The Landlord Times - Colorado - April 2013 by Professional Publishing, Inc

Professional Publishing, Inc

www.TheLandlordTimes.com

April 2013

COLORADO

DENVER METRO • COLORADO SPRINGS • BOULDER

Vol. 5 Issue 4

MONTHLY CIRCULATION TO MORE THAN 7,000 APARTMENT OWNERS, PROPERTY MANAGERS, ON-SITE & MAINTENANCE PERSONNEL

Obama Administration Announces $19,668,850 to Continue Helping Homeless Persons and Families in Colorado HUD grants renew support for 83 local housing and service projects U.S. Housing and Urban Development (HUD) Secretary Shaun Donovan recently awarded $19,668,850 to renew support for 83 local homeless housing and service programs in Colorado. Provided through HUD’s Continuum of Care programs, the funding recently announced will ensure these HUD-assisted local homeless assistance programs remain operating in the coming year. Later this year, HUD will award additional grant funding to support hundreds of other local programs, including new projects. View a complete list of all the Colorado homeless projects awarded funding. “The evidence is clear that every dollar we spend on those programs that help ﬁnd a stable home for our homeless neighbors not only saves

money but quite literally saves lives,” said Donovan. “We know these programs work and we know these grants can mean the difference between homeless persons and families ﬁnding stable housing or living on our streets.” HUD’s Continuum of Care grants are awarded competitively to local projects to meet the needs of their homeless clients. The grants fund a wide variety of programs from street outreach and assessment programs to transitional and permanent housing for homeless persons and families. HUD funds are a critical part of the Obama Administration’s strategic plan to prevent and end homelessness. Continued on page 4

6 Questions with Darrel Dickson The Landlord Times recently caught up with apartment owner, broker and real estate entrepreneur Darrel Dickson about multifamily industry trends, the economy and real estate investment and management best practices. The Landlord Times: What about the industry has changed most since you started your career? Darrel Dickson: When I started in the business in 1987 interest rates were substantially higher than what they are today. Right now interest rates on 30 year amortization on a Market rate deal are about four and a half percent fixed for ten years. When I got started in the business it Professional Publishing, Inc PO Box 30327 Portland, OR 97294-3327

was in the 7-8% range for a ten year fixed rate loan. Therefore, if you can find an apartment building that is well priced you have a chance to make greater cash flow. There is a large demand to receive a stable return on investment from investors. Many are starved for cash flow. Currently, investors are getting almost nothing on bank certificates of deposits. When I started in this business interest rates on bank certificates of deposits were much higher. The returns through CDs at banks are currently close to zero. Investors can receive 5 to 10% steady cash flow in through owning apartment building. Investors will seek to deploy capital aggressively in the real estate considering the sustained low treasury rates that are available.

Current Resident or

TLT: What do you perceive for the economy in the next year so? How will this affect the industry? DD: Powerful demographic and economic trends will continue to strengthen the apartment market. The apartment market is in the fourth year of an increasing demand for rental units. The US vacancy rates was at 4.3% in 2012, which is resulting in a projected 4-5% rent growth nationally in 2013. The oldest echo boomers turn 28 years old and have created a significant number of new households. Additionally, over the next few years approximately 1.2 million to 1.6 million immigrants will arrive annually through 2017. The unique demographics of increased Echo boomers as well as new immigrants looking Continued on page 3

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Number of Improving Housing Markets Holding Steady in April Following seven consecutive months of gains, the list of improving U.S. housing markets remained virtually unchanged in April, with 273 metros on the National Association of Home Builders/First American Improving Markets Index (IMI), released today. This total reflects a net reduction of one market since March and again includes entrants from all 50 states and the District of Columbia. The IMI identifies metropolitan areas that have shown improvement from their respective troughs in housing permits, employment and house prices for at least six consecutive months. Five new markets were added to the list and six markets were dropped from it this month. Newcomers included the geographically diverse locations of Macon, Ga.; Portland, Maine; Rocky Mount, N.C.; Eugene, Ore.; and Jackson, Tenn. “The stability in the improving markets list this month is encouraging, with three quarters of all metros tracked by our index considered on the upswing as the housing recovery spreads to parts of every state,” said NAHB Chairman Rick Judson, a home builder from Charlotte, N.C. “In some markets, the main thing that’s holding back a recovery is a relatively thin inventory of homes for sale, which could be resolved if builders had easier access to credit for building homes and putting people back to work.” “After a strong run-up through late 2012 and early 2013, the number of improving markets is holding steady at a high level,” said NAHB Chief Economist David Crowe. “We can expect to see more gradual gains going forward as challenges related to increased demand kick in – including everything from tightened supplies of developable lots and labor to the rising cost of building materials.” “With 75 percent of the country seeing measurable improvement in housing market conditions, the outlook is definitely brightening for local economies this spring,” noted Kurt Pfotenhauer, vice chairman of First American Title Insurance Company. The IMI is designed to track housing markets throughout the country that are showing signs of improving economic health. The index measures three sets of independent Continued on page 2

COLORADO

Manufactured Fireplaces: Repair or Replace? Article submitted by Portland Chimney & Masonry, Inc. Many of your units, especially apartments and condominiums, are equipped with Manufactured Fireplaces. Over time, various parts of these Manufactured Fireplaces will wear out. Most commonly the interior fireplace area called the firebox. The firebox consists of the back wall panel, two side wall panels and the floor panel. When the Manufactured Fireplace is cleaned and inspected by a Certified Chimney Sweep and if cracks or holes are noted in the panels, these panels should be replaced

soon after by the Chimney Sweep as a follow up service. The Manufactured Fireplaces are basically appliances and it is vital to their longevity to provide routine maintenance and part replacement as needed. If they are left to deteriorate or are not repaired, replacement of the Manufactured Fireplace is then needed which is much more costly. Not to mention being a fire hazard for the property itself.

*The National Fire Protection Association recommends annual inspections and cleanings of fireplaces. “13.2 Annual Inspection. Chimney, fireplaces and vents shall be inspected at least once a year in accordance with the requirements of Section 14.2.” In the Great Northwest fireplaces abound. With the burning season coming to a close this is a good time to perform routine maintenance and cleaning. Let’s keep them safe, clean, properly maintained and ready for use.

Article submitted by Portland Chimney & Masonry Inc. Reference: National Fire Protection Association 211 Standard for Chimneys, Fireplaces, Vents, and Solid Fuel-Burning Appliances 2010 Edition. Chapter13 Maintenance

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Number ...continued from front page monthly data to get a mark on the top improving Metropolitan Statistical Areas. The three indicators that are analyzed are employment growth from the Bureau of Labor Statistics, house price appreciation from Freddie Mac and single-family housing permit growth from the U.S. Census Bureau. NAHB uses the latest available data from these sources to generate a list of improving markets. A metro area must see improvement in all three measures for at least six consecutive months follow-

ing those measures’ respective troughs before being included on the improving markets list. A complete list of all 273 metropolitan areas currently on the IMI, and separate breakouts of metros newly added to or dropped from the list in April, is available at www. nahb.org/imi.

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The Landlord Times - Colorado • April 2013

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6 Questions ...continued from front page for new rentals will put pressure on vacancy notwithstanding the increase in supply of rental units. Between 2005 and 2010 the number of 20 to 34-year-olds living with parents increased 600%. As the job market improves these young singles living with parents will be looking to exit from living with their mom and dad and get an apartment. TLT: The economy is clearly one of the most important topics of conversation and concerns. How is the economy affecting the multifamily rental housing industry today? DD: The home ownership percentages since 2006 in the United States are as follows: 2006: 68.9%, 2007: 67.8%, 2008: 67.5%, 2009: 67.2%, 2010: 66.5%, 2011: 66%, 2012: 65.5% The percentage of a home ownership has consistently dropped annually since 2006, and every 1% drop in housing ownership represents approximately 1,000,000 new renters. Multifamily properties have been so doing well because there are fewer homeowners and more renters. The market for multifamily housing construction will remain strong in 2013 according to the NAHB chief economist David Crow. He estimates that there will be 299,000 new multi-

The Landlord Times - Colorado â&#x20AC;˘ April 2013

family residential units built in 2013. He said that this is still considerably less than the 350,000 units the required to keep up with the demand and supply imbalance. That said, the cost of materials and labor make it unfeasible to build in certain areas. Also, there are financing hesitations on the part of some lenders to build new construction multifamily which makes it difficult in some circumstances. The demand for multifamily units will continue to remain strong. Multifamily assets remain have the highest occupancy rates with the most aggressive rent growth and are the easiest to finance. These are all compelling reasons for investors to continue to invest in apartment buildings in 2013. TLT: What you feel are the most important things to consider when hiring a vendor for your business? DD: First look for someone that is concerned about doing the right thing for the property. Our management company looks to get three bids prior to hiring a vendor. We want to make sure that our vendors are providing work that has been competitively bid. At our management firm I also look to make sure that our vendors have good insurance and name our company and the apartment building as an additional insured. Good references from satis-

fied customers are important, as well as the knowledge to do what is right for the building and the tenants.

TLT: For small independent owners do you suggest self-managing or hiring a property manager?

TLT: Generally speaking what two or three pieces of advice would you give to a room full of investors?

DD: If you or your wife has the time you can do the property management and save a lot of money. However if you are busy executive and you don't have time then really you want to find a property manager. It makes sense to have a property management that has a significant investment in the property so that your interests are aligned.

DD: Look to invest in markets where there is something significant going on for example major job and growth population growth and revenue growth are important to add value to a multifamily investment property. Secondly look to obtain long-term fixed-rate financing at low rates. Third look to buy well below replacement cost in well located areas. And fourth make sure you do your due diligence very well prior to purchasing a multifamily property. Some of the best deals you do are the deals you donâ&#x20AC;&#x2122;t do. If you donâ&#x20AC;&#x2122;t have the time to manage your own property you will want to consider developing opportunities with sponsors who have a proven track record operating multifamily properties.

Darrel Dickson is Principal at Preferred Capital Management, Inc. and ApartmentsForSale.com.

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Obama ...continued from front page “HUD is proving its commitment to prevent and end homelessness through investments in rental assistance, housing assistance and supportive services,” said HUD’s Rocky Mountain Regional Administrator Rick M. Garcia. “In addition to funding, we continue to apply tools from the HEARTH Act, to the Homeless Prevention and Rapid Re-Housing Program (HPRP), which are fundamentally changing the way communities respond to homelessness.” While the Fiscal Year 2012 funds awarded today are not impacted by the automatic across-the-board budget cuts under sequestration that began March 1st, Donovan cau-

tioned that future budget cuts may reverse signiﬁcant reported declines in homelessness: “During this challenging budget climate, we must make certain that we don’t balance our books on the backs of our most vulnerable citizens. When we make even modest investments in these programs, we see a measureable decline in homelessness.” HUD recently announced its 2012 “point in time” estimate of the number of homeless persons in America. Approximately 3,000 cities and counties reported 633,782 homeless persons on a single night in January of 2012, largely unchanged from

the year before. While HUD found signiﬁcant declines among the longterm homeless and veterans, local communities reported an increase in the number of sheltered and unsheltered families with children. In Colorado, local communities reported a 10.9 percent overall rise in homelessness in 2012. HUD’s Continuum of Care grants announced today will continue offering permanent and transitional housing to homeless persons as well as services including job training, health care, mental health counseling, substance abuse treatment and child care. Continuum of Care grants are awarded competitively to local

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programs to meet the needs of their homeless clients. These grants fund a wide variety of programs from street outreach and assessment programs to transitional and permanent housing for homeless persons and families. In 2010, President Obama and 19 federal agencies and ofﬁces that form the U.S. Interagency Council on Homelessness (USICH) launched the nation’s ﬁrst comprehensive strategy to prevent and end homelessness. Opening Doors: Federal Strategic Plan to Prevent and End Homelessness puts the country on a path to end veterans and chronic homelessness by 2015 and to ending homelessness among children, family, and youth by 2020. HUD’s mission is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD is working to strengthen the housing market to bolster the economy and protect consumers; meet the need for quality affordable rental homes: utilize housing as a platform for improving quality of life; build inclusive and sustainable communities free from discrimination; and transform the way HUD does business. More information about HUD and its programs is available on the Internet at www.hud.gov and http://espanol.hud. gov. You can also follow HUD on twitter @HUDnews, on facebook at www. facebook.com/HUD, or sign up for news alerts on HUD’s News Mailing List.

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1) The pet(s) shall be on a leash or otherwise under tenant’sGarbage control Cans when it is outside the tenant’s dwelling unit. TV Antenna/Cable 2) Tenant(s) shall promptly pick up all pet waste from the premises promptly. 3) Tenant(s) are responsible for the conduct of their pet(s) Fireplace at all times. 4) Tenant(s) are liable for all damages caused by their pet(s). 5) Tenant(s) shall pay the additional security deposit listedCleanliness above and/or their rental agreement as a condition to keeping the pet(s) listed above. 6) Tenant(s) shall not allow their pets to cause any sort of disturbance or injury to the BEDROOM other tenants, guests, landlord or any other persons lawfully on the premises. 1 7) Tenant(s) shall immediately report to landlord any typeWalls of damage or injury caused by their pet. Windows 8) This agreement is incorporated into and shall become part of the rental agreement exe -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. _____________________________ Landlord

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The Landlord Times - Colorado • April 2013