Rental Housing Journal Arizona
April 2015 - Vol. 7 Issue 4
2. Student Loan Debt Affects Real Estate Investments in a Big Way 3. Taking A Pulse Check On Your Attitude 4. Tenant Screening – Between a Rock and a Hard Place 5. Serving a Noncompliance Notice
6. Behind The Leasing Desk with Heather Blume 8. Can You Afford to Lose $230,400 In Leasing Revenue? – The Coach 10. Secret Shopper Multifamily Apartment Marketing: Are You Missing Out On New Leases?
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Federal Legislation & Budget Proposal Threaten 1031 Exchanges
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RC 1031 allows owners of investment property to defer capital gains taxes, on the sale of property, so long as another investment property is purchased, per the rules of IRC 1031. Tax deferred exchanges have long been utilized by apartment complex owners to to defer taxes and build their investment portfolios. Many owners of multifamily portfolios initially bought their first apartment complexes, by exchanging single family rental house(s) for multifamily properties, utilizing 1031 exchanges. Currently there are three federal government proposals to restrict or eliminate IRC 1031 Exchanges: • The President's proposed 2016 Budget limits the deferral of gain for IRC 1031 exchangers to $1,000,000 per taxpayer per year. • A draft proposal from US House Ways & Means Committee Chairman Paul Ryan, expected to be released by August 2015, proposes eliminating IRC 1031 exchanges entirely.
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• Senate Finance Committee Chairman Orrin Hatch has stated that this summer is the time to do a tax reform bill. Discussions have included total elimination ...continued on page 5
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Metro Phoenix Apartment Market Update
he 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). Vacancy Decline Led by Smaller-Size Apts Vacancy rates for the 4th quarter for stabilized 50+ unit multifamily properties decreased from 6.6% to 6.1%. This is the 14th decrease in the past 15 quarters. We have been predicting that the lack of construction for the B and C product – combined continued on page 7
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Sunset of the Protecting Tenants at Foreclosure Act
n May 2009, the Protecting Tenants at Foreclosure Act of 2009 (the “PTFA”) was enacted. The Act provided various protections to those tenants who were currently renting a property at the time of foreclosure and provided limitations on the ability of the new owner to change terms of the lease agreement and/or terminate the lease agreement. Pursuant to the PTFA, an immedi-
ate successor in interest “of any foreclosure on a federally-related mortgage loan or on any dwelling or residential real property” is required to (i) honor the remainder of the term under a “bona fide lease” entered into prior to the notice of foreclosure and (ii) give at least 90 days notice to vacate to a “bona fide tenant” who does not have a lease or has a lease terminable at will. In almost all cases where the PTFA
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was asserted as a defense, the legal issue invariably became whether or not the lease was a “bona fide” lease. The PTFA defined a “bona fide” lease or tenant is one in which (a) the borrower or his/her child, spouse or parent is not the tenant, (b) the lease or tenancy is the result of an armslength transaction; and (c) the rent is “not substantially less than fair market rent” or is reduced or subsidized continued on page 6
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RENTAL HOUSING JOURNAL ARIZONA
Student Loan Debt Affects Real Estate Investments in a Big Way By Clifford A. Hockley, President Bluestone & Hockley Real Estate Services
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ally did everything right. She was accepted into her first choice college and received a first rate education to pursue her dream career. She filled out the student loan applications like everyone told her to; after all, she couldn’t afford the $90,000 degree without it. When she graduated, she started out entry level in her chosen field, making near minimum wage which just covered her rent (with three roommates) and living expenses. She deferred payment on her student loans for 2 years but after watching the interest inflate her debt up to $170,000 she had to move back in with her parents to concentrate on paying it off before it got any worse. Then her boyfriend proposed to her. He talked about wanting to buy a house and have a family, the whole American dream, but though he knew she lived with her parents in order to pay off her student loans, he didn’t know the extent of her situation. She knew her debt would make buying a house impossible, so she called her loan provider to see if she could get her interest reduced. They said no, she already had .25 for direct
stances make it unlikely that the borrower will ever be able to repay. Asking nicely won’t make it go away.
deposit taken. Her interest was 8%. She could barely make the minimum required monthly payment to take care of the interest let alone get down to the principal. Worst of all, when she told her fiancé this, he withdrew his offer; he didn’t want her bad debt ruining his good credit. According the National Association of Consumer Bankruptcy Attorneys, seven out of ten college
seniors who graduated in 2012 had student loan debt, with an average of $29,400 per borrower. Currently 29 million of 86 million Americans aged 20 – 39 have some level of student debt, which translates into 16.8 million households. Because federal law treats student debt as non-dischargeable in bankruptcy proceedings, borrowers can be burdened with this debt for a lifetime even if circum-
How does this affect real estate investors? In a 2014 blog post, Rick Palcios Jr. and Ali Wolf of John Burns Real Estate Consulting, LLC, estimated that 414,000 real estate transactions would be lost in 2014 due to student debt. At a typical sales price of $200,000 for an entry level home, they calculated that out to $83 billion in lost sales volume or 8% of the total marketplace demand. (8% of 20 -29 year olds usually buy a home each year, which would be equal to 1.35 million transactions a year.) They calculated that 5.9 million households under the age of 40 pay over $250 a month in student loans as compared to 2.2 million in 2005. As a percentage, that is from 22% in 2005 to 35% in 2014. In that same eleven year timeframe, student debt increased from 241 billion to between $1.1 and $1.2 trillion dollars, which is even greater than current credit card debt. ...continued on page 9
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RENTAL HOUSING JOURNAL ARIZONA
Taking A Pulse Check On Your Attitude A Change In Thinking Can Lead To A Change In Behavior And Results, Says Sought-After Speaker
H
ard times that sap your energy and leave you frustrated are an inevitable part of
life. Maybe you lost a job. Maybe your finances took a turn for the worse. Maybe your personal life is in disarray or a health problem emerged forcing a lifestyle change. Such setbacks can leave people feeling afraid, uncertain, angry or unsatisfied, says Darlene Hunter, a renowned speaker and author of “Win-Ability, Navigating through Life’s Challenges with a Winning Attitude,” (www.darlenehunter. com). Overcoming those emotions, she says, comes down to a person’s mindset and perspective. “Your attitude is a critical factor that can either hold you back or help you move forward,” Hunter says. “Everyone needs to take the time to do a pulse check on where they are in their thinking. Is it positive or negative?” A positive attitude comes easily when life is rosy. The real trick is persevering when things go awry so you can continue to strive toward your goals. “The important thing to remem-
ber is that we cannot give up just because things do not work out the way we want,” Hunter says. “We must be persistent and press our way through to the end.” Hunter offers five tips that can help change your thinking, which in turn will change your behavior and, ultimately, change your results. • Be a planner. To live your dream, you need to know what you want and have a plan for getting there. “Planning your day, week and month are critical ingredients to living your dream and purpose,” Hunter says. The “how” and “why” elements are important factors in planning, as they guide you in the direction you want to go. • Be goal oriented. Once you set goals, the next step is to work on completing them. That’s why it’s important to set goals you can accomplish. Each time you can check a goal off your list, you are one step closer to what you ultimately want to achieve. “The sense of accomplishment that comes from reaching even the smallest goals will help you keep moving and striving to get your desired end,” Hunter says.
• Be driven for results. When you are driven, Hunter says, you have a compulsive and urgent desire to accomplish what you are seeking, whether it’s a bonus, a promotion, additional knowledge in a particular area or some other goal. The important factor is to always know what you are seeking. Results-driven people focus on meeting objectives and delivering on the goals they set. • Have a winning attitude. You must be determined, dedicated and devoted to succeed. “You should never give up on your goals and dreams simply because something goes wrong or you are not getting where you hoped to be fast enough,” Hunter says. • Be focused. When you are focused, you have a clear perception and understanding of what you want to accomplish and where you need to go to get there. “Think about long-distance runners who will run a 26-mile marathon,” Hunter says. “They find their pace and then they stay with it. They may get weary and tired, but they find their zone and stay focused and concentrate on what
is needed to get to the end.” “Plenty of stories can be told about people who failed in the beginning, but made it to the top of their profession because they did not give up after being told they weren’t good enough,” Hunter says. “The ability to keep trying and pushing no matter how many failures or obstacles you hit is the power of perseverance and is what ‘WinAbility’ is all about.” About Darlene Hunter Darlene Hunter, (www.darlenehunter.com), is president of Darlene Hunter & Associates, LLC, a motivational / inspirational speaker, author, life and business coach, and awardwinning radio talk show host. Her new book, “Win-Ability, Navigating through Life’s Challenges with a Winning Attitude,” is her fourth on the theme of perseverance. She is the host of “The Darlene Hunter Show”, winner of the Fishbowl Radio Network 2013 Distance Show Of The Year Award. Hunter has been a top performer in management for more than 30 years.
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Tenant Screening – Between a Rock and a Hard Place
Landlords are truly caught between a rock and a hard place when it comes to tenant screening. By Paul Prudente, Moco Inc.| MyScreeningReport. com® The Rock A failure to adequately screen prospective residents can have a devastating impact on the bottom line – NOI & equity. Further, there is a well-established duty to exercise care in screening prospective residents. A failure to do so has resulted in disaster – followed by substantial civil penalties. The Hard Place
There has never been a more hostile legal and regulatory environment when it comes to tenant screening. First, there is a large and evolving body of law regulating consumer reporting (including tenant screening). There is, of course, the federal Fair Credit Reporting Act (FCRA) as amended by the FACT Act. States often have their own consumer reporting statutes – which may or may not align neatly with the FCRA. Bottom line – these laws impose specific requirements on landlords (End-users as defined in the FCRA)
as well as consumer reporting (tenant screening) agencies. A failure to comply can result in lawsuits or regulatory action! Then there is Title VIII of the Civil Rights Act (as amended) which prohibits discrimination in housing based on race, religion, national origin, gender, disability and family status. State law often expands on the list of protected groups. Landlords know better than to intentionally violate fair housing law. It is the emergence of the “disparate impact” form of discrimination that poses the greatest risk these days. The disparate impact legal theory holds that a so-called “facially neutral” business practice that has a disproportionate impact on protected individuals may form the basis of a Title VIII (fair housing) claim. A good example might be the practice of denying tenancy based on records of arrest alone (versus convictions). Another is to deny tenancy for any and all criminal convictions – regardless of the nature of the offense or when it occurred. It is well established that such practices have a disparate impact based on race &
national origin. The Good News The good news is that it is possible to thoroughly vet prospective residents and to mitigate the risk of legal or regulatory action. Here’s how: 1. Limit consideration of criminal records to convictions (versus records of arrests). Develop a list of serious offenses – that are truly pertinent to the tenancy. Consider only those where the date of final disposition antedates the report less than seven years. 2. Develop and consistently follow formal (and objective) rental criteria. A critical step in developing criteria is deciding what is acceptable in terms of credit, rental history, criminal and eviction history, length of employment and income – within the context of what is “reportable”. 3. Use a well-designed (and legally compliant) application to rent. The application does two things for you. It collects the informa...continued from 9
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RENTAL HOUSING JOURNAL ARIZONA • April 2015
RENTAL HOUSING JOURNAL ARIZONA
Serving a Noncompliance Notice By Andrew M. Hull
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oncompliance notification is one of the provisions of the Arizona Residential Landlord and Tenant Act. Landlords should be familiar with this notice since it pertains to residents who violate the lease or community policies. This article will address how to properly use the notice and in what situations it can or should be applied. Types of Violations The requirements of A.R.S. § 33-1341 involve resident violations that can lead to a noncompliance notice. Some common examples include: • Unsanitary apartment conditions. • Improper disposal of garbage.
• Deliberate or negligent destruction or removal of any part of the unit. • Unauthorized pets or occupants. Depending on the violations, the landlord could cite A.R.S. § 33-1368 as basis for the non-compliance notice. This states a landlord may deliver a notice if the resident lists false or misleading information on the application. Examples include: number of occupants in the unit; pets; income: Social Security number; prior evictions; and criminal records. Proper drafting of the notice is the first step to take. The statue says the written document must specify the underlying facts that constitute the breach. In other words, the landlord should give the resident sufficient information so he or she knows the accusations and what the person needs to correct. A court may find your notice defective if it does not
specifically state the charges against the resident. Consider this example: You deliver a resident a noncompliance notice for excessive noise coming from his unit. Do no simply say, “Loud noise was coming from your apartment.” The correct wording would be similar to, “On April 15, 2015 at 8:00 p.m., your stereo was being played at such a high level that is disturbed your neighbors.” Five-Day and Ten-Day Notices The last part of the notice must inform the resident he or she has either five or ten days to correct the violation or behavior. If the individual does not comply, his or her right to occupy the apartment will end. The situation should dictate whether the notice is a five-day health and safety or a ten day general violation. An example of a fiveday violation is an unsanitary unit
that causes a bug infestation problem. A ten-day violation could be a loud party held over a weekend. The final step is to properly serve the notice either in person or by certified or registered mail. Once you serve the notice, you should monitor the resident to see if he or she is complying. If the violation continues, you can proceed to court at the end of the five or ten day period. Keep in mind that once you serve the notice, the courts may consider rent as acceptance of partial payment and void your notice. You may accept rent once the resident complies or you elect not to proceed with an eviction. Andrew M. Hull Hull, Holliday & Holliday, PLC www.doctorevictor.com 602.230.0088
• Unreasonable use of electrical, plumbing, sanitary, heating, ventilating and air conditioning facilities.
1031 Changes
...continued from front page of tax deferred exchanges and severely limiting them. It is estimated that at least 45% of the investment real estate transactions in the US are impacted by IRC 1031 exchanges. Repealing or restricting tax deferred exchanges would cause a significant slowdown in investment property sales and negatively impact sale prices. You may send a letter to your legislators, voicing your support for keeping IRC 1031 in its entirety, by going to www.ipx1031.com/action . Jade Bossert is a licensed Real Estate Broker with Tierra Antigua Realty in Tucson. She specializes in the sale of apartment complexes and can be reached at 520-797-6900 or tucsonrealestate@mindspring.com.
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D
ear Heather,
I've been in my current job for about 6 years now and can't seem to move any further up in my company than the role of a property manager. I think I'm good at my work and my employees seem to like me, but when the opportunity to move up happens, my regional always seems to find someone "better qualified." I don't want to have to leave my current company, but I feel like I've earned a promotion and I'm getting a little burned out where I am now. What should I do?
Behind the Leasing Desk with Heather Blume -Looking for a Ladder Dear Looking for a Ladder, I think that it shows a lot of dedication to your company that you have stayed with them for 6 years. In the world of property management, that's a couple of lifetimes for some of us. It can be a very difficult experience for many of us to be passed over for promotions we think we have earned, so I want you to know what you're going through is incredibly common. My first real question to you is, have you talked
Sunset... Foreclosures Act due to federal, state or local subsidy. In the case of a bona fide lease, the successor in interest may terminate the lease, subject to the 90-day notice requirement, only upon the sale of the residence to a purchaser who intends to occupy it as a primary residence (presumably, this applies if the purchaser at the foreclosure sale meets this criteria as well). The PTFA, which took effect on May 20, 2009, was originally scheduled to expire on December 31, 2012.
directly to your regional manager about this yet? So many times, the real problem is that we don't know what other people are thinking or wanting, and so we can't meet their needs. Everything past this point in my reply is based on speculation and experience, so take it for what it's worth. As a former hiring manager, one of the things I can tell you is that why you're being passed over could be due to a number of reasons. Perhaps, as you've been with your company for a while, paying you to
do a higher end job would be more expensive to the payroll right now, and for many companies, they just cannot afford to pay the internal promotion 5 or 6 thousand more a year than they would have to pay an external new hire. Another reason you may not be getting moved up is that there's no one who can fill your shoes. If you are very good at your job, then it's hard for a regional manager to take the risk of someone new behind your desk who might not be able to do the ...continued on page 9
the limitations set forth in the PTFA. While the Arizona Residential Landlord and Tenant Act still applies to any tenancy established in a recently foreclosed property, the purchaser is no longer bound to accept any month-to-month lease for a preliminary 90 day period. The purchaser is free to non-renew the lease agreement through the issuance of a 30 day notice of non-renewal. Certainly, as was the case under the PTFA, the former property owner no
longer has legal claim to possession and can be evicted upon the issuance of a demand to vacate.
...continued from front page
However, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) changed the expiration date to December 31, 2014. While the PTFA was set to expire on December 31, 2014, the PTFA could be renewed by subsequent legislation. However, the PTFA was not renewed and, as of January 1, 2015, is no longer in effect. As a result of the expiration of the PTFA, purchasers of property at foreclosure are no longer subject to
If you have any questions or concerns regarding your rights following the purchase of occupied property at the time of foreclosure, you are encouraged to contact The Law Offices of Scott M. Clark, P.C. for an evaluation.
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RENTAL HOUSING JOURNAL ARIZONA • April 2015
RENTAL HOUSING JOURNAL ARIZONA
Market Update ...continued from front page with the increasing demand from our population growth – will result in high occupancy. In Q4, vacancy dropped a full point (6.5% to 5.5%) in the 50-99 size apartments. The 50-99 size range typically represents older, B and C class communities. Essentially, a 5.5% vacancy rate represents full occupancy – with just small gaps in time for turning units. The 100+ size apartments still reported a slight vacancy decrease. That being said, with more than 20,000 units currently under construction and in the pipeline and more to come, the new construction will soon start having a vacancy effect on the competing communities. We may see a slowdown in the construction as developers are finding it more difficult to secure prime sites plus the cost of construction has gone up considerably over the past
Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Const. 4,967 4,660 4,637 7,037 6,737 698 910 2,031 4,452 5,658
Absorb. 4,756 (4,653) (5,846) (4,466) (5,319) 20,743 2,154 3,028 4,822 4,716
Vacancy 5.0% 5.3% 8.5% 10.8% 14.2% 10.3% 9.7% 8.3% 7.3% 6.1%
few years.
been here before – and it’s happening again. Buyers - make sure that some of the rents are already at higher levels – and don’t be bashful about asking for a reduction for leases that are not yet up to current market rent. We call this “loss to old lease”.
including all size units was $819/u. This was a 4.1% gain from this same period a year ago. The actual values reported are not as significant as the continual upward trend. Continued Strong Sales Activity In the 4th quarter of 2014, there were a total of 60 apartment sales with 10 or more units, plus two broken condo sales and one 3rd party trustee sale. A total of 18 of the 60 sales had 100+ units. Most of the sales took advantage of the continued low interest rates and were financed. Nine of the sales had at least one leg as a 1031 tax deferred exchange. Overall, this is consistent sales activity, but there could be more sales if more quality apartments were available for sale. The buying pressure is clearly here and prices are increasing.
This is a HOT Market – Getting in the Game After losing 50% or more in value over the past five years, we are about back to where values were before “the crash”. For those that survived the crash and SB 1070 – congratulations. For the smart banks that helped restructure loans – many thanks. The demand for multifamily is back to about 2003 levels and increasing – especially from California buyers. Maricopa County (essentially Metro Phoenix) is now the 2nd fastest growing county for population in the US. Smart buyers realize that the fundamentals are in place for a significant run-up in value over the next few years – maybe longer – especially in the B and C class communities. To make a purchase, however, a buyer must now do more than just look at past financials and apply a reasonable cap to determine value. To get in the game, buyers need to appreciate the projected strong rent growth and pay a bit more than desired. We’ve
The New “Fix and Flip” or “Fix and Keep” Everyone seems to always want a “value add” property. A similar option for buyers is to acquire a property with “good bones” and in a good area – then reposition the property – not especially to condo quality, but with a facelift and new amenities. This is replacing the “value add” and is what we call the new “Fix and Flip”. We continue to see this process across the Valley with all size apartment communities – from 10 to 100+ units. We’ve seen huge jumps in rents (and therefore value) with this scenario. The end result of the reposition is not always a “flip” – as these properties are providing strong cash flow. Jim Kasten, CCIM Owner – Designated Broker Kasten Long Commercial Group 2821 E Camelback Road, Suite 600, Phoenix, AZ 85016 602 677 0655 - direct jim@KLCommercialGroup.com www.KLCommercialGroup.com
New Construction Remains Very Strong Nine projects were completed in Q4 totaling 1,837 units, five located in Scottsdale. In 2014, there were a total of 5,456 units completed. There were 9 new apartment projects started (1,575 u) in Q4, mostly in Phoenix. There are 33 currently under construction representing 8,554 units. This includes Optima’s 781 units at Sonoran Village. Many of these projects have commenced pre-leasing. There are also 49 additional projects in various stages from initial rezoning to final permitting - representing 11,563 units. The combined total of “under construction” and in the “pipeline” is 20,117 units. Details of each project are posted on our web site under “Apartments” – “Market Data”. Average Rental Rates Continue Increase For individually metered 50-99 unit size apartments, the average rental rate for 1/1’s was $612 ($0.98/ sf) and for the 2/1’s it was $640 ($0.78/sf). The overall rent including all size units was $708/u. This was a 3.5% gain from this same period a year ago. While this may be statistically accurate, we’ve seen numerous examples of rents jumping more than 20% from this time last year. For individually metered 100+ unit size apartments, the average rental rate for 1/1’s was $719 ($1.05/sf) and for the 2/1’s it was $727 ($0.89/sf). The overall rent RENTAL HOUSING JOURNAL ARIZONA • April 2015
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RENTAL HOUSING JOURNAL ARIZONA
Can You Afford to Lose $230,400 In Leasing Revenue? ©
By Ernest F. Oriente, The Coach {Article #226…since 1995}
O
uch! $230,400 in annualized leasing revenue is being lost by apartment communities around the nation! This is happening because 20 percent of the calls coming from future residents are being missed, which is silently draining the performance of the properties you own/manage. Using the call tracking system of an industry vendor as a resource, this article will summarize our research from 863 apartment communities in 33 states and the statistics below on missed calls are startling! Plus, we have provided a tool for you to calculate the lost leasing revenue for your specific properties and to share the results with your leasing teams. Summarizing the numbers: Using the call tracking system of an industry vendor for our research we evaluated 192,609 in-bound telephone calls placed by future residents to 863 apartment communities over the last 30 days. Based on this statistical information, 20 percent of the total calls went unanswered by these onsite leasing teams. This means 38,521 future residents did not reach a leas-
ing professional the first time they called one of these apartment communities. Based on a national average rental rate of $800 per month, this means 30 million dollars in potential new resident revenue could not be served when they first contacted the apartment community of their choice. This also means this prospect might not be calling back as industry research has told us that a person shopping for a new apartment has a list of 7 to 10 communities to contact before they place their first call. Calculating the lost leasing revenue: Here’s a summary of our research: 1. An average apartment community receives 240 calls per month as a results of their marketing efforts to future residents. 2. Since 20 percent of these calls went unanswered by on-site leasing professionals, this means 48 calls from future residents were missed. 3. Based on national statistics, six of these 48 calls from future resi-
dents, or 12.5 percent, would have been converted into an appointment and a leasing tour. 4. Based on six leasing tours with future residents, two of these tours, or 33 percent, would have been converted into a lease. 5. If an apartment community loses two leases this month, at an average monthly rental rate of $800, this apartment community will lose $19,200 {$800 x two leases x a 12 month lease} in annualized leasing revenue. 6. If this trend continues, this apartment community will lose $230,400 {$19,200 x 12 months} over the next 12 months in annualized leasing revenue. I know these dollars seem big--and they are! The cost of missed telephone calls and lost leasing revenue is a silent drain on the success of the apartment communities managed/owned by your property management company. To calculate the lost revenue at your apartment communities, please fill in the blanks below. When you are finished,
E-mail it to ernest@powerhour.com fax it to 435-615-8670 and we will schedule a free 30 minute coaching call to review your statistics and to share our specific recommendations. A. Our apartment communities received _________ in-bound marketing calls this month. B. Of these in-bound calls, we are not able to answer _________ percent. {Remember, 20 percent is the national average.} C. Based on our company average, ____ of these ____ missed calls from future residents, or ____ percent, would have been converted into an appointment and a leasing tour. D. Based on our company average, from these ____ leasing tours with future residents, ____ of these tours, or ____ percent, would have been converted into a lease. E. If we lost ____ leases this month, at an average monthly rental rate of $____, our apartment communities will lose $______ in annualized leasing revenue. F. If this trend continues, we will
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RENTAL HOUSING JOURNAL ARIZONA • April 2015
RENTAL HOUSING JOURNAL ARIZONA
Looking For A Ladder job as well as you can. In the current market, occupancy is EVERYTHING, and if you've got it, that's not a gamble most regionals will take. The good news is that if this is the reason, then you've got a clock on the obstacle, since the economy is bound to improve AND you can mentor up your current assistant manager so that he or she could step in to your shoes more quickly. Also, your regional manager might not yet see the skill set in you to move you up in the company. One of the easiest ways to get noticed and move up is to either volunteer for new projects that you have a skill set well suited for or to set public goals and meet them. Both are actions that regional managers respect and respond well to. Step up to the plate and mentor the younger managers in the company, or offer your marketing talents to sister properties that are maybe not having as good a run in the current market as you are. If you've found a company that you like, I encourage you to talk with your upper management. After all, there is a reason you're still working for them after 6 years, and from their point of view, they have a lot of time and energy invested in you. Ask your manager for a clear path of what it's going to take for you to move up with the company and then formulate your goals around that path. It's hard not to admire people
Rock and a Hardplace tion you need to begin the screening process and it provides (the applicant with) the disclosure and authorization wording required by state and federal consumer reporting law. 4. Provide a copy of your criteria with the application – so the applicant knows up front whether they qualify or not. It is not only the right thing to do. It saves time and money – for you and your applicant! 5. Use a reputable and legally compliant tenant screening company – lean on them for help with (FCRA) compliance, process and forms. Consumer reporting law is complex, at times ambiguous and often conflicted. Tenant screening companies live and breathe this stuff on a daily basis. No sense reinventing the wheel!
...continued from page 6 who are willing to do what it takes to get the job done. Don't let your burnout get the better of you and your temper. Open up your communication with your regional manager and find a new way to love your job until you can ascend within the ranks of your company! Good Luck! Heather Frustrated with Fibbing Dear Heather, At our property, we are asked to do weekly shops of our competing properties. I'm supposed to call them and get how much they are renting all of their apartments for, if they have any specials, what their traffic has been like, and what their current occupancy is. For 2 of my comps, this is really easy and they're really nice to me. 1 of the other ones never answers their phone, but sometimes if I fax them our sheet, they will return it. The other 2 flat out refuse to give us any information or they lie to us about their stuff, even though we are willing to give them ours and we're always honest. One weekend, the bigger one was doing a free 47 Inch TV with a new lease, and we didn't know about it! How can I get those two properties to give me the information I need? -Frustrated with Fibbing Dear Frustrated with Fibbing, This is a song that we hear all too
often! Kudos to you on actually doing your weekly market survey/ comp shops, since so many leasing consultants don't. Your dedication to being armed with the right information is commendable! Early in my career, I had a property that refused to work with me on my comp shops. I was annoyed with them, and indeed, over time I became annoyed with the whole market survey process. No matter what, every week, my surveys were incomplete because I could NOT get information from this one property. Finally, I got so frustrated that I went over there one day on my day off, scones and Starbucks in hand, and asked them why they wouldn't give me any information. When they couldn't give me a real reason (because I knew that bunk about it being "company policy" was just that - bunk), I asked them if they had any one bedroom apartments open. The leasing consultant hesitantly told me that, yes they did, and I told her I sure wished I had known that because I would have loved to send her a couple I had to turn away the day before, as my property didn't have any open one bedroom apartments. I left her my card, the Starbucks and scones, and wished them a good week. The next week when I called, they gave me the information I was looking for, because I had shown them that I could be an ally, not just an adversary.
My advice to you is this: Build bridges with these people. Reach out to them on a personal level and a professional level, and even though they swat you away a few times, be persistent. If that doesn't work, I encourage you to use the tools at your disposal by searching Craigslist for open units with their phone number. If nothing more, you'll be able to gain prices and potential specials from their postings. But before you take the sneaky route, try the more honorable method of just building the relationship. I promise you, it will yield rewards even greater than the information you're seeking now. Best of Luck, Heather
Heather is the Imagination In Charge of Behind the Leasing Desk Training & Consulting Services out of Seattle, WA. An accomplished national speaker, trainer, consultant, career coach, and author of both books as well as countless industry related articles, Heather holds her CAS designation, is NAA Advanced Instructor trained, and has been a member of the NAA Faculty since 2009, serving as a WMFHA, CAM, and NALP instructor since 2009. You can check out more of her musings, podcasts, and class offerings at www.behindtheleasingdesk.com
...continued from page 4 that by following a few best practices – we can thoroughly screen prospective residents without running aground! Paul Prudente is vice president and general manager of Moco, Incorporated, a specialized consumer reporting agency focused on delivery of quality tenant and pre-employment screening services for the rental housing industry. He has been at the helm of Moco for nearly 12 years. He is principal architect of its pioneering direct-to-consumer tenant screening facility – marketed under the MyScreeningReport.com® brand – developed in collaboration with the low income housing community and designed to address the needs of a growing independent rental owner marketplace.
6. Issue Written Notices of Adverse Action – immediately upon denial or conditional approval of an applicant. Make sure that your tenant screening company responds quickly and respectfully to requests for copies or disputes regarding the content (of tenant screening reports). So while it may be true that we find ourselves between a rock and a hard place these days. It is also true RENTAL HOUSING JOURNAL ARIZONA • April 2015
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RENTAL HOUSING JOURNAL ARIZONA
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he importance of teamwork can not be overstated or emphasized enough. Yet sometimes boundaries are so clearly drawn regarding the role or “job description” of each staff member, that those who desire to “go the extra mile” are forced to remain at the starting line and watch prospects and residents “fall through the cracks.” I was recently asked the following question which brings up the issue of maintenance and leasing staffs getting involved with each others’ job duties: Q: Is it appropriate for maintenance staff members to get involved in the leasing process and how far should they go? A: This is a very important subject, and it brings up another question: Is it appropriate for leasing/ office employees to get involved in some aspects of maintenance and
how far should they go? As property management companies have to make difficult budget decisions. Some budget cuts have involved a reduction in leasing and maintenance personnel. The result is less office coverage and slower response time to resident requests, as one or two team members are trying to do the jobs of three or four people. Providing some “basic” training to your leasing and maintenance personnel to create an “overlap” in their job responsibilities will take some of the pressure off your team members and provide better service to prospective residents and existing residents. If a leasing person is away from the office and a maintenance staff member encounters a prospective resident, the maintenance person at the very least could extend a warm, friendly greeting. The visitor could be made comfortable and offered refreshments, if available,
and be given a brochure to look at while he or she is waiting. If a guest card or visitor log is available, the maintenance person could request that it be filled out. Then, if the wait time becomes excessive and the prospective resident has to go, there will be a record of the visit, and a way to follow up. Office personnel can provide this same type of support to their maintenance team, when they are busy turning apartments and handling service requests. Every person working in the office should know how to operate a plunger and an Allen wrench. Leasing team members must also be willing to pass out flyers, pick up litter, sweep sidewalks, maintain common areas, etc. If you are constantly paging maintenance to pass out your lease renewal letters or handle minor messes around your community, then you are delaying the make ready process, as well as prompt service to your residents.
REMEMBER: Being part of a team means doing whatever it takes to get the job done; whether it’s your job or not! If you are interested in leasing training or have a question or concern that you would like to see addressed, please reach out to me via e-mail. Otherwise, please contact Jancyn for your employee evaluation needs: www.jancyn.com ASK THE SECRET SHOPPER Provided by: Joyce (Kirby) Bica Former owner of Shoptalk Service Evaluations Consultant to Jancyn Evaluation Shops Phone: 425-424-8870 E-mail: shptalk2@gmail.com Copyright© Joyce (Kirby) Bica
Multifamily Apartment Marketing: Are You Missing Out On New Leases? end goal in mind; closing more (lease) sales. Following are three any people believe that areas to implement improvements. Leasing and Sales staff training. property management is an old-line business that All of your marketing falls down if moves slowly. If you believe that once the prospect come to your door then your team is already half a mile there is no one there to greet them behind in a one mile race. In other and begin the process of becoming a words; you are toast because the new resident. Your team must know competition is using all the best prac- how to implement the leasing sales ARIZONA process andMETRO, engage accordingly. The tices at their disposal to make sure VALLEY, they close every new prospect that process must be seamless. Gaps in training lead to fewer closed leases. steps on their property. Market surveillance (knowing If your on-site team is “undertrained” consider revising your pro- competitive assets). Full time propcedures to get quality marketing in erty management businesses undermotion in real-time. In other words, stand that market dynamics change Feb, Apr,with Jun, at a Oct, velocityDec much faster than the implement best practices theAug, By John Wilhoit Jr
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casual observer believes. Utilizing current market information means keeping continually in the loop on pricing and incentives offered by competitors. Knowing, really knowing, the attributes and pricing of directly competitive assets is paramount to understanding your place within the market. Absorption (unit counts). Being APT. NEWS up-to-date with changes to unit counts in your marketplace (and submarket) is imperative. With new construction, absorption is an absolute number but there is more to unit counts. Assure that your team is aware of current and pending changes to the competitive marketplace.
ON-SITE-NW SEATTLE Salsbury Industries
Gaining a new lease is a process. Preparedness is the initial stanza of the process; prepared leasing staff, sales material, office reception, ready units, grounds. These are all part of your property presentation towards making the sale and gaining a new resident. Published courtesy of Multifamilyinsight.net
ON-SITE
VALLEY, METRO, ARIZONA APT. NEWS
Salsbury Industries
Jan, Mar, May, Jul, Sep, Nov,
1010 East 62nd Street, Los Angeles, CA 90001-1598 Phone: 1-800-624-5269 • Fax: 1-800-624-5299
Octoberp
September
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The Industry Leader in Quality
RENTAL HOUSING JOURNAL ARIZONA • April 2015
RENTAL HOUSING JOURNAL ARIZONA
Can You Afford to Loose?...continued from page 8 lose $___________ over the next 12 months in annualized leasing revenue. Tip From The Coach: The lost leasing revenue, based on the dollars above, is staggering. Be certain your telephone systems can handle the volume and velocity of telephone calls received at the apartment communities you manage. In addition, a number of companies can provide your leasing teams with the telephone number for every missed call placed by future residents. By returning these missed calls in a timely fashion, your leasing teams can easily recapture what is otherwise an enormous loss of leasing revenue. Once you have a vendor who can provide this service for your property management company, then compare the national statistics in this article with the statistics at the properties you manage or own. Want to hear more about this important topic or ask some addi-
tional questions about how to accurately track your future resident telephone calls and evaluate your marketing? Send an E-mail to ernest@ powerhour.com and The Coach will E-mail you a free TeleForum invitation. Author’s note: Ernest F. Oriente, a business coach/trainer since 1995 [33,450 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
very cautious, and should be given that many of these student loans are delinquent and their holders have low credit scores. If the Y generation can refinance this debt, then the opportunity exists that within 5 – 7 years a new cohort of buyers might end up in the hous-
ing marketplace. In the meantime the members of this debt-ridden generation are renting apartments and houses together, fueling the apartment building boom.
Student Loan...continued from page 2 That basically means that those that sought shelter in the halls of academia during the economic downturn, often have no way to pay it back. Even with a college education and a decent job, some of these college graduates live with as much expendable income as those under the poverty line since all their wages go to living expenses and to pay down their student debt. We know that home builders are selling fewer homes. As investors, we want to know how long this will go on and how this will impact the demand for alternate living arrangements. Bear in mind The percentage of students who cannot pay their student loans have a huge impact on American society and economic growth: • They can’t afford to buy a car, and their credit may be too bad to finance one. • They are hesitant to marry, because they don’t want to assume liability for unpaid student loan debt or they don’t want their future spouse and household to be burdened by the debt. • They are hesitant to have children, because they can’t afford to raise them or put them through school. (The last thing they want is to have their children pay their student loan debt as well.) • They are putting off medical care because they don’t have the money to pay the deductibles or even afford insurance premiums.
• They can’t buy a house, not only is their credit bad but they cannot afford the house payments, not to mention the down payment required to close. Where does this take us? We have already seen a boom in apartment construction. It is estimated that this boom will continue through 2015 as young people continue to move in together to save money. Many of those tenants don’t have a car and want to live in the downtown of a large city where they can walk or bike everywhere they need to go. At some point, high downtown rents will force those with student loan debt out of the city center, because the rents needed to fund new construction will not be affordable. The Y generation will then need a car, a small used car with high gas mileage, or find a place with easy access to public transportation. As they move to potentially lower rent apartments in the suburbs, their peers without student loan debt will be buying homes and home builders will see some increased demand. Another option for the future would be to encourage the federal government and Sallie Mae, (one of the major holders of student loan debt,) to refinance loans at lower interest rates and to forgive late penalties and interest rate hikes since, as they say, you can’t squeeze water from a stone. Credit unions are showing some interest in helping the Y generation recapitalize their debt, but they are
Advertise in Rental Housing Journal Arizona Circulated to over 10,000 apartment owners, on-site, and maintenance personnel monthly. Call 503-221-1260 for more info. RENTAL HOUSING JOURNAL ARIZONA • April 2015
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RENTAL HOUSING JOURNAL ARIZONA
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RENTAL HOUSING JOURNAL ARIZONA • April 2015