There are a lot of pressures on rents our there, but little in terms of help for current owners.

It’s simply supply and demand, but also the quality of the supply and the tenants perceptions that govern the rental market.

Drive almost any area in the valley and you’ll see lots of discounts on rents.  While many times those discounts are a rouse to get people calling the perception is still there that deals are abound for the tenant.

And they are.  The combination of increased inventory and also new inventory from owners who got a good deal and can undercut the competition, is driving rental prices down.

If someone purchases a fourplex for $170,000 with renovations it will be much easier to compete for a tenant then for an owners who paid more and has higher obligations. They may still have to in order to get tenants, but it will take them longer the actually bite the bullet and lower rents.

Current tenants and potential tenants know this and are able to take advantage of the situation, but asking for reduced rents, improvements to the properties or a combination of the two: actively looking tenants want low move in cost and as little in additional expenses as possible.

Having a nice apartment, a washer and dryer and especially as a small patio or yard is a definite plus and will help lower vacancy rates.  If you can, add these items and you’ll get a long term benefit.

Be prepared for this to continue for a while.

Leasing is an important part of any real estate investment.  It that an understatement!  It is your business in the rental property sector.  The property is but a vehicle with it’s own benefits, but it is the tenants that provide the income, the cash flow so managing that part of the business, well, is crucial.  The article below covers a very common occurrence.

How To & How Not To Lease Out Your Phoenix Home?

There are many ways to invest in real estate.  One is to simply be a money lender.  While this is not truly real estate investing, it is a way to get a decent return on a secured asset.

Invest in Phoenix Real Estate Indirectly: Be a Money Lender With 8-12% Annual Return

While the reports below cover the single family home market.  It is just as important to follow because these numbers influence every facet of the multifamily sector: rental rates, vacancy, etc.

Read Current Phoenix Housing Reports

In the coming week we’ll update the sales numbers for both December 2009 and January 2010 for the small multifamily sector in Greater Phoenix.

(Graph by: PhoenixMarketTrends)

We’re currently revamping Arizona Apartment Investor into a new design, actually it’s been in the works for a while: until it’s completed shortly some updates will be located at PhoenixMarketTrends.com, like the most current look at the triplex and fourplex market in Greater Phoenix.  I chose only triplexes and fourplexes because I happen to like this size, it’s easy to buy and sell: it can be done so via a residential loan like FHA, VA or conventional, these are purchased by investors and owner occupant/investors and they are a good gauge of the small multifamily market.

Please continue reading here.

The Phoenix real estate market seems, to many, to be a bargain basement store where the owners of the store have no sense or are giving things away.  It’s not.  And, that is what cover in the article, 15% Return Cash on Cash On Phoenix Real Estate.  High returns are possible, but not with little or no input from the investors.  It is as it always was, the more astute investors get the better deals, which most educators don’t teach you.

The article, The Greater Phoenix Population Is Moving, Most Of It Down The Street, To The Home Next Door. covers how the population of Greater Phoenix is moving but simple within the same neighborhood from one house which is being sold short or going into foreclosure to another often one purchased by an investor.

There has always been some interest from people who want to combine the need for shelter and investment with purchasing a fourplex.  In the article, Where Are The Triplexes and Fourplexes More Suitable For Owner Occupants in Phoenix, I gripe a little bit and explain whey the choices for owner occupants are so limited.

Some investment related articles we did at PhoenixMarketTrends.com

• Case Study: A Central Phoenix Condo From Lender Owned To Long Term Investment:

This is a case study of a condo purchased by an out of town investor.  It was a lender owned property taken from a plain dirty place to a wonderful inviting home.

• How To Search For Income Multifamily Properties, Duplex, Triplex, Fourplex, In Greater Phoenix.

There are several ways to search for multifamily properties, here and at Phoenix Market Trends and we review them here.

• Being An Active Investor Is The Way To Passive Income

I like this post because I believe you have to be responsible for you own assets and that includes real estate, though your involvement may be limited, but it needs to be there.

• Real Estate Investment Strategies: Opportunities For High Long Term Returns With Multifamily

Multifamily is now in a many year low.  You can find properties priced at the same levels at the 1980’s.  That’s just extraordinary and there is a clear reason for it.  Just the same, there are very good reasons why well purchased multifamily properties will do well in the future, maybe even the near future.

While this weblog is particulary focused on multifamily and our partner weblog is mostly residential we publish general investment articles that are not specific to multifamily there.

Some of the latest articles include.

1. Investment Strategies:  Don’t wait to buy real estate, buy real estate and wait!.

Time is on the side of real estate investors, but only if they have real estate in the portfolio.

2. The location and investment return expectations.

You can’t change the location so pick it carefully. Your investment performance and source of the return will depend on it.

3. Making a move into real estate investing.

It’s not a plunge but a step by step walk.

It’s that cycle of the market where most multifamily property owners are having to adjust their modus operandi: even well cared for and superbly managed properties are seeing increased vacancy and pressures on rents.  This cycle seems to be of great girth, depth and resonance.

It’s a tough one, one that has and will continue to affect may owners.  It’s especially difficult for owners who debt prevents them from being competitive with owners who are able to reduce rents to stay competitive and still cash flow.

So what’s going on.

This is a perfect storm, a beauty from the distance but fierce when you’re in it.

1. Depressionary pressures: prices for many goods are down, but so are wages and unemployment.  Lower demand has forced many retailers to lower prices, cars, houses and many durable goods are down as well with rental rates right behind.

2. Consolidation: many people are consolidating living quarters reducing the need and increasing supply.

3. Vacancy: is also up because the buoyant housing market where prices have decreased a great deal making the rent vs. buy decision easier for the tenant.  The government is providing massive incentives in cash and low interest rates to reduce housing inventory, but at the same time hurting landlords.

4. Competition: is up from other owners and from single family homes and condos.  Multifamily owners not only have to compete against each other, but veryattractively priced single family homes.

What can you do.

This is not the time to cut back on maintenance, advertising and property management: quite the opposite. Owners need to be scrupulous with their resources and activities, but not to the detriment of the properties.

To compete in the is market you need to be diligent with having the units be clean, well cared, for, maintenance free and well advertised.

1. Adjust rents, even for existing tenants to keep them in place. It’s much less expensive to keep existing tenants then to to cope with vacancy, repairs and advertising for a new tenant.

2. Paint is an easy and cheap way to freshen up the interior and exterior. Often some strategically painted walls on the interior with interesting shades will make all the difference with out having to paint the entire interior.

3. Increase the competence and quality of your advertising. Make sure potential residents know about your property and get as much information as possible.

4. Be a little bit more flexible with credit. Many prospective tenants in the current market are the same people who lost their home to foreclosure or a short sale. These actions do not necessarily make them bad tenants.

Don’t skip on processing and due diligence. Sometimes it easy to bend your qualifications too much just to get a body in the doors. I’ll tell you from experience that tenants accepted out of desperation don’t work out and often end up costing much more then if you would have waited.

It’s a very difficult market now, one not seem in many decades. On the one hand there is a tremendous occasion to buy low priced distressed properties that will certainly do well. On the other hand current owners and new owners are all in the same difficult rental market. It’s people that take on adversity as a challange in personal life or business that get past it with strength, often in a better position then before.

One of the most frequently asked questions by investors is about any area is about crime.  We, as agents, cannot give out our opinions about crime or crime rates, but we can show you how you can easily find out.

Crime statistics, while an imperfect measurement at best, nevertheless provide some indication of the level of criminal activity in an area.

A visit or phone call to other law enforcement agencies may be required and is one of the best ways to get detailed information.

The list of links below will provide you with many answers to your questions about the area, city and state crime statistics.  Overall Greater Phoenix has a crime rate below that of  other major cities and is below the national average, but the question of weather an area is safe should bethoroughly investigated to your personal measures of safety and comfort.

• Phoenix Metro Area by zip code
• City of Phoenix
  
• City of Phoenix Hot Spot Map
  
• City of Tempe
• Arizona State University
• City of Glendale
• City of Surprise
• City of Avondale
• City of Scottsdale
• City of Mesa
• Sex Offender Information (Search by Zip Code, Area, Etc for registered sex offenders)
• FBI Crime Statistics
• Maricopa County Sheriff’s Office

While crime is important it’s only one consideration amongst a multitude of measures to consider: jobs, demographics, schools, stores, local culture are amongst the few.  All these will affect what types of clients you will attract.

Another good way, besides speaking with the neighborhood Police is to be in the neighborhood at different times of the day and night and observe what is happening.  Talk to other residents and get their opinions.

The CCIM Institute’s magazine, “Commercial Investment Real Estate” reports the following:

“The strongest net effective rent gains in history may occur between 2011 and 2015 as 75 million echo boomers finally can afford to strike out on their own, says RREEF Research.  This pent-up demand along with a below-average supply, limited by financing constraints and fewer construction starts in 2010 and 2011, will boost rents quickly.”

The Phoenix market has depressed pricing for multifamily, especially the smaller properties that saw a huge speculative run up during the recent boom.

With the depressed pricing, high cap rates and the coming “pent up demand” maybe now and the next year or two will be a rare opportunity with a quick payoff.  It’s sure starting to look this way.