How are rents determined?
Below is a link to an article talking about sophisticated software that landlords can use to somewhat forecast vacancy and rents so that rents and lease terms can be determined that day to maximize profits. This software is created by Real Page, who owns PropertyWare, which provides web based software to property managers. PropertyWare is one of the systems that we have been analyzing should we decide to make a software change. As I have indicated in the past, Rental Home Pros is probably the largest data collector of single family homes and small multi-family rental data and PropertyWare so happens to be a partner who shares their rental data.
Initially, we determine rents by analyzing data from Rental Home Pros and other surveys that we participate in. Additionally, we look at data from some of the larger internet listing services, which we subscribe to. Also, we call on rental signs in the immediate area to check on rent prices and incentives offered. This becomes more important when marketing a single unit within a 4 plex community. From there, we analyze the inquiry traffic from the phones and websites and make the necessary adjustments.
New Accounting Laws Affect Landlords
As a client of First Rate Property Management, this new law has no affect on you, because we simply take care of it. We have always been required to send the owner’s a 1099 for the rental income. You should be receiving your 1099 for 2010’s rental income along with your 2010 Year-end statement at the end of January. Additionally, we are required to send a 1099 to any service provider that we paid over $600 to in any given year, like a plumber. However, if they were a corporation, the 1099 was not required. This new law does not differentiate. Landlords are required to send a 1099 to anyone, regardless of how the business is formed, for total receipts of $600 or more. So not to worry, FRPM takes on this responsibility and our clients are taken care of. However, any Landlord doing their own management needs to create a system to track expenditures and probably work with their accountant to be sure to provide the IRS with the proper reporting. However, my biggest concerns is for those Landlords who are using a property manager that is either not aware of the new law or does not have a system in place to track payments to service providers and does not have the ability to create the proper reporting forms. Those Landlords are at risk and I imagine we’ll see quite a few unhappy when they’re approached by the IRS.
First Rate Property Management’s Vacancy by area and by property type
As promised, in 2011 we are breaking down our vacancy by area and by property type. Since we only have one week of data, this information really is not a good indicator of what area has a better vacancy than another. For example, this data shows that East Boise has a high vacancy rate, but in reality, FRPM doesn’t have a lot of inventory in East Boise, so the results are skewed. On the other hand, the Boise Bench is looking good at 2.86% and we actually have a large inventory on the Bench, but historically, we tend to have more trouble filling our bench properties. My guess is that I won’t consider this data valid until after a year of analysis. In the meantime, we will use this data when looking to take property on. For example, if one of our clients asked us to take on a property in Eagle, I would be inclined to take it on as we currently have no competing inventory. Also, as you can see our single family home vacancy is double our current vacancy as a whole. Interesting information, but as of now, not realistically meaningful.
FRPM Units by AREA Breakdown:
FRPM Units by TYPE Breakdown:
Type of Property:
Single Family Homes
Studio/1 bed multi-family
Two bedroom multi-family
Three bed multi-family