Arizona RHJ May 2018

Rental Housing Journal Arizona

2. Do you Have a Smoke-Free Policy that Adequately Protects Residents?

3. Apartment Owner Ordered to Pay $1.6 Million in Bed Bug Lawsuit

May 2018 - Vol. 10 Issue 5

4. How to Save Money and Water in Apartments

7. Accommodating Disabled Tenants in Your Rental Property

5. Real Estate Syndication Investing – 10 Things to Know

8. Dear Maintenance Men

6. Can Tenants Have Multiple Assistance Animals?

9. Application of Payments and 72 Hour Notices

rentalhousingjournal.com • Professional Publishing, Inc MONTHLY CIRCULATION TO MORE THAN 7,000 APARTMENT OWNERS, PROPERTY MANAGERS, ON-SITE & MAINTENANCE PERSONNEL

Potential for Higher Returns Lures New Buyers, Generating Competition 4 Outdoor Flooring Options for your Rentals

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amaged or worn outdoor flooring, pavement and surfaces can be responsible for making your property look poorly kept.

These surfaces can also endanger the safety of your tenants as cracks, holes and general wear make it easier to slip, trip and fall.

Our expert contractors have provided a breakdown of common materials for outdoor flooring. We have included the pros and cons of each material to help you choose what works best considering your design preferences, pricing, weather-resistance and overall longevity.

Number 1 - Natural stone is a beautiful outdoor flooring option Natural stone can present unique variegations in a variety of colors, which results in a beautiful, one-ofa-kind accent in your outdoor space.

It can be custom-cut to be arranged accordingly to a preferred pattern and look, with irregular shapes being used for meandering mosaics and modular stones being used when a more regular and symmetrical appearance is desired.

Pros • Extremely durable - natural stone is rather tough. It stands strong against the elements and wear and tear, usually requiring little to no maintenance.

• Environmentally friendly and safe ...continued on page 10

Supply of For-Sale Listings Remains Tight, Boosting Prices

Marcus Millichap National Report – Manufactured Housing Research

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ffordable housing need bolsters operations.

Manufactured home communities are benefiting from rising single-family home prices and escalating apartment rents that are creating a shortage of

affordable housing alternatives. This is especially prevalent in urban areas with strong employment gains, such as Salt Lake City or Denver. In these two metros, vacancy in manufactured home parks posted triple-digit drops to average below 2 percent. The lack of new communities and the redevelopment of older parks also contribute to a tightening vacancy rate as displaced

tenants seek alternative placements for their homes.

An aging population benefits manufactured home parks.

During the next 10 years nearly 18 million additional people will reach age 65. Many of these seniors will move to resort or retirement manufactured ...continued on page 4

Real Estate Exit Strategies

By Cliff Hockley, President Bluestone and Hockley Real Estate Services

R

eal estate investors are facing the interesting challenge of where to put their money once they have sold their real estate assets. As most of us have experienced when selling real estate outright, there are always the significant state and federal tax bills to be considered.

Unfortunately, there is virtually nothing to trade into because investors are making money and are hesitant to part with a good thing. Many of these investors are baby boomers who are expected to live for another twenty or thirty years. Baby boomers are currently an average age of 55-70 years old, or birth years ranging from the 1940s to 1964.

What is an investor to do if they want to exit their real estate investments?

Options There are other several options available to an investor as they plan to exit their real estate investments.

• They can pay taxes when they sell it • They can hold on to their property (not sell it) and leave to heirs • They can use a 1031 exchange to trade into another property • They can sell their property and

trade into a Delaware Statutory Trust • They can trade their property into a Tenant in Common (TIC) investment • They can donate to a Charitable Remainder Trust • They can sell and carry the paper (using a contract or a trust deed) also known as an installment sale Paying taxes The investor can convert their assets to cash and reinvest.

Pros: 1. The investor does not have to manage those assets anymore or deal with the property problems, tenant issues, and ever-changing laws 2. They have cash to gift to their heirs or spend 3. They can gift the money to a charity Cons: 1. Capital gains taxes (federal and state), transfer taxes, depreciation recapture, and the 3.8% net investment gain tax add up.

Holding the Property Retaining your investment: Most investors have had success with this over the last 10 years, as the Federal Reserve kept lowering interest rates and they could refinance at equal or lower rates. As we move forward, and inflation looms and interest rates increase, this strategy may not be as

Text REALESTATE-ROI to 44222 to receive a digital copy of this year's Real Estate Opportunities in Investing (ROI) Finding Investing Success in Today's Housing Market

viable or profitable.

Use a 1031 Exchange Selling your property and purchasing another using a 1031 exchange will delay the capital gains and other taxes you might have to pay.

Pros: The investor can go about this in many ways using: 1. Forward exchange 2. Reverse exchange 3. Construction exchange Cons: 1. They only have 45 days to identify a property and 180 days to close, and that may not be enough time in a supply constrained market.

2. With the current supply being so limited, they might buy a lower yielding property or a property that is not of a quality (or in as good a location) as the property you are selling.

Trade into a DST The investor can place their money in a Delaware Statutory Trust also known as DST - similar to a tenant in common investments. Delaware Statutory Trusts or DSTs are an alternative for 1031 exchange investors seeking replacement properties offering the potential for monthly income and diversification without any on-going landlord duties.

Pros: ...continued on page 2

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Rental Housing Journal Arizona

Do you Have a Smoke-Free Policy that Adequately Protects Residents?

By Ellen Clark

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ave you thought about your smoke-free policy or nosmoking policy and whether it adequately protects residents who need a smoke-free environment? The Grace Hill training tip of the week focuses on this issue and new HUD rules for smoke-free policies in public housing.

More and more rental properties across the country are adopting smokefree policies with the goal of improving air quality, reducing the fire risk, and lowering maintenance costs.

Even with no-smoking policies in place in many apartment complexes, research indicates that many of the nearly 80 million Americans who live in multi unit housing experience secondhand smoke infiltration in their living unit that originated from elsewhere in or around their building.

For tenant in apartment buildings and condominiums, secondhand smoke can be a major concern. It can migrate from other units and common areas and travel through doorways, cracks in walls, electrical lines, plumbing, and ventilation systems.

The U.S. Centers for Disease Control and Prevention (CDC) has recommended that all multi-unit housing in the United States adopt

smoke free policies in order to protect residents from the very serious health hazards caused by drifting tobacco smoke. “There is no risk-free level of secondhand smoke, and even brief exposure can cause immediate harm,” the CDC says.

What the CDC says about smokefree multifamily housing “Multi unit housing residents are particularly susceptible to involuntary secondhand smoke exposure in the home. Environmental studies indicate that secondhand smoke constituents can infiltrate units where no smoking occurs (eg, units whose residents have adopted smoke-free home rules) from units and shared areas where smoking is permitted,” the CDC says.

“Nearly 7 million U.S. multi unit housing residents live in government subsidized housing, including approximately 2 million in public housing either owned or operated by a government housing authority.

The potential for secondhand smoke exposure in public or subsidized housing is of particular concern because a large proportion of these units are occupied by people who are particularly sensitive to secondhand smoke, including children (45%), the elderly (41%), and the disabled (25%).

Exit Strategies ...continued from 1

1. They don’t have to worry about their sale creating a taxable event , since they can use a 1031 exchange to get into the DST. Cons: 1. 1031 DST properties are illiquid 2. 1031 DST investors invest in a pool with a sponsor and lose day to day control of their asset and money 3. Once the DST offering is closed, there can be no future contributions to the DST by either current or new investor. If there is a shortfall in cash or a need to deal with major capital improvements, such as a new roof or parking lot cash profits that should be going to your pocket, will be kept by the sponsor to bulk up reserves or to fund these capital improvements.

4. DSTs are hard to exit because the investor needs to find a new investor to take their position. There might be a discount from a buyer because they are a fractional investor and have no power to make any decisions.

2

Trade into a TIC They can trade into a “tenant in common (TIC) partnership, where a sponsor will assemble a group of accredited investors to share in the ownership of a property or properties.

Pros: 1. Shared risk 2.Ususally an experienced sponsor 3. The investor does not have to be involved in the day to day operations of the property 4. There is usually an agreement when investors will exit the investment.

5. Regularly scheduled cash payments (return) and depreciation shelter for the investor 6. For an example of a lower risk TIC, logon to www.RockwellTIC.com They have two models: a. Invest cash and own a property with others that has no bank loan on it b. Properties to invest in using

Public housing must have smokefree policy by end of July All Public Housing Agencies (PHAs) administering low-income, conventional public housing must have a smoke-free policy in place

by July 31, 2018. In December of 2016, HUD published a final rule requiring Public Housing Agencies (PHAs) administering low-income, conventional public housing to implement smoke-free policies.

The rule went into effect in February of 2017, but there is an 18-month implementation period, meaning that all PHAs must have a smokefree policy in place by July 31, 2018.

This rule applies to all public housing except dwelling units in mixed-finance buildings. The rule says that each PHA must implement a smoke-free policy banning the use of prohibited tobacco products in all living units, indoor common areas, PHA administrative office buildings, and outdoor areas within 25 feet of any building on public housing grounds. Note that the rule does not prohibit residents of PHAs from smoking. In fact, PHAs can establish outdoor designated smoking areas beyond the required 25 feet perimeter to accommodate residents who smoke. PHAs may also establish additional smoke-free locations, or they

can even make their entire grounds smoke-free.

money out of a 1031 exchange Cons: 1. Lack of investor control 2. Illiquid 3. No ability to impact management of the investment

someone they have named, a portion of the income that the trust funds accumulate. These payments will last for a set number of years, or for the remainder of their life, depending upon how the documents were drawn up. The trust will end at the time of their death and the donated property will go to the charity.

4. It’s a perfect place to place assets if there are no heirs.

Cons: 1. Its irrevocable – in other words it cannot be reversed.

the

Donate to a Charitable Remainder Trust Charitable remainder trust: A charitable remainder trust (CRT) is an irrevocable trust that generates a potential income stream for the donor to the CRT, or other beneficiaries, with the remainder of the donated assets going to a favorite charity or charities.

Pros: 1. First, after the investor has set up and donated to a charitable trust, they are allowed to take an income tax deduction and spread it over five years, for the value of the gift to charity.

However, they do not get to deduct dollar for dollar the amount that they initially gave. Instead, the IRS calculates the total deduction as the amount they originally gave minus what they can expect to receive as a return through interest payments. For example, if they gave $200,000 but are expecting to get back $100,000 in interest over the course of their life, their total deduction would have to be $100,000.

2. Second, because the property given to the trust will go to the charity outright upon the investor’s death, the property will not be included in their estate for the purposes of determining their estate tax.

3. The charity will pay them, or

HUD rules could help any apartment community with smokefree policy While this rule applies to public housing (except dwelling units in mixed-finance buildings), the materials that HUD has assembled to help PHAs comply with this rule may be very helpful to any community that is thinking about, or in some stage of implementing, a smoke-free policy.

More rental properties across the country are adopting smokefree policies. If you are one of those properties, here are some great resources HUD has put together to help PHAs implement smoke-free policies that may also be helpful to you.

Implementing HUD’s Smoke-Free Policy in Public Housing includes strategies for communicating with residents, examples of smoke-free policies and enforcement plans, tips for training staff, helpful information for launching a smoke-free policy, and guidance on responding to requests for accommodation.

Smoke-Free Housing: A Toolkit for Owners/Management Agents of Federally Assisted Public and Multi...continued on page 10

Installment Sale (carrying the paper) Carrying the paper is most effective if a property is owned free and clear and not wrapped around an existing financial ( i.e. mortgage or trust deed) instrument - like a note and trust deed, or a mortgage - especially since most financial instruments prohibit the wrap.

Pros: 1. The investor pays taxes only on the income received: Tax on the income received on the interest charged and capital gains taxes (on the reduction in principal of the investor note.) If the investor is retired and this is their major source of income, they might be in a lower income tax bracket for the investor income tax as compared to when they were working.

2. The investor’s tax on the principal will be the same but it is spread out over many years and by default puts the investor in a lover tax bracket if they are

Rental Housing Journal Arizona · May 2018

Rental Housing Journal Arizona

Apartment Owner Ordered to Pay $1.6 Million in Bed Bug Lawsuit

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jury has awarded a California family $1.6 million in one of the largest single bed bug case awards ever reported against an apartment owner, according to a release.

Liliana Martinez told NBC in Los Angles her family suffered for months with bed bugs at the Kahala Islander Apartments in Inglewood, California in 2010. She said her child, a baby at the time, was covered in bites.

"Just seeing how he would scratch all the time and nothing would heal because it would start bleeding again. It was very emotional, very stressful," she told the television station.

The family says they complained to apartment management and were told to throw out all of their furniture and sleep on the floor. But it took months to eradicate the bugs. The lawyer who represents the apartment building declined to comment on the case.

The defendant in the case, Amusement Six Apartments LLC owns an apartment complex in Inglewood and simply didn't respond appropriately to the Plaintiffs complaints about bedbugs, according to Yahoo news. According to the suit, it took management 9 days to initially schedule bedbug treatment, and when they did, the pest control

operator left handfuls of chemical all over their belongings and carpet.

When the plaintiffs complained about the chemical, the management told them there was nothing they could do, and they should vacuum a square area in their living room to sleep on with their 2 young children. Although they then agreed to change the carpet, it took them 3 months to do so, and all the while, the bed bugs were feeding and breeding in the carpet until it was changed. The family continued to receive bedbug bites the entire time.

Bed bug verdict the largest in U.S. Brian Virag, attorney from the law

firm of mybedbuglawyer.com, obtained the $1.6 million verdict for the family and said in a release it was the largest verdict for a single family for bed bugs in the U.S. He represented the family of four including a 3-year old boy and a 3-month old baby girl who were all bitten by bed bugs. His clients were all exposed to bedbugs between July and October of 2012.

The case was Liliana Martinez Et. Al. v. Amusement Six Apartments LLC. The young boy, Jorge Maravilla Jr., who was 3 years old at the time of the bedbug exposure was covered in bed bug bites. He has significant residual scarring to the day. The jury awarded

Jorge Jr. $880,000.

This is the fifth landmark verdict obtained by Virag in the last 12 months that included a 3.5-million-dollar verdict against PLB Management, and a $546,000 verdict in October against the Hilton Garden Inn in Rancho Cucamonga, CA, whose clients were exposed to bed bugs for a one-night hotel stay.

Sixteen former and current residents of one of Los Angeles' largest apartment complexes won a $3.5-million verdict over an infestation of bed bugs in their units last year, Virag told the Los Angeles Times.

Park La Brea Apartments, a sprawling complex with more than 4,000 units in the Miracle Mile District, was found liable by a jury in Los Angeles Superior Court late Friday afternoon, said attorney Brian Virag, who represented the plaintiffs.

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Exit Stratigies ...continued from 2 selling an expensive piece of property like a small office, retail or industrial building.

3. With a strong down payment (20 or 30%) investors have a solid income stream that they can control and thereby control your taxes as well.

4. The property typically will go up in value and so the risk reduces over time 5. If banks are willing to take the risk, why shouldn’t the investor?

6. Heirs can inherit the note.

7. In an emergency, the note can be sold on the secondary market with a discount if the buyer has been paying on time and the note is seasoned.

Cons: 1. If your sale results in a loss, the investor can't use the installment method. If the loss is on an installment sale of business or investment property, they can deduct it only in the tax year of sale (unstated interest.)

2. They need a strong buyer 3. The investor needs to aggressively manage the terms of the installment sale to prevent a prepayment penalty when they are not ready to cash out 4. The investor has to keep an eye on the property to make sure the Buyer is taking good care of the investment - if the property needs to be repossessed for non-payment on the note, then they will not have to repair the property 5. The investor is the bank and need to be comfortable with foreclosing on the note if the Buyer does not pay 6. They need an experienced real

estate attorney and may need a collection escrow account.

Summary Taxes play a large role for most investors (especially if they have successfully traded up more than one time) - their existing basis is then carried forward to the next property and will affect the residual return when they want to sell.

There are many ways for an investor to exit from an existing property. If they don’t want to pay capital gains taxes, their options are: • They can use a 1031 exchange to trade into another property • They can sell their property and trade into a Delaware Statutory Trust • They can trade their property into a Tenant in Common (TIC) investment • They can donate to a Charitable Remainder Trust • They can sell and carry the paper (using a contract or a trust deed) also known as an installment sale But, most investors have limited choices: • They can use a 1031 exchange to trade up • They can refinance to take out cash and purchase other investments • They can leave their properties to their heirs • They can use a charitable remainder trust to create an annuity • To carry the note, the property being sold needs to be free and clear of other encumbrances, most existing trust deeds and mortgages do not allow

Rental Housing Journal Arizona · May 2018

a wrap around the existing financing Every investor has a different set of circumstances that drive their decision-making process. It all depends on where an investor is at in their personal or business investment cycle.

Are they holding on to the property?

Reinvesting? Stepping up to larger or different property? Working through a partnership split? Diversifying or liquidating? Tired of owning the property? Investors must take the time to look at the various options, meet with real estate attorneys, CPAs, and real estate agents to listen to the many different ideas that are in the marketplace today to develop a successful strategy to exit their investments.

Finally, I want to mention that when trading into another property via 1031 exchange, and trading up or into a

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3

Rental Housing Journal Arizona

How to Save Money and Water in Apartments

By John Triplett Rental Housing Journal

It is likely these rates will rise as the cost of providing water increases.”

The Michigan State University study, called “Affordable Water In the U.S. – A Burgeoning Crisis,” says “If water rates continue rising at projected amounts, the number of U.S. households unable to afford water could triple in five years, to nearly 36 percent.”

So Lamondin said it's actually a growing problem not just for apartment owners but “pretty much anyone paying their water bill right now because of our aging infrastructure and certain stresses on the water supply.”

“I think part of the reason why we've actually seen a lot more interest in water conservation over the last few years is the fact that it's hitting people's pockets in a meaningful way,” he said.

H

ow to save money and water in apartments is the passion of entrepreneur Richard Lamondin Jr., who has founded a company to take on the challenge of both saving water and helping apartment owners, landlords and property managers make their apartment communities more green and eco-friendly.

In an interview with Rental Housing Journal, one entrepreneur, who is in the middle of a large 10-property project in Dallas to help the Dallas-Fort Worth area with water conservation, talked about his passion and his company. The project is expected to save multifamily properties there an estimated 108 million gallons of water this year alone.

The company is expecting to save two billion gallons of water over time.

How leaking toilets are key to saving money and water in apartments “My brother and I grew up with a father who is a real estate developer, so we basically grew up on construction sites,” said Richard Lamondin Jr., CEO of Ecosystems. “But we are also environmentalists. We began researching the water situation here in

The Ecosystems team in Houston where they did 1,300 bathrooms. Lamondin is back left top.

the U.S. and found that 20 percent of all toilets in the U.S. right now are leaking as much as 200 gallons of water a day.

“I can go on with the numbers, but homes waste one trillion gallons of water every year. So while we're trying to find solutions on the grand scale, a lot of times what's being overlooked is the basic building block of water usage in apartment communities, which is the bathroom,” he said.

Seattle and Atlanta two of highest cost cities Atlanta, Georgia and Seattle, Washington have some of the highest water rates in the country at $325.52 and $309.72 per month for a family of four, respectively, according to a Michigan State University study.

“These rates are based on 100 gallons (378.54 liters) of water per person per day including water, sewer and storm water for 5/8 inch (15.875 mm) meters.

Apartment bathrooms are the initial focus “We audit a property’s water usage,” Lamondin said. The audit is based upon the building structure plus any potential local incentives and other contributing factors. Then they create a program based upon that property.

“Most of the time what that includes is full replacements of all water-using fixtures in the bathrooms and kitchens. ...continued on page 8

Potential for Higher Returns Lures New Buyers ...continued from 1 home communities, many of which are in the Sunbelt. The number of people age 65 and older will continue to swell through 2045 as the baby boomer generation ages. This bodes well for age-restricted communities.

Operations tighten across the nation.

During 2017, vacancy in all subregions reached a 10-year low, boosting rent growth and raising NOI. These factors combined with higher cap rates than many other real estate product types are intensifying competition for manufactured home communities and pushing prices up.

Investment Highlights • Buyers are flush with capital amid a scarce supply of available listings throughout most areas of the nation, which has resulted in more off-market transactions. Heightened demand is producing aggressive pricing that keeps cap rates steady despite the rise in interest rates.

• In some areas of the country, for-sale listings are further reduced by resident groups in manufactured home communities exercising their right of first refusal and making offers to purchase the park.

• Exchange buyers remain active. Many of these investors are trading out of other commercial real estate product types, such as apartments, and are unfamiliar with owning a manufactured home community. In many instances the potential for higher returns is luring them to consider park ownership and they are willing to pay a premium to own, helping to drive prices higher.

• Communities on well and septic are still slower to trade. Some buyers are searching for a value-add opportunity in parks that have the potential to be hooked up to these city services.

The information contained in this report was obtained from sources deemed to bereliable. Every effort was made to obtain accurate and complete information; however,no representation, warranty or guarantee, express or implied may be made as to theaccuracy or reliability of the information contained herein. This is not intended to bea forecast of future events and this is not a guaranty regarding a future event. This isnot intended to provide specific investment advice and should not be considered asinvestment advice. Sources: Marcus & Millichap Research Services; Datacomp-JLT;CoStar Group, Inc.; Institute for Building Technology and Safety; U.S. Census Bureau.

4

Manufactured Home Communities Group Michael L. Glass First Vice President National Director 216) 264-2000 Prepared and edited byNancy Olmsted

Senior Market Analyst Research Services For information on national manufactured housing trends, contact: John Chang First Vice President, National Director

Research Services Tel: (602) 707-9700 © Marcus & Millichap 2018 www.MarcusMillichap. com

•

Rental Housing Journal Arizona · May 2018

Rental Housing Journal Arizona

Real Estate Syndication Investing – 10 Things to Know

by Kim Lisa Taylor, Esq.

I

f you are thinking of investing in a real estate syndication, especially for multifamily investing, here are 10 things to know from Kim Lisa Taylor, Esq., founding attorney of Syndication Attorneys, PLLC. If you have a self-directed IRA or substantial investment funds, you no doubt have considered investing in real estate, especially multifamily.

However, you may lack the funds to invest on your own or the desire to deal with the hassles of property management. A viable option for you may be to invest in a real estate “syndication” (i.e., a group real estate investment, also known as a Private Placement Offering) as a passive investor.

What is a Real Estate Syndication?

In a real estate syndication, a “sponsor” or “syndicator (which may be an individual or an entity) will typically identify a real estate asset, such as an existing commercial or multifamily property (or vacant land for development) or single-family fix-andflips that will yield a sufficient return to pay themselves and their investors from cash flow during operations and/ or equity on resale.

The sponsor may obtain institutional financing for a portion of the purchase price and then pool funds from private investors to finance the down payment and closing costs, or he or she may raise all of the purchase money from private investors. The sponsor’s job will consist of finding a suitable property, putting the group of investors together and managing the asset on their behalf. In exchange for these efforts, the sponsor will receive fees and/or a percentage of the “distributable cash” (i.e., profits) left after all expenses and loan obligations have been paid.

What Kind of Returns Do Syndications Offer?

Typical investor returns can range from 6 % to 12% (or more) annualized, calculated against the amount of money invested. The range varies, based on the type of investment and the level of risk to which an investor may be exposed.

The higher the return offered, the greater the risk.

For example, an investor or selfdirected IRA might take a position as a “debt partner,” in which case the returns will be calculated as interest on the amount invested. Such returns may be in the lower ranges, but the debt partnership position may be “preferred” or “secured” by a lien against the real estate, which is a lower-risk position.

Another option for investors is an “equity partnership” position, where the distributable cash is split proportionately between the group of investors and the sponsor, whose compensation can range from 25% to 50% of the distributable cash. In this case, the investor returns may be greater, but they will be dependent on the performance of the property and the sponsor’s ability to maximize returns by increasing income and minimizing expenses.

What Information Should I Get from the Syndicator?

Prior to accepting any investor funds, the sponsor is required by securities laws to provide a set of offering documents that explains the terms and discloses the risks of the offering to prospective investors.

Further, sponsors typically answer to their investors by means of periodic newsletters, financial reports and/ or teleconferences. Unlike a stock investment, investors may also have some limited voting rights regarding major decisions affecting the company or their investment.

Investing In A Real Estate Syndication - 10 Things To Know Before investing in a real estate syndication, you should carefully

review all of the offering documents provided by the sponsor and look for (or ask) questions regarding the following things: 1. The Sponsor’s background, education and experience with similar investments, if any.

2. The team members involved in acquisition and operation of the property, including attorneys, CPAs, other members of the sponsor, property managers and affiliates that may receive fees, etc.

3. Cash distributions to investors during acquisition, operation and disposition of the property, including the proposed timing and anticipated percentage returns.

4. Sponsor fees and cash distributions.

5. Anticipated duration of the investment.

6. Property information, including its type and condition, the purchase price, financial history, proposed “value add” and exit strategies and pro form a financial projections.

7. Dispute resolution provisions.

8. Voting rights of investors.

9. Provisions for removal of the sponsor.

10. Information about the law firm that structured the offering and drafted ...continued on page 6

Potential for Higher Returns Lures New Buyers ...continued from 4 West Region – Mountain Trends Vacancy: The vacancy rate contracted 110 basis points to 6.4 percent during 2017. The rate has fallen 490 basis points from the cyclical peak in 2011. The Denver market recorded the tightest vacancy among U.S. metros at 1.2 percent.

Rents: The average monthly rent posted a 3.7 percent rise to $528, up 17percent during the last five years. Denver holds the highest average rent in the subregion at $660 per month, after a 5.4 percent gain in 2017.

the 4 percent range.

Prices: The average price jumped 30 percent to $52,600 per unit in the West. Assets in the desired coastal communities can top $100,000 per unit.

Pacific Trends^ Vacancy: Rising home prices and strong job growth created a tight housing market in the Pacific, resulting in the lowest vacancy among subregions at3.2 percent in 2017.

Rents: Monthly rent surged 4.2 percent to an average of $549 in 2017, the highest rent by subregion.

Rent in coastal California properties can be double the average.

West Sales Trends Cap Rates: Buyer demand for communities remains intense, though a lack of marketed properties reduced trading activity last year. Cap rates for quality assets typically begin in Rental Housing Journal Arizona · May 2018

5

Rental Housing Journal Arizona

Can Tenants Have Multiple Assistance Animals?

By Ellen Clark

B

y now you’ve probably figured out that complying with assistance animal requests is confusing and difficult.

One of the situations that many people find particularly confusing is when there are multiple animals involved and an apartment complex that may have a one-pet rule.

• Can residents have more than one assistance animal?

• Can residents have pets and assistance animals?

Can a resident have more than one assistance animal?

The Fair Housing Act (FHA) and Section 504 of the Rehabilitation Act of 1973 (Section 504) do not limit the number of assistance animals one person can have.

Consider these assistance animals scenarios: • A person with a visual disability and a seizure disorder may use a guide dog to get around and another animal to be alerted to oncoming seizures • A person might need two assistance animals for the same task, such as two dogs for stability when walking If a resident requests multiple animals, you may request documentation to show

that each animal provides disabilityrelated assistance or emotional support.

Remember that you can only request documentation for the animals where the disability-related need is not obvious or known to you.

What if I have a one-pet policy and a resident with a pet requests an assistance animal, too?

If a person with a disability has a pet and makes a reasonable accommodation request to have an assistance animal too, you cannot deny the request just because of your one-pet policy.

Remember, assistance animals are not pets.

If the number of animals requested becomes unreasonable or you think it presents an undue hardship to your community, consult with your legal counsel to see if you can legally deny the request.

Open communication with residents is best solution Remember, evaluating a reasonable accommodation request should be an individualized process with an ongoing dialog between you and the resident.

Often people file discrimination claims because they don’t feel heard, don’t understand the process, or aren’t kept in the loop.

Don’t underestimate the importance of good communication as you navigate

these complicated issues.

Ellen Clark is the Director of Assessment at Grace Hill. Her work has spanned the entire learner lifecycle, from elementary school through professional education. She spent over 10 years working with K12 Inc.’s network of online charter schools - measuring learning, developing learning improvement plans using evidence-based strategies, and conducting learning studies. Later, at Kaplan Inc., she worked in the vocational education and job training divisions, improving online, blended and face-to-face training programs, and working directly with business leadership and trainers to improve learner outcomes and job performance.

Ellen lives and works in Maryland, where she was born and raised.

For nearly two decades, Grace Hill has been developing best-inclass online training courseware and administration solely for the Property Management Industry, designed to help people, teams and companies improve performance and reduce risk.

•

Capt. Robert Baldwin and 1st Lt. Gregory Caliwag, 88th Medical Center clinical nurses pet Bailey, a pet therapy dog from the Miami Valley Pet Therapy Association on July 21, 2017.

Pet therapy dogs visit the medical center seven days a week to provide comfort to patients and staff members. (U.S. Air Force photo/Stacey Geiger) via creative commons.

10 Things to Know ...continued from 5

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the offering documents, and whether the firm is experienced with securities offerings.

Seek Professional Advice In addition to satisfying yourself with respect to all of the items listed above, you should seek the advice of your own attorney, financial adviser or accountant regarding the investment.

Your attorney should determine whether the offering complies with applicable securities laws. A sponsor that disregards the applicable laws (or drafts its own documents) may expose itself and the entire investment to unnecessary civil or criminal liability, or it may be unaware of its fiduciary obligations to its investors.

Your CPA or financial adviser should evaluate the financial merits of the investment based on past financial statements for the property and pro form a projections provided by the sponsor, as well as its suitability for your investment portfolio.

The discussion herein is of a general nature only and is not to be construed as specific legal advice, which requires the establishment of an attorney-client relationship and fee agreement. An issuer represented by securities counsel should rely on his or her own attorney’s advice with respect to the matters discussed in this article.

Kim Lisa Taylor, Esq., is founding attorney of Syndication Attorneys, PLLC, a boutique corporate securities law firm that helps clients nationwide with their federal real estate securities offerings. She has been licensed in California since 2002 and in Florida since 2012 and has made securities transactional law the focus of her practice since 2008. The firm employs one additional contract attorney with securities experience as well as other support staff. Kim and her team are available for consultation in St. Augustine, Florida.

•

Where Can I Meet Syndicators?

Become a member of your local real estate investment clubs and attend their meetings on a regular basis, and attend the informational seminars offered by your self-directed IRA administrator.

480-855-7800 25950 S. Arizona Ave., Chandler

6

Rental Housing Journal Arizona · May 2018

Rental Housing Journal Arizona

A

Accommodating Disabled Tenants in Your Rental Property

s a property manager it is fundamental to understand the laws pertaining to disability and accessibility for prospective disabled tenants. The maintenance checkup from Keepe this week involves 15 maintenance ideas to make your property more accessible to disabled tenants.

Researching and studying actual accessibility law should be a priority to prepare and protect yourself.

The Fair Housing Act and the Fair Housing Amendments Act make it unlawful to reject a prospective tenant because of their disability as you know.

However it also prohibits asking a prospective disabled tenant about whether they are disabled and about the nature of their disability, visible or not.

While such questions are unlawful, the law allows for clarifying whether a prospective tenant qualifies for demanding a rental unit designed for disabled tenants only, or for a unit designed to accommodate certain disabilities in particular.

Accommodations are a core element to accessibility law. The law states that disabled tenants may request reasonable accommodations to be provided, added or allowed for them to use and access their living space and common areas

within the property.

Disabled tenants request for accommodation should be reasonable Accommodating Disabled Tenants In Your Rental Property The nature of the accommodation requested should exhibit a reasonable relationship to the disability. Such reasonable requests include allowing a service animal to live on the property or a designated parking space. To handle requests properly, it is fundamental to have an open discussion with a tenant regarding their needs.

Deciding what represents a

“reasonable” request can be challenging considering that it can vary from case to case and property to property: the US Department of Housing Development requires a “interactive process" for reaching a reasonable compromise between a tenant and property manager/landlord/owner, generally justifying the rejection of demands for certain accommodations only when they represent an “undue” financial burden.

Accessibility Through Property Modifications Requesting or making changes to a property fall into the category

of “reasonable” requests that may or may not be granted. Before any modifications can be made, they must be approved by a property manager/ landlord/owner in charge, who can ask the tenant to provide information regarding how proposed changes are necessary and/or ideal for them.

State laws can also apply to residential requirements, and should be considered when handling a request for building modifications.

Why You Should Invest In Accessible Modifications Accommodating Disabled Tenants In Your Rental Property Generally, unless a property is considered to be federally assisted housing, disabled tenants are expected to arrange and pay for necessary modifications to the property. This being said, the following 15 tips have been provided to make residential units safe and accessible for prospective tenants who are disabled or who have particular needs pertaining to mobility and access.

These changes can be significantly beneficial. It can make a rental property particularly appealing for tenants who value living in an accessible and safe ...continued on page 11

REASONS TO 5 REASONS TO USE5RENTEGRATION USE RENTEGRATION 1. Access - Rentegration.com is a web based, multi-user software offering customers 24/7 access to forms generation, archives, property management database, basic accounting, vendor ordering and other services.

2. Rental and Lease Forms - Unlimited use of a full line of state specific rental and lease forms. All Rentegration.com forms are created by attorneys and/or local rental housing associations.

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tion.com is an easy to use, database driven1.software. form fields are autois a web based, multi-user software Access Most - Rentegration.com populated from the database.24/7 The modoffering cus- tomers access to forms generation, archives, ules are all integrated and work together. property management database, basic accounting, vendor orderFor example, a customer can use the renting and other services. roll function to identify all delinquencies, apply fees, and create eviction forms with andofLease Forms - Unlimited use of a full line of state a 2. fewRental simple clicks the mouse.

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for only forms generation will save time 3. Simplified Accounting - Owners and managers can track in3. Simplified Accounting - Owners and • Logos areover providedother on the CDmethods. in all three forms: money Mid and managers can track income and expense for each unit, property and company. Perfect for mid and small size property managers and independent rental owners, who neither have the need or budget for larger, more expensive software.

alland black, reversed to white, or for in PMSeach 280 Blue/PMS 7543property Gray spot or 4/color applications. come pense unit, and compa- ny. Perfect and small sizeexproperty managers and Please see below for specific use examples. independent rental owners manage managers and independent rental for mid and small sizecan property • No other colors are acceptable for use for the logo. their entire business atis allowed. a fraction of the owners, neither have the circumstance need or budget for • No alteringwho of the logo If you have a special that requires something not larger, more cost of other and providedsoftware on the CD, please callforms.

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Blue PMS 280/Gray PMS 7543

OR-RTG-20 Oregon

CHECK-IN/CHECK-OUT CONDITION

REPORT

TENANT(S): ____________________ ________________________________________ ______ ADDRESS: ____________________ ____________________________UNIT: ______________ CITY: ___________________________________ STATE: ________ ZIP: _________________ OR-RTG-24 Oregon

PET AGREEMENT Rating Scale

= (E)Excellent (VG) Very Good

TENANT INFORMATION

(G)Good (F)Fair (P)Poor

IN Out TENANT(S): ____________________________________________________ DATE:________ LIVING AREAS ADDRESS: ____________________________________________________ UNIT: _________ KITCHEN CITY: _________________________________________ STATE: __________ ZIP: _________ Walls

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DESCRIPTION OF PET(S) Windows

Stove/Racks

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________ STATE:

________ UNIT: _________ __________ ZIP: _________

48-HOUR NOTICE OF ENTRY

Pursuant to RCW 59.18.150, this is your WA-RTG-20 Washington 48 hour entering the dwelling notice that your

landlord or their agents unit and ______________________ premises located at (Address) will be CHECK-IN/CHEC ______________________ K-OUT CONDIT ION REPORT______________________ ___________

Floor

Carpet/Vinyl/Wood 3) Type _______________ Breed _______________ Size ______ Age __ Weight ___ Color ____ Name ________ Disposal Vaccinations: Yes____ No____ License Number: ______________ Doors/Woodwork

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___________ ______________________ Out CITY: ______________________ ________ DATE:________ ___________

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Refrigerator 1) Type _______________ Breed _______________ Size ______ Age __ Weight ___ Color ____ Name ________ Vaccinations: Yes____ No____ Rods License Number: ______________

Additional Security Deposit Required:$

WA-RTG-40 Washington

48-HOUR NOTICE OF ENTRY

TENANT(S): ___________ ______________________ ADDRESS:

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TENANT(S): ___________ the hours of ___________ (Date) and Doors/Woodwork ADDRESS: . ______________________ _________________________________ (Time) (Time) ___________ ___________ CITY: Locks______________________ The entry will occur _______________UNIT: _____________ STATE: for the following purpose: ______________ ______________________ ________ ZIP: ___________ Rating CeilingsScale = (E)Excellent ___________ ______ (VG) Very Good___________ ______________________ ___________ (G)Good ___________ (F)Fair (P)Poor Electric Outlets IN ______________________ _______________________ Out LIVING AREAS ______________________ In Out _ KITCHEN In Out Walls between

PMS 280/PMS 7543 over color

_

State specific rental and lease forms available in: AK, AZ, CA, CO, DC, DE, FL, GA, IL, IN, KS, KY, MA, NC, NJ, NV, NY, OH, OR, PA, TX, UT, VA, WA & WV. Locks

Cabinets Tenant(s) Tenant(s) certify that the above pet(s) are the only pet(s) on the premises.

Ceilings understands that the additional pet(s) are not permitted unless the landlord gives ten Sink ant(s) written permission. Tenant(s) agree to keep the above-listed pets in the premises Electrical Outlets subject to the following terms and conditions: Floor Garbage Cans

Windows 1) The pet(s) shall be on a leash or otherwise under tenant’s control when it is outside the Antenna/Cable tenant’s dwelling TV unit.

Blinds/Drapes 2) Tenant(s) shall promptly pick up all pet waste from the premises promptly.

Fireplace 3) Tenant(s) are responsible for the conduct of their pet(s) at all times.

4) Tenant(s) are liable for all damages caused by their pet(s).

Cleanliness 5) Tenant(s) shall pay the additional security deposit listed above and/or their rental agreement as a condition to keeping the pet(s) listed above.

6) Tenant(s) shall notBEDROOM allow their pets to cause any sort of disturbance or injury to the 1 BEDROOM 2 other tenants, guests, landlord or any other persons lawfully on the premises.

Walls 7) Tenant(s) shall immediately report to landlord any type of damage Walls or injury caused by their pet.

Windows 8) This agreement is incorporated into and shall become part of Windows the rental agreement exe Blinds/Drapes -cuted between the parties. Failure by tenant to comply with any part of this agreement Blinds/Drapes shall constitute a material breach of the rental agreement.

BEDROOM 3

Walls

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Personal Service:

Post and Mail:

Rods

Shelves/Drawer

* Add one additional

d

Phone

Windows

Refrigerator

Method Ice Traysof Service:

Sink & Vanity

Toilet

Tub/Shower

Walls

Stove/Racks

Blinds/Drapes Rods Floor

Carpet/Vinyl/Woo

Disposal

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Floor day for compliance

if served by post

* and mail.

www.Rentegration.com rentigration.com I 503-933-6437 503.933.6437 I sales@rentegration.com sales@rentegration.com Rods

_____________________________ Floor Landlord

Light Fixtures

Doors/Woodwork

Locks

Cabinets

Services

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Cleanliness Heating

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permission.

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of this form may Floor be reproduced without

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written permission.

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Doors/Woodwork

Doors/Woodwork

Locks

Locks

Ceilings

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Tub/Shower

Walls Windows ©2009 NO PORTION

Blinds/Drapes

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Windows

©2011 NO PORTION of this form

Light Fixtures

Doors/Woodwork

Locks

Sink

Light Outlets Electrical Fixtures

Garbage Cans

TV Antenna/Cable Essential

Locks ©2011 NO PORTION of this form may be reproduced without written permission.

Ceilings

Dishwasher

Counter Tops

Electric Outlets Ceilings

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______________________________ Floor Tenant ______________________________ Light Fixtures Tenant

Electrical Outlets

Fan (Exhaust) Doors/Woodwork

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Essential Services Plumbing

UNACCEPTABLE COLOR USAGE

Heating Electricity Hot Water Smoke Detectors

©2009 NO PORTION

Rental Housing Journal Arizona · May 2018

of this form may

be reproduced without

written permission.

©PPI-2018

DO NOT change the color

DO NOT alter in any way

DO NOT put over a busy background

7

Rental Housing Journal Arizona

Dear Maintenance Men

By Jerry L'Ecuyer & Frank Alvarez Dear Maintenance Men: I own a small apartment complex that I manage myself. The property is starting to experience repetitive sewage backups. I’ve called the plumber several times and the problem is never resolved.

The plumber is recommending the installation of a 4-inch main line clean out, running a camera down the line and few other things. It is all starting to sound expensive and I don’t know what to do. Why can’t the plumber just do the job right the first time?

Bryan Dear Bryan: Your plumber is giving you good advice. Using the camera will determine exactly what the problem is and will help you decide the best course of action

3. On a preventive maintenance basis, Hydro-jet annually to clean your main line.

This work may not be cheap, but in the long run you will benefit from lower plumbing bills, late night emergency calls and happier residents.

to solve your plumbing problem. We highly recommend adding an exterior mainline clean out. In the long run, a 4-inch clean out will save you money by making the plumber’s job easier to do. The plumber can run a larger snake without going on the roof or removing a toilet or disturbing the residents.

The 4-inch clean-out is key to help keep your drains clear on a preventive

maintenance basis.

We would follow the advice of your plumber and get bids on: 1. Running a camera down the line to determine the actual cause of your problem i.e. Roots, sewer line break, corroded pipe or cracks, etc.

2. Install a 4-inch main line clean out with street sweep and repair the sewer line as needed.

Dear Maintenance Men: How do I safely remove a large mirror from a bathroom wall without shredding myself or my helper in the process?

Tom Dear Tom: Removing a large piece of glass or mirror can be spooky.

Safety first, be sure you are wearing eye protection, gloves and a sleeve long sleeve shirt or jacket. Next, use duct tape diagonally in both directions on the ...continued on page 11

Save Money and Water ...continued from 4 So we'll change out toilets, shower heads, sinks, or even just the sink aerators ,” Lamondin said.

They also inspect the apartment community looking for: • Any sinks, tubs, valves and supply lines that may have an existing leak • Any ground leaks throughout the property ”It’s very common to come across toilets that use three-and-a-half gallons per flush. Now those toilets were manufactured usually in the 70's and 80's and haven't been changed since.”

And when the company is done, “We're really saving anywhere from about 30 percent to as much as 68 percent off of water bills,” Lamondin said.

Installing new toilets without disrupting tenants “These days, you're getting toilets that are flushing 0.8 to one gallon per flush with more power than those big guzzling fixtures. It is basically a simple math problem.

“If you take a three-and-a-half gallon per flush toilet and cut 75% off its water use, it's going to save you money. The same thing in the shower heads. A typical shower head uses two-and-ahalf gallons per minute. We typically put in one-and-a-half gallon per minute shower heads, and that saves 40 percent off their shower usage right there.

“We try to make conservation unavoidable. We do not seek to disrupt any person’s daily routine, that's really embedded in our philosophy,” Lamondin said.

“Sometimes we find some fun things when we lift up the toilets. And, that is another added value of the program.

“For instance, we may lift up the fixture and find there's a rotted floor under there. Or, there's some cracked item or a leaky valve that may in the future cause a catastrophic leak. So we go in and harden those properties against those leaks in a multi-floor building.

8

“We're in and out usually within half an hour or 45 minutes, very quickly.

We try to disrupt residents as little as possible. I would say that a lot of times the management, especially property managers on site, really appreciate the efforts we go through to handle that. We have their maintenance teams opening doors for us. We have a member of the staff with us at all times so residents see a friendly face. We really make an effort to make this a positive project,” Lamondin said.

Big projects around the country to save money and water in apartments Lamondin said his company works with another company called BH Management Services, LLC which has expanded to a nation-wide project.

“We're doing more than 14,000 bathrooms with them over the next year nationwide. In Arizona, we did 4,400 bathrooms in the fourth quarter of last year. We're still working on getting the savings numbers off of that, but they're going to be saving hundreds of millions of gallons of fresh water. I have no doubt about that,” he said.

Denver project provided return on investment in nine months “Last year we did a project in Denver for one property.” Lamondin said. “It used to be called the Breakers and now it's called Tava Waters,” and is managed

by BH Management Services.

“It was about 2,500 bathrooms in one shot. We did it in three months.

Denver Water didn't think we could do it in five months. They gave our clients the largest rebate in Colorado history. it was about $376,000 on that project.

Their return on investment (ROI) was about nine months.

“This was the largest toilet rebate we’ve ever done,” Jeff Tejral, Denver Water conservation manager, said in the great toilet payback on the Denver Water site. “It was an impressive project, and they’re saving a lot of water by using some of the most efficient toilets

available.” Denver Water estimates that Tava Waters will save around 33 million gallons of water each year by making the changes. Before the changes, Tava Waters residents were using about 51 gallons per person, per day; after the renovations, each person is using around 33 gallons per day.

The practical side of working with a single vendor Mike Watkins, Director of Construction, West, for BH Management Services, said, “In the very beginning of an acquisition or refinance, we're working with an engineer on a green study report to identify the different items and areas where there could be efficiencies, electrical or water. A lot of our projects to date have been focused around water savings.

“EcoSystems really stood out to me,” Watkins said. “I was involved in the Denver project where we had a short time frame of less than 90 days to do about 2,500 bathrooms. When I got involved with the program, and looked at how to roll this out nationally, we asked ‘Does it make sense to have multiple different vendors throughout the country doing it, or does it make sense to work with one vendor who has it down?’

“Based on their response and how they performed on the project in Denver, it was a no-brainer to work with them on the project nationwide That way, we have similar crews going on site and into tenant’s units, rather than having multiple different vendors.

This has allowed EcoSystems to become more efficient working with our projects and our managers to continue to deliver a high level of customer service to our residents. ,” Watkins said.

Freddie Mac Green Up Program for borrowers “BH Management has the Denver property but also 269 properties and just over 80,000 units under ownership and management,” said Kate Miller, Senior

Asset Manager for BH Management Services.

“We started participating in the Freddie Mac Green Up program when it was initiated in early 2017. The benefit here is Freddie Mac recognized that in most multifamily apartment communities, the tenants paid their own utilities such as electric, gas, water, etc.. Previously, multi-family investors didn’t have a strong motivation to focus on green improvements.

However, Miller said, “We are always cognizant of our footprint. We want to save resources, both utilitywise and financially, and we're always trying to do the right thing. We’ve taken full advantage of the Freddie Mac loans since they were introduced, which provide for funds to be rolled into the loan at favorable loan rates to implement green initiatives within the individual units.

“It's a program that we're really excited about,” she said. Of their 269 properties “we've got 55 properties to date that are participating in the Green Up initiative. It's really something that we're proud of. It takes a lot of work.

It takes a lot of logistics. But it's fun to see these projects wrap up. EcoSystems been very helpful to us in tracking, so going forward we'll be able to see the benefits of the investments being made in these properties,” Miller said.

City rebates make a difference “Municipalities often offer rebates to encourage owners to participate in energy saving practices ,” Watkins said.

“Denver had a phenomenal rebate. It basically paid for more than half of the project, which was fantastic.”

“In Phoenix, we've taken advantage of smaller rebates; every market and county has their own standard for what is offered. But as far as all the cities, between Phoenix and Tempe, everything was fine. I can’t think of anything that stood out to me, where it didn't go smoothly,” Watkins said. ...continued on page 9

Rental Housing Journal Arizona · May 2018

Rental Housing Journal Arizona

Application of Payments and 72 Hour Notices

by Brad Kraus Attorney at Law Warren Allen LLP

I

see it at least once a week.

Bewildered landlords painfully discovering recently enacted laws governing how and where to apply tenants’ payments. I’m talking about ORS 90.220(9), affectionately known as the “application of payments statute” in the ORLTA. Believe it or not, due to this statute, many of those landlords’ NonPayment of Rent Notices may have been defective, without them even knowing about it.

Prior to ORS 90.220(9), any payments received from tenants could be applied in manner described in the Rental Agreement. If the Rental Agreement was silent, the Landlord could simply

“fill the bottom of the barrel first.” In amending ORS 90.220, the legislature forced Landlords to apply payments received by tenants in a predetermined order. Pursuant to ORS 90.220(9), any payments received from your tenants must now be applied as follows: “A. Outstanding rent from prior rental periods; B. Rent for the current rental period; C. Utility or service charges; D. Late rent payment charges; and E. Fees or charges owed by the tenant under ORS 90.302 or other fees or charges related to damage claims or other claims against the tenant.”

At first glance, the statute is pretty straightforward. However, when put into practice, the statute causes waiver problems galore, especially when tenants carry arrearages from one

month to the next. A simple example will illustrate the waiver problem: Terry’s monthly rent is $1,000.00.

If Terry pays only $500.00 in January, and the Landlord accepts it, a partial payment has been created. If Terry thereafter pays $1,000.00 in February, $500.00 of that would first go to January’s outstanding balance. The remainder could then either be applied to February’s rent (thereby creating another partial payment issue) or returned pursuant to ORS 90.414 (thereby preserving the Landlords Non-payment termination rights under ORS 90.394).

Simple enough… right? Not so fast!

Here’s where it could get complicated . ..

Terry’s monthly rent is $1,000.00, but Terry also owes the Landlord utilities

every month (and hasn’t paid them for over 10 months, causing a utility arrearage of $600.00). Terry also hasn’t paid his rent on time for the past 10 months, incurring a $100.00 late fee each month. Accordingly, Terry’s ledger balance, including his January and February unpaid rent, is $3,600.00.

Yikes!

Let’s say that Terry tenders a payment of $1,500.00, which the Landlord accepts. The Landlord wrongly assumes that, due to Terry’s large balance, $2,100.00 (of the $3,600.00 balance) is still owed for rent. Accordingly, the Landlord serves a Non-Payment of Rent Notice, Terry fails to cure, and the Landlord files an FED. The parties then appear at the First Appearance, and a Tenants’ attorney appears on Terry’s ...continued on page 11

Save Money and Water ...continued from 8 Return on investment for apartment owners Apartment owners can finance much of the cost for the water saving initiatives.

“Right now, there's a fantastic financing opportunity through Fannie Mae and Freddie Mac for any owners purchasing or refinancing,” Lamondin said.

The programs go by different names, but “they all boil down to basically green loan programs.”

“And for owners, that can save 25 percent on their utility costs. They're able to receive significant reductions of up to 30 basis points on the loan in basis points, basis point discount, sa well as receive back much of the cost of the project that they implement through rebates.” Whose quote is this?

“So, for example, that project in Denver was one of the early ones for that program, and they received, I don't know officially how much, but I think about 30 basis points off of their loan in addition to the water savings.

We've seen a lot of growth and a lot of large owners taking advantage of this program lately,” Lamondin said.

“I'd say about 18 months is our average ROI. We've had as quickly as three. When we do our due diligence, we ask the owner what their tolerance is in terms of an ROI. And if it goes above that - it's the least favorite part of my job - but we recommend not performing projects if something doesn't meet roughly about a 24- to 36-month ROI. “We really understand the importance from a business perspective in doing this work. But I would say right now anything built before 2000 has significant potential from a conservation standpoint. And there's about 20 million or so bathrooms in the U.S. that meet that criteria just in the multifamily industry,” he said.

consumption, the amount of gallons saved, but we're pretty steady on that savings number,” Lamondin said. “A lot of times the way bills are structured - and this is something that we teach our partners - is a large determining factor in how much savings in dollars are achieved.

“For example, you have things on your bill like a storm water charge that no one can affect. However, you also have consumption charges based on the number of gallons. That's where we really hone in. And a lot of times people don't understand how much of the bill they can actually affect. And so we do a lot of educating on understanding both opportunity and liability from a utility standpoint,” he said.

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Millennials like apartments to focus on green initiatives So for example, for BH Management, “We did a projection that they're going to save about 400 million gallons of fresh water annually and just from the projects we're going to do for them within a calendar year,” Lamondin said. “Those are significant numbers that continue to build on each other.

“I'm 30. A lot of times people in my generation do care that the place they live is doing their part to keep and stay green,” Lamondin said, and the key is to save money and water in apartments.

Owners saving 35 percent to 68 percent “It really all depends in terms of Rental Housing Journal Arizona · May 2018

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Rental Housing Journal Arizona

Outdoor Flooring...continued from 1 - as a natural material, stone is not engineered utilizing chemicals or other substances that can be toxic to humans and the environment.

• Affordable when local - a unique quality of natural stone is that local varieties are generally more affordable. Purchasing a type of stone that is characteristic to your area gives you the option to source materials in a more eco-friendly and affordable way.

• Versatile - natural stone can be used to pave a variety of outdoor spaces - from driveways and walkways to pool decks. While some materials are particularly sensitive to temperature and moisture, making it necessary to consider whether using them in a particular area of your property will make them more prone to damage, stone does not make this a concern.

Cons • Longer installation time - installing stone pavements requires very precise planning and is typically a rather labor-intensive project, which means that completing the project will generally take longer.

• Can be pricey - considering that, as mentioned above, installation is labor intensive and that certain varieties of stone will have to be sourced from places that are not located nearby, a natural stone pavement project can be more expensive.

Number 2 – Wood is a common outdoor flooring

Wood is one of the most common flooring materials utilized for decks and porches, and has been a favorite for generations.

Pros • Visual appeal and versatility - the natural look of wood - with numerous colorations and designs made available by all the different varieties of wood that exist - is preferred by those wanting to achieve a warmer or one-of-a-kind, custom look.

• Local is more affordable - as for natural stone, turning to locally-sourced varieties of wood will make it more affordable to opt for wood.

Cons • Vulnerability and durability - wood is one of the most sensitive materials, being vulnerable to scratches, discoloration from prolonged directed sunlight exposure, as well as rotting and warping following moisture exposure. Opting for wood will mean keeping in mind that you will need to plan for protecting your investment.

• High maintenance - as a delicate material, regular preventative maintenance will become a necessity, especially with wood requiring to be regularly sealed. To avoid letting wood pavements to become damaged and worn, it is fundamental to be ready and expect to be investing in regular maintenance help frequently.

Number 3 – Concrete outdoor

Smoke-Free Policy ...continued from 2 family Housing provides fact sheets, brochures, and other resources to help guide PHAs and multifamily owners and property managers through the process of implementing smoke-free policies.

Change is in the Air: An Action Guide for Establishing Smoke-Free Public Housing and Multifamily Properties among other things addresses how PHAs have approached smoke-free policies for residents with disabilities.

There is more available on the Healthy Homes section of HUD’s website. Take some time to look around – you might find just what you are looking for!

Also, the American Lung Association worked with experts around the United States to develop an online curriculum

on how to implement a smoke free policy in multifamily housing properties like apartments and condominiums.

• Communicate the health and economic impact of secondhand smoke in multi-unit housing.

• Engage with building managers, property owners, policymakers, residents and other stakeholders to adopt smoke-free multi-unit housing policies.

• Plan and implement a successful smoke-free multi-unit housing policy.

• Identify resident rights and responsibilities, as well as options for providing services to help smokers quit.

flooring Concrete pavements are simple.

Their simplicity can make them the ideal element to feature along with minimalist, modern décor. Or, make them a definite “no-no” for those wanting their outdoor flooring to be a more visible accent piece.

Pros • Accessible - concrete slabs are inexpensive (generally costing a third of what natural stone would cost) and can be laid out by most contractors.

• Durable - overall, concrete requires little to no maintenance. Concrete pavers are most resistant and preferable to slabs.

• Customizable - while this comes at an extra cost, modern advancements in manufacturing have made it possible to stamp concrete to resemble the textures of other types of pavements, such as brick and stone.

Cons • Cracking and chipping - prolonged exposure, especially to cold or harsh weather, can result in concrete chipping and cracking on the long run.

Those cracks can be difficult to repair in a way that does not make the space look “patched up.” Our experts point out that while this is common for concrete slabs, concrete pavers are less likely to exhibit this quality.

• Slipping hazard - concrete can easily freeze when temperatures drop.

Slipping becomes a serious concern during the winter months.

• Simplicity - to some, the look of concrete is rather bleak. Indeed, the simplicity of concrete might not be ideal for those wanting pavements to contribute to the overall aesthetics of their exteriors by adding a unique touch of color or texture.

intricate decorative contrasts.

designs

and

Pros • Design potential - tile is highly-customizable and makes it possible to create beautiful accents and designs for your outdoor areas.

• Easy to install - unless one opts for a more elaborate design, installing basic tile is an easy project that contractors can complete quickly.

Cons • Slipping - tiles freeze easily and become incredibly slippery when wet.

To avoid dangerous falls, our experts highly encourage considering highly slip-resistant types only.

• Cracking - freeze-thaw cycles take a serious toll on ceramic tiles, which can easily crack and chip following repeated exposure. Again, our experts find it best to only consider denser tiles that are formulated for the outdoors.

• Grout maintenance - on top of concerns that have to do with maintaining the tiles alone, the grout joining them together adds an extra element to take care of. Grout can crack, stain and chip off over time, which is why consulting the manufacturer or a trusted contractor on what an ideal upkeep schedule would look like is necessary.

Summary: As the weather starts to warm - and dry - up, there is no better time to tend to the needs of your property’s outdoor flooring. The weather should make it easy and usually fast to complete flooring projects, but it also should be a reminder signaling that now is the best time to check your property to assess whether any wear or damage has occurred over time.

Number 4 – Tile outdoor flooring Tile is a common pavement type. It allows you to achieve both uniform, subtle pavements but also incredibly

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Advertise in Rental Housing Arizona Circulated to over 6,000 apartment owners, on-site and maintenance personnel monthly.

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Call 503-221-1260 for more info

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Rental Housing Journal Arizona · May 2018

Rental Housing Journal Arizona

72 Hour Notices ...continued from 9 behalf, demanding a dismissal (due to the waiver problem) and $750.00 in attorney’s fees. Unfortunately, the Tenant’s attorney’s position is legally sound, and the Landlord is in trouble ...

Why? Remember, due to the application of payments statute, the first $1,000.00 applied to January’s outstanding rent due. The remaining $500.00 then applied to February’s outstanding rent, regardless of how much money Terry owed. Maddening, right?

So what can be done to prevent such a disastrous outcome? While every situation must be analyzed on its own merits, some best practices can be articulated. First, Landlords must know how the application of payments statute works in practice. This can be difficult when the Landlord’s ledger software merely throws payments at the oldest (or total) balance. Second, Landlords should protect themselves (and their books) by serving valid For Cause notices. Third, if the Landlord desires to accept a partial payment, the parties should execute a partial payment agreement, in order to protect

Dear Maintenance Men ...continued from 8

the Landlord. Finally, prior to service of any Non-Payment of Rent notice upon tenants who carry a substantial balance, Landlords should look at their ledger and determine whether or not, in the current month, a payment of larger than the outstanding previous months’ rent was made. If so, the application of payments statute may negate the Landlord’s ability to serve a Non-Payment of Rent Notice, and a For Cause notice may be the only remaining option.

While it’s difficult to discuss and outline every possible way ORS 90.220(9) can complicate your life, knowing that the statute exists is half the battle. Once you acclimate yourself with the statute, and understand its practical effects, you can better protect yourself from potential waiver issues.

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Accommodating Disabled Tenants ...continued from 7 space.

Considering that disability law is more lax and challenging to apply uniformly for residential spaces, disabled tenants will likely also value their ability to find a welcoming space that they can trust to accommodate their needs, often becoming long-term tenants.

Finally, addressing accessibility improvements to a property in a proactive manner makes it possible to avoid being unprepared when a prospective disabled tenant makes requests down the road.

15 Maintenance Tips For Making a Property Safe And Accessible For Disabled Tenants 1. Repair or remove carpet flooring that has become loose, broken tiling and/or any kind of uneven, damaged pavement.

2. Pave all walkways and driveways to render them regular and obstaclefree.

3. Enlarge all doorways on both interior and exteriors to at least 36 in. wide 4. Consider installing automatic systems allowing remote opening of doorways, garages and gates 5. Install ramps on all multileveled access points; our experts encourage having a qualified urban planning professional inspect the property and recommend adequate placement of ramps 6. Replace door knobs with accessible flat handles 7. Install non-slip flooring in bathrooms, kitchens, exterior walkways and any other surface that is likely to become slippery when wet 8. Install grab bars in the bathroom, ensuring that they are placed at the correct height and that can support the weight of an average adult 9. Consider installing particular accessible fixtures - such as toilets

and showers - or begin by lowering toilets and lavatories.

10. Accessible faucets are ideally switched on by motion sensors 11. Light switches should be lowered to be accessible for wheelchair users, or substituted for a motion-sensing lighting system 12. Mailboxes should be lowered or substituted for accessible models 13. If the unit is furnished, furniture arrangements should allow enough clearance for users of assistive devices to travel around comfortably 14. Consider implementing Smart technology home system; Smart tech automates several in-home, everyday tasks, which renders them accessible. Additionally, Smart tech is generally a worthy investment as it is a unique and practical asset for most tenants - regardless of ability.

15. Upgrade to a side-by-side refrigerator: especially if your property is due for replacing outdated appliances - which is a beneficial investment considering that most newer appliance models feature energy-saving features - side-to-side refrigerators are ideal as they allow easy access to both refrigerating and freezing compartments Keepe is an on-demand maintenance solution for property managers and independent landlords. The company makes hundreds of independent contractors and handymen available for maintenance projects at rental properties. Keepe is available in the Greater Seattle area,

Rental Housing Journal Arizona · May 2018

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face of the mirror. This will help keep the mirror whole if it cracks or breaks.

If the mirror is glued to the wall; cover the glass with a blanket or tarp and tape it to the top edge of the mirror. Be sure to cover the entire mirror top to bottom.

You are now ready to remove the mirror and should it shatter, the blanket will contain the shards, protecting you and making the clean-up much easier.

Dear Maintenance Men: What is the normal time frame for a one or two bedroom make ready? I have always heard the three-day rule to get an apartment ready for rent. My units seem to be on the three-week rule! How can I tighten up the process and turn my units faster?

Martin Dear Martin: The “Three-Day Rule” is a nice goal to strive for and can be done. But, most units are not in rent ready condition when we get them back from our departing residents. Here’s a useful time table and work schedule for a one or two bedroom apartment requiring complete paint, carpet, flooring, minor repairs, window coverings and cleaning.

Day 1 & 2: Paint prep, trash out, minor repairs, removal of blinds, drapes, switch outlet plates etc.

Day 3: Paint Day 4: Carpet/Flooring Day 5: Installation of window coverings, doorstops, switch/outlet plates, fixtures, accessories, toilet seat

etc. Touch up paint if needed.

Day 6: Cleaning – General cleaning including windows & final inspection.

If you have done a per-inspection of the unit before the resident moves out.

You can plan what needs to be done before the unit is vacant. Organize the maintenance techs and contractors ahead of time. Have all the repair and replacement parts ready to go. The key is to plan each day and try to stick to the plan.

WE NEED Maintenance Questions!!! If you would like to see your maintenance question in the “Dear Maintenance Men:” column, please send in your questions to: DearMaintenanceMen@gmail.com If you need maintenance work or consultation for your building or project, please feel free to contact us. We are available throughout Southern California. For an appointment please call Buffalo Maintenance, Inc. at 714 956-8371 Frank Alvarez is licensed contractor and the Operations Director and co-owner of Buffalo Maintenance, Inc. He has been involved with apartment maintenance & construction for over 20 years. He is also a lecturer & educational instructor and Co-Chair of the Education Committee of the Apartment Association of Orange County as well as being Chairman of the Product Service Counsel. Frank can be reached at (714) 956-8371 Frankie@BuffaloMaintenance. com For more info please go to: www.BuffaloMaintenance.com Jerry L'Ecuyer is a licensed contractor & real estate broker. He is currently on the Board of Directors and Past President and past Chairman of the Education Committee of the Apartment Association of Orange County. Jerry has been involved with apartments as a professional since 1988.

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Rental Housing Journal Arizona

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Rental Housing Journal Arizona · May 2018