Naturally, some of the questions people ask us are, where should they should buy a rental home in the Phoenix area, what kind of home and what rental rates are doing best. The answers are a moving target. The rental market is not static... it moves, shakes, rumbles and is always changing.
We turned to a variety of experts, professional property managers, to get answers based on today's market conditions. These people work in the trenches and generally have their finger on the pulse of the rental market. We asked the same series of questions and below is what we heard.
Keri Banker, Impero Property Management
email: info@impero-property.com
Q. Where do you feel the best area to find qualified tenants today?
A. Finding tenants is tough in this market. Many have credit blemishes. However, the west valley seems to be performing the best right now. Avondale, Litchfield Park, Goodyear are all renting well. A few months ago the East Valley was going well, however its gotten pretty quiet lately. We don't work in the north Phoenix area so we can't really comment on that market.
Q. What rental price points are doing best?
A. The $800.00-$995.00 range for single family homes are doing best. We recommend keeping rents under the $1000.00 number in the most of the West Valley.
Q. What kind of property do you recommend buying.
A. Definitely single family homes, the condo & multi-family market is pretty flat. Why live in a condo when you can get a home for the same price? Both 3 and 4 bedroom homes are renting well if the price is right.
Jennifer Ridenour, Realty Executives Center Pointe
email: Jenniferiannellaj@realtyexecutives.com
Q. Where do you feel the best area to find qualified tenants today? Q. What rental price points are doing best? Q. What kind of property do you recommend buying.
A. My business is now based in the Central and North Central Phoenix area although I've worked in many parts of the Valley. I like N. Phoenix properties along the 101 from Tatum all the way into Glendale. I find tenants in the areas north of Shea to the 101 and from Tatum to 7th Avenue tend to be longer term than tenants in the west valley. I stay away from Anthem as people are finding the commute time, especially with accidents on I-17, to be too much.
A. The $950.00 - $1150.00 rental rates are the easiest to find qualified tenant. I have to add that finding qualified tenants is not that easy right now. Most have credit issues.
A. Single Family Homes only. The condo market is not good right now.
Tom Steinheiser, Metropolitan
email: thomas@metrowb.com
Q. Where do you feel the best area to find qualified tenants today?
A. We see the SW Valley as the prime area. Purchase prices are commensurate with lease rates. Tollison, Buckeye, Goodyear, Litchfield Park and Laveen are all doing well. We're staying away from the far East Valley at this time. We see that market turning around slowly in the future. The N. Phoenix and Scottsdale markets are not as competitive lease wise. However, there are niche markets in those areas that do work.
Q. What rental price points are doing best?
A. We're finding the $900.00 to $1200.00 range to be rent-able We're able to lease most homes in about 30 days if they are priced right and landlords are keeping the deposits reasonable. We do expect a slight decrease in rent rates in the next 6 months but nothing dramatic.
Q. What kind of property do you recommend buying?
A. Single family homes are best. We recommend 4 bedroom properties if the price is right. There are a glut of condos on the market right now so unless your in a niche market, I'd stay away from them. Just make sure you buy right so you are well positioned for the market.
Susan Napier, Realty Executives Peoria
email: susannapier19@yahoo.com
Q. Where do you feel the best area to find qualified tenants today?
A. I work in the West Valley primarily so that is my expertise. I recommend homes located on the north side of I-10. I find Peoria and Avondale homes do better because the schools are more attractive. Westwind and Fletcher Heights subdivisions have a lot of appeal as well.
Q. What rental price points are doing best?
A. 4 bedroom homes in the $1100.00 - $1300.00 range are pretty easy to lease.
Q. What kind of property do you recommend buying?
A. First, I recommend people new to residential investing become well educated about the business and the market. I prefer 4 bedroom homes and tell people to stay away from older houses due to high long term maintenance costs. The same is true for multi-family properties as they tend to be older. Look for homes in well established neighborhoods with quality schools. A lot of parents care what schools their children attend.
Kimberly Hunter, Realty Executives Tempe
email: khunter357@cox.net
Q. Where do you feel the best area to find qualified tenants today?
A. I work in the east valley, Tempe and Scottsdale areas. Tempe is always strong because of ASU. The city does have a 3 non-related tenant policy so bigger homes are not good college rentals. South Scottsdale is often better for student renters. Queen Creek offers the largest homes for the least amount.
Q. What rental price points are doing best?
A. $1200.00 seems to be the high mark at this time. Student rental rates are different. Sometimes you can get a little higher rates.
Q. What kind of property do you recommend buying?
A. Single Family Homes are all that's renting, even in Tempe these day.
Q. Can you tell us more about renting to people in the college area?
A. Most students want a nice place and will pay a little extra. Make sure and put the parents on the lease as a responsible party in case of rent or damage issues.
A Few Thoughts From Us:
First we want to thank everyone who contributed to this post. We are fortunate to have their talents added to the mix. As you can see, most agree the West Valley is where it's at these day. This is in large part due to the amazing prices we've seen in the last 6 months. CAP rates are high, and a lots of displaced families looking for somewhere to live.
Finding tenants with good credit scores can be tough. Some suggest putting more emphasis on employment history, current income and a clean background check and less on recent credit problems. That will be your call though.
The Central Phoenix market and Scottsdale did not come up in most of the conversations due to the price point at which homes can be bought and leased. The math is pretty clear... buy a home in Avondale for $85,000 and rent it for $950.00 or buy a house near Tatum & 101 for $190,000 and rent it for $1200.00. However, vacancy rates and turnover need to be taken into consideration. Some said the turnover in the west valley is high so each year you have to do some cleanups and you may be vacant for a month or more.
One other consideration is the long term appreciation of the property and long term rental rates. The questions are; Will a more expensive home in a desirable Phoenix or Scottsdale neighborhood see more appreciation over time than one in, say, Avondale? Will the rents rise faster in these areas over time as well? We feel a long-term comparative analysis is advised and should be put of the equation.
Another consideration is niche marketing. Some feel there is value in finding an under exposed niche and working it. Examples include: golf course homes, corporate relocation, luxury homes or homes that target a specific large employer. An investor with good marketing skills may find a niche approach both exciting and rewarding verses battling it out in a less defined market. It just gets more exciting by the minute doesn't it?
We hope this information is of value to you. As always, we are here to answer your questions, do reasearch and generally be of service.
Ron Urban & Gene Urban
The Urban Team at Realty Executives
www.urbanteamaz.com
602-234-5777
email: gene@urbanteamaz.com
