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.

A question I get quite often, mainly because I work with buyers and sellers of investment properties, including homes and multifamily, is: what are the rents in a particular area. 

A buyer needs to know this to establish the value of the property being considered: to evaluate the demand and supply in a particular neighborhood: and the gauge the ability to pursue other techniques to increase his/her return, things like repositioning.

A manager -whether an owner manager or a hired manager- needs to know the market to keep vacancy rates low but also to maximize the return and track any trends.

When a property may go up for sale or an owner needs to evaluate the investment, he/she will also need to know -that is of course if they don’t already know- what the rental market is like, what are the trends, and what affect will they have on the price and in who’s favor will the negotiations tip. In each stage the access to reliable rental data is vital.

But how to you get that data and how do you ensure it’s the best data?

There are many ways to get rental data.  Some people assume that looking through a paper is good or craigslist: others ask a Realtor: and yet others do a rental survey.

The two former data gathering sources can be used as an overall gauge but this is never as accurate as the latter: the rental survey, and it is this that I want to focus on. 

The Rental Survey.

A rental survey a concise study of the rental market -whether single family homes or multifamily apartment – which involves more then a surface view: it involves getting into the details by getting a first hand look at your competition. To get the most accurate rental data you should do as many of the following activities as possible.

1.  Drive the neighborhood and see how many signs are up? Are they individual owners or management companies.  If you see signs over and over the same location it could mean multiple things but higher vacancies are one of them: this could also signify a very transient neighborhood and tenants that move often lower your income and increase risk.

2.  View the apartments or homes if possible.  It’s not the rates themselves that are singularly important.  What is a tenant getting for the rent.  Which utilities are included or not and who is responsible for what.  In addition the condition of the property is very important: flooring, paint, state of the kitchen and cleanliness are very important and have a large affect on the rental rate.

3.  Speak with the owners or management companies to see how long the property has been available  and are there any concessions offered.  Each is a good source of information but you need to vet it as well as you may not get the whole story.

4.  Talk to a management company of Realtor who does management in the area.  Some Realtors do management and some -though few- do a rental survey themselves.  You may want to talk to someone like that but be courteous about requesting free information if you’re not a client.  It takes a lot of work to do a proper survey.

5.  Talk to fellow investors who do work in the area.  Some real estate investment clubs and organizations have enough members that you’re bound to find someone who is in the know.  In Greater Phoenix there are several clubs but AZREIA is the larges and the meeting are a great source first hand information.

6.  Then compare to active listing in the various sources available to see any discrepancies between what is being offered and what is actually happening; You can also compare what you have found to a general survey of rental rates in Phoenix, like this one to see if there are any trends.

Just as you would want to know where you customers will come from, how much they earn, and spend before you open any sort of business you want to know the same for an investment property because this is where your cash flow will come from and you want to know the quality and value of that cash flow. 

Even small discrepancies can affect values greatly.  Over time an owner can lose lots of income due to improper rental pricing or loss of value when selling.  A buyer can be in a much stronger negotiating position if he/she knows the strength of the income and any market pressures on it.

A rental survey should be part of any due diligence for a buyer and seller and a regular activity for managers/owners of a property. 

Part of our service for our clients is a rental survey when buying or selling an investment property.

You can sometimes get a house rented by only sticking in the ground a "for rent" sign but just as with selling a home its worth going the extra effort to expose your home to as many prospective tenants as possible. Below are several things you can do to increase the possibility of renting a house, doing it sooner and possibly for more. Here is a simple quick overview of what to consider when leasing your property.

1. Start by having a clean and prepared property.

There is nothing worse to turn off good tenants then a property which is not clean and I mean really clean, clean enough that you would be happy living there. Even if you are prepping a property its probably worth it to finish it and clean it up before you show it. As imaginative as people are its just hard to imagine a dirty property clean. Just spend the money and time, you’ll often get better tenants and better rents. Plus it will be much easier to take photos for additional exposure.

2. Have a "For Rent" sign.

This is almost free advertising. It exposes a property to people seeking rentals in a particular neighborhoods who may be driving around and to others in the area who may know someone who would like to rent there. Take it a step further and have a dedicated property website. You can get them for for a minimal cost online. A good example may be www.22032n74th.com. This was a bit more expensive but you can get a more scaled down version for much less. Then have a rider made for about $30.00 which will hang on the sign. The same site you created can be used for additional exposure online.

3. Advertise online.

Not yourself but the property. The dedicated website you created can be used as a catalyst for additional exposure. Its an easy and quick way to have lot of photos, a floor plan, and full details. The website address can be placed in places like Craigslist.com. Photos rent properties. The more the better. I have up to 80 photos, but usually 10-20 is fine, as long as it shows the house well. Remember that many of your prospective tenants may be out of state and they will be searching online before they come here.

4. Paid placement and other types of advertising.

You can seek additional exposure though paid placement in some online rental sites, in the newspapers or local editions. your return for such advertising will vary depending on the exposure and the property being rented. It may or may not be worth it.
Sometimes a church or other organizations and local businesses may be in need of rentals. the more people know the better.

5. Place your property for rent with an agent.

If you hire a Realtor to rent your property most of all those things will be done for you plus much more exposure then you may put together. Plus many Realtors have economies of scale for advertising. This means that they can expose your home in more paces for less money. Also consider your time to arrange meeting and show properties. This can be taken car of for you. Just a with selling, pick an agent that is active and can show you what will be done. There are fees involved but considering time and the hassle its usually worth if to hire an agent for leasing out a home or condo, but not an apartment.

6. Write an enticing ad.

Write carefully and be succinct. Make it easy for prospective tenants to reach you and get they information they need.

Having a clean well prepared property and not skimping on advertising will help you rent it out quicker and for more. Be open to negotiation. It may be worth it to lease a property for a little less and have a better tenant and leased our sooner.