More on Legislation and Lead Base Paint

First Rate Property Management becomes a Certified Lead Based Paint Renovator


Lead based paint was banned from residential use in 1978 due to the known health issues it can cause, especially to children under the age of 6 years old. A new law was passed by the EPA and will take effect April 22nd that requires that repairs done to homes built prior to 1978 can cause disturbances to lead based paint to be completed by a Certified Renovator. A Certified Renovator has to complete an EPA-accredited renovator course that teaches you how to perform lead-safe work practices safely and effectively. This includes proper testing for lead based paint, preparation, record keeping, and clean up of dust and debris to minimized possible exposures to lead based paint. To comply, FRPM has already gotten our Maintenance Coordinator, Sheila Thomason, certified in lead based paint renovation. So what most likely will happen in the future is that FRPM will purchase Lead Based Paint test kits and test any property built prior to 1978 that requires any work that will disturb the paint and make sure that property procedures are followed.

First Rate Property Management fights for all Idaho Landlords

On March 9, 2010, Idaho House bill 505 ( interest paid on Security deposits held by Landlords ) was presented to the Idaho house business committee. The bill applied to residential as well as commercial landlords. Members from a number of professional associations were there to testify to include the National Association of Residential Property Managers (NARPM) and First Rate Property Management’s Lizz Loop, MPM, RMP and Sheila Thomason. Our argument was that trust accounts don’t pay interest and if they did, the cost to administer the program would far exceed any interest paid to the tenant. The committee voted and decided to do what they call in substitute (hold off for now) Rep. We’ll be sure to let you know if this bill surfaces again and once again fight to keep landlord rights in place.

Four Plex and Duplex Sales Update

Bank owned and Short-sales continue to dictate the market value on Ada county duplexes and four plexes. We have a 20 month supply of four plexes and 16 months of supply on duplexes. So based on the foreclosures coming down the pipe and the current absorption rate, I am still confident that we have not reached the bottom yet. So it is still a good time to buy. Performance is just like the good ol’ days.

Legislation, Lead Based Paint, and Vacancy

Our vacancy dropped a tad bit to 2.56%. Below is a graph that we will publish every so often so that you can see the trends. As I stated before, February was a great month for us. We leased a lot of properties up. Our system creates a report of all properties on notice and vacant. It tracks where we are at on the turnover, any applications, dates for lease signings, etc. In reviewing this report, I am not seeing as many applications and lease signings scheduled. Hopefully that only indicates an interim slow down.

Legislation
Members of First Rate Property Management along with local members of the National Association of Residential Property Managers went to the State Capital Building on March 9th to fight a new bill that would cause hard ache and added costs to property managers. In summary, we got the bill squashed. We’ll post a summary of the bill and what our arguments were soon.

Lead Based Paint
The EPA has new laws concerning maintenance and repair of homes built prior to 1978 coming out in April. On March 8th, Sheila Thomason attended the required education and is now certified. Look for a post soon on how these new laws affect Landlords and the upkeep of your rentals.

March vacancy rises slightly

Turnover rate and vacancy are completely different terms. The turnover rate is the rate our inventory becomes available, where vacancy rate is the percentage of our inventory that is vacant. The vacancy rate can never exceed the turnover rate. Currently our turnover rate is 6.5% and our vacancy is right at 3%. Since we receive most of our notices to vacate 30-days in advance, we can predict that our vacancy rate in April will not exceed 6.5%.

Last week I posted that I saw a lot of notices from tenants buying homes. That certainly was the prevailing reason for notice, but only accounted for about 60% of the notices received. We preleased a good number of our properties in February, so if that trend continues, I anticipate our vacancy to remain low in comparison to the market.

Also, as a reminder, our turnover rate is very predictable. January turnover rate is low, mostly due to the cold weather. Then as the weather improves the turnover rate increases each month. Around June or July, depending on when school gets out, the turnover rate explodes. In September, the turnover rate slows down as the weather cools down and school goes back in session. The end of November and all of December has a very low turnover rate.

The vacancy rate is always less than the turnover rate, but during super slow times like December and January, the vacancy rate can match the turnover rate. The other time vacancy rate is close to turnover rate is in the summer months and I think that is mostly influenced by the volume, not so much the market.

$8K Housing Credit Termination causing some urgency with tenants

In order to receive the $8,000 Housing Tax Credit first time home buyers need to be under contract by the end of April and closed by the end of June. Based on the number of tenants giving First Rate Property Management notice to vacate due to buying a home, there seems to be a sense of urgency to take advantage of the $8K tax credit now. We saw the same thing happen in the fall of 2009 as the original $8,000 tax credit was due to terminate at the end of the year. If history repeats itself, we can expect more notices to come in April and May.

As I understand it, the $8,000 tax credit will not be extended again. Perhaps this will help stabilize our rental market.

Below is a link to a Wall Street Journal article...

that discussed the current rental investment market. For the most part, I agree with what the article says. There is no doubt that at today’s prices, the right investment property can produce a great return. I love the example of the California investors who are boasting a 6% return. Come to Boise, we can do better than that. And then the story of the man who bought the Manhattan condo because values were going up so high, he would be able to turn around and sell it for a profit. I know a lot of people that played that game and they made a lot of money. But unfortunately, I know a lot of people that were late into the game and then when the music stopped, they were left without a chair. But worse yet, he still doesn’t get it. He states that once he pays off the loan, he’ll be producing a positive income. Sure, its positive but no growth on his initial investment. It kind of reminds me of the people that call me and say, “I want a property with good positive cash flow”. Well, heck, I can get you good positive cash flow on just about any property if you pay cash for the property. So what they really want is something that is cash positive with the least amount down and with the greatest potential of future income.


http://online.wsj.com/article_email/SB20001424052748703798904575069341576405172-lMyQjAyMTAwMDIwNTEyNDUyWj.html

Mid-February’s Vacancy Rate

First Rate Property Management’s vacancy rate continued to lower to 2.9%. This is absolutely phenomenal. To me the number suggest a time to increase rents. The Leasing agents tell me “No, it’s the low rents and incentives that are getting us so much activity”. I’ll continue to watch and unless we have numerous properties in a given area, I’ll probably be pushing leasing to begin cutting back incentives and not to be so quick to drop the rent.

Tony’s Absence:

I am sorry, I never updated everyone on my election as the National Association of Residential Property Manager’s (NARPM’s) 2010 President-elect. Which means unless I screw it up, I’ll be NARPM’s President in 2011. This is a volunteer role that I really enjoy, but it does require some travel. When I am traveling it is difficult to return calls, due to time zone changes and that I am up early and back late. I am generally able to catch up on email in the late evenings. So as a general reminder, below is the contact information for the department heads. Each of these should be able to respond to any of your questions or concerns in a timely manner.

General Manager- Lizz Loop, MPM® RMP® 208-577-5202    Lizz@FRPMrentals.com

Leasing Manager- Maria Swanson 208-577-5203   Marie@FRPMrentals.com

Maintenance Coordinator- Sheila Thomason 208-577-5201   Sheila@FRPMrentals.com

Accounting Manager- Cathy Hazlett  208-577-5204   Cathy@FRPMrentals.com

FRPM VACANCY RATE CONTINUES TO HOLD STRONG

Today FRPM posted a 3.8% vacancy rate. There must be something in the water. We’re still seeing some difficulty in filling some properties due to poor applicants, but for the most part, we are getting things rented. Callers are still expecting move-in incentives and low rents. In fact, in reviewing the traffic reports there is a very clear difference in the number of inquiries for properties with no incentives versus those with incentives.