Swope Investment Properties publishes a newsletter like this one This quarter’s newsletter discusses property inspections, maintenance tips, hazard insurance, supporting a local charity, and provides some listing information. Please contact Shane Brown at firstname.lastname@example.org to be added to their electronic distribution list.
Swope Investment Properties is the leader in Boise investment properties, and surrounding areas. Their agents specialize in residential income properties. Established in 2003 by Mike Swope, the. brokerage provides a higher level of client services and satisfaction by using a consultant/advisor based approached, over getting the sale. Swope agents understand that honesty and integrity are the keys to helping clients maximize their investment dollars, which often means advising clients not to buy certain properties to protect their financial interest.
While most Boise real estate brokerages concentrate on residential housing, these agents are trained in the specific niche of investment properties. The Swope team has broad-based market knowledge in areas such as investing, cash flow, return on investment, analysis, property management, and tax implications. All of their agents are real estate investors themselves, which provides them with invaluable experience, especially when it comes to investing in rentals.
It’s New, Why Inspect?
We always recommend an independent home inspection
regardless if its a home or multi-unit development that is being
purchased. What if it’s new construction? What if it’s a premier
builder? It’s not only my opinion, but its been my experience that
you absolutely should. With the shortage of multi-family housing,
some are rushing construction to completion and there is a lot being
missed. The punch lists can be significant.
A home inspection gives the Buyer detailed information about
the overall condition of the property prior to purchase. A property
inspection should provide an in-depth and unbiased evaluation of
the physical condition, structure, construction, and mechanical
systems, as well as identify items that need to be repaired or
replaced. Additionally, the inspector should be able to estimate the
remaining useful life of the major systems and equipment.
Inspectors will also check the attic and crawlspace to ensure there
aren’t problems that are not always apparent.
Make an independent home inspection part of your due
diligence, regardless of the property type or age. Our agents have
worked with a handful of professional home inspectors and are
happy to assist you.
By: Tony Drost
Feb. Maintenance Tips
1. Spiff up some paint - Freshen
up interior paint on walls, cabinets,
doors and trim. If you want to
hire a pro, call before spring and
you might get a discount.
2. Clean out dryer vents - Clean the
duct that connects the back of the
dryer to the outside vent. If you
don’t, lint and other debris could
decrease your dryers efficiency,
increase energy bills and even
3. Clean refrigerator coils- To keep
your refrigerator in tiptop shape
and save energy, clean the
refrigerator condenser coils
located in the back or on the
bottom of the appliance.
4. Give your mattress some love-
Vacuum box springs and the
mattress top and bottom. Rotate
or flip the mattress.
5. Clean windows- Clean up the
insides of the windows and let
some extra vitamin D in. While
you are cleaning you can ensure
the weather seals haven’t been
compromised and there is no
condensation forming. Also check
the caulking and weather stripping.
In Case of Emergency, Are you Covered?
Homeowner’s insurance provides a benefit to investing in real estate
that uninsurable assets don’t share. I truly valued the information
provided by Renae Goodwin of Payne West Insurance as a reminder
how to get the most from an insurance policy.
Goodwin addressed common mistakes made by real estate investors,
and shared these insights and others at a meeting of AVID Investor’s
• If your property is in an LLC, adding your LLC as an additionally
named insured is a commonly missed detail.
• Have your insurance agent run your property through the
replacement cost estimator every few years. If you haven’t
updated your coverage amounts or rent amounts, you may be
• Include personal property in a landlord policy – that covers the
range, fridge, window treatments and faucets. The dishwasher is
“built in” and already would be covered.
• Get a personal umbrella policy if you don’t already have one.
• Renae Goodwin of Payne West recommends using zip ties to add
red water shut off tags to the water shut off valves under sinks,
near toilets and for the main line of the house, so tenants may
help themselves in case of a late-night water leak.
• Understand what would fall under a separate endorsement a
separate policy. An extra catastrophe policy may be required to
cover floods, earthquakes or landslides.
• Ensure your lease or your property manager requires that tenants
carry renter’s insurance.
More information like this can by gained by taking advantage of your
invitation to an upcoming meeting of AVID Investor’s Club on
February 20th or March 20th.
AVID meets on the third Wednesday of every month except August
Swope Gives Back
Every year our office votes on a local
charity/non-profit to donate a portion
of our commission checks to. This
year we decided on Camp Rainbow
Gold and in January we dropped of a
check for $2,800! Thank you to
everyone who allowed us to represent
you and allow us to make a difference
in our local community!
Tony Drost, Chairman
What in the world would the cost of a new Corvette have in common with Boise rents? Please bear with me on the comparison of the two. In Boise, you can buy a 2019 Corvette ZR1 for $135,895. It would be incorrect to say, that cars in Boise cost $135K. It would be wrong to say the average new Corvette in Boise is about $135K, because you can buy a 2019 Corvette Stringray for about $60,000. And there are a lot more Corvette Stingrays sold than ZR1’s. Even within the Stingray model, you have various trims and options to choose from that cause pricing differences.
Within the last week, there have been several news reports about Boise’s sky rocketing rents. One such story referenced a one-bedroom apartment, with approximately 650 square feet renting in the $1,300’s. Unfortunately, some investors read this and now expect higher rents on their one-bedroom units. Like the Corvette, there are a lot of factors that go into pricing, and $1,300 is certainly not the Boise average.
The rent prices here in the Treasure Valley are indeed rising, but there is a lot that goes into determining those numbers. When we set rents here at First Rate property Management, we don’t just pick a number out of a hat. A lot of research and time goes into determining that RENT amount. We look at the following:
- Square Footage
The below graph is the 4th quarter vacancy and rent results posted by The SW Idaho Chapter of the National Association or Residential Managers. According to the Chapter, the average rent for one-bedroom multi-family units was $738. I agree, that sounds low, and certainly not what we’re seeing within our own portfolio. First, the purpose of the Chapter’s survey is to report vacancy and rental rate trends for buildings with 2-15 units. So, this survey excludes the large and high-end downtown apartments with generous amenities. If you have a larger complex or a downtown apartment, there are other sources that we refer to on setting a rent price, which are generally much higher.
Currently FRPM’s one-bedrooms range from $750 to $925 per month. In fact, if you are looking for a one-bedroom apartment, we actually have a couple that are in a great location too. Click here. Boise is growing. Rents are increasing. And we’re seeing new product and markets open up, to include some down town and lavish apartments along with one or two Corvette ZR1s.
Arica Elordi, Leasing Team Member
The following post is from Jack Harty, a commercial lender with Harty Mortgage Advisors.
Various observers of the economy see threats to the economy coming from opposite directions for two different and contradictory reasons. Some think the economy is weakening; others think it is too vigorous and on the verge of excessive inflation. That puts the economy somewhere between Scylla and Charybdis aka a Rock and a Hard Place. We have been warned about mutually exclusive risks of impending recession and an overheating economy (read: inflation).
The ancient Greek economist Homer gave us a graphic depiction of the twin threats to the economy in his epic economic treatise the Odyssey.
Photo: Scylla (Inflation) on left; Charybdis (Recession) on right.
Those who see higher interest rates in the future can still cling to that vision because some day that prediction will be correct…just not in Q1 2019.
Is the sky falling?
For those who still cling to the quaint notion that facts-matter, below are some happy facts.
Interest Rates Edge Downward:
The Fed ceased tapping the economy’s brakes in January. Since November, long-term rates have fallen over 50 basis points (1/2%).
10 Yr T Bond Yield - Past 3 Months:
On January 30 CNBC quoted Fed Chairman Powell: “The case for raising rates has weakened somewhat,” Powell said during a news conference following this week’s two-day Federal Open Market Committee meeting.
The Fed vowed to take a “patient” approach toward further hikes. Powell added that the funds rate [short-term interest rate] is “in the committee’s” range of a neutral rate estimate, a key measure for the Fed.
Idaho unemployment number ranks 4th lowest in the nation at 2.6% (as of 1/18/19). This compares to Dept of Labor (BLS) numbers for the month of January which showed national unemployment rate at 4.0% (based on U-3 measure).
An equally meaningful measure of unemployment rate is the U6 measure, which for December was at 7.6%. U6 is at a virtual decade low.
The U6 unemployment rate counts not only people without work seeking full-time employment (the more familiar U-3 rate), but also counts "marginally attached workers and those working part-time for economic reasons." The "marginally attached workers" include those who have gotten discouraged and stopped looking, but still want to work.
U-6 UNEMPLOYMENT RATE: 2000 - 2018
Labor Force Participation Rate:
In January Labor Force Participation was 63.2%. It has been in that range for the past 5 years. Combined with U6 Unemployment, there appears to still be available labor on the sidelines to satisfy labor needs for economic expansion without ginning-up high inflation.
Given the ample supply of labor still on the sidelines, it may explain why January average hourly earnings growth was a tepid 0.1%. In contrast, for the prior 12 months wage growth was 3.3% which is in excess of 2018 inflation of 1.9% (see graph below). Higher wages in an approximately 70% consumer-driven economy is a good thing.
Industrial Capacity Utilization:
Industrial Capacity Utilization is also a meaningful measure of national economic health. That number stood at a virtual 10 year high of 78.4% in December. By comparison, from 1960 - 2000 that rate typically was in the 80% - 85% range.
Annual Inflation Rates (2008 to 2018):
Currently inflation is <2% - productivity growth (1%) is somewhat mitigating wage growth (3.3%) which has yet to fuel big inflation.
HARTY MORTGAGE ADVISORS
950 W. Bannock St - Ste 402
Boise ID 83702
Main: 208 344 4141
The current Boise rental market is strong which makes units much easier to get rented. However, that is not the only factor that goes into getting a unit filled! There is not a silver bullet when it comes to getting a unit rented. While some things are more important than others, it is many things combined that do the trick!
A good renewal process is the first step. If the existing tenant never moves out, then your units are never vacant! It’s our recommendation to not be too conservative in setting renewals rents, but also not too aggressive. Being too conservative is not fulfilling our responsibility to the client. Being too aggressive may cause too many tenants to leave and potentially saddle property owners with large and unnecessary turnover costs. It can be a very fine line.
If a Landlord ends up with a vacant unit, have solid standards to what is considered rent-ready. Do not be over critical, as it is a rental unit. However, high standards should make the unit much more appealing and set the standard for the tenant from the day they move in.
Cost effective upgrades to the unit are also a way to make a unit more appealing to a perspective tenant. Consider installing cabinet hardware, new light fixtures and/or ceiling fans, 2” faux blinds, led light bulbs, electrical outlets with USB charging ports built in, or anything else you can think of that adds appeal to the property for a reasonable cost.
Online marketing is the best tool you have in the tool box to get a unit rented. A constant re-evaluation process will ensure your advertised property prices are adjusted to match an ever changing market. Online advertising offers huge exposure and uncountable options to get unit listings in front of perspective tenants. Having a clean and easy to navigate website that automatically syndicates to other rental website is key.
Even in this great rental market, sometimes properties sit. Perhaps it’s the time of the year or maybe a large number of units to rent up. Here are some tactics we have tried: consider some move-in rent concessions. Host Open Houses where we advertise and stage a showing agent at the property for several hours on a weekend. Supplement online advertising with websites like Craig’s List and/or Rentals.com. Offer existing tenants a rent credit for referring someone who ends up renting from you. Offer a reduced deposit amount. Use yard signs with dedicated phone numbers for perspective tenants to call and get more information and schedule a showing. Have different property classes for high-end properties versus lower-end properties with different screening criteria (remember fair housing). You can even get more creative and shake a sign or install a crazy arm blower guy!
If the marketing plan has done its job, people will want to see the property. If the property is well maintained and the turnover standards are high, once they tour it, they will rent it! Preleasing is a strategy that not everyone uses. Once a tenant gives us their notice that they are vacating the property, we begin marketing and showing the unit. More often than not, we have a unit re-rented before the exiting tenant even vacates the property. We always dedicate the necessary resources to ensure we have showing agents available to meet perspective tenants at the property and walk them through available units. This is a personal touch that allows perspective tenants to ask questions and has proven to help the showing-to-application conversion rate. There are also self-showing options that allow tenants to provide ID and Credit Card information to receive a code to a lock box that allows them to self-tour vacant units at a time that is convenient for them.
These tools can often be the difference maker even in this market. With that said, imagine how important they will be if/when the market softens?!
Jim Sharone, Vice President
Service Animals are seen everywhere these days and have captured the attention of many, to include the national media. New websites popped up selling official Service Animal certificates, along with collars and jackets that alert all that this is a Service Animal. Most of the media attention focused on air travel and the shocking examples of emotional support animals, like the retired man with his companion alligator named Wally. So when someone forwarded us the below article, we took notice. We have also provided a copy of the Utah article, as well has the actual HUD memo and an article from the National Housing Law project. At a minimum, we suggest you read the HUD memo as this really should be an eye opener for many.
In the US, disabled Americans are granted civil rights protections against discrimination. We are most familiar with the Americans with Disabilities Act (ADA) and the Fair Housing Act. I would say that the media and most of the population don’t know the difference. Their just angry that they have to sit next to a dog with a nervous stomach on a long flight. Additionally, ordinary people hear “service animal and to them its synonymous with: emotional support animal, comfort, companion animal, or assistance animal. The Department of Justice define "service animals" narrowly as any dog that is individually trained to do work or perform tasks for the benefit of an individual with a disability. The revised regulations specify that "the provision of emotional support, well-being, comfort, or companionship do not constitute work or tasks for the purposes of this definition. Thus, trained dogs are the only species of animal that may qualify as service animals under the ADA (there is a separate provision regarding trained miniature horses), and emotional support animals are expressly precluded from qualifying as service animals under the ADA.
An "assistance animal" is not a pet. It is an animal that works, provides assistance, or performs tasks for the benefit of a person with a disability, or provides emotional support. Assistance animals perform many disability-related functions, including but not limited to, guiding individuals who are blind or have low vision, alerting individuals who are deaf or hard of hearing to sounds, providing protection or rescue assistance, pulling a wheelchair, fetching items, alerting persons to impending seizures, or providing emotional support to persons with disabilities who have a disability-related need for such support. Assistance animals do not have to be trained or certified. While dogs are the most common type of assistance animal, other animals can also be assistance animals.
Twenty-five years ago, it was fairly uncommon to have a tenant request such an accommodation at a non-pet rental property. With education and enforcement, this has greatly changed to the explosion that we have seen within the last decade. Way back in the day, property managers used a form which required a physician to attest to the need with some very strong wording about possible consequences if the patient or physician lied. Anyone using that form today would likely experience some unpleasant actions from HUD or one of their Fair Housing Advocates. Today, the general accepted proof of need is from anyone in the know. So that could a parent, counselor, etc. Which obviously leaves the opportunity to misrepresent an actual need.
Full article here: Lying about emotional support animals
HUD- Service Animals
Kristen Curtis, Executive Assistant
We recently updated our website and would really appreciate your input. You may have noticed that we’ve changed our domain from Boise-Rentals.com to https://www.boiseproperty.management/. Both sites are still up and running for the time being, but we ask that you only use the Boise Property Management website.
Our website was changed to improve the user’s experience by making it more mobile friendly and responsive (faster). However, there are a number of other improvements.
1. Introduction of a live chat feature.
2. A thumbs up and down feature on our email signatures to help with our feedback culture.
3. Like the old site, the new site has a great rental listing syndication feature that pushes our listings to over 100 rental listing sites. A majority of these are free sites, but we do push listings to monthly fee sites as well as pay-per click.
4. A new fresh and clean appearance with easier navigation.
5. New coding that helps users with disabilities.
6. Another great customer service improvement is that tenant’s may now upload photos along with their maintenance requests.
7. A new and improved rental search filter
8. Improved tenant listing service that notifies tenants the moment a rental that fits their criteria becomes available.
9. With all of these improvements, we expect our SEO to improve, which should help tenants find our rental listings much faster.
Thanks again for taking a look. We appreciate your feedback.
Tony Drost, Chairman
The SW Idaho Narpm chapter just released the 4th quarter vacancy results. The results are pretty standard for this time of year, with vacancy up a little. At this time of year, we find that renters don't like to move due to the holidays and cold weather. Even in the slower time, First Rate has kept a vacancy of under 1% for the last quarter. Getting rentals filled this time of year can be challenging so it takes some creativity with move-in specials and sometimes shorter leases. The average rents overall are still strong for this time of year and with spring renewals we see opportunity to increase rents
Read full report here: SW Idaho Narpm Vacancy Survey
Melissa Sharone, President
The government shutdown has hit an all time record of one month. Many aspects of our nation have been negatively affected by the implications of the shut down.
What does this mean for subsidized housing programs? In December & January, the contracts of 1,150 Section 8 units expired, putting residents at risk of losing their home. Local experts worry this could be tragic if there are no alternatives. While housing authorities are coming up with contingency plans, there is concern there is no end in sight.
Should the government remain shut down for a month, BCACHA is working diligently to implement contingency plans. Planning for the worst, but hoping for the best. Professionals believe their plan will maintain subsidized housing program assistance through the end of February.
Much of the funding for BCACHA comes from the federal government. The shutdown has the potential to impact Public Housing & Housing Choice Voucher (AKA Section 8) used to assist low-income families pay portions of rent.
BCACHA Executive Director DeAnna Watson reported they spend $1 million in rental assistance every month. If this shutdown continues, BCACHA will struggle to fund the month of March in rental assistance. This will affect more than 2,800 households.
Turning properties quickly is extremely important in Property Management. Now by turning, we mean getting the property rent ready for the new tenant to move in. The owner, tenant, and property management company all benefit from having the property turned as quickly as possible. With our business model, turning properties quickly is even more important as we pre-lease. This means we show and rent the unit while the exiting tenant is still there. With that said, nine times out of ten, our properties are rented before the old tenant moves out. Basically, the only time that a property is not rented is the time it takes to turn the unit.
The property management company benefits from quick turns by being providing measurable that potential owners are looking for. When an owner is looking into a property management company they need to know you are good for their investment. Just like if you were hiring a landscaper to work on your yard, you are going to want to know what kind of work they can do before you hire them. When you can show an interested owner that you can get properties turned and re-rented in a timely manner, it lets them know that their investment is safe with you. The owner benefits from having the unit turned quickly as it reduces the days they go without rent. An owner is losing around $30 average per day the unit is vacant!
As the property managers we do not want to see the owners losing money because the turn between tenants is taking too long. We want to show our owners that our end goal is the same as their end goal, this is getting vacant units turned and re-rented. In 2017 our average business days it took to turn a unit was 5.83 days. In 2018 our average was 4.68 business days. Our goal for 2019 is 4 business days or less to have the units turned and rent ready.
Tenants can have many different reasons why they are moving. They may have just had another baby and need more space. Maybe they are going to college and they are moving into their first apartment, or they took a promotion at work and are new to the Boise area. Whatever the reason for the move is, they want to be in the new apartment as soon as they can and having the unit turned quickly will only help them achieve this goal!
To reach the goals we have set for our company, choosing vendors that we can trust to get the job done is important. Keeping in constant contact with the vendors helps us make sure the turn is completed timely as well as up to our standards. When you have three to four vendors that are going in and out of the unit being organized helps to know where each unit is during the tuning process.
Turns are an important part of property management. We know that the tenants that move in are not going to stay forever. When we all work together to get the units turned, this makes our owners and tenants happy to do business with us. Our main focus as a property management company is to try and ensure that everyone we are working with is taken care of.
Vacancy rates are still relevant, although they may not tell the whole story. I compare it to Earned Runs Average. That used to be what baseball (pitchers) were judged off of, but then it just became a cliché that somewhat lost its importance (seemingly). Well, as time went on, we wanted more explanations for all the idiosyncrasies within the game. That’s when the age of saber metrics was born. Where we developed stats like Wins Against Replacement, Walks and Hits Per Innings Pitched, ect. Despite all this, in 2018, ERA is still a very valued statistic in baseball. The point is, vacancy can in fact still tell you a lot, although maybe not the whole story. Here is why you should still care about that number, especially when looking at a Property Manager.
We are all here for the money, right? This is after all, an investment, correct? Well then let me relate this to you in monetary terms. Vacancy is just lost income, let’s just call it what it is. Let us say that you manage a $1,000.00 single family home, let’s assume (for ease of the example) that there are no expenses associated with it. Over the course of the year, you would bring in $12,000.00, or roughly $33.00 per day. With our vacancy rate of 0.59%, that translates into a cost to you of only (if you were a standalone unit) about $71.00 for the year due to vacancy. Southwest Idaho’s Average Vacancy Rate is 2.3%, this would translate into about $277.00/ year due simply to the vacancy rate, or $206.00 more per year, per unit you own. This compounds very quickly as you add units, but I don’t need to tell anyone that! As illustrated in the graph below, we out perform the industry as a whole in this statistic. Part of this, admittedly, is the wonderful market that we are in right now. Both the SW Idaho and First Rate Property Management have been enjoying the benefits of this (illustrated below).
Naturally, we will not be in this great of a market forever. Like all others, this is cyclical. But vacancy rate is not just a result born out of our high market, it is an indicator of something larger. That is, a healthy company and good customer service. This is why our vacancy rate stays so low over time. The graph below illustrates three important things that I feel are big factors in our success with this metric. Consistency, Efficiency and Honesty. These are why we have low vacancy rate. Other than May and June, we have stayed remarkably consistent in our vacancy rate over the last three years. When they are up for rent, on average for 2018, our units are on the market 13 days. Considering we usually shop them 30 days before they are vacant, most units don’t even see truly vacant time. This efficiently gets units off the market, either by a new renter or by a renewal. Finally, our renewal rate is very high due to tenants really enjoying their experience with us because we do business the honest way. Repeat business is, across the board, a great indicator of customer service.
So next time you see vacancy rate, don’t just scoff because it is cliché at this point. Really ask yourself, how does this relate to my position? How does this affect me? Chances are, it affects you more than you may realize.
- Rental Property Maintenance
- Boise Area Rental Market
- Boise Real Estate Market
- Property Management
- Property Managment
- Boise Area Real Estate Market
- Interest Rates
- Boise and Idaho in the News
- Deferred property maintenance
- Fair Housing
- Investor Newsletter
- Corvettes and Rents
- Economy by the Numbers
- To rent, or not to rent
- Lying About Support Animal is a Misdemeanor
- Tony Drost
- Arica Elordi
- Jim Sharone
- Kristen Curtis
- Melissa Sharone
- Julie Tollifson
- Lacey Hofman
- Kurtis Tarbet
- Tyler Selee
- Tyler Brown
- Tara Pecora
- Marie Swanson
- Lizz Loop