5 Crazy Marketing Tactics That Actually Attract Student Renters

Written by Landlord Property Management Magazine on . Posted in Blog

Shared Post by Appfolio

If you currently manage a student housing portfolio then you probably notice that you have to go the extra mile to be the hottest property around, as most students are just hoping for a room with a bed. This means you might have to employ some more creative marketing tactics to max out your student housing.

Here are a few unconventional ideas on how to fill your properties on and off campus this year.

mobile_smart_phones_millennials

Hit the Road with Mobile Marketing

Some student housing property managers have taken to the road with a rather ingenious way to attract attention—a rent bus.

If the student housing pool in your area is particularly competitive, standing out is an absolute must. That’s why Haven Campus Communities decided to take their marketing to the streets with an old food truck that they tricked out to be a mobile leasing station. Parking at sporting events or around campus, students are invited inside the bus to check out floor plans, photos, and even apply for an apartment on the spot.

Talk about driving demand! When taking your business to the streets, mobility and cloud functionality is key—property management software can help you streamline these processes.

Throw a Pool Party

If the property you are trying to fill has a shared pool, what better way to attract new renters than to throw a pool party? Spread the word across campus using flyers, an email blast, or social media. Invite local DJs or bands to play at your party. If your property has grills, use those to offer your prospects free food while they splash around. Throwing a huge party is a great way to show renters that your properties will keep the good times rolling…All they need to do is apply.

Offer Free Food (Who Can Say “No” to Free Food?)

If you want to draw a crowd, free food is always the way to go. No matter where you may be promoting your properties, if you bring food people will come. Consider hiring a food truck for the day and bringing it to a student housing event or local beer and wine festival. Hungry students (and prospective renters) will never refuse an application if it comes with free tacos!

Be a Renter Superfan

Students have a wide variety of interests. College students have the highest attendance rate of sporting events and music festivals than any other age group in the country—and where there are large gatherings of students, there is an opportunity to market!

If you have a marketing team, get them to help you design cool paper collateral to hand out at festivals, concerts, or sports games; Millennials and younger generations think of quality creative work as a sign of professionalism, and a fresh poster or postcard design is one of the best ways to leave a positive impression in a student’s mind.

Many events also need local sponsors to help bring their projects to life. Sponsor a local event and get permission to set up a booth where attendees can speak to you in person about your properties. To sweeten the pot, you can even provide a little free swag like a fanny pack or water bottle that displays your company brand while providing a service to your prospects.

Get Creative with Incentives (Loan-a-bike systems, public transportation included in rent, etc.)

In college towns or large universities where student housing is competitive, most students know that they can be picky about where they want to live while also staying within their price range. You can make your properties more attractive on a financial level by providing creative yet practical incentives for your renters when they sign.

As an example, Chicago is a diverse city filled with many different types of higher learning institutions; it is also very large and can be difficult and expensive to navigate. Divvy is a local a bike loan service that allows students to pick up a bike in one of their many locations and drop it off when they are finished. At only $75/ year per student, this could be a great signing incentive that would provide real value to students without breaking their bank or yours.

While students need to get around, they also need places to go. Many large universities will offer season passes to sporting events to their students at a discount; try to strike the same deal for your property, then run a promotion offering free season passes to the first 100 students that sign a lease with you. Most students will reason that they were going to buy the tickets anyway, so they might as well get them for free.


Remember, young renters are not always financially stable on their own, so a big piece of the marketing puzzle is about including their parents in the rental decision. Your marketing can be fun and adventurous so long as it also shows professionalism and makes fiscal sense to the real decision maker.

Along the same lines, you may also want to consider accepting cosigners for your student housing portfolio. Not only is it financially safer for you and your renters, it helps create a sense of responsibility and ownership in young adults without forcing them to sign a lease completely on their own. Allowing cosigners will help you fill vacancies faster and assume less risk.

These are just a few of many wacky ways to capture a college student’s attention, don’t be afraid to get a little more edgy when it comes to marketing to a younger crowd. Who knows? You might discover new ways to market to your larger portfolio in the process.

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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.

Investors Poised to Capitalize on Multifamily Real Estate Market

Written by Landlord Property Management Magazine on . Posted in Blog

Shared post from wealthmanagement.com

apartment buildings

As volatility remains ever-present and investors search for yield, where do you turn? Alternative investment vehicles seem to be growing exponentially and investors and advisors remain at the forefront of the allocation debate.

One asset class has remained tried and true: real estate, more specifically, multifamily real estate. Value-add strategies in the multifamily space remain steadfast, even during the most trying of economic conditions, and is one of the best hard, non-correlated assets acting as a hedge against inflation. Furthermore, value-add enables investors to be flexible by offering lower holding periods, often around three years, and managers have agility to allocate based on evolving demographic and economic indicators.

While REITs seem to hog the spotlight in real estate, they are simply too correlated with the general market and interest rates to offer diversification. Of all the real estate streams, multifamily is perhaps the best place to generate absolute returns based on national trends that signal high occupancy, high rental demand and low supply. Let’s examine:

Surplus renter demand outpacing supply

U.S. renters are driven by two groups, lifestyle renters and primary renters priced out of homeownership. Lifestyle renters, 69 percent of whom are married with no children below age 18, can afford a home but opt to rent due to its ease and capital preservation. Public opinion polls reveal homeownership is no longer a central tenet of “the American dream” as maintaining an owned residence is expensive, labor-intensive and many folks would rather enjoy amenities apartment communities offer. The lifestyle renter cohort emerged as a definitive renter following the housing bubble of the Great Recession.

Prime renters, (between ages 20-34) or millennials, lead a mobile lifestyle to follow the job market. This encourages renting as it offers young people the greatest flexibility or liquidity to find a better opportunity elsewhere. The mobility desire is reinforced by the difficult consequences of the recession, forcing this somewhat nomadic demographic to search for jobs away from their cities of origin. The prime renter age cohort is growing at its fastest rate on record as the children of baby boomers come of age. This record pace of growth is projected to increase prime renters age cohort by 500,000 persons per year through 2023.

Student debt is also afflicting prime renters at record levels, having increased nearly three times since 2004 for those under 30. This prolongs their attachment to rental properties or drives some to reside with family. More than one in five Americans with student loans are at least three months behind on a payment. Today, the percentage of prime renters living with parents is at the highest level since 1967, when these statistics were first collected. Even if those living at home attain employment or improved jobs, they will naturally emerge as renters because the barrier to entry for home buying remains tall. Home buying events are also being delayed, lengthening one’s status as a renter. The decision to marry and to have children are now at the oldest ages on record.

Yet construction of new apartments to meet the demand has failed to keep pace, resulting in today’s high occupancy rates, averaging 95.2 percent as of June 2016 according to Axiometrics. Axiometrics also reports multifamily permits issued in the trailing 12 months of 381,000 units, which compares favorably to the aforementioned growth in the prime renter age cohort, resulting in continued high occupancy levels coupled with above-average rental growth rates. Additionally, home ownership rates have yet to find a bottom almost a decade following their peak. Each 1 percent decline in the home ownership rate is estimated to represent nearly 1.1 million new renters, according to Census Bureau statistics.

Millennials pick suburbs over urban centers

The most opportunistic multifamily investments are not in the nation’s biggest cities of New York, Los Angeles or Washington, D.C. Rather, they are often in suburban areas in the South and Midwest, buoyed by business-friendly policies that have opened new jobs for millennials. Enhanced business environments have led to the relocation of major corporate headquarters such as Toyota, away from traditional Californian urban cores, to Texas, for example. Other key markets with thriving suburban economies include North Miami Beach, Orlando, Florida’s Gulf Coast, Dallas and Denver. New and sustainable jobs are emerging in the tech, corporate and financial services industries. These higher wages will allow young people to rent higher-quality apartments all the while having a multiplier effect on the local economy.

How to make the most of multifamily investing?

Multifamily properties, especially those in the middle market, provide a combination of significant yield and absolute returns in these increasingly volatile times. For advisors and clients, this can be an attractive avenue to achieve a steady return stream as traditional fixed-income allocations provide low to negative yields. In addition, value-add multifamily investing offers the prospect of capital appreciation, which is expected to result in absolute double-digit returns per year, while U.S. public equities are reaching record levels of volatility. Only managers that follow an agile strategy, use deep macro research and maintain local operator relationships can unearth properties that are poised to benefit from both demographics and local economic dynamics that drive value.

 

Tax Rules For Renting To A Relative

Written by Landlord Property Management Magazine on . Posted in Blog

Shared post from forbes.com

renting to family

AARP calls young adults moving back in with their parents “the new normal.” Although the U.S. economy has come a long way since the financial crisis, more young adults in this country are living with their parents than at any time since 1940. Some return home after being on their own for a while, some never left at all.

Recently, I met with clients who were in just such a situation. Their adult daughter returned to the family home after college. She is employed, but her job doesn’t pay enough to afford the life she’s enjoying in her parents’ home. Rather than downgrade to something in her price range, she wanted to stay put.

Her parents had a better idea. Financially stable with a paid-off mortgage, they would purchase a home for dear daughter to live in. The daughter could rent from her parents at a reduced rate, and the parents could deduct expenses of the rental property their tax return. Win/win?

Possibly not, since special rules apply when renting property to family members. Anyone unaware of these rules can find themselves taking a double tax hit when their rental deductions are disallowed while rental income is taxed.

To deduct the costs associated with a rental property, you first have to determine how the IRS will classify the property in light of Section 280A. The house may be considered a rental property, a vacation home, or a personal residence.

Rental Property

A rental property is rented during the year and used by the owner for personal purposes less than the greater of 14 days or 10% of the number of days during the tax year that the unit was rented at fair rental value.

If a home qualifies as a rental property, expenses including mortgage interest, real estate taxes, homeowner association dues, utilities, and maintenance expenses can be used to offset rental income. If total expenses exceed rental income, the expenses may even generate a net loss.

Vacation Home

When a home is mixed-use, it may be rented and used by the owner for personal purposes for more than the greater of 14 days or 10% of the number of days during the tax year that the unit is rented at fair rental value.

When a vacation home is rented, expenses such as mortgage interest, real estate taxes, etc. are allocated between rental and personal use. Rental expenses may only be deducted to the extent of rental income generated by the property. In other words, they can reduce your taxable rental income to zero, but never generate a loss.

Personal Residence

When a home is rented for fewer than 14 days during the tax year, the home is considered a personal residence. Mortgage interest and real estate taxes may be deducted as itemized deductions on Schedule A, and the owner is not required to report rental income.

When you rent a home to a relative, such as a spouse, child, grandchild, parent, grandparent, or sibling, any day rented at less than the fair rental price is considered a personal use day. To avoid having the rental days considered personal days, the property must be rented at fair market rates and be the renter’s principal residence.

The issue, in this case, is that the parents want to offer dear daughter a bargain, charging her less than fair rental value. If they go this route, they will have to allocate expenses between personal and rental expenses. All of the days the home is rented to the daughter at less than fair rental value are considered personal days, so the rental portion is zero. They would have to include all of the rental income received from their daughter in taxable income, but none of the rental expenses would be deductible, other than mortgage interest and real estate taxes, which would be deductible as itemized deductions on Schedule A.

Is Rent-Free Better?
What if these parents wanted to be really generous and allow their daughter to live in the home rent-free? The parents could still deduct mortgage interest and real estate taxes on Schedule A, but they might run into gift tax issues.

If the daughter lives in the residence rent-free, the parents could be treated as having made a gift to their daughter equal to the fair rental value of the home. For 2016, the annual gift exclusion is $14,000. If the fair rental value of the home is greater than $1,167 per month, or the parents give any other gifts to their daughter that push them over the $14,000 threshold, they would be required to file a gift tax return. In some parts of the country, this may not be an issue, but this client is located in Scottsdale, Arizona where the average one-bedroom apartment rents for $1,225 a month.
In the end, if these parents want to help their daughter out, they should charge a fair market rate of rent, determined by looking at comparable rentals in the area. That determination of fair market rate should be documented in case they are ever audited by the IRS.

Ideally, the parents should also formalize the agreement by signing a lease detailing the terms of the agreement including rent amount, when rent is due, and any other rules they want to be followed on their property. In a perfect world, renting a home to a family member would be seen as a blessing and their daughter will be respectful of the property. However, not everyone, even dear daughter, is an ideal tenant.

Why Rental Housing Professionals Should Think About HR

Written by Landlord Property Management Magazine on . Posted in Blog

Shared post by The Mammoth HR Pros

Hand holding a Human Resources Word Sphere on white background.

Hand holding a Human Resources Word Sphere on white background.

With the minute-to-minute demands of managing and servicing rental properties, who has time for HR? Best hiring and retention practices can take a back seat to maintenance repairs, rent collection, showings and listings, right?

It’s true that HR usually can’t compete with maintenance emergencies and other such urgent matters, but it needs to be part of the regular routine. HR done well gives employers the tools to create a great workplace and to ensure compliance with employee-related laws and regulations. It sets and maintains a solid, stable foundation. Ignoring HR—or doing it poorly—is like building on unstable land: the foundation will eventually crack and, in a crisis, the structure will collapse. Bad HR is bad for business.

HR Helps You Create a Great Rental Workplace

Let’s imagine a common scene: two prospective tenants have taken their lunch hour to visit a couple of nearby apartment complexes. The two places have similar rates and offer comparable perks to renters. Nevertheless, the prospective tenants rule out the second one almost immediately after entering the property.

At the first location, they’re greeted warmly by the apartment management staff. They have to wait a few minutes to be seen, so they have a moment to take in the office atmosphere. The front office is busy, but not chaotic. Maintenance and janitorial employees pop in and out, and their interactions with the office manager are courteous and efficient. Overall, the employees seem happy, and the office has a welcoming vibe.

At the second location, the prospective tenants are seen to immediately, but there’s no warmth to the place. The employee at the front desk mutters that today was supposed to be his day off. Two others argue audibly in a back office. The employees clearly don’t want to be there, and the applicants conclude they feel the same. They leave, without having looked at any of the available apartments, and drive back to the first place.

When employees like where they work, they tend to be happier. That’s good for customers, clients, and prospects too—it makes the place they come to for business (or residence!) a happier place, a place they like to be. And when employees dislike their workplace, their disapproval shows. Having angry or disengaged employees is the fastest avenue to negative reviews and a negative reputation.

Whether a business has a good or bad reputation is no mere matter of chance: it’s largely a consequence of doing HR well or poorly. Doing HR well means valuing and honoring the work and contributions of employees, attending to their working conditions, establishing consistent employment practices and policies, setting clear channels for communication, building a workplace culture of collaboration and camaraderie, and providing perks and benefits when possible. Doing HR poorly means choosing to neglect one or more of these areas.

Human Resources Helps You Comply with Laws and Regulations

HR is also about the law, meaning HR can be a headache and a half. But whether or not an employer attends to HR, the laws and regulations are going to be there. And ignoring them has consequences.

Every employer needs to know about federal laws like the Fair Labor Standards Act (FLSA) and the Family and Medical Leave Act (FLMA), the Americans with Disabilities Act (ADA) and Title VII of the Civil Rights Act, the Equal Pay Act (EPA) and the Affordance Care Act (ACA). Every law won’t apply to every employer, but violations can be expensive, so an employer shouldn’t just assume they’re exempt. Even simple oversights can be costly. A company can incur fines simply for not having the proper labor law posters displayed!

States too have their own labor-related laws, covering everything from minimum wages, to payroll deductions, to sick leaves, to travel reimbursements, to what questions employers can ask applicants. Twenty-three states even have social media privacy laws! Municipalities are getting more and more into the action as well: some cities have their own minimum wages and sick leaves, among other ordinances.

To handle all these laws and regulations, large companies have their own HR departments, but small and midsized companies can often afford to have only one person in charge of these matters. These one-person HR Departments often have many other responsibilities demanding their attention (like setting rentals rates, calculating taxes, and advertising vacancies). Consequently, HR often gets less priority, putting these organizations at risk.

Bottom Line

It’s vital to the health of an organization to put at least one person in charge of HR and give that person adequate time to attend to it – and not only during times of an HR crisis. Whoever oversees HR matters needs time to do research or seek the advice of other HR professionals. With sufficient time and resources, an HR individual or team can help ensure that the organization has a great and compliant workplace. And that’s good for increasing rental income and reducing expenses, no matter what the business!

By The Mammoth HR Pros

At Mammoth, our mission is to make HR approachable, simple and intuitive for small and medium-sized organizations nationwide. We serve over 15,000 businesses and offer live, 1-on-1 consultations with our certified HR Pros, a state-of-the-art online portal, exclusive HR compliance tools, support for all 50 states, live online chat assistance and more. Whether you need an employee handbook, answers to your HR questions, or help understanding the rules and regulations, our on-call HR team is here to help. And they’re awesome – 95% of our clients say they’d recommend us to others. Visit us at mammothhr.com.

Seven Under-The-Radar Cities For Renters

Written by Landlord Property Management Magazine on . Posted in Blog

By Carl Whitaker | Axiometrics Real Estate Analyst

ForRentSign_1

San Francisco. Los Angeles. New York. These are just a few metros that are constantly brought up in conversations regarding the apartment industry due to their high demand among renters.

But what about other metros not at the forefront of international – or even American – consciousness? “Under the radar” metros, if you will. Some metros such as Chattanooga, Ann Arbor and Reno may not have the same clout as the larger metros mentioned earlier, but would still make wonderful places for many people.

So from an apartment renter’s perspective, what are some of these under the radar metros?

Axiometrics has compiled a list of metros fitting this criteria. Whether it be their affordable rent, strong economy – e.g. strong job growth – or a certain je ne sais quoi,these metros are surely worth an under the radar discussion.

They’re also less expensive for renters than the national average.

Under the Radar

Athens, GA: Those familiar with the college football landscape immediately recognize Athens as the home of the University of Georgia. While it may seem as though this quintessential college town is a one-trick pony whose economic prosperity depends solely upon the university, recent job growth figures suggest the Athens metropolitan area has far more working in its favor.

In fact, Athens has seen some of the strongest job growth in the nation – an estimated 4.0% job growth between June 2015 and June 2016 – which means those looking to rent an apartment in the area probably won’t have much trouble finding a job. Music lovers will find more than their fair share of concerts to attend as well, as the city has a thriving music scene – not an uncommon phenomenon in college towns.

Savannah, GA: Located on the Georgia coast, Savannah is steeped in history and is one of the oldest cities in the southern U.S.

Much like the other Peach State city on this list, the Savannah metro has enjoyed healthy job growth over the past year (approximately 4.1% from June 2015 to June 2016), which of course makes the task of finding a job much easier. Furthermore, the 10% job growth within the Professional and Businesses Services sector suggests jobs coming to the area are higher paying jobs – another indicator of a strong local economy.

Given its antiquity, history buffs looking to rent an apartment might not have to look much farther than Savannah. As an added plus, Savannah’s proximity to the beach means you’re a history buff and a beach-goer, Savannah just might be your perfect city.

Cape Coral, FL: Cape Coral is included in this list because many people may overlook the coastal city in favor of larger Florida cities such as Miami, Orlando, and Tampa.

Make no mistake, though, that the Cape Coral area has plenty to offer those looking to rent an apartment. Job growth figures since 2015 suggest the area’s economy is doing well, and finding a job won’t prove to be too problematic.  Cape Coral’s job growth of 4.2% over the past twelve months – driven primarily by growth in the Leisure and Hospitality sector – places the city among the nation’s fastest job growth markets.

Baseball fans will be especially endeared to the area. With four minor-league baseball stadiums within a two-hour drive and the month-long sanctuary that is spring training, taking in a few dozen baseball games every year is as easy as can be.

Ann Arbor, MI: Ann Arbor is another city often associated with a university (the University of Michigan), but the city’s sheer size and importance for the region this means Ann Arbor is a town bustling with activities for residents. The low unemployment rate (3.2% according to the latest figures) and high job-growth rate (4.4% from June 2015 to June 2016) reinforces Ann Arbor’s importance as a regional employment hub.

Word to the wise – those looking to catch a college football game at Michigan’s stadium, “The Big House” (an appropriate name seeing that it’s the largest stadium in the nation), may want to consider buying tickets well in advance, as the stadium is consistently filled to capacity.

Reno, NV: Reno is yet another city enjoying its fair share of recent economic prosperity. The northwestern Nevada city can boast about its recent job growth, which is among the nation’s best since the beginning of 2015. Multiple employment sectors including Mining, Logging, and Construction, Professional and Business Services, and Trade, Transportation & Utilities have all grown more than 4% since June 2015.

Those looking to rent in Reno will also find plenty to do throughout the year. The city’s close proximity to the Sierra Nevada Mountains means renters can spend their winters skiing and the rest of the year enjoying an array of entertainment options around the city.

Chattanooga, TN: Tucked in between a few of the many ridges created by the Appalachian Mountains, Chattanooga is one of the nation’s most scenic cities. In fact, the official nickname of the city is the “Scenic City”.

Chattanooga, though, has far more to offer than just its natural beauty. Chattanooga was the first city in the nation to implement fiber optic internet service, which means residents have the luxury of incredibly fast internet speeds. This fiber optic network is helping spur the city’s economy forward as well.

Tacoma, WA: Tacoma may get overlooked in favor of nearby Seattle, but Tacoma has plenty to offer potential renters. For one, the rent in Tacoma is much cheaper than Seattle. While the average rent in Seattle will cost you almost $1,700 per month, the average rent in Tacoma is about $500 less.

A drive of 40+ miles may scare off some folks, but other transit options such as SoundTransit are viable options to cut down on the commute hassle. In addition, Tacoma has been adding a healthy amount of jobs – 3.5% job growth from June 2015 to June 2016 – so a commute to Seattle may not be necessary. Nearby Mount Rainier is also a plus for any outdoorsy types.

Axiometrics’ specialty is monitoring the apartment and student housing markets to provide a granular view of volatile market trends through the interactive AXIOPortal.

6 Ways To Reward Residents For Referrals

Written by Landlord Property Management Magazine on . Posted in Blog

Shared post from rent.uloop.com

refer a friend

When it comes to bringing in more tenants and keeping your rooms full, the best method is to get your current tenants to recommend the place. However, encouraging residents to go out of their way to promote their place can be a bit tricky.

This is where resident referral rewards come in. Most will go for the obvious money draw, but there are definitely other ways that may fit in better with your current residents (and save you more money). Here are six different ways to reward your residents for referrals.

1. Cash

The most tried and true method to gaining more residents through resident referrals is to give a flat rate of cash. Depending on your demand and need for referrals, this amount of money can vary greatly. Some apartment complexes will offer anywhere from $50 to $300 just for one valid referral.

Giving an unconditional flat rate appeals to all your residents. Everyone can use a little extra cash. Apartment owners know that no advertising is as good as a solid recommendation from another trusted person which makes resident referrals all the more worthwhile. They’re necessary to keeping your resident economy running at its best.

2. Rent decrease

Another way to reward your residents for giving referrals isn’t to pay them outright, but just to let them pay you less. This is most easily done by allowing some decrease in rent, whether it be waiving a half month’s or entire month’s fee. If your resident is loyal and plans to stay for a while, it could mean simply lowering their monthly rent by a small amount so that it adds up in savings over time. Essentially, a rent decrease is a similar bargain as the cash offer, but just handled in a different way that could be easier and more cost effective.

3. Gift cards

Another way to promote resident referrals if you aren’t keen on just giving out cash is to reward your tenants with gift cards. Most towns and areas have similar stores that are useful no matter the situation. From Walmart to McDonald’s to Applebee’s, give your residents a choice of whichever gift card they feel they’ll get the most use out of.

Some people like getting gift cards instead of cash because they’ll either end up just saving the cash or spending it all immediately. If they’re given a gift card, they may be more apt to treat themselves modestly on a nice meal or some new shirts.

4. Cleaning services

Some people will do almost anything to avoid cleaning their apartment. When you have people like this, sometimes a cleaning service can be of the most value. It also works as a win-win for you as the landlord because you know the space is being kept up. You could offer them a free carpet cleaning, window washing, painting, landscaping if they have it or whatever else they seem to be needing.

Sometimes it is best to reward tenants with something immediately practical and useful rather than something that could be spent on something trivial.

5. Local benefits

If you’re looking to boost your resident referrals and help out your local economy, consider giving them benefits and gift cards to local places and shops. Residents may find appeal in a free gym membership or tickets to a community event. They may also find appeal in small gift cards to multiple local shops around town.

If you go to some of these businesses, they may even give you free gift certificates for your residents to help promote their own sales. This could be a good way to keep your own costs down by not having to pay out of pocket and to bolster the community around you.

6. Use a point system

Some apartment complexes already have resident reward point systems that include resident referrals. Tenants can rack up differing amounts of points based on paying rent in a timely manner, renewing their lease, helping out in local community events, amongst other things.

Resident referrals can easily be worked into this system likely as the highest value of points. When your residents reach their point goal, they can then be rewarded with any of the aforementioned gifts above. Reward systems encourage residents to keep up their good work continuously rather than doing one good thing and stopping. This could also help the reward seem greater and the tenant more accomplished if they’ve been working toward it for some time.

If you’ve followed any of these ideas, or even come up with your own, you’ll soon see the benefits of the resident referral. One good personal review and recommendation can win someone over dozens of other online reviews and websites. They are absolutely key in making sure your complex stays full and profitable. Their power can’t be overstated.

Student Housing Sector Continues to Outperform

Written by Landlord Property Management Magazine on . Posted in Blog

students

The past two quarters were monumental for student housing. In the first quarter of 2016, a record $2.6 billion in capital poured into the sector, marking the largest single-quarter investment since 2006. In total, the sales volume made for 66.2 percent in year-over-year growth for this property type, according to Lucy Fletcher, a managing director and international capital expert at commercial real estate services firm JLL.

“We are seeing more direct deals by foreign investors this year,” she says, with about one half of the volume in this quarter coming from offshore investors. That $1.4 billion in foreign inflow came primarily from a joint venture deal between Scion, Canada Pension Plan Investment Board and GIC, which formed Scion Student Communities and acquired University House Communities Group’s portfolio.

“Why is global investment increasing? Resiliency of income,” Fletcher says.

This quarter and last quarter, we are seeing “increasing international investment through income funds and sovereign funds,” says Tom Errath, senior vice president of research for Harrison Street Real Estate Capital, the largest private equity firm focused on real estate investments in student housing, managing approximately $10.6 billion in AUM. For universities seeking to build on-campus housing, Errath says Harrison Street is one of a number of firms and investors who are starting to enter into 50-to 75-year ground lease agreements with universities.

Land lease agreements are becoming more popular for campuses that need repositioning or that have been vacant, sources say.

So far this year, the student housing sector is seeing cap rates that are consistently just north of 6.0 percent.

When investors consider student housing, the most crucial elements are real enrollment numbers, location, sponsor strength and site operation experience.

“Investors are buying into really well-managed platforms. There is large pent-up demand across the entire sector of core products,” says Scott Streiff, executive vice president with JLL.  He describes the core class-A product as having enrollment of 30,000 students plus. “We are seeing investors chasing core products that deliver attractive cap rates with projected student enrollment increases.”

Right now investors are seeing those types of properties trade at approximately 5.0 percent cap rates. “Larger campuses historically carry lower cap rates,” Streiff says.

Never quite even

“I don’t know if there will ever be a point of supply and demand meeting in this sector, says Jaclyn Fitts, national director of student housing at real estate services firm CBRE. Student housing tends to be recession-proof, since when times get tough, many people opt to return to school. Add to the equation the national trend of continually increasing enrollment rates for higher education. The year 2014-2015 was the biggest on record in this sector for new beds added, with approximately 60,000 new beds, according to CBRE data. The firm expects another 45,000 student housing beds added in 2016-2017.

“There will continue to be investment opportunities in 2017 and 2018,” says Fitts. “We will continue to see new development in 2017. Additionally, purpose-built student housing properties completed in the 2000s are primed for repositioning, so we will continue to see opportunity there in rehabbing first-generation purpose-built [properties] and raising rents.”

Although supply is being added yearly, there is still 96 percent occupancy nationally for the 2015-2016 academic school year, Errath says. There were some specific markets, however, that saw overdevelopment this year. One example is Texas A&M, a market that needs to absorb 7,500 more beds in the next three years, according to Fitts.

Student housing spin-offs

Post-graduation, many young adults find themselves facing an expensive housing market and a very tight apartment rental market. Those who are pursuing post-graduate degrees or already working at the university may not have the funds or credit history to qualify for traditional housing options.

One developer, Post Brothers, has sought to answer the needs of this market and is doing so by delving into a sub-sector called post-graduate housing. Post Brothers builds and invests in university housing-oriented cities that have college economies. College economies generally have large research budgets, NIH grants and major hospitals that act as employers for post-graduate students.

Post Brothers recently acquired Garden Court Plaza, a 13-story, 146-unit apartment building at 4701 Pine Street in Philadelphia for repositioning as part of its development strategy in University City. The developer has earmarked $250 million for continued development in that city in the next few years.

“We see it as better than student housing, because it is targeted to young professionals and graduate and medical students. They may not want to pay for class-A new construction and our properties offer a value proposition that doesn’t compromise quality,” says Matt Pestronk, CEO of Post Brothers. “ We are not seeing a lot of investor resistance to the concept.”

Source: nreionline.com

Homeowners Associations vs. Property Management – What’s the Difference?

Written by Landlord Property Management Magazine on . Posted in Blog

Shared post from Appfolio

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It’s easy to confuse a homeowners association (HOA) with property managers. They are both involved in the management of housing communities. It could be helpful to view a brief description of both HOAs and property managers to see how the functions of each are different. In most cases, they work together, but sometimes they may come into conflict. This information should be useful to property owners, property management companies, and tenants who live in a community that is governed by an HOA.

What Are Homeowners Associations?

Neighborhoods, subdivisions, and condo complexes contain lots of housing units that are owned by many different owners. At the same time, homeowners may need to share the responsibility for certain things. They may also share expectations for the way that their neighbors will maintain their properties. Thus, these communities form HOAs to develop and enforce the rules (known as covenants, conditions, and restrictions, or CC&Rs for short) that all property owners need to abide by.

According to the Community Association Institute, over 63 million Americans reside in an estimated 320,000 association-governed communities.

The individuals who belong to these organizations also own property in that community. While all HOA members may propose and vote on rules, an elected HOA board usually has the final responsibility for ensuring that rules get kept and other responsibilities get met.

Besides making and enforcing rules, typical HOA responsibilities include:

  • Maintaining common areas, like playgrounds and swimming pools
  • Setting and collecting dues to pay for things like maintenance of common areas and security
  • Setting budgets for the items that HOA dues pay for
  • Obtaining insurance for common areas
  • Hiring staff and contractors

Obviously, the HOA doesn’t physically perform all of their responsibilities. For example, they may hire security people, secretaries, and maintenance crews. In some cases, overseeing all of the work requires a separate property manager to assist them. To help with all of the tasks involved, an HOA may also hire a property manager or property management company.

What Do Property Managers Do in a Homeowners Association?

There are two different situations when a community may have both property managers and homeowners associations. In the most commonly discussed case, the property management company works for the HOA. In another case, property owners may own some houses or condos in a community that also has owner-occupied units. In this second case, the property owners and their managers are just property owners with the same status as any other owners. If property owners occupy their own housing or lease it to tenants, they still have the same responsibilities to the HOA.

Property managers as employees of the HOA: HOA members may volunteer for their positions as an investment in their community. As volunteers, they may not have time to oversee all of the day-to-day obligations of the board. In this case, an HOA might hire a property manager or property management company to assist them.

The duties of property managers can vary, but they may include overseeing paid staff or contractors, communicating with residents, collecting dues, and handling emergencies. As employees of the HOA board, property managers report to them.

Property managers as owners within the community: In this case, property managers simply have to abide by the same rules that any owners who occupy their homes do. This situation is somewhat more complex because tenants actually occupy the property. The owners and tenants may have to cooperate to stay in compliance.

The property managers for leased housing units may make sure that HOA dues get paid if this cost is simply included in the rent. Still, they need to make certain their tenants don’t violate other rules. For example, there may be guidelines about maintaining lawns, how to handle garbage, behavior in common areas, and so on. It’s prudent to include a clause in the lease about adhering to HOA rules and to make sure that renters know the guidelines.

Many HOAs Have Power to Enforce Rules

Typical HOAs will issue warnings if rules get violated. However, they do have legal power to enforce their rules. For example, an HOA can put a lien on a property if HOA dues don’t get paid. If a lawn doesn’t get mowed after a warning, they might send their own landscapers and charge the property owner a high fee. If property managers work for the HOA or are simply managing properties in the community, the HOA will factor into management duties.

The post Homeowners Associations vs. Property Management – What’s the Difference? appeared first on The Official AppFolio Blog.

Ready or Not, New FASB Rules Are Here

Written by Landlord Property Management Magazine on . Posted in Blog

By Billy Fink | Shared post from the Hightower Blog

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The long awaited new lease accounting standards are here. And despite years in the making, some companies are finding themselves behind the curve in putting processes and systems in place to adapt to the new regulations.

The Financial Accounting Standards Board (FASB) officially issued the new accounting standards in February. The changes are aimed at creating greater transparency as it relates to how companies record leases on their balance sheets. The proposed lease accounting changes will remove the distinction between finance leases and operating leases, and recognize operating leases as both an asset and a liability.

According to a new Deloitte survey poll, only 9.8% of financial and accounting professionals surveyed said their companies are prepared to comply with the new standards. “I think companies are starting to come out of the fog now and thinking about how they are going to implement the changes. But, I think the ones that are just starting now have a long road ahead of them,” says Katie Murphy, a partner in the Real Estate and Leasing group of law firm Goodwin.

Companies that have already started are ahead of the curve. Yet there are some legitimate reasons why firms have put FASB on the back burner. The process of circulating proposed drafts and fine tuning the proposed requirements has been dragging out for nearly a decade. Companies did not want to start too early before they had a firm idea of what the final standards would look like.

There has been more activity in putting new lease accounting processes and systems in place over the last year. Officially, public companies will have to start reporting in fiscal or calendar year 2019 and private companies in 2020. However, public companies that use Generally Accepted Accounting Principles (GAAP) accounting will have to report comparative figures starting two years prior, effectively 2017. Some firms are already looking at 2016 as a “dry run” to get up and running and work out any potential problems, says Murphy.

In a 2016 Lease Accounting Survey conducted jointly by PwC and CBRE, 70% of the firms surveyed said they plan to start implementing the new standard this year. However, only 10% had selected a software solution to accommodate the new standard.

Initially, the biggest stumbling block is gathering all of the data, because it requires a different level of analysis than the old rules, notes Murphy. Existing leases won’t be “grandfathered” in or accepted under the old rules. Companies will have to go back and look at all of their existing leases to make sure they have all of the needed information. “It is going to be a hard and painstaking process to get all of that data,” she says. As such, the new standards will also have a bigger impact on companies with a high number of leases, such as retail and restaurant chains that have hundreds of locations.

Deloitte’s survey found that retail/distribution firms were the least prepared with 61.2% of respondents expressing concerns over readiness. Other sectors that also rated high in that regard were automotive and telecoms at 59.3% and 56.9% respectively.

Another key difference is that companies have traditionally met reporting requirements by utilizing a hard lease abstract or by a spreadsheet. That is not going to work under the new standards, because there are assumptions that need to be made about lease trends that will require more than just plugging numbers into a spreadsheet. So, the two main steps for companies in preparing will be introducing new lease accounting software and also having increased coordination and communication between the accounting group and the business and legal people who negotiate and enter into the leases, notes Murphy.

“Under the new rules, if circumstances change, assumptions need to be reevaluated and the reporting adjusted,” she says. “So, it is more of an ongoing process than in the past, and it will require a lot more effort on behalf of companies to manage their portfolio.”

ABOUT
Billy Fink
Billy Fink is a marketing manager at Hightower focused on writing the best of CRE news and trends. He previously worked at Axial, and is a graduate of Columbia University.

The Top 5 Ways to Make More Money on Your Rental Properties

Written by Landlord Property Management Magazine on . Posted in Blog

Shared Post | Original Post seen on Time.com

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If you own rental property, be sure to maximize your profits on your current investments before rushing out to buy new ones.

Rather than just acquiring as many properties as possible, let’s take a step back and think about whether the best way to make more money is to focus on your current portfolio.

1. Decrease Vacancy

The best way to minimize vacancies is to find a long-term tenant so that you don’t have to deal with turnover. This is covered separately by my next point because it is not the only way to keep your property occupied.

In the event that your tenant must move, vacancy can also be minimized by keeping turnaround time to a minimum. A friend of mine owns a condo in the D.C. area that is rented to 3 individual roommates. Although multiple tenants have moved on, he has kept occupancy at essentially 100% by posting ads the minute he learns of the move. Demand in the area is so high that he will have immediate interest and line up a new tenant to move in on the coattails of the old one.

You might think, “how does that apply to my property in an area with lower demand?” The thing is, nearly every property in every neighborhood has solid demand at a price. If your vacancies are consistently high, you may be doing it to yourself and need to think about your price point.

Every month of vacancy costs you 8.3% of your potential yearly revenue, so you would be better off renting every property one month faster for 5% less rent, two months faster for 10% less rent, and so on.

Another way to think about vacancy is this. If a property does not have some characteristic that sets it apart from the rest and sells itself such as a prime location or a to-die-for kitchen, you can give it one by providing the best value in town.

2. Minimize Turnover

Turnover costs money in multiple ways. There are advertising costs, the cost of patching and painting walls and replacing flooring that your previous tenant would have lived with, and, of course, vacancy. It’s a little counterintuitive, but this is another area where relatively lower rent may have the tendency to increase revenue.

One of your goals should be to find quality tenants that take care of your property and pay consistently. When you find these people, do what you can to keep them!

Some people will inevitably leave because they are moving across the country or buying a home, but the last thing that you want is to lose your best tenants to the landlord down the street, dealing with the expense of acquiring a new tenant and lost revenue in the vacancy.

The price of rent is not the only factor involved in tenant retention. The other key is customer service. Whether you personally manage your properties or have a property manager, make sure your tenants are treated with respect and professionalism, their concerns are valued, and matters are dealt with urgently and to their satisfaction. A good tenant/landlord relationship keeps tenants from thinking about moving.

To assess whether your property manager is performing in a way that fosters good tenant/landlord relationships, send a postcard soliciting feedback from your tenants, letting them know their opinion is valued and they can contact you directly if they are dissatisfied with their manager.

3. Increase Rent Strategically

Now, after telling you that lower rents can lead to higher revenue, I will proceed to advise increasing your rents on your longer-term tenants. This is really not a contradiction at all. Rather, it is a delicate balance that requires knowledge of your property’s value relative to your competition.

As I mentioned, tenants may be more loyal if they can’t find lower rent elsewhere. But this doesn’t mean that you should never raise rents when you have good reason to do so. Moving costs tenants money too. If the value of their current rental is significantly better than the value of a new rental plus the cost of moving, you still have the upper hand.

Make sure you know the rents in the area, researching sites such as Zillow, Rentometer, Craigslist, and the MLS if you have access. You may find there is plenty of room to increase your revenue a small amount each year (1%-3%) while remaining competitive.

Two tactics I use to increase rents: Communicate an offset to new costs such as increased HOA fees, which cover utilities and amenities that they enjoy, and have them coincide with an upgrade to the rental. For instance, I may plan to paint the exterior of the home or upgrade old windows from single to dual pane anyway, but I will schedule the work to coincide with a lease renewal and the tenant feels they are getting something out of the deal.

I may even ask them if there is anything that would make them more comfortable and select items from this list that will justify rent increases while increasing the market value of the home. In other words, make improvements that are necessary for maintenance or have immediate return on investment.

4. Be Diligent on Late Fees

Showing kindness and respect to your tenants does not mean being a pushover when it comes to rent collection and late fees. Collections are not the most enjoyable part of being a landlord, but are essential to running a profitable business. Make sure your tenants understand that this is a business, they have signed a contract, and it is your job to complete this transaction, following the contract and all applicable laws (including eviction proceedings if necessary).

If you allow tenants to get away with paying late without the appropriate fees, you are leaving money on the table. And, your tenants may try to get away with late payments several more times, causing you extra work and stress.

If your tenant sends you a late check without including the late fees, politely explain that rent is not considered paid until all fees are collected, and that unfortunately you cannot accept this payment until all fees are paid. If you hold firm, they will quickly learn that you cannot be taken advantage of and will most likely comply.

5. Add Revenue Streams

In multi-family properties, look for the opportunity to add services like coin-operated laundry and vending machines, which will not only provide revenue but will add resale value by raising the property’s return on asset value, or capitalization rate.

In single-family homes, offer extra house cleaning and landscaping services to tenants when they sign the lease. They may be happy to pay extra to avoid responsibilities they’d otherwise take on. You can negotiate the rates of independent landscaping and cleaning services, contract them out, and collect a fee as the contractor. For instance, if a cleaner agrees on a $75/month fee, you may offer the service to your tenant for $85/month, increasing your annual revenue by $120.

Overall, you may find that you can reach your business goals not only through acquiring a large number of properties but by operating a smaller number of properties more intelligently.