Circle PM Blog - Insight, Stats and More

Getting your home inspected isn’t just for new homebuyers. At Circle Property Management, we provide a home inspection for all our new clients.

Having your investment property inspected is essential to creating a better tenant experience, lowering risk of property issues, and controlling maintenance costs. Here, we discuss exactly how all these things work to provide you with a better version of your investment property.

Here’s what to expect for your home inspection at Circle Property Management.

High Level Service and Value

At Circle Property Management, you can expect us to go over every detail of your investment property from top to bottom. A proper home inspection leaves no stone unturned. We provide our clients with the highest level service and value available. When you choose us, you know that your property is scrutinized under the eyes of professionals who have been in the business for years and know how to properly evaluate a rental home.

Better Tenant Experience

When you get your investment property inspected, there are zero surprises for the tenant. This means you know about issues beforehand and have the opportunity to correct small maintenance issues before they become larger problems. A tenant who knows his or her home is well cared for is a happy tenant.

Better tenant experiences enable you to not only get positive references for future tenants, but also encourage your tenants to properly maintain the home. When the tenant feels as though you’re taking care of business, they may be more amicable when and if things do go wrong.

Lower Risk of Property Issues

We just discussed how knowing about issues beforehand can keep your property in much better condition. A thorough property inspection can uncover many issues, therefore lowering your risk of costly maintenance in the future.

Fixing a problem before the tenant has a chance to move in and complain about it is always preferable to the tenant moving in and then having to handle an issue. A home inspection that’s well conducted can make future maintenance on your investment property a breeze!

What’s Included in Your Home Inspection

When we do home inspections at Circle Property Management, we cover all the bases. These are some of the items we include when we do your inspection:

• Inspect heating, ventilation, and air conditioning

• Check for potential problems with condensation on air conditioning lines

• Confirm easy access to shut off valves

• Inspect washer and dryer; look for any mold or dampness in this area

• Check for drainage issues, gutter problems, and soil sloping toward the house rather than away

• Inspect the attic

• Document all appliances and potential repairs needed

• If there are any water stains visible on the ceiling, we identify the cause or the source

• Use a moisture meter throughout the home to identify any potential issues

• Check for gas leaks or other leaks that may cause a strange smell

Based on all this information and more, we create a report that’s approximately 30 pages long including pictures. You can review this information and we’ll be happy to review it with you to discuss what needs to be done to get the property in working order.

How the Home Inspection Helps You

The goal of our home inspection at Circle Property Management is to uncover potential problems on your property that should be corrected before tenants move in. We can also confirm pre-existing conditions on the home, which allows you to be clear when it comes to tenant vs. landlord responsibilities.

Essentially, our detailed home inspection will help protect both the landlord and the property manager in the event that something should happen. It’s expected that maintenance concerns will arise with your investment property. Let us help you better understand them and manage your maintenance costs appropriately through our home inspection.

When was the last time your investment property got a home inspection? Or maybe you’re on the hunt for the perfect rental property to make some extra income. We can help. Our home inspection goes a long way towards ensuring that your investment property stays at just that—an investment. Let us help you create a better tenant experience and lower maintenance costs with a proper home inspection!

Circle Property Management has closed the books for 2016 and now we reflect on the positive events throughout the year. There was some surprising moments as well as positive numbers for the rental market compared to 2015. The year started strong but stalled in September, October and November.

We did have a surprise bump in December which we attribute to the end of Presidential Election of 2016. November was our worst month year over year with a 23% drop in units-rented. We recovered nicely in December with a 7.8% increase over last year. Overall we saw a positive year as reflected in the data below.

Average Rent rose again in 2016 compared to previous years

Comparison To Last Year

Compared to 2015 we are positive on all the numbers with the exception of units rented "as an average". We were down 3.8% on units rented year-over-year but all the other statistics are in positive territory. Reflected below is rental statistics which is either positive or negative to the market.

Looking Towards 2017

After we reflect on 2016 our thoughts now look towards 2017 and the overall mood seems to be positive for Real Estate.. Sales were positive in 2016 exceeding "sales 2011 through 2015". On the chart below the black line with green squares represents homes sold throughout the year in 2016 compared to the past 5 years and it's apparent that 2016 was a good year to sell a home. We have heard that many of the sales fell through representing over thirty percent of all contracts that never went to closing. This high failure rate was due in part to rising interest rates and concerns about the economy, pre-election.

Washington Area Economy

With the election behind us and a new president, we see both positive and negative potentials which could effect the local economy. It's still very early to anticipate the outcome but we will follow this closely. Our only concern is the hiring freezes in the Federal Government and one would expect some caution with housing among Federal employees. We depend on new employment to drive growth and a robust rental market.

UNITS SOLD 2011 THRU 2016

If we continue the sales trend our market should improve as we start the spring cycle. We have not seen much negative correlation between sales and units rented but have felt from time to time, when tenants consider renewing a Lease we lose some to a home purchase. Overall our outlook is positive but will keep an eye on the numbers.

We have placed a data chart on our main page of http://www.circlepm.com towards the bottom of the page. We still maintain all the spreadsheets and monitor the MLS every month but limit the commenting to specific events. All of the data we extract is form our MLS system (MRIS) and still use Excel to present the data and charts.

October is following a steeper trend started in September. The downward trend began in July and has seen a steady decline every month. This is compared to units rented in 2015; we are seeing levels similar to 2012 and 2013.

Units rented compared to 2015

• July -1.8%
• August -1.4%
• September -12.3%
• October -16%

Active units compared to previous years

On the positive side, inventory has not been impacted like last year. Our inventory for active listings as of October is below 2015.

• October 2015 -19%
• October 2014 -13%

Market temperature

We have spoken to clients and associates and feel the downward trend may be a symptom of the election year cycle. Although 16% drop in rented units is high, we’ll have a better understanding on the direction by the end of the year. We still have a couple of months of data to process and we can declare a trend in January.

Do Home sales affect the rental market?

The sales market seems to be affecting our numbers seeing the best year in sales since 2006 per our MLS provider. As consumers look to buy we lose them from the pool of renters and it’s difficult to quantify how sales impact the rental market but we know from experience a good year in sales affects us all.

Market Condition Report

Our region and all of Fairfax County have performed well in comparison to 2015. We have seen small gains in Average Rent, improved Days on Market, with a significant improvement with Active Units. The quantity of Units Rented has remained constant through out the years, with very little difference year over year. The variable in obtaining the maximum rent; is effected by the quantity of units available (Active Units) and to a small part the units sold. When there is excess inventory we do see a decline in average rent due to the competition which was evident in 2015 as compared to 2016.

• Average Rent has exceeded 2015 by 1.2 percent (2016-$2273 2015-$2219)
• Days on market improved by 7 percent as compared to 2015. (39.63 vs. 42.6)
• Active units has declined by 21.5 percent as compared to 2015 (1191 vs. 1450)
• Units rented increased by .5 percent as compared to 2015
• Units sold has increase by 6.7 percent as compared to 2015

Circle Property Management tracks the market as part of our overall process for evaluating the rental market, helping our clients better understand the cyclicality of the market and the timing. 2015 has been a good year overall with very few major issues with marketing.

Maintenance and Repairs

As of August we have seen a significant rise in maintenance and repair requests exceeding 2015 by 27 percent. The increase was not based on dollars rather it is based on work orders processed. We attribute this to the aging of our portfolio of homes and there seems to be a pattern of every seven years. We have been seeing some sort of Appliance or HCAC system problem at 7, 14 and 21 years. When ever we process a major work order we look at the age of the appliance and the age of the home and inevitably it’s falling into the seven, fourteen, twenty-one year range. I have spoken to my major vendors and their feedback is of a similar conviction, indicating the quality of products is just not what they used to be. My main HVAC contractor has told me that most of the compressors are now manufactured in Taiwan and in my own observations I have noticed the compressors look much smaller and less sturdy looking than before.

We have renewed our contract with our HVAC contractor and they had a small price increase for new systems due to mandated efficiency requirements. We have a flat rate for the following:

• New 14 Seer HVAC system up to 4 ton AC $5,500.00
• Recharge AC (up to 1.5 lbs refrigerant) $350.00
• Clean coils $300.00-450.00

For detail chart Click Here

Rental Over-Supply, reverses trend in November vs. December (17% + above average supply)
The Rental and Sales market for 2015 was interesting to say the least. We have seen the supply of rentals go from a high of 20% above average supply to parity by the end of the year. This has been a marvelous reversal of a trend we began to worry about mid-year. 

Average Rent Charged Slightly Higher in 2015 (Just ½% higher in 2015)
Despite the average rent charged ending the year above 2014, it was a very bumpy ride. The first half started to move above 2014 but as the over-supply started to affect the market we saw a decline in average rent charged in June which severely effected the days on market as seen on the charts. November was our worst month but it did bounce back in December. 2015 was a break-even year coming in at $2219.50 which is just $7.17 more than last year (See chart on page 2 & 3)

Average Day On Market (12% higher than 2014)
The average days on market tells the story best. Due to the excessive supply “the time a listing was on the market” was extended on average 10% over the year. There were several months where the days on market were in excess of 25% more days than the previous year. (See Chart on page 6)

Homes Sold 2015 (9% higher than 2014)
The over supply does not tell the whole story about the softer rental market in 2015. Over the past 5 years, 2015 will be a record year with a total of 14,363 units sold. This represents an increase of 9% over 2014, 1 ¾% increase over 2013, 6.8% increase over 2012, and a 16% increase over 2011. We do feel the sales are part of the overall picture and some prospective tenants decided to purchase rather than continuing to rent. This may be a symptom of rising rents over the past 15 years. As rents begin to reach a point in which a consumer can purchase for less than rent we will potentially see a decline in rents charged. Despite the rising rents we do feel this will not affect 2016.

The rental market has seen a shift to lower supply but we have seen evidence of the over-supply effecting Rents in 2015 based on the average rent chart below.

Because the supply was high in the first half of 2015 we saw a much more competitive rental market resulting in lower average rents for November.

As the inventory declines we should start to see some improvement in the average rent. In the chart below you can see in yellow the decline in inventory more in-line with 2014. We did see a spike in activity in November which in part is due to the decline in sales. (next chart)

In the chart below you can see the decline in sales between October and November and an increase in units rented in November. We are not sure how the sales have affected the rental market but simply extrapolate the data. In conversations with Realtors we hear the market for sales have dramatically decreased.

In conclusion we feel 2016 will be a stable rental market and we suspect sales will decline as interest rates start to rise.

This report is prepared monthly with data collected from MRIS. Circle Property Management is a Licensed Broker and a member of NVAR, a licensed user of the MLS service provided by MRIS. We make every effort to collect the data but provide no guarantee of the statistical data in our charts.

Prepared by: Eric Guggenheimer

As we enter the fall and winter market we try to examine trends and gain some insight to the coming year. As we look backwards we see year-to-date 2015 has been one of the more challenging years. The greatest influence has been the supply of rentals averaging 20 percent above previous years resulting in a more competitive market. As we attempt to look forward, we see similar concerns with excess supply and new housing options developed by large companies appealing to demographic trends.

The Days on Market have been stubbornly high in 2015 which is evidence of the excess supply and the overall competitive market.

The Average Month’s Rent remained strong through the first half but started to decline sometime in June. It’s difficult to draw any conclusions from this data but it is interesting to see an early drop.

The Sales of existing homes did compete with rentals through July but we did see a large drop in sales activity between July and August.

In conclusion

With an improving job market we don’t see dramatic changes but remain a bit concerned that the inventory will remain high creating a more competitive market. On the positive side we did see more units rented on average for 2015 as compared to 2014. (742 Vs 673) The average rent is still above 2014 by $30.

Our December year-end report will provide better overall analysis and we will be sending it out to our owners the second week of January 2016.

This report is prepared monthly with data collected from MRIS. Circle Property Management is a Licensed Broker and a member of NVAR, a licensed user of the MLS service provided by MRIS. We make every effort to collect the data but provide no guarantee of the statistical data in our charts.

Prepared by: Eric Guggenheimer

Click here for the September Market Report