Real Estate Investing 101

Section 8 Housing and the Benefits to Landlords In Arizona

Section 8 Housing is one of the rental vehicles available to landlords. In our opinion, it has received an unwarranted bad reputation. Many feel the program will bring bad tenants and problems when in fact, most landlords who utilize the program are happy.

The city of Phoenix Housing Department, the largest provider of Section 8 housing in Arizona, have a web site dedicated to information about this program. Among the many topics are the benefits to landlords that we have summarized below.

There are several benefits to landlords who participate in the Section 8 Housing Choice Voucher (HCV) program, from free advertising for your unit to annual inspections of your property.  There are no fees or charges assessed to property owners for services provided under the Section 8 HCV program.  Also, there is no application process required for potential landlords.

The Housing Department does require that all owners joining the Section 8 HCV program register their property with the Maricopa County Assessor’s Office Residential Rental Registration program.  The Housing Department also encourages certification of properties in the Phoenix Police Department’s Crime Free Multi-Housing program.

 

How the Section 8 Housing Choice Voucher Program Works

The Section 8 Housing Choice Voucher (HCV) program provides assistance, in the form of a Voucher, to qualified families, seniors and persons with disabilities for rental units chosen by the tenant in the private market.

The city of Phoenix Housing Department provides monthly payments directly to participating property owners to offset the cost difference between tenant payments and unit rent.  Tenant rent payment amounts are determined based on their adjusted income.  Program applicants may choose from a variety of housing options including apartments, condos, duplexes, single-family homes and townhouses.

 

We encourage interested landlords to talk with the appropriate people in the City of their interest. If you have properties in the Phoenix area, you can visit the City's section 8 housing web site for more information.

 

We are planning a meetup.com group meeting in March that will focus on Section 8 housing in the Phoenix area. Visit our meetup.com group page for meeting announcements.

 

Best wishes for success

 

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

How Do I Determine Rent Rates For My Vacant Home?

The question of how to determine rent rates comes up often, especially in a market as saturated as the Greater Phoenix area. You could gaze into a crystal ball for the answer or read at few ideas we've collected over the years. Your choice.

Ask The Vacating Tenant:
Your current tenant can be a wealth of information. Tenants often know the market better than landlords. They often have friends who are renters in the area and probably monitor the rent rates in the neighborhood.

Knowledge is Afoot:
Walk the neighborhood. You'd be amazed how much you can learn by walking around the area your place is located. Rental signs on other properties often have amounts and certainly a phone number you can call. If people are outside working on cars, playing and such you can ask them what rents are like in the area... don't wear fine duds unless it is appropriate for the area.

Keep Your Comps Relevant:
Some people use apartment rates to determine single family home prices and visa versa. They are not the same animal. At the same time, it can help give you a sense of the competition.

Is Your  Phone Ringing:
A silent phone is often the sign of too high a price. Be proactive and lower the price in small increments often until you start getting calls.

Greedy Can Kill Over Time:
Turnover is one of the biggest causes of lost cash flow... unless you get the tenant from hell you Craig's Lists all your cabinets, appliances and such. If  a tenant feels he or she is paying way above market value they will not stay long. They'll shop around and find a better deal. Since loss of rent, turnover repairs and marketing are costly, you may want to balance those costs in our rental rates. In a competitive market you may not want to do annual rent increases. This may be tough for the old timers who are used to 3 - 5 percent increases each year but we're not in Kansas anymore Dorothy.

Check Online Comps:
Craig's List and Rent.com can give you insight into current market values. Stop at your local grocery store too and pick up  a few of the rent magazines. This is something you should do every 3-4 months so you keep your pulse on neighborhood values. If rents have dropped in your area substantially, you may want to lower the rate to encourage your tenant to stay another year or two. Remember to keep you eye on the long term value of renters who stay with you for many years.

Know Thy Neighborhood Property Managers:
Do you know any property managers in the area. sure they might be the competition and they also can be invaluable help. A cup of java or a happy hour toast can be just the right thing to nurture a relationship.

We hope these ideas are helpful to you. Keeping your investment rented with quality tenants is the name of the game and proper pricing plays a major role.

Best to you,

Urban Team Launches New Real Estate Search Site for Greater Phoenix

Greetings on a rainy Monday in Phoenix. Rain is such an uncommon event here it is worth noting.

We, The Urban Team, are excited to announce our latest specialty web site for people searching for homes, condos, land, and investment property in the Greater Phoenix area. WWW.SearchForHomesInPhoenix/com not only features the spectacular Diverse Solutions search tool, it has a bevy of specialty pre-built searches designed to save you time.

Among the many specialty searches are:

• Search by zip code.
• Search by subdivision (Many of the most popular subdivisions are included)
• Search for foreclosures and bank owned properties.
• Find short sale homes, condos, land.

Don't forget to look at our Tips for Better Home Searching page too. It has info for both investors and regular home hunters.

Have a great day and even more fun as you search and find the best homes in the Phoenix Arizona market.

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

Landlords... Make sure You Conduct a Move-in & Move-out inspection

Most landlords know the importance of conducting move-in and move-out inspections. Some who are new to the business may not and will likely learn the hard way.

The inspection, with documentation is extremely important for all parties. If a problem erupts it will be a battle of he said, she said and landlords often loose in court.

The move-in, move-out inspection is relatively simple. the landlord and tenant walk the property and the tenant notes any items he or she feel are broken, damaged, missing, in need of repair and such. A move-in/move-out form should be used. Several such documents can be found on the internet and downloaded for free or a small fee. In addition, it is considered wise to take pictures and/or video of the premises as well. We'll talk more about that below.

We are told it is important the tenant fill out the form so there is no question of impropriety. They should also sign and date the form. This form is used prior to occupancy and at the end of the lease agreement and can be used by both parties to establish pre-exiting conditions and/or damage during occupancy.

Attorney Andy Hull says the following about using the form:

In an attempt to avoid being sued, or at least to properly defend any lawsuit regarding the deposit, the landlord should always have the move-in/move-out inspection form, the names of the individuals who did the move in/move out inspection, and the supporting documentation (invoices, photographs, vendor statements, etc.)

Today, many landlords take video during the move-in and move-out inspections as a way to document the condition of the property. We are told it is important to date stamp the video and show the property address and unit number at the beginning and end.

Some say the inspection is a CYA thing. We disagree. We feel it is intended to create a clear understanding between parties regarding the condition of the home or apartment. Thus, performing a thorough inspection is simply prudent.

If you have more questions about this process, we recommend you talk to a competent attorney who specializes in landlord/tenant law. In Arizona, we really like the people at Andy Hull's firm and have found them to be quite helpful. They can be reached at 602-230-0088.

We hope this post has been helpful and we truly appreciate you visiting Real Estate Investing 101. Come back often as we update this site on a regular basis.

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

 

 

Common Mistakes Landlords and Investors are Making on Rentals

I was interviewed by Melissa Blasius at News Channel 12 a couple days ago and asked to discuss common mistakes we see investors make as they enter the rental market.

We are seeing a number of issues with many new investor/landlords. The most common are:

• Failure to conduct background screening of potential tenants.
• Many landlords are waiving security and pet deposits.
• Few investors write a business and marketing plan. They don't treat the project like a business.
• Some investors do not have sufficient cash reserves to cover non-occupied times or necessary repairs. We recommend 6 months of operating capital. Do not use credit cards for this.
• Many underestimate hold times on property. In the current market, close to 10 years may be necessary to reap optimum rewards.
• A lot of landlords do not realize it can take 3-5 months to find a good tenant in the current market. Vacancy periods are long right now due to the large number of available homes. Turnover is high as well.

The interview was part of the ten o'clock news program and carried as a news article on AZCentral.com. Below is the video feed for the interview. Hope you enjoy it.

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

Landlords... Do You Know Your Fair Housing Law? Violations are a serious offense.

We just attended a fair housingseminar our brokerage sponsored. It reminded us that we have not talked about this on Real Estate Investing 101. Our bad.

The fair housing act was signed into law by President Johnson back in 1968 and has been amended a few times since. Fundamentally, the law prohibits discrimination against people buying, selling, renting and financing housing based on a number of criteria. We will be focusing on the rental side of the law in Arizona, however, Fair Housing is a Federal Act and applies to all States.

The Arizona Attorney General's office oversees violations to the Fair Housing Act. Below is a summary of the Act and some of the considerations a landlord needs to understand.

When based on race, color, sex, religion, national origin, familial status or disability, the following actions by housing providers or professionals are prohibited under the Fair Housing Act:

• Refusing to show, rent or sell a house, lot, or apartment.
• Refusing to negotiate the rental or sale of a house, lot, or apartment.
• Charging more to buy or rent a house, lot, or apartment.
• Requesting a larger security deposit.
• Telling a person that the property is no longer for sale or rent when it really is.
• Advertising that a certain type of person is wanted to sell or rent the property.
• Denying services that are available to others.
• Insisting that a family live in a designated area.
• Denying access or use of the facility or service that is normally available with occupancy of a property.
• Telling owners or renters to move because the neighborhood is being integrated by minorities.
• Suggesting that a person move to a specific area or property.
• Refusing to permit reasonable accommodations for assistive aides, assistive animals, parking, or physical modifications to existing properties.
• Failing or refusing to provide wheelchair accessible housing in new construction of multifamily dwellings (i.e., accessible environmental controls, accessible routes into and through the dwelling, usable bathrooms, etc.).
• Engaging in retaliation or intimidation against a person who complains about housing discrimination.
• Harassment such as racial and sexual slurs or threats.

As you can see, there are a number of ways a landlord can violate fair housing and this list is just the beginning. A.G. Goddard says most violation are due to ignorance of the law or simply not understanding its applications. We recommend landlords take continuing education classes to better understand the law and learn about specific case studies.

In Arizona, housing providers who would like to attend a free training on the Fair Housing Act and their responsibilities and rights under the law may contact Joy Johnson, Fair Housing and Technical Assistance Coordinator, (602) 771-1026. Other States offer similar courses for your edification.

Failure to comply with fair housing laws can come with stiff penalties. Below is a partial list:

• Civil Action fines up to $11,500 for the first offense and up to $50,000 for repeated offenses
• Unlimited punitive damages if the case proceeds to federal court
• Compensation for actual damages, including humiliation, mental distress, and loss of housing opportunities.
  

We've included a link to the HUD web site page on the Fair Housing Act for your reading pleasure.

Happy studying...

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

Don't forget to take a look at our sister site, Urban Life, where we focus on downtown and central Phoenix.

The above information is provided as educational and does not constitute legal advise. Legal questions should always be addressed to a qualified legal professional.

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

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

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

______________________________________________________

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.

Accepting Partial Payments from Tenants in Arizona... know the law.

Another in our ongoing series on legal issues. Please note that our legal issues series is based on Arizona law and may not be applicable in other States. Today's opinion is provided by the very talented and well regarded landlord/tenant attorney, Andy Hull. If you have questions, concerns or need counsel, please give Andy a call... he is a very helpful man. He can be reached at (602) 230-0088.

Today's topic is acceptance of partial rent payments. In the past, there was some grey area regarding this subject. However, things changed in late January 2009 when the Justices of the Peace in Arizona offered interpretations of the new rules of eviction in Arizona.

PARTIAL PAYMENTS:

Rule 13(a)(4) states that if a landlord accepts a partial payment without having the tenant sign a partial payment non-waiver form, the eviction will be dismissed. In the past, arguably the tenant had the obligation to come to court and raise that issue.

As a reminder, you cannot take any rent if the tenant is under any default notice (including for noise etc.) without having the tenant sign a non-waiver. Otherwise, your case will be dismissed.

If you accidentally accept the money, send it back. If it has been deposited, issue a new notice and wait until the first day of the next month to file the eviction.

We hope this information has been of value to you. If there is a topic of interest to you, please send an email to the Urban Team with your question and we'll do our best to secure an opinion.

Hope you had a great Memorial Day Weekend.

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