Real Estate Investing 101

Greater Phoenix Rental Market Showing Strength

I was in a workshop with Cromford Report guru Mike Orr a couple days ago. He mentioned ARMLS data shows strength in the Greater Phoenix rental market. Specifically, he said the active rental listings during 2009 hovered between 8000 & 9500 rental listings. Today’s ARMLS numbers for all types of rentals popped up at 6339.

Mind you, not all rentals are on ARMLS. Many rentals are advertised using other media, yet I believe the ARMLS numbers show a trend. I have put called into AZCentral.com and Rent.com to see if they have similar figures. When I get them I’ll update this post.

In the meantime, let’s look at some ARMLS single family home rental numbers; The data is pretty telling. The table below shows the number of active rental listings as of this post,  as well as the number of signed contracts year-to-date in 2010.

NOTE: ALL DATA IS FOR SINGLE FAMILY HOMES ONLY.

City	# of Active SFH Rental Listings on 2/26/2010	Signed SFH Rental Contracts Jan/Feb 2010
Valley Wide	3352	3263
Phoenix	670	668
Chandler	142	266
Glendale	136	177
Peoria	143	156
Anthem	51	71
Scottsdale	623	280

As you can see,  the number of active listings is about 50% of the signed contracts numbers. This indicates the inventory is turning over approximately every 2 months.

Chandler and Anthem are showing great strength with the inventory turn over in the 1 month range while Scottsdale is relatively sluggish with a turnover rate of approximately 4 months.

Provided that the ARMLS numbers represent a general market trend, landlords are seeing good news for the future. Add to this the number of home owners being displaced by foreclosure or short sales and the 2010 rental market is looking good.

If you would like us to run this data report for you, we’d be delighted. We can provide results by city or zip code.

Best to you,

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

Information is deemed reliable, but not guaranteed. Data provided by ARMLS.

Flipping Homes Just Got Easier With New FHA Guidelines

Good news for residential real estate investors who are flipping properties. Last Friday FHA issued a waiver on the 90 day flipping rule. In the past, a real estate investor had to let a property "season" for a minimum of 90 days before they could sell it to a buyer using an FHA loan product. Since many of the flips were in the under $150,000 range, FHA buyers were a big part of the market.Under the new FHA guidelines, the waiver of the 90 day rule allows an investor to put the property on the market immediately with the following restrictions.

1. Waiver takes effect February 1, 2010 and will last for one year unless extended.
2. Investors are now exempt from the 90 day seasoning rule.
3. All transactions must be arms-length.
4. No identity of interest can exist between the buyer and seller.

There are a few more considerations in the guidelines. We understand that homes marketed for more than 20% of purchase price will need to substantiate the increased value. So keep all your receipts for costs incurred in the renovation.

Investors should also understand that appraisers will still evaluate the price of the home based on current market value. We advise performing a detailed evaluation of the neighborhood you are investing in and plan your expenditures wisely. You don't want to do all this work only to find you have overbuilt for the neighborhood.

Best to you and thanks for following us on Real Estate Investing 101.

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

our other sites:

www.SearchforHomesinPhoenix.com -- The best real estate search site for Greater Phoenix

www.UrbanLifeBlog.com -- Downtown and Central Phoenix Information

www.Short-Sale-Phoenix.com -- Everything you wanted to know about short sales.

November Rent Rates Fall Slightly In Phoenix Area

According to rentBits, a rental search engine for apartments and rental homes, the average rental rates for Phoenix have seen a slight decrease November over October. Collectively, across all bedrooms (3,541 listings), the average rental rates has decreased from $788 in October to $786 in November.

"Demand for rentals in Phoenix has not caught up with supply." says Dan Daugherty, CEO of rentBits. "This is putting slight downward pressure on the rental rates in this area."

In most other cities across the US, rental rates for apartments are seeing a slight decrease for the year. Much of this is due to a decrease in demand. Many renters for apartments are either moving into a single family home rental, moving back in with Family or sharing rooms with friends. This transitional period has put downward pressure on most apartment rental rates.

Source: http://rentbits.com/rb/t/rental-rates/phoenix-arizona

Hope you have a great weekend…

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

Visit our other blogs and sites:

Search for Homes in Phoenix... an incredible property search site
Short-Sale-Phoenix.com… Info site for short sales in Phoenix
Urban Life … the downtown and central Phoenix real estate Blog

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

Short Sales In Phoenix... Questions, Answers, Negotiation Help

Short sales are quickly becoming one of the main options investors have when buying a property in the Greater Phoenix and Scottsdale real estate market. In response, the Urban Team has launched a short sale specific web site. We'll tell you a bit more about that in a minute. Let's take a look at short sales first.

Some ask why short sales are becoming more prevalent when they have a reputation for being difficult to buy or sell. In the Valley of the Sun, the answer is pretty simple.

According to the Attorney General's office, 82% of Maricopa country homeowners with mortgages are upside down. If you are upside down on your mortgage, you have few options to sell your home. You can find a cash buyer who doesn't mind overpaying a lot (good luck with that one), you can sell your home and pay off the balance due on your mortgage (provided you have a lot of cash lying around) or you can do a short sale.

The good news is that short sales are getting easier to buy and sell. Many of the lenders have their act together and actually make decisions in under 60 days. What a concept!  In addition, new short sale guidelines are coming down the pike from Treasury that sound pretty good and will help the process immeasurably. We'll let you know when and what they do.

I just pulled some stats on the active listings in a few parts of towns and the data is pretty clear that short sales are on the rise. A couple months ago short sales comprised about 10% of the listings in Phoenix; Today the number is 31%. If we look at the NW Valley we see even higher numbers with short sales coming in at 35% of the active listings. Conversely, bank owned homes in the NW valley are way down with only 16% of the listings being REO properties. 

If you would like to learn more about short sales, the process and such, we have created a site just for you. Shot-Sale-Phoenix.com has lots of current information including: FAQ's, what goes into a short sale package, negotiating short sales, buyer questions as we ll as answers to those selling by short sale.

If there are areas of interest or questions not covered on the site, please let us know and we'll go hunting and foraging for the info.

Best to you on this beautiful November day.

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

The Urban Team... Featured Real Estate Columnists for Times Publishing

A couple months ago we were contacted by the publisher at Times Publishing to write a specialty column called "After The Bubble." We were asked to research and provide information about some of the great real estate deals in the Greater Phoenix market.

We spit the market into four sections: Great deals in the West Valley, the East Valley, Scottsdale and the luxury market. We scoured the Arizona Regional Multiple Listing Service (ARMLS) looking for recent home sales that were significantly less than what the home sold for a few years back.

The process has been very fun and the research has been surprising at times. You too can see the wild deals we find by picking up a copy of one of the many Times Publishing newspapers including: The Scottsdale Times, Chandler times, Northeast Phoenix Times, Glendale Times, Gilbert Times, Ahwatukee Times or East Mesa Times. The paper can be found in racks at most Grocery Stores, Walgreens and other locations valley wide.

We've included a scan of the column from the September edition. We hope you enjoy and be sure and pick up the October edition coming out soon. If you click on the image you will see it full size.

 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

Urban Team Hosts Sucessful Real Estate Investor Seminar & Discussion

Just a quick post on last night's Arizona residential real estate investor panel discussion. First, let us thank all those who came to the gathering. It wasn't a huge crowd, just the right number to have valuable discourse.

Gene Urban led things off with an update on the Greater Phoenix residential real estate market. The focus was on REOs and short sales. The fundamental market shift has been diminishing bank-owned listings with  a rise in short sale listings and actual closed transactions.

If you've read our blogs for a while, you know we have not been big fans of short sales. The odds of closing escrow have been pretty miserable and there are a lot of variables. That said, we are looking at them a bit more favorably. Many of the banks have finally gotten their act together on short sale transactions and more are closing escrow. There are still a lot of loose ends and concerns,  but the odds of closing escrow are much better and may be worth the hassle.

The stats on closed short sale transactions for the Greater Phoenix market are very interesting. During the first three months of 2009 only 1527 short sales made it through the bumpy process to completion. However, this past month, July 2009,  1304 short sales were reported "Sold" on ARMLS... that's a big performance shift.

Next up on the panel was Jennifer Ridenour, a ten year veteran of property management. She talked about the current state of the rental market. Her main topics were tenant acquisition and retention.

One area of concern is amateur landlords who are taking tenants without background checks and waiving part or all deposits. This puts a lot of pressure on the pros who have learned better. Oh well... the times are a changing. She recommends continuing tenant screening and perhaps be more open to tenants whose credit issues are primarily foreclosure related.

Tenant retention was another topic. Landlords are having to be more accommodating than in times past. A little honey helps keep happy tenants. We wrote a blog post on this topic a few weeks back you may want to take a look at...how to reduce vacancy rates on rental properties. 

Judy Giel with MetLife Home Loans was next up and talked about changes in lending practices. The focus of her talk was on condo loans. Last March Fannie Mae changed the loan guild lines on condos and FHA has fallen in with the tougher standards. The most problematic area has to do with HOA's. Fannie Mae won't buy loans on condos where over 15% of the homeowners in a complex are behind on HOA dues. As you can imagine, a lot of properties have more than 15% of the home owners behind on their dues.

Judy's take on the condo market is that loan aquisition will continue to  be difficult, resulting in a softening of condo sector. Cash investors may be able to pick up some incredible deals in Q4 2009 and into 2010. She advises very strong due-dilligence on HOAs.

The evening ended with a general Q & A session. A lot of good questions and answers where shared.

Best to you our loyal readers... we appreciate the time you spend with us.

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

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

Investing In Real Estate... Warren Buffett says it's a good hedge against the coming inflation

While perusing excerpts from the recent Berkshire Hathaway shareholder meeting an interesting headline caught my eye. CNN Money reported "Buffett wary of real estate slowdown ahead."  Based on the headline, I expected to hear that Buffett doesn't like real estate. The actual article talked little about real estate and rather more about real estate brokerages and mortgage companies.

Unsatisfied with another headline that didn't match the article, I Googled further. I found a interesting article about Buffett's take on inflation, one of my biggest worries.

 The article actually discussed inflation, I was encouraged. Next I was pleased to read Buffett likes real estate as an investment and recommends it as hedge against inflation. Here is an excerpt from the article.

The best way to fight inflation for the average consumer is probably this: Buy real estate with 20% down and a 30-year fixed rate mortgage. If you don't already own a home, this means you will likely be able to take advantage of the $8,000 first-time home buyer tax credit. If we get rampant inflation and you don't own a home, you will find your monthly rent obligations soaring. If you buy a home, your mortgage cost will remain the same as your salary increases, leaving you with more cash to save and invest.

The other nice thing about buying a home is that, even if property values appreciate slower than inflation, you can still end up ahead because of the power of leverage. For example:

• Buy a home at $100,000 with $20,000 down. Property value appreciates 3%. Inflation clocks in at 6%. So your property value goes up $3,000, but since your down payment was only $20,000, your cash on cash return is 15% -- easily preserving your purchasing power in the face of 6% inflation.

And that's a worst-case scenario because on average, real estate appreciation tends to beat inflation by a couple percentage points. Leverage magnifies that gain, meaning that inflation is actually the friend of real estate investors.

We were happy to read this from a man whose knowledge and long-term success is legendary.

Thanks for reading and just in case you don't know, we have what many consider the very best real estate search tool for the Arizona market. Click here to search for homes, foreclosure properties, condos, or land in the Greater Phoenix Arizona area.

Gene Urban & Ron Urban
The Urban Team at Realty Executives