Increased Demand for Rental Housing Boosts REITs

Written by Landlord Property Management Magazine on . Posted in Blog

REITs_1Higher interest rates, rising house prices, better employment ratios, and reluctance to own houses due to prior foreclosures are all factors pushing up the demand for rental housing. This is opening up opportunities for residential real estate investment trusts globally, say financial advisors at Frost & Sullivan.

Their analysis shows rent growth and decreasing vacancy rates will further boost the profitability of REITs.

Frost & Sullivan’s report on the global residential REIT industry is based on a study of 108 REITs, and reveals that the market earned revenues of $23.23 billion in 2012. Key profitability ratios such as return on equity and earnings before interest, taxes, depreciation and amortization (EBITDA) margins rose in 2012, and this trend is expected to continue.

“North American companies dominate the list of top performers in the global residential REIT industry, which is not surprising given that they have been in the industry longer than their European and Asian counterparts,” said Frost & Sullivan Financial Analyst Bharath Meenakshi Sundaram. “In the next three to five years, however, countries such as Australia, France and Belgium are expected to witness more activity in this industry.”

Successful companies in the REIT domain follow several best practices. One key factor is selecting the right location and properties for acquisitions. Leading firms have in-house acquisition teams that are always on the lookout for properties that are located in areas with easy access to workplaces, schools and retail markets.

Moreover, some organizations pass on only sustainable increases in lease rates in order to maintain a lower tenant turnover. By doing so, they also build a sense of community around their brand. Customer service, including having a 24-hour call center, maintenance of apartments, and seasonal requirements such as regular clearing of snow, play a key role in retaining tenants and maintaining higher occupancy rates.

For more information, visit http://www.frost.com/prod/servlet/finsvc-home.pag


logo_aaoa American Apartment Owners Association | Company Website |

Rental property management can be very demanding. Our job is to make this day-to-day property management process smoother. AAOA provides a host of services ranging from tenant screening to landlord rental application forms and contractor directory to apartment financing.

2014 Predictions for Apartment Managers and Real Estate Professionals

Written by Landlord Property Management Magazine on . Posted in Blog

Appfolio_2014PredictionsIf the end of the year numbers from the National Association of Home Builders (NAHB) are any indication of what we can expect in 2014 — managers and property owners in the multifamily housing market have plenty to smile about.

NAHB reported building permit issuance jumped more than 15% in October. There was so not-so-nice news though.  While the West and Southern regions experienced healthy increases, 15.4% and 9.4% respectively, the Midwest reported a steep drop of 9.6%.

Resident Demographics

It looks like 2014 is going to be the year for filet mignon and top ramen. There are some indications that luxury and high-end apartment home communities, along with economy units for students and recent grads, can expect better occupancy rates than mid-priced properties.

On one end there is a  high number of recent college graduates saddled with high student debt loans. On the other end, baby boomers with extra cash and empty-nest syndrome are trading the large family home for a smaller dwelling.

Sustainability and Digital Trends

Back in 2011, Multifamily Executive Magazine reported more than 60% of participants in a residential survey conducted by Strata Research said that environmental elements were high on the list of things they considered when choosing a place to rent. That trend is expected to continue into 2014. Evidence shows that more people expect low-energy appliances and windows with lower U-values and better thermal performance.

There is still some disparity between what consumers want and how much they are willing to pay for environmentally friendly features in apartments. The gap is beginning to narrow as residents learn more about how saving money and saving the planet can work together.

Residents in 2014 will be looking for electric car fueling centers, built-in iPad docking stations and community access to wi-fi and Cat-5.

Visuals and Aesthetics

Glass Magazine reports that commercial customers are demanding windows that not only provide superior thermal performance, but also have less visual obstruction and uninterrupted sight-lines. Look for more vinyl and less metal based windows in newer apartment homes and retrofit buildings. Fenestration trends include addressing the demand for aesthetics, sustainability and performance in one package.

Residents want more green space — with connectivity. Property owners will hear more requests for community gardens, rooftop retreats and common areas to socialize with other residents and online friends.

This new year will bring many exciting opportunities for property managers to connect better with current residents and make changes to lure new renters to their property with eco-friendly features and digital everything. Bottom line. Expect 2014 to be an exciting year with last years emerging trends gaining more traction and stability, and new technology opening doors to create better relationships between real estate professionals and people searching for a new place to call home.


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.

3 Proven Steps for Taxpayers to Survive Tax Season

Written by Landlord Property Management Magazine on . Posted in Blog

TaxSeason

1) Be Prepared
Ah yes, the Boy Scout Motto, “Be Prepared”.  It is very applicable to surviving tax season. How can you get prepared?  Start with completing your tax organizer.  We send these out to our clients in early January.  This will contain all of the prior year information.  Some clients don’t like filling out the tax organizer.  That’s fine. Just organize your records as best as possible. Try to get all of your material together.  Finally, schedule an appointment with your CPA early during tax season.

2) Be Patient
Expect delays from the Internal Revenue Service (“IRS”).  This is nothing new.  We can’t really blame them. It really comes down to Congressional action. Or inaction as the case may be.

Also, expect amended Form 1099′s. This seems to be happening more frequently, particularly later in tax season. If you have had amended 1099′s in the past, let your CPA know.  They may want to complete your returns but request that you don’t file them until later in the filing season.   This may avoid having to file an amended return. It’s like what any veteran carpenter will tell you, “measure twice, cut once.”  Well said.

You may be asking yourself “Where’s my K-1?” People who have invested in Partnerships or Subchapter S corporations need their K-1 to report their portion of the profit or loss on their individual income tax return.  Unfortunately the K-1 forms are not due until April 15, the same day the individual income tax return is due. Don’t wait for your K-1′s. Give all of the tax material you have to your CPA and let them get started on your return.  You can just forward the K-1 to them when you receive them.  This will increase the odds of your return being filed on time.

3) Be Proactive
While you need to be patient, you also need to be very proactive. While 2013 may be in the books, it’s time to start addressing your tax planning for 2014.  This could be something as simple as maximizing your contribution to your 401(k) plan at work.  Taxpayers are allowed to contribute up to $17,500 into their 401(k) plan in 2014.  Taxpayers age 50 or older can contribute an additional $5,500 in a so-called ‘catch up’ contribution for a total of $23,000. Or perhaps your employer has added a Roth 401(k) plan feature to the existing 401(k) plan.  This might be something you should consider allocating a portion of your 401(k) contributions to.


logo_aaoa American Apartment Owners Association | Company Website |

Rental property management can be very demanding. Our job is to make this day-to-day property management process smoother. AAOA provides a host of services ranging from tenant screening to landlord rental application forms and contractor directory to apartment financing. 

How to Read Credit Reports from Each of the Three Bureaus

Written by Landlord Property Management Magazine on . Posted in Blog

credit-reportCan you say you’re completely confident reading each of the different credit reports with their key codes? If you are, this article can serve as a good training guide for your staff on the differences of each of the three credit bureau’s credit reports. Or in case your tenant screening company says they provide you with credit reports, when in reality they only provide you with credit summaries, these guides and codes will come in handy.

First and foremost: when reading a credit report, double check the person’s full name, social security number, and their date of birth. If there are any discrepancies, be sure to check with the applicant. Keep in mind that the information obtained in credit reports isn’t always perfect. The credit bureaus search for input information on two out of those three information fields mentioned above, to avoid human error. Credit bureaus can either input, or are sometimes given incorrect information.

Equifax and TransUnion Credit Report Quick Look Guide:

  •        Personal Information
  •        Report Summary
  •        Scorecards (if a score is given in the report)
  •        Collections (if the applicant has any)
  •        Public Records (if the applicant has any)
  •        Trade lines (this includes both loan and revolving debt payments)
  •        Inquiries (how many times a report has been pulled – and from whom)
  •        Warning Messages

TransUnion_CreditKeyEquifaxCreditKey

Experian Credit Report Quick Look Guide:

  •        Index
  •        Potentially Negative Items (public records, if the applicant has any)
  •        Credit Items
  •        Collections (if the applicant has any)
  •        Accounts in Good Standing
  •        Requests for Credit History
  •        Personal Information

ExperianCreditKey

The credit sections of each report use a different set of codes in order to keep the report short, when showing payment patterns. The starting dates for trade lines for Equifax and Experian begin in the month reported, while TransUnion’s begins on the payment pattern start date (see each code key below).

If your applicant believes an error has occurred in their report, advise them to contact the credit bureau directly (contact information is located below). When reviewing credit reports to determine if your applicant will be a good fit for your rental property make sure you know how to read them carefully, and always, always, always perform due diligence on the information you find.

Trans Union
P. O. Box 1000
Chester, PA. 19022
1-800-888-4213
http://www.transunion.com/personal-credit/credit-disputes/credit-disputes.page
 
Equifax
PO Box 740241
Atlanta, GA 30374-0241
1-800-685-1111
https://experian.referral.equifax.com/CreditInvestigation/home.action
 
Experian
http://www.experian.com/credit-advice/topic-disputing-information.html 

ElizabethWhited Elizabeth Whited | Company Website | LinkedIn Connect |

Elizabeth is the Operations Coordinator at the Rent Rite Directory. She has written educational articles for multifamily magazines and Real Estate websites to help Property Managers and Owners improve their properties, and reduce crime in their communities.

 

Show And Tell, Making An Apartment Tour Memorable

Written by Landlord Property Management Magazine on . Posted in Blog

image

Many apartment communities do not have the budget or the decorating pizzazz to stage a furnished model.

A hodge podge of abandoned furniture will not improve the marketing presence of the apartment, (with evergrowing concerns about bedbugs…this could create a whole new range of problems.)

The lack of a model often sets a negative tone, when a prospect asks to see an apartment.  The first experience the prospect has is negative..”we don’t have a model.”

“I can show you a vacant apartment”..Just the language has an unappealing tone….vacant..vacated….consider including the term “vacant” with words that don’t belong in a marketing conversation.  ”Lets take a look at our two bedroom.?”  Or instead of jumping in, with a “we don’t have a model, but I could show you a vacant”…could we respond with an offer to show an unfurnished model home?

A cost effective alternative to the undertaking of furnishing four or five rooms with accessories from Pottery Barn or Pier One. A mini-model can fit any budget.

imageMini models can be structured with budgets ranging from $25 to $100.  The presence of kitchen, bath, closet or laundry accessories can soften the impact of an unfurnished apartment home.  Mugs, hot chocolate, and a basket of star shaped marshmellows offers a focal point in the apartment, a unique objectt for a prospect to remember. A sink full of yellow rubber ducks or a themed shower curtain are quick easy options.

If its apartment touring day, a propsective resident will tour a half dozen apartment homes, double that for weekends.  Mini model accessories can be the item that helps an apartment stand out in a prospects memory.

The mini model accessories can become the move in gift for the new resident. This small addition to the featured apartment gives both the leasing staff and the prospect a focus point. The prospect leaves the property remembering the apartment with the spaghetti basket or the frog shower curtain.

Randomly placing “Resident Delights” can add a fun element to tours creates spontaneity. Opening a freezer to find a sign with treats, “What would you do for a Klondike bar?” Taking the time for a quick snack allows more conversation with the prospect.

Keeping leasing tours fresh with a variety of quick mini models adds some excitement for the leasing team. A property doesn’t have to support an extensive marketing budget to make an impression with available apartment homes.


Lori_Hammond Lori Hammond | Company Website | LinkedIn Connect |

Lori has 30+ years’ experience in the Property Management Industry, working with both market rate and affordable housing.  Lori has been privileged to work with some tremendous industry leaders during employment tenures with Oxford Management, NHP Management, AIMCO, Alliance Residential, Boston Capital, The Sterling Group, P.K. Housing and currently Management Resources Development.

New California Laws to Impact Multifamily Housing

Written by Landlord Property Management Magazine on . Posted in Blog

California_Laws_Landlord1According to the California Apartment Association (CAA), several new laws will impact multifamily housing this year. To help keep you informed of the changes, here’s a list of what you can expect.

Assembly Bill No. 60 – After January 1, 2015, the Department of Motor Vehicles will issue driver licenses to individuals who do not provide a social security number on their application, but provide satisfactory proof that their presence in the U.S. is authorized under federal law.

The DMV may also issue a license to an individual if they are unable to show proof of legal residence. The applicant may sign an affidavit attesting they are ineligible for a SSN and unable to show proof of legal residence.

It is a violation of the law to discriminate against an individual because they hold or present the license. The bill also prohibits using the license to consider citizenship or immigration status on the basis of criminal investigation, arrest, or detention. Click here for more information about AB 60.

While this change is new to the DMV, the multifamily housing and tenant screening industries already familiar with disregarding an individual’s citizenship status. Assembly Bill No. 976, Section 1940.3 prohibits landlords from inquiring about the citizenship status of a tenant, prospective tenant, occupant, or prospective occupant of a residential property. Click here for more information about AB 976, Section 1940.3.

Senate Bill No. 745 – All smoke alarms sold in California after July 1, 2014 will have a non-replaceable, non-removable battery capable of powering the smoke alarm for at least 10 years. The amendment does not apply to smoke alarms that have been ordered by, or are in the inventory of an owner, managing agent, contractor, wholesaler, or retailer on or before July 1, 2014, until July 1, 2015.

Beginning January 1, 2015, all smoke alarms must display the date of manufacture on the device, provide a place on the device where the date of installation can be written and incorporate a hush feature to be approved and listed by the State Fire Marshal. Click here for more information about SB 745.

Senate Bill No. 612 – A tenant may notify landlords that he or she, or a household member, was a victim of domestic violence, sexual assault, stalking, human trafficking, or abuse of an elder or dependent adult, and intends to terminate the tenancy.

To terminate the lease, the notification must be written and include one of the following attached to the notice:  A copy of the restraining order, emergency protective order or protective order from the courts; a copy of the police report; or documentation from a qualified third party, such as a doctor. Click here for more information about SB 612.

Assembly Bill No. 227 – This bill limits penalties to $500 for businesses that correct specified Proposition 65 violations, within 14 days of a notice of violation. These violations include exposure to chemicals known to the state to cause cancer or reproductive toxicity, such as engine exhaust and exposure to secondhand tobacco smoke on premises. Click here for more information about AB 227.

Senate Bill No. 254 – Establishes the Used Mattress Recovery and Recycling Act and requires the mattress recycling organization to develop a state plan for recycling used mattresses by January 1, 2015. Retailers by July 1, 2014 are required to give customers the option of having a used mattress picked up, at no additional cost, at the time the new mattress is delivered or at least give the option for free drop-off of the used mattress. Click here for more information about SB 254.

Assembly Bill No. 1092 – The Building Standards Commission is required to adopt building standards for the installation of future electric vehicle charging infrastructure for parking spaces in multifamily dwellings and nonresidential development. Click here for more information about AB 1092.

Assembly Bill No. 10 – Minimum wage will increase to $9 per hour on July 1, 2014 and $10 per hour on January 1, 2016Click here for more information about AB 10.

3 Things Landlords Need to Know About Going Smoke-Free

Written by Landlord Property Management Magazine on . Posted in Blog

Smoke-Free-Apartments

With all the benefit of smoke-free rental housing, you may have decided a smoking ban is right for you.  There are several how-to guides to lead you through the process, but there are a few things you should know before you adopt your smoking ban:

1. To be enforceable, the no-smoking policy must be outlined in the lease agreement. Many landlords choose the easy option of attaching a Smoke-Free Lease Addendum to their existing lease. We’ve provided a sample of such an addendum in our post How to Draft a Non-Smoking Lease Agreement.  Note that the addendum is signed by the tenant.

But don’t stop there.

In addition to adding that lease addendum, it is important to re-read your lease agreement and all other attachments, looking for contradictions or omissions. For example, does your lease also provide for a smoking lounge or permissible places to smoke?  Does that contradict the Smoke-Free Addendum? If so, the contradiction must be resolved or the policy may fail.

Do your house rules include the smoking ban?

Review your remedies in the lease.  You need to have the right to evict a tenant who violates the smoking ban.  Be aware of any policies that require a warning before you take action against a tenant, particularly if that warning must be made in writing.

2. While the heart of the smoke-free policy is in the lease, in practice, it is easier to enforce those provisions if you make the non-smoking policy crystal clear to tenants from the very start.

Include “no-smoking” in your rental ads to discourage applicants who aren’t sure they can comply with the policy. List your vacancies in smoke-free rental listing databases to increase the odds of finding applicants who embrace the smoke-free policy.

Reiterate the smoking policy when you speak with prospects.

Include no-smoking signs around the property.

3. A sample smoke-free lease addendum may only cover tobacco smoke — cigars, pipes and cigarettes. If you want to include smoking cannabis or other “herbal” cigarettes, it is best to be clear in the addendum.

Enlist the help of a landlord attorney if you want to be sure your new lease is ironclad.


logo_aaoa American Apartment Owners Association

Rental property management can be very demanding. Our job is to make this day-to-day property management process smoother. AAOA provides a host of services ranging from tenant screening to landlord rental application forms and contractor directory to apartment financing.

Landlord to Pay $20,000 Over Leasing Policy

Written by Landlord Property Management Magazine on . Posted in Blog

The owner and manager of an apartment complex in Kansas City, Missouri have agreed to pay $20,000 to resolve a complaint that they discriminated against a tenant with a disability.

The allegations stem from the tenant’s request to have a live-in caretaker.

Bidding on a homeAccording to the charges, the landlord’s policies required a tenant to remain in an apartment for six months before adding another person to the lease. The tenant told the apartment management company that her sister was willing to move into the apartment and provide the necessary care. The woman’s doctor documented her need for the accommodation, but the management company denied her request.

HUD, which pursued the claim, further alleged that the woman was forced to vacate her apartment and move to different housing out of state because of the management company’s refusal to grant her request.

The Fair Housing Act requires housing providers to make reasonable accommodations in their rules, policies, practices or services when needed to provide persons with disabilities an equal opportunity to use or enjoy a dwelling.

“When it comes to residents with disabilities, the rigid application of the same rules you apply to others can result in the denial of housing opportunities,” said Bryan Greene, Acting Assistant Secretary for Fair Housing and Equal Opportunity.

The owner and management company have agreed to pay the woman $20,000, adopt and implement a reasonable accommodation policy, and provide fair housing training for all employees that interact with tenants.


logo_aaoa American Apartment Owners Association

Rental property management can be very demanding. Our job is to make this day-to-day property management process smoother. AAOA provides a host of services ranging from tenant screening to landlord rental application forms and contractor directory to apartment financing. 

Multifamily Housing Trends for 2014

Written by Landlord Property Management Magazine on . Posted in Blog

What’s in store for multifamily in 2014? That’s the billion-dollar question. To come to some sort of understanding about what the future holds, ironically, we need to take a look back at 2013.

New Construction

  • The demand for multifamily rentals in 2013 was unprecedented and housing providers had a hard time keeping up. The first and second quarters of 2013 saw a growth in new construction. And as these projects got underway they added new jobs in the construction segment at a rate of around 1,110 jobs for every 1,000 apartment units built.
  • By the third quarter of 2013, 90% of U.S. cities have reported a boost in real estate prices across the board, outpacing previous national averages.
  • One of the elements fueling growth is the recent boost in job growth, with the overall unemployment rate falling to 7% as of November. This means less people living with their parents or in other emergency housing and more qualified renters in the market for an apartment.

2014 AND BEYOND

Back to our original question—what’s in store for multifamily in 2014? Using the data from 2013, we’ve put together a list of trends to help keep you ahead of the curve.

Renting will become even more appealing. Housing prices and mortgage rates are going up, causing fewer people to buy. On the other hand, the increase in multifamily construction will add to the supply of apartments in 2014. With many of these being located in fast-growing cities, these apartments will likely be favored over single-family homes for many young adults.

People love their pets. Between now and 2018, the number of pet owners is estimated to increase by around 12% from 82.5 million to 92 million. Instead of banning pet ownership, you can tap into this growing trend and welcome pet owners to your community.

Tablets and smartphone sales are increasing. According to Forbes, 87% of electronic device sales will be tablets and smartphones. Remarkably, these mobile devices are slated to outsell desktop and laptop computers in 2014. Accommodate mobile prospects and applicants with On-Site’s mobile optimized online leasing tools.

Sharing quality content increases loyalty. More and more people are going mobile. Mobile devices and cellular data networks are going to keep getting faster to meet demand. Take advantage of the technology by posting high-resolution images and videos. Doing so can help generate a more active following and a higher ROI for your marketing efforts. By the way, On-Site can help. Our websites feature HD professionally hosted video tours.

Use the right tools and stay ahead of the competition. With the continuing construction projects, industry experts project that some of the largest metro areas will see big profits from rent growth. Seattle takes the cake, with many reporting it will see the biggest percent change in rentals as the city continues to grow. The San Francisco and San Jose Bay Area is on track to increase rent pricing by around 4.7% next year as the unemployment rate in the area dropped from 6.9% to 6.1%. Around the country, we’ll see an average 3% increase in rent pricing in 2014 as well (normally double the rate of inflation).

The bottom line is that the rental market is going to get very competitive in 2014. Stay ahead of the competition by putting tools in place that make it easy for renters to do business with you. On-Site’s full-featured leasing platform allows renters to shop for an apartment, apply, qualify and e-sign their lease in one continuous, online checkout process, optimized to run on the smart phones and tablets favored by millennial renters.


onsitelogoAbout On-Site.comFounded in 1999 in Silicon Valley, On-Site set out to use the Internet to revolutionize the business of apartment management.

On-Site has grown to become the gold standard in the apartment business. We are self-funded and profitable, with growth fueled by award-winning marketing, leasing and mobile tools. We allow apartment operators to maximize occupancy, enhance quality control, maintain compliance and ensure consistent success at all levels of property operations.

Solving The Occupancy Equation, Affecting Vacancy With Leasing Prospects And Closing Ratios

Written by Landlord Property Management Magazine on . Posted in Blog

Leasing apartments is a skill for property management professionals. To forecast the results, there are two measurable factors: the number of leasing opportunities who make appointments or arrive at the property; and the number (percent) that commit to lease.

Explaining the financial impact of vacant apartments and the recovery period will assist in creating a sense of urgency for the staff to secure leases and move ins.

With average rents of $600, every day an apartment remains vacant, the property loses $20. This doesn’t seem to be an amount of lost revenue to cause concern. The same twenty dollars increases to $140 each week. With ten vacant apartments, the loss is $200 each day, totaling $6000 per month. The property quickly has accumulated 3000 days of vacancy loss.

imageFacing this inventory of vacant apartments and several pending move outs; employing an occupancy matrix can forecast the timing to restore the desired occupancy. Part of this analysis includes the historical trend of prospective leasing visits received each week or month, and the number of sales/leases secured. A property supporting 20 leasing opportunities and securing 4 leases, has a closing ratio of 20%. With no changes or adjustments; to overcome ten vacant apartments would take more than 2 months, resulting in more than $10,000 of vacancy loss.

To increase move ins, the property needs more leases. This can be achieved by either increasing the number of leasing opportunities coming to visit the property or increasing the number of individuals who make the decision to lease.

Doubling the volume of visits to the property to 40 individuals will result in 8 leases. With this increased traffic, adding some closing tools; complimentary carport for a month, discounted security deposit, a structured follow up effort, the closing ratio could grow to 30%. This results in 12 leases. Occupancy can be back on track within thirty days instead of sixty, recovering a potential $6,000 into the revenue stream.

image

Without an adjustment to the number of visits or the leases secured, the number of vacant apartments lingers on resulting in a financial drain on the property. Setting goals for prospective leasing visits, securing commitments to lease and completing the move ins, will put the property on road to occupancy recovery.


Lori_Hammond Lori Hammond | Company Website | LinkedIn Connect |

Lori has 30+ years’ experience in the Property Management Industry, working with both market rate and affordable housing.  Lori has been privileged to work with some tremendous industry leaders during employment tenures with Oxford Management, NHP Management, AIMCO, Alliance Residential, Boston Capital, The Sterling Group, P.K. Housing and currently Management Resources Development.