visit the American Stroke Foundation website: http://americanstroke.org/.

Thank you so much for all your contributions!

Marie Swanson

Marie Swanson, Accounting Team Leader
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about First Rate Property Management's accounting operations in Boise, Idaho.



View Externally Here

Do it yourself Maintenance

Do it yourself maintenance is something that FRPM considers pretty important. It helps reduce costs for owners, solves the issue for tenants faster and allows the property manager to get more accomplished. FRPM has a variety of maintenance FAQ’s listed on their website to help guide the tenants through a step by step process that in hope will resolve the issue. When a resident calls in for a maintenance request we have them go through trouble shooting steps as an attempt to remedy the problem which in return cuts down on unnecessary trips made by vendors. 

While it is important to try to have resident address some of their maintenance problems themselves, it is important to decipher which things tenants can do and which things we will want to send someone out for to avoid liability.

Things we try to troubleshoot and have tenants do themselves would be:

• Changing furnace filter if they can reach it

• Changing smoke detector batteries if they can reach them

• Reset circuit breaker

• Unjamming a garbage disposal

Things that would seem like it should be a tenant responsibility but we like to send vendors for:

• Changing detector batteries in vaulted ceilings. This requires a ladder. Most tenants don’t even have a ladder, not to mention it is dangerous for them to climb a ladder and is a liability if they fall

• Re lighting a pilot light- Some tenants are comfortable and have enough knowledge to do this but in most cases they don’t and we are more comfortable with sending out a

• Any repairs that could lead to property damage! For obvious reasons

• Spraying for wasps nest if they are in a high area and or if tenant is allergic to bees/spiders/ any pests we just prefer to have treated by a professional and avoid the risk.

The biggest thing to keep in mind is safety first. Yes it would be great to have tenants take care of simple things but sometimes those can lead to further problems or can cause a safety concern for the tenant.

Tara Pecora, Maintenance Team Leader, First Rate Property Management, Inc.
Tara Pecora, Maintenance Team Leader
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about First Rate Property Management's rental maintenance operations in Boise, Idaho.



View Externally Here

Continuous Service Agreements

electric meter

First Rate Property Management (First Rate) takes a lot of pride in managing investment properties and maintaining the high standards that we have set forth within our company. One tool and method that we employ to accomplish these goals and to maximize our client's investment is the Continuous Service Agreement (CSA).

A CSA is an arrangement with a utility company so that the utility service is not shut off between tenants. When a tenant moves out and schedules services to be terminated, the utility company should revert service back into the property owner's name, rather than shutting the utility off. First Rate property owners supply us with a power-of-attorney authorizing us to commence these agreements. We set up the CSAs with the power and gas companies for each rental we manage.

electric lines

The CSA is important, as it should ensure that there is no interruption in service. We don't want any interruption for any tenant; we want the tenant taken care of and to not have to worry about utility issues. When we receive notices to vacate from tenants we are able to schedule a new tenant to move in within a matter of days from when the old tenant moves out, because we are relatively assured that there won't be any interruption in service and can schedule vendors accordingly. If utilities were shut off between tenants it would cause delays in our processes.

Having CSAs set up on your properties is important and can save you money in the long run. The charge to turn service on is more than reverting it to the CSA, and doing so will not cause a delay in getting the property ready for the next tenant. The property will be turned over quickly with fewer interruptions and therefore your income is maximized with fewer days waiting to get the property ready for the new tenant.


Lizz Loop, Vice President, First Rate Property Management, Inc.
Lizz Loop, Vice President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Ada County Real Estate Report

The Ada County Association of Realtors just released their 2015 real estate report. Below are some highlights.

  • The National Association of Realtors (NAR) ranked Idaho as #2 in the country for job growth, up 3.2% year-over-year.
  • Idaho was 4th in the nation for price appreciation last year -- up 8.5% from 2014.
  • Overall, Idaho's price appreciation is expected to stabilize and we'll see more of a historic average of about 3.9% price appreciation in 2016.
  • Domestic migration from neighboring states -- especially California -- should continue in 2016.
  • Low inventory coupled with population growth is driving prices and demand.

2015 Residential Real Estate Market Report for Ada County
Provided by the Ada County Association of REALTORS® (ACAR)
Based primarily on data from the Intermountain MLS (IMLS)
January 2016

view PDF in browser
view PDF as file

Boise Subdivision and Foothills


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Ada County Rents Topped Out?

The SW Idaho Chapter of the National Association of Residential Property Managers (NARPM) just published their 4th quarter rental rate and vacancy report, and the results are surprising.

Vacancy improved with an overall vacancy rate of 2.8% for the 4th quarter of 2015. However rent rates dropped. What could contribute to lower vacancy and lower rents? According to NARPM, "this large decrease is solely based on the competitive time of year and the fact that vacancies are much tougher to fill during the 4th quarter." Perhaps, but it could be a sign that rents are stabilizing. Time will tell.

We've been suggesting that the massive amount of new multi-family housing would create a surplus of inventory and create a correction in rents, but we also expected to see higher vacancy rates at that time too. I would not be surprised if we see very little difference in rents in the first quarter of 2016 and higher vacancy rates correlating the two.

More information and data below.


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.


Southwest Idaho NARPM Vacancy Report Q4 2015

Introduction

The purpose of this survey is to show vacancy and rental rate trends among single-family homes and multi-family units (2-15) in Ada and Canyon County. Survey results are displayed by type (single or multi-family) and bedrooms (1-5) for the respective county. Property status was surveyed as of December 31st, 2015.

The survey participants were property management companies affiliated with the SW Idaho Chapter of NARPM and are considered to the representative sample of the inventory of professionally managed rentals of less than 16 units.

Survey Respondents

Data from a total of 23 property management companies were included in the survey results, which accounted for a total of 6532 homes: 2536 single-family and 3996 multi-family. The accuracy and reliability of this survey is improved with an increased sampling.


 

Click to enlarge

Ada and Canyon County Vacancies 1

 

Click to enlarge

Ada and Canyon County Vacancies 2

 

Click to enlarge

Ada and Canyon County Vacancies 3

 

Summary

Vacancy rates moved down slightly to 2.9% for the 4th quarter of 2015. This is a decrease of .7% from last quarter. The largest decrease in vacancy rates from last quarter was single family homes in Ada County at 1.3%. Canyon county single family had a decrease of .4%.

Rental rates in Ada County decreased on the average of $139 for single family homes. There was an overall decrease of $126 in rental rates for multi-family homes, in Ada County. On the average Ada County showed a $182 decrease in rental rates over last quarter. This large decrease is solely based on the competitive time of year and the fact that vacancies are much tougher to fill during the 4th quarter.

Rental rates in Canyon County showed an average decrease of $230, from last quarter. This large number is in part due to the increase in rental rates for Canyon County last quarter and directly related to the increase in rate 5 bedroom single family homes and again related to the competitive time of year.

Both Ada and Canyon County experienced significant the vacancy decreases for the 4th Quarter of 2015. Although both counties experienced the vacancy decrease, Ada County had the higher reduction in vacancy rates by 19% last quarter.

We thank you for participating in this survey. Please educate more Professional Members, about the importance of this survey. By having more participants, the accuracy and reliability of this survey is always improved.

View the SW Idaho NARPM 2015 Q4 Vacancy Report as original PDF file

Courtney Wolfe
agent@tpdpropertymanagement.com
208-949-3083


Find out more about Idaho's premier organization of residential property management professionals at www.swidaho.narpm.org

NARPM is the professional, educational, and ethical leader for the residential property management industry.

Learn more about the National Association of Residential Property Managers at www.narpm.org

Contact Courtney Wolfe at 208-949-3083 with any questions and to learn how you can contribute and benefit!



View Externally Here

Coordinating Maintenance Contractors

construction tools

A big part of property management is coordinating maintenance and repairs. Some management companies have in-house maintenance while others, like FRPM, use independent contractors. As a Certified Maintenance Coordinator, I am taught to understand the differences and to have policies and procedures in place for the various contracting situations that we encounter every day. Not every property manager is thorough in establishing and communicating these guidelines, if they establish guidelines at all, so I wanted to provide some helpful information on the topic of independent contractor relationships. Property owners can be sure that their property manager does not put them at risk, by seeking out a management company that adheres to the letter and spirit of the law in these areas. First Rate Property Management is one such company.

The federal government is cracking down on wage disputes across the country, and many of the issues involve people claiming unpaid wages for allegedly working overtime but not being paid for it. Often the folks making these claims are actually independent contractors. Property managers are being sued and some are losing in court because a number of things occurred (or did not occur) during their relationship with their independent contractors.

  • There are many practical and legal ways to differentiate between someone who is an employee and someone who is an independent contractor. Some of these property managers referred to their independent contractors as employees in their employee handbook and/or internal policy and procedures.
  • Property managers should have their independent contractors sign a vendor agreement, like FRPM, that specifically states that we do not employ them and that they are independently contracted.
  • Property managers should report independent contractor earnings to the IRS with a 1099, not a W-2 to report earnings.
  • Some of these property managers were giving their employee handbook to independent contractors.

contractor agreement

It boils down to how much control you have over your independent contractors. The more control you have the more likely they will be considered your employees. Other determinants of the distinction between employees and independent contractors raise other questions: Do your vendors depend on you economically? Do you provide software or tools to your contractor? Is your contractor in charge of hiring/firing his or her own employees? Do you specify an individual to service your properties, or does the contractor just send out who is available?

Bottom line, property management companies that use independent contractors should make sure that they treat them as such, or they could be liable for damages.


Tara Pecora, Maintenance Team Leader, First Rate Property Management, Inc.
Tara Pecora, Maintenance Team Leader
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about First Rate Property Management's rental maintenance operations in Boise, Idaho.



View Externally Here

Inherited Tenants

row houses

When taking over management of occupied units, a property manager is taking on the current rental agreement that the tenants contracted with either a previous owner or property manager. Each rental agreement can be unique with regard to fees, policies and individual clauses, which can result in a property manager enforcing multiple rentals agreements across different properties at the same time. It takes time to review each rental agreement in detail and to note specific items such as late fees and deposit-release time frames. Therefore, having a procedure in place for signing tenants onto the new property manager's rental agreement is beneficial to tenants and owners, because property managers are experts on the workings of their own rental agreements. Placing all tenants on the property manager's lease provides for effective management for the property owners and consistent service for tenants.

When tenants are inherited, chances are that they were placed in the rental unit based upon different qualifying criteria; therefore, they may not be the best fit with the new property management. Allowing inherited tenants to renew for a shorter term -- with the stipulation that they sign onto the new rental agreement -- can serve as a trial run for both the tenant and the property manager. The tenant’s performance at the property (payments, upkeep, compliance, etc.) can then be based on the new rental agreement, so the standards are clear and set and can assist the new property manager in determining if the tenant should be able to renew again. Offering different options for a renewal, such as different rent amounts for different term lengths or even incentives, can encourage a tenant to sign the new rental agreement, especially if he or she is hesitant of changing to a new management company but does not want to move.

success or failure

The procedure for attaining a lease agreement with inherited tenants can begin as soon as you retain management of an occupied unit, if the tenant is on a month-to-month rental agreement or if the rental agreement is set to expire. It is wise to perform inspections of the units and to discuss the results with the property owner prior to offering any renewal options. That way, any possible lease violations can be avoided or corrected prior to locking in the tenant for an extended term. At the beginning of management, have an open dialogue with the property owner so that expectations for rents and term lengths can be established. The property manager can then proceed to renew multiple inherited tenants efficiently, especially in larger complexes. For rental agreements that are still in a term period, set the procedure to work those tenants in with any other renewal procedures you have.

Consistency is key in effective property management, so having inherited tenant renewal procedures in place can streamline the whole renewal process. Having all tenants on the same rental agreement is beneficial to the owner and tenants because you are able to address any issues as they arise, and not have to determine or interpret what the previous rental agreement states.


Kristen Curtis, Leasing Team Leader, First Rate Property Management, Inc.
Kristen Curtis, Leasing Team Leader
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Property Rental markets in Boise and Idaho.



View Externally Here

Secret of Our Success

FRPM tracks a number of metrics to evaluate our processes and services. Although a number of our metrics measure our business, most measure FRPM's performance for our property owners and tenants. I thought I would share some that I hope you find not only interesting, but also appreciate.

Vacancy

The one metric that we report on a frequent basis is our vacancy rate. Our low vacancy rate is something that we continue to be proud of. Over the past two years, FRPM's average vacancy rate has been 1.47%, which is exceptionally good compared to the national average of about 7.38%. As you read on, you'll see that our success in other areas contributes to this great vacancy rate.

Turnovers

Our maintenance team tracks things like call backs for contractors and the number of days to get a property rent ready for the next. In 2015, the average number of days it took to get a property rent ready was 5 days. This is a good number because it also includes turnovers where the property had to be completely remodeled, such as full paint, all new flooring, perhaps new windows and doors, etc. Our quick turnover time allows us to place the new tenants in sooner, which of course contributes to our lower vacancy rate.

Days-on-market

Besides vacancy, our leasing team tracks things such as: average days on market, lease renewal rate, and rent averages. Days-on-market is typically the number of days a property sits vacant before a new tenant is selected. Unlike many other Boise property management companies, FRPM begins advertising once the tenant gives notice and we work with the outgoing tenant to show the property while it is still occupied. On average, FRPM advertised for 24 days, which tells our property owners that FRPM gets their properties, rented almost a week before the current tenant even moved out.

Eviction rate

Our tenant eviction rate is another metric that we track that helps our property owners understand the importance that we put on our tenant screening. For years our eviction rate has been less than one-tenth of one percent, and in 2015 we matched our historical consistency with an eviction rate of less than one-tenth of one percent, monthly average. Again, our screening criteria help FRPM to keep important statistics where they ought to be, which in turn keeps our owners and tenants happy. Moreover, when this measurement does jump up, we have seen that the increase often coincides with taking on properties where the property manager did not screen well and FRPM as the new property manager had to evict. We do our best to make these transitions as smooth as possible for all parties involved, while enforcing our rental policies in the interests of all parties involved.

FRPM is always striving for continued success and improvement, and through these metrics we learn both where we can improve and where we should continue to focus our efforts on what we do best.

First Rate Property Management Rental Vacancy Rate

2015: 1.37%

Click to enlarge
FRPM vacancy rate 2015


Melissa Sharone, Operations Manager
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Property Rental markets in Boise and Idaho.



View Externally Here

Landlord Threatens to Evict After Tenant Shoots Intruder

apartment leases and guns

This is an interesting story for a number of reasons. Idaho has a lot of gun owners and hunting is one of the reasons people move to the Boise area. One auto dealer even offers a free gun with the purchase of a new truck. To comment about the article is tough, because we don't know all of the facts and it is easy to make some assumptions. So with so many gun owners and a constitutional right to bear arms, can an apartment complex have a rule about possessing a pistol? Why did the apartment complex add such a rule? Maybe there is good reason and maybe they legally could make that rule. In a time where litigation is rampant, it can be confusing on what a Landlord or a property manager can do. Fair Housing says that a Landlord cannot deny a tenant's pit bull that is his or her bona fide companion animal. However, Landlords have been sued when one tenant's pit bull attacked another tenant. It wasn't the Landlord who filed the lawsuit -- it was the tenant. In this story about the retired Maine lobsterman, the apartment complex never did file an eviction. They sent a letter referring to the apartment rules and that they could evict for violating apartment rules. Look at the collateral damaged caused by a bad guy set out to burglarize a man's home. The bad guy got shot and is being charged with burglary. The good guy protected himself and his home and was unharmed by doing so.

Ex-Lobsterman who fought off intruder could face eviction for gun
Source: FOX News Network
December 27, 2015


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Who Is to Govern Property Managers

Who Is to Govern Property Managers

Four or five years ago, when the Idaho Real Estate Commission (IREC) came to Tony Drost, President of First Rate Property Management, looking for support in licensing of property managers, Tony was all for it and offered any assistance that he could provide. But based on a recent Idaho Business Review article, Tony now seems to have a little different opinion. What changed? "I was all for it," says Tony, and when he learned that they were forming a task force, he reached out and offered to volunteer. Tony was not selected and he did not participate in the task force as this article says, but fortunately, several of our fellow colleagues were and they kept us updated. It was what the members of the task force were reporting back that made Tony start thinking that perhaps a real estate license is not the best way to go. Tony still believes that something should be done, but he now thinks that perhaps the real estate commission is not the right entity to govern. Below are some of the arguments that Tony heard as the task force considered real estate licensing.

1. PM is different. Most states require property managers to be licensed real estate agents and many of these property managers don't believe the real estate commission is the best choice to oversee them. Why? Because the real estate departments across the nation are sales oriented. Most if not all of the required continued education is oriented for real estate sales, not rental property management. When they take the state and national tests, a majority of the test content is based on sales and not rentals. Many of these property managers don't want to do any sales -- they just want to do property management.

Other states have recognized this problem, but they had already put real estate and property management under one roof. So states like Arizona and Nevada both have added a separate property management license that offers requirements, networking and education just for property management, as it is much different from real estate sales.

The other concern that came up about property management being under real estate licensing is that that the National Association of Realtors (NAR) doesn't really support their property management issues. NAR has a property management leg, which is the Institute of Real Estate Management, which focuses on commercial property management, not residential. Property management for commercial properties and residential property managers differs and it sounds as though the task force was trying to find one way to do things, and the commercial and residential property managers could not agree.

2. Public Protection. Everyone agreed that protecting the public from bad people is good, but they didn't agree that licensing would actually provide that protection. As stated before, most states require licensing of property managers under the department of real estate, yet these states still see the same issues as states that don't.

3. Costs will go up. "I liked the idea of having a broker overseeing the company," said Tony, who is already a licensed real estate broker. But according to some within the task force, there was talk about requiring many of the positions within a company to be licensed. States that require real estate licensing tend to manage properties with a single property manager. That person is responsible for his or her clients' leasing, maintenance and accounting needs. It's a lot like how cars were built before the production line: a single individual installed the motor, painted the body and mounted the wheels. FRPM is structured much like a modern production line: we have people performing jobs based on their speciality. They can become very good at the one thing.

Because Idaho property managers are not required to be licensed real estate agents, it is very uncommon to see leasing commissions, which are the norm in states that do require licensing under the real estate commission. Leasing commissions vary from market to market, but they can be as much as a full month's rent on a new lease and half a month's rent on a renewal. Those are costs that most residential property investors have not had to pay. That's significant, and what type of impact will that have on Idaho investors? Will they raise rents to recover the added expense? Or will they simply choose to invest elsewhere?

Tony does say that the quote within the article about Boise having a lot of competition is true. "It has kept management fees very low in comparison to other states."

4. Government doesn't belong in business. Some of the examples that were given -- where the government got involved and made a process more complicated and increased costs -- were good examples of this, but we are deciding to stay away from commenting on the examples. We can assume that everyone reading this can think of some good examples on their own.

Other concerns involve how far government will take the laws in restricting fees. California has taken it so far that it is very difficult to evict tenants, even for non-payment of rent. In Seattle, a property manager is in violation of the law if they collect rent from a tenant and do not remove the property manager's management fee that very moment. The task force discuss what fees can and cannot be charged and the limits. Property managers from out of the state cite these types of restrictions as instances of government taking things too far. Limiting the amount that they can charge in late fees, and how they can apply rents, is crippling the property manager's and landlord's ability to discourage lease violations.

In summary, First Rate Property Management does believe something could be done to improve property management in Idaho, but putting it under the real estate commission no longer seems to be the right place for the solution. In the meantime, Tony recommends that Idaho residential investors only hire property managers that have professional designations. Sure, hiring someone affiliated with the National Association of Residential Property Managers (NARPM) is a good first step, but unfortunately some join just to be able to put the logo on their marketing materials. So, look for dedication in a property manager and one who is educated and experienced by having attained professional designations such as: Residential Management Professional, Master Property Manager and Certified Maintenance Coordinator. But the granddaddy of them all is the company certification of being a Certified Residential Management Company. I guarantee, that almost any issues that the realtors were concerned about is addressed in the requirements for this designation.


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Idaho Sees Nation's Largest Increase in Employment Growth

Idaho's job growth is #1 in the nation

According to the Idaho Business Review, Idaho's job growth is #1 in the nation. Construction jobs grew by 12.5% and are the main reason Idaho tops the list. I found it interesting that the top 5 states included Utah, Nevada, Washington, and Idaho. Below is a link to the full article.

Idaho sees nation's largest increase in employment growth
Source: Idaho Business Review
by Benton Alexander Smith
December 1, 2015


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

America's Top 50 Cities to Live

Over the years, Boise has been mentioned as a top-ranked city to live, work and retire. In the below recent article, 24/7 Wall St. just posted "America's 50 Best Cities to Live"; and Boise didn't even make the list. Meridian, Idaho, not only made the list, but took the #1 position. I grew up in Boise and now live in Eagle, but I went to Meridian schools and have lived so close to Meridian most of my life, it is like home. So when I read this article, and I looked at some of the attributes they used, I could see why Meridian scored so high.

24/7 Wall St. reviewed data on 550 US cities using a wide range of variables, including: crime rates, employment growth, access to restaurants and attractions, educational attainment, and housing affordability. According to the article, a safe place to live is top priority, while jobs are a major determining factor to move. Other important factors included good schools. The only way they could have described Meridian any better is if they had mentioned low property taxes, too.

America's 50 Best Cities to Live
24/7 Wall St.
November 5, 2015


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.


Meridian, Idaho 00


Meridian, Idaho 01


Meridian, Idaho 02


Meridian, Idaho 03


Meridian, Idaho 04

 


View Externally Here

Rents Continue to Climb, but so Does Vacancy

The SW Idaho Chapter of the National Association of Residential Property Managers (NARPM), which meets in Boise every month, recently posted their 3rd quarter rental vacancy survey results for Ada and Canyon counties. We have displayed some of the graphs and charts below.

The market continues to prove us wrong, in that we expected to see rents soften this 3rd quarter. The vacancy rate for Ada County single-family home rentals as well as multi-family rentals is about the same at 3.4%. The average rents posted for single-family homes seems to be in line with what we have seen in the market. There were only 18 companies that reported their rental data and, based on the average rents shown for the multi-family units, I believe the rents are skewed upward and likely being influenced by a large number of brand new properties.

In comparison, FRPM's current vacancy rate is half of 1% (.005), which is great. For those of you who are regular readers, you know that FRPM recommends to the property owners to not allow leases to expire in the fall and winter months, so our low vacancy is due to design. Typically such a low vacancy rate would indicate that rents can be pushed up a bit. Perhaps, but we find that it's best not to push up in these winter months, because if the property doesn't rent right away, it could sit for months.


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.


Southwest Idaho NARPM Vacancy Report Q3 2015

Introduction

The purpose of this survey is to show vacancy and rental rate trends among single-family homes and multi-family units (2-15) in Ada and Canyon County. Survey results are displayed by type (single or multi-family) and bedrooms (1-5) for the respective county. Property status was surveyed as of September 30, 2015.

The survey participants were property management companies affiliated with the SW Idaho Chapter of NARPM and are considered to the representative sample of the inventory of professionally managed rentals of less than 16 units.

Survey Respondents

Data from a total of 18 property management companies were included in the survey results, which accounted for a total of 5074 homes: 2392 single-family and 2682 multi-family. The accuracy and reliability of this survey is improved with an increased sampling.


 

Click to enlarge

Ada and Canyon County Vacancies 1

 

Click to enlarge

Ada and Canyon County Vacancies 2

 

Click to enlarge

Ada and Canyon County Vacancies 3

 

Summary

Vacancy rates moved down slightly to 3.6% for the 3rd quarter of 2015. This is a decrease of .3% from last quarter. The largest decrease in vacancy rates from last quarter was multi-family homes in Ada County. Canyon county multi-family had a decrease of .2% and single family homes where unchanged.

Rental rates in Ada County increased on the average of $22 for single family homes. There was an overall increase of $82 in rental rates for multi-family homes, in Ada County. On the average Ada County showed a $33 increase in rental rates over last quarter.

Rental rates in Canyon County showed an average increase of $54, from last quarter. The increase in rental rates for Canyon County was solely due to the increase in rates for 5 bedroom single family homes.

Both Ada and Canyon County experienced the vacancy decreases for the 3rd Quarter of 2015. Although both counties experienced the vacancy decrease, Ada County had the higher reduction in vacancy rates by a full .4% over last quarter.

We thank you for participating in this survey. Please educate more Professional Members, about the importance of this survey. By having more participants, the accuracy and reliability of this survey is always improved.

View the SW Idaho NARPM 2015 Q3 Vacancy Report as original PDF file

Angela Post
angela@postpropertyidaho.com
208-585-3256


Find out more about Idaho's premier organization of residential property management professionals at www.swidaho.narpm.org

NARPM is the professional, educational, and ethical leader for the residential property management industry.

Learn more about the National Association of Residential Property Managers at www.narpm.org

Contact Angela Post at 208-585-3256 with any questions and to learn how you can contribute and benefit!



View Externally Here

Announcement: New Rental Management Software

Big News! Beginning January 2016, First Rate Property Management will begin using the cloud-based accounting and property-management software, Rent Manager. With Rent Manager, we will have a consolidated suite of software solutions for managing the needs of properties, tenancy, owners, vendors and taxation reporting. For detailed overviews of the Rent Manager software products, please visit the Rent Manager website. Two particularly helpful pages for a quick look at the software application are Rent Manager Product Overview and Rent Manager Features.

Rent Manager's powerful accounting system is at the core of its functionality for servicing the needs of all our clients. From there, the Rent Manager software expands to multiple additional software applications and hardware integrations. Our tenants will still be able to pay rent online, and now will also be able to access tenant account statements and other correspondence from FRPM, all online through an online tenant portal. Owners will likewise retain access to online statements, reports and correspondence, as in the past, but will now also be able to initiate certain type of financial transactions online, such as owner property contributions. Owners will also be pleased to know that the Rent Manager software comes pre-built and customizable with numerous tools that FRPM will develop for advancing property marketing, advertising and tenant selection. We will literally be on the cutting-edge of software technology for getting owners' properties occupied quickly and with the best possible tenants. We will also be utilizing the Rent Manager Work Order system, for handling property maintenance work and assisting our vendors and contractors with tools and workflows for smooth, streamlined service calls and property turn-over processes.

Rent Manager logo

This is an exciting transition for both First Rate Property Management and all of our tenant, owner and vendor stakeholders. We anticipate a limited amount of challenge initially, such as staff training and re-developing several of the forms and reports that we have used in the past and to which our clients have become accustomed to receiving each month. Rest assured, our top priority in switching to the Rent Manager software is not to have shiny, new windows on our computer screens, but is to maintain and improve on delivery of the first-rate service that we take great pride in and, above all else, that our tenants, owners and vendors expect and deserve. We are committed to being personally available every step of the way, for all these folks, to make the transition one which not only improves the efficiency of our systems, but improves everyone's bottom line.

We will post more details on the transition, before and after January 1, 2016, and will be keeping you up-to-speed via postal notices as well. Hoorah for new and better software for our property management needs, and yours!


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

ADA Service Animal Guide

Over the past two months the National Association of Residential Property Managers' Governmental Affairs Chairman, Scott Abernathy, MPM® RMP®, has spelled out about everything you ever wanted to know about ADA Service Animals. It's always a hot topic and rarely fully understood.

Please click on the below links to read the entire article.

ADA Service Animal Guide
by Scott Abernathy, MPM® RMP®
Governmental Affairs Chairman, NARPM
Oct/Nov 2015

view PDF in browser
view PDF as file


Pit Bull Service Animal

Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Met Our Charity Goal
 

At the beginning of the year First Rate Property Management announced that we had selected the American Brain Tumor Association (ABTA) as this year's charity focus. It was our hope that we would not only raise awareness of those who suffer, but also raise money to increase better diagnoses and treatment for those with brain tumors. With the generous donations from our employees, contractors, and owners, we surpassed our goal of $5,000. It's amazing that with a handful of contributors, we were able to raise so much.

First, I would like to thank the team of employees at FRPM for allowing me to pick this year's charity, and for their selfless donations. Next, I would like to thank three of our vendors: Dominic Nation with Property Maintenance Plus, Bob Conklin with Hometown Lawncare, and Robert Waldron with Desert to Oasis. With FRPM's match those three vendors raised nearly $2,000. And lastly, we had a handful of owners contribute and FRPM also matched their donations. Thank you to Cam and Mary Houlgate, Malia Thomas, Gary Elrod, Ray and Nancy Melville, Robert and Teresa Abbott, Aaron and Harmony White, Mike and Carla Gamblin, Mike and Mary Jane Swope, and Lee Pearson.

Thank you all for joining us in this endeavor. I hope it was as rewarding for you as it is for all of us.

Also, I wanted to report that property managers across the country raised about $170,000 for the ABTA at several fundraising events, including one in Las Vegas. And I would like to recognize my friends in Seattle at Bell-Anderson and Associates, who took fundraising to a whole new level. They held a number of fundraising events and also matched all donations. All-in-all, they raised over $17,000. Absolutely amazing.

Thank you all!

 


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

FRPM's Vacancy Rate for Boise, Meridian and Eagle: September 3, 2015

First Rate Property Management Rental Vacancy Rate

September 3, 2015: 1.68%

Click to enlarge
vacancy rate September 3, 2015


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Investor Indecisiveness

I was forwarded an article titled, How One Real Estate Investor's Indecision Cost Him Close to $80,000. Fact is, I didn't even read the full article. I think the more important issue here is that if you are thinking of investing into real estate, do your due diligence before diving in, so that when the right property comes along, you can buy with confidence.

Before you decide to invest in rental properties:

  • You should get pre-approved with a lender.
  • You should talk to your accountant and make sure that you have cash reserves.
  • You should select a real estate agent who specializes in the type of rental you want.
  • And you should choose a property manager to help advise before you buy. Property managers' perspective of rental properties is much different than most, so get that perspective before you buy.


Real Estate Investor Team
Real estate investing -- put together a solid team

Let's face it, indecisive people can be very frustrating to work with. Once you assemble the team that I described and consider their input as you identify properties, I think you can do so with confidence. Find the right property for you and do not worry about walking away from one property if any one of the members of your team thinks that there is risk or a bad deal. I can't help but think of an example where I worked with buyers in 2005 who were absolutely decisive and purchased properties with great confidence. I remember telling one buyer, who was doing an 80/10/10 loan, that his HELOC was at an interest rate over 10% and that I calculated his cash-on-cash return in the negatives. The buyer's response was, "Don't you worry about that because the property is going to be worth $30,000 more than the purchase price before we even close escrow." It wasn't but a few months later that we saw the first sign that the market was not going to continue to go up and up.

So be smart. Leverage can greatly improve your return, but don't be in a position where you are absolutely dependent on appreciation. Don't be so dependent on cash flow that a downturn in rents or vacancy puts you in financial trouble. If you have the reserves, you'll weather the storm and I believe that you will come out ahead down the road.


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Is Fair Housing Fair?

Property Managers across the country are told all the time that Fair Housing laws are not fair to all people.  Tenants who are not considered a protected class, complain that those who are, receive unfair and preferential treatment.  Landlords complain to their property managers that some interpretations and enforcement of the Fair Housing Act are unreasonable and add unnecessary costs to being a landlord.  Well like any law, you will always have opposition from one corner or another.  As property managers, it is our duty to follow the laws.  The purpose of this blog post is to provide news within the industry and to give a voice to a tenant who feels that he has none.


Drives a Bugatti -- accepts public housing assistance?

Maybe the more appropriate title for this post would be, "Is HUD Fair?"  HUD oversees the Fair Housing Act and subsidized housing.  The article that caught the eye of one of our very own tenants and blog subscribers was sent to me with absolute discontent (A family in public housing makes $498,000. HUD wants them to stay. -- The Washington Post).  Our tenant qualifies for housing assistance but receives none, and he is disheartened to know that a family making nearly $500,000 per year receives public housing assistance.  The article states:

"In a new report, the watchdog for the Department of Housing and Urban Development describes these and more than 25,000 other "over income" families earning more than the maximum income for government-subsidized housing as an "egregious" abuse of the system.  While the family in New York with an annual income of almost $500,000 raked in $790,500 in rental income on its real estate holdings in recent years, more than 300,000 families that really qualify for public housing lingered on waiting lists."  New York, Puerto Rico and Texas had the most over-income families in public housing, while Utah, Idaho and Wyoming had the fewest, investigators found."

Well, I was at a loss for words. I thanked our tenant for forwarding the article, though I also felt the need to apologize for a system that I feel I have no control of.  I encouraged the tenant to contact the local Housing Authority to pursue any 'entitlements' for which he might be eligible.  The tenant's response was not like anything that I had expected, which was, "I said that I qualified and that I don't receive public housing assistance. Just because I qualify, doesn't mean that I want or need the assistance."


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Boise Area Home Sales Slow

The Idaho Statesman published this article last week, "Treasure Valley Home-Sales Market Likely to Slow, Real Estate Agents Say." I wanted to highlight a few statements from the article.

  • Sales are slowing down
  • Increasing lending rates will hurt affordability
  • Prices may slip a bit, but the low inventory levels should protect values
  • Boise is still a great buy in comparison

Treasure Valley Home-Sales Market Likely to Slow, Real Estate Agents Say
August 6, 2015
By Zach Kyle / Idaho Statesman
zkyle@idahostatesman.com
 


 Keller Williams Realty Boise President Stacie States
 


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Local News Station Reports: Cost of Rent on the Rise

First Rate Property Management's blog gets a lot of attention and I guess we shouldn't be surprised that when the media decides to research a topic, they too hit the web. Last week we posted the rent and vacancy reports from the SW Idaho Chapter of the National Association of Residential Property Managers (NARPM), and it got KTVB's attention. Below is a video and a link to their story. In our summary, we point out that the data shows that rents appear to have stabilized. The title of their news report is "Cost of Rent on the Rise." I guess our fault for not agreeing to meet face-to-face. Being the first of the month, we just didn't have the time. So to clarify, the cost to rent has been on the rise and, based on the data, it appears to be stabilizing. Once all of the new construction is completed, we might see a bit of a correction. Only time will tell.
 

Report: Boise rental prices grow faster than national average (KTVB.com)
Deren Martinez/KTVB and Emily Valla/KTVB
 


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

SW Idaho NARPM 2015 Q2 Vacancy Report

The SW Idaho Chapter of the National Association of Residential Property Managers (NARPM), which meets in Boise every month, just released their 2nd quarter vacancy data for Ada and Canyon counties. We have displayed some of the Ada County graphs below.

Ada County Historical Rents

Multi-family rents remain unchanged from 2014 and 2015 as shown in the below graph (Ada County historical rents on page 4). Rents continued to grow on single family home according to NARPM. That's a bit surprising to us.

Ada County Vacancies

Considering the high tenant turnover during the summer months, vacancy is outstanding as shown below. (Ada County vacancy line graph on page 2).

Summary

Are rents finally stabilizing as this quarter's data suggests? If the 3rd quarter results due out in October show similar results, we are calling it a trend and we believe that if the building of multi-family continues we then might actually see rents drop a bit.


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.


Southwest Idaho NARPM Vacancy Report Q2 2015

Introduction

The purpose of this survey is to show vacancy and rental rate trends among single-family homes and multi-family units (2-15) in Ada and Canyon County. Survey results are displayed by type (single or multi-family) and bedrooms (1-5) for the respective county. Property status was surveyed as of June 30, 2015.

The survey participants were property management companies affiliated with the SW Idaho Chapter of NARPM and are considered to the representative sample of the inventory of professionally managed rentals of less than 16 units.

Survey Respondents

Data from a total of 15 property management companies were included in the survey results, which accounted for a total of 5027 homes: 2290 single-family and 2737 multi-family. The accuracy and reliability of this survey is improved with an increased sampling.


 

Click to enlarge
Ada and Canyon County Vacancies 1

 

Click to enlarge
Ada and Canyon County Vacancies 2

 

Click to enlarge
Ada and Canyon County Vacancies 3

 

Click to enlarge
Ada and Canyon County Vacancies 4


Summary

Vacancy rates moved up almost a full percent to 3.9% for the 2nd quarter of 2015. This is an increase of .9% from last quarter. The largest increase in vacancy rates from last quarter was multi-family homes in Canyon County and single family homes in Ada County. Nevertheless, the increase was in both multi-family and single family in both Ada and Canyon County.

Rental rates in Ada County increased slightly for single family homes, with an average of $9. There was an overall decrease of $31 in rental rates for multi-family homes, in Ada County. On the average Ada County showed an $11 increase in rental rates over last quarter.

Rental rates in Canyon County showed an average decrease of $38. There was a decrease in rental rates in Canyon County for both multi-family homes and single family.

Both Ada and Canyon County were affected by the vacancy increases for the 2nd Quarter of 2015. Although both counties were affected by the vacancy increase, Ada County had the higher increase in vacancy rates by a full 1% over last quarter.

Currently the trend is showing multi-family and single family vacancy is continuing to rise, in both Ada and Canyon County. Furthermore, rental rates are starting to decrease in both counties. It will be interesting to see what the 3rd quarter of 2015 will bring.

We thank you for participating in this survey. Please educate more Professional Members, about the importance of this survey. By having more participants, the accuracy and reliability of this survey is always improved.

View the SW Idaho NARPM 2015 Q2 Vacancy Report as original PDF file

Angela Post
angela@postpropertyidaho.com
208-585-3256


Find out more about Idaho's premier organization of residential property management professionals at www.swidaho.narpm.org

NARPM is the professional, educational, and ethical leader for the residential property management industry.

Learn more about the National Association of Residential Property Managers at www.narpm.org

Contact Angela Post at 208-585-3256 with any questions and to learn how you can contribute and benefit!



View Externally Here

Deferred Maintenance

Deferred Maintenance II Two incidents occurred recently at FRPM that made us want to discuss deferred maintenance. Although these incidents that we are sharing show deferring maintenance as a negative, we will also mention a couple examples of where deferring maintenance may make sense.

First of all, as FRPM identifies items that we believe need fixed, it is totally up to the property owner to choose to repair or replace them, so long as there isn't a tenant safety or habitability requirements issue. So deferring the repair may make sense. But our first two examples show where an abundance of deferring hurts value and performance.

Tony was asked to list a small apartment building. The owners provided P&Ls and said that the "books are a lot better with their new property manager" and that the old one was nickel-and-diming them on maintenance. Upon inspection, the property was in poor condition and the lack of maintenance in the past year had caused thousands of dollars of damage. The clogged gutters had caused water to spill over and damage the fascia, soffit and siding. On the interior, the list was vast, but let's jump to the bottom line: unattended water leaks had created so much mold and damage that the property would not qualify for conventional financing and required a cash buyer, or else the sellers were looking at about $30,000 in mold remediation and repairs.

In this example, the absentee owners were very pleased with the improved cash flow by their change in management. But it ended up costing them tens of thousands not that far down the road.

Deferred Maintenance I The other example is a very similar story, but comes from one of our contractors who went out to bid some exterior issues. The property owners expressed raving reviews of their new property manager because they were "making so much more money now." According to the contractor, the neglect and delay in some repairs damaged other components that now cannot be fixed but need to be replaced. He also said that the entire property looked "tired" and it was clear that its horrible appearance was steering away good tenants.

Just like the first example, the owners' decision to not only defer maintenance but to go to another management company that didn't bring such items to their attention cost them thousands more, plus a higher tenant turnover and an untold loss of value.

Like we said, we wanted to also give you examples of when deferring repairs may make sense. We had some in mind, but did a quick GOOGLE search to see if we could reference any good links on the subject. Unfortunately all we found were articles of why deferring maintenance and repairs was a bad idea. So we'll stick to our own examples of sensible deferred maintenance:

  1. Short deferral period. There are tons of examples of where the home owner has budgeted and plans on replacing fencing, siding, roofing, windows, paving, etc. very soon but a need for a short-term fix is necessary until the planned maintenance occurs. That makes sense.
  2. I know it is hard to believe, but even after passing a thorough screening process, sometimes tenants and/or their guests don't keep a clean house and misuse or neglect the property. It doesn't take long and the next thing you know, you are looking at new flooring, paint and a whole host of repairs and expense. However, the tenants are otherwise very good tenants. In this case, there is a good argument to defer this maintenance until the tenants vacate. Another approach may be to identify those costs and have the tenants start making small monthly payments so that you will have the funds to make those repairs and replacements when the tenants move out.

Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

FRPM's Vacancy Rate for Boise, Meridian and Eagle: July 17, 2015

Below is First Rate Property Management's current vacancy graph. Vacancy has spiked, just as it has in years past. This spike is the result of a number of factors.

  1. Most of FRPM's leases terminate in the summer months as the winter historically has been a more difficult time to rent up vacancies.
  2. FRPM has many rental units around Boise State University (BSU) and the time to turn those over is also during the summer break.
  3. The vacancy rate is a bit overstated. Most of these vacant units have already been re-leased, but the tenants have not yet moved in.
  4. All rental units turned over go through a thorough move-out inspection and receive painting, cleaning, carpet cleaning/replacement, and maintenance. This is all done between tenants and it takes an average of 5 days to complete that work.

Overall, we continue to see a strong rental market. Most multi-family is moving very quickly. Higher end homes with large rents are moving a little slower. Most tenants seem to be looking for the most amenities for the least rent. With the heat in full gear and a very recent increase in electricity billing, central air is a favorite for its efficiency and ability to keep all rooms cool. Although the need for heating is months away, it is very common for tenants' search criteria to include central heat. Units with wall or window A/C are still renting, but tenants are requiring a price differential.

Unless a hot topic comes up in the meantime, our next blog post will address deferred maintenance.


First Rate Property Management Rental Vacancy Rate

July 17, 2015: 2.46%

Click to enlarge
vacancy rate July 17, 2015


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

FRPM's Tony Drost: A Brief Bio

Last year, I wrote a blog post about the Fourplex Evolution in the Boise Area. I guess the history of fourplexes sparked some interest because I received a good deal of responses. Most just wanted to know more about me and how I knew about this evolution of the fourplex market. Some conversations were longer than others, but after some discussions, a few thought it would be good for potential investors to know more about my experience in the area.

I grew up in Boise. We only had four high schools then, and I attended Meridian HS, which was comprised of students from West Boise, Meridian and Eagle. Upon graduating I joined the military. I used my VA loan while still active duty and purchased my first duplex in 1990, right before the Gulf War hit. At that point in time, I understood the benefits of cash flow and leverage, but didn't know how to calculate or analyze different scenarios. I got lucky and bought low and sold high. After the military, I finished my degree in Operations Management, and moved back to Boise. In 1994, I sold the duplex and used the sale proceeds to leverage into two fourplexes in Meridian. The birth of First Rate Property Management followed shortly thereafter.


Garverdale Fourplex
Garverdale Fourplexes -- currently managed by FRPM

Later in the 1990s, I met Mike Swope. Mike specialized in investment properties. It was through Mike that I learned much more on the valuation of income-producing properties. I had already gravitated towards fourplexes, but now with my newly found number-crunching tools, I really could compare one property to another and determine which was likely to perform better. As his property manager, I worked with Mike and saw his processes of getting properties ready for sale and the due diligence needed to buy right.


Remodel Fourplex

In 2000, I joined the National Association of Residential Property Managers (NARPM). Attending their meetings was like lying on a couch talking to a therapist. Finally I could talk to people who lived the same life. What I mean is that they see the same crazy stuff and they know the stress of the job. My story of the tenants using the dishwasher to clean car parts, didn't shock any of them. Nor did the story about the tenants who were trying to avoid the extra charge for disposing of their Christmas tree, by shoving it down the garbage disposal. In 2005 I became the Chapter President of NARPM. Our membership and affiliate programs nearly doubled that year, which gave me some national attention. In 2006 I was nominated to sit on the national board. I was the national President of NARPM in 2011 and left the board at the end of 2012. My most enjoyable time on the board was my first two years where my whole job was to network and work with other property managers within my region. We would share things and all of us would leave a little smarter.


Narpm Education

In 2005 I moved my family to Eagle. I've continued to invest and am very grateful to have assisted hundreds of people with their investments in rental properties.

So there is my story. What's yours?


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Avid Investors Meeting: June Highlights Video

June's Investor Meeting Recap

Swope Investment PropertiesThank you to all attending members from June! You collectively gave our meeting 4.9 stars (out of 5). "Management Matters" by Tony Drost was packed with info and tips, as the summary video shows. It also inspired investors to share some of their trade secrets during the Q&A period. If the condensed meeting left you needing or wanting more, Tony Drost has welcomed your follow-up questions at Tony@FRPMRentals.com or 208-794-6424. Any of your team members at Swope Investment Properties are also at your service.
 


 Avid Investors Meeting: June 2015 Highlights Video

Summary video on Facebook: www.facebook.com/inflowpr (you're invited to Like the page while you're there).
 


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Supreme Court: Fair Housing Act Claims Can Use "Disparate Impact"

Supreme Court Storm Over the weekend, my phone made that recognizable buzz noise indicating an email. Shortly after, another buzz, and then another and another. If I wouldn't have picked the phone up, I am sure that the barrage of email notifications would have caused it to walk itself off the counter. What in the world could be so important? Turns out, something very important. So important that I immediately contacted one of our local Fair Housing Advocates, asking for help to make sure that First Rate Property Management's policy and procedures meet the laws. Off the top of my head, the two big areas of concern are our tenant-screening criteria and our eviction policy and procedures.

Before you read on, please read the below links.

Supreme Court: Fair Housing Act claims can use "disparate impact"

TERRIFYING: Supreme Court Attacks Real Estate Investors

So how does this affect Landlords and professional residential property managers? That's the question and the result of the dozens of email notifications that I received. Below are some of the questions that other property managers across the nation were asking each other. For now, FRPM has been silent in the discussion and waiting for the official word from the fair housing specialists.

  • "Can I continue to do thorough criminal background checks and deny applicants based on criminal history?"
  • "If I do change my criteria and allow convicted criminals who have served their time, can I evict if they violate the lease, or do I have to accommodate them in some other way?"

And here is what other property managers have had to say about tenant screenings, evictions and disparate impact:

"I don't obtain or track tenants' race, religion, national origin, etc. Our policies are similar to everyone else's out there extending credit. We require certain documents showing the ability to pay, such as credit worthiness, income, work history, etc."
"We deny any applicant who doesn't fit that minimum criteria -- and do so fairly -- as it's the same across the board. We evict tenants who violate the lease, such as for non-payment of rent. We do so fairly and across the board regardless of any other factor, other than non-payment. We don't know who they are; we pull a report that essentially says, "these three tenants did NOT pay their rent, so send them an eviction notice." Those who pay, stay. Those who don't pay, get evicted. We don't go through the list and figure out who may or may not be in a protected class or somehow has a claim of disparate impact. I wouldn't even know how to do that unless I had every tenant fill out some lengthy questionnaire, which has always been irrelevant. We don't care about your race, religion, etc. We just want to make sure you are credit worthy, and when you fail to pay as promised, we want you out so that we can get someone in who will pay."

Disparate Impact TheoryDisparate impact goes far beyond these questions. Honestly, I don't know how it will impact the industry, which is why I have already reached out for help. Regardless of whether First Rate Property Management agrees with the ruling or not, it's now the law and therefore we need to comply. We'll keep you posted as we learn more. Below are two links to past blog posts of ours that discuss in more detail the concepts and consequences of disparate impact.

Insurance Companies Drop Properties with Section 8 Tenants

Disparate Impact to Fair Housing


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

9 Top Cities Where You Get the Most for Your Money

Source: BusinessAdviceSource.com

Even within the United States, the cost of living can vary drastically depending on which city you call home. If you would like to make your dollar stretch a little further, consider taking up residency in one of these nine cities:
* Please note that each index in this report is based off the cost of living in New York City. For example, a rent index 0f 40% means that the average rent in that city is 40% of what it is in New York City.

1) Boise, Idaho

Boise Nightline

As a general rule, most all western cities (excluding those in California) have an average cost of living on the lower end, and Boise is no exception. The capital city and the largest city of the state of Idaho, Boise is consistently ranked as having one of the lowest costs of living of any US city. With beautiful surrounding scenery and a nice "college town" environment, it is a great residence to consider if you are looking to settle down in a place that will make your dollar stretch further. Here are the cost of living statistics for Boise, Idaho:

  • Rent Index: 22.89%
  • Groceries Index: 58.82%
  • Restaurants Index: 72.60%
  • Average Cost of Gasoline (Per Gallon): $2.17
  • Average Cost of Milk (Per Gallon): $2.95
  • Average Monthly Rent of 3 Bedroom Apartment in City’s Centre: $1,173
  • Average Monthly Internet Bill: $47
  • Average Monthly Utilities for a 915 sq. ft. Apartment: $113

Read More...
9 Top Cities Where You Get the Most for Your Money


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

17 Things Only Someone Who's Been to Idaho Will Understand

The below was forwarded to me and I thought it was neat and would be of interest to everyone.

Source: Matador Network
by Hailey Hirst
May 15, 2015

1. Idaho is more than just potatoes.

1. Idaho is more than just potatoes.
Photo: Social Geek

Idaho's combined public lands total 12 million acres, including 2.4 million wilderness acres and 3,100 miles of whitewater river — that's more than any other state in the Lower 48. So yes, potatoes made us famous, but it's our wild landscapes and the fact that any day can include a mix of hiking, biking, rafting, and skiing that makes Idaho so epic.

2. This is not the Midwest.

2. This is not the Midwest.
Photo: Sawtooth Mountain Guides

Contrary to popular belief, Idaho is not just flat plains or farmland. The Sawtooth Mountains alone have more than 40 peaks over 10,000 feet, as well as hundreds of alpine lakes and 700 miles of backcountry trails. Idaho is also home to North America's tallest single-structure sand dune (Bruneau Dunes, 470 feet) and the deepest river gorge (Hells Canyon, 8,000 feet).

3. Idaho is the birthplace of modern skiing.

3. Idaho is the birthplace of modern skiing.
Photo: Ray J. Gadd

Home to the world's first chair lift, opened in 1936, Sun Valley is where skiing as we know it was born. It's also where the first helicopter skiing outfit in the US got its start.

4. River surfing is a thing.

4. River surfing is a thing.
Photo: CalmTreeSurf.com

And it's amazing. More than 300 miles from the Pacific Ocean, people are surfing on the curling standing waves of the Lochsa, Salmon, and Payette Rivers, and at the Boise River Park.

5. Hot springs are better than hot tubs.

5. Hot springs are better than hot tubs.
Photo: Leah Grunzke

After a day of skiing or hiking, nothing beats a good soak. Even better than a hot tub full of chlorine is a dip in one of Idaho's steaming spring-fed pools. Lava Hot Springs is possibly the best known, but there are dozens of less-developed, under-the-radar pools out in the forest wilderness (this guide can get you started). In fact, there are more ‘soakable' springs here than in any other state — 134 in all.

6. Idahoans aren't all farmers.

6. Idahoans aren't all farmers.
Photo: Tech Cocktail

With all of its wilderness area and farmland, most of the state averages fewer than ten people per square mile. But the cities are thriving, and the Boise Valley alone is a growing home to more than 600,000 people. Major tech companies like Micron and Hewlett Packard are set up in the area, so no wonder 70% of Idaho's exports are in the technology sector, not agriculture.

7. The state is vastly different from top to bottom.

7. The state is vastly different from top to bottom.
Photo: Loren Kerns

All mountain lakes and ponderosa pine forests, Idaho's northern panhandle looks like British Columbia. Farther south, the Palouse is entirely different with its rolling grassland hills and fields of wheat. From there, the state's central Rocky Mountains and rivers could be mistaken for wild Alaska. And the southern Great Basin Desert is like Nevada — filled with endless sagebrush steppe where you'll find volcanic caves and black-rock river gorges studded with cottonwoods.

8. You've never seen stars like this.

8. You've never seen stars like this.
Photo: Billy Gast

It's not just a few twinkling planets and the Big Dipper. When you're miles from any city, in a valley between 10,000ft peaks, seeing the bright band of the Milky Way is almost a given. Even within the cities, stargazing is impressive on any clear night (thanks to light pollution ordinances and scant city smog).

9. There are volcanoes here.

9. There are volcanoes here.
Photo: Bureau of Land Management

They haven't erupted in eons, but the scars remain. Home to cinder- and spatter-cone volcanoes and lava-tube caves, Craters of the Moon National Monument covers 618 square miles of lava fields in Southern Idaho.

10. There are still places where roads don't go.

10. There are still places where roads don't go.
Photo: Bureau of Land Management

The Frank Church River of No Return Wilderness stretches over 2.4 million acres. And even though there are 2,600 miles of trails, over half of this wild landscape is accessible only by riverboat, small plane, or strenuous off-trail trekking with a Salmon River outfitter. Seen above is Birds of Prey National Conservation Area, another largely roadless patch of wild Idaho, despite sitting right on the outskirts of Boise.

11. Lake swimming beats ocean swimming.

11. Lake swimming beats ocean swimming.
Photo: Charles Knowles

Some of Idaho's glacial lakes might be cold (popular Redfish Lake's average water temp is barely 60 degrees by July) but crystal-clear water, beaches fringed with pine trees, and snow-capped mountain peaks in the distance more than make up for the chill. Plus, you never have to worry about sharks or rip currents.

12. It's good to get away from it all.

12. It's good to get away from it all.
Photo: Miguel Vieira

Backpacking all or part of Idaho's 1,200-mile Centennial Trail means no cell service or wifi, no power outlets or running water — you can truly unplug. As Albert Einstein said, "Look deep into nature, and then you will understand everything better." Idaho is a great place for it.

13. There's a Niagara of the West.

13. There's a Niagara of the West.
Photo: Todd Kulesza

Niagara Falls gets all the glory, but there's a taller waterfall this side of the Mississippi that's just as sweet. In the spring, Idaho's Shoshone Falls is a thing of glory, with water plummeting 212 feet over a smooth basalt wall into the Snake River Canyon.

14. No national parks, no problem.

14. No national parks, no problem.
Photo: Charles Knowles

Some people think that without a national park, there's nothing to see here. Wrong. Equal in size to Yosemite, the nearly 800,000-acre Sawtooth National Recreation Area is arguably more wild and rugged than a park, precisely because it's not one. It's not crowded, it's not paved with parking lots. As the locals say, "It's the Tetons without the handrails."

15. There's more to life than work.

15. There's more to life than work.
Photo: Brian Kelly

Idahoans work hard (proven by the state's 3.8% unemployment rate), but they aren't caught up in the rat race. This isn't LA or NYC — there are ski hills and mountain bike trails within an hour of our city centers, and people take time to enjoy the beautiful outdoors in their backyard. Hopefully you will too when you're here.

16. Open range laws always apply.

16. Open range laws always apply.
Photo: gordonplant

Outside city limits, Idaho cattle are free to roam and graze wherever they're not fenced out, including on the grassy shoulders around state highways. You hit it, you buy it. Hope you like beef!

17. Idahoans are proud of where they're from, and they're not itching to leave.

17. Idahoans are proud of where they're from, and they're not itching to leave.
Photo: Nan Palmero

They know Idaho is underrated, and often phonetically confused with Iowa and Ohio, but they love it here, and they're not dying to move somewhere "better" or "more civilized." Even if Idahoans travel or move elsewhere, they know the Gem State equals fresh powder at Christmas and a lake for swimming in summer. It's mountains and rivers, it's home, and that's all that matters.


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Where Did They All Come From?

Below is a link to a recent Idaho Statesman article titled, "Living and working in Idaho: Where did you come from, where did you go?" I don't have a lot to comment as I think the graphic I chose to post on this blog says a lot. However, there is some interesting information in the article and more interesting graphics.

Confirming my concerns with the increasing rents, according to this article the two fastest growing industries are food service and retail. I always wanted to comment on why those industries seemed to be growing, but I had no idea why. To me it just seemed that there was a huge population of people where their favorite thing to make for dinner was a reservation. The explanation within the article makes sense, which is that the retirees are selling their tiny homes where they once lived and then move to Idaho and have more. These retirees have money to spend and eating out, retail, arts, and entertainment are services that they demand. I hope they tip well, because those service workers deserve it and need it to pay their rent.


renting versus owning

I encourage you to read and learn more as it is interesting. Even the jabs about Californians. Not that it is right or wrong, but I found it amusing that the Californian jab has been heard all my life.

Living and working in Idaho: Where did you come from, where did you go?
by Zach Kyle, Idaho Statesman
May 11, 2015


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

WSJ: New Housing Headwind Looms as Fewer Renters Can Afford to Own

First Rate Property Management has been agreeing that the demand to rent has increased over the past few years. Contrary to the attached WSJ article, we've been saying that we're seeing people who have the funds for a down payment, and the income to buy a home, choosing to rent instead. It would appear that those choosing to rent, but can afford to buy, want the flexibility that renting provides and like not having to deal with the home maintenance that ownership requires. We've also been stating that, due to the massive amounts of local multi-family units being built in the Boise area, we would see rents stabilize and perhaps drop by the end of the year. Well, school is out and summer is here and rents continue to push upward. So ... what's the prediction? We don't know. I still think that rents have pushed to a level making it very hard for many renters to afford -- especially when you see the biggest employment rise being service oriented -- but I guess the day that we see signs of a correction may be further down the road.


renting versus owning

Attached is an article from the Wall Street Journal stating that renters are choosing to rent because they cannot afford to own. The writer also touches on the fact that the 400,000 rental units being built this year are more suited for the tenants we described above: young professionals. But these luxurious rentals are bringing big bucks, which cause rents on older-and-not-as-fancy rentals to go up along with them. It's a housing issue that far exceeds our expertise. All we can do is follow the market. At some point, there is probably going to be a correction. Is that within the next year, next 5, or next 10 years? I don't know. I refer to our prior comments, which are to buy using conservative rents. That way if rents drop, your investment property will still perform.

New Housing Headwind Looms as Fewer Renters Can Afford to Own
by Nick Timiraos, Wall Street Journal
Updated June 7, 2015


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Investor Club Meeting: June 17th @ 6:30pm
Swope Investment Properties

Swope Investment Properties has created an Investor Club. Their first meeting was in May and their second meeting is scheduled for June 17th at 6:30pm.

Networking with others has proven to be a great tool in just about every industry. Learning and listening to others with similar goals offers a great opportunity to learn, especially in an informal environment. This month, Tony Drost is speaking about management. He'll share advantages of self-management versus professional management as well as some tips for successful management, regardless of whether a property is self-managed or professionally managed. Market updates and available investment properties will also be discussed.

If you are interested in participating, please reach out to Tony, Tony@FRPMrentals.com, or Stacy McBain at (208) 921-0630, and we'll get you an official invitation and RSVP.


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Boise Makes Top 10 for Investor Opportunity

Below is a link to an article from the Local Market Monitor that provides the top 10 mid-sized markets, which includes Boise and Nampa. They looked at home values and growth in employment and population. The article states that the masses are looking elsewhere, so there is opportunity to buy a prime property. When I look at my tracking of Ada County 4 plexes and remove one odd duck that has been on the market for over 1.5 years, the average days on market in April of this year was only 8 days and over half of the 4 plexes sold in April were pre-sold. So the cat is out of the bag in my opinion.

Midsized Markets Offer Opportunity for Smaller Investors
by Ingo Winzer
President, Local Market Monitor
May/June 2015

view PDF in browser
view PDF as file


boise real estate investment

Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Will Ada County Tax Assessments Spoil Your Memorial Day Weekend?
property value assessment

Every year all of us with Swope Investment Properties meet with appraisers with the Ada County Tax Assessors to get an idea of where they are seeing values.  Below I provide some changes to this year's valuations, as well as some preliminary value increase percentages for residential and apartments.  These are preliminary and could change by the time the assessment notices hit your mail box over the holiday weekend.  The assessment process isn't perfect as the appraisers only drive by 20% of the properties a year.  So there is a possibility that your assessed value is off and if so, I discuss the appeal process below.

Changes to 2015 Valuations:
This year you will see a new allocation of land value.  My recommendation is to focus on the total value and not be so concerned with how it was allocated between land and the improvement (home or apartment).

Residential:
The range of value increases for residential homes, duplexes, triplexes and four-plexes are from 0-30% with a median average of about 7-8%.  That's a lot lower than I expected.  Residential home values to include small multi-family use the Sales Comparison Approach.  But when it comes to four-plexes, they may also look at Gross Rent Multiplier, especially if the value is being questioned.

Apartments:
Apartments with 16 units and more are looking at a median value increase of 15% and that's about what I expected to hear.  Apartment values are determined by the income approach.  As we've discussed over the last year in my other blog posts, we're seeing some new apartments selling at very high amounts with above market rents.  The appraisers agreed that some of the rents they are seeing are not sustainable:  "This is Boise, ID.  The job growth and average wage doesn't support those rents."

Appeal:
If you think your valuation is off, I am happy to help.  But we have to act quick.  Your tax notice will include the name, phone number and email address of the assessor.  If you believe your assessment is incorrect we will want to reach out to the assessor within a week or two of receiving the notice to hopefully be able to submit our appeal informally.  Otherwise, it will take a formal appeal in front of the Ada County Commissioners.  I have had success both ways.  Although the year I appealed many was the year after the crash and it just seemed the assessors were a little behind the drop in values, just as they were a little behind with the increase in values the prior two years.  I will do my best to help any client who reaches out to me, but it will be first-come, first-served.


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

SW Idaho NARPM 2015 Q1 Vacancy Report

The SW Idaho Chapter of the National Association of Residential Property Managers (NARPM) just released their first quarter of 2015 Rental Vacancy Report. All-in-all, I'd say the numbers paint an outstanding picture with a slight hint that we will see some corrections in rent. Those corrections may not become apparent until those leases are renewed, but I think the data suggest it may be necessary.

If you look at the Vacancy Rate Graph, you will see that multi-family vacancy is up to 4%. That surprises me because First Rate Property Management's multi-family is below 1% and we're pre-leasing almost all of our multi-family right now. It also tells me that FRPM probably should perhaps advise our clients to be a bit more aggressive on rent increases. I would not be surprised to find out that these vacancy numbers are the result of the rent-up of some of the new 4 plexes. Which brings me to the next graph, which are Rental Amounts. I believe the stated averages are a bit inflated. Remember, these multi-family units being surveyed are small multi-family buildings, not apartments that are offering a host of amenities. In fact, I would guess that the majority of the units surveyed are 4 plexes. I believe we can correlate the higher vacancy rate and the above average rents to newer 4 plexes coming on line. The newer 4 plexes are rich with upgraded finishes and also being new, they are pulling premium rents. With so many coming online this first quarter, they likely are the cause of the higher vacancy and influential in the higher rental rates. Just as we discussed in a recent blog, the higher vacancy will likely cause a correction in those rents. In fact, we are already seeing concessions in the rent up of those buildings and I think if the survey showed effective rents (lease rent - concessions) we would see a more realistic rent average.


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.


Southwest Idaho NARPM Vacancy Report Q1 2015

Introduction

The purpose of this survey is to show vacancy and rental rate trends among single-family homes and multi-family units (2-15) in Ada and Canyon County. Survey results are displayed by type (single or multi-family) and bedrooms (1-5) for the respective county. Property status was surveyed as of March 31, 2015.

The survey participants were property management companies affiliated with the SW Idaho Chapter of NARPM and are considered to the representative sample of the inventory of professionally managed rentals of less than 16 units.

Survey Respondents

Data from a total of 17 property management companies were included in the survey results, which accounted for a total of 4347 homes: 2106 single-family and 2241 multi-family. The accuracy and reliability of this survey is improved with an increased sampling.


 

Click to enlarge
Ada and Canyon County Vacancies 1

 

Click to enlarge
Ada and Canyon County Vacancies 2

 

Click to enlarge
Ada and Canyon County Vacancies 3

 

Click to enlarge
Ada and Canyon County Vacancies 4


Summary

Vacancy rates moved slightly down to 3.0% for the 1st quarter of 2015. This is a decrease of .2% from last quarter. The largest decrease in vacancy rates from last quarter was single-family homes in both Ada and Canyon County.

Rental rates in Ada County again increased slightly from last quarter. The increase in rental rates in Ada County has been in all areas of the rental market, from single-family to multi-family.

Rental rates in Canyon County also showed a slight increase, however, only in the single-family homes. There was a decrease in rental rates in Canyon County for multi-family homes.

Currently the trend is showing multi-family vacancy is continuing to rise slightly every quarter and single-family vacancy decreased significantly from last quarter.

The historical data for both Ada and Canyon County has been included in order to help provide a better perspective on how the market has changed over the last few years. We hope you find it valuable.

We thank you for participating in this survey. Please educate more Professional Members, about the importance of this survey. By having more participants, the accuracy and reliability of this survey is always improved.

View the SW Idaho NARPM 2015 Q1 Vacancy Report as original PDF file

Angela Post
angela@postpropertyidaho.com
208-585-3256


Find out more about Idaho's premier organization of residential property management professionals at www.swidaho.narpm.org

NARPM is the professional, educational, and ethical leader for the residential property management industry.

Learn more about the National Association of Residential Property Managers at www.narpm.org

Contact Angela Post at 208-585-3256 with any questions and to learn how you can contribute and benefit!



View Externally Here

FRPM and NARPM Family Has Me in Awe

Since January, when First Rate Property Management announced that the American Brain Tumor Association (ABTA.org) was chosen as their main charity for 2015, I have been in awe and full of emotion.  I don't even know where to start.  Do I start with the amount raised to-date, or acknowledge those who have donated so generously and my sincere appreciation, or do I first describe the emotions of it all.

Funds Raised

FRPM's goal is to raise $5,000 by September, 2015.  In just two months and with only a handful of contributors, we have raised over $1,600.  NARPM's goal is to raise $250,000 and to-date they have raised over $125,000.  Now you know why I am in awe and struggle with what to report first.

Generosity and Appreciation

The first to contribute were our FRPM employees, who are having funds removed from each paycheck.  What an amazing Group.  Thank you Liz Robson, Lizz Loop, Tara Pecora, Marie Swanson, Dawn Lambert, Terri Franklin, Kadie Byers, Hannah Ross, Debra Cardin, Melissa Sharone, and Kristen Curtis.  This amazing team also donated Personal Time Off and money when Kristen, who is pregnant, lost her fiancé in a terrible accident earlier this year.  I am so proud of my team.

Next to commit were several of our wonderful contractors.  We're so appreciative for the work they do at the properties, but also the relationships we have developed.  I would like to thank the following contractors for their contributions:  Property Maintenance Plus, Desert to Oasis, and Home Town Lawn Care.  You guys rock.

The support and donations from our owners is so awesome.  Thank you to Lee Pearson, Cam and Mary Houlgate, Malia Thomas, Gary Elrod, Aaron and Harmony White, Robert and Teresa Abbott, Mike and Mary Jane Swope, and Mike and Carla Gamblin.  Please know that I do believe that your contributions will make a difference.

Last but certainly not least, is my NARPM family.  Property Managers across the nation have contributed over $100,000 in 3 events, with 2 events left to go.  Also, NARPM is blessed to have great Affiliate Vendors who are always willing to step up and give, and to-date they have contributed about $11,000.  And when I call them my "NARPM Family," it's not just a nice way to introduce them; it's really how I feel.  Thank you peeps -- I am in awe of your generosity and selflessness.

A Few Property Managers Who Donated $5,000 or More


Property Managers who donated to the ABTA


Property Managers who donated to the ABTA


Property Managers who donated to the ABTA


Emotions

To begin with, choosing ABTA has created a roller coaster of emotions for me.  Participating in this endeavor -- and in some sense leading it -- has me sitting on Cloud 9.  But being this involved, I am constantly reminded of why I chose this charity and the loved ones it has affected.  Some have survived, while others have not.  And just recently, another one of my NARPM family members has been diagnosed with a terminal brain tumor.  It's all so very sad.

But just as this roller coaster of emotions hits bottom, it starts to rise again.  When I stood in front of 650 property managers last month and over $100,000 was raised within minutes, I was overwhelmed with emotion.  I cannot explain my feelings, other than to say I am in absolute awe of you all.  Thank you so much.

Join the Fight

If you would like to partner with FRPM in the fight against brain cancer, we can assist you in sending your donation to the American Brain Tumor Association.

First Rate Property Management is not the only company participating in this charity fund raising event.  See the article from the National Association of Residential Property Managers.  Since FRPM is one of thousands of property management companies looking to raise funds, and because we need to track those funds and our progress to our goal, please write your donation check payable to "The Hampton Roads Foundation" -- referencing the ABTA on your check -- and mail or drop off to First Rate Property Management at 7150 Potomac Drive, Boise, ID  83704.  First Rate Property Management will forward your donation to the Hampton Roads Foundation and the ABTA.  That way we can track the funds our owners, tenants and contractors donated, and everyone who donates will receive a receipt to use for tax purposes.

Make your donation check payable to:

The Hampton Roads Foundation
(reference the ABTA on your check)

Mail or deliver your donation check to:

First Rate Property Management
7150 Potomac Drive
Boise, ID  83704

 

Tony Drost broke down with a dead battery on the Las Vegas Strip
Tony Drost broke down with a dead battery on the Las Vegas Strip


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Don't Complain or Else

A Florida Property Manager posted the article below (Huffington Post) about an Apartment complex that required tenants to sign a "Social Media Addendum."


Florida Apartment Complex Threatens Tenants With $10,000 Fine For Bad Reviews Online

They might be the landlords from hell, but you're not allowed to complain about them.

A Florida apartment complex is under fire after management forced new tenants to sign a "social media addendum" that threatened a fine of $10,000 if they gave the place a bad review online, Ars Technica reports.  The addendum, which went viral Tuesday after the Windermere Cay complex in Winter Garden started handing it out, also forces tenants to sign away their rights to any photos, reviews or other material about the complex posted online:

"Applicant will refrain from directly or indirectly publishing or airing negative commentary regarding the Unit, Owner, property or the apartments," the addendum reads.  "This means that Applicant shall not post negative commentary or reviews on Yelp!, Apartment Ratings, Facebook, or any other website or Internet-based publication or blog."

Before Tuesday, few people had reviewed Windermere Cay.  By the end of the day, however, a lot of people had reviewed the place.  Things are not going well for the apartment complex online.

On Yelp, reviews have been flooding in from people who are either disgusted by the contract or think the whole thing is a joke.  Most of them said they weren't tenants.  One of Windermere's five-star reviews, for instance, comes from "Adolf H." who hailed the complex for having "my kind of management."

Other reviews on that site and ApartmentRatings.com were similar.

Ars Technica spoke to one resident of the five-building complex, who wished to remain anonymous.  He called the addendum "ridiculous" and said he asked management to remove it from his lease, but didn't receive a response.

"If I took a photo of people in my apartment, they would own it," the tenant said.

Windermere Cay's property management team responded to Ars Technica by email, blaming the addendum on several false reviews: 

"This addendum was put in place by a previous general partner for the community following a series of false reviews.  The current general partner and property management do not support the continued use of this addendum and have voided it for all residents."

Regardless, law experts have told multiple publications that the addendum wouldn't hold up in court.  Even so, it seems that trying to control tenants' thoughts on your business is a lot harder than trying to make them happy in the first place.


Obviously this was not a good idea.  I take no issue to anyone posting reviews.  What I take issue with is that those allowing these reviews do nothing to verify them.  I have said that internet reviews are today's bathroom wall writing.  I encourage you to review my blog post Internet Reviews are the Bathroom Wall Writings of the Past.  In that blog post I explain why I compare internet reviews to mindless writings on bathroom walls.  For one, we have reviews from people claiming to be FRPM tenants.  We have no such name in our system.  So are these reviewers mistaking us for another company, or are they a competitor trying to discredit us, or are they an actual tenant using an alias?  Companies like Yelp and Google have to put forth efforts to not allow all three of those scenarios and honestly, I think they are negligent in not doing so.  People should not be allowed to post using an alias because it allows for untrue or embellished stories that no one can confirm or deny.  I am convinced, these companies created these reviews not because they believe they actually help consumers, but because they require them to be a user with a username and password, they capture more customers to pay for their services.

FRPM has looked at an addendum that would allow us to post photos, videos and recordings, such as the recording below, to publicly dispute negative reviews.  But we never implemented it because when we looked at our bad reviews, less than 5% were of names of actual tenants or described a situation that we could actually substantiate.  By the way, we beeped out the name and address of the tenant that left us that voicemail.  Imagine if that tenant posted an untrue and negative review.  I so much would like to respond with that recording of her so that everyone knew we were dealing with a psycho.  Maybe I blame Al Gore for inventing the internet.


Psychotic Rage
 


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Experts Say That Vacancy Will Double by Year-End

Moe Therrien with Mountain States Appraisal spoke to the Boise chapter of the National Association of Residential Property Managers (NARPM) last week and presented a report that he just released providing an overview of where the rental and real estate markets are today, where they have been, and what the future could be. Moe has been collecting rental and real estate data in the Boise area for over 25 years now. Attached is the full report and below is a summary with a bit of our own take on the information.

Vacancies Double

Predicting vacancies to increase from 3% to 6% is significant. This is something First Rate Property Management cautioned as a possibility in 2014, but obviously we were incorrect. The same could happen in 2015, but just as we suggested before, we recommend hedging your bets a bit by offering 2-year leases. Why you ask? Because over the past few years, thousands of multi-family rental units have been built. Currently there are over 2,000 units under construction now with another 1,500 to follow. One of the best rental markets has been the Boise State University area. There currently are 540 units with 1,500 bedrooms being built across the street from BSU. The growth of rental units is expected to exceed the number of renters. Additionally, as confidence in the economy and real estate market continue to improve, so will the demand to buy. If interest rates were to start trending upward, I think you would actually see droves of people making a knee-jerk reaction to purchase a home before rates became "too high" and keep them from buying a home later.

West Sherwood Apartments, across Capitol Blvd. from Boise State University
West Sherwood Apartments, across Capitol Blvd. from Boise State University

Rents

Moe also stated that he believes rents have stabilized and we won't see massive increases in rent this year. I tend to agree, but I also think that we will see rent averages continue to climb and here is why: The easiest time to increase rents is when filling a vacancy. The unit is either new or at least freshened up and this is the best opportunity to get a higher rent. Vacancies filled this month are probably at that stabilized amount. Depending on the increase in market rents, most Landlords agree that hitting current tenants with a 10% to 15% rent increase could cause some hard feelings and a vacancy. So they ease into the rent increases. This is the segment of the market that I think will raise the average rents, because these tenants are paying less and will see moderate rent increases until Landlord and Property Managers see the market soften. The last segment is for the tenants who were filled during the winter months, who likely signed for a lower rent. An owner would not want those leases to expire next winter, so they likely signed a 6-month lease and as those come due, we should see those rents increase.

Rent Concessions

Rent concessions may be something we see this fall and winter. Well, let's be real, there are rent concessions going on now. Many of these new complexes have pushed the rents so far over market that they are offering incentives to get them filled. It's just not in big bold print on billboards and such. But Moe thinks that may change by year end.

Job Growth

According to the report, Ada County is seeing 6,000 new jobs per year. What I would like to know is what kinds of jobs and how many people are moving to the area and from where. If you drive North on Eagle Rd. from Pine to Ustick, you probably would think all the new jobs are all service providers for restaurants and bar and grills.

Values

real estate values

If you look through the report, you will see average home prices from 2007 to current. What you aren't seeing is what the current rental demand has done to rental property supply and demand. Well, demand is up, so values have been moving upward and supply has not met demand. This has helped improve the values of older properties which really have been struggling to get back up to where they once were.

First Rate Property Management's Takeaway

I think the new construction has been good for all of our clients because the rents have been so high that existing properties looked like that much better of a deal. If the rental market were to take a hit, I think the first to be hit will be the new properties that have pushed rents to areas never before seen in the Boise area. Properties that have stayed within 10% of average rents posted by the surveys will probably be least affected.

Please do read the report and feel free to reach out to us if you have any questions. Within the report you will find the following subjects:

  • Vacancy rate for 1-3 bedroom apartments
  • Vacancy over the past 5 years
  • Average apartment rents per square foot since 20006
  • Rents comparison between a 30-year-old apartment building with minimal amenities to new, full amenity apartments in huge projects.

Also listed are building permits for single-family and multi-family in Ada and Canyon Counties, and employment growth since 2005 as reported by the Idaho Department of Employment. On the real estate side, single family prices since 2007 are shown along with market observations. What most of you may find the most interesting is the list of apartment projects currently under construction and proposed. And lastly, Ada Real Estate Surveys Boise Project Vacancy Report shows all of the different apartments and their reported rents and vacancy. I would like to point out that we did find some errors on this report for apartments that First Rate Property Management manages. Also, because participants of this survey know that the results are posted, it is believed that some may understate their vacancies. So actual vacancy is probably higher. In the same light, managers probably post today's rents and not the range of rents from tenants that haven't been moved to market rent yet.

March 2015 Vacancy Overview
Ada Real Estate Surveys, Mountain States Appraisal
PDF in webpage
PDF as file


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Rent Affordability Will Deteriorate over next Two Years: Zillow CEO

zillow

Many Realtors and Property Managers tend to cringe, when a client starts a conversation with, "according to Zillow ...," because immediately following that is a quoted property value or rent price. It's been my experience that in most cases, the agent disagrees and now has to explain why perhaps their valuation is lower. I'll explain why later, but for now, I will say that I agree with almost everything Zillow's CEO, Spencer Rascoff, had to say in the interview found in the video below. In fact, I reviewed many of my past blog posts and we've discussed much of what is said in this interview. Below are some of the topics covered in this article and also addressed in our past blog posts.

  • Rents continue trending upward. They mention Denver, Kansas City, Portland, Charlotte and Nashville as being some booming areas within the nation. Nope, sorry, no Boise, Meridian or Eagle.
  • After the housing crash, the demand to rent increased. Within this interview, they state homeownership dropped from 69% to 63%, putting 5 million people in the rental market.
  • Renting is not always bad and there are a number of reasons why renting can be the better option.

The one area that we may have disagreed with is that I see a small segment people who easily qualify to buy a home, choosing to rent instead. They seem to prefer the flexibility to up and move and the simplicity of submitting a web request for a repair.

Now, why do Realtors and Property Managers not like hearing clients quoting values or rent prices from Zillow? Because, more often than not, they disagree. This too has been included in past blog topics. I don't know if it is true, but I would guess that Zillow likely holds the largest database on property values and rents. I don't know how they collect the data, but if it is out there, they seem to find it. Also, I have no idea how they determine value or rent prices, but it would appear that they collect all of this data -- such as sales data, tax records, and internet listings -- and apply some algorithm to determine value. As I explained to one client within the past week, if a subdivision of tract homes had a lot of recent activity, I would bet that Zillow is pretty close to the correct values. However, I believe Zillow's estimated values in a custom home subdivision with not much activity can be off the mark.

property valueWhen determining value, agents and real estate appraisers find comparable sales, but then make adjustments for differences, such as: condition, location, age, lot size and features, floor plan, age of sale, etc. It's a huge list and it requires spending time comparing the subject property to comparable properties. I don't think Zillow can account for these difference in the way that a real estate agent or appraiser can. Also, using public data, and not knowing how much to weigh it, hurts. For example, it looks as though they use Ada County tax assessments within the calculation of their estimate. But unlike other counties, Ada County Assessor values are usually lower than actual values. If Zillow is going to use the assessed amount in their calculations, they need a way to make adjustments, just like I mentioned above.

Internet rental listings occur much more frequently, so I think they can get Zillow closer to correct values, but I still see problems. If you have many properties rented and re-rented near a home that hasn't been on the market for many years, the rent estimate seems to be heavily influenced by the surrounding rentals. The problem I have seen is that the other homes were, let's say, three-bedroom homes with two baths but this home coming on the market is a five-bedroom home. So without being able to make adjustments, I think there is a lot of room for error.

However, I do absolutely agree that Zillow data can be used to identify trends, such as an increase in values from one year to the next. The holder of the data is King and Zillow is on its way.


Renting is going to get more expensive
 


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

How Credit Scores Are Calculated

credit historyI receive updates from about five different lenders. Some of these are daily updates, while others are weekly, and they almost always include current rate information. But sometimes they include other information that I like to pass on. Below is a link to an update from Eric Leigh with Idaho First Bank. In this update, Eric summarizes how credit scores are calculated. I think this varies depending on which agency is reporting.

First Rate Property Management uses credit scores in the determination or acceptance of all applicants. Years ago we simplified our internal decision tool to use the FICO score. The decision tool makes it so that all applicants are scored exactly the same way each and every time. With an eviction rate of less than one tenth of one percent, we feel comfortable with the screening criteria. Almost all of our property owners understand the importance of credit being one of the factors in approving a tenant, but not all do. When a tenant is approved and signs a lease to a property, they receive possession of the property. This could be a $500,000 house or a rental unit within a multi-family building with a value of around $100,000. Nonetheless, the property owner or investor is taking the risk that the tenant will abide by all terms of the rental agreement, which includes payment of rent without demand and taking care of the property. So they are extending the applicant credit. There is no guarantee that the tenant will pay the rent after they move in, therefore the property manager helps reduce the property owner's risk by screening tenants, which includes a credit report.

Credit reports are a track record that shows an applicant's payment history. For obvious reasons, property managers and landlords alike want to select a tenant who can reassure them that they will in fact make payments. In FRPM's decision tool, we look at the FICO score. The higher the number the lower the assumed risk. With credit history being an important factor in applicants' approval for housing and anything else that extends credit, I thought Eric's mortgage update could be useful. In his update Eric explains the factors used to determine one's credit score.

  • 35% Payment History
  • 30% Balance
  • 15% Credit History
  • 10% Type of Credit
  • 10% Number of Inquiries

How Credit Scores Are Calculated
Eric Leigh
Mortgage Consultant
Idaho First Bank


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

FRPM's Vacancy Rate for Boise, Meridian and Eagle: March 12, 2015

With the first quarter coming to an end soon, First Rate Property Management's vacancy rate continues to hover around the 1% range. With such a low vacancy, rents continue to push upward. Considering the number rental units built and introduced within the last two years, we're amazed. Boise's population must be growing steadily. We are hoping to post an update on the growth; number of rental units slated to be built within the year; and perhaps a forecast of what may become of the Boise area rental market. FRPM continues to offer a 2-year lease option to help hedge the impact of overbuilding or pushing rents too high. So far, about half of our tenants prefer to lock the rental rate at the lower amount and commit for two full years, while the other half would rather only commit to a year and pay a little more in rent. It seems to be a good mix for an unpredictable future.

Supply and Demand was one of the topics yesterday from one of the property management forums we belong to. Fewer than twenty Property Managers from across the country weighed in, but all of those who did, reported vacancy rates similar to what FRPM is seeing here within Ada County. The Southwest Idaho Chapter of the National Association of Residential Property Managers (NARPM) are due to report their survey results for the first quarter of 2015 around the middle of April. We anticipate to see a trend of lower vacancies and higher rents. Stay tuned and we'll share the results and how we interpret the data.


First Rate Property Management Rental Vacancy Rate

March 12, 2015: 0.67%

Click to enlarge
vacancy rate March 12, 2015


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Striving to Be First Rate

NARPM LogoFirst Rate Property Management is continually seeking improvement. Currently all of our Team Leaders are working on professional designations from the National Association of Residential Property Managers (NARPM®). NARPM just recently released two new professional designations and our Team Leaders made it an immediate goal not only to earn the designations, but also to be the first in the nation to achieve the designations.

 

Tara PecoraTara Pecora, our Maintenance Coordination Team Leader, could very well be the first Certified Maintenance Coordinator (CMC®) within the entire nation. The CMC is one of the newest certifications available from NARPM. NARPM seeks to become the dominant source for educating and training within the residential property management industry.

 

Marie SwansonMarie Swanson is our Accounting Team Leader and she is also very close to becoming the very first Certified Residential Management Bookkeeper (CRMB®) not only in the Boise area, but also for the entire nation.

 

Melissa SharoneAnd lastly, Melissa Sharone, our Leasing Team Leader, is currently a candidate to earn her Residential Management Professional (RMP®) designation from NARPM. This is a professional designation already held by President Tony Drost and General Manager Lizz Loop and is one that Tara and Marie will work on after they earn the designations they are currently working on.

 

Tony and Lizz have had their Master Property Manager (MPM®) designations for years. The MPM designation will surely be the next on the Team Leaders' lists. And of course, First Rate Property Management was the second company in all of Idaho to earn the Certified Residential Management Company (CRMC®) designation.

We are proud of the Team Leaders for setting these goals and working so hard to earn these professional designations. Where the professional property management designations tell the world about their dedication and knowledge, we are happy to implement what they have learned and to improve the services we provide every day. Great job Team!


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Property Management Insurances
Wild Wild West

Idaho is often criticized (or lauded) as being the "Wild Wild West." We have fewer laws and requirements than most states. With fewer barriers to business, such as property management, we see greater competition. Greater competition puts an emphasis on quality and price. Those who do a good job get referrals and grow, while those who do a bad job eventually fail.

Disclaimer: I am not an insurance agent nor an attorney and I encourage you to discuss these matters with an insurance agent or attorney. Within this blog, I am re-iterating my understanding after talking to several insurance agents, the Idaho Industrial Commission, the State Insurance Fund and an attorney.

Landlord Policy

Owners of rental property should inform their insurance agent that the property is a non-owner-occupied property and is a rental and specifically request the additional coverage that a Landlord Policy provides, such as lost rent caused by a water loss. Also, almost all property managers will request, if not require, the property owner to list the property manager as an additional insured. Some insurance companies charge more to do so, while others do not. Those that do charge agree to add the property manager as an additional interest, which does not provide the protection the property owner or the property manager wants. I use the trampoline story told to me by an attorney over a decade ago for understanding of the benefit.

The property manager's lease states "no trampolines." The tenants install a trampoline without permission. The neighbor's son comes over to play with tenants on the trampoline and his double back flip with a twist ends up with a broken arm. The neighbors sue the tenants, the property owner and the property manager.

Because of the indemnification clause in almost all property management agreements, the property owner and/or their insurance company would be responsible to reimburse the property manager their legal fees to defend themselves. Whereas if the property manager was listed as an additional insured, the property owner's insurance company likely would cover both the property manager and the property owner together. Hence saving the property owner and/or their insurance company money.

Liability Insurance

The property owner is going to want their Landlord to have liability insurance. I encourage the property owners to talk to their own insurance agents as to the dollar amount of coverage they suggest the property manager to have. Why? For one, it is the law and I explain that a little later. For two, the property owner's own insurance provider may require it. And finally, you as the property owner need to protect yourself.

For example, I sit on the board of an HOA and the Association recently changed insurance companies for liability coverage. Part of the application was for the Association to certify that all contractors and property managers working on-site and accessing the common area have liability insurance. I agreed to collect the information from the property managers and while I was at it, I also requested copies of workers' compensation insurance. The first to respond was Lizz with First Rate Property Management, who manages nearly half the buildings within the Association. Next was First Service Group. Maybe there is something in having "First" in the company name? But after that, no other property managers produced these documents. One stated that the homeowner had listed them as an additional insured and that covered their liability insurance and the others all stated they were exempt. Some flat out ignored the request altogether. As a result, the Association's insurance company could drop them or increase the premiums due to the added risk and non-compliance.

General Contractors

Property Managers and Contractors

First Rate Property Management is a registered contractor to comply with Idaho Statute 54-5204. Within this statute it says anyone undertaking a project considered casual, minor, or inconsequential and the aggregate contract price for labor and materials is more than $2,000, must be a registered contractor. A turnover that includes replacing carpet and paint can exceed that amount and therefore property managers are required to become registered contractors.

The law further requires contractors to maintain general liability insurance, of not less than $300,000 single limit. If the contractor has employees, they must carry the appropriate workers' compensation insurance. Although the law allows sole proprietors to be exempt from having workers' compensation insurance, the State Insurance Fund requires companies like First Rate Property Management not only to have our own workers' comp, but also anyone we sub work out to to have it, regardless if they are a sole proprietor or not.

Link to Statute

Workers' Compensation Insurance

A property owner is going to want their property manager to have workers' compensation insurance for one reason: to protect themselves. We know that property managers have all kinds of sub-contractors, to perform cleaning, yard care and general maintenance. So even a property manager who is a sole proprietor, and exempt from having workers' comp, is still hiring sub-contractors. If the property manager has workers' comp and they get hurt, or one of their subs gets hurt, or if one of the sub's subs gets hurt, the property owner is more protected.

The State Insurance Fund recommends "best practices" and they require companies with employees to require all sub-contractors, regardless if they are sole proprietors, to carry workers' compensation insurance. A sole proprietor would purchase a workers' compensation policy called a "what if" or "if any" policy that costs between $150 to $300 per year. I am sure most would agree -- that is a small price to pay for the added protection.

Work-arounds

Some property managers have their own maintenance company and claim that the work being organized is through the maintenance company, not the property management company. Although I would agree that the maintenance division needs its own liability insurance and workers' compensation insurance, but so does the property management company. And when it costs so little to comply, why not?


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

War Is Declared on Fake Assistance Animals

service animal


Before the holidays we blogged about a potential law making it illegal to lie about the need for an assistance animal. Maybe it was the photo, but for whatever reason that post got the most attention of any blog entry before. I guess I finally got to see sensationalism at work. As a highlight I discussed the absolute need for assistance animals and that the pit bull was an extreme example of people using assistance animal accommodations to house their pets. We also discussed how I believe the method of proving the need has diminished, opening the door for people to lie and take advantage of the situation. Well, the emails I received were humorous, but also eye opening for many. For whatever reason, so many people cannot wrap their brain around the concept. So as I explained Fair Housing and common examples of Reasonable Accommodations and Reasonable Modifications, I got an earful. Some were certain I had it wrong. Others thought it was so ridiculous that it couldn't possibly be a law that HUD would enforce. The truth is quite the opposite. So let me explain further and then discuss a hilarious article that one of you sent me.


companion animals


An assistance animal is not a pet. You have to look at the animal as an object that assists a person with a disability to live more of a normal life. The Landlord cannot ask about the need for the animal, nor about the individual's disability. It's the law and you have to deal with it. Period. I don't disagree with the law or its purpose. What I disagree with is the process of proving such a need and perhaps the definition of "reasonable." Until then, we have very little means by which to test the request.


pets or protection animals


Now, to the article one of you sent me. The link is below. It had some funny and outlandish stories in it. We see a lot of people reference the American with Disabilities Act (ADA) who are unaware that the ADA differs from the Fair Housing Act. The ADA deals with public access and I am fairly certain that the ADA would only apply to our world of rental in an apartment complex that provides a Resident Manager's office. So when we are talking about assistance animals in a rental, we are talking about Fair Housing, and most likely not the ADA. Fair Housing is different. It's much broader and there isn't much room to question the need for the alleged assistance animal.

Pets Allowed
Why are so many animals now in places where they shouldn't be?
By Patricia Marx
The New Yorker
October 20, 2014

More articles about service and assistance animals:

New Yorkers use bogus 'therapy dog' tags to take Fido everywhere
By Tara Palmeri
New York Post
August 5, 2013

Worms and Germs Blog - Service Animals
Published by University of Guelph Centre for Public Health & Zoonoses

The Hidden Complications of Fake Service Dogs
By Anything Pawsable Staff
Anything Pawsable
November 22, 2013


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Vacancy Rate: February 5, 2015

Below is First Rate Property Management's five-year vacancy chart. The chart shows our rental vacancy rates, by week, for the past five years. At a month into 2015 we continue to see a strong rental market, with a vacancy rate of 1.35% in the first week of February. Vacancy is low and rents continue to increase. We have two rentals that are throwing our metrics out of whack. One is a multi-family unit where we pushed rents a little too hard and need to bring it back down. The other is just so unfortunate that we have denied every applicant. Other than that, everything continues to rent quickly and at a higher rent than before the start of the year.

With rents continuing to increase, we expect that the lease renewal rate will be strong in 2015. The cost to move and the increase in local rents make it easier for tenants to stay put.

Our Leasing Team Leader, Melissa Sharone, reports that, as things start to pick up with the start of the year, FRPM is still seeing low vacancy rates. "I believe this is because we are pre-leasing a majority of our properties," explains Melissa. "I also feel that as the rental market continues to climb people want to get moved prior to prices going even higher. Also, the reason for the spike this week is that tenants who were due to move out at the end of the month moved out early. These properties are mostly re-rented but the new tenants are not moving in until March, therefore they are vacant for longer than normal."


First Rate Property Management Rental Vacancy Rate

February 5, 2015: 1.35%

Click to enlarge

vacancy rates February 5, 2015


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Feds Change Water Heaters

water heaters


The company that handles our after-hours maintenance calls, NightTenders, sends out certain maintenance alerts. The most recent was from the US Department of Energy for improved energy efficiency for water heaters that goes into effect as of April 16, 2015. This change will have a substantial impact on the cost of water heaters AND even more importantly the installation. The water heaters will likely be taller AND wider than current models in order to achieve the required energy efficiency. Some manufacturers are suggesting that we could see prices double.

This is going to create issues for many properties where the hot water heater is located in a confined or small location. Apartments will have the biggest issues with water heaters in small closets –- this may require drywall, framing and/or HVAC changes. Some people might think installing a tankless water heater will solve the issue but it opens the door for a number of other problems, such as venting, electrical supply, gas usages and gas supply line capacity.

You can read more about the legal changes here. Or, most manufacturers (i.e., Rheem, Bradford White, Whirlpool, American, State, etc.) have informational sheets on their web sites.


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

December 2014 Sales Stats in Ada County

The Ada County Association of Realtors (ACAR) just released December 2014 sales numbers. I thought the graphic provided a nice snapshot. Click on the image below to link you to the full report. Below is a quick summary.

Sales:
December sales were up by 4% from December 2013, but when you look at total sales for all of 2014 compared to total sales in 2013, they went down 2.5%.

Median Home Price:
December median home price was $214,000; up 8% from December 2013. The 2014 median home price was $210,000 which is 6% over 2013.

Inventory:
The price categories in shortest supply are homes between $100,000 to $119,000 which has a 1.3 month supply and homes between $120,000 to $159,000 have a 1.8 month supply. In December, sales in the latter category were up 17% over November sales.


ACAR December 2014 Market Report


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Who's #1 in Residential Income Properties

It was just over ten years ago that I joined Swope Investment Properties. Prior to joining Swope Investment Properties, I, through First Rate Property Management, managed many of Mike Swope's properties. Mike and I had also invested in some four-plexes together. It's been probably the best business decision I have ever made and I'd like to share why, but first I'd like to tell you what Swope Investment Properties has done over the past decade.

Swope Investment Properties continues to be #1 in residential income sales according to the Intermountain Multiple Listing Service. Over that past decade (2004-2014), Swope Investment Properties has sold nearly 230 million dollars in rental properties within Boise and the surrounding areas. What's more impressive, is that 2nd, 3rd and 4th places are huge brokerages with hundreds of agents. Mike Swope tops the leader board as the top producing residential income agent for that same period. Yours truly, Tony Drost, was the 4th highest producing agent for residential income properties for 2014 as well as over the past decade. Mike tends to focus on the bigger apartment complexes, whereas I tend to do smaller multi-family properties, so that if the client so chooses, First Rate Property Management can be there to support the investment. Below is my 2014 production:

   
Type # Sold
   
RESIDENTIAL INCOME
(multi-family)
 
    Duplexes 2
    Tri-plexes 1
    4 plexes 11
    Apartments * 4
   
RESIDENTIAL  
    Building Lot 1
    Single Family Homes 13
   
COMMERCIAL  
    Office space * 1
   
   
* includes listings, part ownership or client referrals
   

The main reason I asked Mike if I could sell under his brokerage, was because in my opinion, there was no other person in this town that knew and still knows more about financial performance of rentals in this area. I knew I'd be learning from the best. The 2nd reason was because after working with him on his own rentals for over 6 years, I knew that he was an honest person who put serving his clients' interests far above anything else. That's the business philosophy my dad taught me as a young boy. I would offer to mow our neighbors' yards or shovel their driveways. When they asked, "How much?" I would recommend that I do the work first and they could evaluate the job I did and pay me whatever they felt was fair. I don't know if that made me more or less money, but I remember how great I felt at the end of the day.

Since joining Swope and becoming an associate broker, I've learned a lot from Mike in just about every aspect of the job. Mike and the whole group have been good to me and my family. I would not be where I am at today, if it were not for Mike Swope.


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Rentals in Boise Finish Strong

The SW Idaho Chapter of the National Association of Residential Property Managers (NARPM) just released their 2014 4Q survey results. As the below graphs show, vacancy increased slightly in the 4th quarter. During the summer months when we see the most moving activity, vacancy rates can easily overstate vacancy because of the lead time it takes to get a vacant property move-in ready. I think Q4 numbers give us a better picture of any surplus or shortage of inventory, and I don't see any indication that we have a surplus. Boise and Meridian continue to build more and more multi-family properties, but so far there is no indication that we have over built.

Also, rents have continued to improve. I think we'll continue to see rents improve until we see some surplus in inventory because the demand to rent continues to be strong.

The first graph below is the vacancy rate chart from FRPM, with the vacancy rate for January 15, 2015 at 0.68%.

"FRPM vacancy rates continue to remain low due to our advertising strategy and property turnover plan," says Leasing Team Leader, Melissa Sharone. A lot of property management companies wait to advertise properties until they are vacant or sometimes they wait until after all repairs and cleaning have been completed. FRPM begins advertising the moment the current tenants give notice. 8 times out of 10, FRPM has a new tenant selected before the old tenant even moves out. When Melissa talks about our turnover plan, she is referring in part to our renewal program and lease expiration dates. FRPM is very pro-active on contacting tenants on renewing. Also, throughout the year, we analyze lease termination dates and we purposely avoid bad times of the year to have leases terminate.

Melissa believes that 2015 will be another great year with low vacancy and increasing rents. We'll be looking to identify any trends and will alert you should the data indicate otherwise.


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.


First Rate Property Management Vacancy Rate
January 15, 2015:  0.68%

Click to enlarge

FRPM vacancy rate January 15, 2015


Southwest Idaho NARPM Vacancy Report Q4 2014

Introduction

The purpose of this survey is to show vacancy and rental rate trends among single-family homes and multi-family units (2-15) in Ada and Canyon County. Survey results are displayed by type (single or multi-family) and bedrooms (1-5) for the respective county. Property status was surveyed as of December 29, 2014.

The survey participants were property management companies affiliated with the SW Idaho Chapter of NARPM and are considered to the representative sample of the inventory of professionally managed rentals of less than 16 units.

Survey Respondents

Data from a total of 17 property management companies were included in the survey results, which accounted for a total of 5717 homes: 2396 single-family and 3321 multi-family. The accuracy and reliability of this survey is improved with an increased sampling.


 

Click to enlarge
Ada and Canyon County Vacancies 1

 

Click to enlarge
Ada and Canyon County Vacancies 2

 

Click to enlarge
Ada and Canyon County Vacancies 3


Summary

Vacancy rates moved slightly up to 3.2% for the 4th quarter. This is an increase of .6% from last quarter. The largest increases in vacancy rates from last quarter, was multi-family homes in Ada County with a 1.1% increase and single-family homes in Canyon County with a 2.6% increase.

Rental rates in Ada County increased slightly from last quarter. The increase in rental rates in Ada County has been in all areas of the rental market, from single-family to multi-family. The increase in rental rates averaged out to be $33 over last quarter.

Rental rates in Canyon County also showed a slight increase. The rental rate increase in Canyon County was in both the single-family and multi-family homes. The increase in Canyon County rental rates was very minimal and averaged out to be $7 over last quarter.

Although, the rental rate increases in both counties were minimal, they are very significant. To be able to show an increase in rental rates, in both Ada and Canyon County, during the most challenging time of year to rent a home, is exceptionally remarkable. In addition, we have been able to maintain the vacancy rates and historically high rental rates, for yet another quarter. This shows we are still maintaining an incredible balance between our supply and demand of rental properties, in both the Ada and Canyon County markets.

The SW Idaho Chapter of NARPM is proud to announce, the City of Boise has acquired our vacancy report data to help with evaluating their own housing needs. We are pleased to have been able to contribute to their planning needs. With this acquisition, it truly confirms the value in our quarterly vacancy survey.

We thank you for participating in this survey. Please educate more Professional Members, about the importance of this survey. By having more participants, the accuracy and reliability of this survey is always improved.

View the SW Idaho NARPM Vacancy Report as original PDF file

Angela Post
angela@postpropertyidaho.com
208-585-3256


Find out more about Idaho's premier organization of residential property management professionals at www.swidaho.narpm.org

NARPM is the professional, educational, and ethical leader for the residential property management industry.

Learn more about the National Association of Residential Property Managers at www.narpm.org

Contact Angela Post at 208-585-3256 with any questions and to learn how you can contribute and benefit!



View Externally Here

Instant Tenant Screenings Are TV Dinners

Tenant Background CheckIn the past, we've discussed many technology changes within the property management industry. These changes in general reduce a manager's workload and help facilitate that need for something "instant." Instant and online screening are good examples of where technology has stepped in. Examples of instant tenant screening are programs built within property management software or where a user goes to a certain website and receives the results within seconds. Online tenant screening is another example.

Benefits of Instant Screening

  1. It's instant. The faster you approve a tenant, the less likely that he or she will continue shopping, and the faster that you can get a firm commitment. A full record search can usually be done within a business day, but sometimes can take longer. Some tenants don't want to wait a couple of days to learn the results.
  2. In almost all cases, it's cheaper and the property manager could choose to charge a lower application fee or choose to make money on applications.
  3. It reduces labor.
  4. Allows the property manager to say that a national background screening check has been conducted.
  5. The credit portion of these are accurate, just not the criminal part.

Cons of Instant Screening

  1. According to Acranet, only 8% of the criminal records returned are valid after verifying the records with the courts.
  2. Nearly 70% of criminal records in the US are at lower court levels and thus not available through a "National Search."
  3. A county or state search is the only sufficient option for 30 states in the US.
  4. User could actually deny an applicant because the instant report got it wrong, whereas the other companies that go to the courts to verify would have caught the mistake.

I keep putting "national" in quotes, because that's the buzz word you hear, but as the below map demonstrates, the instant "National" criminal search is a bit lacking. It's the perfect answer for those who want to say they do a national criminal background check, but if they, their clients and their clients' hazard insurance carriers are expecting a thorough criminal background check, these type of searches are not the answer. First Rate Property Management doesn't discriminate against any protected class, but for the safety of everyone, we do want to discriminate and deny applications that fail to meet our criminal history criteria.


Click to enlarge

Acranet National Stats


Summary

I chose the title, Instant Tenant Screenings Are TV Dinners, because when I look at the results, I see a TV Dinner on one side and a nice, charbroiled steak from my favorite restaurant on the other side. You know, just about everyone who knows me says that I am a technology junky. I realize that I am getting older, but it just seems as though, time after time, First Rate Property Management is choosing against these technology changes, because we don't believe that the money and time savings -- nor the ability to meet instant expectations -- is worth the risk to us, the property owner or the surrounding neighbors.


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Service to Others Is Service to Self
American Brain Tumor Association


The Hampton Roads Foundation

Over the years, First Rate Property Management has donated thousands of dollars and volunteered an untold number of hours to local and national charities. It's meant more to us to donate without recognition, which is why this is probably the first time you are learning of this. However this year, we're not just donating, we're hoping to raise money for one of our charities. Last year we had a few vendors ask to be involved with one of our charity events and the result was a much more rewarding experience for everyone.

So in 2015, we're hoping to create that rewarding experience with many more as we look to raise funds for the American Brain Tumor Association. First Rate Property Management is matching all donations up to a certain dollar amount from our employees, vendors, property owners, and tenants. Our goal is to raise $5,000 by the end of August. If you don't have any particular charity this year, we would be honored if you would join FRPM in this endeavor.

First Rate Property Management is not the only company participating in this charity fund raising event. See the attached article from the National Association of Residential Property Managers. Since FRPM is one of thousands of property management companies looking to raise funds, and because we need to track those funds and our progress to our goal, please write your donation check payable to "The Hampton Roads Foundation" -- referencing the ABTA on your check -- and mail or drop off to First Rate Property Management at 7150 Potomac Drive, Boise, ID  83704. First Rate Property Management will forward your donation to the Hampton Roads Foundation and the ABTA. That way we can track the funds our owners, tenants and contractors donated, and everyone who donates will receive a receipt to use for tax purposes.

Make your donation check payable to:

The Hampton Roads Foundation
(reference the ABTA on your check)

Mail or deliver your donation check to:

First Rate Property Management
7150 Potomac Drive
Boise, ID  83704

 

This year, it was I who chose the ABTA to be our main charity. It's my hope that with raised awareness and increased donations, research will provide better diagnosis and treatment options. Over the years, I have had a number of friends affected by brain tumors. My first was the loss of a childhood friend of mine around the age of 11. Most recent, was the loss of my friend, Tim Gaskill. Tim passed away 3 years ago. The brain tumor took his life within 5 months of learning he had one. I can only hope that the funds we raise can help early detection, prevention, and cure of brain tumors.

Please view this video from the American Brain Tumor Association about one family's brain tumor experience.


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Insurance Companies Drop Properties with Section 8 Tenants

Section 8 logoAttached is a report that was forwarded to me from a local fair housing advocate. Evidently there are federal complaints that allege that, once insurance providers become aware of the presence of Section 8 tenants at an insured property, they have either canceled the existing property insurance policy or required a higher premium to continue coverage, and that these actions have a disparate impact on protected groups, such as racial minorities and people with disabilities,thereby violating the Fair Housing Act (FHA).

First Rate Property Management participates in the local Section 8 Voucher program, but we have always left it up to each individual owner to decide if they want to participate. Tenants with vouchers pay a small part of the monthly rent and the remaining amount is covered by federal funding.

This is not a short read and I found myself having to reread several paragraphs to really understand some of the arguments. Here is the summary: The feds are saying that insurance companies canceling or charging higher rates for voucher programs causes discrimination via Disparate Impact. The theory of disparate impact holds that practices in employment, housing, or other areas may be considered discriminatory and illegal if they have a disproportionate "adverse impact" on persons along the lines of a protected trait. Although the protected traits vary by statute, most federal civil rights laws include race, color, religion, national origin, and gender as protected traits, and some laws include disability status and other traits as well. The insurance companies are saying they should be exempt as insurance is risk-based and what the feds want interferes with state regulations.

Disparate Impact TheoryFirst Rate Property Management has not seen where insurance companies have cancelled or increased premiums to those clients of ours that participate in Section 8 Housing. We're not even aware of the insurance companies asking. Nor have we seen any higher insurance claims on any of our properties with section 8 housing. We all need insurance and as a business owner, I have a ton of it and pay thousands of dollars a month for auto, medical, business liability, property, and E&O. I think the feds got involved with the medical insurance and I don't know how it is working for all, but my medical insurance went up 41% this year and I had $0 go towards my deductible. That's just wrong.

PDF file
Not Worth the Risk: The Legal Consequences of the Refusal to Insure Properties with Section 8 Tenants
by Jean M. Zachariasiewicz


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

I Lied, My Pitbull Isn't Really an Assistance Animal

pitbull dog

Assistance Animals have gone through a lot of names over the years, but regardless if they are called Support Animals, Companion Animals or Assistance Animals, they serve a purpose for those in need. This area of the Fair Housing Act can be very complicated, especially to a private property owner who hasn't sat through the classes year after year. Because of the level of complication, I am going to generalize some things here in an attempt to make it easier to understand in a general sense, not as a true policy or procedure to use. Most relate support or assistance animals to something like a seeing-eye dog. Yes, that is an animal that is protected under Fair Housing, but so are miniature horses or cats that provide emotional support. The type of animal can be just about anything considered reasonable and its role can be anything that helps a person with a disability. You cannot charge more rent; you cannot charge a pet deposit (because they are not considered a pet, they are considered a tool to assist the tenant to live a more normal life); you cannot unreasonably deny the animal; and you cannot ask the tenant why they need the animal.

Like anything in life, you always have someone who tries to take advantage of something. Let's face it, most Landlords are scared to death of animals in their rentals because of the potential damage. So tenants wanting a pet or already have a pet, can claim a disability and their pet becomes an assistance animal that is protected under the Fair Housing Laws. Heck, I have seen tenants who stated they had no pets or assistance animals upon move-in and then when an animal is found at the property, they produce documentation stating that the animal is not a pet but is an assistance animal. Landlords' rights on confirming such a need have really diminished, which has created a new business for someone by offering Assistance Animal certifications via the web. Because of the severe consequences for violating Fair Housing, most property managers advise not to test the "reasonableness" or need. Which finally gets me to this article about making it illegal to lie about the need for a service animal. Many Landlords are hopeful that this includes or leads to fair housing as well.

Companion Animals

Does there really need to be a law making it illegal to lie? What if HUD were to allow Landlords to once again require a form to be signed by a physician or psychologist? I understand the argument that sometimes a mother of a young child may be the best person to identify the need for an assistance animal, but so would a physician or psychologist and if they are in need it's likely they are already seeing such an expert. It's likely no extra steps and it could keep the cheaters out of it.

Oh, by the way, Pitbulls are never listed as a pitbull. They are almost always listed as an American Staffordshire Terrier. I used a pitbull in my title and photo because that seems to be the extreme that so many jump to. The type of animal must be reasonable and there may be reasons why a pitbull isn't reasonable, but that's another can of worms. If you want to learn everything you can, I recommend you first start with information at the HUD website regarding your rights.


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Virtual Office Not for Property Management

We just placed a nice family in one of our single family rental homes and the reason they chose to move, is something we hear often. I think these tenants' reasons are valid and I hope you find this blog post objectively written and not a "Hey, look how great First Rate Property Management is."

Benefits of a Virtual Office

As technology improves, virtual and home offices are becoming the norm. My subdivision is full of people working out of their home and not all are working for huge corporations. I work from my home office almost every morning, and then some evenings and weekends. In many cases the business or licensing requires a physical business address, sign, and phone number. So they rent virtual space to meet those requirements. In so many ways I agree with this trend and believe it decreases corporate costs, increases worker performance, and in many ways improves employee's personal lives as they have the flexibility to do personal things throughout the day. But when it comes to property management, the virtual or home office may not be the best.

home-office.jpg

Tenant Complaints about a Virtual Office

One of the things First Rate Property Management does is follow up with our tenants throughout the rental term. The first of many follow ups with our tenants is just after they moved into the property to make sure the move went well and everything is good with the property. Here is part of the email that came from those tenants mentioned above.

"We left [name deleted] Property Management because all calls go to a message machine. With no office to go to, we would panic if they didn't return our calls; and sometimes it would be weeks before they called us back. When we began searching for properties, you [First Rate Property Management] were one of the few companies that actually had a live person answer the phone. When we called to schedule, you guys worked around our schedule and the other company wouldn't even meet with us. They told us to use a key they hid. With you, it was like we had our very own agent helping us. I liked that we were able to come into the office to sign the lease and discuss everything."

To be fair, I doubt that everyone with a virtual or home office directs all calls to a message machine before calling them back. Even though First Rate Property Management tries to answer every call live, there are times in the summer that we are not able to answer each and every call as they come in. Also, I know several really good property managers with home offices and I think they do allow face-to-face meetings at their home. Interesting enough, self-showings were a topic not too long ago and this tenant's experience reinforces one of the negatives I brought up. And lastly, although old fashion customer service of personal attention goes a long ways, I agree, a property manager needs technology to meet the needs of those who don't want the personal service.

Tenant Screening Issues with a Virtual Office

But, here is what this tenant and likely very few property owners know. As identity theft increased, the major credit data providers require a site visit where they verify a brick and mortar office and a sign, among other requirements. Unless things have since changed, that means someone with a home or virtual office would not be able to subscribe to their service, and would not have the ability to run the national credit and criminal checks that First Rate Property Management runs. Now, there are some online solutions and from what I am told, the credit reporting is instant and accurate. The criminal search is also instant, but because there is no one true criminal database, these online solutions can miss some criminal records.

leasing-agent.jpg

Technology -- vs -- Personal Service

Earlier we demonstrated how personal service trumped that of technology, but I still think property managers need to provide both. An applicant can view our available properties online, apply online, electronically execute lease documents, electronically transfer deposit and rent funds, and make requests all electronically. Except for personally showing the properties, everything else can be done electronically and paperless.


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Boise Area Vacancy Rate, December 3, 2014

Vacancy Rate December 3, 2014: 0.99%


Click to enlarge
vacancy rates December 3, 2014



View Externally Here

Idaho: Boise and Meridian 4-Plexes

4-Plex Evolution in the Boise Area

When talking to investors and property managers across the country, I am told that Boise is a different breed. They are always surprised to learn how many 4-plexes and 4-plex communities there are in Boise and Meridian. I wanted to share my perspective of how the 4-plex market has grown and evolved over the past decades. I also wanted to share some of my own thoughts on the advantages and disadvantages of 4-plexes as investments in the Boise area.

1970s - 1980s: We saw rows of 4-plexes built. Each was individually owned as a stand-alone building, just a like a single-family home. Today, this is the norm across the country, except for Boise.

1990s: In the early '90s we saw an explosion of 4-plex communities wherein the complex for all intents and purposes looked like an apartment complex. But it wasn't. Each building was individually owned and managed. An HOA was formed to manage the common areas to keep some consistency and help maintain that apartment look.

Mid-2000s: In the mid-2000s the building of stand-alone 4-plexes nearly completely disappeared. Almost all 4-plexes were built in communities with an HOA. They were still individually owned and managed. But now they were adding amenities to the common area such as pools, clubhouses, and playgrounds. To the unknowing, these communities appeared to be apartment complexes.

2005 to present: We saw some of the amenities stripped away and much less autonomy; the owner has a lot less control. The 4-plexes are still individually owned and there is still an HOA. However, the HOA has become the authority. They control everything. They select who manages ALL of the buildings; what the rent amounts are; screening criteria; order of tasks to complete; etc. This control started gradually and increased to a point where I think every new 4-plex community falls under this model.


Grayling Place Apartments
Grayling Place 4-Plex Apartments -- Boise, Idaho


Advantages and Disadvantages

The advantages of a 4-plex are:

  • Developer can sell them off as they build them out, whereas when building an apartment complex, they have to complete all 200 units before selling.
  • A 4-plex is considered a residential loan and doesn't require a ton of cash to purchase.
  • Performance is sometimes just as good as an apartment complex at a much lower price point.

Some of the disadvantages were that perhaps the owner next door to your building didn't keep up with maintenance, or didn't do any tenant screening so your tenants were constantly dealing with undesirable neighbors, or maybe they undercut their rent so that their vacancies would fill before yours. Attempts to remove some of these disadvantages is why we saw the new complexes taking over more control. Sure, by controlling rent, demanding certain screening and controlling maintenance, etc., the HOA can protect against some of those negatives. But that in itself can certainly be a disadvantage as it relies heavily on the decisions made by the HOA and the HOA leaders. Another disadvantage is the cost of HOA dues. With the HOA taking on more and more responsibilities, they are having to charge more and collect more for maintenance reserves. So in most cases, those added expenses decrease the Net Operating Income enough that in my opinion the property no longer performs well enough.

A benefit to the developer under the new structure of these 4-plex communities is that they typically control the HOA during development. By controlling rents, you can control value. The stronger the rents, the stronger the value. Since a potential buyer has no input on their property manager, they likely don't ask questions about how realistic are the rents and to even think to ask what kind of concessions were needed to get that rent. If you are buying a 4-plex in such a community, you need to be asking these questions.


Boomer Apartments
Boomer 4-Plex Apartments -- Boise, Idaho


Value

In October we saw Capitalization Rates (Cap Rates) dip below 6%. More than half of the Ada County 4-plexes sold were new 4-plexes, of which many were part of the new 4-plex community. The average Cap Rate of the new 4-plexes was 5.5%. Based on the sales prices and the poor performance of these newer buildings, I am confident that 10- to 20-year-old 4-plex buildings with anything over a 6% Cap Rate will sell quickly.


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Boise Area Vacancy Rate, November 5, 2014

Vacancy Rate November 5, 2014: 0.60%

First Rate Property Management's vacancy rate is currently 0.60%, down from 0.70% at this time last year. This is the 39th consecutive week that FRPM has achieved record-low vacancies. As a policy FRPM recommends to all of our property owners not to allow leases to terminate in the winter months. But there are always circumstances that occur where the owner allows tenants to go month-to-month. Unfortunately sometimes those tenants choose to vacate in the holiday seasons. The holidays have always historically proven to be a very hard times of the year to fill vacancies.


Click to enlarge
vacancy rates November 5, 2014



View Externally Here

Boise Rentals and Vacancy Rates -- October, 2014

The Southwest Idaho Chapter of the National Association of Residential Property Managers just released their 3rd quarter vacancy survey results. The NARPM members reported that vacancies across Ada and Canyon Counties are down and that rents in Ada County are also down. Multi-family vacancies were reported at a mere 1.9% while single-family vacancies were said to be at 3.3%. First Rate Property Management's own numbers support the vacancy rate finding, but we are not seeing a decrease in rent rates at FRPM (Ada County). FRPM's average vacancy for all of 2014 has been 1.79% through October. That's incredible.

The 3.3% vacancy rate number for single-family homes didn't surprise me. Typically, once school starts, the demand lowers and homes become harder to fill. However, we had a couple properties become available this month and, with over a 10% rent increase, they filled with great tenants within days. It would be great if this kind of demand would continue through the winter, but I wouldn't count on it. The winter and the holiday season always scare me because so many times in the past nobody was looking for rental housing. All they were looking for was turkey and gift shopping. So, if you have a vacancy or one coming up, even in this stellar market, our property managers are going to be watching the inquiry rate and if things slow down, we'll be contacting you to consider decreases in rent and maybe even a concession. We just don't want the property to sit vacant through the winter. Hopefully this is not the case or the concern, given the recent downward-trend in valley vacancy rates and FRPM's steadily upward-trending rent rates in Ada County.


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.


First Rate Property Management Vacancy Rate
October 17, 2014:  1.13%

Click to enlarge
vacancy rates October 17, 2014


Southwest Idaho NARPM Vacancy Report Q3 2014

Introduction

The purpose of this survey is to show vacancy and rental rate trends among single-family homes and multi-family units (2-15) in Ada and Canyon County. Survey results are displayed by type (single or multi-family) and bedrooms (1-5) for the respective county. Property status was surveyed as of September 30, 2014.

The survey participants were property management companies affiliated with the SW Idaho Chapter of NARPM and are considered to the representative sample of the inventory of professionally managed rentals of less than 16 units.

Survey Respondents

Data from a total of 18 property management companies were included in the survey results, which accounted for a total of 7191 homes: 3324 single-family and 3867 multi-family. The accuracy and reliability of this survey is improved with an increased sampling.

click to enlarge

click to enlarge

click to enlarge


Summary

Vacancy rates moved significantly down, to 2.6% for the 3rd quarter. This is a decrease of 1.6 percentage points from last quarter. The largest decrease in vacancy rate was in the single-family homes, specifically within Canyon County. The decrease may have a direct correlation with the increase in sampling provided in the Canyon County market.

Rental rates in Ada County decreased slightly from last quarter. The decrease in rental rates in Ada County has been in all areas of the rental market, from single-family to multi-family. However, the decrease in rental rates was very minimal, and averaged out to be only a $21 decrease over last quarter.

Rental rates in Canyon County showed a slight increase, again this may have a direct correlation with the increase in sampling. The rental rate increase in Canyon County was also across the board, in both the single-family and multi-family homes. The increase in Canyon County rental rates averaged $50 over last quarter.

Last quarter rental rates were at an historical high, and yet we have been able to maintain the rates again for another quarter. This shows we are still maintaining a balance between our supply and demand of rental properties, in both the Ada and Canyon County markets.

The SW Idaho Chapter of NARPM thanks you for participating in this survey. Please educate more Professional Members, about the importance of this survey. By having more participants, the accuracy and reliability of this survey is improved.

View the NARPM Report as original PDF file

Angela Post
angela@postpropertyidaho.com
208-585-3256


Find out more about Idaho's premiere organization of residential property management professionals at www.swidaho.narpm.org

NARPM is the professional, educational, and ethical leader for the residential property management industry.

Learn more about the National Association of Residential Property Managers at www.narpm.org

Contact Angela Post at 208-585-3256 with any questions and to learn how you can contribute and benefit!



View Externally Here

Ada County Four-Plex Sales in September, 2014

For the first time in over four years, there were no short sales or bank-owned property sales within Ada County for four-plexes, during a calendar month. In September, we had 6 non-distressed four-plex sales at an average sales price of $337,000. The average days on market over the past six months has been right at two months, which translates into about a month on the market with another month to close an accepted deal. Cap rates are right at 6% with an average Gross Rent Multiplier (GRM) of 117 (trailing 6 months). Using GRM for a quick valuation, that means a four-plex with rents of $3,000 per month is roughly worth about $350,000.

Cooper Canyon Apartments, Boise, Idaho
Cooper Canyon Four-Plexes -- Meridian, Idaho

There are not a lot of four-plexes currently listed, which is likely helping higher sales prices. If you are a potential Seller, it's a good time to list your property. With little inventory, Buyers will likely need to jump on something or expect a longer process finding something that fits their needs.


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Factors That Can Affect the Cost of Home Insurance

Below is an article distributed by Prospect Mortgage here in Boise. I thought this provided some good general information for a standard homeowner's insurance policy. For rentals, however, I highly recommend that you speak to your insurance agent about special Landlord riders that cover things such as lost rent. Typically the agents know to offer if not automatically add such additional coverage for Landlords for multi-family units, but maybe not so for a single family rental. If you have a single family rental unit, you might just want to check with your insurance carrier that they are aware that the property is not owner-occupied and in fact is a rental.

Tony Drost
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.

 


 

 
 
Factors That Can Affect the Cost of Home Insurance
 
Share this: FacebookTwitterLinkedIn
 

Many factors can affect the cost of home insurance. Here are some of the most important.

Home Location
The average cost of a homeowner's insurance policy is approximately $900 a year. If the home is located in a high-risk area susceptible to wildfires, tornadoes or hurricanes, the cost of insurance could triple or quadruple. The crime rate in the neighborhood will also affect costs. Security systems can offer on average a 5% to 15% discount off an insurance policy.

Home Age
A new home can provide a discount up to 30%. If a home is over 25 years old, insurance rates will be higher. Older structures are more susceptible to electrical, plumbing, roofing and foundation problems that can be costly to repair. Plumbing is an acute problem because water can lead to mold and mold is expensive to remediate.

Home Materials
Fire-resistant materials, such as brick or concrete, can lower home insurance costs by as much as 20%. Alternatively, more flammable materials, such as wood shingles or wood siding, can increase the cost of home insurance.

Backyard Pool
Pools present additional liability for insurance companies and many require a solid fence with a locking gate surrounding the pool. Pools -- and items like trampolines -- can increase insurance costs by 10% or more.

Canine Companions
The average cost paid out for dog bite claims in 2012 was $29,752, according to the Insurance Information Institute. For this reason, dog owners -- particularly those with larger dogs -- will pay higher insurance rates.

Fire Station and Fire Hydrant Distance
Proximity to a fire hydrant and station can alter the cost of insurance, as well as whether the fire department is a professional or volunteer fire service.

 
Prospect
Mortgage   Facebook Twitter LinkedIn Pinterest
 
Mind Your
Money
 
Douglas
Nicolls
 
Douglas Nicolls
Sr. Loan Originator
Prospect Mortgage
 
6305 W Overland Road
Boise, ID 83709
 
Office: (208) 377-7306
Fax: (877) 314-9312
Direct: (208) 891-5412
 
douglas.nicolls@prospectmortgage.com
NMLS# 400383
 
Visit My
Website!
 
 
 
Rev. 8.26.14 (0814-1533)


View Externally Here

HUD Granted an Additional $75,000,000 to Help with Self Sufficiency

September 29, 2014

The U.S. Department of Housing and Urban Development (HUD), under the direction of Secretary Julian Castro, was awarded $75 million in family Self Sufficiency grants of which $591,302 came to Idaho. The goal is to help public housing and Housing Choice Voucher residents connect with local services to improve their education and employment and to put them on a path to self-sufficiency. "HUD connects folks to opportunity," said Castro. "These grants will link people to the computer access, financial literacy, job training, childcare and other tools they need to compete and succeed in the workplace. Every American deserves access to the skills and resources necessary to become self-sufficient."

HUD logo"Many people in public housing are struggling to overcome multiple barriers, and can benefit tremendously from help acquiring the skills, making the connections and building their way to economic self-sufficiency," said HUD Northwest Regional Administrator Bill Block. "That is exactly the kind of help housing authorities are able to provide to their residents through the FSS program. In partnership with the housing authority, residents in the FSS programs are able to reap substantial benefits that help them to take charge of their financial futures."

Participants in the program sign a five-year contract that requires the head of the household to obtain employment and no longer receive cash welfare assistance at the end of the five-year term. As the family's income rises, a portion of that increased income is deposited in an interest-bearing escrow account. If the family successfully completes its FSS contract, the family receives the escrow funds that it can use for any purpose, including improving credit scores, paying educational expenses, or a down-payment on a home.



View Externally Here

Tenant Self Showings

Rental HomeIn today's world it would seem that everyone wants immediate access to just about everything. If we can access it via our phone or computer, better yet, right? In many ways, I have to agree that I'd prefer jumping on the web and doing my research and closing the deal. Does allowing prospective tenants physical access to vacant rental units via the web -- and absent an owner or agent accompanying them to look at the property -- make sense? Is it not meeting the demand of the people seeking housing?

In a lot of ways, it does make sense to meet the need for immediate and easy access. Over the past few years, allowing prospective tenants to "self show" properties has been a growing trend and, in some parts of the nation, it has become the NORM. The pros appear to outweigh all the cons. Or do they? I say that they do not, and I am throwing the topic out there for feedback and comments, but please read my entire post before making up your mind. I'd like to discuss the benefits; the cons that I see, which surely misses many; and the systems being used. Also, for my colleagues reading this blog entry, by no means are my comments meant to discredit their procedures. I am sold on the concept. Also, I know many who use Tenant Self Showings and they report no to very few of the problems that I describe in my closing paragraph. However, I do believe that owners need to know if their properties are not being shown by an agent and, furthermore, I believe owners need to be notified of the type of system being used and the risks and who assumes those risks.

Let's first make sure everyone knows what we are talking about. Tenant Self Showings is a system whereby prospective tenants are given physical access to a vacant unit, absent the presence of the owner or owner's agent. The cheapest system is the installation of a $10 combination lock at the property. Prospective tenants are given the code to gain access to the key to let themselves in. Once in, a prospective tenant is instructed to be sure to turn off all lights, lock all windows and doors and put the key back in the lockbox upon completion of the private showing. This is the most common process I see being used because it is cheap, easy and simple. Seeing some risk with this process, electronic systems have been created. Some are as basic as replacing the mechanical lockbox with an electronic one that allows random combination coding, so that each visitor receives a unique code. The sophistication and risk reduction of the systems improve from there, and most of the development has been pioneered by the Vacation Rental Market. Electronic locks may work on Wi-Fi and Bluetooth and may also allow the owner or owner's agent to provide an individual access for specific dates and times. Trying to further reduce risk, locks that are swiped by a credit or debit card allow access and by swiping they agree to be held responsible for damages, rent, etc., if certain actions by the visitor are or are not taken.

What are the pros? As already discussed, Tenant Self Showings allow immediate, flexible and easy access. Prospective tenants enjoy the no-pressure opportunity to see the rental. Also, there is good data that shows a very high showing-to-lease conversion ratio, so long as the manager requires an approved application and collects a security deposit to cover damages or unauthorized tenancy, prior to providing the "keys to the castle." Another pro is that Tenant Self Showings reduce a ton of labor. Using simple math (labor, vehicles and related costs) FRPM spends nearly $100,000 per year on showing properties. So we could substantially improve our bottom line, or even pass some of that savings onto our property owners to improve their bottom lines. And lastly, these systems provide great controls and flexibility for contractors performing maintenance and repairs.

Lease ShowingI am not sure if I or anyone else could think of all of the things that could go wrong that could lead to expense and liability. So as not to compromise those using the mechanical systems, I prefer not to explain how the systems can be misused, but rather describe the risks: unauthorized entry, unauthorized tenancy, vandalism, theft, total property loss, high utility bills for lights left on and heating and cooling adjusted during the showing. And should any of these happen, would the property owner's or property manager's insurance policy cover that damage, knowing that the prospective tenant was given a code to access the property? The electronic versions reduce risk because the code can control date and time access. The Wi-Fi and Bluetooth systems can control date and times, plus the source. The credit card systems control date, time, source and provide some legal agreement hoping to hold the visitor responsible for any of the items I listed above. But has anyone caught perhaps one of the most important disadvantages of a Self Showing System? You don't have an agent meeting the prospective tenants to sell the property and the property management services, answer questions, solicit other properties that may better suit their needs, and to ensure the property is secure once done. Also, FRPM pre-leases most of our properties. That means we are showing them and executing new leases before the current tenants have even vacated. So, the self-showing system would provide little benefit to FRPM unless we were willing to wait for tenants to vacate before showing, which would increase vacancy.

 

Tony Drost Virtual Card



View Externally Here

Boise Area Vacancy Rate (September 10, 2014)

Vacancy Rate September 10, 2014: 2.70%

Click to enlarge
vacancy rates September 10, 2014



View Externally Here

Multifamily Housing is Booming, and It Doesn't Look Like a Bubble

Here is a link to a post from the CFA Institute Enterprising Investor Blog: Multifamily Housing is Booming, and It Doesn’t Look Like a Bubble.

The CFA Institute Enterprising Investor Blog is a forum for delivering practical analysis of current issues in finance and investing. Below are some of my comments with the Boise market in mind and some of the graphs and images included in this blog post.

Let's start with the title, "Multifamily Housing is Booming, and It Doesn't Look Like a Bubble." We really saw values increase in 2013, but 2014 has been what I would call very stable. But the number of multifamily developments already built, under construction now, and on the schedule for future development is certainly a boom. Is that a bubble? I think so. But I think the real concern is will that bubble burst? I don't follow the big apartment developments all that much, but what I have seen is that they boast huge rents to support their very high price tags. For now, there seems to be plenty of people willing to pay the higher rent. But if we build too much, we'll have occupancy issues, which typically cause rents to lower. Lower rents decrease value.

Below are two graphs included in the blog showing single-family and multifamily starts (in thousands).


Single-Family Housing Starts (In Thousands)

Click to enlarge
Single-Family Housing Starts (In Thousands)


Multifamily Housing Starts (In Thousands)

Click to enlarge
Multifamily Housing Starts (In Thousands)


I always enjoy seeing others reference similar milestones that I have previously mentioned within my own blogs. Here the author references President Clinton's desires to improve Homeownership. I've referenced that as the American Dream. And I don't think we can totally blame that administration, as that Dream continued on as we created hundreds if not thousands of different loan programs. The results ended up being the American Nightmare. As I have said before: owning isn't for everyone and that by no means is a slam. There are plenty of very good reasons to rent and they can make the best financial sense. But back to their point. Below is a graph showing how the homeownership rate has decreased.


Homeownership Rate

Click to enlarge
Homeownership Rate


Then we get to where national numbers and my Boise-area experience differ. Unlike the rest of the country, our rents and occupancy didn't peak in 2008. After the crash, we ended up with a ton of single-family homes that either were not selling or not selling for a price the owner was willing to accept. So those homes became rentals. We had a huge supply and it took awhile to get them all rented up. But it certainly was a turning point where we started seeing the demand to rent, and as inventory levels were absorbed, the rental market strengthened. They discuss a 7.5% vacancy rate where here in the Boise area we're half that rate.

Below they showed the average rental rate for multifamily properties. Although the dollar numbers are lower in the Boise area, our graph is climbing similarly.


Average Rental Rate of Multifamily Properties

Click to enlarge
Average Rental Rate of Multifamily Properties


Overall Implications

Within their post, they list a number of well-made points. I've always considered myself a conservative skeptic. Considering the number of rentals I myself have invested in, there are a lot of people that look at me and wonder how I could ever call myself conservative or a skeptic. Well, I have my comfort level and that comfort level has probably kept me from taking more risk and creating huge wealth. Or perhaps, it's what saved my bacon through the crash. So back to being the conservative skeptic. Here in Boise, I think we are building too much too fast at prices that require rents that may not be sustainable or allow room for growth. If the numbers work well using conservative rents and higher vacancy, then it probably would make more sense. Remember all of those investors who bought because values just kept going up and up? Same thing here in my opinion. If the project only makes sense if rents keep going up and up and vacancy has to continue to be records lows, I personally think it's gonna hurt. But in the meantime, it's putting a ton of people to work and sales profits are giving lots of people money to spend and put back into the economy.

Tony Drost, President, First Rate Property Management



View Externally Here

School is in.  Tenants settle in as well.

Below is First Rate Property Management's vacancy chart for summer 2014. As we have reported all year long, 2014 has been a strong year. Rents have increased and occupancy hasn't been this good since the late 1990s and early 2000s. Now that school is in, we're seeing people wanting to hunker-in. Most have already made their move and won't start looking to potentially move again until late spring and early summer. This is a trend that we see in both single-family home buyers and tenants. With this being the case, the demand to rent or buy is slowing and will continue to slow the closer we get to the winter months. This is most evident in our single-family homes. The multi-family rental units are still moving at a nice rate. Therefore, single-family Landlords may need to look at slightly lower rents to get the few that are still willing to look at their home over others. I would even consider a move-in credit if the inquiry rate is slow. Rentals in November thru February are typically hard to move with the only exception being rentals near Boise State University that come available during the first and second semester break. All in all, I couldn't be happier with the team members at First Rate Property Management and how they have managed the lease renewals and filling vacancies this year.

Click to enlarge
FRPM vacancy rates August, 2014



View Externally Here

Housing market stuck in downward spiral?

housing spiral

Housing market stuck in downward spiral: Shari Olefson

The link above goes to a Yahoo article with a video. Yahoo did a great job with the title, as it gets your attention and maybe your reaction was similar to mine: "downward spiral" ? ... What?

Instead of disputing that and sharing Boise-area numbers, I prefer to hammer on some of the other statements, and I do understand that the Boise market is different than the nation as a whole. For example, Shari Olefson "sees more potential buyers turning into renters and believes there's a lack of suitable housing and loan products for what people can afford now." Let's start with the first part of the quote regarding renters.

Renters. Yes, there seems to be a growing preference to rent over buy. Some say this is because many saw friends and relatives lose their homes after the crash and don't want to take the risk. Others prefer to rent because they don't want to have to worry about maintenance. Or, they want the flexibility to move easily without having to worry about selling and figuring out if they have to sell first in order to buy at the new location. In so many ways, renting is the easier approach and could even be the cheaper approach.

Lack of suitable housing. I am getting ready to list a 13-year-old, 1300-square-foot home with a 2-car garage for $150,000. With FHA or IHFA financing, a buyer could get in with as little as $4,500 down. Actually, even less if the deal were structured differently. So, in at least the Boise market, there is affordable housing. Albeit it, if you want granite counter tops, and custom trim work, and the other "mack daddy" features, you are going to have to spend more. Or, you can rent something with those features, and perhaps spend less. Typically the advantage of renting improves with the higher the value of the house they are renting.

Loan products. Come on. In the example I gave above, the buyers could be in a home for as little as $4,500. Let's not fall in that trap again. If we had a higher down payment and reserve requirements in 2005-2008, we probably wouldn't have seen values spike the way they did and we probably wouldn't have had a crash like we did. So no need for this "economic stimulus." Let the market be the market and let's quit playing around with interest rates and loan packages to try to help. Oh, in the example I've been using, the buyer's PITI would be less than the rent. But, they can't just up and leave any time they want. They have to maintain the home at their expense. And, there is no guarantee that values will improve or won't fall back. Today, with so many disposable products in people's lives, does it not surprise us that people see renting as the more immediate and flexible option.

Then my last remarks are about the cost of multi-family and single-family construction. Hey, the builders are following the demand. It's cheaper to build multi-family real estate. You can build multi-family with the same amenities as a "mack daddy" home, for less, for so many reasons. One is density, such as land prices, more units on a single foundation, building vertical, common walls, etc. Multi-family sells for less per unit not to undercut single-family homes, but simply because it is cheaper to build.

Tony Drost Virtual Card



View Externally Here

SW Idaho Chapter of NARPM releases 2nd quarter vacancy report (2014)

Below is the 2014 second quarter report from the SW Idaho Chapter of the National Association of Residential Property Managers. The report shows that the combined vacancy rate, for single-family and multi-family rentals, stands at 4% at the end of the second quarter 2014 (June 30, 2014). First Rate Property Management's rental data is included in the SW Idaho Chapter of NARPM survey. We provide our vacancy information up to the last day of the quarter to participate in the survey.

The First Rate Property Management vacancy rate for the second quarter 2014 is 2%, which is a record low for us for the last several years. Properties are renting quickly because there isn't much out there, and rents have been increasing during the past couple of years as the market allows. We expect our trend of historically low vacancy rates and elevated rents to continue for the foreseeable future. The only rental practice that First Rate Property Management has adjusted -- due to the recent vacancy and rent conditions -- is to offer longer-term leases at a market rent and if tenants want a shorter lease they pay a bit above market rent.

For property owners, we have seen that people often cannot sell their houses at their asking prices, so they are wanting to rent them out until the market is better for selling. The properties are renting up quickly because of the low supply of rentals in the Boise area.

Tony Drost


Introduction

The purpose of this survey is to show vacancy and rental rate trends among single-family homes and multi-family units (2-15) in Ada and Canyon County. Survey results are displayed by type (single or multi-family) and bedrooms (1-5) for the respective county. Property status was surveyed as of June 30th, 2014.

The survey participants were property management companies affiliated with the SW Idaho Chapter of NARPM and are considered to the representative sample of the inventory of professionally managed rentals of less than 16 units.

Survey Respondents

Data from a total of 11 property management companies were included in the survey results, which accounted for a total of 4143 homes: 1607 single-family and 2536 multi-family. The accuracy and reliability of this survey is improved with an increased sampling.

click to enlarge
units managed

click to enlarge
Ada & Canyon Counties

click to enlarge
Historical Combined

click to enlarge
Single-Family Rental Rates


Summary

Vacancy rates moved significantly up, by 2.5% from last quarter. Comparing summer to summer, the surveyed vacancy rate increased from 3.5% for Q2 of 2013 to 4.2% for Q2 of 2014, with a large increase of single-family vacancies for the quarter.

Rental rates also rose from last quarter. The largest increase in rental rates has been in the smaller units, such as, 1 bedroom and 2 bedroom units. This explains why the multi-family market carried the majority of increase, in rental rates. However, the largest increase in vacancy rates was in the single-family. Therefore, the increase in rental rates and the increase in vacancy rates, may have no direct correlation.

Summer rate increases are historically higher than the spring months. However, comparing the historical data, we have currently reached record high rental rates.

The SW Idaho Chapter of NARPM thanks you for participating in this survey. Please educate more Professional Members, about the importance of this survey. By having more participants, the accuracy and reliability of this survey is improved.

View the SW Idaho NARPM Vacancy Report Q2 2014 Report as original PDF file.

Angela Post
angela@postpropertyidaho.com
208-585-3256
Find out more about Idaho’s premiere organization of residential property management professionals at www.swidaho.narpm.org.
NARPM is the professional, educational, and ethical leader for the residential property management industry.
Learn more about the National Association of Residential Property Managers at www.narpm.org.

Contact Angela Post at 208-585-3256 with any questions and to learn how you can contribute and benefit!



View Externally Here

Rents Continue to Push Upward

Below is an article from The Wall Street Journal. I found it to be a good read. The article states that over the last year, rents across the nation have increased by 3.4%, but in some areas, as much as 6.7%. Boise is considered a small market, but I would believe that Boise-area rents have increased closer to the 6.7% than the average of 3.4%. But the article also addresses income. Rents are moving up but nationally, incomes are not. I think this is a very good point and something I have brought up before. Is the sky the limit, for Boise-area rents? It can't be. The family income has to play a factor.

for-rent-sign.jpg

With that said, the ratio between property value and rents for single-family homes has always been much higher in Boise than the national average. For example, a $150,000 house in Austin, TX may rent for $1,800. In Boise, that same $150,000 house would rent for about $1,000 on the high side. So although Boise-area income levels have to play a factor, rents in the Boise area are still considered to be low in comparison to property values.

Apartment Rents Rise as Incomes Stagnate
by Chelsey Dulaney
The Wall Street Journal
July 2, 2014

 


View Externally Here

Boise Area Vacancy Rate (July 2, 2014)

Vacancy Rate July 2, 2014: 2.80%
Historically low vacancy for last 9 months

Click to enlarge
vacancy rates July 2, 2014



View Externally Here

Boise Area Vacancy Rate (June 25, 2014)

Vacancy Rate June 25, 2014: 2.50%

Click to enlarge
vacancy rates June 25, 2014



View Externally Here

Boise Area Vacancy Rate (June 2014)

Historically Low Vacancy Rates in Boise, Idaho

Eight months of historically low vacancy rates for First Rate Property Management in Boise, Idaho.

Click to enlarge
vacancy rates June 2014



View Externally Here

Idaho, more than just potatoes

Below is a link to an article from CNN citing 10 locations within the world that we all should adventure. Location 4, is Idaho, just 6 spots before Outer Space. What a compliment to list Idaho amongst well known destinations like Bolivia, Mongolia, Bhutan, and and the Arctic Circle. In fact, they recommend starting your Idaho adventure in Boise. Some of the Idaho features cited, were the deepest river gorge in North America (Hells Canyon), more miles of rivers than any other state, a waterfall (Shoshone Falls) taller than the famous Niagara Falls, and a lot more.

It's a good read, but bittersweet for me. It's nice that Idaho is getting some attention. But I must admit, I miss the small town I grew up in.

Tony Drost Virtual Card
Tony Drost, President
First Rate Property Management
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



CNN 10: Dare to Go

Sawtooth Mountains, Idaho

Sawtooth Mountains, Idaho

Shoshone Falls, Idaho

Shoshone Falls, Idaho



View Externally Here

April Idaho & Boise Area Unemployment Continue to Improve . . . Incomes, Not So Much

Below is an unemployment and income update that I received from Jack Harty at Harty Mortgage Advisors.

Tony Drost Virtual Card
Tony Drost, President
First Rate Property Management
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.


Glass Half-FullPhoto: Glass half (insert your preferred word here)

When looking at economic data, the glass is always half full (or the other alternative, if you prefer).

Area unemployment numbers are enviable compared to the nation, but not so much regarding Idaho average personal income.

 

Unemployment Rate

Unemployment rates in Boise and the State of Idaho continue to be among the most favorable in the nation, with Idaho unemployment at 5.0% and Boise Unemployment at 4.4%. Idaho ranks 16th among 50 states and D.C. in lowest unemployment rates.

April 2014

Unemployment Rate April 2014 Month/Month Year/Year
National 6.3% -0.4 -1.2
Idaho 5.0% -0.2 -1.4

In the Boise MSA, April unemployment breaks down as follows:

Boise Meridian Nampa Caldwell Ada Co Canyon Co
4.4% 4.1% 5.6% 6.4% 4.4% 5.8%

Recovery of Lost Jobs

Idaho has recovered most of the jobs lost from The Crash. See Idaho Dept. of Labor 5/16/14 Labor Market Report excerpt following:

Idaho, on an annual average basis, had recovered about 70 percent of its recession job losses in 2013. The strong growth in the first four months of 2014 put total non-farm jobs in April just below their pre-recession peak, and it is possible average jobs for 2014 will exceed the pre-recession high. Population growth since the recession hit has been less than half the rate of the previous decade, slipping to the national growth rate in 2012 for the first time in decades, before returning to 1 percent growth in 2013.

Personal Income

This good news is generated against a headwind of lower Per Capita Personal Income. Per the University of Idaho analysis that adjusts for inflation as of 2013 and uses income figures for 2012 (Figures for 2013 are not yet available) Idaho ranks 49th in mean average Personal Income, 21% lower than the national average. However, it is important to recognize and be proud of the fact that Idaho ranks ahead of Mississippi, the lowest personal income state. Low wages contribute to lower cost of living and low cost of doing business. Nonetheless, being grouped with Mississippi does not confer bragging rights to Idaho.

personal income
Source: University of Idaho

Blaine County - Sun Valley ($62,451) exceeds the national average Personal Income ($44,376), but Ada County lags at $41,338. Canyon County at $25,000 is lower than the lowest state of Mississippi (statewide average of $34,150).


SOURCE:
Jack Harty, Harty Mortgage Advisors
121 N. 9th Street - Ste 402
Boise ID 83702
Direct: (208) 514-4766
Main: (208) 344-4141
Email: jharty@harty.biz



View Externally Here

Boise Area Vacancy Rate (May 2014)

This is the 34th week in a row of record-low vacancy rates for First Rate Property Management, Inc.

Click to enlarge

We anticipate that this summer's vacancy rate will follow closer to 2011-2012 as opposed to 2013 record-high vacancy rates.



View Externally Here

Update on the Unemployment Rates

Below is an unemployment update that I received from a local commercial lender.

Tony Drost


Today the BLS posted national unemployment figures for April. Initial figures are always subject to subsequent change as the numbers are refined. April Employment growth was solid at 288,000 new jobs, reducing the U3 unemployment rate to 6.3%. However, that was driven by the reality that 806,000 workers left the job market for various reasons. Retirement is one reason, but only one of many reasons - all the other reasons being problematical.

Essentially the work force is contracting relative to the potential labor pool. Labor Force Participation fell to 62.8%, the lowest level since 1978.

National Unemployment

US unemployment (U3 measure) for April is 6.3%. The more meaningful U6* unemployment measure is 12.3%.

Interesting contrast between US and Idaho U6 unemployment: or the 12 months ended 3/31/14, national U6 unemployment averaged 13.4%; in contrast Idaho averaged 7.1%.

*U6 Unemployment Measure: total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers.

Idaho Unemployment

Idaho ranks 16th nationally in employment. State wide unemployment for Idaho as of March was 5.2% (Idaho April numbers will not be available until the third week of May).

Ada County unemployment as of March was 4.9%; Canyon County was 6.6%. Combined those counties constitute the Boise MSA which posted 5.4% unemployment. Boise City posted 4.9%.

Summary

There's a lot of people employed in Idaho and Boise and the Boise MSA compared to the nation. However, Idaho wages are the nation's lowest and Idaho is at the bottom with the percentage of minimum wage workers. Also, over the past 30 years, Idaho inflation adjusted wages grew only 3.4% - that's essential flat-line growth over three decades. The Nationwide Labor Force Participation is contracting. If you depend on a consumer driven economy, as does the US in which GDP formerly was 70% consumer driven, then U6 unemployment, labor force participation and household income stagnation is problematical.

Financial Model for Derivatives

It works . . . at least until it stops working. As Chuck Prince, then CEO of Citibank advised us in 2007, you have to keep dancing until the music stops. Sadly, the music had already stopped for Citi when Prince said that, but he could not hear the silence that surrounded him.

Off-balance-sheet assets and derivatives were at the root of the 2008 financial crisis. Mortgage securitizations kept off the books came back to haunt banks forced to repurchase home loans sold to special investment vehicles. The government had to rescue AIG with a bailout that ballooned to $182 billion after the insurer couldn't pay banks on derivatives tied to those bonds.

Derivatives are financial contracts whose value depends on stocks, bonds, currencies or other securities. Because two parties agree to swap cash or collateral at the end of a pre-determined period, that value also depends on the existence of the counterparty when it's time to pay. If the counterparty is AIG or JP Morgan Chase or the like, then the feds will step in to pay.



View Externally Here

SW Idaho Chapter of NARPM releases 1st quarter vacancy report (2014)

Below is the 2014 first quarter report from the SW Idaho Chapter of the National Association of Residential Property Managers. The report shows that vacancies in both Ada and Canyon County vacancies have dropped below 2% for single family rentals as well as multi-family rentals. The report also shows a nice steady climb on rents across the board with only minor exceptions, which I credit to skewed numbers from a small sample size. All in all, the numbers are very consistent with what we have been reporting.

There are at least another 2521 multi-family units being built within Boise and the surrounding areas this year, so like last summer, First Rate Property Management is proceeding with some caution, as the increase in supply could affect the market. So, we continue to offer 2 year leases as an option to help smooth out any abrupt market changes.

Tony Drost


Introduction

The purpose of this survey is to show vacancy and rental rate trends among single-family homes and multi-family units (2-15) in Ada and Canyon County. Survey results are displayed by type (single or multi-family) and bedrooms (1-5) for the respective county. Property status was surveyed as of March 31st, 2014.

The survey participants were property management companies affiliated with the SW Idaho Chapter of NARPM and are considered to the representative sample of the inventory of professionally managed rentals of less than 16 units.

Survey Respondents

Data from a total of 19 property management companies were included in the survey results, which accounted for a total of 6324 homes: 2773 single-family and 3551 multi-family. The accuracy and reliability of this survey is improved with an increased sampling.

click to enlarge
values

click to enlarge
counties

click to enlarge
single-family

click to enlarge
rental-rates

click to enlarge
ada-county


Summary

Vacancy rates moved downward 2.2% from last quarter. Comparing spring to spring, the surveyed vacancy rate dropped from 2.6% for Q1 of 2013 to 1.7% for Q1 of 2014, with a recent reduction in single-family vacancies for the quarter.

Rental rates also rose significantly, as the supply of homes increasingly comes closer to falling below the demand. Spring rate increases are historically higher than the winter months, however, comparing last year's data, we have already reached Q2 of 2013 rental rates. Multi-family rates were relatively stable with some segments slightly up and some slightly down within the statistical variability of the survey. Most of the upward rental rate movement for the quarter was in the single-family market.

The SW Idaho Chapter of NARPM invites you to learn more about the National Association of Residential Property Managers and the educational resources provided to help you run an effective, professional, and ethical property management business. Visit our website to view upcoming and past events and feel free to contact one of our chair members with any questions or stop by one of our meetings.

View the NARPM Report as original PDF file

Angela Post
angela@postpropertyidaho.com
208-585-3256


Find out more about Idaho's premiere organization of residential property management professionals at www.swidaho.narpm.org

NARPM is the professional, educational, and ethical leader for the residential property management industry.

Learn more about the National Association of Residential Property Managers at www.narpm.org

Contact Angela Post at 208-585-3256 with any questions and to learn how you can contribute and benefit!



View Externally Here

Rents Are Up, Inventory Is Down, More Rental Applicants

A recent article by Jennifer Gonzalez with Idaho Business Review (April 11, 2014) reflects on the increased rental housing demand in the Treasure Valley that has shifted rent prices higher across the board during the past several months. Vacancy rates are low -- historically low for some property managers including First Rate Property Management as we reported earlier this week.

Adding to the ranks of those seeking rental housing are the folks being displaced by owners who are now able to sell property that was mortgaged underwater just a couple of years ago. In addition to the much-anticipated higher rents, owners are also welcoming relief from the move-in and other incentives they have needed to offer in recent years in order to keep vacancy rates down. Bottom line: owners will be making more money, with less expense, and will have deeper pools of qualified tenant applicants.

Things are looking up!

Tony Drost


  

Looking for a rental in the Treasure Valley? Expect to pay more, find less inventory

By: Jennifer Gonzalez
April 11, 2014 -- Idaho Business Review

A spike in demand for apartments or homes to rent has pushed vacancy down, and rental rates up.

"I've never seen demand for rentals as high as it's been in the last four or five months," Park Place Property Management President Andrew Propst said.

"In some cases, we will have just one day to prepare an apartment from the time one tenant moves out, and another needs to move in," said Steve Fender, President of Verity Property Management.

According to data from Mountain States Appraisal and Consulting Services, of 13,933 units surveyed in January 2014, there was an overall vacancy of 2.3 percent. By bedroom count, vacancy for a one bedroom unit was 1.6 percent; a two-bedroom: 2.9 percent; and three bedroom: 2.6 percent. In comparison, in January 2009, 13,288 units were surveyed with an overall vacancy of 9.5 percent. Vacancy for one-bedroom was 7.9 percent; two-bedroom: 10.3 percent and three-bedroom; 11.7 percent.

Park Place Property Management manages 2,200 rentals in the Treasure Valley, including apartments and other multi-family units and single-family houses. In the last year, Propst said larger families who have been renting single-family homes have been displaced at a higher rate than before, because homeowners who purchased those properties prior to the economic downturn are now selling them, forcing their tenants to seek other housing options.

"It's an interesting phenomenon especially apparent among buyers who got in in 2005, 2006 and 2007 and were underwater, but are now in a position to sell," Propst said.

Most in-demand properties are one-bedroom, one-bathroom units or three-bedroom multi-family townhouse-style units, Propst said. Location is also a big factor, with more demand for multi-family properties closer to Boise.

"Anything close to downtown is staying full," Fender said. "Young, educated people don't always want the anchor of real estate and are looking for an urban lifestyle."

Verity Property Management manages 1,900 units in Ada, Canyon and Twin Falls Counties. In the last year, Fender said rental rates have gone up 1.5 to 4.5 percent, dependent on the building and its location. In the C.W. Moore Apartments in downtown Boise, managed by Verity, every one-bedroom unit is occupied. Fender said, an 98 percent occupancy rate is preferable, but in the last year, that number has neared 100 percent in many of his properties. Concessions and other incentives to lure tenants have also gone away.

"The apartment market has become flooded in the last year and rents that were $600 someplace, are now easily $650 or higher," he said.

"In my 15 years in this business, I haven't seen anything like this," Propst said.



View Externally Here

Boise named 'Best City to Move to in 2014'

by Matt Standal -- KTVB.com
April 8, 2014

BOISE -- News flash, Boise -- you make a lot of top 10 lists.

The latest, compiled by Simple Moving Labor, named the City of Trees the best place to move for 2014.

That list ranked 10 cities across America in the categories of unemployment, median income, home value growth, and home affordability.

Boise was judged 5th in unemployment, 3rd in median income, 2nd in home value growth, and 1st in home affordability. The overall score put Boise on top of the list.

  1. Boise
  2. Seattle
  3. Ft. Lauderdale
  4. Phoenix
  5. Orlando
  6. Minneapolis
  7. Fort Worth
  8. Salt Lake City
  9. Tampa
  10. Houston

KTVB.com broadcast video ...

Boise Best Move 2014


Tony Drost



View Externally Here

Ada County Residential Income Property Trends and Market Analysis

Below are some great graphs providing insight into the residential investment market for duplexes, triplexes, and fourplexes within Ada County, produced by Alan Smith, GIS/Appraisal Analyst, on March 10, 2014. All of the sales and listing data came from the Intermountain Multiple Listing Service and the Ada County Assessor's Office between 2004-2013. The reports do show the trends well. However, it is unknown if the rents used in some of the calculations were actual rents or market rents. What a seller and/or the seller's listing agent believe to be "market rents" isn't always accurate. So what I am saying is that while the reports do accurately identify trends, the actual GRMs posted could be skewed. Mr. Smith states that residential income property values increased by slightly over 1% per month throughout 2013. When I do my proformas, I typically use 3% per year. That certainly proves to be very conservative for at least the past few years.

Ada County Stats 1

Ada County Stats 2

For additional illustration, I thought I would use some of the data that I collect to show you how some of these numbers can be used to develop approximate value. For my illustration I used $2,500 as my Gross Monthly Rents. I also used $18,000 as my Net Operating Income (NOI). NOI is your gross annual rents, less vacancy, less property expenses, such as utilities, property taxes, hazard insurance, and repairs. NOI does not include debt service or capital expenditures. I also used a Gross Rent Multiplier (GRM) of 119, which is the average I have calculated for the first quarter of 2014. I used a Cap rate of 6% which is pretty indicative to the current market.

Rents NOI GRM Cap Rate
$2,500 $18,000 119 6%
Value: $297,500 $300,000

Tony Drost



View Externally Here

RECORD LOW VACANCIES CONTINUE

Click to enlarge
First Rate Property Management Vacancy Rates (April 2014)

Vacancy Rate: First Rate Property Management Inc. has experienced historically low vacancies for the last 27 weeks. This week the vacancy rate is 1.59%, down from 1.69% last year (which was a record low at that time). The high for this time of year was 3.79% in 2012. We've been tracking vacancy numbers since October of 2009. April is historically the time of year vacancies start to rise sharply. Due to our renewal efforts, low inventory and higher rents throughout the entire Boise area, most tenants are staying put rather than taking on the expense of moving.

Tony Drost Business Card



View Externally Here

HUD Announcement: Fair Housing

HUD awarded a multimillion dollar grant to several fair housing organizations to include Idaho. The Intermountain Fair Housing Council, Inc. of Boise, Idaho was awarded $324,630.00. This grant will help the Intermountain Fair Housing Council provide a wide range of fair housing services, focusing on many important issues within the industry.


HUD AWARDS $38 MILLION TO FIGHT HOUSING DISCRIMINATION

WASHINGTON – The U.S. Department of Housing and Urban Development today awarded $38.3 million to 95 fair housing organizations and other non-profit agencies in 38 states and the District of Columbia in an effort to reduce housing discrimination (see attached list of grantees). Read a complete project-by-project summary of the programs awarded grants today.

Funded through HUD's Fair Housing Initiatives Program (FHIP), these grants will help enforce the Fair Housing Act through investigation and testing of alleged discriminatory practices. In addition, the funds will educate housing providers, local governments and potential victims of housing discrimination about their rights and responsibilities under the Fair Housing Act.

"Ending housing discrimination requires that we support the law of the land and protect the housing rights of individuals and families who would be denied those rights," stated HUD Secretary Shaun Donovan. "Ensuring and promoting Fair Housing practices lies at the core of HUD's mission and these grants enable community groups all over the nation to help families who are denied equal access to housing."

"Everyone should have access to the neighborhoods and homes for which they financially qualify," added Bryan Greene, HUD Acting Assistant Secretary for Fair Housing and Equal Opportunity. "These grants make it possible for non-profits to assist people in their communities pursue their fair housing rights and educate housing providers and others about their responsibilities under the Fair Housing Act."

The categories of grants awarded today are:

  • Private Enforcement Initiative grants (PEI) – HUD awarded $24.7 million to help local non-profit fair housing organizations carry out testing and enforcement activities to prevent or eliminate discriminatory housing practices.
  • Education and Outreach Initiative grants (EOI) – HUD awarded $3.8 million to groups that educate the public and housing providers about their rights and responsibilities under federal, state, and local fair housing laws.
  • Fair Housing Organizations Initiative (FHOI) – HUD awarded $9.8 million to help build the capacity and effectiveness of non-profit fair housing organizations, particularly organizations that focus on the rights and needs of underserved groups, such as rural and immigrant populations.

Tony Drost



View Externally Here

Red-Hot Town

TIME Magazine recently declared Nashville, Tennessee The South's Red-Hot Town, in a piece written by Jon Meacham and published March 7, 2014.

Absorbing the scene, a visiting out-of-towner looked up from his iced tea and shook his head with an admiration that bordered on envy. "This place," he said, "just sounds prosperous." ... 

Batman Building, downtown Nashville

The "Batman Building" in downtown Nashville

While Nashville -- on the list of nine U.S. regions "getting it right" -- was awarded the limelight in this TIME article describing flourishing regional economies, Boise, Idaho also received recognition for its strong real estate market, cultural scene and fast-growing high-tech industries.

Middle Tennessee is one of at least a dozen red-hot but sometimes overlooked regions that have successfully pulled themselves out of the Great Recession and into a broad, rising prosperity. Though the ingredients for the booms are often similar, each region has a different recipe.

That's right, TIME included Boise in the heap of nine regional economies that share similar traits and factors for prosperity in the post-Great Recession era: employment stability in health care, higher education, government and culture; and growth generation via the region's political climate. And -- in Boise's case -- a budding presence of several high-tech industries. For the full text of the TIME article see The South's Red-Hot Town. The print-edition of the TIME article also locates Boise on the hot-spot map graphic.

Tony Drost



View Externally Here

Boise Hot-Spot Moves West

For as long as I can remember, I've always said that West Boise is a strong market, for both sales and rental properties. When I was a kid, the busiest intersection in all of Idaho was Fairview and Cole Road. In fact, as a kindergartner, I walked 3/4 of a mile every day to Cole school. Boy, have things changed in those regards, but let's get back to my point with the rental market. In the past ten years, we have seen great business growth near Eagle Road and Overland. Those businesses support a good rental market in the vicinity. Meridian's "The Village," located on Eagle Road and Fairview, is a mall-like atmosphere never seen before in the Boise area. I'm told that the fountains were designed by the same guy who did the Bellagio in Las Vegas. And interesting enough, I'm told that the project was funded by the company that manages the investments for the California Teachers Association.

The Village at Meridian

Also interestingly enough, rents for buildings near the Ten Mile and Pine area get about $75 per month more than their identical older twins near Fairview and Locust Grove. To my point, the Boise hot spot has been moving westward and I wonder when and where it will stop as Ada and Canyon counties collide.

Oh, since I shared my kindergartner story, I thought I would share another story relative to the Eagle/Fairview intersection. When I was in high school, Eagle Road was a two-lane road. From the freeway, we had a stop light at Fairview and a flashing light at the intersection Eagle Road and Chinden. I could get from the freeway to Eagle in under ten minutes. Today, it takes me about 30 minutes and has so many signals I couldn't even count them all. I am feeling a little old now.

Tony Drost



View Externally Here

Boise Idaho Four-Plex Market Update

I collect the sales data on all four-plexes sold within Ada County. I then make some calculations to find certain market indicators. One of the easiest, is Gross Rent Multiplier (GRM).

Currently the average GRM is 113 times the monthly gross rental income. If the gross monthly rent is $2,800 a ballpark value would be about $316,400 (2,800 X 113 = $316,400). GRM is a quick way to obtain a ballpark value, and it can easily vary depending on the Net Operating Income (NOI). NOI divided by value or sales price, calculates the Capitalization Rate or often referred to as the "cap." Typically buyers prefer to see higher cap rates because that indicates that the NOI is high in comparison to value. It's not always the case, but as cap rates decline, it typically means values have increased. Anything affecting NOI, will affect the cap rate.

Today, most four-plex buyers are looking for a minimum of a 6% cap. This is slightly up from where we were last summer and I believe that is mostly due to increased rents which reflect a higher NOI. If you have interest in buying or selling, I'd be happy to go over some of these in a format that simplifies it and makes it much easier to understand.

Tony Drost



View Externally Here

HUD and Census Bureau Announcement

WASHINGTON -- The U.S. Department of Housing and Urban Development (HUD) and the U.S. Census Bureau today announced the following new residential construction statistics for January 2014:

BUILDING PERMITS
Privately owned housing units authorized by building permits in January were at a seasonally adjusted annual rate of 937,000. This is 5.4 percent (±0.7%) below the revised December rate of 991,000, but is 2.4 percent (±1.0%) above the January 2013 estimate of 915,000. Single-family authorizations in January were at a rate of 602,000; this is 1.3 percent (±0.8%) below the revised December figure of 610,000. Authorizations of units in buildings with five units or more were at a rate of 309,000 in January.

HOUSING STARTS
Privately owned housing starts in January were at a seasonally adjusted annual rate of 880,000. This is 16.0 percent (±10.5%) below the revised December estimate of 1,048,000 and is 2.0 percent (±10.8%)* below the January 2013 rate of 898,000. Single-family housing starts in January were at a rate of 573,000; this is 15.9 percent (±12.1%) below the revised December figure of 681,000. The January rate for units in buildings with five units or more was 300,000.

HOUSING COMPLETIONS
Privately owned housing completions in January were at a seasonally adjusted annual rate of 814,000. This is 4.6 percent (±8.3%)* above the revised December estimate of 778,000 and is 13.1 percent (±12.8%) above the January 2013 rate of 720,000. Single-family housing completions in January were at a rate of 580,000; this is 3.0 percent (±7.3%)* above the revised December rate of 563,000. The January rate for units in buildings with five units or more was 220,000.

EXPLANATORY NOTES
In interpreting changes in the statistics in this release, note that month-to-month changes in seasonally adjusted statistics often show movements which may be irregular. It may take 2 months to establish an underlying trend for building permit authorizations, 4 months for total starts, and 6 months for total completions. The statistics in this release are estimated from sample surveys and are subject to sampling variability as well as non-sampling error including bias and variance from response, non-reporting, and undercoverage. Estimated relative standard errors of the most recent data are shown in the tables. Whenever a statement such as "2.5 percent (3.2%) above" appears in the text, this indicates the range (-0.7 to 5.7 percent) in which the actual percent change is likely to have occurred. All ranges given for percent changes are 90-percent confidence intervals and account only for sampling variability. If a range does not contain zero, the change is statistically significant. If it does contain zero, the change is not statistically significant; that is, it is uncertain whether there was an increase or decrease. The same policies apply to the confidence intervals for percent changes shown in the tables. On average, the preliminary seasonally adjusted estimates of total building permits, housing starts and housing completions are revised about two percent or less. Explanations of confidence intervals and sampling variability can be found on our web site listed below.

* 90% confidence interval includes zero. The Census Bureau does not have sufficient statistical evidence to conclude that the actual change is different from zero.

New Residential Construction data for February 2014 will be released on Tuesday, March 18, 2014, at 8:30 A.M. EST at http://www.census.gov/starts.

Read more about today's release of housing construction activity.

John Meyers

John.W.Meyers@hud.gov
Field Office Director
(208) 334-1088 x3002
800 Park Blvd, Ste 220
Boise, ID 83712-7743



View Externally Here

Rents On The Rise And Its About Time

Below is a link to an article about rising rents in the country's top technical hubs. Although Boise is not included, I wanted our subscribers to see that rents are on the rise. I know that our Boise Investors don't have to be reminded, but I think anyone wanting to spin this to make it sound like Boise Landlords are raking in, please consider this.

In 2002 we saw the government's plan to make the American Dream of being a home owner began. Slowly we saw new loan programs coming out by the hundreds and at one point I heard that there were over a 1,000 different kinds of programs out. With low rates and loan programs that made it possible for nearly anyone to buy a home, we saw renters leave the rental market and become homeowners. This hurt the rental market and rents went down. Not only did rents decrease, but vacancy between tenants increased and for the first time in my life as a property manager we saw move-in incentives that said, "How Much Free Rent Do You Want." Within the past few years we've seen rents finally improving and in most cases, it was until this last year or so that we saw rents finally meet and go over the rents that we saw prior to 2001.

But wait, there is more. Over that decade where rental income was down, the Boise investor saw increases in utilities, property taxes, and repairs. Paint, flooring, and roofing all have increased over this time. Even labor has increased. Yes, rents are on the rise, but it's been a long time coming.

http://www.theatlanticcities.com/housing/2014/02/yes-rent-rising-faster-americas-tech-hubs/8321/

Tony Drost



View Externally Here

Boise Idaho Construction Data

Future Boise Construction data according to the site below.

MultiFamilyData is a nationwide database of apartment and condominium projects in the planning and construction stages.

In January 2014, we added 720 new projects totaling more than 67550 units while updating 389 more projects. Below are five of the projects that may be of interest to you:

Project Name

City/State

# of Units

Product Type

Start Date

Updated

Barbervalley Townhomes

Boise, ID

180

Market Rate

Planning

1/13/2014

West Sherwood Apartments

Boise, ID

110

Market Rate

Planning

1/9/2014

Jefferson Residential Building

Boise, ID

4

N/A

Planning

1/9/2014

Lusk Place Apartments

Boise, ID

126

Market Rate

Planning

1/9/2014

Falconers Place Condominiums

Meridian, ID

36

Market Rate

Planning

1/6/2014

In addition to detailed project information, MultiFamilyData focuses on obtaining information not publicly available, such as owner, developer and architect contact information. It also features Map View, allowing users to search, identify and analyze projects on an interactive map.

We invite you to learn more about MultiFamilyData by visiting our site or contacting us at 866-316-5300.

Thank you,
The MultiFamilyData Team at BuildCentral



View Externally Here

Continued Record Low Rental Vacancy In Boise Idaho

Click to enlarge
FRPM vacancy rate January 2014

Currently the vacancy rate for First Rate Property Management, Inc. is .58%, down nearly 1.0 percentage point from last year at this time. It is our policy to ensure that leases do not expire in winter because of the difficultly to rent when the weather is predictably inclement. Theoretically we would have 0.0% vacancy during that time frame. Due to tenants that: bail, are month-to-month, break the lease and properties that we take on that are already vacant, we have only once (so far), experienced that elusive zero vacancy.



View Externally Here

Rents Up By 7.6%

The SW Idaho Chapter of the National Association of Residential Property Managers just released their 4th quarter results. In a year-over-year comparison, NARPM stated that rents increased 7.6% from 2012. If they had the ability to remove long-term leases and isolate the calculations to only include rentals that either renewed or had a turnover in 2013, I think the number would be higher. Another way of saying it is that I believe that for those properties that were eligible for a rent increase, saw an increase greater than 7.6%.

First Rate Property Management's vacancy has been below 1% for month's now. Based on the data provided by NARPM, our record low vacancies are the results of procedures. We know that historically, tenants don't like to move during the holidays and cold winter months. With a low demand, it is common to see lower rents and increased vacancy. Therefore, by design, FRPM purposely doesn't have leases expire during those months.

Tony's 2014 Forecast: I believe that we will continue to see increased rents and low vacancies. I say that even though the builders are meeting the demand to rent by building more and more multi-family rents. We're seeing people choosing to rent over buying and as home prices continue to increase, I don't see that demand diminishing. I also believe any rise in interest rates will also help the rental market.

Click to Enlarge

Click to Enlarge



View Externally Here

Record Low Vacancies In Boise Idaho

Currently First Rate Property Management has a .43% vacancy rate. The last two weeks of December the vacancy rates were 0.00% and 0.14% respectively. The first weeks of January were 0.29%, 0.58% and this week at 0.43%. The last 12 weeks have all been record low vacancies.

Click to enlarge



View Externally Here

Why We Recommend the Things We Do

Years ago, First Rate Property Management started using SmartStrand carpet like what you see below. Most of what we use is speckled and has a high and low cut. The color specs and height variations help hide stains and traffic wear and added to the characteristics of the carpet itself, it should save owner’s thousands.

Below are before and after photos provided to us from our carpet company, Great Floors. This is the flooring of an apartment unit. The floor on the left obviously looks very bad and if it didn’t come clean, it would need to be replaced, which would cost the owner over $1,000. But because SmartStrand was used, the carpet came clean. A lot of Landlords and production builders use the cheapest stuff. It looks good until it gets used because the carpet fibers fray, crush, and mat down. They also stain very easily. So even if it is stain free, it just doesn’t look good. SmartStrand certainly isn’t the most expensive and it too can succumb to neglect. But it appears to be a better alternative to the super cheap stuff. Speaking of super cheap stuff, because of First Rate Property Management’s volume, we have secured the best pricing available. That’s right, you won’t find the same carpet for less anywhere else.

One other recommendation First Rate Property Management has, is to offer free carpet cleanings at lease renewals. For one, the offer of the carpet cleaning is very appreciated by the tenants and they too feel appreciated by the owner. The other reason is that dirty carpet can really damage the carpet. As people walk, the dirt grinds at the fibers or mats down, giving the carpet a dirty appearance. Even if the carpet comes clean, it looks old and dirty.

Oh, and its environment friendly. Please read the below to learn more about SmartStrand

Don’t Worry. It’s SmartStrand®

From the Field to the Floor, It’s Just Better™

Mohawk leads innovation in sustainable flooring with SmartStrand® carpet with DuPont™ Sorona® renewably sourced polymer. In a partnership with DuPont, this carpet exclusively offers fiber made with Bio-PDO™ (the key Sorona® ingredient), which is produced from corn sugar. By utilizing this new ingredient, 37 percent of Sorona® is being made from renewable resources. This marks the first time that a luxuriously soft carpet offers durability and stain protection, while also making less of an environmental impact.

Why Is SmartStrand Environmentally Smart?

DuPont™ Sorona® plays a major role in the worldwide objective of a renewable economy and represents a new frontier in sustainability. This carpet is environmentally smart because:

• The production of Sorona® polymer requires 30 percent less energy than the production of an equal amount of nylon.

• Greenhouse gas emissions from the production of Sorona® are 63 percent lower than nylon manufacturing.

• This energy reduction results in approximately one gallon of gasoline saved per every seven square yards of carpet.

The superior stain resistance of SmartStrand® carpet is engineered into the fiber and will never wear or wash off, meaning consumers will never need to retreat the carpet with stain protectors after steam cleaning.

And this engineered-in stain resistance reaches new levels of protection, allowing tough stains such as mustard, red wine, and cherry Kool-Aid® to be removed simply with warm water and a mild detergent, or with Mohawk FloorCare™ Essentials. The fiber even resists discoloration from bleach.

It goes without saying that SmartStrand can be found as a major component in inspired homes everywhere.



View Externally Here

Record Low Vacancy In Boise

Currently First Rate Property Management has a .3% vacancy rate, the lowest we have ever experienced. In the last three years the average vacancy rate for this same time period was 1.6%. As long as the inventory remains the same and no tenants move-out in the next two weeks FRPM will have a 0.0% vacancy rate from Saturday the 14th of December through the first of the year.

Click to enlarge



View Externally Here

Population Growth Behind Rising Treasure Valley Home Prices

Below is a link to a news story by Justin Corr with KTVB explaining why the Boise area housing market continues to improve.  Within the story, Justin explains how home values have improved and in part, due to growth within the Boise Valley with most of that growth being in Meridian.  However the housing market consists of two markets, sales and rentals.  Since Justin didn’t cover the rental side, I will.  As of today, First Rate Property Management does not have a single available rental.  That’s right, with nearly 1,000 rental units in management; we don’t have a single one available.  All management companies within the area likely are reporting record low vacancies and I would assume that the same factors that have improved the sales market have also improved the rental market.

BOISE -- Fewer and fewer people are upside down on their mortgages, thanks to rising home values around the country, and here in Idaho.  See all 5 photos »

Intermountain MLS says at this point last year, the median home price in Ada was $177,500. This year, it's about $20,000 more.

The reason? Real estate expert Chris Lofthus says it's because of population growth.

"We're seeing an influx of people that are moving in from out of state, anywhere from Alaska to Washington," said Lofthus. "A ton of California people are moving in here."

The growth is clearing visible in the state's largest school district. According to Meridian School District spokesman Eric Exline, the district has grown by about 500 kids per year over the past few years.

By next year, Exline says that number could double to 1000 per year, which is the pre-recession level.

"There are subdivisions that I would describe as having sort of been 'moth-balled,' just shut down," said Exline. "Nothing happened for about three years. And now, there are houses coming out of them in a number of places. And, we also have a fair amount of commercial property."

And while there has been a rise in the commercial real estate market, too, you might wonder where all these new Idahoans are going to work.

Lofthus says many of his clients are people who can telecommute throughout the region.

"We're seeing a lot of people that can live anywhere on the West Coast, like regional sales managers," he said. "We're seeing lots of people move in, who don't necessarily need to have a job in Boise."

But, are prices rising too much too fast? Is this boom going to turn into another bust? Lofthus doesn't think so, and he's supported by rising borrowing costs.

"We're going to see another increase this next coming year," Lofthus said. "I don't think it's going to go crazy. I don't think the banks are going to loosen up their purse strings any time soon."

by Justin Corr

Follow: @JCorrKTVB

KTVB.COM

Posted on December 1, 2013 at 6:17 PM



View Externally Here

Quick Month End Figures from Hennessey Appraisals

I subscribe to a number of feeds that push information to me and one is from Hennessey Appraisals.  Below is a snippet of the data he presents but once you click on the Read More link, you can see much more.  It’s good to see the Boise area continuing to improve in so many ways.

 

  The inventory report was updated today Ada County single family average monthly sold price went down in November ($240,000 to $235,000), however its yearly trend is up 16% in the last 12 months ($203,000 vs. 235,000).  Canyon County single family average monthly sold price went up November ($133,000 to $138,000).  Its yearly trend is up 23% in the last 12 months. ($112,000 vs. $138,000) Monthly sold volume is down about 10% in both Counties in November-2013 compared to November-2012 Si ...

Read More

http://www.hennesseyappraisals.com/BlogCertContactID=60670585&CampElementID=1259123

 

 

 

 

 

 



View Externally Here

Hoarding Defined As A Disability?

The article below covers hoarding as a possible Fair Housing issue.  Apparently if a tenant is diagnosed as a hoarder they would have housing protection due to this newly discovered handicap.  The problem is hoarding can be dangerous to the occupants and surrounding tenants.  Possessions stored in such a manner can also cause serious damage to the property due to the neglect of areas not accessible.

The solution is bi-yearly interior inspections and once identified, documenting the most egregious areas that pose health or safety issues.  We would hope that most judges would rule in favor of a well documented safety, health and property damage case…

Fair Housing and Hoarding

Posted on August 15, 2013 by sslattery

By Shannon Slattery

The American Psychiatric Association officially labeled hoarding as a mental disorder in May of this year.  So what does this new recognition mean for your property and your residents?

Photo credit: Angie [A Whole Lot of Nothing] / Foter / CC BY-NC-ND

If you have a tenant whom you suspect of hoarding, they now are covered under the disability section of the Federal Fair Housing Act.  This person, as with other persons having disabilities, has the right to “reasonable accommodation.”

Reasonable accommodation is the request for a waiver of policy, practice, or procedure in order to provide equal access and opportunity for people with disabilities. Any request for reasonable accommodation must be approved as long as it is directly related to the person’s disability and does not cause any undue financial or administrative burdens.

However, when a hoarder’s behavior affects the health and safety of themselves, the property, or other tenants residing in close proximity, the hoarder becomes the property manager’s problem.

When taking action, there are some points to keep in mind. Since hoarders tend to be secretive, going unnoticed usually until a neighbor complains, they typically won’t reach out and ask for accommodation.  So taking the first step usually falls in the hands of the property manager.

Since hoarders can sometimes be possessive or defensive about their behavior, it’s best to approach the situation with tact. Don’t refer to their items as “junk,” “trash,” or “clutter.”  And don’t threaten eviction. Simply visit and take notes of any health or safety issues.

Photo credit: Aric McKeown / Foter / CC BY

Identify the largest areas of concern. Create a written plan for them to clean up their residence—with the end goal being a safe and sanitary environment. Allow a reasonable amount of time for them to accomplish this task. Be proactive in lending support—provide a dumpster or an unmarked truck they can use for disposal. Ask the tenant to sign the written plan of action. If they are unwilling to sign, simply ask them to sign a letter stating they reviewed the plan but refused signature.

If you don’t have success with reaching an agreement for reasonable accommodation, then the final route may be eviction. Hiring attorneys to defend a Fair Housing complaint can be expensive, so it’s best to resort to eviction only after all alternative options have been exhausted. If you’ve documented your attempts to accommodate the hoarder, this will lend support to your eviction request and help prove you’ve fulfilled your due diligence in the matter.

In short, property managers need to be prepared accommodate hoarders as they would other tenants with disabilities—such as those with multiple sclerosis, seizure disorders, or physical handicaps. When expectations are clear and defined, hoarders often can be valuable, long-term renters.



View Externally Here

New Homes Get Built With Renters in Mind

Below is a link along with the text of a story reported by the Wall Street Journal by Conor Dougherty.  This link only accesses a subscriber page so the entire article can be opened by subscribers, copy of the article below.  This was forwarded to me by a long-time client.  Thank you Chris.  I have some opinions and concerns regarding this article, but before you start selling your REITs or other investments with real estate funds, realize I don't know a darn thing about how those things work and many of the cited sources actually do.  I know that Zelman and Associates is a very reliable source and they would likely be able to confirm or dispel any of my concerns.  But here it goes:

The article cites that new homes are being built for the sole purpose of being a rental.  I am not aware of this in the Boise area, but that doesn't mean it isn't happening.  One reason I don't know is because we refused to work with institutional investors, banks, or investment groups.  Years ago First Rate Property Management was approached by such groups to manage their distressed properties.  We listened, but we turned them down.  They said they wanted to use a professional and an expert, but then provided a stack of papers defining what we could do and what we couldn't do.  It was my opinion that their contracts denied us the ability to properly manage the properties.  Well, there is always somebody in position to take them on.  So whether it was money driven, or a start-up company looking to grow, or a company not fully understanding what was expected of them, managers across the country agreed to manage these properties under a different set of rules.  Was it integrity or my own ego that made me turn these guys down, because I didn't want to do things differently?

Moving on.  So I am not aware of any in Idaho, but as the article cites, it is the big institutional investors buying the homes in blocks and renting them out.  These sales get categorized as CASH sales, but are they really?  Aren't some of the funds coming from investors like my very own 401K?  In other cases, we see huge lines of credits being established to allow these purchases.  Then of course, we see that these huge real estate buyers capitalize as much as they legally can, where the typical investor tries to expense everything he can.  What does that mean?  To me, it means that if we see these institutions posting huge losses, we are likely to see even bigger losses when they actualy realize the expense.  Also attached is a story from Bloomberg from a year ago.  I encourage you to read it.

I am sorry, I got side tracked expressing my concerns of these huge buyers.  So in summary what's my point?  First I wanted to share the article as I think many of us knew about these big company purchases, but this was the first where I see them buying new homes in blocks for the sole purpose to rent.   Because I believe that in many cases, they are using OPM (Other People's Money), the process of buying, renting, and selling is just not as tight as we would see if we were making the investment.  the Bloomberg articles discusses borrowed money, high vacancy rates due to improper management, and too much unknowns for me.  I don't fully understand what happened with the sub-prime market and how bad loans got sold off as A loans.  From what I understand, it included misrepresentation.  I don't fully understand how these big companies can buy like they are, they aren’t' relying on professional managers' known practices, and I do not fully understand where all of their money is coming from.  For that reason, I think I prefer to control my own real estate investments.  But then again, I am a conservative pessimist.  Or so they told me so in 2007.  I just think that we would see everyone across America with investment funds being used for these purchases becoming more and more wealthy.  Instead, I am seeing the people making the purchases getting wealthy.

http://www.bloomberg.com/news/2012-10-17/private-equity-in-atlanta-after-picking-phoenix-clean-mortgages.html

 

WSJ Article:

http://online.wsj.com/news/articles/SB10001424052702303843104579171791879768178

More single-family homes across the nation are being built for renters, a shift that mirrors a steady decline in homeownership in the years since the housing bust.

Until recently, real-estate investors had focused primarily on scooping up tens of thousands of foreclosed homes, at a sharp discount, and converting them into rental properties. Now that the pool of these properties has declined and prices have risen, these investors are snapping up newly finished single-family homes to be used as rentals, or even developing vacant lots from the ground up.

Last year 5.8% of the 535,000 single-family homes started were being built as rentals, up from 4.8% in 2011 and the highest share since at least 1974, according to an analysis of census data by the National Association of Homebuilders. From 1974 to the home-price peak in 2006, only about 2% of single-family homes were built for rentals.

Vanessa Finch sees her new rental as a waypoint. Ms. Finch, a 37-year-old human-resources manager, recently moved into a newly built rental home in Jacksonville, Fla. Ms. Finch and her husband, who have four children, wanted to get to know the area before they buy. Their two-story, four-bedroom rental costs $1,400 a month, but unlike most rentals, it has new paint and fresh landscaping.

"A lot of the neighbors came by because they were interested," she says. "They were really surprised that there were brand-spanking new houses for rent. They had never heard of such a thing."

For investors, the interest in new homes reflects their belief that the rental market will continue to see strong demand and rising rents. While there is little data for the level of single-family home rents, apartment rents have shot up 11.3% since 2009, according toReis Inc. REIS -1.32% Overall, about 15 million of the nation's single-family homes were rentals last year, up from 10.8 million in 2005, according to Zelman & Associates, a research firm.

Meanwhile, foreclosures and other distressed sales accounted for less than 15% of all home sales in September, down from 21% a year earlier and 33% at the peak of the housing bust in early 2009, according to CoreLogicCLGX  1.02% a data firm.

The new homes-turned-rentals can be found both in new subdivisions or built on lots in long-standing communities.

Colony Capital LLC's Colony American Homes unit has about 1,000 newly built homes out of a total portfolio of 15,000 rentals. The company purchases them from home builders and is able to customize the building along the way.

"We can say we want a three-bedroom home with 2,000 square feet with these kinds of finishings and they're in these communities where most of the families have lived there for a while," says Justin Chang, chief executive of Colony American Homes. "It's not like a whole subdivision of rental homes; the builder sells us 30 or 50 homes from the last build out."

For builders like Marc Jungers, institutional buyers offer a way to move homes in a hurry and keep cash coming in the door. He recently sold about 30 newly finished homes to Landsmith LP, a San Francisco real-estate investment firm that plans to rent them out to tenants. Mr. Jungers says the newly built rental homes, because they are sold in bulk, are discounted between 8% and 10% of what an owner-occupant buyer would pay. "It gives us certainty of closing and helps us backfill a community," he says.

Building new rental homes undercuts part of the thesis of investing in single-family rental homes. Investors were attracted to this market largely because they could buy houses for less than the "replacement cost" or how much it would cost to build a new home.

But investors say they can still make profits. They point out that new homes typically come with builder warranties and cost less to maintain, at least in the initial years of ownership.

Also, the cost of building a new home is relatively low these days if lots were purchased on the cheap. Take the case of Alex Sifakis, a 30-year-old entrepreneur who began his real-estate career in 2006 when he graduated from college and started buying and flipping properties.

Mr. Sifakis started buying empty lots at a discount during the downturn, and in the meantime he got a contractor's license so he could expand into development and build rental housing from the ground up. Mr. Sifakis's Jacksonville-based company, JWB Real Estate Capital, built 68 new rental homes last year, he says, and is on track to start somewhere between 70 and 90 new rentals this year.

The homes are spread throughout the Jacksonville area, mostly as developments in older neighborhoods and subdivisions. JWB can rent them and still make money partly because land typically accounts for about 40% of the cost of building a home.

Landsmith bought about 1,800 existing single-family homes over the past two years but has recently turned to buying new homes. The company has developed or bought about 600 new single-family rentals in Houston, Indianapolis and Charlotte, N.C.

"So you could buy a house from 1990 and get a 12% return. Now you can buy a brand-new house and get a 10% net return, so the spread isn't that dramatic given the uptick in quality you're getting," says Chang Kim, a vice president at Landsmith. "We're in a unique period where brand-new houses can be built for a low enough cost that single family rentals can work."



View Externally Here

Boise Rental Property Inventory Low

First Rate Property Management Inc. has 6 properties that are vacant, of those, two are rented and waiting for the new tenants to move in. Of the available units, three have contingency leases waiting approval.

Click to enlarge

Currently FRPM's vacancy rate is 0.85%, lower than the previous five years during the same time period.



View Externally Here

Boise Area Vacancy Rate

Below is a link to NARPM’s SE Idaho Chapter’s 2013 3rd quarter vacancy survey results, showing the vacancy rates for single family homes, small multi-family buildings and a total of the two for Ada County. As you can see, both single family homes and small multi-family properties finished off the 3rd quarter right around 5%.  First Rate Property Management has been fortunate enough to keep our vacancy below this average.  Currently FRPM’s vacancy rate is 1.4%

South West NARPM Vacancy Report Q3 2013



View Externally Here

Keys to Excellence

Last week, Lizz Loop, MPM® RMP® and I attended the National Association of Residential Property Managers Annual Convention in San Diego.  I taught a designation class on Owner/Client Relations, which is something I like to think FRPM does very well.  I contribute our success with our clients mostly because of my own background.  I was an investor before I was a professional property manager, so my expectations are frequently in line with the clients.  Also, we try to only take on clients and properties that share the same goals and approaches to managing the property as we do.  Today, 50% of First Rate Property Management's staff are investors and landlords themselves.  That says something.

Some of the workshops we attended were:  Organization, The Customer Experience - Creating a Customer Service-Centric Organization, and How to Structure Your Growing Company.  But we also attended a Business Development Class where the speaker, Joe Quitoni, is a Director with the Ritz-Carlton Hotels.  I found Joe to be amazing and I plan on spending some time and money studying their structure on customer service.  Also, Ivy Zelman, CEO of Zelman and Associates, shared her 20-years experience covering the housing industry.  Currently her firm performs thematic research overlaid with proprietary surveys to produce unparalleled differentiated, value-added research.

Lizz and I currently hold the Residential Management Professional and Master Property Manager designations.  Additionally, First Rate Property Management, CRMC®, is one of less than 50 companies across the nation that holds the distinguished Certified Residential Management Company designation.  It’s a hard designation to achieve.



View Externally Here

Winter: Few Vacancies, Fewer Inquiries

Winter is fast approaching so few prospective tenants are searching for even fewer rental properties.  Low demand yet lower inventories might tempt prices to remain stable, but typically we see lower rents and higher more aggressive rent credits.  If rents remain high properties could remain vacant over the winter.

Currently First Rate Property Managements vacancy rate is 2.3%, lower than the previous five years during the same time period.

 



View Externally Here

Second Home Rentals
vacation home by lake

Earlier this week I attended a meeting where the guest speaker was Arla Kester, CPA with BA Harris and Associates. Arla provided information on many of the new tax laws as well as some general tax issues. I thought I would disseminate some of the most relevant information over the next few months, but if you want to find it, you can go to www.harriscpa.com.

The first thing that caught my eye was sales tax on vacation rentals, as well as tourism and convention taxes. According to Idaho statutes, a vacation rental is really no different from a hotel. Any rental for which the rental period is less than 30 days is subject to sales tax (6%), tourism and convention tax (2%), and possibly local taxes. It is the responsibility of the owner to collect and remit these taxes. If your second home or vacation rental is professionally managed, it is recommended that you check with them to ensure they are complying with these rules.


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.



View Externally Here

Rentals Slowing Down

Click to enlarge

School is in and the rental market slows down. The above graph shows our lower vacancy factor which I believe will continue to go down. The vacancy isn't going down because of huge demand. It's going down because fewer renters want to move during this time of the year. Does lower activity mean lower demand? I think so. We're really seeing that with the single family homes. All summer long they were flying off the board with great rent increases and now, we're really trying to get them rented up before winter hits and no one wants to move. The smaller multi-family properties like apartments seem to be doing just fine.



View Externally Here

Are Rentals Rocking the Boise Housing Market

Below is a link to an article in The Fiscal Times.  Within the article they provide 7 reasons why home ownership is down.  I must say, I agree.

http://theweek.com/article/index/250446/7-reasons-rentals-are-rocking-the-housing-market

1.  There's a lingering impact from the foreclosure crisis and I think there should be.  Hopefully some of the takeaways are, don't buy a home if you can't afford it, don't count on appreciation, live within your means.

2.  Lending conditions remain tight and I sure hope the government doesn't push the guidelines that so many lenders tend to follow making it easier to buy a home.  Buyer's need skin in the game.  So a reasonable down payment and reserve requirements make sense to me.

3.  Investors have reshaped the market, even though the Boise market has really flushed a good portion of the foreclosures, there is at least one institutional investor buying as much as they can.  They are buying them at foreclosures, so I am not too sure how much that impacts the real-estate market.  They're cleaning these up and re-selling at a profit at market value.

4.  Boomerang kids are going to rent first and it states many are living at home.  My oldest just turned 21 and that's what she is doing.

5.  Fewer people are married with children, I guess I will have to trust them on that.  It seems to me that our population growth just continues to grow daily.

6.  Potential buyers are worried about mortgage rates, I think when you are smart enough to understand proper budgeting and living within your means, mortgage rates don't scare you as much.

7.  Buying isn't the "American Dream" anymore.  Did that quote come from me?  I think that is what I had stated on a previous blog post where I stated home ownership isn't for everyone and there are many reasons why renting can be cheaper and better for some.



View Externally Here

Who Says Buying is Better than Renting?

Below is a link to an article stating that buying is cheaper than renting.  All of us that invest in rentals pretty much had that figured out.  Initially the article sites national numbers that really don't come close to Boise numbers.  The article states that within the 100 largest metros, buying is 45% cheaper than renting.  Wouldn't that mean owners of rentals would make 45% profit off their rentals?  Something is missing on the explanation of this and my fear is that current renters would read this and somehow think they'd be far better off buying instead of renting, which just isn't true for everyone.  For tenants considering buying over renting, I like to remind them that there were a lot of buyers in 2005-2008 that wish they would have rented instead of bought.  In fact, for those that exited home ownership shortly after words, it would have probably been 45% cheaper for them to have rented instead.

http://stateimpact.npr.org/idaho/2012/09/17/buying-trumps-renting-in-boises-recovering-housing-market/

I think there are some certain situations where renting makes more sense.

1.  Employment:  If your employment requires you to move often.  Also, what if your job requires you to travel all of the time?  It might make sense to rent so that you don't have to worry about the maintenance of the property.

2.  Money:  I wanted to say that if you don't have money, you shouldn't buy.  But then I remember how I got started.  I used my VA loan and purchased a duplex with no money down.  In two years, I sold it for $40K more and rolled that into two four plexes.  So my no money deal lead to tens of thousands of dollars of rents but better yet, hundreds of thousands of dollars of profit.  So let’s just hope that the new lender guidelines are helping people make good decisions whether or not to buy instead of continue renting their home.  Also, we can only hope that everyone involved in this decision helps explain the hidden costs of home ownership which can be property taxes, insurance, maintenance, and capital improvements.

3.  Hassles:  Like the example I used above with the road warrior who is rarely home. There are many who flat out prefer to have someone else mow the yard and fix things when they break.

4.  Location:  In some locations such as the downtown Boise area, it seems to me it is a whole lot cheaper to rent than buy.  I had a client look at one of the new Condos.  Asking price was $400 per square foot.  Rents would be about $2,500 per month, but property taxes were nearly $600 per month, plus $300 per month in HOA dues.  So in this case, it was about $600 per month cheaper to rent than buy.  The only upside would be appreciation.

 



View Externally Here

Big Money Investors Continue Gobbling up Single Family Rentals

Single Family Gold Rush

Even as home prices recover, private-equity firms continue bulking up on capital to buy homes, renovate them and rent them out. The latest to do so is Thomas J. Barrack Jr.'s Colony Capital LLC, a Los Angeles-based investment firm. On Friday, the company's housing unit, Colony American Homes, closed on a $500 million line of credit—which could expand up to $1 billion—from J.P. Morgan Chase & Co., according to the company.

Other housing investors have tapped major Wall Street banks over the past year as well. Blackstone Group LP, the largest single-family-home landlord, has taken out $3.6 billion in loans from a group of lenders led by Deutsche Bank LP, while Waypoint Real Estate Group LLC, a smaller investor, borrowed money from Citigroup Inc. last year to buy homes.

"We continue to be very bullish on this opportunity," said Justin Chang, Colony American's CEO. "We're still in the early days."

Colony is buying between 1,000 and 1,500 homes a month in cities from Georgia to California and has so far amassed a portfolio of 15,000 homes at a cost of more than $2 billion since April 2012.

 

Big Money Investors Continue Gobbling up Singe Family Rentals:

The 9/3/13 WSJ piece above about Colony Capital $1B credit facility for acquisition of single family homes raises two questions.

The effective single family residential (SFR) moratorium that became a fact of life in 2006 and thereafter has now created a good circumstance for many home sellers.  Short supply, continued family formation, historically low interest rates and resultant pent-up demand are driving SFR price resurgence.

Question 1:  To what extent is the market for SFR distorted by those influences that may be one-time, transitory conditions, such as:

- pent-up demand

- low but increasing interest rates

- non-traditional buyers (Wall Street) 'ginning up the marketplace

- Congressional restructuring of the role formerly played by Fannie and Freddie in the SFR mortgage market

Question 2:  Will increasing SFR housing prices, tighter financing requirements and interest costs rebound to benefit multifamily owners?

The SFR buyer pool is getting crowded. The likes of Colony Capital, Blackstone and publicly funded funds are jumping into a crowded pool to chase SFR acquisitions.  Opportunistic public funds, Wall Street and mega-Banks are a potent potion.

Last time that gang ganged up on an asset class the asset class inflated and then burst.

 

ANSWER GUIDE

Answers to Questions 1 & 2:

1.  You make your own call

2.  Yes - regardless of your answer to Question 1.

Jack Harty

jharty@harty.biz



View Externally Here

Is the Boise Area Seeing a Housing Bubble?

Below is a market update from some local Boise lenders. The article states that the fact we are seeing investors buying properties with cash, bidding wars, rising prices, and lower inventories are indicators that there should be another housing bubble. However interest rates have been rising which should be slowing the pace down along with rising prices. That may be the case, but in Boise, I am also seeing some investors who see the rates increasing, so they are now motivated more than ever to get something going. I guess you can call it a bubble, but I don't think it's a bubble that is going to burst. My guess, and that is all I can do, is that here in the Boise area we'll see things slowly come back to a normal market with normal activity again. Unless of course the feds play with other factors that seem to cause these huge market changes.

There is No Housing Bubble



View Externally Here

First Rate Property Management's Vacancy Rate

First Rate Property Management's Vacancy Rate:

Below is a chart showing FRPM's vacancy rate. As you can see, our vacancy this summer has been greater than years in the past. Yet, we have continually posted how great the rental market is. So why the higher vacancy?

We have always tried to run leases from summer to summer as this is the time most tenants are looking to move. We are able to get higher rents with a shorter vacancy period between tenants during the summer months. However, in years past, that wasn't a hard set rule and we allowed exceptions and we were not assertive with tenants who just wanted to remain on a month-to-month lease. After year after year of working towards summer lease terminations, this year we had nearly 80% of our leases come up for renewal this summer. Also, with a greatly improved rental market, we were much more aggressive with rent increases and requiring month-to-month tenants to renew their lease. As a combined result, we had a record turnover summer. The vacancy numbers posted on our graph, show a higher vacancy rate, but the truth is, it more reflects the turnover rate and most of these weekly rates represent the downtime between tenants. So with that said, I anticipate very low vacancy rates for the remainder of the year going into next Spring and I believe the annual vacancy rate will be lower with the one caveat being that we saw rent increases that we have not seen for over a decade.

Click to enlarge



View Externally Here

Boise Runs Out of Water

Boise Runs Out of Water:

Nampa & Meridian Irrigation District announced that they will shut off water to 500 miles of canals on September 5, marking a very early end to the irrigation season.  Typically, the irrigation season lasts until the first week of October. In 2012, water flows were halted on October 4.  Low snow-pack and below normal precipitation are to blame for the early shut off.  Not only was last winter's snow pack low, I heard that this summer was Boise’s hottest summer ever recorded  since the time the National Weather Service started compiling statistics in 1898.  Since the first of the year, Boise temperatures reached 90 degrees or higher 70 times so far this year, which is 44 more days than normal.

 

The canal water shut off means residential water users using pressurized urban irrigation systems managed by the District will need to switch to another water source such as a municipal system if they want to continue to irrigate lawns and landscaping.  Our lawn companies notified First Rate Property Management of this early shut-off several weeks before it became official.  We immediately notified all of our tenants that this was coming, but did not remove their responsibility to maintain the yard.  So if need be, they'll need to set up hoses and sprinklers or if the house has the ability to switch to city water, to do so.

 

Unfortunately, I think it is prudent to expect some dry grass and stressed grass, which leads to weeds and insect issues come next growing season.  It is recommended that you treat the yards next spring with a billbug preventative and fertilizers targeted to the roots.



View Externally Here

BOISE IDAHO FOUR PLEX COMPLEX DILEMMA

New Website:
For a decade First Rate Property Management's website dominated the Search Engine Optimization.  Google makes changes to their algorithms to prevent cheaters, and perhaps for personal reasons, such as using their own website building tools and pay-per-click campaigns.  We've been working on a new website that maximizes SEO for just over a year now and the new one is about a week or two away.  If you would like to review it, please go to www.Boise-Rentals.com.

 

Open or Closed Management?

 

The Boise area seems to favor 4 plex complexes.  In many ways, it makes sense.  These complexes can offer amenities similar to apartment complexes, but because they are 4 plexes on their own parcels surrounded by common area, they make for an easy sale to individual investors, as there are more buyers at that smaller price point.  As a result, an association is necessary to manage the common area and dues are collected to fund it.  Typically, the HOA is managed by a company that specializes in HOA management and the individual 4 plexes are managed by managers that specialize in residential property management.  My title, Open or Closed Management, refers to the management of each individual 4 plex.  Open management allows each individual owner to choose their own property manager.  Closed management is where a single management company is selected to manage all buildings.  Which is better?  Below I have outlined some of the pros and cons of closed management.
 
 
Pros:
 
Control.  With a single manager, the owners', as a whole, have better control.  For example, you can set rents, screening criteria, pet policies, and many other factors to ensure high quality tenants and strong market rents.  Also, with a single manager, management fees are typically lower, as well as advertising costs. 
 
Cons:
Control.  That's right, for the same reason control can be beneficial, it can also be very detrimental.  Typically, the decision makers are the board of directors for the HOA.  These positions change and sometimes a strong-willed board member takes control and selection of management and the setting of policies may not necessarily be what’s best for all owners.  Additionally, management companies change.  Perhaps the current company is absolutely the best, but what happens when they sell the management business or there is a change in a key person.
 
Summary:
I've seen the extreme of both open and closed management.  I've seen rent wars where a rogue manager in an open management complex undercuts rents, which drives rents down throughout.  Even worse, is when you have a very unprofessional manager in an open management complex that does no screening and rents to anyone who shows up with a good story and maybe some cash in hand.  On the other hand, I've seen ill-informed or strong-willed board members ruin the complex with their poor decisions.  As well as great management companies that had some kind of change and no longer are providing the service necessary.
 
So which is best?  Well, all though my examples above are true, they are extreme.  I think if you own or are buying into a 4 plex community, you or your well trusted agent should very much be involved in the workings of the HOA.  Are their communications transparent, or secret?  Do they consult with the members, or do they make unilateral decisions? 


View Externally Here

NARPM BOISE IDAHO AREA VACANCY REPORT

Boise Area Vacancies and Rents Reports by NARPM:
Below is the link to the Boise Regional NARPM vacancy survey results showing higher overall rents and slightly higher vacancy rates.

SWIdahoVacancySurvey2013




View Externally Here

WHERE THE ECONOMY AND INTEREST RATES ARE GOING

Viewpoint of where Economy is Going According to Mauldin Economics:

 

 
Outside the Box

 

 

Hoisington Investment Management – Quarterly Review and Outlook, Second Quarter 2013
By Lacy Hunt, PhD, and Van Hoisington
Lower Long Term Rates
The secular low in bond yields has yet to be recorded. This assessment for a continuing pattern of lower yields in the quarters ahead is clearly a minority view, as the recent selling of all types of bond products attest. The rise in long term yields over the last several months was accelerated by the recent Federal Reserve announcement that it would be “tapering” its purchases of Treasury and mortgage-backed securities. This has convinced many bond market participants that the low in long rates is in the past. The Treasury bond market’s short term fluctuations are a function of many factors, but its primary and most fundamental determinate is attitudes toward current and future inflation. From that perspective, the outlook for long term Treasury yields to fall is most favorable in light of: a) diminished inflation pressures; b) slowing GDP growth; c) weakening consumer fundamentals; and d) anti-growth monetary and fiscal policies.
Inflation
Sustained higher inflation is, and has always been, a prerequisite for sustained increases in long term interest rates. Inflation’s role in determining the level of long term rates was quantified by Irving Fisher 83 years ago (Theory of Interest, 1930) with the Fisher equation. It states that long term rates are the sum of inflation expectations and the real rate. This proposition has been reconfirmed in numerous sophisticated statistical studies and can also be empirically observed by comparing the Treasury bond yield to the inflation rate (Chart 1). On an annual basis, the Treasury bond yield and the inflation rate have moved in the same direction in 80% of the years since 1954.
http://www.mauldineconomics.com/images/uploads/newsletters/Image_1_20130723_OTB.gif
Presently the inflation picture is most favorable to bond yields. The year-over-year change in the core personal consumption expenditures deflator, an indicator to which the Fed pays close attention, stands at a record low for the entire five plus decades of the series (Chart 2).
http://www.mauldineconomics.com/images/uploads/newsletters/Image_2_20130723_OTB.gif
Additional factors restraining inflation are the appreciation of the dollar and the decline in commodity prices. The dollar is currently up 14% from its 2011 lows. A rise in the value of the dollar causes a “collapsing umbrella” effect on prices. A higher dollar leads to reduced prices of imports, which have been deflating at a 1% rate (ex-fuel) over the past year. When importers cut prices, domestic producers are forced to follow. Commodity prices have dropped more than 20% from their peak in 2011. This drop in commodity prices has also contributed to lower rates inflation.
Sustained higher inflation is not currently evident, and the forces that create inflation are absent. Thus, a period of sustained higher long term rates is improbable.
GDP
GDP growth, whether if measured in nominal or real terms, is the slowest of any expansion since 1948. From the first quarter of 2012 through the first quarter of 2013, nominal GDP grew at 3.3%. This is below the level of every entry point of economic contraction since 1948 (Chart 3). Real GDP shows a similar pattern. For the past four quarters real economic growth was just 1.6%, which was even less than the 1.8% growth rate in the 2000s and dramatically less than the 3.8% average growth rate in the past 223 years. These results demonstrate chronic long term economic underperformance.
http://www.mauldineconomics.com/images/uploads/newsletters/Image_3_20130723_OTB.gif
Over the past year, the Treasury bond yield rose as the nominal growth in GDP slowed. The difference between the Treasury bond yield and the nominal GDP growth rate (Chart 4) is important in two respects. First, when the bond yield rises more rapidly than the GDP growth rate, monetary conditions are a restraint on economic growth. This condition occurred prior to all the recessions since the 1950s, as indicated in the chart. This condition also signaled the growth recessions in 1962 and 1966-67. Second, the nominal GDP growth rate represents the yield on the total economy, a return that embodies greater risk than a 30 year Treasury bond. Thus, the differential is a barometer of cyclical value for investors in Treasury bonds versus more risky assets.
http://www.mauldineconomics.com/images/uploads/newsletters/Image_4_20130723_OTB.gif
On two occasions in the 1990s the Treasury bond/GDP differential rose sharply. Neither a quasi- nor outright recession ensued, but in both cases bonds turned in a stellar performance over the next year or longer. This economic indicator simultaneously casts doubt on the prevailing pessimism on Treasury bonds and the optimism over U.S. economic growth.
Consumer
Consumers have not yet healed from the great recession. Their income and employment situations have languished. Based on the standard of living, as measured by the real median household income, this entire recovery has bypassed the consumer sector. The standard of living has contracted regularly in recessions, but this is the first time deep into an expansion that it has continued to erode. The current standard of living is unchanged from 1995 (Chart 5).
http://www.mauldineconomics.com/images/uploads/newsletters/Image_5_20130723_OTB.gif
In spite of job gains in the first half of 2013, the downward pressure on the standard of living actually intensified. Approximately three quarters of the increases in jobs were in four of the lowest paying industries – retail trade; the temporary help services component of professional and business services; hospitality and leisure; and the nursing and residential care facilities component of the medical category. These increases may reflect efforts of firms to minimize the increase in health care costs associated with full time employment under the Affordable Care Act. Part time jobs averaged increases of 93,000 per month in the first half of 2013, while full time jobs averaged increases of only 22,000 per month. Full time employment as a percentage of the adult population is currently 47%, which is near the lows of the last three decades.
Historically, when taxes are increased, the initial response of households results in a lower saving rate rather than an immediate reduction in spending. For some consumers, recognition of the tax changes in their income is a problem, particularly for those whose earnings are dependent on commissions, bonuses or seasonal work. This explains the sharp drop in the personal saving rate to 2.7% in the first five months of this year, a level at or below the entry points of all the economic contractions since 1929. The 2013 slump in the saving rate is a precursor of the painful adjustments that lie ahead, and an additional restraint on economic growth. (Note: In late July the Bureau of Economic Analysis is expected to release a benchmark revision to the National Income and Product Accounts. As a result of the revision the personal saving rate may be raised by up to 1.5%. This is due to the change in consumer ownership of defined benefit pension plans. This revision will no t change the trend of the saving rate, nor will this higher figure indicate a source of funds for immediate spending since consumers will only receive such pension benefits when they retire.)
The drop in the saving rate in 2013 also serves to explain why the primary drain from higher taxes occurs with a lag after the taxes take effect. Based on various academic studies there is a two or three quarter lag in curtailed spending after the tax increase. Thus, the main drag on growth will fall in the third and fourth quarters of this year, with negative residual influences persisting through the end of 2015. Approximately $140 billion of the tax increase constitutes what might be termed a reduction in permanent income, or its equivalent life cycle income. In addition to working with a lag, over a three year period this portion will carry a negative multiplier of between two and three.
Monetary & Fiscal
Astronomical sums of money have been expended by both monetary and fiscal authorities since the crisis. With the benefit of hindsight it is clear their efforts have not aided economic growth, but rather the balance of their actions has been counter productive. The Fed has maintained the Fed Funds rate at near-zero levels, and it has tried to lower longer term rates through a series of quantitative easings. The effect of each of the quantitative easings was the opposite of the Fed’s intentions. During every period of balance sheet expansion long rates rose, yet when securities purchases were discontinued yields fell (Chart 6). The Fed cannot control long rates because long rates are affected by inflation expectations, not by supply and demand in the market place. This is extremely counter intuitive. With more buying, one would assume that prices would rise and thus yields would fall, but the opposite occurred. Why? When the Fed buys, it appears that the existing owners of Treasuries (now amounting to $9.5 trillion) decide that the Fed’s actions are inflationary and sell their holdings, raising interest rates. When the Fed stops this program, inflation expectations fall creating a demand for Treasuries, bringing rates back down. The Fed’s quantitative policies have been counter productive to growth as interest rates have risen during each period of quantitative easing. During QE1 and QE2, commodity prices rose, the dollar fell and inflation rose temporarily. Wages, however, did not respond. Thus, the higher interest rates during all QEs and the fall in the real wage income during QE 1 & 2 served to worsen the income and wealth divide. This means many more households were hurt, rather than helped, by the Fed’s efforts.
http://www.mauldineconomics.com/images/uploads/newsletters/Image_6_20130723_OTB.gif
In terms of government spending, fiscal policy has not, and will not, have a major affect on economic growth. The increased spending immediately following the financial crisis did little to encourage the economy to grow faster. Likewise, the decrease in spending associated with the “sequester” will unlikely be a drag on growth after the initial and lagged effects are fully exhausted. The research on government spending multipliers suggests that the multiplier on spending is very close to zero.
The impact of tax changes is not nearly as harmless. It has been argued that an expired “temporary payroll tax cut” would not effect spending as the initial increase in income was not seen as permanent. The facts seem to counter this opinion. The average monthly year-over-year growth rate of real personal income less transfer payments for 2011 was 3.4%, and in 2012 it was 2.2%. This year, with the payroll tax change in effect, the average is 1.8% through May. The slower income has resulted in a slowdown in spending. Like income, real personal consumption expenditures has trended lower, with average monthly year-over-year growth rates of 2.5% for 2011, 1.9% for 2012 and 1.8% through May of this year. This trend is expected to continue for some time.
A Final Consideration Favoring Bonds
In the aftermath of the debt induced panic years of 1873 and 1929 in the U.S. and 1989 in Japan, the long term government bond yield dropped to 2% between 13 and 14 years after the panic. The U.S. Treasury bond yield is tracking those previous experiences (Chart 7). Thus, the historical record also suggests that the secular low in long term rates is in the future.
http://www.mauldineconomics.com/images/uploads/newsletters/Image_7_20130723_OTB.gif
   

 



View Externally Here

BOISE IDAHO VACANCY RATE AND RENTAL UPDATE

Renters are Here to Stay:

Below is a link to an article from HousingWire.com that states 5-6 million rental households will be created within the next 10-years. Further they state that there are currently 38 million rentals across the nation currently, which is expected to grow to 41 million just within the next two years. Why? One of the reasons was the increase of supply of rentals after the housing crash now make it possible to find a rental in a location ideal to some specific needs, such as schools and employment.

Are renters here to stay? Spoiler alert: Experts say yes

 

FRPM Vacancy Rate to Date: Currently the vacancy rate for our rentals in the Boise area is 3.5%.

Click to enlarge

 



View Externally Here

TREASURE VALLEY RENTAL MARKET A TOUGH NUT TO CRACK

All Saved Up with Nothing to Buy:
Below is an article from the Idaho Business Review that sums up the Boise area investment market fairly well.  Interest rates, low vacancy, higher rents, and low inventory has boosted consumer confidence.  However, there is little on the market, because those who currently own must consider what or where they invest when they sell.  So if you have been considering selling with little on the market and high demand, now would probably be a very good time.

 

All saved up and nothing to buy: Treasure Valley rental market a tough nut to crack

 

by Cady McGovern
Published: June 6th, 2013
Treasure Valley rental properties are an appealing option for investors, but it's tough to find a property to buy, industry experts say.
"It's all a pretty active market right now, from single family right on up to the really big apartments," said Mike Swope, of Swope Investment Properties in Boise. "Investor confidence is back up...
They've got funds sitting there."
"In most places, multifamily is doing fine or even better than fine," said Jack Harty, of Harty Capital in Boise. "We're at virtually historic occupancy."
Apartment vacancy in the Treasure Valley has declined over the past few years, according to a housing market analysis from the U.S. Department of Housing and Urban Development. The report quotes REIS Inc. data indicating vacancy dropped from 6.4 percent in the first quarter of 2011 to 4.6 percent in the first quarter of 2012. REIS data for the first quarter of 2013 shows vacancy at 3.8 percent.
"The real issue is there aren't a lot of sellers out there," Harty said. He said people who own rental properties don't have a lot of options for investing the money they would earn if they sold the property. Low interest rates are producing modest returns in treasury bonds and certificates of deposit, and buying a new rental property is expensive. The high occupancy that is drawing in new investors prompts property owners to hang on to their investments.
Swope compiles monthly reports detailing duplex and fourplex listings and sales in Ada and Canyon counties. His most recent data, from April, show there were 54 such properties actively listed, down 27 percent from the number of properties available in April of 2013.
"Fourplex inventory is particularly low both in Ada and Canyon counties," Swope said. There were 13 active listings for fourplexes in those counties in April, down 69 percent from 42 active listings in April 2012.
Smaller rental properties such as duplexes and fourplexes are appealing to new investors, Swope said, because they require a smaller initial investment than a large apartment complex.
"More people have 75,000 (dollars) than 500,000," he said. New construction is not likely to fill the inventory void any time soon, Swope said. "There's one or two builders that are building fourplexes right now," he said. "New construction is tending to be. more expensive than what the market has been... The cap rate isn't as good as what an investor can get on an existing project."

 

 

First Rate Property Management's Vacancy:

 

Vacancy has jumped up to 5.2%.  No need to be alarmed.  Within our vacancy calculations, we count a house that is vacant but has a signed lease and the new tenants have not yet moved in.  So our un-rented vacancy number is quite lower.  Most leases terminate during the summer months.  This is also when most tenants make their decisions to move, as school is out.  Most of this vacancy is due to the lead time necessary to move the old tenant out, perform the necessary cleaning and repairs, and then placement of the tenant.
Our average vacancy for 2013 is 2.06%.

 
 
 
 
 
 
 
 
 
Tony A. Drost
http://www.boiseinvestmentproperties.net//
First Rate Property Management, Inc.
Boise, ID


View Externally Here

BOISE RENTAL RENTS UP, VACANCIES DOWN

Boise Idaho Rental Vacancy Rate:
Currently First Rate Property Managements vacancy rate is 2.7%. Our year to date average is 1.75%, down from 2.91% at this time last year. We are pre-leasing over 80% of the available units while rent has increased on average 10%.

Click to enlarge

 


Tony A. Drost

http://boise-rentals.com/
http://www.boiseinvestmentproperties.net/
First Rate Property Management, Inc.
Boise, ID



View Externally Here

IDAHO HOME PRICES CONTINUE TO RISE

Idaho Home Prices - 4th Biggest Gain in Nation:
Below is a link to an article out of Spokane talking about Idaho home prices having the 4th biggest gain in the nation.

 

 

 

 

 
 
 
 
 
 
 
Vacancy Rate Boise Idaho:
Currently First Rate Property Management's vacancy rate is 4.1%.  This is due to new tenants moving into these units later in the month than usual.  Next weeks' projected vacancy will be around 2.8%, which is average for this time of year.
 
 
 


View Externally Here

BOISE HOME PRICES GROWING

 

Boise Home Prices Grow:

 

Below is another article describing improved home values in the Boise area.
HomePricesGrow


First Rate Property Management Vacancy Rate:
Below is a chart showing our current vacancy rate of 2.7%.  This is our lowest vacancy rate for the first week of May ever.  The Boise rental market continues to exhibit strength with low vacancy and improving rents
 

 

 

 


Tony A. Drost

 

 

http://www.frpmrentals.com/
http://www.boiseinvestmentproperties.net//
First Rate Property Management, Inc
Boise, ID

 





.
 
 
 


View Externally Here

Boise Property Management Internet Reviews

Internet Reviews Are the Bathroom Wall Writings of the Past

As far back as I can remember I would find meaningless yet entertaining writings on bathroom walls.  Who could have known that these were the predecessors to what we now call Internet Reviews.  I'm sure all of you have read Internet Reviews at one time or another and I really wonder who is actually finding them helpful.  To get an understanding of why I compare them to the mindless writings on bathroom walls, I invite you to review First Rate Property Management's Reviews.  What I would like you to do is go to GOOGLE, and type in the search words, "Boise Property Management."  Most likely we will be the first or second business listing on the first page.  Those on top are pay per click ads.  Once you find our listing, please click on Reviews and feel free to read them.  For one, you will find that every poor review was posted by an alleged past tenant.  I say alleged because in most cases we cannot find a tenant by the name of the person posting the review, nor can we find any data within our system that corroborates their story.  In some cases, I think it is a situation of mistaken identity, meaning they posted the review to FRPM, but were writing about another company.  But some of the reviews are so outlandish, I honestly can't figure out how they came about.  Really, who is to say they aren't posted from a competitor hoping to discredit us, hoping it helps them.  GOOGLE has proven that they have no method or process to ensure that reviews are legit and accurate.  In fact, my colleagues from California have stated that reviews on some sites have run companies out of business.  Based on what?  In my opinion, these reviews are about as valid as me calling some number on the bathroom wall thinking I will find true love.

Ok, I think I have totally discredited the negative reviews.  Most are fictitious and those that may actually be related to an actual experience are likely from a disgruntled tenant who was appropriately charged for damages upon their exit.  Now let's look at the positive reviews.  I know that most of those are factual because in most cases, those people let us know how happy they were and that they wanted to share it with the world by posting to the internet.  So there is another difference.  Legitimate reviews are preceded with communications to us, prior to posting to the internet.  If the "Nay Sayers" actually wanted a resolution, we know they too would also contact us and work for a solution.

Tony Drost

Regardless, until these internet companies take an actual interest in ensuring reviews are real and legitimate and internet users quit relying on what they may innocently believe to be reality, internet reviews can pose a serious issue.  For example, a prospective tenant of one of our properties may read the reviews and decide to look elsewhere.  Now that isn't a problem with prospective owners, as we have no negative reviews from owners.  But it is a concern about prospective tenants.  In order to find the best tenants possible, we need to appeal to as many as possible.  So, if you would like to help and have had a positive experience with us, we ask you to do a couple of things.  Please use your favorite search engine, such as Google, and click if you found the review to be helpful or not.  That hopefully will help discredit the fictitious reviews.  Next, if you believe our service is noteworthy, we invite you to post a review using the below instructions.  If going through all the hoops necessary to post a review is troublesome, please feel free to email me at Tony@FRPMrentals.com.


Steps to Write a Review for First Rate Property Management

  1. Go to the link(s) below and click on "Write a Review."
  2. Depending on the site, you will need to create an account if you do not already have one. (Clicking on Write a Review will inform you to either create an account or sign in if you already have an account).
  3. Once signed in, write the text of your review, select a rating and click submit.

Theses links take you directly to a page to write a review:



View Externally Here

BOISE AREA RENTAL VACANCY REPORTS

Vacancy Rate for Rentals in the Boise Idaho Market:
First Rate Property Management's current vacancy rate is 1.6%. In the week ending March 31st, FRPM's vacancy rate was 1.1% as compared to 2% - 4% for the Boise/Nampa area rental markets.

 

 

 

 





Boise/Nampa Area Rental Market Summary:
All indications from the Q1 2013 survey are that the rental market is highly favorable for rental property owners enjoying low vacancy rates and rental rates rising even over the frigid winter. Vacancy rates continue to hold an impressive position in Ada County that is notably better than the national average. All market segments surveyed in Ada County saw an increase in rents with the exception being 5-bedroom, single-family homes, which is a segment with an often limited amount of data and therefore larger margin of error.

Canyon County saw a significant improvement in the multi-family vacancy rate, which was previously a drag on rental performance in the county. With this improvement, vacancy rates by every measure in the Treasure Valley are outperforming national averages. Rents increased for all Canyon County market segments other than one-bedroom, multi-family, which was flat.
For a more precise conclusion refer to the link below to view the recent vacancy survey conducted by the Southwest Idaho chapter of NARPM.
http://www.legeritypm.com/files/2013/04/1q-sw-idaho-vacancy-survey-2013.pdf

 

Tony A. Drost
http://www.frpmrentals.com/
http://www.boiseinvestmentproperties.net//
First Rate Property Management, Inc
Boise, ID

 

 

 

 

 

 



View Externally Here

NATIONAL VERSUS BOISE IDAHO HOUSING INVESTORS
 
Above is a link from CNN Fortune discussing investors involvement in the recovery of the housing market.  In the article it states that perhaps investor interest has peaked.  As usual, I think the general message is on track, but I believe the Boise area market differs.  In dealing with my own clients, my numbers are down, but it certainly isn't because of lack of investor interest.  It has to do more with lower inventory levels and finding the right property at the right price.  So as as the article suggest, this may make for a great time to sell and investment property.
 
The article also discusses home rental rates flattening out.  That may be the case nationally, but that is not yet the case within the Boise area.  The author sites information from www.Trulia.com.  From my experience, Trulia does a good job collecting home sales and rental data.  As far as I can tell, they take that data and develop an average based on some basic criteria.  I think the data is good in identifying trends but not necessarily an accurate sales value or rent amount for one specific home.  Perhaps the average home sale in a certain area is $250,000, but the home you are interested in has multiple levels, more or fewer upgrades, larger lot... and the list goes on and on.  Those differences can be fairly minor, while many are actually very important and can affect actual value or rent greatly.
 
 
The Blue Print to Organizational Greatness:
A client of mine forwarded me this great article about the Boise State Bronco football team.  I thought the article was very good and the book they reference, Good To Great, is also a very good book.  In fact, I actually quote directly from the book within our policy and procedure manual.  One such quote is, "Why is Good the Enemy of Great?"...because we at First Rate Property Management never want to settle with just being good.  We always want to seek continuous improvement so that we can become great.  I hope you enjoy the article and maybe you have a new book to read.
 
 
 
 



View Externally Here

WHY THIS IS THE BEST TIME TO BUY INVESTMENT PROPERTY

Why This is the Best Time to Buy Investment Property

 

The link above is to an article from the American Apartments Owners Association.  I found it to be a good read and agreed with most of it and perhaps he is generalizing for space requirements.  I offer the following comments.

 

Look For Cash Flow:

 

Within the article the author, Russ Whitney, described his description of why so many investors lost their shirts when the bubble broke.  Like the author, I agree that when you invest, the property should perform on its own and let appreciation be the bonus, not the sole reason.  I saw the same thing he did which is what I call speculative investing.  The property didn't cash flow and the investor was betting on appreciation.  Before the collapse, I saw a lot of investors make a ton of money.  But like most investments, the higher the risk, generally the higher the return.  But unfortunately many of those who did that, continued to invest and found themselves without a chair when the music stopped.  So my personal approach likely won't make you rich over night, but I think it will help develop long-term wealth.

 

Single Family versus Multi-family:

 

I personally have pretty much followed his thoughts and invested in multi-family.  But, I don't think that needs to always be the case.  In many areas of the country, rents in comparison to sales price are very strong and performance is good.  As of late, Boise home prices in comparison to potential rents, have been strong and offer decent performance.  But for how long?  Also, I tend to follow the performance.  In 2005-2007, investor demand shot up values in most segments of the market. However, because of price point, apartment values were not as much influenced and offered stronger performance.  So I moved out of single family homes and small multi-family properties and exchanged into apartments.  I did well on the sale because of the increased values and put the money into something with equal or better performance.  Then after the market crashed and values sunk, 4- plex prices made for outstanding performance and made the best sense to me.  Although I generally agree with Mr Whitney's thoughts, it is my opinion that markets vary and no matter what market you are looking to invest in, be sure to have someone there that knows the market and can provide data to help you make the best decision.

 

Follow my Lead:

 

Unlike Mr. Whitney, I am not comfortable at all to state that if you follow my lead, you can become wealthy.  I do however believe that I can provide my clients with the information to make a well-informed decision and in general, I'd like to say that my clients have invested well.  Did some over pay?  Sure in 2005 and 2006 I helped clients perform exchanges where values were very much inflated.  But in many of those instances, those clients sold other properties for an equal or greater inflated price and the performance of the replacement property was greatly improved.

 

The Three Reasons Why to Buy Now:

Within the article he provides 3 reasons why we all should invest now.  I don't disagree, but things are just a little different in the Boise area.

 

Reason #1: Yes, distress properties were a good source for investment opportunities, but the number of distress properties has greatly reduced and with so little, we're seeing them priced at market, not at the bargain prices before.

 

Reason #2: Financing terms and rates are looking great and you can read past blog posts on how that may change this year.

 

Reason #3: The rental market is strong, but back to my conservative approach, don't bet on it always being strong.  Use historical rents and historical vacancy.  If those numbers look good, then you will be even more delighted in performance under the current market conditions.

 

 
Tony A. Drost
http://www.frpmrentals.com/
http://www.boiseinvestmentproperties.net//
First Rate Property Management, Inc
Boise, ID

 


View Externally Here

BOISE HOME AND RENT PRICES RISING, FEWER VACANCIES

Ada County Home Prices Continue to Rise:
Last week I touched on the increase of single family home prices in the Boise area.  Over the past week I have read dozens of articles discussing the single family sales market and the increase in values.  Below I have posted some link to a few of these articles.  The opinions vary, but all good to consider when evaluating and considering buyer, selling, renting, or even investing in single family rentals.  On the rental social media side, we're seeing a lot of opinions that with the increase in values, we're going to continue to see a high demand to rent, even with these incredibly low interest rates.  That increase in demand is raising rents across the board and lower income renters are feeling the pinch.  Enjoy and feel free to share your thoughts as you read some of these.

 

 

 

 

 

First Rate Property Management's Vacancy:
Below is a chart showing First Rate Property Management's vacancy.  These numbers are based on nearly a thousand rentals in the Boise, Meridian, and Eagle areas.  They also consist of small multi-family rentals, such as a duplex, four-plex, or small apartment complex, as well as hundreds of single family homes.  With the low vacancy we are also increasing rents by over 10% on average.  Our leases automatically include an 8% rent increase in them, upon the termination of the initial lease term.  When the market was soft, we would offer a lower renewal rate, which made the owner and us look extra nice and made it more enticing to the tenant.  But now with the market improving, First Rate Property Management is renewing at the 8% as the minimum.
 
 

 







Also, last week, I spoke about protecting our clients against a potential soft rental market that potentially could come about with so many multi-family properties coming on line and invited our readers to contact me.  I was reluctant to post our strategy, since so many of our competitors are subscribers to our blog.  But, because I received so many inquiries, I thought I would give a little hint to that strategy.  It’s all about the lease term.  We are offering longer rental terms and ensuring lease terms end in the time of the year when most tenants are looking.

 


Tony A. Drost
http://www.frpmrentals.com/
http://www.boiseinvestmentproperties.net//
First Rate Property Management, Inc
Boise, ID
 
 


View Externally Here

STRONG RENTAL MARKET IN BOISE IDAHO

Developers Meet the Rental Demand:
As you can see by our recent posts, our vacancy rate is outstanding in the 1% range and rents are improving.  No question, the rental market is once again strong.  The developers and builders took notice and are here to meet that demand.  During the real estate bubble in 2005 and 2006, we saw an increase in construction, but in many ways, that increase was to meet the demand of the investors, not necessarily the renters.  This time, I suppose it is meeting both.  Last year I posted a list of multi-family dwellings planned to be built.  Not counting 4 plexes, but a little over 500 units were built in 2012 with another 240 still under construction off of Eagle Road.  For 2013, we have about 1,400 units in early construction phase or with plans to start soon and possibly another 1,400 units looking for a developer or approval.
With so many rental units being introduced, what affect will this have on the rental market?  I wish I could predict that, but there are quite a few variables.  A few that come to mind are: 1) completion dates spread out, 2) unemployment and job growth, and 3) population growth.  But also the home sales market is also another variable, such as any changes in interest rates and average sales price.  So what does one do to take advantage of the current strong rental market and/or safeguard against a possible declined rental market?  Well, I've got some ideas, so feel free to email me directly and I'd be happy to share them.

 
Single Family Rentals:

After the bubble burst, we saw more and more houses becoming rentals.  Many of these homeowners were leaving the area and couldn't or weren't willing to sell at the current market value, so they chose to rent the home out.  Initially, we had a surplus of homes that weren't selling, so those also became rentals.  But, now with values improving, we're seeing a lot of rented homes getting sold.  Unless these tenants buy a home, they will be part of the variable I listed above and will help absorb the new rental inventory.
With that said, the demand for rental homes is about as good as it was in the late 90's.  Although values are improving, rents continue to improve as well and with the right house, performance can be decent.  What's the right house?  Above I mentioned how so many homeowners rented their homes when values were down.  In most cases, that made a lot of sense and in these cases only, performance wasn't a real factor.  It was more of a need to supplement a monthly mortgage payment while they waited for values to come back up.  The right house tends to be a newer basic home (but not bare bones).  Also to get the most for your money, they tend to be two-levels, as tenants also look for the most space for the least amount of money.  And lastly, their main search criterion is bedroom count. And from there, they sort by price.  So the home I just described, allows you to get the most house for the most rent.  A custom home costs much more and typically the rent difference is not enough to get the most for your dollar.

Tony A. Drost
http://www.frpmrentals.com/
http://www.boiseinvestmentproperties.net//
First Rate Property Management, Inc
Boise, ID



 

 

 

 

 

 



View Externally Here

INTEREST RATES TIED TO UNEMPLOYMENT
 

Unemployment Effects to Interest Rates:

 
Jack Harty with Harty Capital, is a commercial lender that I have used and he is pretty good at passing on information that can effect lending. Below he describes that once unemployment reaches 6.5%, we will likely see a rise in interest rates. Good news is that we see that Ada County (Boise, Garden City, Eagle, Kuna, Meridian, and Star) is at 5.5% as of January of this year. Below is Jack's informal announcement along with some graphs which I think is very informative.



 

 

 

 

 


Unemployment isn’t bad in Ada County - 5.5% for January.  February National Unemployment rate is down to 7.7% (per standard U3 measure), but the U6 measure of Unemployment is still high at 14.3% (includes those who work P/T but want to work F/T, plus those who've dropped out of the labor market). Thus, as more jobs are created (Feb job creation saw strong net new job creation of 236,000) more people will return to the labor market from their positions on the sidelines. They will then be counted as unemployed while they look for one of the 236,000 new jobs. That will have the affect of slowing the decline of the unemployment rate, or even increasing it, as occurred between December and January - 7.8% vs. 7.9% respectively.

 

So what?… the importance of the U3 Rate is that the Fed has declared that it will maintain "accommodative" (read: low) interest rates until national unemployment stabilizes at 6.5% per the U3 Unemployment Rate. It is hard to predict when national unemployment will reach 6.5% due to the push/pull effect of people who've dropped out of the labor market (see U6 Unemployment Rate) and then return to the labor market as jobs are created. Those people will tend to dilute the unemployed pool, probably retarding the rate of unemployment decline somewhat.

 

U3 UNEMPLOYMENT RATE (ADA COUNTY - Jan 1 2013)

 

 
Graph of Unemployment Rate in Ada County, ID
 
 
 
U6 UNEMPLOYMENT RATE (NATIONAL - Feb. 2013)
 
 
 
 
 
 

 



View Externally Here

THE CHANGING REAL ESTATE MARKET

Boise Idaho Residential Vacancy Rate:
Effective renewal efforts continue to keep First Rate Property Managements' vacancy rate low at 1.6%.  Last year at this time the vacancy rate was 3.2%.

 

 

 

 

 

 

 


Strong Real Estate Market:
The Blackstone Group L.P. is an American-based alternative asset management and financial services company that specializes in private equity, credit and marketable alternative investment strategies, as well as financial advisory services.  Because of the strength in the housing market the Blackstone Group is investing heavily into single family homes. The following article from CNBC illiterates this.
http://finance.yahoo.com/news/were-betting-big-real-estate-171222223.html

 

No More Easy Money:

 

From more documentation, minimum down payments rising, debt to income percentage lowering, to more federal scrutiny, easy loans are definitely over.  The following article is found on the Hamptonroads website.
 

Tony A. Drost
http://www.frpmrentals.com/
http://www.boiseinvestmentproperties.net//
First Rate Property Management, Inc
Boise, ID


View Externally Here

Disparate Impact to Fair Housing

Boise Idaho Residential Vacancy Rate

Currently First Rate Property Managements vacancy rate is 1.2%. This is the 20th week in a row that we have had vacancy rates under 2%.

Click to enlarge...
Vacancy Rate February 27, 2013


Fair Housing

Below is an article in yesterday's Wall Street Journal which addresses changes to how the Fair Housing Act perceives or determines if discrimination took place. It states that Landlords can be held guilty of discrimination, even if there was no intent to discriminate or even if the process is implemented in a non-discriminatory reason. This is concerning, because First Rate Property Management has a very detailed and thorough screening process. This process is needed to guarantee payment of rent each month, reduce chances of property damage, and to ensure the safety of neighboring tenants in apartments. For example, First Rate Property Management performs a thorough national criminal background check on all applicants. This article suggests that that standard can be questioned if that process limits the number of tenants within any of the protected classes. First Rate Property Management also requires some form of government issued ID to protect our owners from bad people who make fake IDs assuming another person’s identify. First Rate Property Management also requires all applicants to meet a certain income level in order to qualify. This too can be challenged. The article suggests that Landlords can either remove legitimate screening criteria or use a double standard of discrimination to make sure that an appropriate number of tenants are within the protected classes.

If you needed another reason to hire a professional manager to protect the investor, this certainly adds to that list.


Tony Drost, President, First Rate Property Management, Inc.
Tony Drost, President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.


How Not to Fight Discrimination

The federal obsession with 'disparate impact' forces employers to apply racial double standards.

By ROGER CLEGG (Wall Street Journal)
Feb. 25, 2013

Welcome to the era of "disparate impact."

The Obama administration this month issued regulations formally adopting the "disparate impact" approach to its enforcement of the Fair Housing Act, the 1968 law designed to protect buyers and renters from discrimination (racial and otherwise). This approach is increasingly becoming standard in housing and every area of the law.

Landlords, businesses, local governments and others can be held liable for policies that have disproportionate racial effects—even if those policies make no racial distinctions, are adopted with no discriminatory intent, and are applied in nondiscriminatory ways.

Landlords, businesses, local governments and others can be held liable for policies that have disproportionate racial effects—even if those policies make no racial distinctions, are adopted with no discriminatory intent, and are applied in nondiscriminatory ways.

The disparate-impact standard for antidiscrimination law pushes people to do one or both of two things: Get rid of legitimate selection criteria, or use a racial double standard to ensure that the numbers come out right. This approach first became infamous in a 1971 Supreme Court opinion as a way to strike down hiring and promotion tests in employment. For example, the federal government and civil-rights groups have challenged police and firefighter written exams for having disparate racial impact, and physical exams for having a disparate impact on women.

The Obama administration is still doing plenty of that, but also much more. In 2010, the Equal Employment Opportunity Commission sued Kaplan Higher Learning Corp. for running credit checks on job applicants. Kaplan did so to cut down on employee theft of student payments. The Obama administration objected because the checks had a supposedly disparate impact on black applicants. I say "supposedly" because Kaplan kept no racial data on its personnel. The government hired "experts" to look at DMV photos and apply a "race rating." Mercifully, a judge threw out the lawsuit last month.

The magic of disparate impact can also mean that if a recipient of federal funding doesn't provide a service—say, a driver's license exam—in a foreign language, it can be held liable for national-origin discrimination.

The Obama administration is challenging school-discipline policies around the country as having a disparate impact on African-Americans—even though if discipline breaks down, the classrooms that will suffer most are likely to be filled disproportionately with other African-American students. The administration is also taking action against employers—and soon possibly landlords—who use criminal background checks before they hire or rent.

If a business, agency or school has standards for hiring, promoting, admissions or offering a mortgage that aren't being met by individuals in some racial and ethnic groups, there are three things that can be done. First, the standards can be relaxed for those groups. That is what racial preferences do. Second, the government can attack the standards themselves. That is what the disparate-impact approach to enforcement does. Third, one can examine why a disproportionate number of individuals in some groups aren't meeting the standards—such as failing public schools or being born out of wedlock—and do something about it. This option holds little interest on the political left.

If the executive branch is out of control, then there are the courts and Congress. The Supreme Court is considering whether to hear a case challenging the disparate-impact approach in federal enforcement of the Fair Housing Act. The court would have heard arguments in a similar case a year ago, but the Obama administration pressured the City of St. Paul, Minn., into dropping its anti-disparate-impact defense. ("We were afraid we might lose disparate impact in the Supreme Court because there wasn't a regulation," said Sara Pratt, an official in the Department of Housing and Urban Development.)

The court could strike down disparate-impact enforcement—a possibility that Justice Antonin Scalia raised during a 2009 case (Ricci v. DeStefano) involving firefighters in New Haven, Conn. After all, the disparate-impact approach urges employers to weigh racial results when hiring—the sort of thing the U.S. Constitution ordinarily forbids. (In the New Haven case, city officials threw out an exam because "too many" people of one color and "not enough" of another color did well on it. The court ruled against the city.)

The Obama administration has also used disparate-impact arguments to challenge voter-ID laws aggressively, using Section 5 of the Voting Rights Act—arguments about the constitutionality of which the Supreme Court will hear on Wednesday.

Congress needs to act, too. First, it can refrain from passing laws adopting the disparate-impact approach. Second, it can clarify that existing laws don't allow it. And where officials and courts have interpreted statutes as allowing it, Congress should amend the law to foreclose liability, at least if the defendant can show a lack of discriminatory purpose in the challenged practice.

Disparate impact makes illegal what any rational person would not define as discrimination. And by forcing a change in neutral standards for hiring, renting and the like in order to count outcomes by race, it actually causes discrimination.

Mr. Clegg is president and general counsel of the Center for Equal Opportunity, which has filed amicus briefs in many cases challenging disparate impact.



View Externally Here

BOISE, A BETTER PLACE TO OWN A HOME

Good News for Boise Homeowners:

 
Below is a link to an article from StateImpact, written by Molly Messick.  I was attending a Lead Based Paint class, when my phone lit up and I saw, "Worst Place to Buy.....Boise", come across the screen.  I will admit, I couldn't wait for a break and had to read the article right away. I was happy to quickly realize that this was a good thing.

 

The short article mentions that the number of foreclosures fell by 27% from 2011 to 2012. If we look at distress sales of 4 plexes in Ada and Canyon counties, the numbers are even stronger.  We saw a 49% drop in distressed sales from 2011 to 2012.  At the end of 2010, 93% of these 4 plexes were distress sales.  Now the good news, we are now below 10%.  As a result, we have seen 4 plexes appreciate very well over the last year.  Anyway, please take a look, it’s a short read.

 

 

Tony A. Drost
http://www.frpmrentals.com/
http://www.boiseinvestmentproperties.net//
First Rate Property Management, Inc
Boise, ID

 

 



View Externally Here

BOISE IDAHO RENTAL VACANCY RATE

Vacancy Rate for Rentals in the Boise Idaho Market:

 

First Rate Property Management's current vacancy rate is 1.6%. In the last 16 weeks we have averaged a vacancy rate of 1.53%. 

 

<span style="font-family: " times","serif";="" font-size:="" 12pt;="" line-height:="" 115%;="" mso-bidi-font-family:="" "times="" new="" roman";="" mso-fareast-font-family:="" roman";"="">

 

 

 

 

 
2013 National Apartment Report:
The below link offers unique insights into the market dynamics of several metropolitans across the country, and delves into construction activity, rents, vacancy rates and investment trends.
 

https://www.marcusmillichap.com


Tony A. Drost
http://www.frpmrentals.com/
http://www.boiseinvestmentproperties.net//
First Rate Property Management, Inc
Boise, ID

 

 

 



View Externally Here

Market Update On Rents And Vacancy

 

Below are the results of the SW Idaho Chapter of the National Association of Residential Property Managers 4th quarter survey.  It is important to know that NARPM members typically manage single family homes and small multi-family dwellings.  So this data does not include large apartment complexes that usually have many amenities, such as pools, clubhouses, workout facilities, computer center, etc.  Because of those amenities, those properties typically rent for much more.
 
 
 VACANCY RATES:
Below is a line graph showing vacancy for single family home rentals and multi-family rentals.  As you can see, overall rental vacancy was just about 3% at the end of 2012.  It was interesting to see that multi-family rental vacancy, over 4%, was over twice that of single family homes, at about 2%.  Why?  Well, for certain, the inventory or supply of multi-family dwelling is quite a bit more than Single family home rentals.  So that could be a factor.  Another factor could be that demand for single family rental homes has improved.  As we have mentioned in past posts, we are seeing well established people choosing to rent instead of buying.  Lastly, single family home rental tenants tend to stay longer and being winter, they are choosing to stay put for now.
 

 

AVERAGE RENTS
The below graphs show average rents for single family homes and multi-family rentals within *Ada and *Canyon Counties.  I think it is important to understand that these are just averages from the sample.  I would say that the data for single family rental homes is probably a little more skewed.  For example, $1,400 per month for a 5 bedroom home in Meridian that is only 1500 SqFt is probably a little high, but is very low for a 3,000 SqFt home in Eagle, which might actually rent closer to $2,900.  The same could be said for the multi-family rentals, but I think the range is much tighter.  Nonetheless, all average rents dipped this last quarter, which has historically been the case due to lower demand in the winter months.
 

*All of the above data references Ada and/or Canyon Counties.  Ada County includes Boise, Eagle, Garden City, Kuna, Meridian, and Star.  I would assume that most of the data coming from Boise and Meridian.  Canyon County includes:  Caldwell, Nampa, Greenleaf, Melba, Middleton, Notus, Parma, and Wilder.  I believe it is safe to assume that most, if not all of this data came from property managers in Nampa and Caldwell.
 
 
 
Tony A. Drosthttp://www.frpmrentals.com/
http://www.boiseinvestmentproperties.net//
First Rate Property Management, Inc
Boise, ID

 



View Externally Here

HOME SALES AND PRICES IMPROVING

Vacancy Rate for Rentals in the Boise Idaho Market:

 
First Rate Property Management's current vacancy rate is 1.0%, 2.5 times lower than the previous year’s.  This is due to higher renewal rates and eliminating leases ending in winter months.

 

Home Prices Continue to Improve:
Below is a link to the FNC Residential Price Index update for December of 2012.  Within the article it states that home values have continued to improve 8 straight months.  Some of the contributors were declining foreclosures and an increase in sales volume.


Tony A. Drost
http://www.frpmrentals.com/
http://www.boiseinvestmentproperties.net//
First Rate Property Management, Inc
Boise, ID

 


View Externally Here

BOISE, IDAHO REALESTATE AND RENTAL MARKET


Boise Area Vacancy Rate First Rate Property Management:
Currently our vacancy rate is 1.6% and for the year to date we are at 2.8%. We're on pace with last years’ vacancy rate numbers.

 

 

 


 

 

What's Really Driving the Rise in Home Prices:
The Wall Street Journal recently cited five significant factors behind the rise in home prices, as numerous markets see significant year-over-year gains. The big price drives are:

1. The rise in housing affordability - which is drawing more buyers out into the market who are looking to cash in on low mortgage rates and fallen home prices compared to a few years ago.
2. The rise in household formation - which is expected to hit 1 million new households this year. That is up from an average of 570,000 over the last five years, according to data by Bank of America Merrill Lynch.
3. The rise in rents- which has prompted more investors to purchase properties to rent out and more renters to second-guess why they are paying so much in rent when they could buy.
4. The decline in distressed sales and foreclosures - which has fallen significantly this past year. While distressed sales are still high by historical standards, they have fallen from their peaks in most markets, helping to alleviate the downward pressure on home prices in many areas.
5. Inventories of homes for-sale are at their lowest levels in nearly 50 years - and builders have cut back on construction and many home owners are waiting to sell until they can recover some equity on their properties.


Tony A. Drost
http://www.frpmrentals.com/
http://www.boiseinvestmentproperties.net//
First Rate Property Management, Inc.
Boise, ID

 

 



View Externally Here

BOISE IDAHO PROPERTY MANAGEMENT VACANCY REPORT


Vacancy Rate for Rentals in the Boise ID Area:
First Rate Property Management's current vacancy rate is 1.4%. Our phone and sales activity has slowed significantly with the holidays. Prospective tenants are thinking more about friends and family than a new place to live. Most people have secured a home by now and as the weather gets colder, they tend to hunker down. We suggest enticing these last few procrastinators by offering a rent incentive or lower rent for properties that are currently vacant.

 

 


 





Tony A. Drost
http://www.frpmrentals.com/
http://www.boiseinvestmentproperties.net//
First Rate Property Management, Inc
Boise, ID



View Externally Here

Idaho Real Estate Market Ranked #2 within US
Below is a link from Yahoo News forwarded by one of my clients. Within the article, it is said that Idaho is the 2nd best real estate market to recover with expectations to rise an additional 8.8% in 2013 making it the highest in the nation. We have certainly seen some great improvements in many markets, especially the 4 plex market. So I tend to believe this to be true. However, one market, really hasn't recovered and that is of the larger high-end homes. It seems that homes priced over $500,000, no matter how extravagant, continue to struggle. Of course the higher the price, the more the struggle.

 

 



View Externally Here

BOISE PROPERTY MANAGEMENT VACANCY REPORT

Vacancy Rate for Rentals in the Boise ID Area:
First Rate Property Management's current vacancy rate is 1.1%, much lower compared to previous year’s numbers at this time.  This is mostly due to higher renewal rates and efforts at reducing the number of leases ending in winter months.

 

 

 

 

 

The Southwest Idaho Chapter of the National Association of Residential Property Managers (NARPM®) has released its vacancy data as of September 30th, 2012. Their comparable vacancy numbers are similar to First Rates vacancy results for that time period. However, compared to the Ada County results, First Rate's multi-unit rents were 2.5% higher and single family home rents were 6.5% higher than the SW Chapters average

 

NARPM's SW Idaho survey results are in the following link:
 

Tony A. Drost
http://www.frpmrentals.com/
http://www.boiseinvestmentproperties.net//
First Rate Property Management, Inc
Boise, ID
 



View Externally Here

BOISE ID RENTAL COMPANY VACANCIES AT HISTORIC LOW

Vacancy Rate:
First Rate Property Management's current vacancy rate is 3.1%, this is low compared to previous year’s numbers at this time.  With the colder weather and the holidays coming, most tenants have secured a home.  This is the time to start lowering rents or increasing rental incentives or we'll be sitting on some empty units until March of 2013.

 

 

 

 

 

 


Tony A. Drost
http://www.frpmrentals.com/
http://www.boiseinvestmentproperties.net//
First Rate Property Management, Inc
Boise, ID

 



View Externally Here

BOISE IDAHO BEST IN US REAL ESTATE RECOVERY

Vacancy Rate:
First Rate Property Management's current vacancy rate is 2.4%, this is way down from previous year’s numbers at this time.

 

 

 

 

 

 

 


Boise Area Real Estate Market Best in Country:
According to a national real estate research company, Boise and the surrounding communities real estate markets are improving better than anywhere else in the US.

See link below
http://www.idahostatesman.com/2012/09/18/2276470/boise-area-is-the-countrys-most.html


Tony A. Drost
http://www.frpmrentals.com/
http://www.boiseinvestmentproperties.net//
First Rate Property Management, Inc
Boise, ID

 

 

 

 

 



View Externally Here

BOISE IDAHO RENTAL SCAMS

Vacancy Rate:
First Rate Property Management's current vacancy rate is 3.7%, down from last years numbers at this time at 4.0%.  Rental inquires are slowing down mainly due to school being in session and tenants mostly have secured housing.

 

Boise Targeted With Rental Scams:
We've posted about rental scams before, but since this story just ran on the local Boise news, I thought I would touch on it again. In most cases, these rental scammers find an on-line ad. They steal the photos and property description, but use their contact information instead of the Landlord's or rental agencies and then post on Craig's list. Why Craig's list? Well, because it is free. If Craig's list would just charge a low fee to post ads, I believe a majority, if not all of the scammers would stop and move on to some other scam. Also, we need tenants to know that no legitimate Landlord is going to ask you to wire funds. To protect our listings, we watermark all of our photos. Someone could doctor the photos to remove the watermark, but why go to that trouble when there are so many other listings without the watermark. Those are much easier pickings.

 

In most cases, the tenants get scammed and lose their money. However, we receive calls where they see the scammer listing and our listing too and they think we are the ones trying to pull a fast one. Fortunately, because of the precautionary measures that we take to protect our listings from being easy prey, we do not believe any of the properties managed by First Rate Property Management have successfully been used to scam anyone.
 
The link below highlights one type of scam:


View Externally Here

Ada County Values Improve as Distress Sales Decrease
 
In 2007 when the real estate bubble came to an end, values declined. In most areas and for most types of building types, the decline wasn't drastic. It was a slow decline. However, once the distress sales (REOs and Short Sales) began to dominate the market values declined more sharply. Different segments peaked at different times. For example, Ada County 4 plexes peaked in January of 2010 when 100% of the sales were from distress sales. On average, we ended up with 89% of all Ada County 4 Plex sales being a distress sale. This obviously affected values. In 2011 we saw that average drop to 59%. Today, we're under 20%. This, along with low inventories has improved values. I believe that we will continue to see these the number of distress sales continue to decline back to a normal amount and things should settle down.
 
 
The single family market is certainly a different market. I don't track the data for single family homes to the level of 4 plexes, but the numbers are also improving in most areas. Price point is more of an issue with single family homes. Homes over $400K are still suffering. Certainly the best buys for your dollar are those higher-end homes. It’s amazing, you look at a home for $200,000 and you likely will find a 2,000 square foot home in nice condition but still a basic home. Triple that price and you find a 4,500 square foot home sitting within a prestigious neighborhood on a view lot, and upgrades fit for a king, but on the market for many months with very little activity. In contrast, homes under $140,000 are really moving fast. From where I am sitting, things are improving.
 
 
Tony A. Drost

 

 

 

 


http://www.frpmrentals.com/
http://www.boiseinvestmentproperties.net//
First Rate Property Management, Inc
Boise, ID 



View Externally Here

Rental Market across the Nation

 

I wanted to share some of the trends seen across the nation. At renewal, most tenants are seeing an average rent increase of 3.7%. Homes vacated and then re-rented are seeing an average rent increase of about 6%. And lastly, the rental in the highest demand is a home between 1,400 to 2,000 square feet.
 
 
Over the summer, First Rate Property Management, rented most of their single family homes out before the current tenants moved out. Rent increases for single family and small multi-family rentals averaged about 12%, for those rentals that turned over tenants. We saw an average of just over 6% in rent increases on renewals. First Rate Property Management's leases have an 8% increase built in and an automatic renewal clause. So for those who chose to auto renew, their rent increased by 8%. Then we have those tenants who contact us to renew, but state that they will move out before paying 8% more. So the property investor is contacted and generally an increase is negotiated, which is less than the 8%. Lastly, we do have tenants that were already paying above market rent. A good example is where the tenants went to a month-to-month rate for a period of time and then decided to renew.
 
Some could read this and think that allowing the tenant to vacate to get a 12% increase in rents is the far better approach. In some cases, I would agree, but in most, I disagree. Let’s use an average rent of $1,000 for easy math plus in many cases an over statement of the differences. 6% difference between a renewal rate versus a new tenant is $60 per month or $720/ year. If you have a good tenant, is $720 worth the risk of the next tenant not being as good? All of the screening in the world cannot assure that they will be everything we hope they would be. Also, you will have turnover costs, advertising, utilities while vacant and lost rent. So, I think the 6% increase is higher than the national average and in most cases, the much better approach.
 
Vacancy report
Week 34 – 4.78% vacancy.
 
 
Tony A. Drost

 

 

 

 

 

http://www.frpmrentals.com/
http://www.boiseinvestmentproperties.net//
First Rate Property Management, Inc
Boise, ID



View Externally Here

Boise Idaho Low Rental Vacacy Means Higher Rents

Boise Idaho Vacancy Report Update:
As of July 25th, 2012, First Rate Property Management's vacancy is 1.95%, compared to 2.7% last year at this time. In 2010 the vacancy rate was 3.7% and in 2009 it was 5.1%. Last week’s blog is holding true, we are experiencing record low rental vacancy numbers.  Because of this, we are asking and getting higher rents in some select areas.

 
Posted by Robert Waldron for:

Tony A. Drost

 

 

 

 


http://www.frpmrentals.com/
http://www.boiseinvestmentproperties.net//
First Rate Property Management, Inc
Boise, ID



View Externally Here

Boise Idaho Seeing Record Low Vacancy Rates

Southwest Idaho Seeing Record Low Vacancy Rates:
Southwest Idaho is still seeing incredibly low vacancy rates. With the number of rentals going on the market increasing, you would think it would cause a fluctuation in the vacancy rate, but it is just the opposite. The demand for rentals is higher than ever causing the rates to be very stable. Canyon County is close to the national vacancy rate, while other markets are well below. Ada County even saw a 1% drop in vacancy rates. This high demand for rentals has slightly increased average rent prices especially in Ada County. We do expect to see a continuation of higher prices for the next few quarters as vacancy rates linger at record lows.

View the Southwest Idaho Chapter of NARPM’s full survey report.

 

Currently, First Rate Property Managements' vacancy rate is 2.6%, down .2% from last year at this time and down from 4.16% in 2010 and 5.9% in 2009.
 
 
Boise Investment Properties Update:
 
Current inventory of 4 plexes and duplexes are at the lowest in over 4 years with less than a 3 month supply in Ada County. As a result, we have seen values continue to improve. If you have been thinking of selling, now may be a good time. I currently have 4 buyers wanting to buy a 4 plex or duplex. Their criteria is all different. One is OK with older and deferred maintenance, while two are more interested in something newer. So if you want to sell, please let me know.

 

Posted by Robert Waldron for:

Tony A. Drost

 


http://www.frpmrentals.com/
http://www.boiseinvestmentproperties.net//
First Rate Property Management, Inc
Boise, ID

 



View Externally Here

BOISE REAL ESTATE BOOMING

Boise Area's Real Estate is Quickly Growing:
The web-article link below states numerous national publications are ranking the Boise area's real estate market as one of the fastest-improving in the nation and local realtors agree.
BoiseNextboomtown


Demand Causing Competition Between Investors and Homebuyers:
National figures show that the housing recovery is slow, but Boise is one of a few U.S. cities that have seen a run-up in demand and prices.  Because of this investors and homebuyers are in competition, and both say there is a shortage.
Competinginvestorshomebuyers


Idaho Ranked Amongst Friendliest States for Small Business:
Thumbtack.com, in partnership with the Ewing Marion Kauffman Foundation, has conducted a two-month survey of over 6,000 small business owners nationwide. The data shines a new light on the United States' business regulatory climate and the nation's economic health.
http://www.thumbtack.com/survey

Posted by Robert Waldron for:

Tony A. Drost
http://www.frpmrentals.com/
http://www.boiseinvestmentproperties.net//
First Rate Property Management, Inc
Boise, ID



View Externally Here

BOISE ID RENTAL VACANCY DOWN, REAL ESTATE SALES UP

Vacancy Rate and Rental Renewal Efforts:
First Rate Property Management's current vacancy rate is 2.1%, down from last years numbers at this time at 2.6%.  One reason our vacancy rate is lower is because of the lease renewal efforts.  In the 2011 January through April time frame we had 205 leases ending and renewed 97 of them, a 47% retention rate.  This year in the same time frame we had 171 leases ending and renewed 106 of them, a 62% retention rate.

The graph below shows the vacancy rates for the last three years.

 

 

 

 

 

 


Boise Rental Investment Sales Market:
The sales market also continues to improve for both single family and smaller multi-family buildings. It’s a great sign to once again see so many construction vehicles on the road pulling equipment or trailers headed to a build job. To get an idea of what's going on, I thought I would share some of my own activity for the past 8 weeks through Swope Investment properties.

 

Type
Location
Age
Price
Status
Duplex
BSU
1997
$249,900
Active
Home
Meridian
1998
$139,900
Active
Duplex
North End
1941
$168,900
Active
Home
West Boise
2002
$159,900
Active
4 Plex
Meridian
1971
 
Coming Soon
Home
Meridian
2003
 
Coming Soon
4 Plex
Boise Bench
1993
 
Coming Soon
Duplex
Boise Bench
1993
 
Coming Soon
4 Plex
North End
1905
 
Coming Soon
4 plex
Meridian
2012
$295,000
Pending
4 Plex
Meridian
2012
$295,000
Pending
4 Plex
Meridian
2005
$314,900
Pending
4 Plex
Meridian
2008
$305,000
Pending
Home
Meridian
2005
$134,900
Pending
4 Plex
Boise Bench
1992
$228,000
Pending
Duplex
West Boise
1964
$244,900
Pending
Home
Kuna
2005
$120,000
Pending
Home
Kuna
2006
$115,000
Pending
4 Plex
West Boise
2004
$274,900
Pending
4 plex
West Boise
1994
$279,900
Sold
         


Posted by Robert Waldron for:

Tony A. Drost
http://www.frpmrentals.com/
http://www.boiseinvestmentproperties.net//
First Rate Property Management, Inc
Boise, ID

 

 

 

 

 



View Externally Here

BOISE IDAHO TOP 20 FASTEST RECOVERING CITIES

Boise Recovering Fast: Below is a link to the online version of ktvb news in Boise, ID.  From higher than expected real estate sales to family-friendly environments like low crime rates and listed as one of the friendliest cities to live in, Boise is a desirable place to live and conduct business.
http://www.ktvb.com/news/local/Boise-is-climbing-the-ranks-150756575.html


First Rate Property Management Vacancy Rate:
This week our vacancy rate for the Boise/Meridian areas is 2.5%.  This year to date we are at 2.9%, up 2.7% from last year at this time.  There are still some apartments by Boise State University that continue to sit vacant due to timing with class schedules.

Posted by Robert Waldron for:

Tony A. Drost
http://www.frpmrentals.com/
http://www.boiseinvestmentproperties.net//
First Rate Property Management, Inc
Boise, ID



View Externally Here

RENTAL DEMAND IS GREAT. IS DEMAND TO BE A PROPERTY MANAGER GREATER?

Below are two posts.  The first talks about the demand to get into the property management business and the second is about the growth of existing property management companies.

Newbie Property Managers:
As the demand to rent improves, many try to capitalize and become property managers.  I’m sure that you have seen the post cards in the mail or received an email blast or two.  A majority of these new property managers are sales agents.  But we’re seeing some come from all kinds of real estate related businesses.

Competition is a good thing.  It keeps pricing and services in check.  The real concern that I have is the potential black eye, again to the Boise property management industry.  Idaho does not require property managers to be licensed and there are no standard policies, procedures, processes, or forms.  First Rate Property Management has established these through twenty years of experience and more importantly, by ongoing education.  So, I foresee more issues coming up with mishandled funds and other issues, which can deter investing in Idaho.  I don’t want to see anyone get burned or harmed, but it’s going to happen and it’s going to be the short-sighted investor, who shops purely on price and not by experience and professional knowledge.  As a reminder, First Rate Property Management does provide some questions for a property owner to use when interviewing for a property manager, which I have provided below.


Existing Property Managers Plan to Grow:
A good number of First Rate Property Management employees attended the NW Regional Conference for the National Association of Residential Managers here in Boise.  Interesting enough, not only did every breakout session have a speaker on Marketing and growing your business, but they were also the most popular.  I have the upmost respect for these speakers and they run very good companies.  However, fundamentally, I have to respectfully disagree.

One speaker stated that any new owner call or email goes to a hunt group of multiple people so that the lead gets immediate attention.  For years, First Rate Property Management’s response was, “I am sorry, we currently are not taking on new clients except for current clients or their referrals”.  Should they get past that phase, their call is returned in order of importance.  And if we have an urgent matter for a current client or tenant, that matter will be taken care of before talking to a prospective new client.

Another speaker did an outstanding job on describing their marketing plan, which is the largest portion of their budget.  They have marketing people with quotas to fill each month.  The processes shared to gain new clients and properties to manage were outstanding.

So, I thought I would share First Rate Property Management’s Marketing Plan.  “All marketing will be directed towards securing the best tenants for the rental properties in which we are entrusted to manage.  First Rate Property Management will respond to all current owner, current tenant, and perspective tenants in a timely and professional manner.” 

By making our current clients and tenants our number one priority and providing exceptional service, those current clients and tenants will become RAVING FANS and tell others about First Rate Property Management.  It shall be First Rate Property Management’s reputation and referrals that allows for future growth.

I’m sorry to disappoint, but you won’t be receiving post cards or email blasts.  You aren’t going to see us changing procedures to process new property leads over other, more important matters like our current clients and tenants.


Tony A. Drost
http://www.frpmrentals.com/
http://www.boiseinvestmentproperties.net//
First Rate Property Management, Inc
Boise, ID

 

 


View Externally Here

More Signs of Strenthening Real Estate Market

Boise Idaho Vacancy Rate:

On Wednesday our vacancy rate hit 3.3% due to the first of the month move outs.  Due to the turn-over time it takes to prep a unit for rental, the vacancy rate will drop as new tenants move in.  This is the typical pattern of high vacancy at the first of the month, lower vacancy at the end of the month.

Signs of Stronger Real Estate Market:

Below is a link to an article in the Wall Street Journal regarding signs that the housing market has hit bottom and the bidding wars between buyers.

 

Low Interest Offers:

The rates below are offered by a local firm.

CONV Investment 1 Unit *CONV 5/1 ARM 7/1 ARM US RD30 Yr. Fixed 75% LTV 3.750%
4.250% 2.875% 3.125%
 
Zero Discount Points/Fee ---.500 Points/Fee-------- Zero Fee
*JUMBO 30 Yr Fixed CONSTRUCTION/PERM
$417,001 to 1 Million 30 Yr Fixed4.875% 5.250%
.500 Discount Points/Fee 1.00% Discount Point/Fee
-----PORTFOLIO LOANS------
30 Yr Fixed 15 Yr Fixed 5/1 ARM
6.375% 5.875% 5.500%

Tony A. Drost
http://www.frpmrentals.com/
http://www.boiseinvestmentproperties.net//
First Rate Property Management, Inc
Boise, ID

 
 


View Externally Here

Builders Capitalize on Low Inventory Levels

The demand to rent is high. Interest rates remain low. Investors realize that the bottom has come and gone and values are now improving. Gee, if they had only been reading my blog, they would have known to buy months ago. And lastly, inventory levels are very low. The combination of those 4 factors have created an urgency to buy in Boise and Meridian. We've actually seen quite a bubble in the last 30 days. I hate using that word, but what better describes the huge jump in pricing that we've seen. Evidently the builders and developers saw the demand and are more than willing to help provide the supply. There are 1,200-1,600 rental units in the works to be built. Some are under construction now while others are in early planning stages. Below are some of the sites and status. This does not include the current build-out of four plexes in unfinished subdivision like Sommersby, located at Ten Mile and Franklin. That same builder is looking at building the same 4 plexes in Southeast Boise near Broadway and I-84.

APARTMENT CONSTRUCTION - 2012

Project Name # units Proposed Status
12th st. Boise, Sec. 42 Senior 53 Under Construction
Traditions Senior, Eagle N. of Ustick 170 Under Construction
N. of Overland, E. of 5 mile in Cory Barton Sub. 126 Permits/Foundations
Gramercy Villas 48 Done
Gramercy Phase 2 I think they are looking for $$$ to do this still   Early Planning Stages
Macys Down Town Boise   Demo
2 projects off Royal St. by BSU. Student Housing Quad   Concept Planning
Regency at River Valley, E.of Eagle rd., S. of Ustick 240 Plans, Site Work
Park Center 5 B I would guess fewer units will be built 278 Planning/public hearings
Park blvd and Front street, East of State Tax Commission bldg 68 Early Planning Stages
BSU Apts on Lincoln & Beacon 90 x 4 beds = 360 beds 90 Done
Crossfield Apts, S side of Ustick W. of Meridian rd. 80 Plans, Site Work
Apts by Settlers Park, W. side Meridian, N of Ustick. 36 Planning/public hearings
Franklin & 10 Mile Not real at this point (369 units)             Early Planning Stages
  1189  
Significant Remodels    
Pioneer Square 43 Almost Done
Longmont 15 Done
Lancaster 30        Should be done this year
  88  

Boise rents were starting to improve and vacancy has been excellent, so what will this substantial increase in supply do to the rental market and the investment sales market? Well, based on some of the pricing that has already come out, it looks like the new construction will strengthen values. I do think the increase in rental supply will have an effect on vacancy rates. Other contributors to vacancy is the huge move-in specials being used to fill these complexes quickly. We've seen $99 move-in specials and one month free rent. That surely will entice some of our current tenants. But what the new construction will do to rents is the real mystery? We're seeing fantastic floor plans with upgraded finishes similar to new high-end homes so rents are much higher than average. It's possible this new construction will hurt rents, but with the higher rents, we may see that void filled in providing high-end rental housing for those young professional wanting to rent instead of purchasing a home. In fact, their rents are so high, they may make the older and more simplistic rentals seem more affordable and therefore allow for modest rent increases. Only time will tell.

As promised, I have another post coming soon that talks about how the improved rental market has caused many first-time managers to enter into the business and how some companies are doing what they can to capitalize on the hot market.



View Externally Here

Apartment Investment Lagging Bigger Regions

 

Below is a link to an article published by Brad Carlson of the Idaho Business Review that discusses buyer demand and improving values in many regions. Just as I have reported in recent posts, inventory levels are low here in Boise and the demand is high. Keep your eye out for my next post that talks about how the builders and developers seem to be responding to this local demand. Also, my post after that will discuss new demand for property managers and what industry they are coming from. Then lastly, what many local property managers are doing to capitalize on this new rental market. I think these next two posts are going to be some eye openers and we'll see a lot of discussion on them. My goal has always been to advise and provide good information on these blog posts, good or bad. The posts to follow will suggest some caution in certain circumstances, as the market continues to fluctuate and respond to this increased demand to hurry up and capitalize on the low interest rates and prices. I can't wait to share.

 

 
 
Boise has yet to join the apartment-investment surge that’s driving prices up in much of the United States.
Would-be buyers are lining up in southwest Idaho and other regions to take advantage of rising occupancy rates and rents. And they can afford to pay more, thanks to record-low financing rates.
But in the Boise area, sales have been few by comparison.
Occupancy rates are good for the first time in several years, and rent concessions have gone away for the most part, said Moe Therrien of Mountain States Appraisal in Boise.
“Some of the owners are taking a breath and enjoying the better market conditions,” he said.
Low interest rates are available for apartment financing, but there aren’t many owners who must sell now said Therrien, who follows the Boise-area apartment market closely.
"There is high interest in investing in apartments in Ada County, but there hasn’t been a high volume of transactions because of the impasse between the seller’s pricing and the buyer’s investment expectations,” Therrien said.
Apartment loan interest rates offered by government-sponsored enterprises Fannie Mae and Freddie Mac are at historic lows and are lower than rates on other types of commercial investment real estate loans, said Jack Harty, of commercial mortgage brokerage Harty Capital in Boise. These apartment loan interest rates are lower because apartments have been performing better than other property types and because Fannie and Freddie financing carries a lower risk premium, he said.
Low interest rates mean buyers can afford to pay more, and apartment prices are rising to bubble-like proportions in some markets, Harty said. “That’s tending to drive prices up nationally,” he said.
“Some regions are feeling a bubble, and that’s not healthy,” he said. “There are regions where prices are hyper-inflated, and for those properties to be viable in the long term, it will require rents to escalate significantly over a long period of time. If you’re in a region with a limited capacity and can’t pay more and more, there’s going to be a crunch.”
These market dynamics can materialize anywhere, but apartment prices aren’t excessive in Boise compared to many markets, Harty said. Many apartment owners in Boise live in the area, and thus don’t sell as often, he said. Construction has been limited recently, he said.
Apartment complexes change hands frequently in southern California in part because there are so many complexes, said Thornton Oliver Keller’s Mike Keller, who worked in that region. Apartments there are trading at aggressive, low, annual rates of return – as measured by a ratio of income to price – as prices increase, he said.
Harty said high prices elsewhere could encourage more investors to look in the Boise area, but projects here are smaller and thus less attractive to national investors.
Ada County has just five apartment complexes with 300 units or more, Therrien said. Fifteen have at least 200, and 43 have at least 100, he said.
More projects of 100-plus units have been built in the last 20 years in Ada County. The larger complexes also enable the developer to build better amenities and spread their cost across more rent payers, Therrien said.
Clay Anderson of the Colliers International real estate firm recently sold the 91-unit Park River Apartments and is marketing the 117-unit Orchard Place complex. But the market has many more buyers than sellers, he said.
“There’s a reasonable portion of owners who can’t sell because their loan hasn’t matured and their prepayment penalties are too high to sell the property today,” Anderson said. “That’s definitely part of the story as to why more sellers aren’t selling.” Many of these loans were made for 10 years to owners who planned to keep the apartment complexes at least that long, he said.
Many national investment groups won’t buy in Boise because it lacks the bulk total they’re after – 2,000 units, for example, Anderson said. “You would need 10 or more sellers on the same page,” he said.
Buyers also want a higher rate of return in smaller markets, he said. In contrast, larger “core” markets give investors more confidence and have more large investment groups selling holdings in five- to seven-year cycles, he said.
Available inventory of Ada County fourplexes and Canyon County duplexes is at its lowest level in over four years, Mike Swope of Swope Investment Properties, Boise, said in a report.
Updated to clarify fourplex inventory.


View Externally Here

BOISE RENTAL & INVESTMENT MARKET HEATS UP

Ada County and Canyon County Vacancies:
Below are the results of the first quarter rental and vacancy survey conducted by the SW Idaho Chapter of the National Association of Residential Property Managers. The Ada County results are primarily Boise and Meridian, but include smaller cities such as Kuna, Eagle, and Star. They are getting more participation with Canyon County Property Managers and now can post some meaningful data. 
Below are two pie graphs that show that the few rentals that are vacant, 69% of them are multi-family. This data is validated as First Rate Property Management's vacancy rate on single family homes is only 3 tenths of one percent, where multi-family is 2.07%. These statistics could mislead someone into thinking that multi-family is a poorer investment due to higher vacancy. That simply is not the case. The demand for single family home rentals is high and the inventory levels are much smaller and therefore they currently are renting much quicker and we are seeing rents increase. However, investors are doing their best to snatch up homes to rent, so that inventory is growing.

 

 

 

 

 

 

 


I think it is important to note that financial performance on most of these single family rentals is not as good as most multi-family. Some investors like the small initial investment required and the ease of managing a single tenant. Also, although rental income in comparison to initial investment isn't as good, investors are looking at the real money to be made in the appreciation.

 

 

 


Historical Vacancy Rate:
The line graph below shows the historical vacancy rate from 2007 to current. It is also important to note that these numbers include data from both Canyon and Ada County and the vacancy rate in Canyon County is greater than that of Ada County and therefore skews the data slightly. First Rate Property Management's current vacancy rate is 2.4%, which is just below the average shown on the below chart.

 

 


Where should rents be?

 

Below are two bar graphs that show rents for multi-family rentals and single family rentals for both Ada and Canyon Counties.
 

 

 
 


The type of average used is called the median, which lines up numbers from the least to the greatest and the number in the middle is the median average. If you have an average 3 bedroom, 2 bath home, with a 2 car garage in an average neighborhood and is in average condition, then I think rent should probably be $850 as indicated on the graph. However, if it is a little larger, nicer, and in a better area, rents are higher. If it is older, not in as good of condition, and in a poorer area, rents may be lower. Hopefully that kind of explains how to read these numbers, as they are not the gospel. Now that I have somewhat discredited the averages, lets compare where First Rate Property Management compares to results of the survey. Looks like I owe the First Rate team a steak dinner!


Single Family Homes     FRPM Rents     Survey Average
2 bedroom                       $711.25             $629
3 bedroom                       $952                  $854
4 bedroom                       $1,209               $1,088

 

Multi-Family Units        FRPM Rents     Survey Average

1 bedroom                      $503                  $445

 

2 bedroom                      $621                  $578

 

3 bedroom                      $737                  $698

Tony A. Drost
http://www.frpmrentals.com/
http://www.boiseinvestmentproperties.net//
First Rate Property Management, Inc
Boise, ID

 


View Externally Here

BOISE IDAHO LEADING REAL ESTATE RECOVERY

Boise Home Prices Getting Stronger:
As the article below highlights, larger cities with higher inventory levels are seeing further price reductions, small markets like Boise, ID are enjoying price increases due to dwindling inventories.

 

U.S. Home Prices Fall, While Boise Surges
By Front Street Brokers
The Standard & Poor's/Case-Shiller home price index for the month of January recently showed home prices falling in most major metro cities. Down 3.8% year over year in their 20 City Index, and down almost 1% in January from the previous month.

As with any bad news this got a lot of press, in part because housing news in the first quarter of 2012 has been fairly positive and encouraging.

So what caused the price drop? With home sales increasing and inventory levels dropping across the US, why would we see further decline? I spent some time investigating the causes of these recent declines in home prices and this is what I discovered:

First, not all cities are down. Many larger metro cities did see some recent declines in home prices, but other, smaller metro areas like Boise, Idaho have seen a recent upturn in home prices. Boise's February home prices were up 11% higher than January's. One reason smaller markets are rebounding quicker is due to low levels of inventory of homes on the market in comparison to the numbers larger metro markets are showing.

Another reason many cities are experiencing a new dip in home prices is due to the price range in which people are buying. A lot of the recent increases in home sales have been in lower priced homes, especially with more investors trying to buy properties priced at the bottom of the market. Whereas typical home buyers tend to purchase in the summer months, investors tend to be very active in winter and therefore, home price statistics often dip in Jan-April. As market home prices are determined by an average of all homes sold in a month, this concentration of activity in the lower price ranges skews the median homes price stats down and gives the impression the market is getting worse.

Boise appears to be ahead of the curve on its recovery, primarily because it has burned through the majority of its foreclosure inventory in the lower price ranges. Other markets are not so lucky and will likely see further declines in 2012, while the bulk of buyers focuses on homes priced at the bottom of the market.
2012 Boise Housing Forecast - Video
 
 
                       2012 Boise Market Forecast: 7m41s

 

 

Boise Area Vacancy Rate:

 

Currently our vacancy rate is 4.4%.  At least 10 units are rented and ready to move in this week, so next weeks’ numbers should drop significantly.  We still have some BSU properties sitting as leases really should follow the school year to avoid vacancies while school is in session.  To date our average overall vacancy rate is 2.8%.  The weather is improving and call volume is continuing to grow.

Tony A. Drost
http://www.frpmrentals.com/
http://www.boiseinvestmentproperties.net//
First Rate Property Management, Inc
Boise, ID
 


View Externally Here

Boise Housing Market Heating Up Despite Higher Construction Costs

Boise Housing Market HOT!:

The below article in the online Idaho Statesman claims that home sales are heating up in Ada County right now.  Most of these properties are receiving multiple offers higher than the asking price.
ada-housing-market-rallies


Construction Material Costs Rise:

This article states that construction materials are starting to climb higher due to higher demand, curtailed production and shipping costs.  Others site inflationary factors are the cause.
construction-costs-rise

 

First Rate Property Management Vacancy Rate:
Spring has sprung!  Current vacancy rate for the first week of March is 2.9%.  We have some one bedroom apartments near Boise State University that are not moving fast, otherwise our vacancy would be closer to 1.5%.  Inquires are coming in faster and faster as the weather gets warmer.  A large percentage of these inquires are still asking for May move-in dates. 
Robert Waldron
SPD
First Rate Property Management


View Externally Here

Boise Rental and Sales Market Update

Small Multi-Family:
Currently there are only 14 active four-plex listings in all of Ada County.  This is the lowest it's been in four years and equates to about a 2.5 month supply.  In recent months, we've had new construction hit the market, and at first, they were slow to go, but now with inventory as low as it is, their selling quickly at prices that we haven't seen for awhile.  With inventory low, great interest rates, and an increase in demand from those investors who now can see that we hit the bottom and values are recovering, I think we are going to see a shot in values.  With this increase in values, we're seeing cap rates taking a bit of dip, so instead of mid 6's and maybe 7%, we're seeing more closely to 6%.  With this shortage and increase in values, I will be listing three four-plexes, priced between $250,000 to $275,000 and a duplex at $149,900.

Single Family Rentals:
As I have explained in recent weeks, I've really struggled securing any for my investors.  I had explained that I kept getting in bidding wars and losing out to higher offers.  This week, I realized that price point had a lot to do with it as well.  Anything under $150,000 seems to be where the demand is.  Obviously, the lower the price, the more who could afford to go after it.

Rental Vacancies:
Spring must be close, because we saw a significant increase in notices to vacate at the end of March.  Current vacancy rate for the first week of March is 3.8%.  Overall, we had 1.8% of our inventory give notice to vacate.  The breakdown as to the reason to vacate is:  32% needing something bigger, 25% due to purchasing a home, 25% due to roommate issues/bailing out, and 18% due to moving out of town or state.

Tony A. Drost
http://www.frpmrentals.com/
http://www.boiseinvestmentproperties.net//
First Rate Property Management, Inc
Boise, ID

 

 

 

 

 

 



View Externally Here

Real Estate Demand Improves in Boise ID

Boise Real Estate Demand Improves:
From where I’m standing, the demand to purchase Boise real estate is booming.  The number of bank owned properties (foreclosures) and short sales are declining, but most of my clients have been going after these because of the low listing prices.  I have written dozens of offers within the last month and in each case, multiple offers had been received and the seller has requested highest and best offer from each buyer.  In each case, my clients were outbid.  The market is changing and it reminds me of when the market was changing after the bubble burst.  Back then, I had sellers who were having a hard time adjusting to the declining values and they did drop list price, but they followed the market down.  If they would have been pro-active and dropped the price earlier, they most likely would have sold for thousands more than what they ended up with.  Today, it’s the reverse.  The market is improving and to make a good purchase and take advantage of the current low interest rates, I think the buyers need to be pro-active and when we get in these bidding wars, not bid to steal the property, but bid to get a good price.

With that said, I have clients wanting to buy.  There are very few multi-family properties listed.  So if you've been holding off, now may be a great time to list.


First Rate Property Management Vacancy:
Our vacancy rate for the last week of February 2012 is 2.4%.  The weather is typical for this time of year, rain/snow/wind/chill with its usual effects on potential renters, yet inquires have picked up.

The graph below depicts gathered vacancy rate data to date, click to enlarge.

 








Tony A. Drost
http://www.frpmrentals.com/
http://www.boiseinvestmentproperties.net//
First Rate Property Management, Inc
Boise, ID


 

 



View Externally Here

Social Media is about People/Boise Rental Vacancy Rate Update
Social Media is About People:
First Rate Property Management participates in some social media.  By no means do we use social media as much as the marketing experts would like us to.  From what little social media we have done, we have had very little results.  However, we continue to attend these training seminars and understand that it certainly appears to be where many people are headed, especially the younger generations.  At a recent meeting, a company by the name of Social Eyes showed the below video.  I found it to be very powerful and I thought I would share with everyone.
 
 

First Rate Property Management Vacancy:

 

Our vacancy rate for the second week of February 2012 is 2.7%.  The inquiry rate on our available rentals is picking up.  However, our application rate has not as a majority seems to be looking for something down the road a month or two.  So the inquiry to lease ratio has dropped.  We review these types of rental metrics on a weekly basis to identify trends and make adjustments.  In most cases, we are recommending a one-time rent decrease or perhaps a small move-in incentive to increase the inquiries.

 

 
The graph below depicts gathered vacancy rate data to date, click to enlarge.
 

 

 

 

 

 

 

 

 
 
 
 
Comments to the Blog:
I always thought it was odd that instead of submitting comments within the blog that everyone emailed me directly.  Well, my apologies to all of you who had been posting your own comments.  I came across them last week in the admin panel and will try to get them to post.  Great stuff and I apologize that I didn’t see them and they didn’t post so all the readers could as well.  I hope to have that fixed soon.
 
Tony A. Drost
http://www.frpmrentals.com/
http://www.boiseinvestmentproperties.net//
First Rate Property Management, Inc
Boise, ID
 



 


View Externally Here

Demand High for Single Family Rentals in Boise ID
 
Single Family Rentals:
As you know, I sell investment properties through Swope Investment Properties. I sell mostly multi-family properties because my clients' realize that the financial analysis is crucial. For the most part, investors purchasing single family homes don't think about the financial analysis and tend to seek out home sales specialists. Because single family home rentals are now in demand from both renters and investors, the market is heating up. And due to articles like,  6 mistakes-landlords make published in the WSJ, investors are understanding that they probably should identify someone who specializes in income properties and should have a full understanding of the potential rents and expenses and what kind of performance they can expect. So I am now working with many investors on purchasing homes. What I wanted the readers to know is that the market for homes under $150,000 is FAST. Just yesterday a great home listed for $110,000. By the time my buyers responded and approved making an offer, there were already 4 offers in and over list price. So the bidding war was on. For the most part, financial performance is not as good as something like a four plex, but I think these investors are looking at the low cost of entry (smaller down), great interest rates, great potential for appreciation due to the low prices, and for the most part, single family rentals are less trouble with higher quality tenants.
 
Duplexes, Triplexes, Four-plexes off the Bottom:
The following link takes you to a great post from Hennessey Appraisals where they provide some data showing values hit bottom and are correcting. I like the approach by comparing what a specific property sold for during the height of the market and then what it sold for years later in a declining market. On face value, some may state that this data doesn't support what I've been posting, so let me explain. Swope Investment Properties tracks duplex and four-plex sales in Ada and Canyon Counties. What we've been looking at is: Inventory (# of listings), pending deals, number of solds, calculated absorption levels, and percentage of distress sales (foreclosures and REOs). Hennessey Appraisals acknowledged that most of their second data points were from distress sales. From our data, I can tell you that we have gone from 97% of the solds being distress sales in June of 2010, to 34% in January of 2012. Our absorption rate has gone from a high of 52 months in August of 2008 to just 4 month's last month.
 
I've been stating that values are increasing. In August of 2010 I lost a deal because a four plex appraised for $190,000. In November of 2011, this same 4 plex appraised and sold for $225,000. What was the difference? With the low inventory levels, turn key properties are increasing in value. Older properties in poor condition seem to be a bit slower.
 
Click here to read the report from Hennessey Appraisals.
 
 
Refinancing and Appraisals:
Last month I posted some good news about refinancing becoming lot easier and many of my clients, to include myself have successfully refinanced at a much better rate. However, a good number of my clients were not able to due to a poor appraisal, none of which were from Hennessey Appraisals (just in case their reading too). Before all of the changes in the lending world, appraisers that specialized in income properties were used. Today, they go into a pool and I think the lowest bidder is selected. So the issues I am seeing is that distress sales with absolutely no adjustments are being used as comparables. I have represented a number of clients who have purchased distress sales and I would say the average cost to get them in rent ready condition has been about $22,000. Additionally, some are simply using comparables. They find a building with similar floor plans, similar finishes and pretty much compare cost/sq ft. By looking at the photos, anyone would say that the buildings were very comparable. However, if that appraiser would have dug in and calculated Net Operating Income, they would have found that one building had about $200 per month in additional expenses. Based on current cap rates and other metrics that I calculate per sale, that should have caused the other property to be worth about $34,000 more. That kind of discrepancy is unacceptable.
 
Tony A Drost

http://www.frpmrentals.com/
http://www.boiseinvestmentproperties.net//
First Rate Property Management, Inc
Boise, ID
 
 
 

 
 
 


View Externally Here

Vacancy Report & Rental Analysis in Boise Idaho

First Rate Property Management Vacancy:
Our vacancy rate for the first week of February 2012 is 3.5%.  This is high compared to 2.9% last year.  We recently acquired 15 new, empty units in the second week of January, that have skewed our data.  Without these units our adjusted vacancy rate would be 2.4%, more in line with last years numbers.

 

The graph below depicts gathered data from 2009 to date.

 

 

 
 
Click image to enlarge

 

 


 
 
Strong Rental Market on TODAY Show:
Below is a link to a video from the TODAY show discussing the rental market. I wanted you to see it, because this is what tenants see and hear. I'm not sure if this is the same Landlord expert the TODAY show has had over the past few years, but I have disagreed with most of what they have reported. A lot of what they discuss in rentals seemed to be geared towards big city apartment living. In New York City where the smallest apartment costs thousands of dollars a month, I can see negotiating a kitchen remodel, but I can tell you that this simply is not the case in most of America. Regardless, the significant message is that the low vacancy and increase in the demand to rent is being noticed across the country. As I stated before, I expect 2012 to be a good year with some increase in rents.

 

 

 

 

 

 

 


Preventative Maintenance in Boise, Meridian ID Rentals:
As you know we have started our preventative maintenance inspections in our rentals.  During these inspections we have found some alarming situations.  One of which was a water heater that was on the verge of exploding.  Imagine having a ticking time bomb in one of your units or even your own home.  Luckily it was caught and replaced before any damage was done.  We are finding mostly plumbing issues such as leaking faucets, tub spouts, garbage disposals, and leaks under sinks. The majority of the tenants are completely unaware of these issues.  This confirms the need to have these inspections completed and repairs made to prevent further damage in your investment properties.

 

 

 

Corroded Water Heater found during Preventative Maintenance Inspections


Renters Insurance:
Over the years, we have had owners ask, "Does First Rate Property Management require tenants to have renter's insurance". The answer has been "No". The main reason is that we have found that most tenants look at that as another expense that is not needed and therefore, it is our belief that if we did require renter's insurance, tenants may choose to rent elsewhere. Also, we know of a few Boise property managers that do require renter's insurance and they state that tenants get the coverage and then shortly after moving in, they cancel it, without the property manager's knowledge. Additionally, some of these renter's insurance policies may only cover the tenant’s possessions and not the owner's damaged property. So when damages do occur, there is no coverage.
Because First Rate Property Management does have clients wanting to make it a requirement for tenants to have some form of Renter's Legal Liability coverage, we have been investigating a Renter's Legal Liability Policy, which allows us to add tenants who voluntarily enroll for a monthly fee of $14.95/month, which is paid for by the tenant. This is additional coverage at no cost to our owners, but certainly to their benefit. In fact, we are told that if you told your insurance agent that all of your tenants were enrolled in the program, you would likely be eligible for a discount on your own insurance. We encourage all of our owners to pose that question and let us know.
If after reading this, you find yourself thinking that you may want to make this mandatory for your property, we certainly can do it. But do remember that some tenants may choose to rent elsewhere because of the additional requirement and expense. It is my belief that such requirements, like renter's legal liability, will become more prevalent within the rental market. Below are some FAQ's. Your comments are always welcome.

What is Renters Legal Liability™?
Renters Legal Liability™ is a community based property damage liability program. The Renters Legal Liability program enables residents to acquire $100,000 of property damage liability protection. Renters Legal Liability is an innovative risk management tool designed to fulfill tenants’ contractual obligations specified in their lease agreement. As an FYI, First Rate Property Management's lease does obligate the tenant to cover any damages caused by their neglect as well as to indemnify us as the property manager and you as the property owner. However, in large losses, it is very uncommon to actually collect from the tenant. Having this policy, would enable us to actually collect.

What does it cover?
Renters Legal Liability™ provides protection for financial responsibility if a tenant originates and causes damages/losses to your rental property. The program covers five ‘perils’ for accidental resident ‐ generated loss. They are: fire, smoke, explosion, water discharge, and resident induced sewer backup . These five perils account for over 95% of resident ‐ generated losses. Coverage for a single occurrence is up to $100,000. Under the program, damages are paid in priority – to the property owner for damage to the building, to non ‐ responsible, impacted residents up to $10,000 for their damage/loss, if monies are available, and then to the resident responsible, up to $10,000 if other damages do not exceed the per ‐ occurrence limit.

How is ‘traditional renters insurance’ different?
The insurance commonly referred to as an HO ‐ 4 policy, or renter’s insurance, is coverage purchased by the resident, in his/her name. The policy typically covers the resident’s personal belongings, and liability coverage. HO ‐ 4 policies can be customized to cover various perils, or ‘risks’ and broadened to include damages that were not caused by the resident. For each level of coverage needed, insurers set rates. Total premiums depend upon coverage selections and the loss history of the resident.

Who is insured by the program?
First Rate Property Management is the insured with administrative control to add tenants who choose to enroll.

Is First Rate Property Management selling insurance?
No. First Rate Property Management is allowing tenants to participate under our community ‐ based program.

Why would a tenant want to have Renters Legal Liability™?
Residents who enroll have easily satisfied the lease requirement to indemnify the property owner and manager against property damage or loss that they are responsible for causing within the rental property, subject to a limit of $100,000. There is no additional application form to complete, nor quotes to obtain. Once enrolled, the resident can pay the small monthly cost with rent. No further notices are sent. There is no need to worry about keeping the program coverage in place.

 

 

 



View Externally Here

Embezzlement, Boise Idaho Vacancy Rates & Our Readers

When it Comes to Embezzlement, Property Management is Risky Business:

 

Attached is an article that ran in the Idaho Business Review earlier this week. For the most part, I agree with much of what is said. Is there an epidemic of embezzling going on; I don't think so. Is there a lot of "rob Peter to pay Paul"; I think so. I think licensing of property managers in Idaho would help, but I know licensing won't completely solve this issue. Most states do require licensing of their property managers and although theft of other people’s money still happens, it’s just happens a lot less frequent in those states that require licensing.

 

Why your money is safe with First Rate Property Management…
1. First Rate Property Management is one of three Certified Residential Management Companies in all of Idaho. The certification required policy and procedures, as well as an audit demonstrating how we assure our owner (Client) and tenant (Customer) funds are reconciled.
2. We utilize property management software that uses a double entry system.
   a. Unlike Quick books, we can't just go in and edit bills, checks, and ledgers to make them do what we want. There is no delete or edit. We either do it right the first time, or have to go in and enter an offsetting charge. The system is not very flexible, which keeps us from doing some things that we'd like, but evidently it’s protecting us from ourselves.
   b. Our system has security levels that deny employee access to areas outside of their department or to the general ledgers.
   c. Monthly we perform a 3-way reconciliation of funds and balance to the penny.

   d. Annually, we hire a 3rd party person to perform a full audit of our books.
   e. Vendor invoices are verified, before a payables clerk processes them and our bookkeeper performs the final check before signing the checks.
   f. All bank reconciliations are done outside of our accounting department.
3. We require owner reserves so that we have the funds to pay bills between the time rents are received and proceeds are released to the owner.
4. First Rate Property Management's books are kept on a complete different set of books and software.

http://idahobusinessreview.com/2012/01/09/when-it-comes-to-embezzlement-property-management-is-a-risky-business/

Vacancy is down; NARPM 2011 rent and vacancy report:
Below are two graphs. One shows vacancies from 2006 to 2011 and the other shows average rents for that same time period. Although vacancies are way down, rents have remained relatively flat. One would expect that the rent amounts would be the inverse to the vacancy graph, meaning as vacancy decreases sharply, so would rent. Why is this? For one, I think that after almost a decade of the market being a tenant market, property managers have been slow or cautious to adjust. Additionally, with today's technology, researching and comparing rents can be done within minutes. As a management company, we subscribe to a number of services that go out and find these on-line listings, create an average and some upper and lower control limits so that we can maximize our rents, yet reduce our chances of the property sitting for a month to get that absolute highest rent. Tenants basically do the same thing, but they look at the lowest rent and don't necessarily make adjustments for improvements and other factors that may make one property higher rent than another. I guess you could call it "PRICELINE" for rentals, but just not quite a formal. It’s too bad Boise property managers don't use the MLS as it certainly could help other property managers in analyzing comps and determine a more fair market rent to ask. And lastly, I believe that the supply of rentals has been slowly increasing to keep up with that demand, therefore not allowing that sharp increase in rents one would expect with such low vacancies. Nonetheless, I do however still believe that we will see slight rent increases in 2012.
 

 
 
 
Click to enlarge images
 
 
 
 
 
 
 
 
 
 
 
 
 
Our Reader Base:
Initially, our blog was just an easy way to convert First Rate Property Management's monthly newsletters into an electronic format. Over the years, our blog has become a resource to many. Our current subscribers consist of: mortgage lenders, insurance agents, would-be investors in the area, other property managers within the Boise area and as far away as New Jersey, local and out-of-state Realtors, vendors, friends of clients, and even a couple tenants have subscribed to the feeds. Although no one ever posts comments within the blog, the FRPM staff and I receive emails all the time regarding our posts, the feedback and recommendations are always great. So I encourage you to continue to forward these blog entries to others. If they are looking to invest, these certainly can help them understand the market or maybe just a topic here and there will be of benefit.
 
Tony A Drost
http://www.frpmrentals.com/
http://www.boiseinvestmentproperties.net//
First Rate Property Management, Inc
Boise, ID
 




 
 


View Externally Here

Vacancies and Evictions in Boise Idaho

First Rate Property Management Vacancy:
Our vacancy rate for the first week of 2012 is 1.2%, compared to 2.4% last year at this time. The average vacancy rate in 2011 was 2.7%, compared to 3.7% in 2010.

                                                 Click image to enlarge

 

 

 

 

 

 

 

 

 

 


Evictions:
First Rate Property Management recently took over a new property. Within 30-days, we had to file 3 evictions. Including these 3 evictions, FRPM only evicted 8 tenants all year long, which equates to less than one tenth of one percent. In comparison, that is very good. So I wanted to explain a bit why I believe our eviction rate is so low and why we had 3 in one month for a new property.

Tenant screening:
Tenant screening is imperative, by examining past payment history, credit, criminal background, eviction history, income, employment verification, and so on, a landlord can quickly screen out those who have a higher chance of not paying. Collecting an application and reading what is entered is not adequate. Bad tenants lie, they have friends pose as their current landlord or employer. They fudge their income. They do what they can to beat the system. That is why we use a 3rd party screening company that digs in and verifies everything.

It is not always the case, but more often than not, those property managers who boast low vacancy rates and higher than market rents, are probably not screening as well as they should. Perhaps the lower screening criterion has worked out and appears to be worth the risk. I've just done this too long and seen too many slip through the cracks to be willing to take that risk for our clients or us as the property manager.

Procedures:
Immediately after tenant becomes past due, First Rate Property Management is texting, emailing, and mailing Past Due Rent Notices. For those who fail to communicate, we are delivering 3-Day Notices to Vacate at the property. After 3 business days, we go to the property and inspect. If payment hasn't been received, we then contact the owner and discuss options. Regardless of the decisions made, FRPM is aggressive on the collection of rent. I am confident that many tenants who were short on money were prepared to short the Landlord, but because we constantly hounded them at home and work, as well as on their computer and phone, they decided to pay us first, just to get us off their back.

So why the three evictions on the new property? I believe screening is one reason. The other was inconsistent procedures from previous management. Many landlords are short sighted and believe that working with everyone makes for a happy relationship. OK, I can see merit in this, but with limits, structure, and consistency. So basically, with any new property and its tenants, we have to train them in how to be good tenants. Pay your rent when it is due and if not, we are going to harass you until you do or we evict you. If you fail to communicate and ignore our requests, you will surely be given an eviction notice and might as well leave, because the cost of eviction are high enough that it doesn't make sense to stop the process once it is started. Let me tell you, after evicting tenants in November, the remaining tenants did a lot better job paying rent in December. I suspect that rent collection will improve as time goes by.

Tony A Drost
http://www.frpmrentals.com/
http://www.boiseinvestmentproperties.net//
First Rate Property Management, Inc
Boise, ID

 

 

 

 

 

 

 

 

 

 

 

 

 

 



View Externally Here

Renting in Boise, Idaho

Happy Holidays To all our valued clients and customers Happy Hoildays and a wonderful upcoming New Year from the staff at First Rate Property Management!

Our Holiday schedule is as follows:
We will be closed the weekends of the 24th - 25th and the 31st – 1st of January.  We will be open Monday through Friday with normal business hours.

More Multi-Family Properties Being Built

 

Last week I attended a Planning and Zoning Committee concerning the building of more four plexes in Meridian.  In my discussion with all of those involved in this project, I learned of many more four plexes and apartments to come in the near future.  And, I was surprised to learn of some apartments that were built in Meridian with more to come.  So the word is definitely out that there is a demand to rent.  Some of the benefits is that these builders are finishing incomplete complexes.  That helps with association dues and really improves the overall appearance of the complexes.  It’s also good in that these new buildings are providing some inventory to meet the demand to buy turn-key properties.  These newer buildings are also selling for more, which should help improve values of residential income properties.
The potential downside is that the new construction increases the supply of rentals, which may soften the expected rent increases and reduced vacancies that we were predicting in 2012.  Also, if priced similarly, or not much higher, tenants may prefer to rent something newer.  Granite countertops, tile flooring, new appliances, and tile back splashes provide a lot of appeal, and if the rent isn't much more, I suspect many renters will be willing to make the move.

Is Renting Becoming more Glamorous?

 

Below is a recent online newsletter from the National Apartments Association sent to me by several clients.  There are a lot of interesting articles.  One that I found interesting, was Recent Study Shows Renting Is Getting Glamorous where the Center for Behavioral Economics at the Federal Reserve of Boston showed that fewer young people think home ownership is preferable to renting.  The study showed that a cultural shift is the reason young professionals are embracing renting in a destination-living community with multiple amenities.  First Rate Property Management has some tenants with high income and great credit choosing to rent.  However, we are still seeing many leaving the rental market to buy homes.  My guess is that this is more prevalent in areas where housing is much more expensive than what we see here in the Boise area.  However, this trend very well may increase in years to come.

Tony A Drost
http://www.frpmrentals.com/ First Rate Property Management, Inc
Boise, ID
 
 


View Externally Here

Freddie and Fannie Make Refinancing a Little Easier

Freddie and Fannie RefinancingMany of First Rate Property Management’s clients have seen the interest rates drop, but unable to refinance due to the decrease in value causing the loan-to-value (LTV) to be too great.  Freddie and Fannie have made it a bit simpler for some of us.  The first thing to do is call the company you make your payments to and ask if the loan is or since been purchased by Freddie or Fannie.  If so, you may be eligible to refinance based on some of the below:

·         125 percent LTV ceiling for fixed-rate mortgages
·         Loan must have been purchased by Fannie/Freddie on or before May 31st 2009
·         45% Debt-to Income max (no exceptions)
·         Requires an automated approval
Current rates ranging from 4% to 4.875%

 

Additionally, I’m told that Fannie and Freddie are updating their underwriting systems and creating an automated value model that is due out around March of 2012.  Although we don’t know if the rates will be as advantageous as they are currently, the new system should make it a bit easier with fewer fees to refinance.  Below are some of the highlights:

 

·         Removing the current 125 percent LTV ceiling for fixed-rate mortgages
·         Their new automated value model eliminates the need for an appraisal
·         Extending the end date for Home Affordable Refinance Program until Dec. 31, 2013 for loans originally sold to FNMA/FHLMC on or before May 31, 2009.  The date by which the loan had to be owned by FNMA/FHLMC has NOT been extended.
·         Eliminating certain risk-based fees for borrowers who refinance into shorter-term mortgages and lowering fees for other borrowers
·         Need an automated approval

 

For more information, I have attached the below link:

 


If you have questions or would like a referral to a lender who can help, please feel free to let me know.

Tony A Drost
http://www.frpmrentals.com/ First Rate Property Management, Inc
Boise, ID
 


View Externally Here

Boise Area Vacancy Rate

Boise Area Rental Vacancy Rate:
Currently, First Rate Property Management Inc. has an historic low of 1.1% overall vacancy rate.  Compared to last year at this time of 2.7% and in 2009 at 7.3%.  This low vacancy rate is mainly the result of policy as explained in the last blog.  The weather is milder now then the last two years which may also be contributing to the overall vacancy numbers.

Real Estate Investment Considerations:
The following link was in the Wall Street Journal on the 12-13th of November, 2011 offering a realistic view point of considerations most first-time investors do not think about.

http://online.wsj.com/article/

Tony A Drost
http://www.frpmrentals.com/

 

First Rate Property Management, Inc
Boise, ID

 

 

 

 

 

 



View Externally Here

Boise, Idaho Rental Vacancy Rates

Boise Area Rental Vacancy Rate: Currently, First Rate Property Management Inc. has a 2.8% overall vacancy rate.  Compared to last year at this time of 3.9% and in 2009 at 6.5%.  This low vacancy rate is the result of policy.  First Rate Property Management does not have leases expire in the months of November, December, or January.  The only reason we have notices in these months is because the tenants lease had expired before those months and wanted to remain month-to-month.  When faced with a situation like that, we have to decide:  Do we require the tenant to extend through the winter months and if the tenant refuses do we give them notice to vacate so that they can be replaced with a long-term tenant. Or, do we allow them to revert to month-to-month at a bit higher rent and hope they don’t choose to vacate in the winter months.  The concern always is that when you force a tenant renew or vacate and they choose to vacate, the owner will have lost rent, advertising costs, and turnover costs.  Which is better?  So by default, we allow the tenant to go month-to-month unless the owner requests us to force the long-term lease renewal.

Wealthy Investors Target Large Multi-Family Complexes:
Below is a link to an article published on the online Idaho Business Review, stating that deep-pocket investors are seeking large apartment complexes over single family homes, duplexes and four-plexes.  I don’t necessarily agree.  The fact is, that with the decline in values of single family homes, duplexes, and four-plexes, they are performing very well.  In many cases a four-plex will perform better than a large apartment complex.  It simply depends on price and effective rents.  Plus, a four-plex down the road is most likely going to be easier to sell.  What I have seen is that investors have gone to apartment complexes because there are so few four-plexes available right now.  There are definitely many buyers out there wanting to take advantage of the low prices and interest rates and in most cases, the return is greater than anywhere else they can put the money.  With that said, I have seen more investors purchasing rental properties using their IRA funds in recent months.


http://idahobusinessreview.com/deeppocketinvestors


Tony A Drost
http://www.frpmrentals.com/

 

First Rate Property Management, Inc
Boise, ID

 

 

 



View Externally Here

Boise Idaho Vacancy Rates

Boise Area Rental Vacancy Rate:
Currently, First Rate Property Management Inc. has a 2.9% overall vacancy rate.  Below is a graph showing the vacancy rate survey results from the SW Idaho Chapter of the National Association of Residential Property Managers.  This graph shows average rents by type as well as average vacancy rates.  It is important to note that the 3rd quarter survey results are as of September.  It was near the end of September that all Boise area property managers saw a dramatic change in the market conditions.  In October we saw rents drop and incentives coming into play.  I believe that most companies, like First Rate Property Management, are being pro-active as we know that come winter, it becomes much more difficult to rent properties, specifically single family homes.  Multi-family units such as plexes and apartments are more difficult, but certainly those with 3 bedrooms and more are the hardest as those tend to appeal to families and most families do their moving during the summer break from school.

Click to enlarge image

 

 

Boise, Idaho Economic Indicator - Micron's R & D Expansion:
In the Oct 14 Idaho Business Review, Micron is planning to complete, in early 2012, a $50,000 R&D expansion in their Boise Fab 4 plant.  Micron said that this will result in "hundreds of jobs."  This is good news because of the job growth, the jobs will tend to be higher paying since they are R&D jobs, they are R&D jobs which probably won't be eventually outsourced as manufacturing jobs could be, and it supports Micron's continued commitment to Boise.

 

Sharp Rise in Foreclosures:
This msnbc article mentions a new spike in home foreclosures.

Rental Market Benefiting from Foreclosures:
The prweb and upi articles below both address how little negative credit has affected home-owners looking for rental property to live in.  This is proving to be good for the rental market.
 
 
 
 


View Externally Here

Mortgage Intrest Rates & Home Prices Fall

Mortgage Interest Rates & Home Prices Fall: In the below referenced on-line Wall Street Journal article, the average 30-year mortgage dropped to 3.94%, while home prices continue to fall, according to Freddie Mac’s weekly rate survey recently released.  According to this article home buyers on the fence are waiting for prices to stabilize and not worrying so much about low interest rates.
Nationally, this may be correct.  Also, I believe the data is skewed, because many of the homes being sold were foreclosed upon or are a short sale.  These properties are selling for much less and pulling the averages down.  It is very common for these distress-sold properties to be in very poor condition, which lowers the sales price.  Also, another factor in skewing the averages are the re-sale of the large homes.  When you sell a home that was once worth $1,000,000 for $425,000, that difference has a huge impact on the average calculations, especially when the average Boise home price is $140,000. Rates are outstanding, prices are outstanding, and I think it is a good time to buy.

 

 

Tony A Drost
http://www.frpmrentals.com/

 

First Rate Property Management, Inc
Boise, ID

 

 

 



View Externally Here

Boise, Idaho Rental Vacancy Rate & Investments

Boise Rental Vacancy Rate
Below is a graph that shows First Rate Property Management’s vacancy numbers, which include rentals in the Boise, Meridian, and Eagle areas. These numbers include all properties within our portfolio, which include single family homes, duplexes, four plexes, condos, and small apartment buildings. What I found interesting is that in 2010 vacancy spiked in October and this year that spike occurred in September. Based on the chatter I’m seeing on the property manager forums and the calls I’m getting, all local property managers are scratching their head wondering why the sudden change in the market. If you go back to my posts throughout the summer, things were moving along real well. Today, the number of inquiries has drastically slowed down. I’m not sure why, but I can only assume that most renters settled in prior to the start of the new school year.
Click image to enlarge

 

 

 

 

 


Boise Rental Vacancy By Building Type
In the spring, we saw a tremendous increase in demand for single-family homes. Today, these units have the highest vacancy rate. Currently we have a 6.4% vacancy on all of our single-family homes which is over double our average vacancy of 2.9%. Again, I believe this is directly related to the fact that the demand for these homes are from families with children and most did their moving in the summer. Our two bedroom properties are doing the best with a low vacancy of 1.85%. Our Studios and one bedroom apartments are at 5.33%.

Boise Rental Vacancy By Area
As normal, the Boise Bench vacancies continue to be much higher than the other areas. We have reduced our multi-family inventory in Eagle so those numbers are looking good. Our homes in Eagle are doing well as they have always done well in Eagle. As I have stated before, multi-family buildings in Eagle don’t perform as well, simply because Eagle is more of a bedroom community with very little employment and no upper level schooling. Eagle rental homes are in good demand, simply because the Eagle area is a desirable place to live. However, we for the first time in a long time, we have a spike in East Boise. The data is skewed, because we have some single family homes in that area and as explained above, that market has softened up. Also, any properties near BSU that didn’t follow our recommendations on having leases go through the school year, are now dealing with a vacancy between semesters and students have already chosen their housing.

Boise Rental Investment Sales Market

 

As I have described, there is a shortage of inventory, which has increased values. However interest rates dropped again on Monday, so performance still remains very good even though the buyer may pay more for the property. I think this creates a win-win scenario. Sellers who have been waiting for values to improve before selling can now get that higher price. Buyers wanting to take advantage of this market still can purchase a great performing property, even though prices are now a little bit higher. Short sales and REO numbers are down on multi-family buildings, but just last night another 4-plex was listed as a short sale at a price well below market. It surely will receive multiple offers and I imagine the actual sales price will be a good 5-10% higher than list price. This confirms that demand is up and supply is low.

 

Tony A. Drost
http://www.frpmrentals.com/

 

 

 



View Externally Here

Boise Area Rentals Slowing Down

Boise Area Single Family Home Rentals Slowing Down:
Now that school is in, rent-ups on all properties, but especially single family homes are slowing way down. Our call volume is down and showings are also faltering. Now is the time to increase incentives and/or lower rents so these homes do not sit unrented over the winter.

Boise Ranked Amongst the "Best Places To Retire"
This article places Boise, Idaho along with the best places to retire in the U.S. comparing home prices, cost of living and population over 50 years old...
http://finance.yahoo.com/retirement/article/113504/best-places-retire-2011-cnnmoney

Mistakes New Investors Make:
Below is a link in the internet version of the Wall Street Journal regarding new investment property owner pitfalls.
http://online.wsj.com/article/SB10001424053111904103404576558484074477822.html

Choices, Risks Ahead If Feds Rent Out Foreclosures:
Below is a link on investors.com regarding the huge glut of foreclosed homes stuck on the books of mortgage-backers Fannie Mae (FNMA) and Freddie Mac (FMCC). They see renting as one way to do it, and maybe stabilize neighborhoods and home values.
http://www.investors.com/NewsAndAnalysis/ArticleChoices.aspx

First Rate Property Managements Greater Boise, Idaho Vacancy Rate:
Currently our vacancy rate is at 3.6%, down from last years' vacancy rate of 3.9%.

Click to enlarge Vacancy Rate image

 

 

 

 


Tony A. Drost
http://www.frpmrentals.com/
http://www.boiseinvestmentproperties.net//

 



View Externally Here

Real Estate Prices Heating Up in Boise

Home Prices Up 12% in Ada County:
According to the latest data from the Intermountain MLS, median home prices had a strong rise of 12% compared to downward forecasts. Please click on the link below to read more.
http://frontstreetbrokers.com/general/mikes-real-estate-minute-–-year-to-date-home-prices-up-12-in-ada-county/

First Rate Property Managements Greater Boise Idaho Vacancy Rate:
Currently our vacancy rate is at 4.4%, up from last years' numbers at this time at 3.2%. Yet, our average vacancy rate to date this year is 2.8%, compared to 4% last year at this time. With school starting, the rental market is temporarily changing, slowing down. Call volume is down compared to a few weeks ago.

Click to enlarge Vacancy Rate image

 

 

 

 

 

 


Boise Investment Properties:
The number of short sales and Bank owned investment properties has slowly been declining. In fact, the number of active listings has been declining as well. This shortage of listings and a fair amount of demand has pushed values up in most areas and building type. So if you were looking to list, but discouraged because of low values, now might be the time to take another look at current market value.
If you are looking to buy, good deals still can be found as not all agents are tracking the trends and realize that a supply shortage has caused values to increase in some segments. With rates as good as they are and with values still down, it’s a great time to buy.
In August I sold two four plexes, a tri-plex, and two duplexes, a single family home rental, and a standard single family home. So as you can see, things are heating up.

 

 

 

 

 

Tony A. Drost
http://www.frpmrentals.com/
http://www.boiseinvestmentproperties.net//



View Externally Here

Boise Idaho Top Ten Cities to Live In

Boise Ranked in Top Ten:
According to the Wall Street Journals' Digital Network, the organization called Relocation America has ranked Boise, Idaho as a top ten city to live in the United States.  Please click on the link below to read more.

 
First Rate Property Managements Vacancy Rate:
 
Currently we are at 3.2%, down from last years' numbers at this time which was at 4.0%. Our average vacancy rate to date this year is 2.8%, compared to over 4% last year.  Of the 59 properties we currently have on the Rental Board (available properties list), over 30 of them have approved applications or leases pending.  We are very busy signing rental leases! 
Click to enlarge image.
 
 


View Externally Here

Boise Idaho Vacancy Rate

Vacancy Rates in Boise, ID:
First Rate Property Management Inc. (FRPM) reported overall vacancy at 2.7% this week. This compares to 4.2% last year at this time and 5.9% in 2009.  The low overall vacancy rate for First Rate Property Management is comparable to the overall numbers reported by Boise proptey managers.  See link below:
http://www.boiserentalvacancyrates


What's Good for Rentals & Not so Good for Home Ownership:
Below is an article regarding housing market conditions according to the latest Housing Market Insights report from Morgan Stanley:
Political deadlocks mixed with terrible housing market conditions will eventually turn America into a society of renters.  High rates of mortgage delinquency, foreclosures and liquidations are turning homeowners into renters, analysts at the investment banking giant said, lowering homeownership rates and increasing demand for rentals.  And it appears even federal institutions are giving up on implicitly supporting what used to be the cornerstone of the ideal American life.
In the Treasury Department white paper on reforming the government-sponsored enterprises, a suggested change to housing policy was put forward: "The administration believes that we must continue to take the necessary steps to ensure that Americans have access to an adequate range of affordable housing options. This does not mean our goal is for all Americans to be homeowners."

 

 

 

 


View Externally Here

Property Management Search Engine Optimization

Vacancy Rate in Boise, ID:
First Rate Property Management Inc. (FRPM) has reported our overall vacancy at 3.0% this week.  This compares to 4.4% last year at this time and 6.5% in 2009.  The office phone call volume is "crazy busy", the highest it's been in nearly a year.


First Rate Property Management Search Engine Optimization:
Since Google has purchased YouTube, they're making YouTube videos relevant in web searches.  Therefore we are now posting our listing videos to YouTube.  Also, GOOGLE is transcribing the words and using them for searches, so we are using generic key words in the first 30 seconds of the video in order to optimize our search engine results.  For example, we are stating the areas we manage, which are Boise, Meridian, and Eagle.  Additionally, we want to be sure to use key words like rent, lease, rental, and property management.  This optimization keeps First Rate Property Management a leader in web searchers for property managers in the Boise Idaho area.



View Externally Here

Vacancy Rate in Boise Idaho
Vacancy Rate in Boise, ID:
First Rate Property Management Inc. (FRPM) reported overall vacancy at 3.1% this week.  This compares to 4.2% last year at this time.  Below is our Vacancy Chart comparing 2010 to 2011.


 



(Click to enlarge image)
 





New Utility Changes:
Seattle utilities are making a billing change- water, sewer and trash will now remain in the property owners name instead of changing it every turnover to the tenant's name. Sometimes these types of changes end up affecting us here, particularly if they are successful.  This change means that owners of single-family rental housing, or property managers, will need to determine a new way of charging tenants for utility costs, whether it's through rent increases or passing bills down to tenants.  To date, Boise Property Managers are still able to place the new tenants name on those utilities.  The link below is the article in whole.

http://campaignSeattleUtilities


 








Tony A. Drost
http://www.frpmrentals.com/
http://www.boiseinvestmentproperties.net/


View Externally Here

Website and Marketing Updates

New Website
We wanted to inform First Rate Property Management’s clients that we have made a website change. The new website looks like the old site, but the back-end functionality is far greater. Like any technology change, we hope that there are no problems, but with over 60 pages, 20 plus URLS, and hundreds of links, there is a possibility that something could go wrong. If you have any problems or see anything that needs fixed, please let us know.

Username/Password
You’ll need to create a username and password. Unlike the previous site, you now can modify your account to allow others to access your account as well. So if you have a partnership or family members, you can give them access without giving them your own user name and password.

Text Messaging
FRPM has been utilizing text messaging, but the new system tracks the leads better. Each listing will have our sign on it which will include a 24/7 hotline as well as a text message service. They can text and immediately get a response as to the rent amount, deposit amount, if the property takes pets or not, and other summary information about the property. On our end, we get a notification and the number they called from so that we can follow up. Unlike anything else, tenants want information immediately so both services will be provided. These added services are free to our clients and paid for by FRPM.

QR Codes
Another really cool tool is that the new system will create QR codes like the one in the link below. Once the system is live, we will add QR codes to all flyers and signs. This will direct perspective tenants with smart phones to access the website listing for that property immediately. This gives them the opportunity to view full descriptions, photos, virtual tours, YouTube videos, and gives them the ability to apply online. Currently a majority of our applications are online.

 

 

 

 
Scannable QR code for http://frpmrentals.com/
 


(Click Image to enlarge)



Videos/Listing Feeds/Mobile Website
The new site and system allows us to post YouTube videos of each property. This improves our search engine optimization as well as gives a video tour of the home.  The new site will continue to feed over 200 other internet listings services to include Craig’s List.

Our current site is viewable from your mobile phone, but soon, anyone searching www.FRPMrentals.com from a mobile device will be directed to a site specifically designed to function on mobile devices, such as a phone. Also soon to follow is an iPhone and Android app that can be downloaded on these mobile devices and assist a perspective tenant looking for a rental, as well as assist current tenants in paying their rent or submitting a maintenance request.
To preview the new site, please visit http://www.boise-rentals.com/

Thank you. We hope that the implementation of this improved technology and service does not inconvenience you.

Tony A. Drost
http://www.frpmrentals.com/
http://www.boiseinvestmentproperties.net/

 

 

 



View Externally Here

Boise Real Estate Market

Boise Real Estate Market:
There is a ton of activity. We are still seeing foreclosures and short-sales at incredible prices, but these properties are also seeing multiple offers and the sales price ends up being quite a bit over list. By seeing the activity levels and bumped up prices, I’m thinking Boise has hit bottom and values are starting to improve. As usual, the very distressed properties in very poor condition are not commanding as much interest or price.
As an example, I’m representing a buyer who locked their interest rate at 4.375% for a 3100 square foot home in Meridian with a purchase price of $265,500. That property had a list price of $242,000, so you can see the affect of high demand in multiple offer situations.

Boise Rental Market:
Single family homes continue to be very strong. FRPM’s current vacancy is at 2.75%, which is better then what it was this same time last year. However, the school year for K-12 ends in May and as a result, we have 4.7% of our total inventory on notice to vacate at the end of May.
I recently read an article written by the Harvard Joint Center for Housing Studies where they indicated concerns that the cost of housing is making it financially difficult for today’s renters. They stated that 1 out of 4 renters spend over 50% of their gross income on housing costs. An additional 26% spend between 30-50 percent of their total income on housing, which is leaving less for necessities such as food and healthcare. Therefore very few renters are able to put much if any money into savings. Additionally, the rising costs of utilities and the recession has increased the need for subsidized housing.

Marketing Your Rental:
In 1998, FRPM launched its first website and that was our first exposure getting leads via the internet. In 2003, we saw the birth of Internet Listing Sites. These were sites that had mastered the search engines algorithms and had top search results for internet searches for rentals. It was about this time that First Rate Property Management reduced the number of print ads and relied more on the internet. Back then, a 3-4 line ad in the classifieds would cost up to $350 per month per listing. So when we reduced our classified ads and focused more on the internet, our clients advertising costs reduced.
Over the years more and more internet listing sites charge a listing fee. Depending on the key words used in the search for a rental, one site would produce better results than another. Currently, FRPM feeds its listings from its two websites,   http://www.boise-rentals.com/ and http://www.boise-rentals.com/ to over 200 sites. However, only 5 of those were sites that charge a monthly fee per listing. We were able to use these paid sites, with some print advertising, and kept the average cost for a full month of advertising below $200, which is considerably lower than print advertising for a lot less exposure and results.
So we’ve been happy with the costs, until we realized that many companies are relying solely on Craig’s List free site, which we use as well. Therefore starting in May, we have reduced our paid sites to just three with the main contributors being http://www.rentals.com/, http://www.rentalhomesplus.com/. We still push our listings to over 200 sites, but not as many that charge per listing. So you should see a reduction in your advertising costs come July since their billing is slow. These paid sites do charge per listing per month, so even if the property only takes 4 days to rent up, the fee is fixed. Our goal is to get our advertising costs down to $75 per listing per month, which is significantly lower than our previous goal of being below $200 per month.

Summer is Around the Corner:
It’s been a wet and cool spring. In fact, some bushes are just now finally producing leaves and flowers. It looks like the warm weather is on its way, so the need to water yards is going to increase.

 

 

 

 


Tony A. Drost
http://www.frpmrentals.com/
http://www.boiseinvestmentproperties.net/



View Externally Here

Boise Area Vacancy Report

Vacancy Rate in Boise

First Rate Property Management Inc. (FRPM) reported overall vacancy at 1.8% this week.  The local chapter of NARPM®, (National Association of Residential Property Managers), also calculates vacancy numbers for the Boise area.  The reporting property management companies averaged 2.8% overall vacancies in the same time period.  The overall numbers for all reporting property management companies in the Boise area is 3.3%.  Are we good or are we lucky?  I think our Leasing Department is kicking butt and our overall marketing efforts are working well.


Property Managers in Boise starting to get Busy

At least I can say we're busy.  In April 2010 we signed 21 leases, up 4 leases from 2009.  This April we have signed 38 leases, a 45% increase over last year.  Our average number of managed units in 2010 and 2011 is roughly the same.  Right now we're signing, on average, nearly 2 leases per business day!  We're receiving hundreds of phone calls every day and showings are booked solid.  We will continue to get busier and not start to slow down until October, if statistical history repeats itself.

Submitted by:
Robert S. Waldron

First Rate Property Management, Inc. CRMC®http://www.frpmrentals.com/



View Externally Here

BOISE PROPERTY MANAGER VISITS DC

Tony Drost of NARPM Visits DC

 

As the President of NARPM, I went to Capitol Hill in DC last week to talk to the Idaho representatives in Congress and Senate about bills in the works that affect Idaho property owners.  I was accompanied by Dave Winder with the Certified Commercial Investment Manager Institute and Mindy Gronbeck with the Institute of Real Estate Management.  It was a very successful and worthwhile visit.  This was an experience of a lifetime for me.

 

For any of you who have ever gotten commercial financing, one thing you know is that although these loans can be amortized over a longer period of time, the term is generally much shorter.  Additionally, commercial financing really looks at the value and performance of the property.  So with values down and in many cases, rents as well, they do not perform as well and may not meet the lender’s requirements.  There becomes a gap in the percentage of equity based on current value which may cause the bank to require the borrower to come up with cash to make up the difference.

The good news is that at least the Idaho representatives seemed to understand that the banks had a poor approach towards handling their crisis with residential properties.  As we have discussed before on this blog, the bank’s own foreclosures and subsequent REO listings caused values to sink like a rock.  They flooded the market and drove values down.  The bail out money appears to have bailed out the banks, not the American home owners.  We’re hoping that they don’t make the same mistake with commercial loans.  If borrowers are making their payments as agreed upon, then the banks should not require these property owners to come up with cash to make up the difference in equity position.  To do so, could likely cause investors to default, which will drive commercial values down.
 

Ada County Tax Assessments
Yesterday I met with appraisers for the Ada County Tax Commission.  Your tax assessments should be mailed out to you near the end of May.  Overall, you should see a decrease in value.  If you have concerns about the assessed value, please scan and send me a copy of the assessment notice immediately, as the time to appeal is a very short window.
 
Current Vacancy Rate Update

April has kept pace with last year, matching the weekly vacancy numbers.  First Rate Property Management's current overall vacancy rate is 2.6%.
Vacancies by Unit Type:
Currently one bedroom apartments are struggling at over 7% vacant, while 3 bedroom multi-family units are at 1.5%.  Two bedroom multi-family units are at 2%.
Vacancies by Area:
We break down our managed areas as follows, North Boise/BSU-East Boise-West Boise-Boise Bench-Eagle-North Meridian-South Meridian.  Out of the seven areas, the Boise Bench and North Boise are the highest at 3.5% and 3.3% respectively.

Running FRPM Boise Area Vacancy Rate Graph (Click on image to enlarge)
 

 

 

 

 


Tony A. Drost
http://www.frpmrentals.com/

http://www.boiseinvestmentproperties.net/

 

 

 

 



View Externally Here