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.

1st week of February’s Vacancy Rate

This week FRPM’s vacancy rate was 3.5%. This very low rate is deceiving as a vacancy rate this minimal generally indicates that rents should be increased and that is not the case. In fact, I completely credit this below market vacancy rate to our pro-active renewal program, move-in incentives, and decreased rents. I know this because we can go weeks without hardly any calls and the moment we drop the rent or add a move-in incentive our call volume increases. We’re in a market where the tenant seem to expect it and therefore I believe they call those units first.



Sale Market Update:

I took a class last week and the instructor stated that Idaho was ranked 6th within the nation for foreclosures. I’ve been representing buyers buying properties at the foreclosure auctions so I look at the lists of foreclosures coming down the pipeline and there are hundreds each week within Ada County alone. I think as long as we continue to see this many foreclosures, we’ll continue to see values decrease. So I am still advising my clients that now is a good time to buy and four plexes in particular are appear to have the biggest bang for your buck.

Rental Application Trends for 2010

In the January 2010 issue of RentGrow, a national tenant screening company and NARPM Affiliate, stated that 2009 was filled with enormous job loss and record high foreclosures causing a turbulent rental market. RentGrow stated that rental traffic in 2009 was down because would-be tenants were staying put or moving in with family. First Rate Property Management saw this trend as well, but found that tenants weren’t just moving back home with mom and dad, many were consolidating households to save money. With no indications of an improved job market within the Boise area, I predict that 2010 will be similar to 2009 as far as the amount of applications processed.


RentGrow did predict a Decline in Credit Quality of Applicants. They stated that with job losses and home foreclosures at record highs in 2008 and 2009, the credit worthiness of the average American declined significantly. With economic recovery, individuals will be trying to re-enter the rental market, but their credit scores won’t be as quick to recover. I believe this to be very accurate, as we’ve been seeing the quality of our applicants declining each and every year for several years now.

RentGrow also anticipated an Increase in Applicants with No Credit History. In their newsletter, they cited that the percentage of applicants with no credit history is expected to increase in 2010 due to a growing rental population of young adults and major legislative reform effecting credit card companies.

Visit http://www.rentgrow.com/ to view their January 2010 newsletter