First Rate Property Management Blog

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?!

Service Animals are seen everywhere these days and have captured the attention of many, to include the national media.  New websites popped up selling official Service Animal certificates, along with collars and jackets that alert all that this is a Service Animal.  Most of the media attention focused on air travel and the shocking examples of emotional support animals, like the retired man with his companion alligator named Wally.  So when someone forwarded us the below article, we took notice.  We have also provided a copy of the Utah article, as well has the actual HUD memo and an article from the National Housing Law project.  At a minimum, we suggest you read the HUD memo as this really should be an eye opener for many.

ADA

In the US, disabled Americans are granted civil rights protections against discrimination.  We are most familiar with the Americans with Disabilities Act (ADA) and the Fair Housing Act.  I would say that the media and most of the population don’t know the difference.  Their just angry that they have to sit next to a dog with a nervous stomach on a long flight.  Additionally, ordinary people hear “service animal and to them its synonymous with:  emotional support animal, comfort, companion animal, or assistance animal.  The Department of Justice define "service animals" narrowly as any dog that is individually trained to do work or perform tasks for the benefit of an individual with a disability. The revised regulations specify that "the provision of emotional support, well-being, comfort, or companionship do not constitute work or tasks for the purposes of this definition. Thus, trained dogs are the only species of animal that may qualify as service animals under the ADA (there is a separate provision regarding trained miniature horses), and emotional support animals are expressly precluded from qualifying as service animals under the ADA.

Assistance Animal

An "assistance animal" is not a pet. It is an animal that works, provides assistance, or performs tasks for the benefit of a person with a disability, or provides emotional support. Assistance animals perform many disability-related functions, including but not limited to, guiding individuals who are blind or have low vision, alerting individuals who are deaf or hard of hearing to sounds, providing protection or rescue assistance, pulling a wheelchair, fetching items, alerting persons to impending seizures, or providing emotional support to persons with disabilities who have a disability-related need for such support. Assistance animals do not have to be trained or certified.  While dogs are the most common type of assistance animal, other animals can also be assistance animals.

Twenty-five years ago, it was fairly uncommon to have a tenant request such an accommodation at a non-pet rental property.  With education and enforcement, this has greatly changed to the explosion that we have seen within the last decade.  Way back in the day, property managers used a form which required a physician to attest to the need with some very strong wording about possible consequences if the patient or physician lied.  Anyone using that form today would likely experience some unpleasant actions from HUD or one of their Fair Housing Advocates.  Today, the general accepted proof of need is from anyone in the know.  So that could a parent, counselor, etc.  Which obviously leaves the opportunity to misrepresent an actual need.

Full article here: Lying about emotional support animals

HUD- Service Animals 

HUD- Defination of Section 504

Kristen Curtis, Executive Assistant

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

We recently updated our website and would really appreciate your input.  You may have noticed that we’ve changed our domain from Boise-Rentals.com to https://www.boiseproperty.management/.  Both sites are still up and running for the time being, but we ask that you only use the Boise Property Management website.

Our website was changed to improve the user’s experience by making it more mobile friendly and responsive (faster). However, there are a number of other improvements.

            1.         Introduction of a live chat feature.

            2.         A thumbs up and down feature on our email signatures to help with our feedback culture.

            3.         Like the old site, the new site has a great rental listing syndication feature that pushes our listings to over 100 rental listing sites. A majority of these are free sites, but we do push listings to monthly fee sites as well as pay-per click.

            4.         A new fresh and clean appearance with easier navigation.

            5.         New coding that helps users with disabilities.

            6.         Another great customer service improvement is that tenant’s may now upload photos along with their maintenance requests.

            7.         A new and improved rental search filter

            8.         Improved tenant listing service that notifies tenants the moment a rental that fits their criteria becomes available.

            9.         With all of these improvements, we expect our SEO to improve, which should help tenants find our rental listings much faster.

Thanks again for taking a look.  We appreciate your feedback

Tony Drost, Chairman

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

The SW Idaho Narpm chapter just released the 4th quarter vacancy results.  The results are pretty standard for this time of year, with vacancy up a little.  At this time of year, we find that renters don't like to move due to the holidays and cold weather.  Even in the slower time, First Rate has kept a vacancy of under 1% for the last quarter.  Getting rentals filled this time of year can be challenging so it takes some creativity with move-in specials and sometimes shorter leases.  The average rents overall are still strong for this time of year and with spring renewals we see opportunity to increase rents

Read full report here: SW Idaho Narpm Vacancy Survey

Melissa Sharone, President 

First Rate Property Management, Inc.
Boise, Idaho
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Turning properties quickly is extremely important in Property Management. Now by turning, we mean getting the property rent ready for the new tenant to move in. The owner, tenant, and property management company all benefit from having the property turned as quickly as possible. With our business model, turning properties quickly is even more important as we pre-lease. This means we show and rent the unit while the exiting tenant is still there. With that said, nine times out of ten, our properties are rented before the old tenant moves out. Basically, the only time that a property is not rented is the time it takes to turn the unit.

            The property management company benefits from quick turns by being providing measurable that potential owners are looking for. When an owner is looking into a property management company they need to know you are good for their investment. Just like if you were hiring a landscaper to work on your yard, you are going to want to know what kind of work they can do before you hire them. When you can show an interested owner that you can get properties turned and re-rented in a timely manner, it lets them know that their investment is safe with you. The owner benefits from having the unit turned quickly as it reduces the days they go without rent. An owner is losing around $30 average per day the unit is vacant!

As the property managers we do not want to see the owners losing money because the turn between tenants is taking too long. We want to show our owners that our end goal is the same as their end goal, this is getting vacant units turned and re-rented. In 2017 our average business days it took to turn a unit was 5.83 days. In 2018 our average was 4.68 business days. Our goal for 2019 is 4 business days or less to have the units turned and rent ready.

Tenants can have many different reasons why they are moving. They may have just had another baby and need more space. Maybe they are going to college and they are moving into their first apartment, or they took a promotion at work and are new to the Boise area. Whatever the reason for the move is, they want to be in the new apartment as soon as they can and having the unit turned quickly will only help them achieve this goal!

To reach the goals we have set for our company, choosing vendors that we can trust to get the job done is important. Keeping in constant contact with the vendors helps us make sure the turn is completed timely as well as up to our standards. When you have three to four vendors that are going in and out of the unit being organized helps to know where each unit is during the tuning process.

Turns are an important part of property management. We know that the tenants that move in are not going to stay forever. When we all work together to get the units turned, this makes our owners and tenants happy to do business with us. Our main focus as a property management company is to try and ensure that everyone we are working with is taken care of.

Lacey Hofman, Maintenance Team Member
First Rate Property Management, Inc.
Boise, Idaho
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No Vacancy: Why You Should Care About Vacancy Rates Again.

                Vacancy rates are still relevant, although they may not tell the whole story. I compare it to Earned Runs Average. That used to be what baseball (pitchers) were judged off of, but then it just became a cliché that somewhat lost its importance (seemingly). Well, as time went on, we wanted more explanations for all the idiosyncrasies within the game. That’s when the age of saber metrics was born. Where we developed stats like Wins Against Replacement, Walks and Hits Per Innings Pitched, ect. Despite all this, in 2018, ERA is still a very valued statistic in baseball. The point is, vacancy can in fact still tell you a lot, although maybe not the whole story. Here is why you should still care about that number, especially when looking at a Property Manager.

                We are all here for the money, right? This is after all, an investment, correct? Well then let me relate this to you in monetary terms. Vacancy is just lost income, let’s just call it what it is. Let us say that you manage a $1,000.00 single family home, let’s assume (for ease of the example) that there are no expenses associated with it. Over the course of the year, you would bring in $12,000.00, or roughly $33.00 per day. With our vacancy rate of 0.59%, that translates into a cost to you of only (if you were a standalone unit) about $71.00 for the year due to vacancy. Southwest Idaho’s Average Vacancy Rate is 2.3%, this would translate into about $277.00/ year due simply to the vacancy rate, or $206.00 more per year, per unit you own. This compounds very quickly as you add units, but I don’t need to tell anyone that! As illustrated in the graph below, we out perform the industry as a whole in this statistic. Part of this, admittedly, is the wonderful market that we are in right now. Both the SW Idaho and First Rate Property Management have been enjoying the benefits of this (illustrated below).           

               Naturally, we will not be in this great of a market forever. Like all others, this is cyclical. But vacancy rate is not just a result born out of our high market, it is an indicator of something larger. That is, a healthy company and good customer service. This is why our vacancy rate stays so low over time. The graph below illustrates three important things that I feel are big factors in our success with this metric. Consistency, Efficiency and Honesty. These are why we have low vacancy rate. Other than May and June, we have stayed remarkably consistent in our vacancy rate over the last three years. When they are up for rent, on average for 2018, our units are on the market 13 days. Considering we usually shop them 30 days before they are vacant, most units don’t even see truly vacant time. This efficiently gets units off the market, either by a new renter or by a renewal. Finally, our renewal rate is very high due to tenants really enjoying their experience with us because we do business the honest way. Repeat business is, across the board, a great indicator of customer service.             

                So next time you see vacancy rate, don’t just scoff because it is cliché at this point. Really ask yourself, how does this relate to my position? How does this affect me? Chances are, it affects you more than you may realize.

Kurtis Tarbet, Accountant
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the stats and info that you read above.

First Rate Property Management is blessed to have great Landlords as our clients (we don’t just take anyone).  Each of our clients provide their tenants with a welcoming gift that is delivered personally by a FRPM team member during the tenants move-in inspection.  Well that’s what we call it, but it's really a move-in orientation.  This is where we show the tenants how things work within their new home and annotate any issues that should not be charged to the tenant upon their move-out.   Our move-in orientation is really something special, so perhaps we will write a blog about that process, but for now, it's back to the tenant gift.  Some tenants thank us upon receiving the gift, but most thank us when the time in need comes.  Best of all this gift provided by the property owner to their tenants has saved that owner an untold amount of service calls.

Let's start with the largest item, the toilet plunger.  We learned that a majority of the tenants do not own a plunger.  Many simply prefer to call their Landlord when they clog a drain or toilet.  The few tenants that do have plungers generally have sink plungers that just don’t work that well.  Not all plungers are equal.  We provide this accordion style plunger because the ribbed/accordion generates considerable pressure that easily breaks up clogs.  These plungers are so effective, one plumber states, “accordion plungers are definitely effective, but it's like using a chainsaw to trim your hedges”.  Sounds like a perfect endorsement to us.

What in the world is that Orange zip tie looking thing?  That’s a Drain Zip Strip which can be used over and over to clear clogged and slow running tubs, showers, and sink drains.  Its free to the tenant and can save a $100 plumber service call.

A roll of bathroom tissue is provided for a couple of reasons.  Toilet paper seems to be the one thing no body packs to move.  So when tenants unpack and find a need to use the toilet, they have the provided roll, which prevents them from using and flushing unauthorized items that can lead to drainage issues.  And as a test of who thoroughly reads these blogs, I will tell you that Tony wanted to put our logo on the bathroom tissue with a slogan of “First Rate Property Management, we can handle your Sh!+”.

We also provide tenants with a garbage disposal wrench.  Garbage disposals aren’t meant to dispose of large quantities at once or coins, yet they seem to find their way in them.  When not used properly, the disposals jam.  Tenants can use this disposal wrench to free the blades and clear the matter causing the jam.

Lastly, we provide a tenant folder full of valuable and helpful information such as:  lease documents, coupons to local businesses, FRPM team directory, referral incentive program, literature on the importance of having renter’s insurance and/or renter’s legal liability coverage, literature on furnace filters, emergency phone numbers, and important website links.

It's an odd looking gift that strikes funny conversation.  It's appreciated by our tenants and saves unnecessary service calls (money).  

Jim Sharone, Vice President
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho. 

FRPM manages hundreds of fourplexes and I tend to sell more fourplexes than anything else within Ada County (mostly Boise and Meridian), so I gather and report the data.  The trends from the 4 plexes' sales seem to be a good indicator of the Boise real estate investment market.   Below are some graphs to help illustrate my points.  Please note that there were no fourplexes sold within Ada county for the month of November.

Absorption rate:   Is the rate at which available fourplexes are sold.  Currently there is less than one month's supply listed on the MLS.  We have a low supply and the demand continues to be great, so they are selling quickly.  Obviously this is a good sign for Sellers.  It means that new listings are going pending fairly quickly.  So as a buyer, you want to have your ducks in a row.  You will want to be in position to make a strong and clean offer quickly.

Average Price for Fourplex:   Prices continue to creep upward.  In January of 2017 the average was $372,000 and in September of 2018, the average was nearly $600,000.   One could look at the chart and because we saw a drop in October and December, they could think values are dropping.  I don't believe that is the case.  We had a couple older 4 plexes with below market rents sell and skew the data.

Gross Rent Multiplier (GRM):  Is the ratio of the price/value to its monthly rental income.  The current 6-month average GRM for Ada County 4 plex is 152.  I use GRM for a quick ballpark value as there are many more factors in determining actual value.  To illustrate how to use GRM, let's assume that rents are $950 per month per unit. Using GRM, the ballpark value would be $950*4*152=$577,600.  It's not uncommon for Landlords not to push rents.  This is one reason why GRM alone won't determine value.  But it's also a good reminder to potential sellers that if you are planning on listing soon, you should consider getting rents to market before listing.

Capitalization rate:  Is the ratio of Net Operating Income to value/price.  Since 4 plexes are considered residential, cap rate is just one of the factors used by a residential appraisers to determine value.  Comparative sales weigh heavy on Fourplex appraisal valuations.  As you can see, we've had a very slow, yet slight drop in cap rates over the past two years.  This is a good trend in comparison to huge drop we saw in 2005.  Values have continued to rise and they are rising just a little faster than rents.

Average Days-On-Market:  Even in a super-hot market, It's hard to believe the average days-on-market for a Fourplex could be as little as 18 days.  There are a couple of factors here.  We are seeing a fair number of cash deals which can close much faster.  But the biggest factor I see here is new construction.  At least one brokerage is not posting their newly constructed Fourplexes on the MLS until the property is sold, which in affect shows zero days on market.

Tony Drost, Chairman
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.

Recently, a local news station ran a story about high application fees, and asks, "Are Landlords unfairly profiting off Treasure Valley affordable housing crunch?"  This prompted a number of inquiries to me asking if it's true.  "Yes", I believe some are, which I explain below, but I do not think the majority are.  The news story reported that some Landlords are charging as much as a $200 per application.  Wow, that certainly seems high to me, so I have to believe that includes more services that were not mentioned.  The application process has gotten a lot more technical than what it was 28 years ago when I first started.  Due to poor screening, many Landlords got burned by poor quality tenants. As the screening became more detailed, some Landlords got sued for discrimination.  I believe it is these two factors that opened the doors to a new market for third parties who specialize in tenant screening to help Landlords find qualified tenants, yet comply with laws, to include Fair Housing Laws.  This is when costs went up. 

Who is not profiting:

First Rate Property Management charges a $40 application fee and utilizes a third party company to run:  a credit report with a FICO score, a national criminal search, an eviction search, collects current and former rental history, verifies employment, and verifies income.  At this point, 80% of the application fee has been spent on third party charges.  Then that data along with any reasonable modifications to the criteria is inputted in an automated decision tool to ensure all applicants are treated the same and fairly.  So the remainder goes towards our own costs to process the application, which can take as little as a few minutes up to hours.

Who could be profiting:

For those property managers who do no screening whatsoever or only run a credit report from a single agency, yet charge a similar fee to those who are doing full screening, are likely profiting off their applications.  In a multi-family dwelling, its discouraged to rent from someone who does not screen, as tenants want to know that their neighbors have been properly screened.  For obvious reasons, Landlords want to hire property managers who are screening their tenants.  Mind you, I have seen lenders charging as much as $60 for credit reports to home buyers and investors.

Also, I suppose those Landlords and property managers who's practice is to accept the best application could be profiting.  This practice is frowned upon and opens the landlord into possible Fair Housing complaints.  First approved, first in has become the industry standard.

Tenant suggestions:

1.  Request a copy of the Landlords written rental policies and guidelines before applying.  Most professional property managers will provide this on their website and with their applications.  What is their criteria for:  income, criminal history, rental history, and employment history?

2.  What is their acceptance policy?  Do they collect  multiple applications and accept the best applicant, or do they accept the first applicant approved.

Profiting off the housing crunch:

I know of one company that allegedly profited off tenants for application and other fees, but they are no longer in business  I think our housing crisis is more about Boise's growth than anything else.   I sell investment properties and I can tell you that I am not seeing greed from the landlords.  The truth is, even with rents increasing, investors have a lower net operating income in relation with the sales price/value of the property.   That's right, homes and multi-family prices have shot through the roof.  But so have other costs such as:  labor costs are up which in return has increased maintenance costs substantially, property taxes are up, and so are insurance rates.  I am no economist, so I can't say that slowing Boise's growth is the answer, but its growth certainly seems to be a factor in costs for the landlord and tenant alike.  I do not blame either for what has happened.

Watch Story Here:  Are landlords unfairly profiting off Treasure Valley affordable housing crunch?

Tony Drost, Chairman
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about the Investment Real Estate and Property Rental markets in Boise and Idaho.

The U.S. Census Bureau announced the following residential vacancy statistics for the third quarter of 2018.The National vacancy rates for the third quarter were 7.1% for rental housing.

As a general rule, 5%-8% vacancy is a good average although the city you are located in and rental market play a factor in this.

First Rate Property Management vacancy rate is currently 0.25%.  The current vacancy rate for Ada/Canyon County is at 2.26%. Contributing factors that lead to these lower numbers are pre-leasing units that are currently on notice, marketing on several different levels (not just utilizing the internet platforms), constant communication with residents and interested parties, reasonable rent increases for both the owner and the resident, and quick response time for maintenance issues. These low vacancy trends we are seeing throughout the treasure valley are a great benefit for investors as property management companies will be able to push the rents. The demand for rental properties is far exceeding the supply.

Arica Elordi, Leasing Team Member
First Rate Property Management, Inc.
Boise, Idaho
Contact me for more information about this blog or proeprty management.