Landlords and Natural Disasters

Written by Landlord Property Management Magazine on . Posted in Blog

By  | Original post from RentPrep
natural-disaster-prepMost parts of the United States are subject to at least one kind of natural disaster, and some areas may be impacted by several different kinds. These disasters can often be tragic and cause devastating losses in lives and property. As a property owner, it’s always a good idea to educate yourself on what natural disasters could take place in your area. Then, you can create a plan for dealing with them during and after they occur.

What is a Natural Disaster?

A natural disaster is a significant event that occurs because of normal functions and actions of the Earth and its forces. Examples of natural disasters include:

  • Earthquakes
  • Hurricanes
  • Tornados
  • Floods
  • Wildfires
  • Tsunamis
  • Drought
  • Landslides
  • Sinkholes
  • Volcanos
  • Blizzards
  • Extreme weather, hot or cold

Natural disasters, depending on the severity, can affect an area economically and cost millions of dollars of state and federal money to help the region recover. The impact on a property owner can be significant and even in the best case scenario, natural disasters can create plenty of stress, damage and tenant issues for landlords.

Regional Risk Factors

The biggest natural disaster risks can be broken down into regions, where certain types of natural disasters are most likely to occur. There is no single area that is completely safe from natural disasters, but some areas have increased odds while others remain relatively disaster free for long periods of time. Let’s review the biggest natural disaster risks for each major geographic region of the United States.

Northeast United States

This area is subject to incredibly powerful storms in this area are called nor’easters. These macro storms get their name from the direction the wind is coming and bring heavy rain or snow, hurricane-force winds and coastal flooding in some instances. Severe winter storms can cause power outages that last for a few days or a few weeks in extreme cases. These storms can also interrupt road travel and cause property damage.

Southeast United States

In the states that border the Gulf of Mexico and the Atlantic Ocean, the biggest natural disaster risk has to be hurricanes. From the first of June through the end of November, the area is susceptible to tropical storms and hurricanes. Hurricanes bring strong winds, heavy rain, and high waves that can affect coastal communities. A hurricane’s heavy rain can cause flooding inland so distance from the coast is not always a relief from damage. Tornados are also common in this region and can cause plenty of damage.

Midwest United States

From North Dakota down to Louisiana, the likelihood of tornados here are high during certain parts of the year. Known as Tornado Alley, this region generates many tornados every year. With strong winds, tornados can decimate a small town in just a few minutes, and cause extensive damage and loss of life. The Midwest is also subject to flooding disasters due to heavy spring rains.

Mountain West United States

Due to the dry nature of the region, the Mountain West’s biggest risk comes from wildfires. With huge expanses of dry forests and acres of grassland, a small spark can ignite a wildfire that can threaten homes and lives. Another risk of natural disaster in the Mountain West region comes from earthquakes, as several significant fault lines run throughout the region. While there hasn’t been a large earthquake in the area for decades, scientists have determined that it’s not a matter of if, but when.

West Coast United States

Similar to the Mountain West, the West Coast is most likely to be affected by wildfires, but the increased activity of earthquakes in this region catapult this type of natural disaster to the top of the risk list. Even moderate earthquakes can cause damage to structures, and the region has a history of several large earthquakes that have resulted in extensive damage and loss of life.

Natural Disaster Risk Areas

Thanks to decades of study and tracking, scientists and researchers can calculate the areas of the country with the highest risk of natural disasters as well as those places with the lowest risk of natural disasters. Several reports have been created to give residents an idea of what kinds of natural disasters they are most likely to face, depending on where they live.

Here is one report that ranks the top 10 states most likely to have natural disasters, as well as what residents are most likely to encounter there:

  1. Texas—tornados, floods, wildfires, hurricanes, floods
  2. California—earthquakes, wildfires, flooding, severe weather, tsunami
  3. Oklahoma—tornado, snow, flooding, wildfires
  4. New York—snow, ice, tropical storms
  5. Florida—hurricanes
  6. Louisiana—hurricanes, flooding
  7. Alabama—hurricanes
  8. Kentucky—flooding, tornados, mudslides, severe weather
  9. Arkansas—heavy rain, snow, ice, tornados, flooding
  10. Missouri—ice storms, snow, tornados, flooding

This report reveals both the highest risk cities, as well as the safest cities, in the United States:

High Risk Cities

  • Dallas-Plano-Irving, Texas
  • Jonesboro, Arkansas
  • Corpus Christi, Texas
  • Houston, Texas
  • Beaumont-Port Arthur, Texas
  • Shreveport, Louisiana
  • Austin, Texas
  • Birmingham, Alabama

Low Risk Cities

  • Corvallis, Oregon
  • Mt. Vernon-Anacortes, Washington
  • Bellingham, Washington
  • Wenatchee, Washington
  • Grand Junction, Colorado
  • Spokane, Washington,
  • Salem, Oregon
  • Seattle, Washington

It’s easy to see that where the Southeast and Midwest intersect, there are more chances for residents to encounter natural disasters. It’s always a good idea for landlords and property owners in general to get familiar with the risks associated with their region, so that proper preparation can begin.

Landlord Plan for Natural Disasters

No matter where you live in the United States, as a homeowner and landlord, you should find out what natural disasters may occur where your properties are located. There should be plenty of state and local resources on how to prepare physically for a natural disaster.

Insurance

As a property owner, consider reviewing your current insurance policies and see what kind of coverage you have signed up for. Some areas require separate insurance for certain disasters that is outside of a standard policy. For example, if your rental property is located on a flood plain, your standard homeowner’s insurance may not cover any damage by a flood and you would need to purchase a separate insurance policy for floods. Follow your insurer’s advice on listing the features of the property and even taking pictures to document everything before disaster strikes. Also, educate your tenant on renter’s insurance.

Records

Keep your information about insurance and so forth in a safe place so you can access it after the natural disaster occurs. If you live in the same area as your rental property, keep hard copies of important documents where you can access them easily. It’s a good idea to create digital copies and store them in the cloud or in an online storage facility like Dropbox or as attachments to an email. Even if you are without a computer or power, you will eventually be able to access the documents. They may be the only versions left if your own home is affected severely.

Tenants and Lease Agreements

It’s also important for landlords to become familiar with the laws concerning the destruction of rental property and how that affects the lease agreement. If the laws are vague or non-existent, landlords can include wording in the lease agreement for clarity in the event of a natural disaster that destroys or otherwise makes a rental property uninhabitable. For example, will rent be temporarily abated while the property is being restored or repaired or will the lease be dissolved?

In other words, make sure the lease agreement has specific wording that covers provisions if the rental property is partially or completely destroyed. Of course, check with a landlord tenant attorney to ensure that your lease is compliant with state laws on the subject.

Structural Preparations

Depending on what types of natural disasters your area is prone to, there may be some things you can do to minimize damage to your rental property. For example, if your rental is in a high hurricane area, consider replacing standard windows with impact resistant glass and installing hurricane shutters. In an earthquake area, take the time to anchor large appliances, like refrigerators, with hooks and straps. For rental properties in wildfire zones, choose landscaping that places shrubs and trees several feet away from a structure. Taking the time now to prep a rental property can mean the difference in thousands of dollars worth of damage and may even lead to keeping tenants safer.

Other Factors

Other factors to consider when it comes to rental properties and natural disasters:

  • Whether a lease is terminated because of a disaster.
  • What happens to the tenant if the rental property is uninhabitable.
  • If the tenant’s job and income is affected by the disaster and how that can impact the ability to pay rent.
  • How the tenant might pay rent on time if normal methods are not stable (mail delivery, electronic banking, etc.).
  • How tenants become informed about the steps for them to recover from the loss of personal belongings or injury claims due to the disaster through FEMA or other avenues, as well as from their renter’s insurance policy.

In order to minimize the amount of stress and to ease the financial burdens for landlords in the event of a natural disaster, the best advice is to be prepared. While there is no way to predict where and when a natural disaster will take place, you can control your level of preparation and ensure the best possible scenario for your property and your tenants.

Landlord Resources

Centers for Disease Control and Prevention: Natural Disasters and Severe Weather

Federal Emergency Management Agency: FEMA

USA.gov: Disasters and Emergencies

Red Cross: Prepare for an Emergency

You can also go online and search for your state’s division of emergency management or emergency department for resources and guidance specific to your state.

What steps have you taken to protect your property from a natural disaster and minimize the stress of a devastating aftermath? Please share this article and let us know your thoughts in the comments section below.

Learn more about RentPrep at RentPrep.com

A Look to Apartments of the Future – Millennials Will Dominate

Written by Landlord Property Management Magazine on . Posted in Blog

Shared post from Axiometrics | by Louis Rosenthal

apartments of the future

The apartment market is always changing. What was popular in the 1980s is a relic today. While today’s renters enjoy the amenities and locations featured at newer properties, changing economies, culture, technologies and interests will make the apartments of the future different.

So what does the medium- and long-term market look like? What should renters, investors and economists know about it in 2025, 2035 or even 2050? This isn’t an idle exercise: While the forces of supply and demand don’t change, the drivers of supply and demand do. In that sense, as we move farther into the future, observers should be keen to demographic and generational changes, technological disruptions and shifting market dynamics.

Starting with demographic and generational changes, the prime renter age group for the next decade or more will be that much-discussed millennial generation. We consider the prime-renter group to include those ages 20-34. If we consider millennials to be anyone born between 1980 and 2000, then the oldest millennials will be 40 years old in 2020, when some of the youngest millennials will be 20. In other words, the youngest of the millennials will still be considered “prime renters” until 2035. Some may think they are entitled, bratty and materialistic — but they will be driving the apartment market for at least the next 20 years.

Consider this: 27% of millennials ages 18-33 have a bachelor’s degree or higher, compared to only 20% of the previous generation, Gen X, according to Pew Research. Only 28% of adult millennials are married, compared to 38% for Generation X when they were 18-33 years old. Perhaps more interesting is how millennials approach the two most expensive assets they will likely ever own: houses and cars.

In 2014, 76.7% of 20-24 year-olds had a driver’s license, compared to 82% of 20-24 year-olds in 2008 and 91.8% in 1983. Over the course of 30 years, the number of young 20-somethings with a driver’s license fell dramatically.  Clearly, the brakes have been put on the car culture that defined Americana in the post-war years. Likewise, only 35% of those 34 and younger own a home, compared to 39% in 2010 and 41% in 2000. In short, Millennials are less interested in driving a car and — at least for now — owning a home.

So what do these trends mean for the apartment market? The homeownership rate is of particular importance because people are classified as either an owner or a renter.

“If the homeownership rate goes down, then the number of renters should go up,” said Jay Denton, Axiometrics Senior Vice President of Analytics. “So, in the end, a declining homeownership rate should benefit the multifamily space, especially given demographics.”

Technology also will be different in the apartment of the future.

Transportation technologies are likely to completely upend the way we think about getting around the city. As driverless cars and Uber-like ride-hailing services become the norm, declining rates of car ownership, more disposable income and the repurposing of America’s 40,000+ parking garages and lots (about 800 millionparking spaces) should follow. This will mean a major change in the physical space that an apartment property occupies, as well as its immediate vicinity. The parking lots could be repurposed into another building or more green space in urban “jungles.”

This, too, ties back into demographic trends: Do millennials want a parking space or do they want adjacent retail shops, movie theaters, restaurants and so on? If it’s the latter, we can safely assume that apartments — particularly those located in urban core areas — will be even more attractive to young renters.

Of course, the economy is a large factor in driving housing decisions. Job growth is the key variable that predicts apartment rent and occupancy growth. When the number of jobs grows in a particular metro, more people come to the metro to take those jobs — and a sizable portion of those job-holders will be renters. In short, when the economy is doing well, so is the apartment market.

So, when we think about the future economy, we need to consider the role of demographics and the business cycle. Starting with demographics, Denton said: “Our country is based on growth, and if you look at millennials, they are waiting longer to have kids, and when they do they are having fewer of them. That means we are not building up our population enough, so we will have to draw on people from other countries.”

In other words, if we are not increasing the population today, then future demand for apartments will suffer as fewer individuals occupy that prime renter age group.

Never far from anyone’s mind is the threat of another recession. As Denton described, “If the economy takes another downturn in the next two or three years, is that another black eye for the single-family home industry? Does the single-family space get hit with a double whammy?”

Another recession in the near future could have two medium- and long-term effects.

  • In the medium-term, it will only further sour younger Americans on homeownership. What is the point in trying to build home equity if there is a deep downturn once a decade?
  • The long-term effects could be similar, but their impact will be protracted: For the youngest millennials alive today, what does it mean to have your formative years colored by deep recessions? Will single-family homes become even less desirable than they might be for the older millennials? Time will tell.

The future is unknowable, and we aren’t presumptuous enough to say that we have some special insight into what the future holds for the apartment industry. We can forecast the key supply and demand variables in the apartment market five years into the future, and we can do so with a considerable degree of accuracy.

But all predictions are necessarily imperfect. What analysts and observers should be doing is asking the sorts of questions raised in this post: questions about the replicability of historical trends, demographic changes, technological disruptions and so on.

All the better to ask these questions now so that the future can be accommodated rather than resisted.

Roof Coatings are not Roofs!

Written by Landlord Property Management Magazine on . Posted in Blog

By Tom Scherer  | T&G Roofing

roofing materials

Roof coatings became popular in the 1970’s and 80’s, along with the “Bee Gees”, and they have been around ever since. Coatings are applied over an existing hot tar roof in an effort to “extend” the life of the roof and to add reflective qualities to the system. This is sound thinking, however, in many cases, coatings are misrepresented by the coating industry and contractors who install them. Most of the waterproofing is done before the coating is even applied. (All cracks and holes are mended with plastic roof cement)

To “extend” the life of the roof could mean getting an extra year or two out of the existing system. But I have heard boasts of 10 and 15 year warranties that may not hold water. I installed one of these coatings exactly as directed by the manufacturer. After being told that I would get a 10 year “leak free” warranty from the manufacturer, I had to refund my customer’s money after the first year. I then installed a single ply TPO system to keep water out of the building and to keep myself out of the “People’s Court.”

Since elastomeric coatings are as thin as a piece of paper, how could they be expected to maintain a waterproof membrane for more than a year or so? They can’t and they don’t.

Coatings are not to be confused with actual roofing systems like hot tar, torch-down or single ply. Coatings, by themselves, are not considered to be a legitimate roofing system. They are considered to be a roof restoration only.

Coatings are often required to be installed over a cap-sheet roof so it meets the title 24 (environmental reflective demands) requirement. But it was never intended as a waterproofing system in itself. Single ply systems, on the other hand, have a reflective coating, that meets Title 24, built right into the system.

The best available flat roofing systems as of Jan. 2015 are single ply systems (TPO or PVC) that carry 20-30 year warranties. Hot tar systems are legitimate, but they do not compare with the single ply across the board in terms of safety, longevity, environmental issues. Torch-down is at the low end of the tier. It has the shortest lifespan, uses open flames, and has safety issues.

Emulsion and elastomeric coatings rely on the roof system that they are covering for longevity. When the roofing that the coating is covering deteriorates then the coating fails.

I know of some manufacturers offering 10 year warranties on their coatings however, the warranty has stipulations that do not protect the property owner. The cost of coatings is about half of regular flat roofing options so many property owners are lured by the lower prices and the long warranties, however these warranties do not stand up to close scrutiny.

Single ply roofing does not rely on the existing roofing at all. It stands by itself, whether it’s over an existing roof or bare plywood. It is like large sheets of thick rubber. This material is substantial and will not allow water to penetrate it for 20+ years. The warranties for single ply are legitimate and are validated by reputable companies.

There is really no comparison between the two. One is akin to painting over a roof (coatings) while the other is a new roof covering (single ply).

New buildings across America are roofing with single ply roofing. No building chain (Lowes, Home Depot, WalMart etc.) is roofing their buildings with a coating only.

Hot tar roofing is an acceptable re-roofing choice as it is substantial and will last 15+ years, however single ply is the better choice for longevity, reflectivity, and environmental effects. (no fumes, not oil based, and it’s recyclable)

At T&G Roofing Company, Inc., we pride ourselves on quality. Every installer is a professional with many years of roofing experience. The materials that we install are of the highest quality, always number one grade and we never use seconds. We install brand name roofing products such as GAF, CertainTeed, Owens Corning, Monier-Lifetile, US Tile, and Eagle. These products have proven time and time again that they can stand up to what Mother Nature has to dish out.

The Latest Trend That’s Changing Student Housing

Written by Landlord Property Management Magazine on . Posted in Blog

By Ian Ritter | Shared post from the Hightower Blog

student housing next gen

Student housing facilities have changed a lot over the last several years. Tech-enabled, communal living spaces have replaced the stacked double rooms that once defined the college dorm.

But, the newest trend is that some student-housing developments are now adding retail and other property sectors to their project, effectively creating a mixed-use arena. This marriage makes sense because student housing has become more of a mainstream commercial real estate product type.

The reason for this change is a spike in undergraduate enrollment, which is attracting both developers and various retail  / restaurant tenants. According to the National Center for Education Statistics, between 2000 and 2010, undergraduate enrollment rates increased by 44 percent. And even more growth is projected. The organization sees a 14 percent increase from now until 2025 for full-time students, while part-time students are reportedly rising 15 percent.

The commercial real estate industry is taking notice.

How to go mixed-use

One recently announced example is in downtown Orlando, where the University of Central Florida’s new student housing complex is going up. The $90-million development, which will have between 14 and 15 stories with 600 to 700 units, will also include 10,000 square feet of retail. Meanwhile, also in downtown Orlando, Valencia College is planning a student housing facility, which will also have 50,000 square feet set aside for a restaurant and staging area for the school’s hospitality program.

This fall, a mixed-use student-housing project is set to open at Johns Hopkins University, in Baltimore. Below will be 30,000 square feet of retail and restaurants anchored by a CVS. Additional tenants include Honeygrow, a regional Northeast fast-casual chain that serves food with local ingredients, and a local ramen shop.

In downtown Greenvillle, N.C., the home of East Carolina University, mixed-use student housing is one of the centerpieces of Greenville 2020, a public-private partnership intended to shape the development future of that city. Part of the $1 billion in total investment, which includes public-transportation improvements, retail, restaurants and breweries includesCampus-Edge. That project will reportedly have 20,000 square feet of retail space underneath five stories of student housing.

These types of developments aren’t limited to housing strictly for students, but are going up where students are major tenants along with other renters. Boston, for example, has several universities scattered throughout its metro area. A development in the Downtown Crossing area looks to target both. A 72-story tower being proposed in Downtown Crossing, will be a mixture of residential and office, and developers Millennium Partners are banking on students taking up much of the apartment space in the building.

Still, not a perfect marriage

A recent Urban Land Institute (ULI) panel on student housing addressed the trend. J. Wesley Rogers, president and CEOLandmark Properties, said that putting retail under the housing units can provide a stronger yield for some assets. In Gainesville, Fla., for example, retail rents in one of the firm’s properties are commanding a strong $50 per square foot.

But Rogers warned that putting the two product types together doesn’t always work. For one thing, some municipalities won’t allow the combination due to zoning issues. Plus, Rogers pointed out, a good student-housing location doesn’t always mean a good retail location.

So, making every student-housing development a mixed-use scenario doesn’t necessarily make sense. But if it is in a dense area near a campus, or in an urban environment, where some universities are located, there isn’t much downside. Student housing in these locations not only has a built-in customer based above the asset, but college towns in many locales are similar to the 24-hour environments in big cities that retailers and restaurants increasingly crave.

ABOUT
Ian Ritter
Ian Ritter is the former Content Director for Connect Media, a Web site that covers commercial real estate nationally, with a focus on California. He is also the Online Content Manager engineering firm GRS Group and writes blogs about national industry trends. Formerly, Ian was the Retail Editor at GlobeSt.com, among other titles over nearly a decade, and was also an editor at the International Council of Shopping Centers publication “Shopping Centers Today.” He holds a Master’s degree in Journalism from Columbia University.

Six Reasons Why Investing in Multi-Family Housing is a Smart Move

Written by Landlord Property Management Magazine on . Posted in Blog

Shared post from cashflowdiary.com

mf investing

People ask me all the time if they should invest in Multi-Family Properties. If you’re one of them, my answer is ABSOLUTELY… but only if it fits your Investor Identity. The truth is though, that it has to be right for you. To help you understand that part, you first need to understand the many benefits.

Investing in multi-family properties is one of the most powerful investment strategies you can use to create astounding and consistent cashflow month after month. But that’s just one reason to invest in multi-family housing.

Here are six more:

1) Multiple Properties Under One Roof Means Easier Management

What’s more attractive… 12 single-family homes spread out across a city to manage, or 12 units under one roof? With the 12 individual properties, you may need more than one property manager; with the one building you only need one manager.

Now let’s say you have a 72-unit building. You still only need one manager on site or one property management company that will handle rent collection, tenant issues, and grounds and other management duties.

Finding a great property manager means you have to ask the right questions, and you always want to have a plan B in case the property manager or management company doesn’t work out.

Make sure you never have a single point of failure.

2) Forcing and Phasing Appreciation in Multi-Family Properties is Easier Compared to Single-Family Housing

Appreciation rarely just happens. You have to do specific things to force the value of a property up or phase in amenities and benefits to tenants which will push the appreciation up.

In single-family housing, you don’t have as many options with these activities, because there’s only so much you can do.

In a single-family home, you can slap some lipstick on the property to give it more curb appeal, or you can do a deeper rehab to make the property more functional. However, you are doing this to force the appreciation on ONE property only.

When you give your apartment building (or even a 4-plex or 8-plex) more curb appeal, fix things in the property that make it more appealing as a living space for tenants, add a nice laundry room or business to the property (if we’re talking about more than 12 doors), or revitalize a useless space to create something that is a benefit to tenants, and you will push up the value of the property exponentially. You will attract tenants to your building vs. another landlord’s building. That’s what you want. Plus, you’re creating more and steadier cashflow, because your tenants will want to stay.

3) You Can Create Even More Cashflow in The Multi-Family Property

This is pretty exciting stuff, because there are ways to create cashflow beyond rents. Take the last point, for example.

What if you add a nice laundry facility to the property? Say you have a one-bedroom unit or a studio apartment in your building that you know will only invite transient tenants. What can that space become that will generate even more income month after month?

A safe, clean, well-lit laundry room with decent coin-operated machines can be a great idea. It benefits the tenants who don’t have washers and dryers in their units and would normally have to lug their laundry to the nearby Laundromat. Why make them do that when they could have the laundry room on the property? They are using coins either way. Why not let them feed those coins into your machines? The cost of the machines will be covered quickly, and you can get great deals through bulk purchasing.

Make the space clean and safe. Consider adding a security camera to keep out any bad elements, and you have a winner. In fact, that’s called a win-win. You win; your tenants win. You’re creating a space that raises the quality of your tenants’ lives, which feels really good. (The laundry room is just ONE thing you can add. There are many more amenities to add that bring additional cashflow in a variety of ways.)

4) There Are Great Tax Breaks that Come with Investing in Multi-Family Properties

When you provide housing it’s a good thing. The government thinks so, too.

The city in which the property is located likes the idea, because you are helping the residents of that city by providing clean, safe, affordable housing to people who might not otherwise find it.

As a result, you can gain all sorts of tax incentives… also known as tax breaks. You can take a whole lot of deductions because this is a business. You are running a business of Real Estate Investing. You can depreciate all sorts of things in an apartment building or rental property, and that depreciation takes place over more than two decades… sometimes three decades, depending on whether the property is classified as residential or commercial. The size of the property and other factors dictate the classification.

The long and short of it is that when you invest in multi-family properties, you’ll want to get a very competent CPA and/or CFO to help you get as many deductions and tax incentives possible. It could be that you can even get government grants to offset upfront costs. The benefits on this side can be massive. You could end up paying zero property taxes. That would save you money in a big way, right?

5) Multi-Family Properties Hold Their Value

Once the property is rehabbed, and you’ve made it attractive to tenants, it will also attract other investors who will be interested in buying the property later (if you ever want to sell). You’ve put in place everything required to attract and retain tenants. That means steady cashflow, which is mighty appealing to investors.

You have to make sure to maintain your property so it retains its value over the long haul. The grounds must be kept up, minor repairs performed in your ongoing maintenance plan, and really good maintenance people must be in place. Find the best by asking the best questions. Do you due diligence on the people wanting to work for you.

You want maintenance people and grounds keepers who share your desire to provide clean, safe housing. That’s part of what they are responsible for… maintaining a good living space for the tenants. You need to learn the difference in workers’ mindsets. It’s a sure bet that theirs will reflect yours. You want motivated workers. Learn how to adequately motivate them to not just care for the property but also care about the people living there.

6) Investing in Multi-Family Housing Allows You to Change Lives

If you create a space where families can thrive, that’s a perk. You could go into Wal-Mart-type areas where you see lots of opportunities for improvement. In apartment buildings and smaller multi-family properties, you’ll see opportunity in the form of boarded-up windows, overgrowth of the grounds, graffiti, messed up swimming pools, filthy laundry rooms and dwellings that need a whole lot of help.

How good would it feel to get that property, rehab it, solve the problems, attract families that need clean, safe, affordable housing, and then positively impact whole zip codes? You can do exactly that if you have the commitment and the right teams in place to help you through the rehab process. You’ll need other team members, too, but you can learn what that looks like before you begin.

Obviously, investing in Wal-Mart-type areas isn’t for everyone. Fortunately, there are plenty of other levels in the multi-family investing space. You can find properties that fit your Investor Identity. Then you can affect change, and earn great cashflow at the same time. That’s a great accomplishment.

Knowing that you have the ability to change lives is something that makes you feel good.

Tax Alert! New Proposed IRC 2407 Regulations May Impact Your Estate Planning Strategy

Written by Landlord Property Management Magazine on . Posted in Blog

By Michael Trainotti

TaxAlert

It has been over two weeks since the U.S. Treasury Department issued on August 4, 2016 proposed regulations under Internal Revenue Code Section 2704 that, when finalized, may substantially increase your wealth transfer taxes by blocking a common estate planning strategy. The new regulations would only apply to individuals whose family assets are more than $5,450,00 or married couples above $10,900,000.

Some commentators believe that if they are finalized this would be the most significant change in the estate planning area since 1986.  You may have read that planning ahead is key. Since the new regulations will not be finalized until early next year, everyone who would be subject to estate taxes should strongly be thinking about making gifts this year based upon the planning example below that will not be available after the new regulations are finalized.

Historically, taxpayers could reduce the value of their taxable estates by placing assets in partnerships, LLCs or closely held corporations and claiming lack of marketability and/or lack of control discounts. These discounts typically reduced the value of the ownership interests by 25% to 45%.

Thus, for example, placing $10 million worth of assets inside a closely-held entity might reduce the value of the estate by $2.5 million to $4.5 million and, given the current 40% estate tax rate, reduce the estate tax payable by $1 million to $1.8 million.

The above example is also true for making current gifts or sale of assets that you believe will appreciate in value over your life expectancy.  Gifting or selling of assets freezes the value of your assets today and shifts the appreciation to other family members.  The sale concept is true for the sale of assets to children, especially if there is a sale to a grantor trust where there is no recognition of income or the assets sold has a high basis and no or little income tax is recognized.

I will be preparing an article shortly explaining in more detail some of the planning opportunities that can be key if the new regulations are finalized. I want to point out that there have already been comments that the proposed regulations in current form, if finalized, may violate the congressional legislative history of allowing discounts, ignoring state law provisions governing business entities and general valuation principals occurring daily in the marketplace.  If that is the case, legal challenges will be a certainty.

You should contact your advisor(s) regarding whether or not the new proposed regulations may have any impact on your family assets if they become finalized.

Don’t miss this Important Tax Article in the September 2016 Issue of Landlord Property Management Magazine!

Michael Trainotti, Inc., A Law Corp
400 Oceangate, Suite 520
Long Beach, CA 90802
Work: (562) 590-8621
Fax: (562) 590-8181
email: mike@trainottilaw.com
website: www.trainottilaw.com

The Landlord’s Guide to Property Safety

Written by Landlord Property Management Magazine on . Posted in Blog

By Brentnie Daggett

A pair of hands holding a small house. Real estate or insurance concept.

One of the most basic responsibilities for housing providers entails landlords and property managers maintaining safe and habitable living conditions for their tenants.

Most states have requirements to ensure that renters are provided with safe and livable homes. These basic rights, known as the implied warranty of habitability, originated as a result of court decisions in the late 1970’s and is the base structure on which all landlords should develop any safety checklists used.

So what exactly does this mean in terms of provisions? The property owner must ensure that: basic building structures are intact, common areas are safe and clean, there is reasonable access to cold and hot water, trash receptacles and pickup is available, living space is free of vermin and (in most states) that the space is safe from foreseeable theft or criminal intrusion.

Since safety is such a crucial aspect of managing rentals, utilizing a safety checklist will help you address any issues before they become a safety risk or a legal liability.

Indoor Safety Feature Check:

  • Gas Safety: annual safety check on each appliances, pipes or flues that utilize gas
  • Electrical Safety:
    • Ensure outlets are in working order and panels are secure. Do extra inspections during turnover to ensure past tenants did not make unauthorized electric alterations.
    • Check each light to ensure switches are working smoothly, delay could indicate a fire-hazard.
    • Inspect dryer vents, and ensure that exhaust is being released while the dryer is running. A blockage could cause a fire, and might need to be handled with a vacuum hose or by a professional.
  • Fire Safety:
    • Ensure all smoke and carbon monoxide alarms are in working order, double-check this during any routine maintenance, as some tenants will not change batteries or take batteries out.
    • Ensure tenants have access to fire escape routes
    • Supply fire extinguisher for residents (Depending on State/Local fire codes)
    • Unclog chimneys so that poor ventilation does not pose a health or fire risk.
  • Structural Safety:
    • Check that walls, stairs floors and other structure is sound.
    • Manage any environmental toxins (mold asbestos and lead paint) appropriately within the space.
    • Check for cracks or holes in the walls or ceilings that can lead or collapse, leaks, or infestations.
    • Check that doors close and open properly, difficulty evacuating through doors poses a fire hazard. Additionally, doors leading outside should have working locks that deter theft or intrusion.
  • Appliance Habitability:
    • Verify that all sinks, showers and toilets have proper water pressure and no leaks. Also, check your water heater’s temp and safety relief valve once a year to remove sediment buildup that can cause failure.
    • Have your HVAC system professionally inspected, and remind tenants to change air filters as this can prevent expensive repairs.
    • Verify that kitchen appliances work properly. Check for potential leaks, that burners ignite properly, and that the refrigerator stays at a proper temp.

Outdoor Safety Feature Check:

  • Walkway Safety:
    • Provide exterior light source(s) to ensure visibility and deter criminal activity.
    • Trim landscape to prevent overgrowth obstructing walkways and allowing for criminal hiding places.
    • Make sure all railings are secure and there are antislip or caution guards in place. Before every wet season do a routine check to ensure tenants will not slip or tumble when grabbing a failing railing.
  • Structure Safety:
    • Check for overgrown tree branches or roots that can cause structural damage, hire a professional to address an area, if need-be.
    • Hire a licensed professional inspect the roof for missing or loose shingles, even slight damage can lead to deterioration of the structure’s insulation, wood or drywall. This can make electrical, plumbing and HVAC systems vulnerable.

To ensure a safe property throughout tenancy, provide seasonal safety inspections and be sure to provide an easy way for tenants to submit maintenance requests so you can address them any health or safety concerns appropriately.

Always to respond to any requests in a timely manner and to take them seriously. This will ensure that you will not only be providing the legal habitability and safety requirements, but also encourages tenants to place a request before a minor issue becomes a major–and expensive–repair. If major repair is not addressed appropriately, some states allow tenants to withhold rent (or even sue).

Due to the serious nature of maintenance repairs in regards to safety, save yourself a sticky situation in the future and keep records of any safety inspections you perform. This paperwork will serve as legal documents in the event that anything happens to your rental, so be sure that you have electronic copies–particularly if your office is within your rental buildings. Your rental software should offer unlimited cloud-based storage for these documents, making them accessible in the event you need documentation of the properties condition in the future.

Author Bio

Brentnie Daggett HeadshotBrentnie Daggett

Brentnie is a writer and contributor for Rentec Direct, providers of management software and tenant screening services. Brentnie is always ready to share relevant industry news and tips for new and experienced landlords alike. To learn more about Brentnie and to discover more great tips for rental management visit www.rentecdirect.com.

Millennials Actually Like the Suburbs

Written by Landlord Property Management Magazine on . Posted in Blog

By Tierney Plumb | Shared Post from the Hightower Blog

millennials in the subs

For the past few years, the media has churned out a steady stream of stories describing how city-loving millennials are driving a re-urbanization of the U.S.

But not so fast. As it turns out, the white picket fence life is still desirable for the young age group, according to a new report from CBRE.

Census data shows domestic net migration out of cities and into suburbia. We chatted with the author of the report, CBRE director of research and analysis Darin Mellott.

By the numbers

The most recent annual data from 2014 shows that 2.8 million people moved from the suburbs to cities that year, but 4.6 million did the opposite. That means the death of suburbs isn’t nigh.

“This news is quite shocking to some people because of how much life that prevailing narrative that has taken on its own,” he said.

Millennials, or those mostly born between 1980 and 1995, make up the largest age group in the country and the biggest segment of the U.S. workforce. But census data does disagree with the media when it comes to where they actually live and where they have been moving to.

About 30% of millennials live within urban areas. The remaining balance doesn’t appear to be rushing to city centers; in 2014, 529,000 people between 25 and 29 moved from cities to suburbs, while only 426,000 did the reverse.

For the younger end of the spectrum (ages 20 to 24), the flow’s direction was even more pronounced, with 554,000 becoming city dwellers and 721,000 trading cities for ‘burbs (keep in mind some of that represented relocation into parents’ basements).

Among the oldest millennials and the tail end of Gen X, negative net migration was even more: 1.2 million people aged 30 to 44 moved from cities to suburbs, while 540,000 did the contrary.

So what do they want?

Space and an urban feel rank high on the list. A recent survey showed that 81% of young people (classified as millennials and those born in the late 1970s) want three bedrooms or more in their place.

That preference means suburbs would be the more likely pick when it comes down to family formation and affordability, he said. “It’s hard to afford a three-bedroom in Manhattan.”

In another study, nearly two-thirds of millennial-aged respondents self-identified as suburbanites or rural people.

Still, country mouse types aren’t everywhere. Millennials love urban perks, like access to public transit, shops, restaurants, and offices. Just because millennials appreciate city living doesn’t translate into demand for downtown real estate.

Suburbs can grow on younger demographics once injected with urban qualities.

In San Jose, for example, mini mixed-use developments like Santana Row have plunked down a myriad of restaurants, bars, and housing that replicate the environment found an hour north in San Francisco. Similar redevelopments on the outskirts, dubbed “hipsturbia” and “urban burbs,” are popping up more and more.

Why the increase? As millennials leave cities, they still crave certain amenities and more developers are reacting to that request, he said.

Western cities like Phoenix and LA are seeing pockets of strong suburban activity, he said, and that same phenomenon is occurring in suburbs of New York and New Jersey.  “Those pockets share common characteristics—that is suburban areas with urban qualities,” said Mellott.

Exceptions to the rule

Of course, the report doesn’t aim to make a blanket statement across the board about millennials and suburbia; keep in mind no two property markets are created equal, and each market has its own dynamics that play out on various levels and in unique ways,

And there are definitely downtown markets across the country that have outperformed—and will continue to outperform, in some cases—suburban markets.

For example, McDonald’s Corp. recently announced plans to move its headquarters from the suburbs to downtown Chicago.

“While we are continuing to suburbanize, that doesn’t mean dynamics are negative in cities,” Mellott said.

Some big firms are realizing that an urban setting is a big selling point when it comes to attracting and retaining new talent. And in San Francisco, Silicon Valley-based Facebook is considering adding a ton of square footage in San Francisco. And LinkedIn recently tacked on an entire office building in downtown San Francisco to appeal to city lovers.

While there’s some truth to the idea of the resurgent urban core, it is also fair to say the extinction of the suburbs and millennials’ love of cities have been “greatly exaggerated,” he concluded. His study aims to dispel erroneous thinking that millennials are anti-suburb.

“We are trying to form a more informed and intelligent conversation around these topics. Suburbs aren’t dying,” he said.

ABOUT
Tierney Plumb
Tierney Plumb is a former reporter for Bisnow San Franscio. She previously worked with the San Diego Daily Transcript and the Washington Business Journal.

Tips for Turning Your Properties Pet-Friendly

Written by Landlord Property Management Magazine on . Posted in Blog

Shared post by Appfolio

pet friendly apt_2

We all know the saying: a dog is a man’s best friend. There are plenty of reasons why—they are cute and fun, and they bring comfort and joy when you need it. If you are a property manager who has a furry friend, you probably understand this already. But even if you don’t have one or are not particularly fond of them, a pet could also be your business’s best friend.

Animals are assets in attracting potential residents and differentiating yourself from competitors. The most frequently asked question from renters is “Do you allow pets?” So while a renter’s dog might not be your cup of tea, it means a good deal to their owners and therefore should mean a lot to you.

As an example, allow me to take a quick moment and tell you how AppFolio utilizes dog friendliness to propel happiness and productivity in the workplace. Trust me, it directly relates to how you can take advantage of pet friendliness in your property management business.

A Dog Friendly AppFolio Boosts Employee Happiness

The dog friendly environment of AppFolio’s offices is one of the reasons why people love working here and why they feel like they have found a home upon joining the team. Welcoming a new dog keeps spirits high throughout the day. They unknowingly foster values beneficial for a productive and close knit community; employees will occasionally reach out to coworkers for dog care which cultivates a mindset of helping one another during and outside of work hours. And when you’re having a rough day, a five-minute break with a new puppy is all it takes to bring a smile. It’s important for companies to offer perks that enable employees to have both a successful personal life and also a professional one. Dog friendliness at AppFolio promotes a happy and social atmosphere, and these points can be easily transcribed from the AppFolio setting to the Property Manager setting.

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How Can Property Managers Institute Dog Friendliness

Most people’s pets are like family to them, so being told that there’s no room for pets can be enough for an applicant to walk out the door. Alternatively, dog friendliness at a property can be very enticing for a potential renter. It can be the reason that your listing initially draws their eye, but can also play a part in what keeps the renter happy and feeling at home.

Making a shift towards dog friendliness (or pet friendliness in general—this is not exclusive to dogs!) can be difficult, but also incredibly rewarding for your business. One of the most common things property managers do is to simply have a “pet interview” where they sit down with the pet and their owner. This can be a great way to make renters feel more welcomed while also helping you stay knowledgeable about the pets living on your properties. Here are three more ways that can make your transition to pet friendliness a smooth one.

  1. Educate your residents about socially acceptable pet behavior. This might seem like common knowledge, but it can be helpful to set expectations when transitioning to a pet friendly community. Having pamphlets available and providing doggie bags gives dog owners and other residents all the tools they need to live in a collaborative and successful multifamily home. Educating your residents ensures that they are up to date about the acceptable pet behavior which helps keep everyone happy.
  2. Charge a fair fee for your additional service. Accepting pets can also be used as another avenue of collecting payments. You are providing an additional service: accommodating pets. As such, it is reasonable to introduce security deposits or additional fees for pets. It might also be worth considering putting limitations on the type and number of pets. You can make the dog friendliness aspect of your business worth your time and effort by putting rules, regulations, and fees in place.
  3. Host pet friendly events to promote resident mingling. One of the best ways to avoid conflicts between pet owners and non-owners, is to host social events that encourage co-mingling. People who love pets, but who don’t own one, are more inclined to forgive their infractions if they actually know the pet. This is also a good way to introduce new members into your housing community, and  it helps both pet owners and their neighbors feel more comfortable and friendly with each other. You can use the pet friendliness of your business to bring together residents and foster a more inclusive and social community, which will in turn improve the face and feel of your business.

While pets can sometimes be a nuisance, the reality is that there are a significant number of dog owners looking to rent properties. In a 2015 All Property Management Research Report, 65% of households had pets and 42% had more than one pet.

AppFolio recently surveyed over 200 property management customers and 78% of respondents allow pets of some kind. While you can certainly set the rules—small dogs only, no cats, etc.—the number of renters who are also pet owners is too high to ignore, and catering to their specific needs or at least making them feel welcome is a great way of expanding your business.

appfolio Appfolio | Company Website | LinkedIn Connect |

AppFolio, Inc. develops Property Management Software that helps businesses improve their workflow so they save time and make more money.  Appfolio submits articles & blogs including topics of Resident Retention, Improved Owner Communication, Time Management, and more.

 

As the apartment rent rocket slows its climb, portfolios turn to Google for higher revenue.

Written by Landlord Property Management Magazine on . Posted in Blog

By Matt Easton is EVP of MultiFamily Traffic 

apartmentSEO

Regional Manager Mark Hunter found a way to stand out from all of the other properties rushing to lease apartments in Austin’s hippest neighborhood: he is using SEO and Google AdWords to skip the line and get instant access to qualified potential residents willing to sign a lease with him today without a special offer like free rent or a lower lease rate.

“I found myself questioning why my community website did not appear on Google by itself for the top keywords luxury renters in Austin were searching for,” said Hunter, whose property went from 82% occupancy to 100% with a wait list in just 120 days using SEO and AdWords from MultiFamily Traffic. “We decided we weren’t happy only being visible to Austin renters in the cattle-call of Internet Listing Services and that it was time for us to stand out and attract renters willing to sign a lease today without a concession.”

Apartment managers are having to take digital marketing and apartment SEO more seriously as weaknesses are starting to show up in the boom that has sent apartment rent rates skyrocketing for the last five years all across America. Now with many cities like New York, Dallas, San Francisco and Denver starting to build a surplus of new apartment units, rents are beginning to slow and leasing units is becoming increasingly more difficult without solid online visibility.

Over the last five years, many community developers have decided to concentrate much of new construction on luxury communities in an effort to help them achieve the profits needed to cover the added expenses of staff salaries and rising cost of land to build on. With many new properties featuring trendy locations, rooftop pools and fire pits, managers like Mark Hunter will have to work harder to find renters.

“We found that once we started to rank the community at the top of Google search results, renters called our leasing office before anyone else”, said Hunter. “By being the first property a renter visits, I don’t have to be saying “me too” as the prospect mentions amenities they have already seen somewhere else. The best part about SEO is that I get the first at bat and when those renters that visit us before any other property and sign a lease, I can avoid a price war with my neighbors.”

So if you are as concerned as many operators are that your units will not be able to fetch premium rents and you won’t keep occupancy at 100% what can you do to get Google working for you?

98% of all leases start with a search online. It can be on a phone a tablet or a PC or Mac it doesn’t matter; if your property is not in the search results it may as well not exist. So then why are renters calling you if you are not in the search results? The answer is, you are – you just happen to show up via a surrogate like an apartment listing service. ILS’s like Apartments.com are fantastic but as Mark Hunter put it “a cattle call is not the best place to get the highest rent”.

ILS’s are great but by nature they make you compete with other properties.  If you want the highest rents and 100% occupancy you don’t want to compete you want to DOMINATE YOUR SPACE that means when someone even thinks about an apartment in your city your property company comes up! Working with the right apartment SEO and certified Google AdWords specialist can help you ensure that your community dominates as renters look for an apartment. If they come to you before they ever use an ILS you want have to compete in the cattle call.

The first step is knowing what the top searched keywords are in your city and where your website ranks for them. Multifamily Traffic has a dedicated research team that performs this as a free service for anyone. You can call that team directly and have your research back free of charge in less than 1 hour in most cases. They are available at 888-683-5885.

The next step is looking for a partner that can drive renters to you without asking you to make changes to your website or overcharging you for the work they do. There are many SEO providers that charge thousands per month for a mixed bag of results. You want to work with a firm that understands the industry and can guarantee results for a price you can fit in your budget.

Once you get your property to the top of the search results you will hear the results in the form of hundreds of calls to the leasing office. Make sure your staff is ready to follow up quickly. If you wait to set an appointment the renter is likely to go back to square one and look at an ILS placing both you and themselves right back in the “cattle call”.

MattEaston_BloggerAbout the author:

Matt Easton is EVP of MultiFamily Traffic the leading apartment SEO and digital marketing provider. MultiFamily Traffic works with 500 communities across the U.S resulting in thousands of leases signed every day. Matt can be reached at 303-803-7372 or www.MultiFamilyTraffic.com