Vacancy Rate as of March 24th, 2010

Below are graphs created by Rental Home Pros, who has the largest amount of rental data in the United States. These graphs show First Rate Property Management’s data as compared to the nation and our local competitors. The GREEN line represents First Rate Property Management, the BLUE line represents Nationwide, and YELLOW is our local competitors.

Average Days on Market is about 15 Days:

As the graph shows, First Rate Property Management listings average days on market are out performing our local competitors as well as those nationwide. However, I believe the data is skewed. For example, First Rate Property Management lists our properties upon time of notice. So they are listed nearly 30 days before they become vacant. So it appears that our average days on market is 15 days

Average Rent:

As the graphs below show, First Rate Property Managements rents on duplexes and 4 plexes are right at about $600 per month. This makes sense since most of our duplexes and four plexes are two bedrooms. We are slightly above the competition and about $100 lower than the national average.

And the graph immediately below this graph shows our average rents for single family home rentals. Again, we’re just a tad bit higher than our local competitors.

Vacancy Rate:

And finally, our vacancy rate as compared to the nation and local property managers. As you can see, our vacancy rate has been on a downward trend and the our competitors have remained fairly constant at just below 10%. Again, I believe the data to be slightly skewed as our vacancy rate has been lower than this. Assuming all data is skewed evenly, we’re doing very well.

First Rate Property Management Vacancy rate as of 03/24/10

In the 3rd week of March, our vacancy rate increased to 3.2%. However, 1% of those vacant properties have leases signed and tenants moving in, but since they are still vacant, we count them.

Obama’s Health Care and Will it Affect Rental Property Investments?

Well, it looks like we will have national healthcare sometime down the road. As I searched the web and reached out to others to find out how it will affect a small business owner like myself, I came across an interesting analogy. “The US Government is a lot like a couple who ran into financial difficulties and became depressed, so they went on a spending spree and now that they are about bankrupt, they decide that their last act will one of a huge charitable donation.”

So how are we going to pay for it? Well, I am not sure anyone knows, but I think I have uncovered some strong possiblities. According to a March 17th Wallstreet Journal article, we could be looking at a 2.9% medicare tax increase on RENTS and CAPITAL GAINS. Capital gains tax was scheduled to return to 20% at the end of this year anyways, so that may end up being 22.9%. A 1031 Tax Deffered Exchange will still protect or defer this tax for us investors who decide to sell and exchange into a better performing property. According to ths article, the 2.9% tax on rents will be only for those who make over $200,000 individually or $250,000 for married couples. I’ll keep you posted as I learn more.

2.5% Vacancy:

Our vacancy rate continues to be very low at just 2.5%. Based on the inquiry and application rate, I am expecting that to climb in April, but maybe things will pick up in the next two weeks. We did push some rents up and drop some move-in specials, so that perhaps is what has slowed down our inquiry rate. We’ll continue to monitor the traffic rate for each listing and make the necessary adjustments to minimize vacancy.

Swing Shift:

With the time change comes extended daylight hours. We have added a swing shift so that we can show properties until 8pm each night. I don’t know any other professional property management companies out there that has extended hours like that, so we tend to capitalize on lease signings.

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.