Median Lease:  $1,100 vs $1,100, Month-over-Month flat

Average Lease:  $1,276 vs $1,269, Month-over-Month +0.55%

Avg. Days on Market:  38 vs 38, Month-over-Month flat

Rent Check Quotient™: 48% vs 50%, Month-over-Month  -4%

Both Median Lease and Days on Market (DOM) stay flat and Average Lease is within 1% month-over-month. It shows the rental market is doing well and the demand and supply have been balanced in the month of July 2013.

However, the Rent Check Quotient improved by 4% to reach 48% meaning number of leases is less than the number of closed sales. In the healthy housing market, the RCO™ is at the range of 30% – 36%. So, the mumber of leases is still on the high side and this is mainly because many renters came from short sale or foreclosure.

Rent Check Quotient™ (RCQ™) is derived by dividing the # of leases by the # of closed sales

All above stats are for single family homes rentals. Condominium and apartment rentals are not included.

Median Lease:  $1,100 vs $1,100, Month-over-Month flat

Average Lease:  $1,269 vs $1,252, Month-over-Month +1.36%

Avg. Days on Market:  38 vs 40, Month-over-Month drop of -5.00%

Rent Check Quotient™: 50% vs 43%, Month-over-Month +16.3%

Days on Market (DOM) further dropped to 38 showing continuous reduced supply of rental properties in the recent months.

Nonetheless, the Rent Check Quotient jumped by 16.3% to 50%. Hopefully it stays below 50% which means number of sales equals the number of leases.

Rent Check Quotient™ (RCQ™) is derived by dividing the # of leases by the # of closed sales

All above stats are for single family homes rentals. Condominium and apartment rentals are not included.

Metro Phoenix Rental Market Snapshot

Median Lease:  $1,100 vs $1,074, Month-over-Month +2.42%

Average Lease:  $1,252 vs $1,225, Month-over-Month +2.20%

Avg. Days on Market:  40 vs 51, Month-over-Month drop of -21.57%

Rent Check Quotient™: 43% vs 40%, Month-over-Month  +7.5%

Days on Market (DOM) dropped to 40 all of a sudden. This could be the result of continuous limited supply of  for sale properties since the begining of 2013.

On the other hand, the Rent Check Quotient increased by 7.5%. Hopefully it stays below 50% which means sales equals lease and no increase of the rental inventory.

Rent Check Quotient™ (RCQ™) is derived by dividing the # of leases by the # of closed sales

All above stats are for single family homes rentals. Condominium and apartment rentals are not included.

In the Southeast Valley, considerable growth in the tech sector at companies such as Intel and eBay has created strong demand for luxury rentals. Apartment construction is occurring at a rapid clip in Tempe, Chandler and Gilbert with nearly 3,300 units underway. The new units will outpace demand as the year progresses, softening occupancy rates and rent growth. In addition, rising home sales will also pose a challenge for operators as more renters consider homeownership ahead of a further rise in prices or interest rates this year. Private equity firms are active at the top end of the market with cap rates typically in the low- to mid-5 percent range.

• Employment – 3.5% increase in total employment – In 2013, employment in the Phoenix metro will rise by 63,000 positions, or 3.5 percent. The education and health services, and financial sectors will each expand payrolls by more than 10,000 positions. During 2012, job growth reached 2.8 percent.
• Construction – 3,223 units will be completed – A total of 3,223 units will be brought into service this year, reflecting a 1.1 percent gain in inventory. This includes more than 1,700 market-rate apartments. Last year 1,123 units were delivered.
• Vacancy – 140 basis point decrease in vacancy – Greater renter demand will outpace the surge in inventory additions this year. As a result, vacancy will fall 140 basis points to 6.2 percent. The preceding year there was a 70-basis point fall.
• Rent – 2.9% increase in effective rents – Improving occupancy will allow operators to raise rents. The average available effective rent will advance 2.9 percent in 2013 to $775 per month. Last year, rents moved up 2.0 percent.

Please not above are forecast for the apartment rental. If you are in the single family home rental, the Rent Check published by ARMLS will be your good reference. However, the apartment rental is competing with single family rental for tenants in many market. So, this information is good to know and to keep in mind when you are making your move of invest or listing rentals.

One of the important task for landlord and property manager is to retain good tenants. Good renters make great assets to both the landlord and property manager.

Here are 7 things to do to keep good tenants happy and in no rush to move:

1. Respond quickly to complaints about broken appliance or HVAC issue, particularly during summer. Suggest landlord to purchase home warranty policy or consider hiring a HVAC contractor to perform seasonal tune up the HVAC system.
2. Schedule maintenance and repairs at times convenient for the tenants, and get tenant permission first before cvontractor entering the property.
3. Follow through on repair requests and other commitments. Recognize that all tenants want their repairs handled promptly, efficiently, and predictably. Many tenants are “renters by choice” who prefer to rent rather than own. Partly because they want someone else to be responsible for repairs. Have a repair and maintenance process that helps to consistently meet or exceed tenant expectations is important.
4. Give the tenants advance notice of upcoming inconveniences that you’re aware of. If you’re aware of upcoming road closures or a planned power or water outage, consider sending out a newsletter, email, or phone call informing the tenants ahead of time.
5. If you are allowing pets, make sure pet owner clean up after them! Tenant retention has been shown to improve if pets are allowed, and certainly there are some great tenants out there who are also animal lovers. If tenants are allowed to keep pets, make sure the lease outlines that the tenant is responsible for all pet damages and for cleaning up after the pets.
6. Be polite, courteous, and professional. Recognize that being a landlord or property manager requires great customer service skills. When the phone rings and the call is from a tenant who is paying thousands of dollars a year, speak politely and be helpful.
7. Create opportunities to appreciate the good tenants. Take time to say “thank you” or send thank-you cards when appropriate. Gestures such as these go a long way in making your good tenants feel welcome and appreciated.

Good tenants know they are good tenants, and they expect to be treated that way. It’s worth the extra effort to keep them. Especially when the rent is paid on time and the property is well maintained.

Proving a negative is never an easy task. Unfortunately, that’s what many landlords are forced to do when fighting deadbeat tenants.

The most likely time that a tenant will dispute the condition of a rental property is when they are in court fighting an eviction or asking for their security deposit back. That’s because they realize they can get an offset against what they may owe in rent or damages by complaining to the judge that the property was poorly managed.

Often, judges grant tenants the leeway to raise every concern imaginable — from bedbugs to ghosts. Sometimes landlords are caught completely off guard.

Move-in/move-out checklist is a landlord’s secret weapon for successfully managing properties, and for defending against frivolous tenant claims.

The move-in/move-out checklist accomplish a number of things:

• The process proves to the tenant that the landlord’s paying attention to the condition of the property.
• The tenant realizes they’ll have a hard time proving their claims in court, and may back off. The chance of that is even greater if the landlord’s taking pictures or video and included them in the move-in/move-out checklist.
• The move-in/move-out checklist forces a tenant to pipe up about needed repairs immediately, rather than sitting passively by for months before raising the concern. If the item is not noted on the move-in report, the landlord can ‘prove a negative’ — that the damage was not there when the tenant moved in.
• The form helps in resolving legitimate condition issues so they don’t come up at the end of the lease term — or during the eviction.

To make the most of move-in/move-out inspections, follow these tips:

• Have the tenant present, especially at move-in.
• Use the Arizona Association of Realtor’s format of the checklist. Here is the copy of AAR move-in/move-out checklist.
• Ask tenants to sign the reports and note any items of concern.
• Allow tenants a few days after move-in to update the report. That helps bolster the landlord’s case that any damage was caused by the new tenant.
• Fix any items that are flagged at move-in. Keep receipts of any repairs.
• Save all tenant communications, including notes of phone calls and copies of emails in the tenant’s file.
• Offer tenants a ‘pre-move-out’  inspection a month before the lease ends while they still have time to clean and restore the property.

The definition of normal wear and tear and damage is often a sticking point between landlords and tenants. Here are some tips to help defuse those tense discussions:

Normal Wear and Tear vs Damage

As a landlord state law allows you to collect a security deposit, but the deposit must be refundable if the property is in the same condition as move in, minus normal wear and tear. This means landlords may only charge tenants for damage done to the property.

Here are a few examples of Normal Wear and Tear:

• Worn carpet and linoleum
• Cracks in walls caused by settling
• Faded or blistered paint

Here are examples of Damage:

• Stained carpet and linoleum
• Holes and dents in walls caused by accidents or carelessness
• Drawings on walls or unapproved painting by tenant

Although normal wear and tear vs. damage can be hard to define, there are a few things you can do to protect yourself from any confusion.

As with most things, communication is the key: if both you and your tenants are clear about the condition of the unit at move-in, the importance of promptly reporting needed repairs, and expectations at move-out, the tenancy and the end of the tenancy will be smoother.

Insist on a walk-through with new tenants. At the walk-through the tenants will have an opportunity to note in writing existing damage and wear and tear in the rental. Also, take dated photographs to keep on file. This way both the landlord and tenant are protected. The tenant can’t be charged for damage that was not documented in the walk through, and the landlord has picture proof of the unit’s condition at move in.

Have your lease outline the requirements for taking care of the property and promptly calling for any repairs needed. Make the tenants aware if they do not not notify the landlord in a timely manner of any issues, they can be charged for any damage that occurred from their negligence.

Freddie Mac reports that residents of apartment communities that include five or more rental units currently make up 15 million U.S. households — a figure that is expected to climb with shifting demographics and housing preferences.

Such factors as demographic trends, household formations, and higher credit standards for home loans are driving the increase in rental housing.  At the same time, though, affordable rental housing is becoming more elusive in certain parts of the country because of gross rent, or rent plus resident-paid utilities.

More than half of all people who rent spend more than 30 percent of their income on housing — an increase from 40 percent in 2000.  Low-income households tend to spend even larger portions of their incomes on rent, based on the U.S. Census Bureau’s American Community Survey 2000-2011.

Based on the stats, we are watching closely the rent/income ratio in all of our rental applications.