Rental Housing Journal Arizona July 2016

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Rental Housing Journal Arizona

July 2016 - Vol. 8 Issue 7

2. Single Best Way for Property Managers to Get Promoted

8. Ask the Secret Shopper – Appropriate Appearance

3. Tips to Taking Better Photos When Marketing Your Property

11. Dear Maintenance Men – Mold, Flush Valve Seats, Heating and Air Conditioning Preventative Maintenance

7. Make Your Units Spacious and Cohesive With New Flooring

WWW.RENTALHOUSINGJOURNAL.COM • PROFESSIONAL PUBLISHING, INC Monthly Circulation To More Than 7,000 Apartment Owners, Property Managers, On-Site & Maintenance Personnel

Co-Signers and Guaranties of Contracts

1Q16 Market Overview Multifamily Housing Update

Payroll Job Summary Total Payrolls Annual Change RCR 2016 Forecast RCR 2017 Forecast RCR 2018 Forecast RCR 2019 Forecast RCR 2020 Forecast Unemployment (NSA)

1,960.4m 66.8m (3.5%) 54.6m (2.9%) 32.1m (2.2%) 28.1m (1.6%) 27.5m (1.4%) 29.6m (1.4%) 4.7% (Dec.)

1Q16 Payroll Trends and Forecast The Phoenix labor market maintained a full head of steam during the first quarter. Establishments added to staff at a 66,800-job, 3.5% annual rate, on par with 4Q15’s nineyear high 68,900-job, 3.6% performance. The finance and construction sectors assumed leadership roles, collectively expanding payrolls at a 16,900-job, 6.2% year-on-year pace, up from 11,800 (4.5%) jobs during the prior quarter. Business, education and healthcare continued to contribute the lion’s share of new jobs, holding steady on a 29,000job, 4.8% year-on-year clip. By contrast, the retail trade, transportation and leisure services were weaker. Seasonally-adjusted data were somewhat at odds. This series recorded a sluggish 5,200-job 1Q16 advance, small-

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andlords and management companies should be extremely careful in understanding Arizona law as it relates to co-signers and guaranties of contacts. This article will cover these areas as they relate to lease agreements for rental property. Many landlords rent to residents with less than perfect credit or rental histories. However, before entering into a lease agreement, the landlord often requires another person to cosign the contract and guaranty the obligations under it. When considering entering into a lease agreement with a co-signer, make sure that you take the following steps: • Make sure you run a credit check on the co-signer. If the person is married, be sure you run the credit check on both the husband and wife. • Beware of out-of-state co-signers. If the lease is breached, you would be required to sue the co-signed and pursue them in another state. continued on page 6

Apartment Occupancy Surge Tops 96% In Second Quarter

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emand for U.S. rental apartments surged during the second quarter of 2016, gaining momentum after a sluggish performance in the first three months of the year, according to a new report from the RealPage.com MFP Research Division. The occupied apartment count across the nation’s 100 largest metros increased by 127,402 units in the second quarter, according to the report. This is one of the biggest quarterly demand totals posted throughout recent years, topping 2015’s second quarcontinued on page 4

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Rental Housing Journal Arizona

Single Best Way for Property Managers to get Promoted What is the Single Biggest Secret to Being Promoted From Property Manager to Regional Manager, Vice President or CEO?

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s EVP at MultiFamily Traffic, I have worked with thousands of property managers, regional managers, marketing managers, CEO’s etc. I have seen them come and I have seen them go. Recently my friends at Rental Housing Journal asked me what the number one trend is in our industry is. My answer is this, management companies are desperate for rock-star talent and when they find it they will promote that person as high as they possibly can. So, what is the secret to being promoted in our industry? The answer may surprise you, it’s not hard work and it’s not who you know. It’s all about how well you can manage the asset and how profitable you can make it. If you can outperform the other managers in terms of leases and lowering occupancy rates and show leadership your abilities are scalable, get ready for an amazing career, you are now in line to be CEO. So let’s breakdown what it means to get leases, increase revenue and scale. Let me start by telling you what it is not.

You will not be promoted if you bring in leases by: • Giving away the farm: Out of this world promotions that bring in unprofitable leases may improve your occupancy rates short term but it’s a sure fire way to get yourself locked into the role of assistant property manager for life. Giving stuff away tells your leadership that you care and can think outside the box but you are also telling them that you better be monitored by someone with experience or you will bankrupt the company. Not a good label to have associated with you.

little or no extra pay. Sales rockstar, get used to now doing your job and teaching the slackers how to do theirs with all hope for promotion quickly fading. Why would they take you away from the leasing office when talking to prospects is where you add value? • Being a shopaholic: You know the type, you may be the type, its ok. The first step is admitting you are a shopaholic. You have banners, you have balloons, you bake cookies and whenever a ILS rep comes into the office you buy whatever they are selling. If you want to be promoted, you need to show leadership you have the ability to make tough decisions. Saying “yesâ€? to everything is not making decisions its going on a shopping spree with the company’s money.

• One-one-selling: So you are the best at closing prospective renters? Awesome. You can show a unit, explain the benefits of living at the property and close the deal. These are all good skills to have. But, if this is what you become famous for, you have now made yourself a leas- You will be promoted if you bring ing agent for life. At best, you can in leases by: hope for a “new titleâ€? and the added • Getting the community in front of responsibilities of a “trainerâ€? with qualified renters looking to sign a /ne !¨Ì£Ă?AÂ?ÂŁ [AÂŁ ¡Ă?¨óÂ?en Ì¡ Ă?¨ A äßÂŽĂśnAĂ? ˜AQ¨Ă? AÂŁe žAĂ?nĂ?Â?AÂ˜Ă“ ÂƒĂŚAĂ?AÂŁĂ?nn½ $ĂłnĂ?  ß ĂśnAĂ?Ă“ ¨| [¨ÂžQÂ?ÂŁne nþ¡nĂ?Â?nÂŁ[nz

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lease without having to use promotion after promotion. The best way to do this is to make sure your property is on the first few pages in Google for as many of the top searched terms that renters in the area are typing in. Additionally, by using Google AdWords campaigns. The bottom line here is, if you are the first property a prospect finds, you don’t need promotions to try and change their minds about other properties they have visited. There are enough renters that sign a lease at the first property they visit for you to get to 100% occupancy without having to use promotions. You just need to be FIRST. • Show leadership you are a leader, not a seller. Imagine meeting with the CEO, and you tell him or her that you are terrific at talking to renters, are you going to be promoted? No. Now imagine that same conversation but instead, you say; “I researched my community

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Rental Housing Journal Arizona ¡ July 2016

Rental Housing Journal Arizona

Tips for Taking Better Photos When Marketing Your Property By Katrina Langer and Jeffrey O’Connor

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ccording to Buildium’s State of the Property Management Industry Report, over two thirds of property owners feel unequipped to effectively market residential properties. When it comes to marketing a property, this can include a variety of tactics, whether it’s listing properties on websites or working with clients and brokers for referrals. While property managers and landlords might have different approaches to how they market their rentals, it goes without saying that the ability to show off a residential property through photos is the foundation of vacancy marketing. That being said, there are a few important things to keep in mind when taking photos for your property listings. While it would be nice to hire a photographer, it’s not always within the budget of a property manager, landlord or owner. Luckily, smartphone providers such as Apple, Motorola, Nokia and Samsung have improved their cameras’ specs in recent years, and newer phones have great cameras. For example, the 2007 iPhone was only 2 megapixels, while the iPhone 6s comes standard with a 12 megapixel camera—a go-to for professional photographers.

But, again, you don’t have to be a professional to effectively market your real estate. This article will dive into tips and best practices for using a smartphone to take property photos.

Get the Right Equipment While most phones are equipped with almost professional-grade camera technology, some of the top-rated phones when it comes to design, function and camera specs include: Apple iPhone 6s, HTC One M9, Samsung Galaxy S7, Google Nexus 6P and Motorola Moto X Pure Edition. Additionally, property owners and managers can download new camera apps to achieve great results, including Cocologics ProCamera (iOS), Open Camera (Android) and Lumia Camera (Windows). Another great piece of inexpensive equipment to look into is an aftermarket wide angle lens for your smartphone (about $100). Wide angle shots are essential for great property photos, as it widens the field of view, making rooms look bigger. Additionally, a tripod or shutter release will help to stabilize the camera to help avoid shaky and/ or crooked shots. Another great way to straighten your shot is to compare the vertical lines

within the room (such as a doorway, window or corner) with the grid settings in your camera app.

Set up the Perfect Shot Truly great shots are usually taken in the middle of the day, when the sunlight is softer than it is at sunrise or sunset, when it streams directly through the windows, creating shadows and bright spots. Midday light is evenly distributed throughout the room, creating a warm, welcoming atmosphere. To get the most out of this light, turn off the flash, open the curtains, and keep the blinds pulled down. When setting up your shot, hold the camera about three or four feet from the floor, and try to shoot from the corners to get as much of the room in the frame as possible. Don’t forget to take exterior shots, too. It’s best to start these in the early afternoon, when the sun is high overhead. And, be sure to take at least one shot from each angle to provide context for the property within the neighborhood. Editing and Uploading Making simple edits to property photos doesn’t require a professional editor. There are free apps for both iPhone and Android users, such as Snapseed and Adobe Lightroom, that offer the ability to adjust verticals, exposure, white balance and sharpness. With these tools,

the editing process should only take around 30 to 60 seconds per photo Once the photos are ready to go, make sure to save your work so they can be easily accessed for marketing materials. Websites such as Google Drive and Dropbox can make this a seamless process, and you can share images easily with links you can send to colleagues and prospective buyers. While professional photographers are a nice-to-have, it’s not always a realistic luxury for property managers or landlords when they’re looking to quickly turn over a property. With these tips and tools that can be used at little to no cost, the images needed for marketing properties can be easily taken, edited and shared as needed. By Katrina Langer and Jeffrey O’Connor Katrina Langer is a content marketer at Buildium with more than five years of experience in writing and SEO, and has worked with a number of Fortune 500 companies to improve their website experience. Jeffrey O’Connor is a Stoneham, MA based commercial photographer specializing in high end residential real estate, product, and food photography. His portfolio includes work for small and large clients across New England and Canada, and as far away as Seattle, WA, and Sydney, Australia. He lives and works out of his home office and studio with his wife, Erin, and their dog, Laika.

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info@rentalhousingjournal.com Rental Housing Journal Arizona · July 2016

3

Rental Housing Journal Arizona

Apartment Occupancy Surge

...continued from page 1

ter demand volume by 23 percent. Furthermore, apartment demand from April to June well surpassed completions totaling 67,550 units, according to MFP Research. “Any concerns that the market couldn’t handle this year’s increase in apartment deliveries appear unfounded for the moment,” Greg Willett, chief economist of RealPage, said in a press release. “As we’ve hit prime leasing season, the greater product availability—brought by sizable new supply—is revealing bigger product demand capacity. Initial lease-up for most new additions is registering at a very healthy pace, and we’re managing to squeeze a few more residents into an existing stock that’s been essentially full for quite a while.” Apartment Occupancy Returns to Peak Level U.S. apartment occupancy inched up to 96.2 percent in the second quarter, regaining the bit of ground lost in late 2015 and early 2016. Current occupancy matches this economic cycle’s previous peak rate seen in the third quarter of last year. The only time occupancy has been tighter was at the height of the tech boom in 2000 and early 2001. “Occupancy remains stronger than the norm during past periods of substantial construction,” Willett said in the release. “The fact that few young adults are opting for home purchases right now is helping the occupancy performance. Economic growth is bringing new renters in through the front door. At the same time, the number of existing residents exiting out the back for other housing options is limited.” Rent Growth Remains Robust Typical rents for new residents climbed another 1.8 percent during the second quarter, taking the price increase seen over the past 12 months to 4.6 percent. Monthly rents for new resident leases now average at $1,282. Influenced by the increased volume of new supply that apartment owners and operators have in the initial leasing stage, average annual rent growth has slowed modestly from this economic cycle’s peak growth of 5.6 percent, seen in the third quarter of 2015. However, today’s annual rent growth pace is still very substantial compared to the long-term historical norm that runs just under 3 percent. “Annual rent growth in the range of 4 to 5 percent is an unprecedented result six years into a growth cycle,” Willett said in the release. Annual rent change has been positive for 24 consecutive quarters, with the average price increase during that period registering at 3.8 percent. For comparison, the mid-2000s growth cycle lasted for 19 quarters, and annual rent growth averaged 2.8 percent in that span. Among individual large metros, Sacramento is now the country’s rent growth leader for the first time ever. Pricing for new-resident leases in Sacramento climbed 9.7 percent during the past year. The following list shows current top performing metros for annual rent growth. Leaders in Annual Rent Growth for New Residents Year Ending in the Second Quarter 2016

Publisher Will Johnson – will@propubinc.com Designer/Editor Kristin Flores – kristin@propubinc.com

Advertising Sales Will Johnson – will@propubinc.com Terry Hokenson – terry@propubinc.com Larry Surratt – larry@propubinc.com

Rental Housing Journal Arizona is a monthly publication published by Professional Publishing Inc., publishers of Real Estate Opportunities in Investing & Real Estate Investor Quarterly

Rank Metro Rent Growth Sacramento, CA Portland, OR Seattle-Tacoma, WA Phoenix, AZ Nashville, TN Oakland, CA Fort Worth, TX

9.7% 8.8% 8.2% 7.6% 7.2% 7.2% 6.8%

Los Angeles, CA Riverside-San Bernardino, CA Fort Lauderdale, FL Las Vegas, NV San Diego, CA West Palm Beach, FL Atlanta, GA

6.7% 6.7% 6.6% 6.4% 6.3% 6.2% 6.0%

Select Metros Losing Steam While annual rent growth remains near this cycle’s peak levels in most metros, pricing power is cooling meaningfully in a handful of spots. After San Francisco, Oakland and San Jose metros, experienced huge rent growth for several years, the size of price increases is coming back to levels that appear more realistically sustainable now that the region’s building activity has climbed to record volumes. Similarly, a substantial amount of new product additions have slowed Denver-Boulder’s annual rent growth pace, after record price increases occurred earlier in this economic cycle. Importantly, the Bay Area metros and Denver-Boulder are posting strong apartment demand. Increased deliveries haven’t resulted in vacancy issues. Thus, while rent growth has slowed from the very robust levels achieved recently, price increases are still strong relative to the long-term norm. In contrast, Houston’s current pricing is weak, not just a slowdown from previous results. Rent growth is close to disappearing due to slowing economic growth occurring alongside aggressive apartment construction. In fact, actual price cuts have emerged in several of the neighborhoods adding the most supply. Markets Losing Rent Growth Momentum Second Quarter 2016 Vs Second Quarter 2015 Annual Rent Growth Metro Q2 2016 Growth Q2 2015 Growth Momentum Change San Jose, CA San Francisco, CA

3.6% 4.7%

10.0% 9.9%

-640 basis points -520 basis points

Oakland, CA Denver-Boulder, CO Houston, TX

7.2% 5.6% 1.1%

11.8% 10.2% 5.0%

-460 basis points -460 basis points -390 basis points

Peak Deliveries Lie Just Ahead A recent slowdown in the number of multifamily housing units authorized by building permits suggests that the apartment construction volume should soon cool slightly. For now, however, ongoing building remains in line with the very high levels posted over the past year or two. Properties totaling 534,743 units are under construction in the nation’s 100 largest metros. “With so much additional product finishing very quickly, the apartment leasing environment could become more competitive in the short-term,” according to Willett. “A large block of new supply is scheduled to finish, just as demand registers its routine seasonal slowdown in the winter months. However, barring a pronounced stumble in economic growth, there’s nothing suggesting future stock is going to cause big-picture problems.” For further information on MPF Research, visit https://www.realpage.com/mpf-research/

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Real Estate Opportunities in Investing (ROI) Finding Investing Success in Today's Housing Market Rental Housing Journal Arizona · July 2016

Rental Housing Journal Arizona

1Q16 Market Overview est since 2Q11. Gains in April and May fell to only 2,900 jobs. A quick reversal of form in June will be called upon to avoid another sequentially weaker outcome in 2Q16. RCR’s PHX payroll forecasting model suggests that May’s soft performance may be a harbinger of future trends. The equation uses US payroll growth (+) and metro income (+) and home price (+) growth as independent variables to reach a 96.7% adjusted R2 (S.E.=0.6%). In keeping with slower projected U.S. gains, the model expects metro expansion to decelerate to below 2% by 1Q17, and further to the mid-1% range for the duration of the 5-year forecast interval. Should home price appreciation decelerate, payroll growth could stumble further. Occupancy Rate Summary Occupancy Rate (Reis) 95.0% RED 50 Rank 33rd Annual Chg. (Reis) -0.5% RCR YE16 Forecast 94.1% RCR YE17 Forecast 93.5% RCR YE18 Forecast 93.3% RCR YE19 Forecast 93.6% RCR YE20 Forecast 93.4%

1Q16 Absorption and Occupancy Rate Trends Apartment demand surged during the seasonally strong winter quarter as renters net leased 1,979 vacant units, according to Reis, up from 1,197 units during the prior quarter and nearly equal to 1Q15’s 15-year high 2,105. On the other hand, developers delivered 3,003 new units to stock, the largest single quarter vintage in 17 years. As a result, occupancy fell -30 basis points sequentially and -50 bps year-on-year to 95.0%, equal lowest since 4Q13. Analysis of same-store stabilized asset performance data published by Axiometrics uncovers similar conditions. These data reveal a 94.9% aver-

...continued from page 1 age occupancy rate, up 10 bps y-o-y. Class-B (95.2%) sports the highest rate; classes- A (94.5%) and –C (94.1%) trail. East Mesa submarket (96.1%) recorded highest occupancy, followed by Paradise Valley (95.6%) and North Scottsdale (95.8%). Central North notched the largest y-o-y gain (0.8%) yet maintained lowest occupancy (91.6%). Tenants absorbed 12.5 units/month at new properties after renting an average of 13.9 in 4Q15. RCR’s demand model uses inventory (+), US payroll (+), home price(t-2) (-) and rent(t-3) growth variables to achieve a 92.5% ARS (SE=0.4%). The model foresees lower absorption in 2016 (4,398 units) overwhelmed by near record supply (8,131), sending occupancy down –90 bps by yearend. Near equilibrium should prevail from 2017 to 2020.

but surpassed by both classes-C (9.1%) and –B (7.4%). Two submarkets recorded annual gains of more than 10% — North Glendale/Peoria and Sunnyslope — while South and West Mesa topped 9%. At the other end of spectrum, South Scottsdale rent advanced only 1.2%. Recent powerful trends notwithstanding, the RCR PHX rent model continues to project materially slower growth going forward. The model uses payroll job (+), U.S. home price (-) and metro inventory(t-1) (-) growth and metro occupancy(t-3) (+) as independent variables to specify a 97.0% ARS (SE=0.55%) equation. The model is influenced by our negative view of metro job trends, upbeat home price forecast and heavy pending supply. Thus, the model foresees slower rent growth developing by year end.

Effective Rent Summary Mean Rent (Reis) Annual Change RED 50 Rent Change Rank

$822 5.9% 9th

Trade & Return Summary $5mm+ / 80-unit+ Sales $822 Approximate Proceeds $595.1mm Average Cap Rate (FNM) 5.1%

RCR YE16 Forecast RCR YE17 Forecast RCR YE18 Forecast RCR YE19 Forecast RCR YE20 Forecast

2.9% 1.0% 1.8% 2.1% 2.3%

Average Price / Unit Expected Total Return RED 46 ETR Rank Risk-adjusted Index RED 46 RAI Rank

1Q16 Effective Rent Trends Phoenix rents continued to soar, rising $12 (1.4%) sequentially, matching 4Q15’s advance, according to Reis. Much of the impetus was attributable to the class-A sector. Class -A asking rents increased 1.4%, according to Reis, while class-B&C gained only 0.4%. Expressed on a year-on-year basis, rents rose 5.9%, the fastest quarterly read since 4Q06 and the 9th fastest advance among the RED 50. Axiometrics same-store data pointed in a similar direction. In this case, average rent increased 7.5% y-o-y, representing the fifth consecutive print over 7%. Class-A rents were robust (6.1%)

Trade velocity reaccelerated during 2Q16, however; through mid-June buyers already had consummated 56 acquisitions for $1.5bn, both record totals. The average price per unit recovered to $102,830, reflecting a larger concentration of complexes built since 1990 in the mix. Value-adds were priced to yields in the low– to mid-5% area. Scant evidence was available indicating that cap rates for newer stabilized assets fell below this range. Based on recent trade RCR elected to raise the PHX purchase cap rate proxy 10 basis points to 5.4%. At this level and model derived rent and occupancy point estimates we calculate that an investor would expect to achieve a 5.2% unlevered IRR on a 5-year hold (RED46 #43). Risk-adjusted returns are more favorable, ranking peer group #23)

$86,077 5.2% 43rd 4.70 23rd

1Q16 Property Markets And Total Returns Following six months of torrid property sales activity, when 73 larger Phoenix assets exchanged hands for total value of $2.3 billion, trade velocity decelerated over the winter. Closings of apartment properties valued at $5 million or more declined –33% quarter-to-quarter to 28, and proceeds declined –55% to $595mm as investors focused almost exclusively on 70’s and 80’s construction value-add situations. For similar reasons the average price of sold units declined from $131,221 to $86,077 or -34%.

By Daniel J Hogan

Director of Research djhogan@redcapitalgroup.com 614-857-1416 Office 1-800-837-5100 Toll Free

continued on page 9

Text 51WAYS to 44222 to receive the FREE e-book 51 Ways to Increase Your Rental Property Cash Flow (And 10 Ways To Ruin It) Rental Housing Journal Arizona · July 2016

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Rental Housing Journal Arizona

Single Best Way

Co-Signers and Guaranties

...continued from page 2

and discovered that we were over spending and underperforming because we were constantly playing catch-up due to the fact that prospects were not finding the property when they looked first. We were battling to win the war of “lookie-loos” who required the best deal to sign a lease. How I fixed this problem is, 1. I evaluated our online presence, 2. I isolated the issue and fixed it by 3. ranking the property for the top searched keywords organically as well as running a Google AdWords campaign simultaneously. This placed the property first in front of prospects allowing me to close all of the potential renters that signed a lease on the first visit, leaving our competing properties to waste resources fighting over the tire kickers.” If you are able to say this, welcome to the big leagues, you are on the path to CEO. • Show leadership you can make tough decisions rather than spend your way out of problems. If you get to 100% occupancy but you have shown leadership a laundry list of expenses needed to get there, you are not ready to lead. Real leaders make calculated decisions. Imagine this conversation with the VP of Operations, “my strategy to improving the properties numbers was twofold. First, I wanted to increase occupancy, but second I wanted to reduce waste and overspending. Both numbers have an equal effect on the bottom line. I found success by boosting the

properties visibility with the best renters and reducing unneeded or redundant expenses. For example, I used Google AdWords, a compressive $499 a month SEO plan and our top performing ILS. I systematically cut out all other unnecessary tenant acquisition expenses”. You just earned yourself a promotion! Matt Easton is EVP of MultiFamily Traffic, the only apartment SEO and AdWords management company that measures themselves by how many leases you sign. Millions of online apartment searches are performed each day, resulting in new leases being signed. Is your website being found by renters? The fact is the first 20 results on search engines like Google receive about 97% of all clickthrough traffic. MultiFamily Traffic’s job is to make your property website one of these top results. By leveraging years of expertise in both apartment marketing and apartment portfolio ownership they will help your property GET FOUND online and your VACANT UNITS LEASED. MultiFamily Traffic is headquartered in Denver, Colorado. They have been in operation since 2003 and have helped thousands communities see great success in driving low cost leases to their properties. Most clients are so pleased with our service that they end up eliminating most other forms of lease-up services including expensive ILS subscriptions, saving the property thousands per month in apartment advertising fees. Matt can be reached directly at 303-803-7372

• Make sure that both sign the lease or a guaranty agreement. While faxed signatures are acceptable and legal, do try to have original signatures on any lease agreement or guaranty addendum. In Arizona, both the husband and wife must sign to make the guarantee enforceable. A.R.S. § 25-214 (C)(2) specifically states that any transaction of guaranty must be signed by both spouses to collect from their marital community property. Failure to obtain both signatures means that you are allowed to only collect from the signer’s separate property, if there is any. If you use a separate written document to guaranty a lease agreement, make sure the document expressly states the length of time it is to be effective and whether it applies to any extension or renewal of the original lease term. Under the Arizona case of Westcor Co. vs. Pickering, “a contract of guaranty will be strictly construed to limit the liability of the guarantor.” Therefore, it is very important that any guaranty agreement be carefully drafted and worded to make the guarantor responsible for any breach. The final question is can a guarantor be held liable for property damage caused by the resident while in the rental property? Again, language should be drafted to make the guarantor aware of the full extent of his or her liabilities.

Com peti Pric tive ing

...continued from page 1

As an example, consider the following: Two residents, May Lee and Faycruss, rent an apartment at Bashford Village. The manager, Pearl Lee Gates, and her leasing assistant, Angel Headband, ask for co-signers as May Lee and Fay Cruss’ rental history are questionable. May Lee has her uncle, Yul B. Sari, sign the lease agreement as co-signer, but his wife fails to sign the document. After the initial lease term ends, May lee and Fay Cruss have an argument. They move out of the apartment, leaving considerable property damage. Pearl Lee Gates has to sue May Lee and Fay Cruss as Yul B. Sari did not sign to guarantee any lease extension. Andrew M. Hull, Esq. Hull, Holliday & Holliday, PLC www.doctorevictor.com 602.230.0088

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Rental Housing Journal Arizona · July 2016

Rental Housing Journal Arizona

Make Your Units Spacious and Cohesive With New Flooring By Mark Voykovic, Division Merchandise Manager, Flooring, The Home Depot

A

s the apartment industry continues to see growth, tenants are looking for the best amenities and value in properties, putting pressure on property managers to keep units looking modern. Flooring is often crucial to impressing potential tenants. New technology in vinyl, laminate, tile and wood offers more options for property managers, often at affordable costs, allowing you to generate a great return on investment.

Vinyl Historically a good option for projects with smaller budgets, new advancements in vinyl give floors a unique, high-end look with a durable finish. Instead of the sheet vinyl you’re used to seeing, many types now feature separate pieces that more closely mirror the look of ceramic tile. You can even grout some new types of vinyl, making the floor look more traditional and unified. Different installation options include peel and stick technology, as well as click-lock systems, helping reduce labor costs and increase savings. Vinyl is also 100 percent waterproof, which has always made it a good choice for kitchens and laundry rooms.

ing more popular and looks great in multifamily units but requires a different type of mortar. Be sure to use a mortar specifically designed for large format tile.

Laminate Laminate flooring has also been advancing in durability, versatility and style. Not only are laminates scratch resistant, but some newer products are even water resistant – withstanding household spills for as much as 24 hours. This technology allows property managers to install laminate in areas such as bathrooms and laundry rooms. Due to the advancement of the single lock system, laminates can be installed easily and quickly, reducing labor costs. When it is time to replace or repair units, you will save significantly by replacing a single plank versus the entire floor. And when you do install laminate, the finished product is going to look better than ever. Digital printing is so

advanced now that certain styles are becoming difficult to distinguish between laminate and more expensive materials like wood.

Tile Tile is constantly evolving. Floor tile has progressed substantially, becoming sharper and more realistic through those same advancements in digital printing that benefit other materials like vinyl and laminate. Wood tile looks like wood, marble tile looks like marble, and so on. Higher end options allow you to grout and seal at the same time, eliminating the need for a second visit from installers. Select products even qualify for a lifetime warranty. Now ranging all the way up to 48 in. x 48 in., large format tile is becom-

Wood Wood flooring is now offering the same easy-to-install features as laminate and vinyl flooring, making it more affordable than it used to be. In the past, property managers had to hire someone to install wood flooring. Options such as engineered and click wood can be self-installed with the same benefits of long lasting, durable flooring at a lower cost. Innovation and advancement are continuous trends in flooring, allowing more options for property managers to consider. By Mark Voykovic, Division Merchandise Manager, Flooring, The Home Depot As the Division Merchandise Manager, Mark is responsible for merchandising all hard-surface flooring products at The Home Depot. He has been with The Home Depot for 10 years, serving in various merchandising roles.

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Rental Housing Journal Arizona

SK THE SECRET SHOPPER Appropriate Appearance

E

veryone knows you only get one chance to make a first impression. What you communicate from the curb, carries over into the office environment and beyond. Paying attention to professional office attire is important year round, but especially during the warmer summer months. When the weather is hot and everyone is trying to keep cool and comfortable, some employees may be presenting more than just their apartments! This can be a distraction to co-workers and residents, and disrupt the sales process. Here is a topic of concern based on the question below: Q: The staffs at some of our communities tend to “dress down,” especially at our smaller buildings where they have responsibilities in and outside the office. I have noticed this sometimes carries over into their personal grooming as they transition from working outside and then come back into the office to assist clients. However, during the warmer summer months when many of my managers have even more responsibilities outside, I have noticed an increase in inappropriate/ unprofessional attire and a decrease in attention to personal grooming. I am concerned about the impression my managers are making on our residents, as well as prospective renters. Other than instituting a “uniform and personal grooming policy” or mandating a strict dress code, what can we do? These are some very valid concerns, and this issue needs to be addressed. However, it’s an extremely sensitive subject because how people dress and present themselves is very personal. Also, there is the financial aspect, as not everyone can afford to make a high end fashion statement! When you throw “gender” into the mix, this issue becomes even more complex, as it’s tough for a male supervisor to approach a female employee on this issue and vice versa. Typically when a confrontation does occur, someone is embarrassed, offended or both. Then you end up right back where you started and nothing is resolved. For those companies who have been able to implement a “uniform” policy and standard of dress: Congratulations! You do not have any of the above headaches any more. Probably the only issue you have to deal with now on this subject is getting your employees to actually WEAR their uniforms!

for all employees, no matter what community they work at, then everyone will know what the expectations are. When a new employee is hired, they can be given this information up front as part of their new hire package. That way, they will understand how they are expected to present themselves. For existing employees who are not in compliance because there was no written dress code at the time they were hired, you can institute a “new company policy” and create a standard for all employees to follow. Of course you must remember a very important principle: Everything in life has a “trickle down” effect. Your efforts to get your employees to comply with a dress code will only work to the degree in which you comply with the same standard yourself. A leasing consultant does not have much motivation to dress up a notch if the assistant or resident manager is “dressing down.” On the other hand, an on site manager will not be inspired to comply with a dress code if the property supervisor or owner visits wearing casual clothing. When employees working together dress inconsistently, this sends a mixed message to the residents and prospects that visit their office. Until people really get to know you, all they have to go on is “appearances.” The employees who are dressed in business attire will “appear” to be professional, organized and prepared to serve their clients. Those dressed otherwise will not. As in every area of life, perception is reality. While you can’t judge a book by its cover, the next person who walks through your door could make a rental decision based upon what’s covering (or not covering) you! Having a standard of dress for all employees, no matter what community they work at, will consistently communicate a sense of pride and professionalism. If you are interested in leasing training or have a question or concern 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 E-mail: shptalk2@gmail.com Copyright © Joyce (Kirby) Bica

For everyone else, the answer is “education.” If you have a written “dress code,” regarding attire and personal grooming 8

Rental Housing Journal Arizona · July 2016

Rental Housing Journal Arizona

1Q16 Market Overview

...continued from page 5

The information contained in this report was prepared for general information purposes only and is not intended as legal, tax, accounting or financial advice, or recommendations to buy or sell currencies or securities or to engage in any specific transactions. Information has been gathered from third party sources and has not been independently verified or accepted by RED Capital Group. RED makes no representations or warranties as to the accuracy or completeness of the information, assumptions, analyses or conclusions presented in the report. RED cannot be held responsible for any errors or misrepresentations contained in the report or in the information gathered from third party sources. Under no circumstances should any information contained herein be used or considered as an offer or a solicitation of an offer to participate in any particular transaction or strategy. Any reliance upon this information is solely and exclusively at your own risk. Please consult your own counsel, accountant or other advisor regarding your specific situation. Any views expressed herein are subject to change without notice due to market conditions and other factors.

continued on page 10

Rental Housing Journal Arizona ¡ July 2016

9

Rental Housing Journal Arizona

1Q16 Market Overview ...continued from page 9

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Rental Housing Journal Arizona · July 2016

Rental Housing Journal Arizona

DEAR MAINTENANCE MEN: Mold, Flush Valve Seats, Heating and Air Conditioning Preventative Maintenance

By Jerry L’Ecuyer & Frank Alvarez

Dear Maintenance Men: I have noticed the base molding in the living room and leading into the kitchen is starting to come off the wall. The corners are splitting and it is starting to look very rough. What do you think is causing this? I don’t see any water anywhere. Randy

tial to properly inspect and troubleshoot your HVAC (a/c)units whether they are window, wall or central. Most A/C units fail or work improperly due to nonexistent or improper maintenance and not age. Cleaning is your A/C is the most inexpensive and critical maintenance procedure you can perform.

Dear Randy: We would bet you do have a water problem somewhere. Chances are it will be traced to the refrigerator. There might be two issues you can look at. First check that the drain line for the defrost cycle is not clogged and two if the refrigerator has an icemaker, that the line is not leaking. Chances are the icemaker line has a hole or the drain line is leaking and the walls are sucking up the water. That is why you don’t see any standing water. Look under the fridge or pull out the fridge and look at the water line. It should be a small quarter inch nylon or polyethylene line; often they are white or translucent in color. If the water line goes though the cabinets to the kitchen sink; follow the line and look for rough spots or kinks in the line. Because these small water lines often leak for a long time before they are discovered, your walls may very well be saturated. The swelling baseboards are an indication they are full of moisture. The repair for this leak goes far beyond repairing the pinhole leak in the icemaker line. You will have to remove the drywall in order to allow the walls to dry properly. Chances are you will also have a major mold issue inside the walls. You should seek professional help for an evaluation of the potential mold issues involved. Please note when replacing icemaker or filter lines, only use tubing specified for that use. Ask for icemaker tubing, it will be marked icemaker compatible.

Here is our 4-point check list: 1. Turn on the A/C and listen for unusual noises. 2. Inspect/clean or replace filters. Filters should be cleaned or replaced at the beginning of each major season, such as before summer and before winter.

Dear Maintenance Men: I have a toilet that runs every ten or twenty minutes. I have replaced the fill valve, the flapper valve and I have even scrubbed under the rim! In other words, all the items I can think of that are replaceable in the tank are new. What else should I be looking at? Sam Dear Sam: You replaced all the easy ones!! When all else fails on a toilet leak down issue; it is time to put on your rubber gloves and get an adjustable wrench. Chances are the problem lies with the Flush Valve Seat. The rubber flapper valve seals against the flush valve seat (the big hole at the bottom of the tank.) to either keep the water in the tank or let the water out of the tank. The seat may have a burr, crack or calcium deposits that allow a small amount of water to seep past the rubber flush valve. Sanding the seat to remove the burr or calcium deposit is a short-term solution, but rarely solves the problem for long. A permanent solution is to replace the flush valve. Start by turning off the wa-

ter supply, completely empty the tank and remove the water line. Remove the two or three bolts holding the tank to the toilet bowl. Turn the tank upside down and remove the large nylon or brass nut that holds the flush valve to the tank. Install the new flush valve. Be sure the tank bottom is clean and no debris gets between the new valve’s rubber gasket and the tank. Tighten the large nut on the outside of the tank and you are ready to reassemble the tank and bowl and put the toilet back into action. When reassembling the tank to the bowl, install new rubber washers and bolts.

Dear Maintenance Men: Can I get some pointers with preventive maintenance when it comes to heating and air conditioning? Mike

3. Clean & repair damaged or bent fins. (They can constrict proper air flow and decrease the cooling capacity of the A/C unit. 4. Clean out all dust and debris inside of the A/C pan or coils. On a central HVAC unit: cleaning or replacing the main and return filters, may be the limit on a DIY cleaning. A qualified technician should do any other work on a central heating and air unit. Bio: Please call: Buffalo Maintenance, Inc for maintenance work or consultation. JLE Property Management, Inc for management service or consultation Frankie Alvarez at 714 956-8371 Jerry L’Ecuyer at 714 778-0480 CA contractor lic: #797645, EPA Real Estate lic. #: 01460075 Certified Renovation Company www.BuffaloMaintenance.com www.ContactJLE.com www.Facebook.com/BuffaloMaintenance

Dear Mike: Heating and air condition or HVAC should be inspected at least twice a year or at the change of the major seasons such as summer and winter. Prior to summer or winter seasons, it is essen-

myitzchaki@MSYLaw.com 㻯㼍㼏㼠㼡㼟㻌㼔㼍㼟㻌㼐㼑㼢㼑㼘㼛㼜㼑㼐㻌㼛㼡㼞㻌㼠㼑㼍㼙㻌 㼍㼚㼐㻌㼜㼞㼍㼏㼠㼕㼏㼑㼟㻌㼠㼛㻌㼜㼞㼛㼢㼕㼐㼑㻌㼠㼔㼑㻌㼎㼑㼟㼠㻌 㼟㼛㼘㼡㼠㼕㼛㼚㼟㻌㼍㼚㼐㻌㼘㼍㼠㼑㼟㼠㻌㼠㼑㼏㼔㼚㼛㼘㼛㼓㼕㼑㼟㻌㻌 㼕㼚㻌㼜㼍㼢㼑㼙㼑㼚㼠㻌㼜㼞㼑㼟㼑㼞㼢㼍㼠㼕㼛㼚㻚㻌㻮㼑㼏㼍㼡㼟㼑㻌 㼛㼒㻌㼛㼡㼞㻌㼏㼛㼙㼙㼕㼠㼙㼑㼚㼠㻌㼠㼛㻌㼝㼡㼍㼘㼕㼠㼥㻌㼍㼚㼐㻌 㼟㼑㼞㼢㼕㼏㼑㻌㻯㼍㼏㼠㼡㼟㻌㼔㼍㼟㻌㼓㼞㼛㼣㼚㻌㼠㼛㻌㼎㼑㻌 㼛㼚㼑㻌㼛㼒㻌㼠㼔㼑㻌㼙㼛㼟㼠㻌㼞㼑㼟㼜㼑㼏㼠㼑㼐㻌㻌 㼜㼍㼢㼑㼙㼑㼚㼠㻌㼏㼛㼚㼠㼞㼍㼏㼠㼛㼞㼟㻌㼕㼚㻌㼠㼔㼑㻌 㻿㼛㼡㼠㼔㼣㼑㼟㼠㻚㻌㻌 㻌 Invite us to bid and we’ll show you 㼑㼤㼍㼏㼠㼘㼥㻌㼣㼔㼍㼠㻌㼣㼑㻌㼙㼑㼍㼚㻚㻌㻌

㼠㻌㻢㻞㻟㻙㻟㻠㻠㻙㻣㻢㻣㻡㻌㻌 㼑㻌㼗㼙㻬㼏㼍㼏㼠㼡㼟㼍㼟㼜㼔㼍㼘㼠㻚㼏㼛㼙㻌㻌 㼣㼣㼣㻚㻯㼍㼏㼠㼡㼟㻭㼟㼜㼔㼍㼘㼠㻚㼏㼛㼙㻌㻌 Rental Housing Journal Arizona · July 2016

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