Are you overpricing your Phoenix rental property?

This is a very simple concept that many owners miss – if the market rent is $1000 you are not magically going to rent it for $1200 AND the longer the property sits vacant over priced the less actual monthly rent will receive. In Phoenix, listing your rental property for a price at market or even a tad below market will increase the odds of getting the property rented quickly and the value of getting the home rented fast far exceeds getting a nominal amount over market rent.

Let’s take a look at the following example of a similar rental home in Phoenix in which market rent is $1000. 

Mr. Myhouserocks is in love with his house.  He is convinced it is worth a rent of $1200 a month (even though the house across the street rents for $1000 and it is the same model) and as such lists it for $1200 on January 1.

On the other hand, Mr. Rentitiquick lists his vacant Phoenix rental at $975 on January 1 which is a bit below the $1000 market rent.

New tenants sign a lease for Mr. Rentitquick’s house in January and move in February 1 with a first rent collection paid on that day.  Mr. Rentitquick’s total rent collected for the 12 month lease is $11700 and his actual rent per month for the full 13 months is $900/month.

Now, back to Mr. Myhouserocks, January and February go by with very little interested in his home so finally March 1st he reluctantly lowers the price to $1100.00.  March goes by with still little interest and finally April 1st he lowers the price to $1050.  New tenant’s sign a lease in April with a May 1st move in and Mr. Myhouserocks thinks he “won” because he is getting $50 over market rent.  His total rent collected for the 12 month lease is $12600 however his actual rent per month for the full 16 months is $787.50  which is more than $100 less than Mr. Rentitquick.  Also, Myhouserocks had to pay utility bills for three more months than Mr. Rentitiquick and by April Phoenix is starting to get hot!

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Phoenix Property Management – Partial Payments

Under Arizona law a landlord is not required to accept a short or partial rent payment. However, per A.R.S. &33-1371 “if the landlord does accept the lesser amount (than full rent), the landlord loses their right to seek eviction of the resident”.  Keep in mind that this does include scheduled semi-monthly payment plans, where residents are regularly permitted to pay the rent on the 1st and the 15th without penalty. Acceptance of half the rent at the beginning of the month is an automatic bar to evicting the resident even if they do not make the second payment on the 15th.

The graver problem, however is when landlords hold onto payments from tenants to see if they can come up with the remainder of the funds.  Unfortunately even if you do not deposit the payment from the tenant, the Courts can and will rule that you have accepted it.  Acceptance can occur even without a specific action, because holding onto the money deprives the resident from its use.  When the resident is deprived of its use by the landlord, then the landlord functionally has accepted it.

You can preserve your rights to enforce the lease (and evict) if you enter into a partial-payment (or promise-to-pay) non-waiver agreement.  This specialized legal notice lists three crucial elements to preserve a landlord’s rights: a) the short payment is identified and credited to the account; b) the remaining balance is scheduled for payment; and (c) a declaration is made that the landlord is not waiving the right to terminate the resident for paying less than the full amount due. Good agreements also include the language of the non-payment Five Day Notice (A.R.S. & 33-1368(B)) in order to avoid issuing a new notice if the scheduled payments are missed.

When it comes to rent collections it is often best to have a Phoenix Property Manager such as RPM West Valley Phoenix being the ones collecting.  With management services you don’t have to worry about being “too nice” and giving the tenant extra time to pay often times forgetting that a tenant who pays late this month most likely won’t have the funds to pay on time next month and the cycle will continue.

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Surprise, Surprise, Surprise!

So you have done all the research, gathered the facts on the neighborhood, the HOA, the taxes, and the current rental statistics and have decided to purchase in Surprise. A little known fact about the city of Surprise, in addition to the city rental taxes of 2.2%, the city also requires that all owners of rental properties have a business license, including those whose properties that are professionally managed. These little unknown requirements by cities in Arizona can be quite costly if not followed. As a Phoenix Property Manager, we have been working with the cities for years to insure all our clients are in compliance.

In order to obtain a business license in Surprise or any other requiring city your property must first be listed as a legal class of “4-Residential Rental” with the county assessor office. The forms to complete this process in Maricopa county can be found on Maricopa County Assessor site. Failure to register as a rental with the county could be extremely costly with fines up to $150 per day. Once you are registered as “Residential Rental” you can apply for a City of Surprise business license. Failure to obtain the proper licensing could result in ordinance violations with hefty fines attached in any city that requires a license. So be sure to research all of the licensing requirements in the city that you purchase your investment property in or contact a local Property Manager to help you navigate smoothly through the process!

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Attracting & Retaining The Right Tenant in Phoenix

Getting and keeping a good tenant is the lifeblood of your Arizona Rental Property.  Taking the right steps to getting a solid tenant is even more important in Phoenix due to a high transient rental pool.

The first step to rental success is to list your vacant rental property for the right price.  You need to be realistic with your expectations.  How do you determine the right price for your Phoenix Rental Property?

There are several ways to determine market rent.  The best way is to talk with people who are familiar with the rent market where your Phoenix properties are located.  At RPM West Valley Phoenix, we have vast experience and will give you a straight answer to what rent you can expect for your Phoenix Rental Property.

The next thing to do is to prepare your vacant property for your prospective renters.  It is important that this preparation is done the right way.  If you do a poor job and use cheap materials and lame workers, the house will not show well.  If you prepare your house well, you will increase the odds of getting the ideal tenant and your rental property will have a greater change of holding up throughout the tenancy.

Once you have rented your property there are some simple steps you can take to retain the tenants.  At RPM West Valley Phoenix, we have observed several easy actions you can take to help keep a good tenant in place.

The first thing you can do to keep your tenants happy is to respond quickly to all legitimate maintenance items.  Replacing a hot water heater quickly and restoring A/C service to your tenants during a hot Phoenix summer are two things you can do that your tenants notice.
When it comes time for the tenant to renew their lease, you need to pay careful attention to whether to increase your rent or not.  Many times owner’s who insist on a rent increase end up with a vacant property!

At RPM West Valley Phoenix, we can help you with tenant attraction and retention.  Our staff has vast experience and can help you achieve your rental property objectives.

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