Metro ( Portland ) Rental Housing Journal January 2015 by Professional Publishing, Inc

Rental Housing Journal Metro

January 2015

2. Commercial Property Winterization 6. RHA Oregon Looking Forward to a New Year! 8. Staying Connected in a World of Change 9. Fair Housing Enforcement 10.U.S. Investors Favor Renting Over Flipping According To

Auction.com Real Estate Investor Activity Report 12. Innovators Beware: Dangerous Intersection Ahead 15. Multifamily Green Light 16. Secret Shopper 17. Property Management Reference Checks…Are They Really Necessary?

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PORTLAND/VANCOUVER

Published in association with: METRO Multifamily Housing Association; Rental Housing Association of Oregon; IREM & Clark County Rental Association

Is Print Advertising Dead? The Evidence Says No!

By Devan Gilbert, Staff Writer, Rental Housing Journal

umor has it in the marketing and advertising world that print advertisements are outdated and inefficient. The numbers, however, say otherwise. It’s time to squash this misinformation and get to the truth about the power of the print. The younger generation doesn’t read print anymore: False. Many like to claim that print advertising is incapable of reaching the younger generation, but research proves differently. While social media is an effective way to target the 18-30 year old demographic, it is not the only way. National Public Radio reported a study that found a quarter of 18-24 year olds had read a newspaper within the past 24 hours. The New York Times announced that 10 percent of its hard copy subscribers are between the ages of 18 and 24. According to Mediamark Research and Intelligence, magazine readership has increased by 4.3 percent in the past five years. The Association of Business Information and Media Companies reported that 96 percent of business-to-business clients still read print publications. If businesses made the fateful decision to disregard print advertising all together, they would be disengaging from a ...continued on page 5 Professional Publishing, Inc PO Box 30327 Portland, OR 97294-3327

Five Tips to Full Occupancy By John Wilhoit Jr.

n multifamily property management, there is always more to do, but there are certain things that must be done. In the effort to maintain full occupancy, these five tips are in the “must be done” category. 1. Renewals! The straightest line to maintaining high occupancy in multifamily is focusing consistent attention on renewals. Ignoring this makes maintaining full occupancy near impossible. 2. Be Ready! Never show a unit to a potential tenant that is not ready to occupy. This includes “almost ready” and “gonna be ready next week” multifamily units. It’s either ready to occupy or… wait. 3. Know Thy Competitors! Know where you can compete and where you cannot. Wendy’s restaurant has tried many times to get

in on McDonald’s breakfast revenue. They just cant do it. Know thy competitors and what concessions they are offering in the present tense. Leasing agents should know amenities of competitor properties and how/where your property can outperform. Example: older units almost always have greater square feet than newer product. Accentuate the positive!

4. Social media is a mainstay! Integration of Internet based advertising/media is a must no matter how small the multifamily market. The renter market is younger people (still). Young people are glued/ stuck/fastens to their smart phones…. smart phones with connectivity to available apartment ...continued on page 4

Buying Twice as Affordable as Renting Says Zillow Study

ven first-time buyers with low down-payments can expect to pay just 17 percent of their income toward mortgage payments as rents soar • Home buyers should expect to spend 15.3 percent of their incomes on mortgage payments for a typical home. Renters should expect to pay twice as much -- 29.9 percent of their median incomes -- to rent. PRSRT STD US Postage PAID Portland, OR Permit #5460

• Likely first-time, 23-to-34-year-old buyers should expect to spend 17.4 percent of their monthly income on house payments. Historically, they spent about 22.5 percent of their income to purchase a home. • It was 30.8 percent more affordable to buy a home in the third quarter than it was in the prebubble years (1985 -1999). It was 19.8 percent less affordable to

rent, compared to the pre-bubble years. It's more affordable to buy a home now in most U.S. metros than it was 15 years ago, even for millennials putting down less money on a home, according to a Zillow analysis of third quarter income and home value data. Renters, however, continue to pay an increasing share of their income to their landlords as ...continued on page 7

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Commercial Property Winterization How to Prevent Winter Emergencies The Real Deal: A Worst-Case Scenario By Cliff Hockley President, Bluestone & Hockley Real Estate Services

t was cold, really cold. Let’s just say that it was below freezing. News reports had been reporting for hours that the roads were icy and that everyone would be better off staying home. Our property managers and maintenance team had been preparing for days for this cold snap. Property inspections had been scheduled to make sure that all rented and vacant commercial spaces we managed would be weatherized.

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Nevertheless we had a few problems. First off, the ice storm downed tree branches and trees. This meant that many of our buildings lost power (and no power means no heat and a higher likelihood of frozen pipes). At one of our smaller twostory buildings the waterlines in the attic were not insulated and broke. When the thaw came a couple of days later, water was everywhere and we had to relocate a couple of tenants for a week until we dried things out. Finally, to add insult to injury, a riser froze in the sprinkler room of one of our retail strip shopping cencontinued on page 3

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Rental Housing Journal Metro • January 2015

RENTAL HOUSING JOURNAL METRO

Winterization ...continued from page 2 ters. When that began to thaw out we had a huge problem with flooding and no fire protection. The Fire Marshal learned about this (because an electronic monitoring alarm went off) and insisted that we post a 24-hour fire watch. Did I mention that these events occurred after we prepared all of our properties for the cold snap and went through our checklist ahead of time? Before the Storm For reference, I have summarized that checklist for use at your properties. Winterization Checklist

• Fire sprinkler systems:

• Dry systems: check operation

of air compressors/gauges and verify the system is completely drained down. Note: if a water flow fire alarm is received on a dry system and not due to an actual fire, the water flow is oftentimes caused by a compressor failure and therefore the system will need to be drained down once the compressor is repaired or replaced.

• Wet sprinkler systems: check to ensure they have antifreeze

in them. • Vacant tenant spaces:

• Those with operable HVAC systems: set the thermometer to at least 40 degrees.

• Those

without operable HVAC systems: provide space heaters to maintain a temperature of at least 40 degrees.

• Fire riser/valve rooms: verify that the heat is turned on to at least 40 degrees to prevent freezing pipes. • Irrigation system: verify that the landscape contractor has fully drained down the system to pre-

vent freezing pipes. • Exterior water faucets (hose bibs): shut off the water source, drain and cover with insulated covers. • Basement crawl spaces: inspect to ensure exposed domestic water lines are insulated to prevent freezing. Close any openings exposed to the outside, consider insulation, and/or a heat source. • Canopy/soffit crawl spaces: inspect to ensure that exposed domestic water lines are insulated to prevent freezing. Close any openings exposed to the outside, consider insulation, and/or a heat source. Refer to the above regarding canopy fire sprinklers. • Snow plowing/sanding/shoveling/de-icing service: contact the landscaping and/or parking lot sweeping companies to arrange for sidewalk, parking lot and drive lane snow services. Define the scope/level of service ahead of time and arrange for auto-deployment. • Store snow shovels, a supply of granular de-icer and a spreader onsite so that the maintenance staff is able to clear snow on the sidewalks. • Roof drains/downspouts: ensure that roof drains and downspouts are clear and in working order so that snow melt is able to appropriately drain from the roofs. • Disconnect all outside hoses: anytime outside weather is freezing all hoses on the outside of the building should be disconnected. How to Respond Once the snow and ice hits, tenants may be calling to report broken pipes, property conditions and other issues. It is important to have an office open and staff on standby to receive those calls and coordinate additional services. Verify that your snow service vendor has in fact dispatched a crew to your property. Maintenance staff needs to be prepositioned with snow blowers, chainsaws and vehicles with studded tires allowing them to travel to properties so they can provide the required service. You may want to consider having a supply of sleeve clamps or “Shark Bite” couplings on hand for repairing pipe breaks in addition to a heat gun to melt frozen pipes. If the snow is very heavy and icy crews need to be dispatched to clear the snow from buildings with flat roofs, in particular the drains need to be cleared so the water can drain off the roof as the snow melts instead of leaking into the tenant spaces. This is important because the weight of snow and ice can stress the roofs and cause them to cave in. Additionally, you also need to keep the air handlers clear of snow. If snow blocks the air flow it stresses the compressors and then you can’t generate heat either. continued on page 4

Rental Housing Journal Metro • January 2015

RENTAL HOUSING JOURNAL METRO

Five Tips ...continued from front page homes. 5. Two-way communication! Leasing Agents are far from order takers- they are the front line representing your asset. A potential tenant coming to your Leasing Office is looking for a place to live and insight on the lifestyle represented. A big part of leasing, then, is to dialogue and convey to potential tenants what they are buying. This is accomplished best by cre-

ating two-way communication. Leasing Agents should be asking open-ended questions that draw information from potential tenants to better understand their needs and wants. This allows Leasing Agents to provide information on features and benefits offered by the development that meet potential customers lifestyle desires. People may look for features, but they buy benefits. The only way to know what benefits

they are looking for is to ask. Multifamily Insight is dedicated to assisting current and future multifamily property owners, operators and investors in executing specific tasks that allow multifamily assets to operate at their highest level of efficiency. We discuss real world issues in multifamily management and acquisitions. This blog is intended to be informational only and does not provide legal, finan-

cial or accounting advice. Seek professional counsel. We discuss best practices in multifamily management and methods related to how to buy apartment complexes. Our focus is sharing strategies and tactics that can be implemented and measured. For more information, visit: http://www. Multifamilyinsight.com

Winterization ...continued from page 3 Preparation Preparation is the name of the game. The more you inspect, plan and prepare for catastrophe the more likely it is that you and your properties will survive them with minimal damage. Make sure your documentation is well organized with property maps, and the locations of water shut offs and roof drains are easily available for you and your staff to access. Also, make sure to have 24-hour maintenance staff, plumbers, electricians and emergency response contractors’ phone numbers in your cell phones to speed up your response. Finally, you will need easy access to your property insur-

ance agents just in case you have a loss and need repair approvals and checks right away. Clifford A. Hockley is President of Bluestone & Hockley Real Estate Services, greater Portland’s full service real estate brokerage and property management company. Founded in 1972, Bluestone & Hockley’s staff totals nearly 110 employees, including 20 licensed brokers. The company’s property management division serves commercial buildings, apartments, condominium associations and houses in the Portland / Vancouver metro area, while the brokerage division facilitates both leasing and sales of investment properties throughout Oregon and Washington.

Cliff earned a degree in Political Science from Claremont McKenna College and holds an MBA from Willamette University. He is a Certified Property Manager and has achieved his Certified Commercial Investment Member designation (CCIM). Bluestone & Hockley Real Estate Services is an Accredited Management Organization (AMO) by the Institute of Real Estate Management (IREM). Cliff is a member of the Institute of Real Estate Management and was named Certified Property Manager of the year in 2001 and 2003. Cliff is a frequent contributor to industry newsletters. Bluestone & Hockley offers customized brokerage, property and asset management, as well as maintenance servic-

es to property owners and investors throughout the Portland/Vancouver metro area. The company’s full-service approach benefits busy property owners and investors, who know they can count on Bluestone & Hockley for high quality real estate services start to finish.

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Rental Housing Journal Metro • January 2015

RENTAL HOUSING JOURNAL METRO

Print Advertizing Dead ...continued from front page massive list of potential clients. Multimedia is the only way to get readers to spend with my company. False. A December 2012 Valassis survey was conducted, focusing on the connection between print advertisements and the spending habits of the generations born in the 1980s and 1990s. Here is the break-down of the results.

• Over half said they would spend less money if they didn’t look at print ads.

• 91 percent said they used

coupon cutouts from print advertisements to save money.

• 51 percent admitted that print

ads inspire their spending habits.

• 30 percent said they refer to

online websites seen in print ads to obtain more information

• 87 percent use print to choose a

restaurant. Print ads make it easy to target certain demographics. Instead of throwing an advertising banner on Facebook or Twitter, you can send magazines, flyers or catalogs to homes in certain areas. Nordstrom, a billion dollar company, still spends a pretty penny on print advertising. Strategically, different versions of catalogs are printed and are distributed according to how much a specific customer spends annually and which departments they shop in. Nordstrom is able to target where and who its catalogs should be

mailed out to. Finding the appropriate audience for a company’s advertising is made easy with print resulting is less wasteful marketing spending and increased profits for a company. Why should I use print ads? Large companies aren’t using them anymore. False. Nordstrom isn’t the only company not falling for the rumors. In 2011 Nike spent $113 million on advertising that did not involve the Internet. Google spent $1 million on non-internet advertising that year as well. We all know these companies have some of the most brilliant marketing teams in the world, which is exactly why they are still using print advertisements. Madison Hildebrand, a star of the Bravo show, “Million Dollar Listings,” has had massive success as a Realtor and is well-known by most television viewers and Internet users. However, it should not be assumed that every potential client uses the Internet or watches cable TV. Mr. Hildebran knew this and recently advertised himself in a four-page spread in Homes and Land magazine. If business thriving people and companies are still using print advertisements then why shouldn’t everyone else? What makes print ads “work”? Great question. As stated before, print is easy to target. People also

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tend to pay more attention to material they are subscribed to rather than a pop-up ad or an ad interrupting their music on Pandora. Websites tend to be skimmed quickly, advertising on TV or on the Internet is only there as long as it is paid to be there. A magazine tends to find a home on a coffee table or in a dentist’s office where it is picked up and sifted through by dozens of people over several months. The Internet these-days is full of scams and fake “news”. Print advertisements are more trustworthy to potential customers. The Internet has helped bring us a fast-paced world. Many people turn to the Internet to accomplish something quickly and efficiently, but that is not necessarily the best place for an advertisement. Can you recall the last advertisement that popped up on your computer screen? What about the company that was advertising itself? Most likely not, and you are not alone. These ads don’t pique most people’s attention. It is not uncommon for somebody to unwind by reading a magazine or newspaper. In a relaxed environment is where information, in this case an advertisement, will be noticed. New advertising techniques are always better. Wrong again. “Out with the old, in with the new” shouldn’t apply to everything. People may argue that spreads with advertisements are flipped past, happens to the hundreds of emails consumers receive a day titled “Cyber Monday sale” “Going, going, gone” or “All orders over $50 take $5 off!” They go directly into the deleted items folder. Although the saying “print is dead”

has been echoing through the advertising world, research shows differently. Penn State conducted a study, that concluded that print ads stick with customers more than online ads. Print is also an advertising technique that can stimulate multiple senses. Take sample perfume ads in magazines, or shopping catalogs, or sample textures in home improvement magazines and pamphlets. A potential customer is not going to be feeling, or smelling anything through the Internet. By stimulating senses, an advertisement becomes more interesting and memorable. Internet and multimedia advertising is important True. Although print advertising continues to prove itself in the marketing world, other forms of advertising are important as well. Many print ads include the company’s website to provide more information. Integrated marketing programs have been proven to be extremely successful if correctly executed and almost always involve print ads. The use of print advertising is increasing. True. The biggest myth of all is that print advertising is quickly slipping through the cracks. This couldn’t be more wrong. According to Media Radar, the medical and pharmaceutical, home furnishings, technology, and beverages categories have all published more print ads than the year before. Ralph Lauren, Chanel, Calvin Klein and Louis Viton amongst other luxury brands have dramatically increased their print ad spending since 2012.

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Rental Housing Journal Metro • January 2015

10/2/14 2:53 AM

RENTAL HOUSING JOURNAL METRO President Elizabeth Carpenter • President Elect John Sage • Past President Phil Owen • Vice President Robin Lashbaugh • Secretary Lynne Whitney • Treasurer Elaine Elsea • Office Manager Cari Pierce

Liz Carpenter RHAOregon President

10520 NE Weidler Portland, OR 97220 (503) 254-4723 • fax (503) 254-4821 info@rhagp.org • www.rhaoregon.org.

President’s Message: RHA Oregon Looking Forward to a New Year!

January is here already and the start of a new year for all of us. This is the time of year where most of us look back on the past year and reflect on our accomplishments and plan for the coming year. I have been looking forward to the New Year with excitement. As the President Elect of RHA Oregon in 2014, I was on the front lines as we made changes to our organization to get us poised for the future. The amount of time and effort that each of your board members put forth shows their dedication and passion for RHA Oregon and for all of us as rental property owners. When we had our board retreat in November to plan for the coming year, the excitement and passion was a presence that you could feel in the room. This excitement and passion gives me what can only be described as a “Warm and fuzzy feeling for the future”. As we start the New Year, I am taking over as President of RHA Oregon from President Elizabeth Carpenter. She has done a great job of leading us thru a time of change

for our organization and I have been privileged to be right there with her to learn and observe. My heartfelt thanks to her for the time and commitment that she has given to RHA Oregon. The foundation that was laid by her leadership holds great promise for our future growth. Your board of Directors also bring a wide variety of knowledge, talent, and passion to the table each and every meeting. Their support and commitment will make my job an easy one. Our Office staff are knowledgeable, talented and excited about working with our members and board to continue RHA Oregon as a premier organization supporting rental property owners. Thanks to Teresa Carlson, Suzanne Fullerton, and Pam Van Loon for their dedication and work and to Office Manager Cari Pierce. Cari has already became an invaluable asset to me. Their skills are on display daily at the RHA Oregon office. So what does the future hold for RHA Oregon? That is the million dollar question and one of the most exciting things about being a part of

this organization. We don’t know everything that may be coming our way as rental property owners this next year. Will there be more changes in law that effect how we do business? Will the current laws and rules become clearer in how they are applied? Thankfully, we have someone keeping us informed about what is going on and what could be coming up at the legislature. Of course I’m talking about our lobbyist Cindy Robert. What a great job she does for us throughout the year. Thank you Cindy!!! Before I forget, be sure to check out and attend RHA Oregon education classes that are offered several times each month and in several locations for your convenience. Katie Poole-Hussa is taking over as Chair of the education committee, so I am really excited about what we will be offering for classes in the coming months. Be sure to check our website, www.rhaoregon.org for class offerings, times and locations. Not to be missed either is the New Member/Mentor sessions. These sessions are held every fourth

Thursday of the month. Do you want to know how to get the most out of your membership? Are you a new rental owner who has questions about being a rental property owner? Come to our next session on January 22 at RHA Oregon office starting at 6pm. Well, since my space is limited I will have to wrap this up for now. Just wanted you all (My Southern Upbringing coming out), to know that I am very grateful to be on the board and working with a great bunch of creative, talented, and passionate people in the coming year. Sincerely John Sage

Rental Housing Journal Metro • January 2015

RENTAL HOUSING JOURNAL METRO

Zillow Study ...continued from front page rents soar and incomes remain flat. On average, U.S. home buyers making the nation's median income and purchasing the typical U.S. home spend 15.3 percent of their income on their monthly house payment, down from the historical norm of 22.1 percent during the pre-bubble period from 1985 to 1999. On average, U.S. renters spent 29.9 percent of their monthly income on rent in the third quarter of 2014, up from 24.9 percent historically. Younger buyers, earning less money in many areas and making smaller down payments on a home, should expect to spend slightly more of their income on mortgage payments – 17.4 percent. Homes for younger buyers remain affordable thanks to continued low mortgage interest rates and their tendency to shop for less expensive homes. Continuously rising rents across the country could drive more people into the home-buying market, but they also make it more difficult for first-time buyers to save for a down payment. Washington, DC renters can expect to spend 27.1 percent of their income on rent, up from 16.2 percent historically. In Miami, rent as a percentage of income has risen

Vi s i t us at www.rental hous i n g j o u r n a l .co m

from 26.5 percent before the bubble to 44.5 percent currently. "Despite rising home values, home ownership remains very accessible for buyers that can scrape together a down payment – even if that down payment is relatively modest – find a home to buy and secure financing," said Zillow Chief Economist Dr. Stan Humphries. "But what keeps me up at night is the fact that it still remains so difficult for so many potential buyers to make those

Metro Area

Q3 2014 MeZillow Home dian Household Value Index Income

% of monthly income devoted to mortgage payments in Q3

United States New York, NY Los Angeles, CA Chicago, IL Dallas, TX Philadelphia, PA Houston, TX Washington, DC Miami, FL Atlanta, GA Boston, MA San Francisco, CA Detroit, MI Riverside, CA Phoenix, AZ Seattle, WA Minneapolis, MN San Diego, CA St. Louis, MO Tampa, FL Baltimore, MD Denver, CO Pittsburgh, PA Portland, OR Sacramento, CA San Antonio, TX Orlando, FL Cincinnati, OH Cleveland, OH Kansas City, MO Las Vegas, NV San Jose, CA Columbus, OH Charlotte, NC Indianapolis, IN

$53,620 $69,337 $60,650 $62,652 $61,310 $64,823 $59,953 $92,610 $47,896 $59,927 $75,059 $77,409 $52,694 $54,085 $53,487 $70,352 $69,569 $63,607 $54,746 $46,050 $72,010 $64,120 $51,668 $60,071 $59,161 $51,884 $48,905 $55,093 $49,842 $58,212 $51,609 $99,230 $55,836 $55,332 $55,238

15.3% 25.6% 40.8% 14.0% 11.3% 14.6% 11.7% 18.1% 19.9% 11.8% 22.5% 41.5% 10.0% 23.9% 16.9% 22.1% 14.3% 34.1% 11.0% 14.7% 15.6% 19.7% 11.2% 21.2% 25.6% 12.9% 16.0% 11.5% 11.3% 11.0% 16.4% 38.2% 12.0% 13.1% 10.8%

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Home ownership rates in the U.S. have steadily declined, even as the housing market has recovered, in part because millennials have delayed their entry into the housing market. But it is likely that by the end of 2015, millennials (aged 23-34) will overtake Generation X as the biggest group of U.S. home buyers, a transition aided by widespread home affordability.

% of monthly income devoted to mortgage payment for first-time homebuyers in Q3 17.4% 30.6% 50.7% 16.2% 14.5% 18.1% 15.0% 24.0% 21.2% 15.2% 26.3% 43.3% 10.6% 28.8% 20.9% 27.3% 17.7% 42.9% 12.5% 14.7% 19.0% 25.4% 11.7% 28.3% 31.1% 15.1% 19.7% 13.9% 13.9% 13.2% 19.3% 43.7% 14.1% 15.3% 13.5%

% of monthly income devoted to rent in Q3

29.9% 40.5% 47.9% 31.5% 27.7% 28.8% 29.4% 27.1% 44.5% 24.1% 34.1% 45.9% 24.1% 36.4% 27.3% 30.8% 26.1% 42.5% 24.1% 32.4% 28.5% 32.9% 26.6% 30.5% 32.2% 29.6% 32.1% 26.0% 27.7% 24.2% 27.5% 37.9% 27.0% 26.3% 25.8%

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Scott Arena President, Multifamily Northwest

Staying Connected in a World of Change

As I begin my tenure as 2015 Board President for Multifamily NW, I reflect back upon a career of 23 years in the real estate management industry. I cannot help but think how so much has changed – and yet some things remain consistent to this day. I have witnessed an incredible evolution in technology and its impact upon how we perform our jobs, deliver service, transmit information/data…and simply communicate between with one another. Today presents a different world in so many ways. Now, perhaps more than ever, as professionals we must keep pace with a rapid rate of development and change that is re-defining tools that help us perform our daily tasks and attain business objectives. As such we have come to rely upon new

ways of communicating and connecting. When I began my career in 1991, the telephone was still a primary device of connecting. Mobile phones were still in a stage of relative infancy – anyone recall the “brick” phone? Email was just being introduced – but we still relied heavily on voicemail. I recall my first flip-phone with the retractable antenna. A couple years later I discovered Palm Pilot – great for organizing, but no phone! Then the Blackberry offered something amazing: combing a phone and e-mail! All this paled in comparison to the “smart phone” of today: phone, email, texting, music, photos, and, of course, apps! All revolutionary advances that changed, and continue to change, the way our culture communicates. Changing the way we “connect.” Today we co-exist in a world of

fully always will. Communication is “connection” and we must use this tool wisely. Whether motivating our employees, greeting customers or servicing clients, we cannot discount the power of a handshake, a hand-written note, or a sincerely voiced commitment. No form of electronic “talking” can convey all that is transmitted with a “tone of voice,” body language or even a simple facial gesture. We may be the most “tech savvy” culture in continued on page 11

“screens.” From ultra-television to iPads to iPhones to iWatches, our world of communication and managing our daily lives is becoming though much faster – somewhat smaller, insular, and less interactive in ways. Along with staying current with such advances, we must not lose sight of “how” we connect. In this wave of development and tech advancement, it is critically important to remember those basics that do not change and remain crucial axioms to this day…and hopeMultifamily NW

Events Calendar January 6, 2015 9:00 AM - 1:00 PM New Hire Training (Portland, OR)

January 23, 2015 9:00 AM - 12:00 PM NALP: Leasing and the Internet (Portland, OR)

January 7, 2015 6:30 PM - 8:00 PM Landlord Study Hall - Show Me the Money (Portland, OR)

January 29, 2015 8:00 AM - 12:00 PM Safety and OSHA Preparedness (Portland, OR)

January 9, 2015 12:00 PM - 1:00 PM January It's the Law Lunchtime Series Mold: How to Handle Tenant's Demands (Portland, OR)

February 2, 2015 1:00 PM - 5:00 PM Oregon Landlord/Tenant Law Class Part I (Portland, OR)

January 15, 2015 8:00 AM - 12:00 PM Fair Housing Fair (Portland, OR)

February 3, 2015 9:00 AM - 2:00 PM CAM: Risk Management (Portland, OR)

January 20, 2015 8:00 AM - 12:00 PM Mold Awareness & Remediation (Portland, OR)

February 4, 2015 9:00 AM - 12:00 PM Emergency Readiness (Portland, OR) February 5, 2015 11:00 AM - 2:00 PM Forms and Notices (Portland, OR)

12:00 PM - 1:00 PM PDX Membership Luncheon - Marijuana Legalization: What it means for you and your property (Portland, OR) January 21, 2015 9:00 AM - 2:00 PM CAM: Legal Responsibilities (Portland, OR)

www.multifamilynw.org | 503-213-1281 | info@multifamilynw.org Consistency Guest Card – M163 OR-WA

The ACE Awards are coming. ACE nominations open on January 5, 2015.

Advertise in Rental Housing Journal METRO Circulated to over 20,000 Apartment owners, On-site, and maintenance personnel monthly. Call 503-221-1260 for more info. 8

CONSISTENCY GUEST CARD WELCOME CONVERSATION PHONE / IN PERSON

DATE __________________________________________ TIME __________________________________________ LEASING CONSULTANT ______________________________________________________________________________________________________________________

Applicant names______________________________________________________________________________________________________________________________________________________________ How soon do you need an apartment?________________________________________ How many people will this be for?_____________________________________ Where are you living now? Address:__________________________________________________________________________________________________________________________________ Any pets?__________________ Type_____________________________________________________________ Weight_______________________________ Age________________________________ What size apartment/how many bedrooms are you looking for?___________________________________________ How many baths?______________________ Is there a particular rent range?___________________________________________ What is important to you in your new home?_____________________________ ______________________________________________________________________________________________________________________________________________________________________________________

How many cars do you have?_____________________________ Why are you moving?______________________________________________________________________________ How did you hear about us?

c Print ad

c Internet

c Drive by

c Resident referral

c Used approved script to describe community amenities c Brochure/application was offered/given to applicants Price quoted________________________ Deposit or deposit range quoted________________________ Different rent or deposit rates quoted?

c Yes

c No

If yes, explain:

_________________________________________________________________________________________________________________

c Revenue Management System

c Other________________________________________________

May we have a phone number and email of where you can be reached? Phone:_______________________________________________________________________________________________________

PHONE CALLS How soon can you come and see me today? Time__________________________ If you are shown an apartment you like, are you prepared to fill out an application? c Yes c No Do you know where we are located? Do you need driving directions? Remember, please bring a copy of a government issued ID.

Email:________________________________________________________________________________________________________

INTERNAL NOTES Recorded visit into log: Call________________ Visit________________ Prospect #_________________________ Date_______________________ Initial_______________________

Who is your “Best of the Best?”

The Consistency Guest Card is a great form for landlords, busy with prospective renters regularly inquiring about vacancies. Diligent use of this form is a smart tool to keep track of potential applicants and provide the level of information that highly qualified applicants expect. Additionally this form helps ensure that all interactions with potential renters follow the same template. This form allows for the easy organization and written proof of how all applicants are asked the same questions or given the same instructions over the phone, experience matching property tours, and receive identical rent and deposit quotes. The audit trail this form creates can be very useful supporting and demonstrating your lawful application process should it ever be questioned.

Apt # shown_______________________ If not shown, reason:______________________________________________________________________________________________________________ Follow-up date within 24 hours?________________________ Second follow-up date:________________________ Third follow-up date:________________________ Leased apt #_______________________ Quoted monthly rent_______________________ Specials quoted_______________________________________________________________ If not leased, give reason__________________________________________________________________________________________________________________________________________________ ______________________________________________________________________________________________________________________________________________________________________________________ ______________________________________________________________________________________________________________________________________________________________________________________

Rental Housing Journal Metro • January 2015

RENTAL HOUSING JOURNAL METRO

Fair Housing Enforcement By Jo Becker, Education/Outreach Specialist, Fair Housing Council of Oregon

hen I’m out in the field teaching fair housing classes I’m often asked what the consequences of a fair housing violation is. Following is a primer on the subject. You can get a visual perspective on the process by viewing our Enforcement Flow Chart at www.FHCO.org/pdfs/ EnfFlowChart.pdf but following is a more detailed outline. The federal Fair Housing Act makes any denial of or differential treatment in housing based on the following protected classes illegal: race, color, national origin, religion, sex, familial status (children) and disability. Oregon law also prohibits discrimination based on marital status, (legal) source of income (including, now Section 8 and other housing subsidies), and sexual orientation and gender identity. (Visit FHCO. org for further information on the area you live or own properties.) It should be noted that one need not intend to discriminate for their words, actions, or advertising to have an illegally discriminatory affect. That is, affect not intention is

the barometer in a fair housing case. How is the Fair Housing Act Enforced? Often the Fair Housing Council of Oregon (FHCO) is the first line of defense. We receive fair housingrelated inquiries and complaints from across the state. Each call is processed and assistance provided whenever and wherever possible. We offer information and referral to appropriate resources if an inquiry is not related to fair housing. As a private nonprofit, we serve as a fair housing resource in Oregon but we are not an enforcement agency, per se. If an inquiry appears to be a bona fide allegation of fair housing discrimination, we assist in whatever way the inquirer desires. We might help mediate the issue or contact the housing provider to advocate on the individual’s behalf; we may help the victim file a formal complaint or conduct an investigation using witness interviews, testing, etc. Testing is a nationally recognized and court-tested practice aimed at identifying whether or not illegal housing discrimination has occurred. Both complaint-based and audit testing is done by FHCO. Testing is used to identify ordinary the busi-

ness practices (of a company, an individual, etc.) and whether or not these practices constitute a violation of the laws. Other enforcement-related activities may involve filing a complaint with a regulatory agency; either on our own behalf or in assisting a housing consumer who claims a fair housing violation has been committed against them. At times, we also file lawsuits with private attorneys. That said, more than 75% of the bona fide fair housing complaints we receive annually are resolved informally and never make it to the formal complaint process. What Happens After a Complaint or Lawsuit is Filed? Fair housing complaints can be filed with the Dept. of Housing and Urban Development (HUD) or a state agency such as the Bureau of Labor and Industries (BOLI) in Oregon. A complainant has up to one year from the date of the last alleged incident of illegal discrimination to file a claim. Alternatively, one may file a suit in court up to two years after the last incident. If filed with a government agency, that office (HUD or BOLI) will initiate an investigation to determine if

there is evidence of illegal discrimination or will attempt to conciliate the complaint with the parties involved. If conciliation fails, the agency will move to determine whether or not “reasonable cause” exists to believe that fair housing laws have been violated. If the government agency finds “no reasonable cause,” the complaint is dismissed. However, if evidence of a violation is found, a hearing will be scheduled before an Administrative Law Judge (ALJ). If either party elects to proceed with the case in federal court, then either the U.S. Dept. of Justice (DOJ) or the state attorney general will represent the case on behalf of the regulatory body. The decisions of the ALJ or the federal district court are subject to review by the U.S. Court of Appeals. If the complainant prevails in the case, s/he may be awarded compensatory damages. These can include any out-of-pocket costs the complainant spent while obtaining alternative housing and any additional costs, including rent, associated with that housing. Emotional distress damages for such things as humiliation, mental anguish or other psychological injuries may be levied and are in addition to out-of-pocket losses. continued on page 16

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U.S. Investors Favor Renting Over Flipping According To Auction.com Real Estate Investor Activity Report Investment Strategies Vary by Region, Vehicle and Investor Profile According to November Survey Results

IRVINE, Calif., /PRNewswire/ --

uction.com, LLC, the nation's leading online real estate marketplace, today announced the findings from its November Real Estate Investor Activity Report™, a nationwide survey of real estate investors bidding on properties offered for auction during the month. This research provides insight into real estate investment trends on both a national and regional level. Survey data collected from investors bidding on property online and at live events across the country reveals that buying property

National Findings: Investor Intent Investor Profile Flip One-time purchase 24.4% Real Estate Investor 46.7% Working on Behalf of 60.4% Another Investor TOTAL 46.6%

to hold and rent is currently favored over flipping nationwide, although investor intent varies considerably by vehicle (online or live event) and investor profile. Respondents who indicated that they were making a one-time purchase preferred a hold-to-rent strategy, as did – to a lesser extent – respondents identifying themselves as full-time "real estate investors." Meanwhile, flipping was favored by the majority of respondents indicating that they were working on behalf of another investor.

Rent 72.2% 50.4% 36.8%

Undecided 3.3% 2.9% 2.8%

50.5%

2.9%

Auction.com's findings based on responses given at online auctions show that investors bidding online generally tend to hold properties to rent rather than flipping them. This data also suggests that purchasing property to rent is more prevalent in

the Midwest and South, whereas there appears to be a higher propensity for flipping among real estate investors in the Northeast. The flip vs. rent split is nearly even in the West, with a very slight preference toward renting.

November Online Investor Data: Intent of All Investors Surveyed Region Flip Rent Undecided West 49.5% 50.5% 0% Midwest 43.5% 51.8% 4.7% South 40.5% 57.1% 2.4% Northeast 54.1% 41.9% 4.1% Nationwide 43.3% 54.0% 2.7% Conversely, investors bidding at live events appear to be more likely to flip the properties they purchase, but there were very strong regional variances. November survey data collected at live events in states where Auction.com is active revealed that flipping was favored overall,

with only Georgia, Tennessee and Texas bucking the trend. Meanwhile, respondents at live events in the Western states such as California, Arizona and Nevada showed an overwhelming preference toward flipping. ...continued on page 14

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Stay Connected ...continued from page 8 history but we are still living, thinking “beings.” Human connection is not a technical procedure. It’s an emotional one. We have more communication options available to us today than ever before. But we must choose the method that best suits the message. Sometimes, voice-to-voice or face-to-face does the job best! My message to all members as this New Year begins is do your best to stay “connected.” But balance your methods of connecting. We text, we email…sometimes when we shouldn’t (keep both hands on that wheel as it helps ensure career lon-

gevity and good health!). Despite what you might hear, there’s not an “app for everything.” Stay connected with your human side. Some things never change. Best wishes for a healthy, productive, successful and progressive 2015! By Scott Arena President Multifamily Northwest Executive Vice President of Quantum Residential, Inc. C

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RENTAL HOUSING JOURNAL METRO

Innovators Beware: Dangerous Intersection Ahead By: Neal Thornberry, Ph.D.

nnovation is not for the faint of heart, as Galileo learned when he said that the Earth revolved around the sun. He was scorned, threatened with death and eventually put under lifetime house arrest. Innovators are not always welcome guests even within their own organizations, and their challenges are heightened by a dangerous orga-

if one measurement captured in a report is good, then more are better. One company, with whom I worked, learned that its sales people were losing a month of selling each year because of the time spent filling out reports required by the finance department. This example of complexity gone awry drove the organization into Wackiness -- sacrificing revenues for reports. There are many other examples of Wackiness getting in the way of innovation – and examples of stealth innovators circumnavigating them. One of my favorites is the tale of Jim Repp, head of Jeep design at the old Daimler Chrysler Corp. Jim knew that many Jeep lovers spent thousands of dollars upgrading their Wranglers for serious offroading. This gave him the great idea

nizational intersection: where Complexity meets Wackiness. The more complex an organization, the more difficult it is for the innovator to figure out where to go with a good idea and how to weave it through the organization to implementation and eventually value creation. Growing organizations cannot avoid complexity. They add processes and people, divisions and specialists. Since we can now measure almost everything, they often believe

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for a mass-produced Jeep with all the upgrades built in at half the cost. When he shared his idea with marketing, they said there was no market for that type of vehicle and besides, you’re an engineer, not a marketer. Undeterred, Jim and a small band of innovators I call Innovation Judo masters built a secret prototype. They took it out on the Rubicon Trail in California for off-road trials and invited the senior executives to watch. Jim’s prototype outperformed the other Wranglers and, as crowds gathered around it, the executives saw their enthusiasm. They immediately authorized production of what is now a best-selling icon, the Jeep Wrangler Rubicon. Fortunately for Chrysler and other companies, there are a few pas... continued on page 15

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Renting Over Flipping ...continued from page 10 November Live Event Investor Data: Intent of All Investors Surveyed State Flip Rent Undecided Arizona 66.7% 19.0% 14.3% California 65.6% 32.2% 2.2% Georgia 41.9% 54.3% 3.9% Idaho 69.2% 30.8% 0% Nevada 88.9% 11.1% 0% Tennessee 39.4% 60.6% 0% Texas 38.7% 60.0% 1.3% Washington 62.5% 37.5% 0% Nationwide 49.3% 47.6% 3.1%

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"Real estate investors appear more likely to flip a property in those regions where home values are higher," said Auction.com Executive Vice President Rick Sharga. "Higher prices can translate to a faster and potentially more significant shortterm return on investment. The hold and rent strategy seems most popular in markets where home prices are lower, allowing investors to charge a more competitive monthly rental

rate and still produce reasonable returns over an extended period of time." Flipping was also the more popular strategy among investors purchasing multiple properties per year – particularly institutional investors (those indicating that they purchase 50 or more properties per year). This was true for both online auctions and live events.

November Online Auction Investor Data: Intent By Purchase Profile Purchase Profile Flip Rent Undecided 0-1 Property/ 30.0% 65.6% 4.4% Year 2-49 Properties/ 52.8% 45.5% 1.7% Year 50+ Properties/ 60.0% 40.0% 0% Year

November Live Event Investor Data: Intent By Purchase Profile Purchase Profile Flip Rent Undecided 0-1 Property/ 41.3% 56.3% 2.5% Year 2-49 Properties/ 49.8% 48.0% 2.2% Year 50+ Properties/ 55.4% 38.6% 6.0% Year Auction.com, LLC, is the nation's leading online real estate marketplace. Founded in 2007, the company has sold over $26 billion in residential and commercial real estate assets. Auction.com has over 900 employees and headquarters in Irvine and Silicon Valley, California as well as offices in Austin and Plano, Texas, Atlanta, Denver, New York and Miami. Visit www.auc-

tion.com for more information. SOURCE Auction.com, LLC Flipping was also the more popular strategy among investors purchasing multiple properties per year – particularly institutional investors (those indicating that they purchase 50 or more properties per year). This was true for both online auctions and live events.

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RENTAL HOUSING JOURNAL METRO

Multifamily Green Light

orecasters have begun to warn of potential overbuilding in the multifamily sector, but concerns from pundits are premature. Multifamily development in the U.S. has yet to meet pent-up demand, and annualized effective rent growth was 4.1 percent in August 2014, the highest since October 2011. At the current rate of development, we anticipate production capacity and demand will reach equilibrium by mid-2015. Subsequently,

U.S. Development Pace is Sustainable for Years to Come

the industry could enjoy up to six additional years of sustainable production, if developers and lenders carefully monitor demand and modify deliveries accordingly. It has been said that multifamily is in the middle innings of an extra inning game. Statistics on the U.S. supply of multifamily units clearly show the sector is not in danger of being overbuilt, although a few markets are the exceptions. Even areas such as Northern Virginia, which recently experienced oversupply conditions, are showing signs of improvement. Here are notable signs of a robust

multifamily sector: • The national multifamily occupancy rate rose to 95.2 percent in August 2014 after being at 95 percent since May, according to research firm Axiometrics. Occupancy rates are holding steady despite the new supply from developers. • There is fresh demand each year for 400,000 to 450,000 units, but developers are completing only 325,000 units a year. • 1 to 1.25 percent of the existing multifamily inventory in this

country is demolished each year, a metric that when not taken into consideration, skews perception of demand. With considerable attention currently on urban development, the trend will continue in the near term. “In The Top 100 U.S. Markets, Demand for Apartments was More than Double that of the Number of Units Delivered.” Fundamentals remain strong on continued on page 18

Inovators Beware ...continued from page 12 sionate innovators like Jim who won’t let go of their idea no matter what. They’ve developed a special set of skills (I call them Innovation Judo) that allow them to bypass those blocks. They are: • Discipline • Leverage • Speed • Openings • Circling • Unbalancing

Rental Housing Journal Metro • January 2015

• Redirection The Jim Repp story illustrates the application of several of these principles. The discipline to plan for building a secret prototype; leverage in getting senior executives to support his idea; utilizing the opening at the Rubicon Trail; and then using the surprise (a tactic of unbalancing) of a Jeep that looked like all the other jeeps on the trail but outperformed them. Since it takes so long to correct the dangers at the Complexity/ Wackiness intersection, identifying and supporting a few Innovation

Judo Masters can go a long way in overcoming some of the most difficult barriers to innovation. Neal Thornberry, Ph.D., is the founder and CEO of IMSTRAT, LLC a consulting firm that specializes in helping private and public sector organizations develop innovation strategies. He serves as the faculty director for innovation initiatives at the Center for Executive Education at the Naval Postgraduate School in Monterey, Calif. Thornberry, author of “Innovation Judo:Disarming Roadblocks & Blockheads on the Path to Creativity”

(www.NealThornberry.com), holds a doctorate in organizational psychology and specializes in innovation, corporate entrepreneurship, leadership and organizational transformation. A respected thought leader in innovation, Thornberry is a highly sought-after international speaker and consultant.

RENTAL HOUSING JOURNAL METRO

T Ask

Secret Shopper

Northwest

s strong market conditions continue to prevail in the Pacific Northwest, many apartment communities are maintaining high occupancy numbers, and others are full with a waiting list. Conditions are optimum for raising rents and increasing property values. Residents of these communities are getting an education in the high cost of relocating and are opting to stay put, even if they receive a significant rent increase. What all this means is that those on the leasing end are in the driver’s seat: It is a seller’s market! However, just because you are full does not mean you quit selling or stop providing quality customer service. Unfortunately, after several years of tough market conditions, some leasing staffs are ready for a break and they are taking it during regular office hours! Based on some disturbing trends that started showing up a couple of

years ago and that are still going strong, the Secret Shopper is wondering if some leasing consultants have the following questions:

• When I have no vacancies or unrented notices, is it really necessary for me to answer the phone, return calls or set appointments?

• When I have no apartments

available to rent, do I really have to keep appointments that conflict with my lunch break?

challenging when your community is 100% occupied. However, even without apartments to rent, you have an existing customer base. Your residents still must be able to conduct business with you in order to renew leases, pick up packages, request maintenance service, etc. If you choose not to answer your phone, return calls or keep your office open, then you are not providing the level of customer service you promised when they were prospective renters

Remember: The future is unpredictable, but a current, updated waiting list is a “sure thing.” Instead of “closing up shop” early on a slow day, how about making some follow up calls. You and your future renters will be glad you did! If you are interested in leasing training or have a question or concern that you would like to see addressed, please reach out to me via e-mail. ASK THE SECRET SHOPPER

• When my community is full and

Regarding your 100% occupancy I’m having a slow day, do I really Congratulations! - It took a lot of hard work to get there. Of course, need to stay open until closing? depending on how you treat your While the above are “imaginary” residents will determine if you STAY questions, I can’t help but wonder there. Oh, and one last thing: How how many of these are real, unspo- are you coming along with your ken thoughts in the minds of some waiting list? Are you keeping in touch with the people who expressed leasing employees. It may be true that the “leasing” interested in renting at your commuVALLEY, METRO, ARIZONA APT. NEWS or did you just take their name side of the rental office becomes less nity and number to “humor them?”

ON-SITE-NW SEATTLE

Salsbury Industries

Fair Housing Enforcement ...continued from page 9

Qs about this article? ‘Interested in corporate or association functions? In cases tried before an ALJ, a civil be filed under both the Fair Housing Feb, Apr, Jun, Aug, Oct, Dec penalty of up to $16,000 may be Act and / or the Equal Credit articles for your company or trade asso- Visit www.FHCO.org/pdfs/classlist.pdf ciation? Contact Jo Becker at jbecker@ imposed for a first violation up to Opportunity Act. In this case, addiFHCO.org or 800/424-3247 Ext. 150 $65,000 for a third violation. If the tional agencies may be involved. Want to schedule an in-office fair If you have questions about fair case is brought by the DOJ, civil penhousing law, please consider us a housing training program or speaker for alties can be as high as $100,000. When heard in federal court, resource and let us know! You may punitive damages may be awarded. want to start on our website where These do not reimburse the plaintiff we have not only the Enforcement for losses actually suffered; instead, Flow Chart posted but also an entire they punish the wrongdoer. Punitive page with tons of resource docudamages are awarded only if the ments and links just for housing plaintiff shows the defendant’s con- providers like yourself. You can find duct was “willful, wanton, or mali- these resources at http://fhco.org/ cious” specifically motivated by an hs_provider_info.htm. intent to exclude the plaintiff for VALLEY, METRO, ARIZONA APT. NEWS This article brought to you by the illegally discriminatory reasons. Fair Housing Council; a civil rights Attorney’s fees may be awarded organization. All rights reserved © to the prevailing party. In addition, 2014. Write jbecker@FHCO.org to courts may issue injunctions if they reprint articles or inquire about ongofeel prompt action is necessary to Cordero Painting is a full-service family owned ing content for your own publication. prevent immediate and irreparable To learn more… Learn more about harm. painting contractor in business since 1995. housing and / or sign up for our In cases involving Jan, illegal Mar,discrimiMay, Jul,fair Sep, Nov, We proudly serve the Portland/Seattle area. free, CA periodic newsletter at nation in home mortgage 1010 Eastloans 62ndor Street, Los Angeles, 90001-1598 We are commited to quality workmanship for • Fax: 1-800-624-5299 www.FHCO.org. home improvementPhone: loans, a1-800-624-5269 suit may

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Rental Housing Journal Metro • January 2015

RENTAL HOUSING JOURNAL METRO

Ernest F. Oriente, The Coach {Article #224…since 1995}

from job candidates and 51 percent discovered falsified information about past salaries. In addition, 61 percent of job candidates falsify their college credentials, a credential that can be easily researched during the reference checking process. Tip From The Coach: Based on the above survey information, conducting thorough reference checks must continue to be an important step in the selection and interview process of hiring SuperStars for your property management company. Developing a reference checking process: The first step is to determine how reference checks are going to be done in your property management company and to establish or strengthen your written policy for how reference checks fit into your interview process. With some of our property management clients, their human resource department handles this important step before a formal job offer is made. With other property management clients, all hiring executives handle their own reference checks, based on the specific level of position being offered or the compensation range being presented. As for references, three or more

ccording to the Society of Human Resource Management {SHRM} over 50 percent of the information presented on a resume by a job candidate may be false or misleading. These are alarming statistics, and as the executive of your property management company, it continues to be increasingly important to understand the mindset of the job candidates that are applying for positions within your company. This article will help you and your company strengthen your reference checking process and eliminate those who will not be a perfect fit, long before a position is ever offered. Some reference checking statistics: A recent SHRM survey at www. shrm.org was sent to 2,640 human resource members regarding reference checking. The survey concluded that job candidates frequently present misleading information about their length of stay with former organizations, their past/current salary levels and their college credentials. More specifically, 53 percent of companies involved in this survey discovered falsified information about length of employment

business references should be supplied by a job candidate as early in the interview process as possible. We highly recommend asking for references early in the interview process because this will give your hiring executives additional time to contact each organization submitted by a job candidate. This also means that your hiring executives will not be rushed to do reference checks in the final hours before making a job offer. This makes for a more thorough and complete reference checking process. Tip From The Coach: In addition to reference checks, many property management companies are now asking permission to do background checks, credit checks and criminal checks as part of their hiring process. Based on the SHRM survey statistics above and your own professional experience, have you recently reviewed your reference checking process? This process will help to link talented SuperStars to compatible positions within your property management company and will reduce the chances of hiring low performers. Questions to ask when calling a

reference: It has been our experience that all of our property management clients want to create their own custom reference checking form. Here are some sample questions to get you started with yours: How would you characterize his/her success with your company? How would you characterize his/her energy level? How was this person viewed by his/her peers? Describe the types of decisions this person made on a daily basis? How did this person manage their time? Tell me about a disagreement or a challenging situation and how this person handled it? Specifically, how was this person paid? Why did this person leave your company? Based on what you shared today, would you hire this person back? Tip From The Coach: We know that many companies are no longer giving references on past employees based on legal and liability concerns. Most of our property management clients now ask a job candidate to sign a reference authorization form giving permission to their previous employers for a full and candid reference while also waiving any legal ...continued on page 19

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Green Light ...continued from page 15 the demand side as the need for rental units continues to rise. In the top 100 U.S. markets, demand for apartments was more than double that of the number of units delivered, with 55,561 units completed and 129,162 units absorbed, according to a second-quarter 2014 report from MPF Research. Job growth is expected to continue for the next five years, according to economists at Axiometrics, barring an unforeseen shock to the economy. Job growth will drive demand for multifamily projects, and as more job formation drifts to the suburbs, so will rental demand. In a somewhat surprising observation, the National Multifamily Housing Council reports that almost 50 percent of new renters are Baby Boomers, rivaling Millennials as the biggest driver of demand. Baby Boomers are becoming “renters by choice” who trade house and yard maintenance for convenient live/ work/play environments. For the time being, several factors are holding the supply/demand ratio in check. The number of Millennials entering the renter pool continues to increase − a circumstance that will not change in the near term. Millennials will constitute 24 million new households between 2015 and 2025, thus driving up demand for rentals and starter homes, according to “The State of the Nation’s Housing 2014,” a report by the Joint Center for Housing Studies of Harvard University. Immigration is also driving additional household formation in everincreasing numbers. Renter growth in 2013 remained well above the 400,000 average annual absorption rates of the last few decades, the study reports. In addition, stringent mortgage underwriting and growing student debt push homeownership further out for many young individuals and families. Also curtailing supply are barriers to entry, which exist in coastal markets as a result of the high costs of land and construction. Artificial barriers in other U.S. markets are a consequence of zoning restrictions and public opposition to higher density projects that are necessary to make some deals financially feasible.

Finally, the lack of skilled labor is putting stress on construction capacity, driving up labor costs and length-

ening construction timetables. Many former and would-be construction workers have been lured to the oil and gas industry by higher wages, leaving the development community without enough tradespeople. While commodity prices are increasing moderately, contractors are pushing up margins to recoup losses incurred during the recession, and the additional costs will price some projects outside the realm of feasibility. The same labor dynamic is slowing the building of homes, which, consequently, also adds to the number of people in need of rental units. Opportunity still abounds in the robust multifamily sector, but future projects will face greater scrutiny from debt and equity sources, particularly as interest rates begin to rise. The “easy” opportunities are largely done and developers must be creative in originating the next round of development opportunities. As long as developers exercise constraint, it appears we will have a number of years of positive investment environment for multifamily. By Mark Culwell, Managing Director, Multifamily Development Transwestern Development Company Mark.Culwell@transwestern.com 214.534.1458

Rental Housing Journal Metro • January 2015

RENTAL HOUSING JOURNAL METRO

Ref. Check – The Coach ...continued from page 17 liability. In addition, we strongly advise our clients to call each reference given by a job candidate and when the reference conversation is complete --- ask this person, “Is their someone else within your company who can give me an additional reference on this job candidate?” Speaking to a second person within the same company is the secret to getting accurate and detailed references. Want to hear more about this important topic or ask some additional questions about how to build a custom reference checking form or to see a sample reference authorization form? Send an E-mail to ernest@ powerhour.com and The Coach will E-mail you a free TeleForum invitation. Author’s note: Ernest F. Oriente, a business coach/trainer since 1995 [33,000 hours], serving property management industry professional since 1988--the author of SmartMatch Alliances™, the founder of PowerHour® [ www.powerhour.com ], the founder of PowerHour SEO [ www.powerhourseo.com ], the live weekly PowerHour Leadership Academy [ www.powerhourleadershipacademy.com/ pm ] and Power Insurance & Risk Management Group [ www.pirmg.com ], has a passion for coaching his clients on executive leadership, hiring and motivating property management SuperStars, traditional and Internet SEO/SEM marketing, competitive sales strategies, and high leverage alliances for property management teams and their leaders. He provides private and group coaching for property management companies around

North America, executive recruiting, investment banking, national utility bill auditing, national real estate and apartment building insurance, SEO/SEM web strategies, national WiFi solutions [ www.powerhour.com/propertymanagement/nationalwifi.html ], powerful tools for hiring property management SuperStars and building dynamic teams, employee policy manuals [ www.powerhour.com/propertymanagement/employeepolicymanuals.html ] and social media strategic solutions [ http://www.powerhour.com/propertymanagement/socialmedialeadership.html ]. Ernest worked for Motorola, Primedia and is certified in the Xerox sales methodologies. Recent interviews and articles have appeared more than 8000+ times in business and trade publications and in a wide variety of leading magazines and newspapers, including Smart Money, Inc., Business 2.0, The New York Times, Fast Company, The LA Times, Fortune, Business Week, Self Employed America and The Financial Times. Since 1995, Ernest has written 225+ articles for the property management industry and created 400+ property management forms, business and marketing checklists, sales letters and presentation tools. To subscribe to his free property management newsletter go to: www. powerhour.com. PowerHour® is based in Olympic-town…Park City, Utah, at 435615-8486, by E-mail ernest@powerhour. com or visit their website: www.powerhour.com

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Rental Housing Journal Metro • January 2015

RENTAL HOUSING JOURNAL METRO

Rental Housing Journal Metro • January 2015