The SW Idaho Chapter of NARPM just released their 1st quarter vacancy report. It shows that vacancy overall is up from 3% to 3.4%. This is pretty typical for this time of year. The activity for rentals has definitely picked up in the last few months. The market is heating for single family homes with higher rents and lower vacancy then last quarter. FRPM still remains at about a 1% vacancy for both multifamily and single family rentals. We expect to see rents continue to rise and the vacancy to stay low throughout the next quarter even with the increased rental activity. FRPM on average is renting properties within 15 days from the time notice is given. Things still look promising for the Boise market.
Read full report here: SW Idaho Chapter of NARPM Vacancy Report
Melissa Sharone, President
As a successful property management company not only in the Boise but among many property managers in the nation, First Rate Property Management understands the importance of continuous improvement. In fact, our company's vision statement is, "Maintain recognition as the most reputable property management company within our industry through continuous improvement". In any business the value of continuous growth is crucial in its success. When you first think of continuous improvement, the first thoughts that come to mind are process, product/service, and people.
I’d like to narrow the focus of continuous improvement of our employees. We work hard to provide our employees the opportunity to develop professionally. Through the National Association of Residential Property Management our employees are able to network among the best, gain creative ideas, and acquire education designations. These designations include Residential Management Professional (RMP®), Master Property Manager (MPM®), & the widely respected Certified Residential Management Company (CRMC®). These opportunities allow for innovative growth in the company, industry, and leadership ability of each of our team members.
First Rate Property Management is extremely proud to be the only property management company in Idaho to have 2 MPM's on staff and we also have the most RMP's on staff totaling 4. We are also 1 of 3 in all of Idaho that holds our CRMC® designation.
Tony Drost MPM® RMP®
Melissa Sharone MPM® RMP®
Kristen Curtis RMP®
Jim Sharone RMP®
The development and education of our team members enables a positive work environment, streamlined communication internally and externally, and forms a company prepared for growth to come organically.
We have moved our blog to a new site. Please click the link below to subscribe to our new blog. This link will take you to our new site and you will see the subscribe box on the right hand side of the page. Just type in your e-mail and hit subscribe. It will then verify your e-mail and you will be good to go. Please contact Melissa@frpmrentals.com with any questions.
As the warm weather slowly approaches we are seeing an increase in activity with properties. While there is an increase of people giving notice for various reasons FRPM vacancy still remains .88%. Our vacancy is outstanding compared to the National average which is sitting at about 6% and the Treasure Valley which is about 2.5%. As things heat up we are still able to push rents for both renewals and newly vacant units. All early signs are indicating that the market is still strong and shall remain that way through summer.
Melissa Sharone, President
We continue to see Ada County 4 plex values increasing at a steady rate. The good news is that rents have been increasing as well. According to the financial information on the Intermountain Multiple Listing Service and financials provided by listing agents, February's Gross Rent Multiplier (GRM) dropped to 143 from 149 in January. Compared to sales price, rents have increased. The trailing 6-month average for GRM still remains at about 150. With the higher rents, February's Cap rate also increased to 5.36 with a trailing 6-month average of 5.29%, which indicates Buyer's Net Operating Income has increased when compared to sales price.
Tony Drost, Chairman
Over the years we at FRPM have consistently preached the importance of scheduling lease termination dates. We'd like to touch on this for only a moment, but then also discuss the importance of also staggering lease termination dates.
Its our experience and recommendation not to have leases expire in the late fall and winter months. In talking with property managers across the nation, this is not always the case. However, it appears to be a standard for areas like Boise with four TRUE seasons. We consider summer time, the “prime time”; or the months of June, July, and August. We throw May into that mix because those tenants who give notice in May vacate in June, which is a good time of the year to maximize rents and minimize vacancy.
Single family homes are a little different. What we found is that a landlord can sneak those dates up to as early as March/April. We may not be able to get maximum rents in March, but a March renewal rate seems to increase the chances a tenant will renew their lease. The tenants don’t want to move within the school year, so they are more apt to renew.
Over this winter, there were a number of newly constructed multi-family rental units come on the rental market. These managers signed one year leases. So, guess what, next winter, not only are all of the leases expiring outside the prime time, but all of the leases are coming up at the same time. This leaves the Landlord a bit vulnerable. What if the rental market is soft? Do you really want vacancy and turnover costs all at one time? The larger the multi-family complex the more important it becomes to stagger lease termination dates.
For example, lets use a four plex that was constructed this winter. The property manager fills all four and signs one year leases all expiring in January. Again, the lease is expiring outside of the prime time and Landlord potentially has more vacancy and expenses all at the same time. Instead, wouldn’t it make more sense to have one unit expire in May, another in June, then July, and the last one expire in August? We think so.
Rentals within the Boise State University area are the exception. In this case, we recommend having all leases expire at the end of July. This is far enough outside of the end of school, that a fair amount of tenants will renew. However for those tenants who do not renew, they will vacate and the rental unit will be ready for students starting in the fall semester. It works like a dream.
Lastly, some may ask, “If this is common knowledge, then why in the world are there property managers who simply sign one-year leases regardless of the end date”? They do it to spread their workload over the year. So, its not for the investor’s benefit , but for their own. Most larger apartment complexes do stagger lease termination dates throughout the year to purposely spread out the work. Makes sense, with the exception of the winter months. “OK, I see why the apartment complexes do it, but why are there property managers managing large 4 plex communities signing one-year leases with perhaps all 80 units expiring in the winter months?” Beats me.
Search Engine Optimization and How it Impacts Your Property Management Company
As technology continues to grow at an exponential and unprecedented rate businesses across the globe are thrown into unchartered territory attempting to navigate the implications and effects this growth will have on their business, brand, and reputation.
The platforms in which prospective clients will research when deciding to use your product or service are extensive. Your online presence cannot be avoided or ignored. It is everywhere. Blogs and social media give your business a great platform to share positive experiences to help build your brand while maintaining a positive reputation.
Why this is important for Property Management Company’s specifically?
Brand & reputation are two of the hardest things to develop and maintain especially for property management companies. We are the middle-men between capitalizing an owner’s investment and communicating effectively with our tenants, yet what demographic do our ads reach first? Tenants.
While it is our job to provide quality service to our clients, who are our investors, it is critical that we maintain positive relationships with our tenants and vendors as well. Their perception of our company is the number one way to increase our Search Engine Optimization (SEO). For owners, the improved SEO will attract greater traffic onto our website so prospective tenants can see which of our owners’ investments best fits their needs.
First Rate Property Management (FRPM) works hard to build SEO and positive reviews all over the World Wide Web. We go to great lengths to ensure we are advocating in the owners’ favor to capitalize on their investments, provide excellent customer service to our tenants and prospective tenants, and to develop and maintain positive relationships with our vendors.
If you get a chance, please take this time to improve our search engine optimization to help create an opportunity for excessive traffic onto our website to fill your vacancy rate! Click the link below to provide a positive Google review!
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
- Boise Area Rental Market
- Property Management
- Boise Area Real Estate
- SEO & Property Management
- Rental Property Maintenance
- Boise Real Estate Market
- Property Managment
- Boise Area Real Estate Market
- Interest Rates
- Boise and Idaho in the News
- Deferred property maintenance
- Fair Housing
- 2019 First Quarter Vacancy Report
- The Value of Employee Development
- Blog and Vacancy Update
- Metric Trends
- Set and Stagger Leases
- Melissa Sharone
- Julie Tollifson
- Tony Drost
- Kristen Curtis
- Arica Elordi
- Jim Sharone
- Lacey Hofman
- Kurtis Tarbet
- Tyler Selee
- Tyler Brown
- Tara Pecora
- Marie Swanson
- Lizz Loop