3-4 Unit Sales in the ARMLS - note: 6/10 is 80 not 90

The small multifamily market has been on of instability, uncertainly and irrationality.  It's is because it so unpredictable and unreasonable that it's a good time to buy.  

The prices are simply so low that it boggles the mind.  Lots of investors are picking up these triplexes and fourplexes at prices not seen since the mid to late 1990's.

The most popular areas where competition for properties is common is Tempe and Mesa, but lots of good deals can be had in Central and North Central Phoenix, a few in Scottsdale and Glendale.

At the time of this post there are 308 active triplexes and fourplexes for sale.  39 are bank owned and 74 are short sale. 

There are 62 properties noted as AWC meaning, probably, short sales awaiting the bank's reply.

There are a total o 74 pending properties.

In June 2010, 80 properties sold.  Please note the graph shows 90: it's 80.  Sales have been inching up, but prices are holding steady at around the 25,000 per unit mark.

The recent SB1070  illegal immigrant law is starting to have some side effects on the market, especially the C class properties where vacancies have shot up as people flee the state.  That's going to make lots of investor more anxious about downward pressures on prices and higher vacancy rates for C class properties which will probably translate to a demand for deeper discounts, but we'll see if that comes to fruition or if the demand will keep prices where they are.

In Greater Phoenix the small multifamily property market is going through some turmoil. The forthcoming 1070 law is having some effects on vacancies.

"Nationally, the apartment vacancy rate was 7.8 percent at the end of June, according to research firm Reis Inc., down from 8 percent in the first quarter.
Rents rose 0.7 percent from April to June, the largest quarterly gain in two years." (The Wall Street Journal, Nick Timiraos (07/08/2010

It first started with the employers sanction law which put pressure on business owners not to hire illegal immigrants and not this law is the second installment, both of which combined with the weaker economy is driving people who fall into those categories out of the state and pushing up C class apartments into lower rent and higher vacancy areas.

On the other side of the spectrum. The mid range single family home rental market, for landlord, is very strong. Homes reasonably priced and in good condition are leasing fast, some with tenants competing for the properties.

Though inventory is up slightly from earlier this year the continued number of tenants who either had a foreclosure, short sale or were in a rental that went through this process is rather high and they are looking for the same high quality homes they are leaving.

I won't post hard data because the only thing close to reliable data is the MLS and that only represents a small segment of the rental market, much of which is done privately.

I'm going to assume you have a property that is in good condition and in a decent in demand neighborhood.

Some rentals rent quickly and others linger on the market and often very little separates the two. When the right principals are applied you can have a home leased in much less then the average time and if you miss a few details you can have a home empty for longer then necessary. Below are a few basic principals.

1. If the home is not clean and I mean sparkling clean even in the nooks and crannies, the grout, the paint, the floor and even the filters, then you'll loose a lot of potential tenants. This is one of the top complaints we hear from potential tenants about other homes they've seen. Often you won't even know that's the problem. They will either tell you "it's nice and I'll get back to you" or simply say no and disappear.

2. Calling back and or returning emails is on par with no. 1 and amongst the silliest of ways to lose potential tenants. Just as often as we hear about cleanliness, we hear about the other guys not returning calls. What's the purpose of placing ads and putting up signs if the caller will not be even called back. You can wait a day or two because by then they will usually forget which property or they may have already found something. Same day works best if you can get back within an hour or two, but 4+ hours and your losing them.

3. Photos of the property will only look good if the property is clean and prepped. Don't skimp on photos. If you don't have an appropriate camera, hire one or hire a photographer. Photos are a key draw and if you have a nice property that's not well photographed you'll easily get dismissed by looking tenants, and are looking online: more so for homes then apartments.

   Consider that a professional photographer that will provide you with some 30 photos will cost about $150 and bad photos may prevent your place from leasing for some additional time, the cost quickly becomes a mute point: if your rent is $1,000 a month, just leasing a weak earlier because of good photos will be very much worth it and you'll have the photos for the future as well.

4. Marketing a home online is vital. Skip the papers. Take the time and spend some money to place the ads in some of the most looked a places, including some that are free like craigslist or some paid like rentals.com for about $40 per month. Also consider PropertyNut.com - a one month ad there is about $10 and they will distribute your ad with photos to lost of sites, including automatic periodic placement in Craigslist.

5. Be flexible with showing times. Lot of potential tenants work a lot. That seems to be the way of live in American. This harsh work life prevents many tenants from having lots of time to look for properties. If you can, accommodate them.

6. Be flexible with credit. The recent market downturn has been bad for a lot of people, but they are not bad people. Yeah, you have to be aware of the complete losers who simply have no respect for credit, but quite a few people had a foreclosure or short sale. Can they now afford the rent, do they have a job, how is the other credit. Don't go by the credit score as you'll lose out on some of your best tenants. Consider more then the numbers.

7. Provide evidence or assurance that you're a good landlord. Lots of tenants move because their current landlord fails to live up to their responsibility. If you can provide evidence and assurance that things get fixed and taken care of, that will go a long way at getting your place leased. Remember this is a business and tenants are your customers.

Consider that tenants are providing so many benefits to you: paying your mortgage and paying down your principal, keeping your property occupied and secure, then it would be prudent to treat them with respect for mutual benefit: it's worth the extra effort, even though, I know, it's easy to sometimes skimp on a few things.

Even if you are not the landlord manager, but you have a management company, check on them. Is the management company doing things right. From my experience they fail on many levels so vet carefully.