Tony Drost of NARPM Visits DC
As the President of NARPM, I went to Capitol Hill in DC last week to talk to the Idaho representatives in Congress and Senate about bills in the works that affect Idaho property owners. I was accompanied by Dave Winder with the Certified Commercial Investment Manager Institute and Mindy Gronbeck with the Institute of Real Estate Management. It was a very successful and worthwhile visit. This was an experience of a lifetime for me.
For any of you who have ever gotten commercial financing, one thing you know is that although these loans can be amortized over a longer period of time, the term is generally much shorter. Additionally, commercial financing really looks at the value and performance of the property. So with values down and in many cases, rents as well, they do not perform as well and may not meet the lender’s requirements. There becomes a gap in the percentage of equity based on current value which may cause the bank to require the borrower to come up with cash to make up the difference.
The good news is that at least the Idaho representatives seemed to understand that the banks had a poor approach towards handling their crisis with residential properties. As we have discussed before on this blog, the bank’s own foreclosures and subsequent REO listings caused values to sink like a rock. They flooded the market and drove values down. The bail out money appears to have bailed out the banks, not the American home owners. We’re hoping that they don’t make the same mistake with commercial loans. If borrowers are making their payments as agreed upon, then the banks should not require these property owners to come up with cash to make up the difference in equity position. To do so, could likely cause investors to default, which will drive commercial values down.
Ada County Tax Assessments
Yesterday I met with appraisers for the Ada County Tax Commission. Your tax assessments should be mailed out to you near the end of May. Overall, you should see a decrease in value. If you have concerns about the assessed value, please scan and send me a copy of the assessment notice immediately, as the time to appeal is a very short window.
Current Vacancy Rate Update
April has kept pace with last year, matching the weekly vacancy numbers. First Rate Property Management's current overall vacancy rate is 2.6%.
Vacancies by Unit Type:
Currently one bedroom apartments are struggling at over 7% vacant, while 3 bedroom multi-family units are at 1.5%. Two bedroom multi-family units are at 2%.
Vacancies by Area
We break down our managed areas as follows, North Boise/BSU-East Boise-West Boise-Boise Bench-Eagle-North Meridian-South Meridian. Out of the seven areas, the Boise Bench and North Boise are the highest at 3.5% and 3.3% respectively.
Running FRPM Boise Area Vacancy Rate Graph