Tony's Newsletter - October 2009

Rental Market:

First Rate Property Management finished September with a 5.26% vacancy rate. Overall, not too bad, but like I have been saying over and over, it’s the incentives that are really killing performance.

Historically, September has been the first month for things to slow down. Not this year. September was just as busy as July and August of this year. So far we have 24 notices to vacate in October. As long as we don’t see the barrage of skips (tenants vacating without notice), October should prove to be a much better month for us. A high turnover rate really sticks it to us; mostly in phone traffic. Literally, our agents are getting off a call only to answer another. I’m not too sure what to predict for this fall. I hope that the turnover rate continues to decrease and move in incentives can go away again.
To date, First Rate Property Management has evicted 7 tenants this year. Comparably, that’s outstanding. However, 2 of those were in September. I spoke with the Ada County Sheriff who assists in these and he reported that they are busier than they have ever been. In fact, he described it as an epidemic. I guess tenants have been seeing homeowners squatting in homes for months or even years, not making a mortgage payment and they thought they could do the same thing. Maybe they were hoping for a Tenant Bailout program.

Sales Market:

When we started seeing the correction in 2007, I remember thinking, “Man the market might completely correct itself and go right back to where it all started in 2004”. Well, as a whole, we have surpassed 2004 and have gone back even further in time. If there has ever been a time to buy, it definitely appears to be now. That’s not to say we won’t continue to see values drop, but if you purchase for the long-term, I am fairly confident it will prove out to be a good investment, even as we struggle through this poor rental market. Appreciation aside, the cash return alone should be 3-7 times greater than some of the CD rates you are seeing. Like I said last month, I think it is prudent to calculate some higher vacancy rates and lower rents when analyzing your next purchase.

Website:

About mid-October, we should be ready to move our new site to the FRPMrentals.com position. Its been a tough process and very happy to have that behind us. Also, our community websites will be rolling out soon too. They aren’t quite what we were hoping for, so we’ll look to improve them once they are up and running.

Currently http://www.coopercanyonapartments.com/ is live, and the following others will be up soon.

The following will be up soon:

http://www.barlowapartments.com/,

http://www.bridgewoodparktownhomes.com/,

http://www.gardengreenapartments.com/,

http://www.westsideplaceapartments.com/,

http://www.blodgettapartments.com/,

We’ve got about 15 others that we plan on adding by the year end. So that will make about 20 different website all directly linked to our own site. That should improve our Search Engine Optimization as well and perhaps allow us to decrease some of our on-line advertising costs.

Have you ever done a search for a Boise, Meridian, or Eagle rental. You’ll find that if our own site isn’t listed first, the sites that we pay advertising for will be.

Tony's Newsletter - September 2009

Rental Market:
Last month I expressed displeasure and frustration with the rental market. Unfortunately, August didn’t get any better. With the number of notices we have received in the first week of September, it doesn’t look like September is going to be much better. The high turnover rate to include the unscheduled move-outs (Tenant skips) has just got us working over time. It’s got us worn out and a bit beat up. But it has made us come up with some new advertising approaches. Starting in mid August, we started running a radio ad on a radio station that has listeners in the age demographics of most of our tenants. The effectiveness of the radio spot has not yet been proven. Click on the play button below to hear this radio spot.



Additionally, since our records indicate that most of our leads are now coming from referrals and yard signs, we have started advertising on bus stop benches .











And lastly, since we still have vacancies near BSU, we have advertised in the BSU Football inserts from the local paper. With our first game being against the Oregon Ducks, this actually got us a lot of exposure. For those of you who have had extended vacancies, you have our deepest sympathy and believe me, we want nothing more than to get the units filled. The sooner we get our available units inventory down, the sooner we can enjoy a less stressful and hectic work day.

We still have a great number of tenants buying homes and the other big reason for vacating continues to be for financial reasons. On the rent-up end of things, we’re just finding it very hard to find good quality tenants with good credit and income. Most of the leases signed in August required higher security deposits and/or co-signers to get the tenants approved. I am just amazed at what I am seeing on these credit reports.

Sales Market:
Values continue to decline and just absolute GOOD DEALS continue to come on the market. Even with rents down, most of these deals just make great sense.

Website:
On top of our market problems, the timing of the new site just hasn’t helped a bit. We commissioned the new site in January and hoped to get it up and running in February or March time frame, which is a slow time for us. Well, it got finished in June, and with summer being so incredibly busy, its just been difficult to devote the time to debug it. The new owner statements are now working perfectly. But the listing side is still not working. Additionally, the double entry of our listings are just killing us in the time it takes. If I only knew, I would have saved the money and waited.

Repairs/Improvements:
Well, I know, it’s tough to spend money when you have lower rental income, but if you have been holding off on some improvements, let us know. Our painting contractors, roofers, siding and window contractors are really coming down on their prices. So if you want to take advantage of the economy, you might ask us to get some bids and see if now is a good time to make those capital improvements.