Arizona Rental Housing Journal November 2014 by Professional Publishing, Inc

Rental Housing Journal Arizona

October 2014 - Vol. 6 Issue 10

2. Industry Review: The Home Depot & ARPOLA Discount Program 3. 5 Strategies to Ensure Family Business Success 4. 4 Principles for Staying Cool Under Pressure – and Succeeding

8. Dear Maintenance Men: 9. Not Screening Tenants? You May Attract the Industry’s Cast-Off Renters 10. For All Those New Female Entrepreneurs, the 5 C’s for Building a Successful Business

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A Monthly Circulation To More Than 10,000 Apartment Owners, Property Managers, On-Site & Maintenance Personnel

Understanding Financing as Your Portfolio Increases

How to Lose an Eviction Case

andlords, from time to time, have to file with the appropriate court to evict their tenants. This procedure is called an Eviction Action, also known as a Special or Forcible Detainer Action. Evictions are filed for nonpayment of rent, violation of the lease, or failure to move after written Notice. While most of these cases are routine in nature, a landlord should be aware of following the proper procedures. Failure to do so can result in the case being dismissed and, if the tenant is represented by an attorney, paying the tenant’s attorney’s fees. Some of the more common ways to lose your case are the following. First, and foremost, is not complying with the Notice requirements of the Arizona Residential Landlord and Tenant Act. Before a landlord can even file an eviction action through the courts, the tenants must be given proper written Notice. Also, the Notice must be properly served or delivered to the tenant.

Service of a Notice There are only two ways to legally serve a tenant a Notice. One is personally handing the Notice to the tenant or an occupant of suitable age at the tenant’s residence. The other method is sending the Notice certified or registered mail, but you cannot start the running of your Notice period until either five days after mailing or after the tenants sign for the mailing, whichever occurs first. Posting of Notices on doors is not legal serve of Notices. Failure to legally serve the Notice will result in continued on page 3

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he Kasten Long Commercial Group (KLCG) has specialized in multifamily brokerage in metro Phoenix since 1998 and over the years has helped many investors significantly increase their net worth by starting with small properties and then moving into larger apartment communities. The progression from small to large is obvious – and it’s important to understand what loans might be available as you step-up in the size and value of your properties. We’ve asked two mortgage professionals for their insight. See if you can follow a few key points: who guarantee’s the loan, the cost for the loan, and the differences in pre-payment. Residential Financing (1 to 4 units) Almost everyone starts their continued on page 6

I follow the market closely. Spotting trends is important to our members, as any insigh very valuable to real estate investors, including rental property owners who manage th as well as property managers providing good counsel to their clients.

Trouble on the Horizon?

follow the market closely. Spotting trends is important to our members, as any insight to the future is very valuable to real estate investors, including rental property owners who manage their own property, as well as property managers providing good counsel to their clients. Every month through ARMLS®, I track the number of closed leases. ARMLS makes this easy with their RENT Check™ chart. Since January, we are seeing the number of closed leases down virtually every month from the same month last year. While several factors may play into this (discussed later), it is the first time in 14 years we have seen an adjustment to the prevailing trend. I recently

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Every month through ARMLS®, I track the number of closed leases. ARMLS makes this RENT Check™ chart. Since January, we are seeing the number of closed leases down vi month from the same month last year. While several factors may play into this (discus first time in 14 years we have seen an adjustment to the prevailing trend. I recently saw saw a chart from Tina Tamboer of the 9% drop. This more clearly reflects Tina Tamboer of the Cromford Report showing the data on an annual basis reflecting a Cromford Report showing the data the trend and I have included it This ore clearly the about trend aand below. I have included it below. on anm annual basisreflects reflecting

continued on page 5 I have written, in this publication, about the unmistakable strength of the rental marke every market cycle of the last decade, including the bubble and bust. So, does this tren first signs of a decrease in demand for rentals? The answer – we don’t know, yet. We Advertise in Rental Housing Journal Arizona rent rates, low days on market and reasonably normal seasonality. All of these would i Circulated to over 10,000 Apartment owners, On-site, and continuing strong demand. The trend, however, emphatically shows that we all need t Maintenance personnel monthly. closely and be prepared to adjust our approach to how we operate. If demand is lessen Call 503-221-1260 for more info. possible actions you might take? Well, a few different scenarios could play out. Here a •

A reduction in demand without a decrease in supply – This would normally affe downside and increase length of vacancies. Increasing your marketing or lockin

RENTAL HOUSING JOURNAL ARIZONA

Industry Review: The Home Depot & ARPOLA Discount Program

ur industry is changing, and technology is one of the drivers of this change. That is why I was interested to read the press release on the new partnership between ARPOLA and The Home Depot. The benefits of this partnership directly affect Rental Housing Journal readers. Specifically, The Home Depot now has a way to treat you – the rental property owner, property manager and service providers on rental property – differently based on how you do business. The program has three major

components: • Savings specific to three primary times work is being done on rental property – maintenance and repair, rent turns and property improvement/ updating. It includes exclusive pricing discounts, special product offers, volume pricing, coupons and even a time and cost saving delivery option. • Information and education on the right solution to your problem the first time – knowing what to buy and saving when

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you do. While this may be more important to less sophisticated owners and operators of rental property, the information may prove to help even the most advanced operator. • Advanced management tools to simplify and control your purchases. Will you save? There’s no doubt that you will. The everyday exclusive pricing discounts up to 5% are clearly posted right on ARPOLA’s website. The discount is based on product category. You will receive 5% on plumbing and hardware, 4% on appliances, electrical and lighting, and lesser amounts in other categories. The current Special Product Offer is 15% off on smoke detectors. This is significantly better than The Home Depot’s current retail promotion during Fire Prevention month. It is also important to you, as many local laws and building codes have been updated to require the new 10 year battery life. If you have a larger purchase of $200 or more, you receive a coupon for $20 off when you register for the program, potentially a 10% savings. How much you save depends on your needs and how

well you use the different aspects of the program. Not every aspect of the program is ideal, as you may have to change the way you purchase to reap some of the benefits. This is true for receiving the exclusive price discounts in the program. When you join ARPOLA and register for the Home Depot Program you are given access to ARPOLA’s exclusive purchasing portal with The Home Depot. You buy directly through this portal online then pick up your purchase in the store, or have it delivered. While not completely intuitive, the portal works very well and has several tools to assist in making the buying process easy. It is expected to save you a lot of time, as well. For some of you, this way of purchasing will be easier and more time efficient. For others, the change could prove to be cumbersome. As a society, we are ordering more and more of what we buy on-line. In the future, this may prove to be the primary purchasing process for your rental properties, too. It all seems headed that way. The informational and educational component is just getting started, so it is difficult to analyze the impact ... continued on page 5

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Rental Housing Journal Arizona • October 2014

RENTAL HOUSING JOURNAL ARIZONA

5 Strategies to Ensure Family Business Success Advisor Shares Tips for Avoiding Common Problems

on-family businesses can learn a lot from family businesses, says Henry Hutcheson, a certified Family Business Advisor and founder of Family Business USA consultancy. “Family businesses outperformed non-family businesses during the boom years leading up to the 2008 recession, and during the 2001 and 2008 recession years,” he says, citing a recent Harvard Business Review study. Hutcheson, author of the new book, “Dirty Little Secrets of Family Business,” (http://dirtylittlesecretsoffamilybusiness.com), says family businesses were less likely to lay off workers during the lean times, and more likely to maintain their emphasis on socially responsible programs. But that’s just the businesses that survived. “Many closed their doors,” he notes.

With 25 years of business management and family business consulting experience, Hutcheson says he’s seen the patterns that can lead to major problems. And they’re almost always preventable. “The factor that enables family businesses to rise to the top is trust: Family members can potentially trust one another far more than nonfamily members,” he says. “But trust can erode – when a family member can’t or won’t perform at the necessary level; when there’s a sense of entitlement; drug abuse; laziness. And that can have serious, businesskilling consequences. “If the business is professionalized, there will be a way to deal with those issues. But too often, safeguards are not in place.” Hutcheson offers five top success strategies for family businesses: Keep the lines of communication

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open. Schedule regular family meetings to discuss issues of concern and topics such as business transition, business performance, and responsibilities. Include all of the family members, no matter where in the hierarchy their jobs fall – exclusion creates animosity. Create a family manual that lays out the ground rules for how the meetings will take place to ensure everyone gets a chance to be heard and impediments to communication are left at the door. Assign clear roles and responsibilities. As a family member, it’s natural to feel that everything is “my” business. However, not everything is every family member’s responsibility. Job definitions prevent everyone from jumping in to tackle the same problem, and help ensure the business runs smoothly. Keep good financial data. The downfall of many small businesses and family businesses is not having solid data. Have a single point of contact to manage the finances. If you’re small enough, you can rely on a family member. Otherwise, you’ll need to bring in a qualified accountant. You may cringe at the cost for

this, but the difference between a good accountant and a bad one is the difference between knowing exactly where you are on the road and trying to drive with a mud-covered windshield. Avoid overpaying family members. Market-based compensation is fundamental and essential. Parents in family businesses tend to overpay the next generation, or pay everyone equally despite differing levels of responsibility. Both are bad practices. The longer unfair compensation practices continue, the messier it will be to clean up when it blows up. Don’t hire relatives if they’re unqualified. Competence is key. Family businesses are a conundrum: The family aspect generates unqualified love, while the business side cares about profits. Thus, family members will be hired to provide them with a job, even though they’re not qualified. The remedy is to get them trained, move them to a role that matches their skills, or have them leave. VALLEY, METRO, “More than 70 percentARIZONA of all businesses are family businesses – they account for a significant number of continued on page 5

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Eviction Case ...continued from front page Proper Wording of a Notice The language of the Notice must also be properly worded. For instance, a five-day Notice to pay or move must identify the tenant, address of property, amount of rent past due, late charges due under the lease, and if rent is not paid, legal action will be taken to evict them. Simply writing “your rent is late, please pay” or something similar would not be adequate to inform the tenant of the allegations against them. Also, if the tenant is given a Noncompliance Notice to correct behavior or violations (e.g. unauthorized pets or occupants, not maintaining the rental, etc.), the Notice must be very specific as to what the alleged violation is, when it occurred and any other information to inform the resident of the violation. Non-compliance by the Landlord Another possible way to lose your eviction case is to not do necessary or needed repairs to the premises when requested by the tenant. Landlords have a duty to make all necessary repairs and many courts may not evict a tenant if the landlord deliberately or negligently does not do these repairs. Tenants can claim retaliation Rental Housing Journal Arizona • October 2014

by the landlord for failure to make repairs and the remedy is a defense to the eviction, plus two month’s rent or actual damages, whichever is greater. Suing After Regaining Possession Other possible defenses are the tenant has moved and no longer occupies the rental. An eviction is only to regain possession of the rental property and if the tenant has moved and returned keys, there is no issue of who is entitled to possession for the court to determine. Be Professional, Be Prompt, Be Prepared An unwritten defense is not being prepared when you come to court, not having witnesses who have personal knowledge of the violation, being rude or argumentative to the judge. The golden rule applies – “be professional, be prompt, and be prepared”. Andrew M. Hull, Esq. HULL, HOLLIDAY & HOLLIDAY, PLC www.doctorevictor.com 602-230-0088

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4 Principles for Staying Cool Under Pressure – and Succeeding

Athlete & World-Renowned Surgeon Shares Tips for Becoming a ‘Super Performer’

e all ask ourselves the same desperate question from time to time: How am I going to make this work?! “No matter how well we’ve done laying the groundwork for everything to run smoothly – becoming educated, choosing the right spouse, treating others well -- we all face situations that challenge us,” says Dr. Robert J. Cerfolio, a world-renowned cardiothoracic surgeon known as “the Michael Jordan of lung surgery.” “If we can keep our cool and adhere to some basic principles, we can not only meet any challenge – we can perform with excellence.” A high-performance athlete in high school and college, Dr. Cerfolio parlayed his talents and focus into pursuing his medical career and creating a happy family with his cherished wife, Lorraine, and their three sons. But after battling breast cancer, Lorraine recently passed away. Cerfolio, author of “Super Performing at Work and at Home: The Athleticism of Surgery and Life,” (www.superperforming.com), shares the principles that helped him through that greatest of all challenges and lesser ones along the way.

“Apply these principles in work, sports and life in general, and you can become a super performer,” he says. Pressure equals opportunity. It’s when something matters that the pressure starts to build; this is where the rubber meets the road for sportsto-life analogies. “In sports as in life, remember your training; follow through just like you did during practice; visualize success; believe it will happen,” Dr. Cerfolio says. “With friends, for example, high-pressure moments can be those times when they need you. The best way to have great friends is to be a great friend.” Strive to hit .400 every year – keep your eye on the prize; write it down. “My high school gave out an award each year to the best student athlete in each grade,” he says. “I wrote down that I wanted to win the Klein Award in the ninth, 10th and 11th grades, and to win the most prestigious award at the senior graduation, the Deetjen Award. He accomplished most of those goals, and a key to those achievements was writing them down and placing the paper where, for four

years, he could see it every night. “By writing them down, I had made my goals clear and objective.” Lean toward a “we-centered” ego rather than a “me-centered” one. “When I traded in my baseball uniform for surgical scrubs, I noticed the importance of stripping the many layers of the ego I once had,” Dr. Cerfolio says. “This is really important: Your ego doesn’t need to be visible to everyone -- or even anyone but yourself.” Being a top performer requires ego – it helps fuel self-confidence and provides some of the motivation necessary to achieve. But it should not hinder the performance of your team: your coworkers, friends and family. Over time, by keeping your ego to yourself, it becomes easier to enact a team-oriented ego, rather than a “me-oriented” one. Time to quit? Rub some dirt on it. In life, work is unavoidable, so embrace it, go big, and appreciate the rewards. No matter how difficult the challenge you face or how much it may hurt to meet that challenge, push through and give it your all. “Yes, there’s a chance you won’t succeed, or won’t succeed to the degree you’d like. But you stand zero chance of success if you don’t

meet that challenge and give it everything you’ve got,” Dr. Cerfolio says. “You owe it to yourself and your team, whether that’s your ball team, your family team or your work team. When you sign up for any team, by definition you promise your time, effort and 100 percent commitment. You have to be at every game and every practice on time and ready to go.” Robert J. Cerfolio, MD, MBA, is the James H. Estes Family Endowed Chair of Lung Cancer Research and Full Professor Chief of Thoracic Surgery at the University of Alabama in Birmingham. He received his medical degree from the University of Rochester School of Medicine, surgical training at the Mayo Clinic and at Cornell-Sloan Kettering hospital, and has been in practice for more than 26 years. The author of “Super Performing at Work and at Home,” (www.superperforming. com), Cerfolio, who was a First Team Academic All-American baseball player in college, is a world-renowned chest surgeon and recognized as one of the busiest and best thoracic surgeons in the world.

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Troubles ...continued from front page I have written, in this publication, about the unmistakable strength of the rental market throughout every market cycle of the last decade, including the bubble and bust. So, does this trend indicate the first signs of a decrease in demand for rentals? The answer – we don’t know, yet. We are seeing rising rent rates, low days on market and reasonably normal seasonality. All of these would indicate continuing strong demand. The trend, however, emphatically shows that we all need to watch it very closely and be prepared to adjust our approach to how we operate. If demand is lessening, what are the possible actions you might take? Well, a few different scenarios could play out. Here are a couple: • Areductionindemandwithouta decrease in supply – This would normally affect price to the downside and increase length of vacancies. Increasing your marketing or locking current tenants into a longer lease term could protect you in this scenario. • A reduction in demand and a corresponding reduction in supply – Little to no price impact or significant change to days on market. What if the current trend isn’t a statement on a reduction in demand? This could easily be true. Maybe fewer properties are being leased through MLS as owners and property managers are marketing in other ways. Maybe demand is so strong operators are avoiding the Realtor

Home Depot & ARPOLA ...continued from page 2

fees. There are certainly reasons to suggest a different interpretation of the data. Back to my original premise. The reduction in closed leases through a consistent source of data over a significant period of time requires you to be on guard about a possible market change that could have significant impact on how you operate. It is better to recognize the trend, follow the data and be prepared to act than to not know about it or worse, not care. We will continue to watch the trend on closed leases and study other factors including rent rates and days on market that could confirm an actual trend. Right now it is too early. Alan Langston Executive Director Arizona Real Estate Investors Association – AZREIA American Rental Property Owners & Landlords Association - ARPOLA 480-990-7092 www.AZREIA.org www.ARPOLA.org AZREIA serves its 1700+ members through chapters in Phoenix, Tucson and Prescott providing extensive market information, education, networking events and support. ARPOLA serves members in all 50 states providing assistance with ownership and operational aspects of rental property.

this will have for our readers. In speaking with Alan Langston, ARPOLA’s president, the information provided will be extensive over time. The objective is to take common product needs for rental property and provide information on that product from the perspective of a rental property owner or operator. The outcome will be an informed purchasing decision based on criteria important to you and the class of rental property needing the work. This concept is different and addresses the basic need of buying the right solution for the issue you have. Example: What size motor does the garbage disposal need for your property? An informed decision may significantly lower the initial cost of acquisition and long term cost. Also, there is an informative article in their blog on smoke detectors. A timely addition considering the special product offer pricing available through the program. What the catch? There is only one, and it isn’t much of a catch. You have to be a member of ARPOLA. With ARPOLA’s dues being only $35 a year, it isn’t much of an inhibitor. The dues for owners that manage their own properties, property managers and services provider are all the same - $35. During the launch of

their partnership with The Home Depot you receive a $10 welcome gift card and a $20 Off Purchase of $200 coupon making the net cost to join ARPOLA only $5 if you can use the coupon. ARPOLA has an aggressive vision to aggregate a large percentage of rental property owners, property managers, rental property owners associations and landlord associations of single family and small multi-family rentals across the country, says Langston. They believe providing information to their members to help them make informed decisions specific to their needs will increase members’ effectiveness and directly improve their profit. Negotiating special pricing for best of class services and products is a direct offshoot of that vision and saves their members directly in cost and indirectly in reducing risk and exposure. Time will tell on how well they deliver, but their latest partnership with The Home Depot confirms they are serious about executing on their vision. By Luke Miller, Contributing Editor, Rental Housing Journal

5 Stategies ...continued from page 3 new jobs and a large portion of the GDP,” Hutcheson says. “But that’s not the only reason they’re so important. “They’re motivated by profits, but also by other important considerations: pride in the family name, building something for future generations, philanthropy. For those reasons, they contribute in tremendous ways to social stability. They make our communities better.” Henry Hutcheson is president of Family Business USA and specializes in helping family and privately held businesses successfully manage transition, maintain harmony, and improve operations. His newest

book is “Dirty Little Secrets of Family Business: How to Successfully Navigate Family Business Conflict and Transition,” (http://dirtylittlesecretsoffamilybusiness.com); he’s also quoted in “Kids, Wealth, and Consequences” and “Sink or Swim: How Lessons from the Titanic Can Save Your Family Business.” Hutcheson grew up working for his family’s business, Olan Mills Portrait Studios. He studied psychology and has an MBA from Columbia Business School, and is a popular speaker at professional, university and corporate-sponsored events.

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Understanding Financing ...continued from front page apartment investment career by purchasing a rental home or a small apartment. Investor loans for a house or a 2, 3 or 4-unit apartments are the same – it’s all residential financing. Typically terms would be a fully amortized loan over 30 years, 25% cash down with no prepayment penalty. Lenders look mostly at the buyer’s credit and pay little attention to the properties cash flow, however, the property cash flow can aid with the qualifying. The ancillary costs are minimal and you can use an inexpensive residential appraisal. The loan is secured by both the property and the borrower’s guaranty.

In addition to the favorable financing, the merit to the smaller properties is that they provide great hands-on training without high-dollar exposure. Learning how to deal with tenants, landlord responsibilities, accounting and how to work with your CPA and taxes is all helpful in developing a strong base of knowledge. The negatives to owning a number of small apartments include: properties are spread-out and that they typically require hands-on management and maintenance. Obtaining many residential loans can be a problem. Once an investor decides they like

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apartments, they want more. Now the economy of scale becomes more important. Four 4-plexes are fine but 16 units in one complex would mean that the maintenance personnel would only need to work in one location. The travel times are reduced and they might have enough room for a maintenance area. A property manager could be hired so the investor does not need to be on site daily. A bookkeeper would be hired to do the records. The next step is to buy a larger number of units at one time. The additional income pays for the extra services. So what changes? The financing. Small apartment financing Small apartment financing is much more dependent on the financial strength of the property and less on the borrower. The property must meet several financial measures including cash flow and debt service ratio. The Net Operating Income (NOI) must exceed the Debt service by 25% or more. That is to say that the debt service ratio must be typically 1.25 or greater. The loan today will not exceed 75% of the appraised value. That value is set by the NOI of the property and to comparable sales. The property is the main source of repayment and so must meet lender standards. The borrower must be able to pay their own debts and not be a drag on the property as

well as having a good credit score. When buying a larger apartment (five or more units) the costs for acquisition are increased. The lender will want a thorough real estate appraisal, not a residential one. That cost can be several thousand dollars. Other third party reports such as an engineering report and environmental report may be required. Insurance costs may be higher also. The benefit is that the sales price of the apartment is adjusted to reflect these costs and to make it a viable deal financially. That analysis means you need to understand the numbers. Are the costs presented normal for the area? Are they reasonable based on the age and condition of the property? Are the rents about the same as the area or are they higher or lower? Why? Are insurance claims outstanding? For what? Why? A lender will evaluate the deal in light of their own guidelines for expenses and norms. Knowing what they will want to see is very important. A good commercial broker can find the best lender with the program that fits your needs. This includes not only the rate, but also the pre-payment penalties, partial releases, and record keeping. What is a pre-payment penalty? ... continued on page 7

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Rental Housing Journal Arizona • October 2014

Understanding Financing ...continued from front page Lenders want to keep their money in an investment for a certain period of time. They do not necessarily want the money back as soon as possible. They charge a pre-payment penalty if you want to pay off early. Prepayment penalties come in several varieties. Most are a percentage of the loan amount that decline every 12 month period (5, 4, 3, 2, 1). Some are soft meaning that if you sell the property, you can waive the prepayment penalty. If you decide to sell the property you need to check to see if that will cause a pre-payment penalty. It is generally easier to get into a loan than out of it. You should review your plans with your broker so they can find the best fit for your plans. Not all lenders charge a pre-payment penalty, but they will have slightly higher rates. Some will allow you to sell part of the property and pay off that part of the loan so they will release that property from their loan. They will charge a higher rate for that. For example, if you bought 16 4-plexes and decided to sell them off individually you might not be able to do that. Be sure you go over your plan before you sign for a loan and understand the terms well. Recourse or non Recourse that is the question! Most small apartment loans are recourse to the borrower. That means if the loan terms are not met the

lender can require the borrower to pay the loan themselves. Non recourse loans are those that do not require the borrower to be financially responsible for the loan except for certain provisions such as fraud. These loans require extensive third party reports and front end expenses. They may require detailed records. They will be locked out for a period meaning you can not repay them for any reason during that time. The pre-payment penalties will be tied to the face rate of the note versus the corresponding Treasury bill or bond for the time left on the loan (Yield Maintenance). This difference will be charged for every month the loan is paid early. Some may also require a third party to administer the pre-payments. This is called defeasance. The interest rates may be quite good for these loans; however the borrower must make certain they are acceptable to him or her and meet their goals. These loans are often sold on Wall Street or to government agencies. As you grow your investment portfolio you will become very familiar with financing options. Until then, seek the advice of a good mortgage professional. Your plan needs to include many considerations. The exit strategy is a major part of your acquisition. After five years you will need to refurbish the units, take out some of your

RENTAL HOUSING JOURNAL ARIZONA equity or take a much needed vacation. This requires a decision. Will you sell the investment and move up to increase your income? Will you refinance and enhance this investment? While you can not know what the future will bring, you can be prepared to make those changes with the least economic impact on your financial condition. Talk through your expectations with your mortgage professional and make the best possible decision with the data available. Each borrower’s situation is different. Review your plans with your CPA and consult a professional mortgage broker to get the best advice on how to maximize your gain with the least amount of effort. Many people have made large amounts of money dealing in the apartment market. This did not happen accidentally. Choose the best for your team and let’s make things happen!

The Kasten Long Commercial Group 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 provides weekly updates (by e-mail) on apartment sales and publishes an apartment market update on a quarterly basis – past issues are available on the company’s web site (www. KLCommercialGroup.com).

Contacts: Robert Cloud, Pinnacle Capital Mortgage Corp., 602 282 3880, rcloud@pcmmtg.com Greg Burckle, USA Mortgage Corp., 602 282-3804, greg@yourmortgagemen. com Jim Kasten, Kasten Long Commercial Group, 602 677 0655, Jim@KLCommercialGroup.com

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602-714-1322 ROC263730-236515-134207

Rental Housing Journal Arizona • October 2014

P.O. Box 44535 Phoenix, AZ 85064

ROC264058 7

RENTAL HOUSING JOURNAL ARIZONA

Dear Maintenance Men: By Jerry L'Ecuyer & Frank Alvarez

Dear Maintenance Men, Now that we have changed our clocks for Daylight Saving, I’m a bit concerned about the lights at my apartment building. I have various fixtures, sensors and timers, not one of which turns on the lights at the same time. Some don’t turn off or on at all. Any suggestions? Burt Dear Burt: There are two ways to effectively control exterior lighting: 1. A timer clock. 2. A photocell for detecting light and dark Both time clocks and photocells have been around forever. We prefer to activate landscape lighting with a photocell as it is virtually maintenance free. A photocell will ensure the property has light only when it is needed and turn off automatically with the approach of daylight. Be sure the photocell located where it can “see” ambient light and not near an artificial light source. A time clock needs constant attention in order to keep up with the changing seasons and adjustments

for longer or shorter nights. There is nothing more frustrating than seeing the property all lit up at 5pm and it only gets dark at 7pm or even worse; the lights turn on at 7pm and it has been dark since 5pm. Remember: the safety of your residents is at its greatest risk when it is dark and the lights are out. Dear Maintenance Men: I’m getting ready to have one of my rental units painted and the painter typically sprays the walls and ceiling as opposed to rolling on the paint. I’m a bit worried about my smoke and CO Detectors. I’m I being overly cautious? George Dear George: Overly cautious? No! We think you are right to worry. The paint and construction dust can contaminate the smoke/CO detectors and lessen their sensitivity. It is important to either cover the detectors in a protective plastic bag or remove them during the painting and construction work. While you are there, check the batteries and dates of installation. If you remove the detectors during painting, don’t forget to reinstall them before the next resident moves in.

Dear Maintenance Men: Garbage deposals are getting me down! I am forever getting calls to unblock them or replace rusted ones. They seem to be a source of constant problems. Are there any alternatives? John Dear John: The first issue may be education. When a new resident moves into a unit; explain how to use the garbage disposal, what should and should not be put through the unit. Show them what to do if the disposal jams and where and how to use the unjam key. (The un-jam key should be attached to the side of the disposer.) The same information should be distributed to all existing residents as well. To answer your question about an alternative to a garbage disposal: We recently met with a small Southern California company that makes an item to eliminate the garbage disposal unit altogether. The product is called SemperScreen and it looks just like a standard sink drain strainer. The difference is in the strainer itself. The strainer is a fine stainless steel mesh permanently attached which will only allow water to drain and

keep debris from going down the drain and into the pipes. In other words, the new drain strainer is used to replace the garbage disposal unit. Because it is permanently installed, the residents cannot remove it. The garbage disposer is removed the SemperScreen replaces it. This product can be found at: www.semperscreen.com . Please call: Buffalo Maintenance, Inc for maintenance work or consultation. JLE Property Management, Inc for management service or consultation Frankie Alvarez at 714 9568371 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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Rental Housing Journal Arizona • October 2014 8/14/14 2:05 PM

RENTAL HOUSING JOURNAL ARIZONA

Not Screening Tenants? You May Attract the Industry’s Cast-Off Renters

ost do-it-yourself (DIY) landlords, individuals who manage their rental properties without assistance from property management companies, don’t properly screen prospective tenants. That’s according to a survey on landlord habits conducted on behalf of Real Property Management by an independent Boston-based research firm, Liminality Inc. The survey, which included a national probability sample of more than 150 DIY landlords nationwide, revealed: • Only 51% of DIY landlords conduct criminal background checks • 23% of DIY landlords sometimes or never conduct credit checks • Only 51% of DIY landlords contact past landlords for references This oversight can create many problems and headaches for the landlord down the road, such as late rent, damage to the property and evictions. Perhaps even more troubling is that DIY landlords with lenient or non-existent screening pol-

Rental Housing Journal Arizona • October 2014

icies actually attract the industry’s cast-off renters. That’s because diligent landlords and reputable property management companies essentially weed out undesirable tenants with their screening policies. When criminals learn their backgrounds will be checked, they turn to a property owner who is not so meticulous. Why would DIY landlords put their property investment in potential harm’s way by not thoroughly conducting background checks? A common problem many DIY landlords face is not having the essential resources or knowledge for properly managing their rental property. Understanding the many tenantlandlord laws, Fair Housing Regulations and guidelines, knowing what questions to ask and not to ask a potential tenant and where to go to perform criminal background and credit checks can be overwhelming for any landlord. However, when landlords who don’t screen tenants combine the inherent risks in renting with the thought that their applicant pool may have a higher percentage of

criminals than the industry, it becomes clear that incorporating standard background checks is a must. If landlords cannot implement thorough screening procedures themselves, then it behooves them to hire a property management firm. These professional companies have policies in place to conduct rigorous background screenings on behalf of their property-owning customers, which includes credit, employment, rental history, criminal and sexual offender checks. This means landlords can rest easy and collect their return on investment without worry-

ing about what baggage their tenants may bring into their properties.

Don Lawby is the president of Real Property Management, the leading rental property management franchise. He has more than 40 years’ experience in the real estate industry and he holds the honor of being named to the Swanepoel Power 200: The Most Powerful People in Residential Real Estate.

www. renta l h o u s i n g j o u rn a l .co m

RENTAL HOUSING JOURNAL ARIZONA

For All Those New Female Entrepreneurs, the 5 C’s for Building a Successful Business By Marsha Friedman

mall businesses have made a huge recovery since the economic crash in 2008 and that’s good news for all of us. Since we account for 63 percent of new jobs, our success puts people back to work. That, in turn, helps us even more – people with paychecks buy stuff! And here’s more good news: Women are launching more businesses than ever – 1,288 a day, according to a recent analysis by American Express. That’s up from 602 in 2011-12. Since 1997, womenowned businesses rose by 68 percent. As a female entrepreneur who will soon celebrate my company’s 25th anniversary, I’m well aware of the challenges these brave new CEOs face. I’m not exaggerating when I use the word “brave.” My experiences have taught me that courage is essential to launching and growing a successful business – particularly if you’re a woman. Why? Because we tend to be more risk adverse than men. We worry more about financial

security and losing it all. Making the right decisions requires overcoming those fears. Courage is one of what I call my 5 C’s for building a business. They’re the guiding principles I’ve learned through the ups and downs and all the mistakes. If I rely on the C’s as a sort of compass, I find I can always guide us back to smoother waters. What are the C’s?

has the knowledge and tools they need to be successful. None of us gets far at all if we don’t care about our customers. Give them the best exchange possible for their money; define expectations so that they understand the end product you are delivering and for which they are paying. Be willing to listen to their concerns, take responsibility for mistakes, and correct them.

Caring It starts with caring enough about yourself and your dreams to stay committed to achieving your goals. (Giving up is never a good option!) You have to care enough about yourself to firmly believe that you deserve success and the good things that come with it. Just as important is caring about your staff and creating a positive work environment for them. Protect their sanity from the clients who want to chew them up and from new hires who don’t fit in and hurt morale. Be supportive when stressful situations arise in their lives outside of work. And ensure everyone

Courage Thirty years ago, I probably would never have said it takes courage to lead a small business, but without it, I assure you, you’ll fail. There are dragons and quicksand and dark woods all around. You’ll find them in the day-to-day problems, the obstacles you didn’t see lying in wait, the risks you must take, and the stresses involved with honoring your obligations to everyone working with and for you. Trust me, your courage will grow every time you push your fear behind you and deal with what frightens you. Which will also help you build confidence.

Confidence Think of the many challenges

you’ve faced in your life, and the many times you’ve overcome them. Bring that confidence to your business. Believing that you can reach for and achieve your short- and longterm goals is essential to getting you there. Competence Competence comes from knowledge and experience. Hone it by staying up on the trends and disruptions in your industry. One of the most important roles a CEO plays is as the visionary for his or her company. That means you can’t, and shouldn’t, take on jobs within your company for which you’re not qualified. You’ll make yourself miserable and your business will suffer. Hire an accountant to handle the financials. Get marketing help if that’s not your thing. As for employees, take the time to hire competent people who you’ll trust in their jobs – and then trust them! Commitment Stay dedicated to your goals no matter how difficult that becomes. That may mean taking painful meacontinued on page 11

3334 W. McDowell Rd. Ste. 20 Phoenix, AZ 85009 Office: (602)218-8813 Fax: (602)218-8611 Email: fandihvacaz@earthlink.net

Rental Housing Journal Arizona • October 2014

RENTAL HOUSING JOURNAL ARIZONA

Entrepreneurs

...continued from front page 10

sures, as it did for me after the 9/11 terrorist attacks put the brakes on the economy. There came a point for my business when all hope looked lost. I had to make drastic cuts, including letting go beloved employees. For more than a year, I ramped up marketing efforts, diversified our services, and took other steps to get the business out of the red. In 2005, I succeeded – and it has been upward and onward ever since.

Building my business has been one of the most rewarding experiences in my life. I get a lot of pleasure from helping our clients meet their goals. I enjoy coming to work and spending time with the team I’m blessed to call part of the family. We laugh loudly and often! If you’ve recently launched a new business, know that you’ll encounter challenges. Don’t panic! Remember the 5 C’s and forge ahead with car-

ing, courage, confidence, competence and commitment. Marsha Friedman is a 24-year veteran of the public relations industry. She is the CEO of EMSI Public Relations (www.emsincorporated.com), a national firm that provides PR strategy and publicity services to businesses, professional firms, entertainers and authors. Marsha is the author of Celebritize Yourself and she can also be heard weekly on her

Blog Talk Radio Show, EMSI’s PR Insider every Thursday at 3:00 PM EST. Follow her on Twitter: @marshafriedman.

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Rental Housing Journal Arizona • October 2014

RENTAL HOUSING JOURNAL ARIZONA

Rental Housing Journal Arizona • October 2014