First Rate Property Management Blog

Boise Housing Market Continues to Break Records

Kat K. - Tuesday, December 15, 2020

As the Boise housing market continues to break records for high prices and low inventory, local renters who are on the quest for homeownership are finding it more and more difficult to make the transition. In August 2020, the average median home price in Boise reached $400,000 for the first time in Idaho history! Even amongst a pandemic, this upward trend for home prices shows no signs of stopping with the Boise Regional Realtors Market Snapshot reporting $425,000 for the month of November. 

Interest Rates have also been setting record lows, alluring current homeowners to stay in place and refinance their homes instead of placing them up for sale. With the luxury of a lower mortgage payment and an outrageously competitive market, homeowners simply don’t want to take the risk of not being able to find a new home. 



Although low supply and high demand has driven the Boise market into uncharted territory, with help from a trusted lender and a Real Estate professional, locals still possess the tools to reach home-buyer victory! Regardless of the state of the current market, if you’re considering your options to rent, buy or sell - the most important component is a plan. Do your research, ask a professional and educate yourself on realistic opportunities within your market! 


SW Idaho NARPM Vacancy Report Q3 2020

Julie Tollifson - Friday, October 23, 2020

View Report Here


Quarter 3 Vacancy Report from the National Association of Residential Property Management indicated that Canyon and Ada County both had a slight increase in vacancy since quarter 2. Less than ½ a percent, but an increases none the less. 


Of these vacancies, it was reported that 27% are Single Family Rentals in Ada County, 28% are in Single Family Rentals. Historically, these percentages are higher than what we’ve seen in previous years during Q3. 


Rental Rates continue to climb in both Canyon County and Ada County overall, however we have seen Singe Family Rental rates decrease by $207 per house during Q3. This is to be expected because of the seasonality of the Single Family Rentals. We expect to see these rates increase again in the spring and summer. Overall the rent per unit decreased in Q3 by about $74 per unit in Ada County. 


Similar trends were noted in Canyon County.


For the year to date compared to 2019, rental rates have increased and vacancy rates continue to remain under 5%.

Eviction Ban Moratorium - What You Need to Know

Julie Tollifson - Wednesday, September 9, 2020

On the 1st of September, the Center for disease Control and Prevention (CDC) issued a nationwide moratorium to protect individuals from eviction upon non-payment of rent until the end of 2020. This order went into effected in the Federal Register on Friday, September 4.

Under the penalty of perjury the renters, in order to be eligible, are to swear they fall under specific income requirements, have made their best efforts to obtain all available government assistance, they have suffered substantial household loss of income, they are making best efforts to make timely or partial payments, AND eviction would render the renter homeless. All of these criteria are required to be met in order to be eligible for the ban on eviction.

                The CDC has a Declaration page that can be used for tenants to sign but any declaration with the same general verbiage can suffice.

                This new order impacts all residential properties. As an investor, if your property did not previously fall under the CARES Act, this order will now apply to said property.

                For landlords, there is still some power in this order. The written affirmation by the tenant must be signed under penalty of perjury by all adults on the lease and given to the landlord. The order does not affect the ability to evict for reasons other than non-payment of rent or the ability to continue to charge late fees. Tenants are still required to adhere to the terms of the lease.

                After December 31st, 2020, property managers and landlords should expect great delays in the eviction process for non-payment of rent.

 Please reach out to your local representatives to help support emergency rental assistance!

NARPM SW Idaho 2nd Quarter Vacancy Report

Julie Tollifson - Friday, July 31, 2020

The National Association for Residential Property Management; SW Idaho Chapter to have a 4.14% Vacancy for Q2 of 2020. The industry has been stagnant since Q1. Similar to last quarter, landlords are wanting to be proactive and anticipate a potentially higher vacancy. In order to combat this challenge, many landlords are minimizing increases or, in some cases, not even increasing at all. For this reason we are not expecting drastic changes in the seasonality of our vacancy, however, we do expect to see a lesser increase in average rental rates.

Last quarter, we predicted the affects of COVID-19 on the rental market. We anticipated vacancies to trend upward as a result of social distancing and stay-at-home-orders. While the trend did not increase, it also did not decrease. 

First Rate Property Managements vacancy rate for the past 12 weeks has been at an average of 1.83%. In our last report we indicated that First Rate Property Management recommends being less aggressive on renewal rates. This has proven to be successful in Q2. While the market has not taken the dip that we all anticipated in March, we are also seeing more people renewing their lease than usual. This has resulted in a well-balanced turnover to renewal ratio. 

In Q3 we anticipate the market to slow down in accordance with the usual property management seasonal trends. While we continue to try and navigate this unprecedented circumstances, we will continue to find a balance in renewal rates until the treasure valley market starts to acclimate to a new normal.

Maintenance by Season

Lacey Hofman - Monday, July 20, 2020

When looking at routine maintenance, proper planning can save time and energy. There are different projects a property manager or Landlord can focus on, depending on the time of year.  Planning and setting the expectations with the vendors prior to the work starting will help ensure there are less last-minute issues and changes. Investors with properties in areas like Boise, who have four seasons, should be planning their routine maintenance and improvements a year in advance. There is a lot of maintenance that should avoid wet and cold weather, so you plan those in the summer.

Spring is when irrigation sprinklers are scheduled to be turned on.  Spring’s cool temperatures with a fair amount of rain makes it a great time for landscaping projects and planting trees and bushes. Spring is also the time to have your HVAC serviced before the heat hits.

Some of the best projects to plan for Summer are exterior projects, such as: exterior building painting, sealing and restriping parking lots and fire lanes, power washing sidewalks and buildings, or cleaning gutters and flat top roofs. Since most of these projects require warmer temperatures to complete, having everything ready for the vendors to start will be important. Most won’t have time to sit down to plan, execute, and follow-up on any routine maintenance once the busy summer time hits.

Fall is a good time to do work on exterior projects that were not able to be finished during the summer months. Sprinklers are blown out in the fall. Landscape planting and tree and shrub trimming are best to be performed in the Fall or Spring. In fall, consider inspecting your properties and making a list of improvements and repairs for next year. Fall is also the time to have the HVAC serviced to make sure the furnace works for the cold temperatures to come.

Winter is slow, so this is a good time to make interior improvements. It’s also a good time to sit down and create your plan for next year’s routine maintenance for each of the seasons.

By planning ahead seasonally, Landlords will be able to better balance and handle their workload, which in return will allow them to properly care for their properties. Plus you won’t have to defer maintenance needs, which as you know is often a pitfall in property management!

Real Estate Investors Flock to Boise...but why

Tony Drost - Monday, June 1, 2020

Real Estate Investors Flock to Boise...but why?


Low Property Tax:

Property Taxes in Boise range from 1.1% to 1.8% of assessed home value, depending on location. Meridian is about 1.3% and Eagle is 1.1%.  Investors looking at Canyon County can expect to pay about 2% of the assessed property value.

 

Low Cost Housing:

Boise housing is still considered affordable, especially when considering where the cities migration is coming from. However, with the double digit appreciation year over year, it's creating a bit of a housing crisis for locals. Demand is high, supply has been an issue, and locals are often beat out by cash buyers from coastal states. 

 

Employment Growth:

Boise continues to be a national leader in both population and employment growth, which trips the national average. In the last couple of years, the population has increased, meaning jobs have been created to sustain the growing city. Boise is no longer being overlooked and has a lot to offer in regards to work and recreation. People looking to work in either education or health services might find great opportunities in the Boise area.

 

Boise's Strong Rental Market:

The employment and population growth as described above has created a shortage of rental housing. Also mentioned above, Boise median home prices are increasing. In fact, they are increasing far greater than wages. All these factors have caused rents to continually increase with record low vacancy. According the the SW Idaho Chapter of the National Association of Residential Property Managers, Ada County vacancy for the 2020 Q1 was 2.7%.

 

Even with the steep increases in rents, Boise doesn't boast the nations highest cap rates. It simply has the growth and overall desirability that many investors crave.

 

Idaho's capital city is also the home of the largest student market in the state of Idaho. Boise State University is the largest, with satellite campus contributions from the University of Idaho and Idaho State University.

 

Idaho Lifestyle:

The quality of life in Boise is said to be one of the best, but there are other contributors to Boise’s growth. When California suffered a wave of wildfires that burned homes to the ground, the slow response and regulatory red tape caused many folks to cash in their insurance check and move to other locations, like Boise. Many new Boise residents moved to escape the high regulatory metros. When cities like Portland, Seattle, and the Bay Area create new rent control laws and more regulation, the investors seem to flock to Boise which has reasonable landlord/tenant laws. Even COVID has created a demand to move to more rural Idaho.

 

Boise is considered a great place to retire. With the low cost of housing, those moving from the big metro areas can buy the home of their dreams. Boise’s access to the outdoors is one of the best, while the true four seasons offer a host of recreation. The winter brings snow sports and the summer is great for water sports and golfing  Which leaves plenty of time to bike, hike, rock climb, and hunt.

 

For now, Boise seems to be hitting all the marks for real estate investors:

Low taxes, strong employment growth, continued population growth, double digit appreciation, relativity low housing, and a strong rental market with low rental regulation.


Stacy McBain and Tony A Drost

$1 of Rent

Melissa Sharone - Thursday, April 30, 2020

Below is a very good graphic provided by the National Apartment Association that explains the value of $1 of rent.  It creates a clear transparent breakdown of where the money goes and in our opinion clears up the misconception that "landlords" take home large margins of profit. This is a valuable educational tool that landlords and property management companies should consider sharing with their investors and tenants.


Melissa Sharone

President, FRPM

melissa@frpmrentals.com

PROACTIVELY REPLACING WATER HEATERS:

Julie Tollifson - Friday, April 24, 2020

PROACTIVELY REPLACING WATER HEATERS:


One of the unknown, inevitable, and scary parts of owning any property, not just an investment property, is unexpected expenses for repairs and replacements. Sometimes the expenses are small, but other times, they can be quite costly. 


Water heaters are an example of a costly expense for many owners. It is our job to help minimize the risk of these expenses. A brand-new water heater is expensive, but some find that replacing them before they go out is better than waiting until they go out. Unfortunately when a water heater goes out, it does not normally just stop making hot water, it starts leaking. Often times the water heater even continues to make hot water while leaking.   


To make matters worse, water heaters are usually found tucked away in a closet, garage, or even under a kitchen counter. While this may prevent a bit of an eye sore, it also can prevent residents from identifying the leak while it is minor. While putting in their lease and training our tenant during the move in walk through helps, tenants occasionally fail to notice and/or report leaks in a timely manner. As a result of the tenant-neglect or the fact that the water heater is out of sight out of mind, the leak can cause a great deal of damage that extends beyond the mere replacement of your water heater.  That is why some owners choose to proactively replace their water heaters. They would much rather sacrifice a few potential years of use with the existing water heater than pay the huge costs of cabinetry, drywall, or flooring. Another thing to keep in mind is that the potential flood/leak damage increases exponentially if the waters are on the second or third story.


Another cost to consider in this is lost rents. If your tenant doesn’t have access to hot water, this would constitute an uninhabitable property and would result in crediting prorated rent back to the tenants for the days in which it is considered uninhabitable.


Furthermore, many after-hours result in dispatching a vendor with “after hours billing” this is often much more inflated than normal business hour calls. It always seems like these water heaters never go out during regular business hours!


Most water heaters are sold with a 5-year warranty and are said to last about 10 years on average. 


But what if you have insurance? While having insurance is of the utmost importance to help mitigate your risk, most do not cover slow leaks. Most policies state they will only cover “sudden or immediate water losses”. 


So now you’re wondering, how can I minimize these seemingly inevitable costs? Here’s how:

  1. Make sure you know the limitations of your insurance policy, better to be proactive than reactive.
  2. Make sure you know where your water heater is located. First floor? Second floor? Garage? Is there a drain or pan underneath it? Is the pan plumbed to the outside of the building?
  3. Train your tenants on how to check for leaks and how often.
  4. Most of all, have a professional annually inspect and service your water heaters to ensure that they are functioning correctly. First Rate Property Management offers this service, among many others, annually in an effort to provide our clients with the opportunity to increase their profit margin by mitigating the risk of expensive repairs and replacements. 

Julie Tollifson, Leasing Team Leader

First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about this blog.

NARPM SW Idaho 1st Quarter Vacancy Report

Melissa Sharone - Tuesday, April 21, 2020

The 1st quarter vacancy survey from the SW Idaho Chapter of the National Association of Residential Property Managers (NARPM) was just released.  While majority of the quarter was unaffected by the COVID-19 pandemic some of these results (mainly the average rental prices) were due to proactive measures taken (not raising rents and or lowing the vacant ones slightly) when the pandemic first hit by many property managers.  Good news is that vacancy is at 2.7% for Ada County, which includes Boise city and 2.8% for Canyon.  This is well below the national average which is at 6.8%.  FRPM maintained a vacancy under 1% the entire first quarter.  This is due to FRPM's internal processes limiting leases expiring in these  first three months of the year.   Overall rents are still increasing but at a slower rate than normal for this time of year.  As we head into the second quarter vacancies are expected to slightly increase and rents will likely plateau which is not usual for this time of year.  

How will COVID impact the 2nd quarter?  Vacancies are already trending upward, due to social distancing and stay-at-home orders.  There are less people moving, which has decreased demand.  While everyone in the nation is expecting non-payment of rent to be the big hit to Landlords, we actually think the increased vacancy and lower effective rent, may actually be the bigger number.  In order to maintain quality, vetted tenants and avoid a vacancy during these uncertain times, the FRPM team is recommending that investors not be aggressive on renewal rates. We anticipate the Boise market picking back up at its usual pace, but the question is when.

Read the full report here: SW Idaho Narpm Report


Melissa Sharone

President, FRPM

melissa@frpmrentals.com

Owners! Get Your Property Rented!

Jim Sharone - Friday, January 24, 2020

One of the scariest times an owner goes through while renting out their property is the vacancy.  First Rate Property Management understands this and is ready to help!

You will be receiving Marketing Updates from our leasing team every Wednesday your property is on the market for rent. These updates include information about recent showings, activity with your property, current advertised rent, and our experts’ recommendations. 

What Does a Vacancy Cost?  On a $1,500 estimated rental property with a $1,250 per month PITI (Principle / Interest / Taxes / Insurance) mortgage, plus utility expenses……a vacancy can cost:

15 Days = $750 in Lost Rent + $625 Mortgage + $100 in Utilities = $1,475

30 Days = $1,500 in Lost Rent + $1,250 Mortgage + $125 in Utilities = $2,875

45 Days = $2,250 in Lost Rent + $1,875 Mortgage + $150 in Utilities = $4,275

60 Days = $3,000 in Lost Rent + $2,500 Mortgage + $200 in Utilities = $5,700

*First Rate Property Management advertises upcoming vacancies between 30 and 45 days prior to the tenant vacating the property. Our average Days-On-Market is below 30 days. By pre-leasing, we save our client anywhere between $750 - $1500 in Lost Rent expenses.*

What Will a Price Adjustment Cost?  On a $1,500 per month property:

$50 per month   =  $600 a year

$100 per month =  $1,200 a year

$150 per month =  $1,800 a year

$200 per month =  $2,400 a year

Which would you rather have for YOUR property?  Dropping the price by $100 from the start and “losing” $1,200 broken up over a year – OR – by thinking your property is worth more than the market will bear, losing $2,000, $3,000, $4,000, $5,000, or more right now?

What Should You Do?  Be aggressive with your pricing decision. It’s much better, financially, to rent your property within the first few weeks on the market making you more money in the long run. 

What Happens When You Price A Property Right?  You get more interest in your property right away. The increased interest leads to more prospective tenants physically viewing the property. We are confident that once a perspective tenant has physically seen the property with one of our well-trained showing agents, your property will be leased in no time!

Consider these other techniques:

  • Lowering the Asking Price for Rent.  If the property is move-in ready and still NOT renting, it’s always, always, always going to be because of the asking price FIRST and FOREMOST.  If a property is vacant, move-in ready, and has even the most basic marketing pictures – the property will rent at the right price.  Finding the right price is an art and a science.  When in doubt – lower the asking price for rent.  Refer to the analysis above for “What Does a Vacancy Cost”.
  • Lowering the Asking Price for Rent for 3 - 6 Months.  We will always recommend a full price reduction when a property is not immediately getting in applications or showings from interested tenants.  However – an alternate technique is to lower the asking price for the first 3 - 6 months to a new tenant.  Be careful with this technique as it can attract more applicants, but can also turn some of them off by what seems to be a gimmick.  
  • Offering a Move-In Credit. Another alternative to lowering the monthly rent is offering a new tenant a move-in credit. New tenants have to pay a large sum of money up front to get in a new property.  A $250 - $500 credit can go a long way without decreasing rental rates or costing our clients very much money! 

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