Real Estate Investing 101

Foreclosures Definitely On The Rise In Greater Phoenix

Investors and other buyers will have a bevy of bank owned homes to choose from this summer and fall in the greater Phoenix area. Pre-foreclosure letters are being sent in droves and trustee sales are on the rise.

Brad Minor from First American Title sends us weekly foreclosure updates and the numbers are rising. The chart below shows the number of pre-foreclosure letters sent to home owners during the past 90 days as well as the actual trustee sales figures. Pre-foreclosure letters are sent to homeowners who are 60-90 days behind in payments and trustee sales represent the homes taken back by the lender.(Not every home in a trustee sale is bought by the lender... just most of them.)

As you can see, over 21000 pre-foreclosure letters were sent out in the past 90 days and there is little to suggest this trend is lessening. We are seeing an average of about 800 trustee sales per week as well and this number is generally climbing.

The data offer both good news and bad for many. Sadly, 800 people per week are losing their homes and the outfall from this can be quite devastating to a family. In addition, the new bank-owned inventory is likely to depress home values a bit more... the old supply and demand thing. On the flip side, this trend offers investors and others many new buying prospects. 

I hope the increase in bank owned inventory will curtail some of the voracious buying practices currently taking place in the sub $200,000 market. Perhaps we will see less multiple offers and escalation clauses. However, best practice suggests you will want to be quick to take action, as well as taking the time to do good due-diligence.

We will continue to watch the market and give advisories as needed.

Best to you,

Ron Urban & Gene Urban
The Urban Team at Realty Executives
602-234-5777

How to Reduce Residential Rental Vacancy Rates And Increase Income

Vacancy is often the most costly aspect of real estate investing. It is hard to make money without cash flow.  We’re going to take a look at ways to reduce vacancies and vacant time periods, thus increasing your income. Below are 7 ways to keep tenants in and vacancy down.

Way #1.  Know your market.
Neighborhoods are not created equal. As an investor you need to know what areas are viable rental markets. If you don’t know, hire someone who does. Hopefully, you do this before you buy. Location is paramount. You want an area where the nearby job market is strong. Good mass transit and short commute times are important for many. If your home is family friendly, quality schools will be a draw. We have an entire post that discusses how to choose rental property… take a look at it.

WAY #2. Price it Right
You are in a competitive business and pricing matters. Many markets have low-priced bank-owned homes flooding the market making it possible for some landlords to offer low rents. Update your market analysis to determine what the current rent rates are for a property like yours. Click here to read our post on how to determine rental rates.

WAY #3. Longer Lease Terms
Naturally, the longer the lease, the lower the vacancy rate over time. Many tenants are afraid of committing to long leases. However, there are ways you can encourage them to take the plunge. You may want to reduced rent for longer term leases.  As a landlord you can afford to be a bit generous when you consider the cost of a one year verses a multi-year tenant.  See Way #7 for more on this topic.

WAY #4  Be Quick To Show & Lease Your Home
Often tenants wait until the last minute to make a decision. They often need to see the home now and get a lease signed yesterday. You need to have all the leasing tools in place and ready to go when a prospective tenant shows up. You might have to rearrange your schedule to show the home quickly. Have the rental application with you and all other necessary forms. What ever system you use to qualify your tenant, make sure it is quick as well as complete. Keep in touch and be encouraging.

WAY #5  Have A Marketing Plan In Place And In A Manner That Helps Tenants Find You.
How are tenants finding your home? The internet is great for tenants who have computers. However, many lower income applicants do not have internet access or the knowledge to search on-line. You need to know your market and advertise appropriately. Bottom line, create a winning advertising and marketing plan that is ready to go when a vacancy occurs. 

WAY #6  Be Quick and Meticulous With Your Turn Around
In another post we talked about having your team in place. This is critical during vacant times. The moment your tenant moves out, you need your cleaning crew, handyman and other vendors getting the place ready to rent... every vacant day cost you money. When you do your move-out inspection make a list of what  needs to be done and move on it ASAP. Do a great job too… there is a lot of competition out there.

WAY #7  Do Things That Make Your Tenant Want To Stay For Years
We can’t tell you the number of stories we hear about landlords doing things that create unhappy renters. When a tenant calls for a repair, get it done rapidly. Failure to fix a leaky faucet may lose you a tenant and cost you hundreds or thousands in lost rent. Call your tenant once a month to see if there are any problems or issues that need attention and make the call in the middle of the month so they know you are not calling about rent. Check with the tenant a couple months before the end of the contract and try to negotiate a new lease. If they are great tenants, offer an incentive to stay. Some landlords send movie tickets, or gift cards every few months with a note saying thanks for being such good tenants. Paying to have the carpets cleaned every 6 months helps both you and your renter. We all like to be recognized and appreciated. Simple acts of kindness can create long term tenancy.

As always, we hope this article has been helpful. If you have questions, please know we are here for you.

Ron Urban & Gene Urban
The Urban Team at Realty Executives
602-234-5777

We’re brothers, you’ll feel like family

Strange & Often Funny Landlord, Tenant Stories

Another chapter in our on-going series of strange and funny tenant, landlord stories from the Arizona courts.

A landlord was terminating the tenant’s lease for false information on the application. The tenant had listed her employment as an adult caregiver but was arrested for prostitution.

In another case, the tenant appeared in Court and told the Judge he could not pay rent because his father had just died of cancer. The next day the father appeared at the apartment complex asking to speak to the manager because he was there to fill out his application and be signed on with his son’s lease. When he was told by the manager that he was dead, at least that was what the tenant told the Judge, and that the tenant had been evicted, the father said, “I guess you won’t be needing that application after all.

If you have a story of your own, please email it to us for consideration.

Have a great weekend,

Ron Urban & Gene Urban
The Urban Team at Realty Executives
602-234-5777
gene@urbanteamaz.com

Landlord Gets A Judgment and Asks... How do I get paid?

We received an email asking how to collect on a court awarded judgment.  Being a legal question, we thought it best answered by someone with the letters JD behind their name. Again, it’s Andy Hull to the rescue and below is his answer to that fine question. If you have a question of your own, please let us know and we’ll track down an opinion. 

From Andy...

One of the persistent questions that I continue to receive is how do I get paid once I have evicted my tenant. Just because you have a Judgment that says the tenant owes you money and has to vacate by a certain date does not mean that you will automatically get paid. The Judgment should be reported on the tenant’s credit history and will show up in the future. If the tenant attempts to obtain a loan, buy a car, house, etc., the Judgment should show up and the tenant would have to pay that off before they could get the loan. The Judgments do carry ten percent (10%) interest per year and that interest would also have to be paid.

Realistically, keep in mind, the Judgment is nothing more than a piece of paper signed by a Judge and it is up to the landlord to try and collect on that. The easiest way to collect is a garnishment of wages if you know where your tenant is employed or garnishment of their bank account if they have sufficient money in the bank account. Otherwise, you may have to forward the Judgment to a collection agency. Keep in mind, any monies due and owing after the Judgment was entered for such things as property damage, future rents, etc. would have to be pursued in a separate lawsuit.

Once you have a Judgment, if you wish to pursue it and you do not know where the tenants are employed but you do have a forwarding address for them, you may wish to explore the following. You can serve upon the former tenant what is commonly called a Judgment Debtor’s Exam. This is a subpoena from the Court that the tenant must appear back in front on the Judge and bring in proof of their assets, bank accounts, property they own, place of employment, tax returns, etc. Whether the tenant is honest enough to bring this information is always a risk. You can also send the Court Constable to their new home with what is called a Writ of Execution. This is an Order to the Constable to seize any nonexempt property and try and sell it. However, most property is going to be exempt unless the tenant has such things as a collection, etc., but this would be for the Constable to determine.

Beyond that, there is not much that can be done.

Again, thanks to Andy Hull. If you need an experienced landlord/tenant attorney in the Greater Phoenix area, Andy’s office number is 602-230-0088. If you need a great real estate person on your team… we’d like to apply for that position.

Gene Urban & Ron Urban
The Urban Team at Realty Executives
602-234-5777
Gene@UrbanTeamAZ.com

Funny Landlord Tenant Stories... the problem with poker.

Here is another story in the never-ending saga of landlord/tenant stories. Since we like to play Texas Hold'um we kind of sympothized with this tenant.

 

Our funny story for this week...

 

The tenant was being evicted for nonpayment of rent and asked the Judge if he could throw himself upon the mercy of the court.  The Judge responded that there is no mercy in his courtroom and he must follow the law.  The Judge asked the tenant why he had not paid his rent.  The tenant informed the Judge that he was leaving his apartment with sufficient cash to more than pay his rent and suddenly realized three hours later that he was at a casino and not the rental office.  He indicated to the Judge at that point he had lost more than half of his money and attempted to win back the money lost.  Of course, the tenant lost all of his money but felt that this was a reasonable excuse for not being evicted. 

 

What do you think... leave your thoughts in the comment section below. Have a great weekend and don't bet all the mortgage or rent money on a pair of Queens... they always seem to get beat at just the wrong time.

 

Gene Urban & Ron Urban

The Urban Team at Realty Executives

602-234-5777

How To Get Your Offer on Bank Owned Homes Accepted

Investors are finding it more and more difficult to find and receive accepted purchase offers on bank owned homes. The inventory has diminished a bit and the competition is pretty fierce.

However, from an investment standpoint, good news is on the way in many parts of the country. We monitor the Greater Phoenix market and have seen a rise in both notices of foreclosure and trustee sales. We anticipate a wave of new inventory will come on market beginning in July, spreading into fall.

This said, the question is how to win the battle for accepted offers? We interviewed several top bank-owned home listing agents in the Phoenix area to solicit their opinion on this subject. The results of our inquiry have been summarized in an article on our sister blog site, Urban LIfe. To read this article on "Tips to Win When Bidding on Bank Owned Homes", simply click on the highlighted text.

If you would like to search for homes in the Greater Phoenix market, we've provided an excellent search tool on this site. You can search for bank owned homes as well as private market properties and the system is map based. All data is current and provided by an IDX feed from our local MLS system, ARMLS.  Have fun.

Best to you,

Gene Urban & Ron Urban
The Urban Team at Realty Executives
602-234-5777

HELP... I'm a landlord with questions.

The job of landlord often comes with more questions than answers. Often,  you find yourself in uncharted territory and the correct path is unknown.

One of the purposes of our site is to provide answers to common questions. We work with a few quality attorny's to provide you, the landlord or tenant, with advice that may prove useful. Below are a few fairly common questions and answers provided by landlord/tenant attorney, Andy Hull. Andy's practice specializes in landlord-tenant law and we've found him to be a great source of counsel. He can be reached at 602-230-7421 or email at hull@doctorevictor.com.

Question: We have a policy that we do not accept third-party checks. However, we have students whose parents pay the rent. Can we accept the parents’ rent check?

Answer: Yes, but I would do an Addendum to your Lease wherein you and the resident agree that the parents will be paying the rent, and you may wish to make the parents a co-signer or guarantor on the lease.

Question: We have a person who is listed as an occupant on the lease application but when the lease was signed the person was not put on as an occupant or a tenant. The person has now moved in. Can we serve a Noncompliance Notice?

Answer: Yes, if the person is not listed as a tenant then they are an unauthorized occupant pursuant to the lease.

Question: We have tenants who were evicted and locked out of their apartment. They have now come up with all the rent money that is owed. Can we take the money and reinstate the lease and how do we do this?

Answer: Yes, you have the discretion to allow a tenant to reinstate their lease after the Court has signed the eviction Order. You also have the option of telling the tenant you do not want them to continue living at your property. If you elect to take the money, simply give them a rent receipt that says lease is reinstated, and then they would be subject to the original lease agreement. You do not need to do a new lease.

The answers given are based on Arizona landlord/tenant law and may or may not apply to other states and localities. Other variables may apply as well. We always recommend you contact an attorney when the need arises.

Gene Urban
The Urban Team at Realty Executives
602-234-5777

Search For Residential Investment Properties in Phoenix 85012

This post explores the 85012 zip code in central Phoenix. The map give you a look at the relative location of the 85012 zip code.

The basic demographics of the area are: 7300+ residents, median 2007 income of $47,700, 50% of residents are renters.

Much of the area is comprised of fine single family homes with higher price points. The Orangewood and Windsor Square neighborhoods are considered highly desirable. Some condo projects are located in the area as well with Landmark Towers capturing many news reports due to HOA problems.

The region is considered by many to be desirable. Easy access to light rail, downtown, Sky Harbor and great restaurants/shopping are just some of the attractions.

From an investment standpoint, 85012 is pretty tough. While checking the ARMLS stats today (June 4, 2009) there were only 39 single family homes and none were REO's. Nine homes were being offered as short sales so some less expensive bank-owned inventory may be around the corner. The condo market has more active inventory, however, the most affordable are in Land Mark Tower and the approximate $500.00/month HOA's make affordable rent rates difficult.

Investors may want to keep an eye on this region as we move into summer. Picking up a well priced single family home could pay good long term dividends. If you are a contractor, keep an eye out for homes in need of major repair and offered at low prices. Good historic remodels can fetch high prices in this area.

At the end of this post is a real estate search engine/tool specifically designed to show homes, condos, land and multi-family properties for sale in the 85012 zip code. The initial view shows the 20 most expensive properties and users may explore all price levels currently available. The data is real time showing you the current inventory, included bank owned, at the time you view this post.

The search tool is map-based, and allows registered users to save searches and receive email updates when new properties come on market. If you would like to personally view any of the properties, we'd be happy to arrange an appointment. Just give us a call (602-234-5777) or send an email request.

Check the "search by zip code" category for information on additional area zip codes.

Best to you,

Ron & Gene Urban
The Urban Team at Realty Executives
602-234-5777

The Rent Check Was Lost In The Mail... dog ate my homework and other tales

We recieved anemail asking what happens if the rent check doesn't arrrive on time but the tenant swears they mailed it. Since we are not lawyers, we turned to landlord/tenant legal expert Andy Hull for an opinion. He is always full of good advice.

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One area that comes up consistently each month is tenants who pay their rent by money orders or certified funds from a bank. The tenants generally will say they have mailed these in to the landlord and come to court with their stubs to show the Judge that they paid the rent. The question then becomes: Did the landlord actually receive the money and misplace it? Did the money orders get lost in the mail? Or did the tenants not even send the money to begin with?

Most of the Judges have ruled that it is the tenants’ responsibility to show that they have paid their rent. However, some Judges will ask the tenants why they haven’t put a tracer on the money orders or suggest that the landlord try and work with the tenants. My suggestion is to add a lease addendum to your lease that covers this area. A suggested lease addendum would be the following:

Tenant understands that it is the tenant’s responsibility to deliver the rent to the landlord. Tenant must deliver the rent in person and/or by certified or registered mail. Tenant understands that it is also their responsibility to get a rent receipt from the landlord and to confirm with the landlord that the landlord did, in fact, receive their rent. The tenant understands that it is their responsibly to put a tracer upon any rent that is allegedly lost or misplaced. Tenant agrees that they will replace any lost rent immediately even if they are having it traced through the institution from which they purchased it. It is the tenant’s responsibility to further provide the landlord with proof that they are tracing the lost money orders or certified funds in a timely manner. Tenant remains liable to keep the rent current until such time as they have discovered what happened to their money orders or certified funds. Landlord agrees to give the tenant credit towards the rent only upon proof presented by the tenant that the landlord or its agent actually received and cashed the tenant’s rent payment.

If you have a question about landlord tenant law or want help with a special situation... toss us an email; we'll put it out to our team of legal experts and post their answer. Remember, a blog site in an interactive forum so feel free to ask away.

Best to you,

Gene Urban & Ron Urban
The Urban Team at Realty Executives
602-234-5777

WHERE TO BUY MULTIPLEX PROPERTIES IN THE GREATER PHOENIX REGION

I was visiting Trulia.com, a popular real estate web site, and came across a question from a gentleman named AL. He wondered what parts of the Valley would be best to purchase a multiplex property. I figured if Al took the time to ask this question, there are probably others who wondered the same thing.

Below is my answer to Al... and now to the rest of you.

Best to you as always...

Gene Urban
The Urban Team at Realty Executives
602-234-5777

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Thanks for offering this question Al. The short answer is that 2-4 plexes are not performing well in the most of Greater Phoenix.

The glut of single family home opportunities has softened the condo, apartment and multi-plex market considerably. Why rent an apartment style unit when you can get a real home for the same money?

That said, I'd look in areas that have good job/economic support and less competition from bank-owned homes gone to the rental market. In a recent article on our investor's blog site I interviewed several top property managers and asked what areas are the best and worst rental zones.

Every property manager interviewed advised staying away from the east valley. They found this region to be over-saturated and economically troubled. Most said the same of the west valley, especially south of I-10. The upper west valley, Peoria & Glendale, show some good prospects due to fine schools and job opportunities. Most everyone we interviewed felt good about the central Phoenix corridor from downtown to the 101.

We are big fans of the downtown area.  We have a full article that explores the opportunity downtown Phoenix offers now and in the future. Take a look here to learn about the opportunities in the downtown area.

Again, I have to offer caution on 2-4 plex properties at this time. It is not that you won't/can't find a tenant, it is that it may take a while. I did a quick search on the MLS for rental properties. (Let me say first that the MLS is not the best place to find a tenant so the figures I looked at simply offered trends.) However, in the past 6 months two time as many single-family homes rented in compared to condos, townhouses, patio homes, and duplexes.

In conclusion, I'd stay away from the west and east valley as the competition to SFH is very high. There are about 125 duplexes & 4-plexes offered for under $200,000 on ARMLS today. If you can buy right, not get into too many expensive repairs (a problem with multi-plexes because the properties are generally pretty old) and get into an under $500.00 per unit price point you could have a winner.