Rental Housing Journal Arizona
May 2014 - Vol. 6 Issue 5 6. How to Turn an Unhappy Resident Into a Raving Fan! by Ernest F. Oriente
2. Positioning Family Real Estate Ownership for future results 3. It’s Time for Sales Managers to Tip the Boat! How to Make a Splash by Managing at All Levels
7. Dear Maintenance Men: 14. The Simple Solution to Handling Packages
Tenant Damages & Alternatives 5. Occupancy by Who’s Standard, Part II of II
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A Monthly Circulation To More Than 10,000 Apartment Owners, Property Managers, On-Site & Maintenance Personnel
Tenant Damages & Alternatives By Andy Hull Hull, Holliday, & Holliday, PLC
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s most landlords are aware, if the tenant causes property damages which are beyond normal wear and tear to the premises during the tenancy, the landlord has a claim for those damages. Often times the landlord does not know what the damages are until the tenant has vacated and returned the keys and possession. At that point, when the landlord does their final inspection, any damages beyond normal wear and tear are accounted for. There is a provision under the Ari-
The Apartment Construction Boom in Metro Phoenix
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hether you are developing new apartments or own smaller and older apartment communities, it is vital to know what is being built and proposed to be built in your area. Knowing your competition can be extremely beneficial when deciding what adjustments you need to make. Having a new, upscale apartment community nearby could be either a strong benefit or a significant concern. This article is specific to metro Phoenix but may apply to many markets across the US. It discusses why there is now a “boom” in apartment construction, reasons for an expected population explosion, the number of projects/ units being constructed, the location of new projects and the variety of the new types of apartment communities. After going thru the data—the bottom line for all apartment owners should be to realize that you are in a very dynamic market. If your assets are in metro Phoenix, we are
Metro Phoenix – New Apartment Construction (50+ units) 10,000 9,000
1995 – 2009 Annual Average = 6,578 Units
8,000 7,000 6,000
5,383 P
5,000
4,114
4,000 3,000
2,019
2,000 1,000 0
696 1991
1993
1995
1997
1999
2001
happy to assist with whatever decision might be needed. If you are not in Arizona but your metro area is undergoing similar boom-type construction, please talk with your local apartment specialist. Times are changing.
2003
2005
2007
2009
800
2011
2013
The Pipeline Turned Off–But That Was Good In the fall of 2008 with the downturn of the entire US economy, there was essentially no construction financing available. The result was a Continued on page 8
What the Property Management Agreement “May” Include
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Continued on page 2 Professional Publishing Inc. PO Box 6244, Beaverton, OR 97007
here a several items a Property Management Agreement must contain to comply with the Arizona Landlord Tenant Act. I will cover those at the end of this article as I feel the items you “may’ include
Current Resident or
PRSRT STD US Postage PAID Seattle, WA Permit #741
in the agreement are more interesting and in need of discussion. For your reference you can consult ARS 322173. The applicable clauses for this article are in italics below. There are items that “may” be part
of a Property Management Agreement as a result of negotiations between a rental property owner and a property manager. I offer my practical input on each with the usual disContinued on page 4
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Positioning Family Real Estate Ownership for future results
By Clifford Hockley President Bluestone and Hockley Real Estate Services
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s you purchase real estate assets for future success you have some basic planning issues to consider: 1. Usually real estate investors establish an initial investment time frame for each investment, typically 5-10 years with a median hold time of seven years. 2. This usually works off the initial purchase costs and gives you some time to improve the operation of the property and allow it to appreciate in value.. With time and physical and managerial upgrades you can improve the prospects for consistent returns. The Basics Some of these upgrades might include
implications. After the Basics Once you have completed the basics and the investment is making a significant return and has appreciated in value, you have a few choices to make about the future of that specific investment • You can keep the property,
o This means you will most likely need to refinance at the end of your first loan term o You will have to decide if you want to pay it off and if there are benefits to paying it off.) • Refinance the property and use the proceeds to reinvest in a larger property • Sell the property through use of a 1031 exchange and trade in to another property • Sell the property and pay taxes and depreciation recapture.
• Gift shares of your property to loved ones or charity ( if you have an LLC) 1. Replacing roof and gutters, Real estate investments, espe2. Completing a new paint job, cially in the short term, don’t always 3. Resurfacing the parking lot make money. A number of issues can present themselves throughout the 4. Repair of damaged siding, process, but its important to remem5. Improving the landscaping ber not to panic and sell the property and site signage too soon. Give your self a change to 6. Replacing the HVAC units,\ renovate the property improve the occupancy rate and deal with the With high energy efficient vagaries of the local economy. There units could be external factors, such as the 7. Completing Interior proper area’s real estate market, local em ty upgrades ployment and health of the area’s b. Improving Management economy that are creating stumbling blocks for you. a. Increasing rents For example many years ago we b. By reducing vacancy managed an apartment property that c. Reducing tenant turns was located close to a freeway and jobs. That property was like a slot d. Improving customer service machine, we never had a vacancy. e. Generating ancillary income Not three miles away we had anf. Changing lease terms by increas- other property that ran a continuous ing common area costs tenants 10 % vacancy rate, and had a hard will pay time attracting quality tenants. You 3. I recommend setting an exit date would think that three miles would keyed to cash flow, expense and, not make a difference, but it did. appreciation of the asset and tax (The same issues apply to commercial properties. ) a. Improving the building
Bottom line not all properties make money. If you make a mistake and buy the wrong property and you are not making money, try to see if you can fix it in less than twelve months. If that is not possible take your lumps and get out. If you can sell it for more that you purchased it for, you may want to wait until you have owned it to evade short term capital gains taxes. (These are higher than long term capital gains taxes, which apply after the first year) (Please confirm your particular situation with your CPA,>. Consult with real estate professionals and your CPA to understand what options you may have for selling the property or holding out for improved cash flow. The future Imagine you are now at the end of your investment career. Your assets are all in a trust and you want to have your kids enjoy the fruits of your investments. You have many choices. First you need to establish if your heirs want the real estate investments, or just want the cash. If they want the real estate investments then you have to strategize five things: • Which one of your heirs will take over from you? • What is the operating/ownership structure of your entity in the event there are multiple heirs? o Will all of the future heirs have a vote in decision making or will there be a leader/manager o You may want to consider assigning a family leader ( though this may cause friction based on conflicting family needs) • Do you need money from your investments till you pass? • Do you want to give to charities?
• What are the tax implications? Once you have considered these questions and assigned future leadership, what is the best course for your investment to take? Here are a few strategies we have used in the past that have seen success.
• Shift from residential properties to single tenant commercial properties for ease of management. • You could invest in an UpReit and have the kids inherit the UpReit shares • You could give to a charitable organization and create a generation skipping trust, so the grandkids get the money (to avoid some state taxes) • Sell your assets and pay the taxes (not your best choice, especially if you sold assets and traded up over and over again using 1031 exchanges.) OR… Leave well enough alone and have them figure it out after you die. ( At over $10,500,000 in estate value, combined federal estate taxes kick in, in many states estate taxes start at over $1,000,000 so the tax hit is not huge if your estate tax is under $10,500,000.( Every case is different please check with your CPA and estate Attorney). So this is not a bad idea. Summary As you plan ahead you need to always plan on your final exit from your real estate investments. As your need for cash and your desire to manage the details of your real estate empire diminishes (it may or may not), you need to simplify your decision making. The more assets you have the more confusing the variables. At that stage you may only want a pain free check every month. Worrying about tenant retention and the health of your investments should eventually become a job for the next generation. You want to reach this point but it takes years of skilled planning to position yourself, your family and your investments for future success. So, Don’t wait till the last minute to reposition your portfolio, include these decisions in your long range planning and your life will be much easier and less stressful. p
Tenant Damages
...continued from front page zona Residential Landlord and Ten- submitting an itemized bill for the ant Act, A.R.S. § 33-1369 that can be actual and reasonable cost, or the fair of great benefit to landlords. Inas- and reasonable value as rent. The much as it allows the landlord to col- tenant then would then be required lect damages during the tenancy and to pay for the damages, along with while the tenant occupies the apart- rent on their next rental due date. The landlord may wish to considment. Under this section, if there is a non-compliance violation by the ten- er giving the tenant a two-day access ant affecting health and safety, and notice periodically during the tenanthe landlord provides the tenant of cy and check the rental unit for damnotice of what those repairs are, the ages. If damages are found, then you tenant must make the repairs within can serve the request to repair notice. fourteen days after written notice by Keep in mind the tenant cannot unthe landlord, unless the repairs are of reasonably withhold access to the an emergency nature. If the tenant landlord during the tenancy and the fails to make the repairs, the landlord landlord has the right to enter to do a has the option of entering the rental general inspection of the premises. unit and having the work done and p
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Rental Housing Journal Arizona • May 2014
ARIZONA REAL ESTATE INVESTORS ASSOCIATION RENTAL HOUSING JOURNAL ARIZONA
It’s Time for Sales Managers to Tip the Boat! How to Make a Splash by Managing By Kevin Higgins, Sales Management Expert
1. High Performers = Deliver results + behave correctly
would have 100% High Performers. Neat concept, most likely not going to happen. What is the next best thing? One hundred percent High Performers and Coachable Performers. This is attainable but it’s not the norm. Most leaders will have some Tough Performers and some Poor Performers. Imagine having ten direct reports with two in these groups. Not bad, manageable. Now imagine four out of ten. Life is tougher and tough moments happen on a daily basis. At six out of ten, it is probably tough to get out of bed in the morning. Ongoing management of performers involves monthly (minimum) One-on-Ones, observational coaching with feedback, sit downs to try and help – all the day-to-day routines to try and lift behavior and results. When these fail to work, that’s when it’s time for the performance conversation, which has five key steps:
2. Coachable Performers = Behave correctly but results are not 100% yet
1. Set a clear standard and set milestones of performance for the direct report.
3. Tough Performers = Deliver results + behave poorly
2. Inform the direct report where they are not meeting the standard and set milestones.
4. Poor Performers = Poor results + poor behaviors In an ideal world, a sales manager
3. Give the direct report the oppor-
them go. Research reveals that a participation rate of 60% or less will give sales managers a 10% chance of making their revenue plan. Sales managers must aim for a high (70%) participation rate to have a good chance of making plan, although it is not guaranteed. Given this, why do sales managers tolerate poor performance? What stops them from having tough conversations? Sales managers are nice. They do not want to rock the boat. Their strategy is hope. A sales rep’s performance can be evaluated on two criteria – behavior and results. Assessing whether a sales rep is or could be delivering results is fairly straightforward – it’s a math problem. There are four performer categories a sales manager works with:
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ngoing management. Low performers, mid-level performers and even high performers need it. It does not assume high performance, and once high performing, does not assume it will always continue. Everyone needs to be managed on a consistent basis. In sales, the goal of ongoing management is participation rate. Participation rate is the percentage of sales team members who are at or above plan. For a sales team, participation rate is easy to calculate. On a team of ten people where four are above their sales plan on a YTD basis, the participation rate is 40%. Participation rate is a statistic that rarely scrutinized. Why? Sales managers are measured for making their quota. If the quota is $100 million, the sales manager’s goal to get each sales person to deliver an average of $10 million. Some will produce $15 million and others will produce $5 million; the sales manager only needs the total to add up to $100 million. The sales manager is incentivized to keep average performers. A sales person who only delivers 50% of their quota is better for the sales manager than the 0% they would contribute if the sales manager let
tunity to meet the standard and set milestones. 4. Offer assistance to meet the standard and set milestones. 5. Advise the direct report of the consequences of not meeting the standard and set milestones. Sales managers know how to do this – the issue is getting up the nerve. Sales managers need to have the conversation as soon as needed – putting it off spares no one. Sales reps who want to be with you will step it up and improve. Those who are not capable/not interested will show very quickly (weeks not months) after the performance conversation. If things still don’t improve, the sales manager can move to the final warning, consulting with HR to effectively handle this and how to go your separate ways if that is required. Kevin Higgins is CEO of training organization Fusion Learning, recognized by Selling Power as one of the top 20 sales training companies in North America and as one of Canada’s Top Small and Medium Employers for 2014. He is the author of Engage Me: Strategies From The Sales Effectiveness Source.
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"May" Include ...continued from front page damages or cancellation fees for early termination of the agreement. Of course, if you are a property manager you want liquidation damages or termination fees as part of the agreement. You’ve worked hard, incurred cost and want a deterrent to cancellation. You also need to have some recourse with an owner as a client who may not operate within acceptable business practices. Of course, as an owner, you don’t want anything in the agreement that could cost you additional money to cancel the agreement for reasons you feel are justified. Let the negotiations begin.
claimer that I am not an attorney, you should certainly not take anything I state as absolute and you should always consult your attorney or other professional advisors. These items include the following: a) Contain an automatic renewal provision, if the property management firm sends the owner a reminder notice at least thirty days before the renewal date. The notice does not negate any other cancellation term otherwise agreed to. While it appears an automatic renewal provision would be of most benefit to the property manager, it is probably in the best interest of both parties to have this included in the agreement. This can save time and alleviate aggravation of having to sign a renewal. The control remains with the owner as the property manager is required to send a reminder notice at least 30 days prior to expiration of the agreement. This allows the owner time to renegotiate or cancel the agreement at the end of the term. While this provision is for automatic renewal, it doesn’t change the requirement that the Property Management Agreement have a cancellation provision agreed to by both parties. Standard cancellation term is 30 days, but it can be shorter or longer. b) Provide for reasonable liquidated
c) Allow the property management firm’s broker to authorize a licensed or unlicensed person in the direct employment of the broker, pursuant to section 32-2174, subsection C, to transfer monies from, or to be a signatory on, a property management trust account to which the property management firm deposits the owner’s monies.
This seems more than reasonable, especially for larger property managers, to be able to delegate certain office processes. As an owner, you may want to understand who the broker has authorized on his behalf.
d) Require more than one signature on checks written from a property management account.
Requiring more than one signature, especially for larger dollar amounts, is good business practice and can help to prevent theft or misuse of funds. Ensuring separation of duties of the signers would further enhance protection. e) Contain any other provisions that are agreed to between the property management firm and the owner which are not in conflict with the requirements of this Chapter. Obviously a catch-all, but this gives the property manager and owner the ability to negotiate terms they feel are important and will help clarify their relationship. As promised, the following items must be included in the Property Management Agreement. These are very clear and aren’t open to interpretation. 32-2173. Property management agreements; contents, termination A property management firm shall write property management agreements in clear, unambiguous language, and the property management agreements: Shall: (a) State all material terms and conditions of the property management firm’s services, obligations, duties and responsibilities to the property owner. (b) Be signed by the property owner or his agent and the property management firm’s designated broker or the broker’s authorized real estate licensee.
that are agreeable to both parties. (e) Provide for the manner of disposition of all monies collected by the property management firm, including any tenant deposits. (f) Specify the type and frequency of status reports to the owner. (g) State the amount and purpose of monies the property management firm holds as an operating reserve for emergency and other purposes. (h) Provide for the disposition and allocation of interest earned on trust account monies. (i) State the terms and conditions of compensation the property owner pays for services pursuant to the property management agreement. (j) Not be assigned to another licensee or licensed entity without the express written consent of the property owner.
Smarter investing, Alan Langston Executive Director Arizona Real Estate Investors Association - AZREIA 480-990-7092 www.AZREIA.org AZREIA serves its 1700+ members through chapters in Phoenix, Tucson and Prescott providing extensive market information, education, networking events and support.
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(c) Specify a beginning and an ending date. (d) Contain cancellation provisions
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Rental Housing Journal Arizona • May 2014
RENTAL HOUSING JOURNAL ARIZONA
Occupancy by Who’s Standard, pt.II of II
By Jo Becker, Education/Outreach Specialist, Fair Housing Council Serving Oregon and SW Washington
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n our last article, we looked at the work of Tim Iglesias and the legal implications of, as well as the disparate impact of overly restrictive occupancy standards, including twopeople-per-bedroom policies. In this article, the last in the twopart series, the work of Ellen Pader, an anthropologist and Associate Director of the Housing Research Center at the University of Massachusetts Amherst we look at the historical and cultural perspectives behind our country’s occupancy policies. I recently read Ms. Pader’s Housing Occupancy Standards: Inscribing Ethnicity and Family Relations on the Land, published in the Journal of Architectural and Planning Research in the winter of 2002. Despite being more than a few years old, it is packed with – what for me – was stunning revelations about the deep and particularly contrived history of occupancy standards in the US. As you read along with me, I ask that you do so with an open mind. Step outside the lens of your role as
a housing provider to gain greater perspective. Warning: Ms. Pader’s vocabulary is rich but dense; I hope the excerpts I have selected here are not too arduous. That said, I strongly suggest you download the entire document (available at www.FHCO. org/occupancy.htm) and read it over a cup of something yummy some long, rainy evening. I’ll start you off with the verbose preface to Pader’s paper: THE PREMISE “Attempts to define family and the appropriate sociospatial arrangements for an idealized “normal” U.S. household formation have had profound influences on the design and size of houses, apartments, and communities throughout the twentieth century. Based on ethnographic, historical, social, political, and legal research, this paper explores the sociopolitical construction of occupancy standards… It concludes that the regulations drive from a combination of upper-class English ideals and outdated scientific knowledge, with concomitant moralistic and assimilationist aspirations on the part of the policy makers. Today, these social
ideals still implicitly underlie much of our current urban design, affecting the ethnic, racial, and economic structure of cities, and by extension, homelessness, coercive segregation, and access to services.” THE CONFLICT “The conflict at the base of this article is how we define and conceptualize housing discrimination on the basis of national origin and by extension… familial status… This inevitably leads to an exploration of how mundane daily practice and macrolevel social policies are inextricably entwined with one another. The daily practice in question here is sleeping arrangements… This directly influences where households with restricted means and more than four or five household members can live. I am retheorizing the definition of “national origin” away from its legal definition of the place of origin of one’s self or one’s ancestors – and toward an anthropological definition of what it means to be from… a particular geographic locale. This means reframing the standard question derived from the 1949 Housing Act which set the goal that all citi-
zens should enjoy “a decent home and suitable living environment.” Thus, rather than asking “Do all households, regardless of national origin or familial status, have equal access to decent housing?,” I ask “Do all households, regardless of national origin or familial status, have the same opportunity to decide for themselves what they consider acceptable and preferred living arrangements, and, therefore, have equal access to decent housing?” …The basic questions are: What is the basis and justification for current standards – which are generally some variation of no more than two people per bedroom? How did this ratio become normalized and win over three people per bedroom, for instance; and why did bedrooms come into the talk of restricting occupancy anyway? Even culturally mediated definitions of what should be counted as a bedroom have found their way into codes and legislation. How did occupancy standards come to be such a bone of contention? …This is not a call to remove occupancy standards altogether and return to the severely densely populat...continued on page 11
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How to Turn an Unhappy Resident Into a Raving Fan!
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by Ernest F. Oriente, The Coach {Article #213…since 1995}
his can happen when you least expect it: An unhappy resident has just arrived in your leasing office while your telephone is ringing, budgets are due in 25 minutes and six future residents are waiting to tour your wonderful apartment community. Time to panic, right? Not a chance! Read this article and use these three easy steps to handle an unhappy resident while turning them into a raving fan. Listening carefully: The moment you realize you have an unhappy resident, take a deep breath and ask this person in a soft voice, if they would be kind enough to join you in your office. This gives you a few seconds to gather your thoughts and will give the two of you the privacy to have a reasonable conversation. Plus, you really do not want your current residents nor any future residents to hear this unhappy conversation. Next, ask your team to hold all your telephone calls, clear your entire desk and take out a blank sheet of paper to take notes. At this point, ask your unhappy resident to begin telling you exactly what the
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problem is. Take detailed notes while listening patiently, making certain not to interrupt him/her while they are speaking. Remember, your resident is not attacking you personally, so keep your cool during this entire conversation. Once your resident is finished explaining why they are unhappy, ask him/her this key question, “Is there anything else you would like to tell me?” This is a key question because it signals to your resident that their turn is now done and you are ready to address and answer their concerns. Tip From The Coach: Before addressing the concerns from your resident, let’s be certain we understand what’s at stake when handling resident problems and why it’s important to handle each resident as if they were liquid gold. A typical resident pays $800 per month or $9,600 per year. In addition, anticipate that each of your current residents will refer two prospects a year to your apartment community, which represents another $19,200 in new revenue and if each of these referrals send you two more referrals this year, that’s
another four more new residents at $38,400 annually. So, $9,600 + $19,200 + $38,400 = $67,200 in potential new revenue, per resident, per year. Can you clearly see why we must convert unhappy residents into raving fans? Diffusing the situation: Once your resident has shared with you exactly why they are unhappy, start your half of the conversation by thanking them for their comments. Next, say to your resident, “Let me see if I understand you completely.” Restate this person’s concerns as you slowly read from your notes. Reading your notes slowly does two things: 1) It gives your resident a chance to calm down; and 2) It shows that you were truly listening to what they had to say and are ready to take action. Now, apologize if you or your team made any mistakes and look for at least one or two points with which you can agree. By conceding a point or two right away, you show that you are not defensive about their concerns and that you really want to solve their problems, not duck blame or make excuses. Tip From The Coach: When-
ever you are interacting with a current resident or a future resident, customer service experts call this a “moment of truth”. When you are dealing with an unhappy resident, this is called the “pinnacle of performance”. SuperStars in the property management profession do not mind handling an unhappy resident because they see this as an opportunity to shine—to win this resident’s longterm loyalty. Converting an unhappy resident into a raving fan: OK, now comes the easy part. Ask your unhappy resident exactly what action steps they would like to see you take. Promise your resident that you will do everything necessary to fix or handle the concerns they have shared with you and tell them exactly when and by what time, they can expect the problems to be handled. Now, look to resolve these problems as quickly as possible--well in advance of the day and time you promised your resident. Motorola calls this, “under-promise, over-perform” and they have used these magic words ...continued on page 10
Rental Housing Journal Arizona • May 2014
RENTAL HOUSING JOURNAL ARIZONA
Dear Maintenance Men: By Jerry L'Ecuyer & Frank Alvarez
Dear Maintenance Men: I am starting my planning for a major kitchen cabinet remodeling project in my rental units. However, I am having a difficult time making material and design decisions. What recommendations can you give? Allen. Dear Allen, When doing a kitchen or bath material selection, cohesive and functional design is important. Kitchen and bath rehabs are some of the most expensive work you can do in an apartment unit and proper planning is a must. In order to appeal to a larger segment of the population, try to keep the interior color scheme to neutral earth tones. Cabinetry quality varies greatly. Don’t let the cabinet fronts fool you. Manufactures designed their cabinets to look good at first glance. Keep in mind, being in a rental environment, the cabinets also need to hold up to abuse. Look at the actual construction of the cabinet box or frame. There is no need to use custom cabinets to fit your existing layout. The use of prefabricated modular cabinetry can greatly reduce the time and cost to have a finished kitchen
Rental Housing Journal Arizona • May 2014
or bathroom. Using real wood cabinet fronts with 3/8” plywood sides is essential for durability. The drawer fronts and sides should be connected with a dovetail or other positive lock construction. Drawers that are held together by nails will not hold up to tenant abuse, nor will particle board constructed cabinets. On a side note; if you are gutting the kitchen or bathroom, use this time to relocate and add more electrical outlets and under cabinet lighting. Dear Maintenance Men: I am looking into alternative methods to cleaning my apartment carpets. I am aware of both dry chemical carpet cleaning and steam cleaning. What is the difference and which do you recommend? Martin Dear Martin: The two primary methods of carpet cleaning are dry cleaning and hot water extraction or steam cleaning. First, let’s dismiss a couple of misconceptions; dry cleaning is not technically dry, but more of a “moisture-controlled” process and steam cleaning does not use steam, it is a process of hot water under high pressure.
Carpet dry cleaning methods use chemical cleaning solutions to extract dirt. There are three methods: Dry Foam: The foam is applied to the carpet and allowed to dry, then vacuumed up along with the dirt. Dry Chemical: A cleaning solution is applied to the carpet and a machine spins a large bonnet from side to side to absorb the dirt from the carpet. Dry Compound: An absorbent mixture resembling wet sawdust is spread over the carpet. A machine brushes the mixture into the carpet to absorb the dirt. When the mixture dries, it is vacuumed out, taking the dirt with it. The dry method does not get as much of the deep dirt out, but is very effective at cleaning the visible portion of the carpet and the carpet may be ready for traffic within an hour. The wet carpet cleaning method uses hot water extraction to force a hot water based cleaning solution into the carpet under high pressure and then sucks it back out of the carpet along with the dirt. There are two water extraction methods: Portable Extraction: The carpet is
cleaned by a small machine using hot tap water and powered by the electricity source in the house. This is the typical DYI method of steam cleaning; some professionals also use this system. Truck Mounted Extraction: This uses a large cleaning machine mounted on a truck or van. The water is heated to a higher temperature and is shot into the carpet at a higher velocity than is possible in portable machines. Out of all the methods listed above, we recommend the Truck Mounted Extraction method. We believe it is the most effective way to clean, mostly because the heat kills bacteria and the extra power separates dirt. These powerful machines also pull most of the water back out of carpets, leaving them damp but not wet. The carpet may be ready for traffic within a few hours or more. One a side note: Most major carpet manufactures listed on the Carpet and Rug Institute (CRI) website (A nonprofit trade association), recommend the use of hot water extraction systems to clean carpets. ...continued from page 13
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RENTAL HOUSING JOURNAL ARIZONA
Boom in Metro ...continued from front page screeching halt in the typical pipeline of new units coming into the market. Between 1995 and 2009 the number of new units in metro Phoenix averaged 6,578 per year. Between 2010 and 2013 the number of new units constructed averaged only 1,907. While apartment values plummeted after 2008 and many owners lost their properties, the decreased supply of apartments allowed the market to slowly improve over the past four years. Vacancy Rates Drop as Population Grows With economic downturn, Arizona and metro Phoenix were further hampered by SB 1070, a controversial immigration law that resulted in many individuals leaving the state. The media also severely tainted the overall impression of Arizona as a destination state to live in or even to visit. The combination resulted in a minimal increase in population and in Q4 2009 apartments experienced the highest vacancy rate in many years (14%+). Since 2009, however, even with the slow economic recovery, metro Phoenix has had an annual population increase of at least 1% (+40,000 persons). In 2013 the increase was 1.7%, ranking metro Phoenix as the 7th fastest growing metropolitan area in the US. With a lack of supply and the increasing population, vacancy rates have steadily decreased every quarter since the end of 2009
with a current rate of 6.5% (Q1 2014). In addition, concessions have been greatly reduced and communities have experienced real rent growth. Arizona: Once Again a Destination State for Business and Retirees Forget the tainted image–Arizona is on the verge of a population explosion for many reasons. (1) As the overall US economy continues to improve there will be a renewed population movement to the sunbelt with Arizona and metro Phoenix being part of this target; (2) Arizona is adjacent to both Mexico and California and along the southern transportation route with much less concern for bad weather; (3) Housing is affordable with an available skilled work force; (4) The business environment is finally competitive and friendly; (5) Metro Phoenix has a dependable 365 day airport with no threats of hurricanes, earthquakes, flooding, tornadoes, tsunamis, snow/ice storms, etc.; and (6) The economy is diversified and includes a vibrant mix of new and established companies in growing industries such as technology, photonics, optics and advanced manufacturing. Apple, Asurion, Garmin, GoDaddy, GM and Intel have recently expanded or relocated to metro Phoenix. Metro Phoenix represents 70% of the Arizona economy and the population explosion will be led by JOBS. In 2010 Arizona ranked 49th in job growth, but in 2013 Ari-
zona had climbed to 10th. WOW!!! Families De-Clustering Provides Unexpected Buyers and Tenants Another interesting thing happened when jobs were lost—a significant number of individuals could no longer afford their home or apartment and oftentimes moved in with family or friends to minimize expenses. Between 2007 and 2010 this was a common occurrence. Some economists call this the “shadow demand”—a stock of possible buyers and renters resulting from the unraveling of the “doubling-up” of households as the economy strengthens and “jobs” return. This means we will have an added supply of new tenants in addition to the increased population. Allure of Renting in Vibrant Areas Beyond the current and expected increase in population growth, there has also been a shift away from home ownership and an increase in renting, especially for the younger generation to move into vibrant, in-fill areas. This is very true of the tech/websavvy “Millennials,” especially the “Generation Y” segment of the population. In metro Phoenix the area near downtown Scottsdale is perfect to meet their criteria. A new measure to determine the convenience of rental properties to the places needed to go for standard errands is the “walk score” (see www.walkscore.com). Apartments being built in areas with
high “walk scores” will be in higher demand and will command higher rents. The Apartment Construction Boom In anticipation of the increasing apartment demand, developers permitted 1,939 new units in 2011 and increased the permitting to 5,144 units in 2012 and 4,803 in 2013. As of Q1 2014 there were 21 projects under construction representing 5,422 units. There were also 76 projects representing an additional 17,472 units in various phases of the permitting process from the initial rezoning request to final approval with construction imminent. Based on the expected completion date of the projects currently under construction, metro Phoenix should have 5,383 units competed in 2014. The dominant locations for new projects are mainly in cities experiencing strong economic growth including Scottsdale, Tempe, Phoenix, Chandler and Gilbert. Another trend for new construction is along the metro Light Rail–especially as it links the education hubs of downtown Phoenix, the ASU campus in Tempe and east to the five new universities in downtown Mesa. Many additional large-scale projects are also in the process of initiating the rezoning application with new projContinued on page 9
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Rental Housing Journal Arizona • May 2014
RENTAL HOUSING JOURNAL ARIZONA
Boom in Metro ...continued from front page ects being announced almost weekly. Most of these are new apartment communities, but condo projects are also starting to gain traction. For example, Deco Communities recently announced the plan to build a $37 million, eight-story project (Envy) in downtown Scottsdale and a $22 million, five-story project (Edison Midtown) in midtown Phoenix. Types of New Construction In general there are several types of large, up-scale, apartment communities being constructed. The first is typical of what Mark Taylor builds—a quality community with surface covered parking. An example would be their Regents at Scottsdale community located on Frank Lloyd Wright Blvd. just east of Pima Road with rents ranging between $0.85/sf and $1.30/sf. This style of community is typical of many projects across the Valley. The next step up would be in dynamic in-fill areas where the “walk score” would support higher density complexes. Examples of this style would be Alliance’s new project at Scottsdale and Lincoln (Broadstone Lincoln) or their recently completed project at 26th Street and Camelback in Phoenix (Broadstone Camelback). Both of these are four stories with more amenities and underground parking with rents ranging from $1.82/sf to $1.92/sf. The most expensive rents are at communities such as Optima’s Sonoran Vil-
lage located at Camelback and 68th Street. With exceptional amenities, underground parking, unique architecture in a high rise setting, rents range between $1.83/sf and $2.45/sf. Will the New Construction Affect You? Developers clearly need to know their submarket and what’s in the new construction pipeline. They also need to fully understand the requirements of their target tenant, the amenities they want and how much they are willing to pay. The main question they are asking is, “With all the new construction, will metro Phoenix be able to absorb all the units?” From my perspective and with all the positives noted above including the projected population increase, the four-year construction shortfall, the “shadow demand,” and the overall attractive location and business environment, metro Phoenix will support the new construction for a number of years. For owners of nearby older communities with less amenities, a few of the commonly asked questions are: (1) What will be the economic effect of a new community?; (2) Will the new project take your tenants?; and (3) Will there be a trickle-down effect on rents and occupancy as tenants move up to newer product when concessions are offered during lease-up? In most cases, realize older properties typically have larger unit
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Rental Housing Journal Arizona • May 2014
sizes with far less rent/sf. Use this to attract and/or keep existing tenants. If there are a number of older properties in your submarket, you want to be the best alternative available. On the flip side, a new, “class A” community in your area may be very beneficial as these tenants may warrant more up-scale retail (restaurants, shops, etc.) thus improving your neighborhood.
provides weekly updates (by e-mail) on apartment sales, publishes the Metro Phoenix Apartment Owner’s Newsletter on a quarterly basis, and provided new construction reports on the company’s web site (www.KLCommercialGroup.com).
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Jim Kasten, CCIM Kasten Long Commercial Group Jim@KLCommercialGroup.com 602 677 0655 The Kasten Long Commercial Group (KLCG) has specialized in apartment brokerage in metro Phoenix since 1998. Agents have brokerage more than 1,000 communities with gross sales in excess of 1 billion dollars. The company also
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RENTAL HOUSING JOURNAL ARIZONA
Raving Fan ...continued from page 6 to create a multi-billion dollar company. Next, take the time to either call this resident or visit them in-person, to tell them the concerns they had shared with you are now fixed and resolved. In addition, take a few minutes to write a small note apologizing again for their unhappiness and thanking them for expressing their concerns. At last, your resident should be completely satisfied that you have addressed their important concerns and you have earned their respect and goodwill. Tip From The Coach: Ready to convert your former-unhappy resi-
dent into a raving fan? Consider purchasing the book “Positively Outrageous Service”, written by T. Scott Gross. His book gives you a step-by-step plan for creating raving fans, and will give you lots of fun and great ideas for converting very unhappy residents into your best referral sources. I have read his book several times and highly recommend you read his pearls of wisdom. In fact, once you are done reading his book, you will realize that handling unhappy residents is really the best way to win new friends!
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Want to hear more about this important topic or ask some additional questions about raving fans? Send an E-mail to ernest@powerhour.com and The Coach will E-mail you a free PowerHour invitation. Author’s note: Ernest F. Oriente, a business coach/trainer since 1995 [31,930 hours], serving property management industry professional since 1988--the author of SmartMatch Alliances™, the founder of PowerHour® [ www.powerhour.com ], the founder of PowerHour SEO [ www.powerhourseo. com ], the live weekly PowerHour Leadership Academy [ www.powerhourleadershipacademy.com/pm ] and Power Insurance & Risk Management Group [ www.pirmg.com ], has a passion for coaching his clients on executive leadership, hiring and motivating property management SuperStars, traditional and Internet SEO/SEM marketing, competitive sales strategies, and high leverage alliances for property management teams and their leaders. He provides private and group coaching for property management companies around North America, executive recruiting, investment banking, national utility bill auditing, national real estate and apartment building insurance, SEO/SEM web strategies, national WiFi solutions [ www.powerhour.com/ propertymanagement/nationalwifi.html
], powerful tools for hiring property management SuperStars and building dynamic teams, employee policy manuals [ www.powerhour.com/propertymanagement/employeepolicymanuals.html ] and social media strategic solutions [ http://www.powerhour.com/ propertymanagement/socialmedialeadership.html ]. Ernest worked for Motorola, Primedia and is certified in the Xerox sales methodologies. Recent interviews and articles have appeared more than 8000+ times in business and trade publications and in a wide variety of leading magazines and newspapers, including Smart Money, Inc., Business 2.0, The New York Times, Fast Company, The LA Times, Fortune, Business Week, Self Employed America and The Financial Times. Since 1995, Ernest has written 225+ articles for the property management industry and created 400+ property management forms, business and marketing checklists, sales letters and presentation tools. To subscribe to his free property management newsletter go to: www.powerhour.com. PowerHour® is based in Olympic-town… Park City, Utah, at 435-615-8486, by E-mail ernest@powerhour.com or visit their website: www.powerhour.com
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Rental Housing Journal Arizona • May 2014
RENTAL HOUSING JOURNAL ARIZONA
Occupancy ...continued from page 5 ed and ill-kempt tenements of early 1900s New York City; this is a call for a reappraisal of currently accepted standards. …Debates around regulating occupancy standards place us firmly in the blurry jurisdictional boundaries between courts and Congress. Here, I will walk in that blur as I draw on some of the social, cultural, historical, political, and legal data that make up my argument as to why most current occupancy standards should be deemed illegal… …Current occupancy standards and their rationales are historical and cultural artifacts that have been accorded the status of universal truth. …The basic strands of my argument… are: First: The general justification for current standards presume [they are] reasonable to the ordinary person. If I can demonstrate that they explicitly derive from, and refer to, upperclass, English and Anglo-American definitions of reasonable, and that definition is in fact unreasonable to many of the ethnicities in the U.S. exactly on account of where they or their ancestors are from and what it means to be from there, then surely the prevailing definitions of “ordinary” and “reasonable” categories lose their privileged positions. Second: The standards tend to be further justified under the rubric of providing for the health, safety, comfort, and convenience of the inhabitants. I argue that it is not [what] is being protected by the 2:I standard as purported. Rather it is a very specific, culturally constricted definition of moral health, safety, comfort and convenience. This is not to argue that less restrictive occupancy standards would similarly have no legitimate physical health, safety, and comfort rationale. What is crowded to some is exactly what is comfortable to others; what is comfortable to some is exactly what is lonely to others. Such differing reactions to spatial relations are largely the consequence of socialization and cultural practices, with implications beyond occupancy standards (Werner , et al., 1997). [It should be noted that it] …is not just people who cannot afford more who share bedrooms. In countries as different as Mexico and China people commonly choose to share bedrooms while leaving other bedrooms unused. In a demographic study of household density in the U.S. using 1990 census data, researchers found that Latino and Asian households often have more than two people per bedroom even when their income is the same as White and Black households of the same size, again suggesting choice is at play, not economic necessity (Myers, et.al, 1996). …Sharing household space with extended family members is a common way of living throughout much Rental Housing Journal Arizona • May 2014
of the world, and a common way of getting through hard times, or even strange times such as first entering a new country. I have often been told when I have interviewed people from a wide range of ethnic backgrounds, a home full of kin is not considered crowded as long as there is room on the floor. …[And], what might have been justifiable on health grounds early in the twentieth century… has become antiquated due to modern medicine and technology. …I often wonder what current policy-makers would say if they knew that their health and safety rationale was based on nineteenth century concepts about miasmas and vitiated, or impure air. This cutting edge scientific knowledge of the late nineteenth century proved, without doubt, that one’s own breath was full of deadly carbonic poisons and that some 40% of deaths in New York City were directly caused by breathing one’s own self-inflicted noxious air – you could drown in your own exhaled breath (Townsend, 1989; lanes, 1876). This led to the perceived need to ensure the right combination of ventilation for dispelling the poisons to match the number of people in an enclosed space.
class establishment – …[t]he dominant belief of the era was that bad housing conditions, including too many people per unit according to their standards of uncomfortable crowding, directly produced illness, crime, intemperance, promiscuity, and the breakdown of the family. Their goal was to bring order to what they considered to be disordered, and thereby dangerous. The reapportionment of domestic space was one step in the orderly Americanization of these not-yet-white immigrants. A 1905 survey [found] about 50% of the apartments housed three or four people per room, while 25% had five or more people (Takaki, 1993). The fairly new discipline of Public Health fought for the first
building codes in New York State in 1867 through their organization, the American Public Health Association (APHA). They wanted to contain the spread of contagious disease, both within the slums and from moving uptown. Improving physical health was only one part of their mission; improving what they assumed to be a lapse in moral health was more important for justifying the push toward assimilation through restructuring domestic space, and in particular, sleeping arrangements. …[W]hat constituted overuse of sleeping rooms to the Reformers (and most rooms were sleeping rooms in the tenements) was lack of physical privacy. The ability to gain privacy by having one’s own physi... continued on page 12
The History …[W]hile the occupancy standards might be facially neutral, that is they are equally applied to everyone across the board, their effect certainly is not, and their intent often is not either. …In large part, occupancy standards derive from the tenement conditions of 19th / early 20th century New York, the Lower East Side in particular with its densely populated immigrant households. As Social Darwinism was losing clout, other ways of denigrating the humanity of the largely Jewish, Polish, Italian, and Slavic populations were taking its place. It must be remembered that each of these non-WASP ethnic groups was considered a separate race; they were what historian David Roediger (1991) calls the ‘not-yetwhite,” a concept with significant implications here. Turn of the century urban tenements were pretty miserable. No one was responsible for cleaning the streets, buildings tended to be dirty, dark, poorly maintained, and often unsanitary (DeForest and Veiller, 1903; lanes, 1876; Lubove, 1962; Veiller, 1910). …Like public and low-income housing today, there is a conflation of the now decrepit physical environment left to deteriorate by the government or private landlords with the moral character of the inhabitants. …I wonder, should it be the character of the people who leave the housing to deteriorate, not the residents who have to live in that decrepitude, that is conflated with the condition of the property? [For h]ousing reformers – who came from the middle- and upper11
RENTAL HOUSING JOURNAL ARIZONA
Occupancy ...continued from page 11 cally bounded space to sleep and think, was by now perceived as an essential necessity for healthful living. Too many people sharing, children sharing bedrooms with their parents, and of course, sharing with lodgers, almost inevitably means that there can be no provision for privacy or decency, and results in sexual precocity and in many cases promiscuity, which may, of course, in time lead to a criminal record. (Gries and Ford, 1932:xx) This clearly articulated environmental deterministic view from the 1932 reports of President Hoover’s Commission on Housing and Home Ownership is no different than the earlier views of [other] reformers. Ironically, these moralists did not consider that many people in a room was a form of surveillance which might even mitigate sexual abuse. If any sleeping arrangement is to be suspect… it should be private sleeping rooms with their closeable and lockable doors. The Standard …The first occupancy standard in the U.S. was enacted in 1870 [in] San Francisco [and] required a minimum of 500 cubic feet of air space per person. However. it was disproportionately enforced in Chinatown where low-paid, single, working Chinese men had no choice but to share rooms with less air space each than mandated. In 1876 California made this minimum a state-wide law. …In 1879 New York City passed its first occupancy standard. It required 600 cubic feet of air space per
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person. This derived in part from the scientifically “objective” belief in miasmas and vitiated air, that one’s own breath contained poisonous carbonic acids. It was believed that without a minimal amount of space and renewable air, people could literally drown in their own breath (Townsend, 1989; lanes, 1876). By 1901 this was decreased to 400 cubic feet for each adult and 200 for each child, still with an underlying, scientific health justification. These early… laws provide an important caution: Where does the line between caring for the plight of others and discrimination lie? It is not always a clearly defined or overt line. When does the desire to improve material conditions of the disenfranchised run a collision course with ethnocentrically derived moral platitudes? …The reformers of the Progressive movement were largely responsible for getting occupancy standards enacted in order to improve the slum conditions and did at least replace the prevailing genetic interpretation of why certain groups predominated in many northern urban slums, with an environmental determinist interpretation, which is a step up. …Progressive concerns with the design and use of low-income immigrant housing were not simply altruistic. …Overcrowded and unsanitary apartments in urban neighborhoods also made ‘productive’ living very difficult (1988:82). …housing was seen as an important political tool, to enhance both assimilation and worker productivity. The emphasis on physically bounded privacy as a moral and even political good was part of the turn of the last century public discourse. Thus, in a 1905 speech, United States Commissioner of Labor, Charles P. Neill pronounced that: [H]ome, above all things, means privacy. It means the possibility of keeping your family off from other families. There must be a separate house, and as far as possible separate rooms, so that at an early period of life the idea of rights to property, the right to things, to privacy may be instilled. (Wright, 1981:126) …In the 1939 publication, Principles for Healthful Housing, the [American Public Health Association] wrote: ‘A room of one’s own’ is the ideal in this respect; but we can at least insist on a room shared with not more than one other person as an essential minimum. Such a room should be occupied only by persons of the same sex except for married couples and young children. The age at which separation of sexes should occur is fixed by law in England at 10 years, but some American authorities would place the figure 2 years lower. Sleeping-rooms of children above the age of 2 years, according to psychiatric opinion, should be separate from those of parents. (p. 16)
…The British Act was explicitly a basis for the American Public Health Association’s (APHA) reports entitled Standards for Healthful Housing. [These] then became the basis for the standards adopted by HUD and non-governmental standards creating agencies since the 1950s. …In 1950 the APHA published: “privacy in the home should be one of the fundamental objectives of design… (p. 15-16).” They also published a confession of sorts: The minimum occupancy standards necessary to attain the goal of “healthful housing ...closely approximates actual practice in the high- income groups” (1950: xx, italics added), making explicit that one sector of society, the high-income primarily white northern European Protestant, had become the marker for all. …the home design guidelines found in HUD’s handbooks and most housing codes reiterate and help maintain certain culturally acceptable notions of proper personal and social behavior. The same culturally imbued structural principles about privacy, privatization and proper moral behavior underlying the 2:1 codes guide the standard definition of a bedroom: “a bedroom cannot be a passthrough to another room” (HUD, 1985:6-5). …Conflated with this are questions of whether “a room used for sleeping” has to be a room labeled as a bedroom, and whether any non-passthrough which is not for instance, a bathroom or kitchen, can be counted as a bedroom for the purposes of establishing maximum occupancy. The ambiguity here is at the basis of much legal and political action. [An unpublished 1940 paper for the APHA explicitly states], “The health justification is to prevent interruption of sleep, but the moral argument is more commonly used” (APHA Archives). …These statements explicitly and intentionally privilege one culturally specific lifeway, discriminating in the creation of the standards against people with different preferred modes of living, and against Iow-income families with children. …These seemingly neutral and healthy sociospatial relations found their way into the child raising dictates of a person who highly influenced how many of us were raised, Dr. Spock the baby doctor. Starting in the late 1940s, and continuing into later editions of Baby and Child Care, he wrote that children should ideally have a room of their own “where they can keep their own possessions under control and have privacy when they want it.” (1976:201) In the 1980s, another great arbiter of American culture, Dear Abby, wrote in What Every Teen Should Know: Youngsters “need a room to retreat to” in order to help them grow as individuals… (Van Buren: n.d.).
…[The moral argument] is based on the U.S. emphasis on individualism objectified in the continual reiteration of the necessity of physical privacy within the home to attain a particular concept of physical, psychological, and social health. As I have suggested, in societies which value and practice interdependency, in which individualism and physical privacy are a punishment, a form of alienation, not a goal to be desired, one commonly finds house plans and social and spatial relations which correlate with and reinforce the concept of interdependency rather than independency (Pader, 1993). Recent Developments Various municipalities and policymakers are trying to change the local occupancy codes to limit the number of people who may live in a unit… Not surprisingly, it is whoever are the current unwanted populations, the not-yet-white populations, that these codes are being used against. For instance, in 1992, Brisefio v. the City of Santa Ana, the lawyer for Mr. Brisefio claimed the city had racist intentions and was trying to rid the city of the growing number of people of Mexican origin (Brisefio v. City of Santa Ana, CA, 6Cal. App. 4th 1378 1992). The judge feared that the impact of the proposed ordinance would be greater homelessness and could find no compelling reason to permit the city to have a more restrictive policy than the state. Other municipalities have passed restrictive occupancy policies and then lost them in court. In Summary …My point then is not to suggest that people from some ethnic groups prefer to be packed like herrings in a barrel. Rather, it is to set a stage for less ethnocentric, more culturally inclusive occupancy standards. Of course most people would like to be in a position to choose whatever size home they want, and then choose for themselves how to apportion the space – maybe by giving each person their own physically bound private space, or maybe by sharing all spaces with immediate and extended family, or maybe some other configuration altogether. In conclusion, I argue that what we are talking about here is not physical and psychological health and safety as the codes are supposed to protect, but moral health and safety from the perspective of early 20th century upper-class and mostly northern European reformers, transposed and naturalized into the late 20th / early 21st century policies, and priorities about individualism, privacy, personal property, the body, responsibility, and social justice among other beliefs. Then, they were explicit about their rationale. Now it is just accepted as natural behavior. And it is the people brought up to ... continued on page 13
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Occupancy ...continued from page 12 believe in the lessons of individualism through privately possessing one’s own space, as psychologically and physically essential for health, who write the policies, and who decide what is, indeed, reasonable to the ordinary person – and who decide what that ordinary person looks like. In actual number, I would guess that the ordinary person they are talking about is in the minority, leaving out most ethnic groups, of all colors. …What is needed is more discussion about reframing the definition of national origin to include what it means to be from a particular geographic locale within the context of understanding the intimate connections between social and spatial relations in the home, at the levels of the individual, the household, and of the larger society of which they are a part. And then to accept the preference for sharing as equally legitimate as the preference for privacy. To do less than this is being complicit in discriminatory housing policies. …Sometimes I wonder what current debates would look like if the dominant mindset was [different]. Would more people be housed? Would extended families and large
families have greater opportunity to select where they want to live? Would apartment developers move from the current trend of emphasizing two-bedroom units (which under current regulations tend to have the effect of eliminating many families with children) to larger ones to allow more nuclear and extended households to find housing of choice?” I told you Ms. Pader was loquacious! That said, her paper illuminates much little-known history and purports some challenging, if not compelling, arguments. A reminder that more information, including additional FHCO articles on this topic, is available at www.FHCO.org/occupancy.htm. Of course, you can find information about familial status and race, color, national origin and other protected classes at the Council’s site as well. This article brought to you by the Fair Housing Council; a nonprofit serving the state of Oregon and SW Washington. All rights reserved © 2014. Write jbecker@FHCO.org to reprint articles or inquire about ongoing content for your own publication. To learn more… Learn more about fair housing and / or sign up for our
free, periodic newsletter at www. FHCO.org. Qs about this article? ‘Interested in articles for your company or trade association? Contact Jo Becker at jbecker@ FHCO.org or 800/424-3247 Ext. 150 Want to schedule an in-office fair housing training program or speaker for corporate or association functions? Visit www.FHCO.org/pdfs/ classlist.pdf The federal Fair Housing Act (FHA) of 1968 coupled with the Fair Housing Amendments Act (FHAA) of 1988 protected the following classes in a housing: race, color, national origin, religion, sex, familial status (children), and disability. Oregon law also protects marital status, source of income, sexual orientation, and domestic violence survivors. Washington law covers martial status, sexual orientation, and domestic violence survivors, and honorably discharged veterans / military status. Additional protected classes have been added in particular geographic areas; visit FHCO.org/mission.htm and read the section entitled “View Local Protected Classes” for more information. 2 At the Fair Housing Council
(FHCO), we have long recommended a policy of two individuals per bedroom plus one more individual for the unit. For example, a housing provider might limit a two bedroomhome to five individuals. This “two plus one” formula can help insulate the housing provider from fair housing violations based on occupancy in most situations. That being said, additional factors should always be considered in developing individual policies. 3 The Keating Memo is an internal document from a HUD staff, Mr. Keating, on the issue of occupancy policies that is oft referred to and much debated. You can view the Keating Memo and subsequent guidance from HUD at www.FHCO.org/occupancy.htm.
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Maintenance Men ...continued from page 7 Dear Maintenance Men: I am running into a hot water issue with my 100-gallon gas fired water heater. The tank is about 5 or 6 years old. The tenants are complaining of not getting enough hot water. I have checked the tank and the thermostat is working, the water is hot. Everything seems fine, so why are my residents not getting the hot water they need? Jim Dear Jim: The water heater may need a bit of maintenance. The first thing to do is clean out the sediment at the bottom of the tank. This will require a shutdown of the heater for a couple of hours and some hands and knees work. Most 100-gallon gas water heaters have a clean-out port at the front of the tank. The port is either round or oval. Be sure to get a new clean-out port gasket before starting this job. Once the water is drained and the port opened, remove all the sediment from the tank. You can expect to haul out one to two buckets of calcium buildup. (Sediment removal should be done once a year.) Removing the sediment will greatly improve the heating efficiency the water heater. Because of the age of the tank; while you have the port open, check the inlet dip tube and the anode rod inside the tank. If the anode rod is corroded, replace it by pulling it out from the top of the tank and inserting a new one. The anode rod is a sacrificial zinc rod Rental Housing Journal Arizona • May 2014
that helps keep the tank from corroding. The second item to check is the cold-water inlet dip tube. Cold water entering the heater is routed to the bottom of the tank by the dip tube. If the tube is corroded, broken or missing, the tank will develop hot and cold areas, leading to complaints about short-term hot water. The dip tube is located inside the cold-water inlet pipe. Replacements for both the anode rod and dip tube can be found at most plumbing supply houses.
QUESTIONS? QUESTIONS? QUESTIONS? We need more Maintenance Quetions!!! To see your maintenance question in the “Dear Maintenance Men:” column, please send submission to: Questions@BuffaloMaintenance. com Please “Like” us on Facebook.com/ BuffaloMaintnance Bio: Please call: Buffalo Maintenance, Inc for maintenance work or consultation. JLE Property Management, Inc for management service or consultation Frankie Alvarez at 714 956-8371 Jerry L’Ecuyer at 714 778-0480 CA contractor lic: #797645, EPA Real Estate lic. #: 01460075 Certified Renovation Company Websites: www.BuffaloMaintenance. com & www.ContactJLE.com www.Facebook.com/ BuffaloMaintenance
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The Simple Solution to Handling Packages
By Barry Hume, President Package Concierge
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any of today’s consumers enjoy the convenience of purchasing everything from groceries to gadgets online rather than traveling to brick-andmortar stores. While the convenience is a great benefit, online shopping is driving the need for creative solutions to manage package volume in apartment communities – and that has made digital package lockers one of the hottest new amenities in 2014. Why is the pressure growing for these kinds of solutions? The answer is simple: Package volume is rising rapidly. A typical 250-unit apartment community receives more than 20,000 packages each year. That’s more than 50 packages per day. That kind of volume requires concierge or leasing staff to spend more than 20 hours per week managing packages – time that could be much better spent catering to other resident services. And there is no end is sight. Online sales have grown exponentially over the last decade, and eMarketer predicts ecommerce in North America will grow from $482.6 billion in 2014 to $660.4 billion by 2017. With the growth in online sales,
package management is becoming an increasingly significant part of the property management business. Owners are recognizing that on-site professionals who manage packages are spending substantial amounts of time to individually log, store and send alerts for every package they accept. And that’s only the front end of the job. On the back end, they have to help residents when they come to pick up their packages throughout the day. For residents in apartment communities, the growth in ecommerce has made package management a critical and valuable amenity. In fact, a 2013 National Multifamily Housing Council (NMHC) resident survey ranked access to packages as the second most important amenity, right after fitness centers. The reasons for the high importance ranking are clear: consumers don’t want to miss deliveries because they’re not home; they want to know their packages are safe and secure; and they want to have access to their packages at convenient times. And while the greater volume of packages is a boon for delivery carriers, it also raises considerable operational challenges. If no one is available to accept a package delivery,
it means the delivery professional needs to return and try again. Efficiency is an important factor in carrier profitability, and re-delivery of packages takes away from route optimization. Plus, more driving means higher gas and emissions from delivery trucks at a time when carriers are trying to meet higher sustainability goals. Everyone involved in the process – residents, delivery carriers, owners and property managers – are looking for solutions to keep up with the rising popularity of online shopping. So, digital package lockers have become one of the hottest new amenities in 2014 for good reason. Owners offer them as a cutting edge amenity for automating package handling – an amenity that residents are often willing to pay for. Property managers advocate for them so that they can focus on their jobs, rather than on logging, storing and retrieving packages. Carriers love them because they only need to scan a barcode and deposit their packages into a locker; it doesn’t matter if no one is available to accept a delivery. And residents want them so they can rest easy that their packages will be safe and secure in a locker they can access at their convenience, 24/7. Ultimately, digital lockers are also a great business investment. Proper-
ty managers watch prospective residents walk away from apartments if the community has no package management solution. That loss can cost a property tens of thousands of dollars a year. Not only does a package management system keep potential residents from walking away, but it also provides the potential to reduce costs and increase revenue. Depending on how a property manages to cut costs or increase fees after installing a digital locker system, a return can be achieved in as little as 12 months. And if that’s true today, just think about the payback on this amenity as the number of package deliveries keeps growing in the years to come. Barry Hume is the co-founder and president of Package Concierge, developer of a digital locker solution for package management at apartment and student housing communities. Previously, Barry was the managing director of Primal Manufacturing and president and CEO of MATS, Inc. He holds a bachelor’s degree from Harvard University and a Master of Business Administration from The Tuck School at Dartmouth.
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