Metro Rental Housing Journal - March 2015 by Professional Publishing, Inc

Rental Housing Journal Metro 3. Strong Job Growth Foreshadows Solid Full-Year Economic Growth Vender Spotlight: NoAppFee.com 5. April Showers, Bring May Flowers... and Moss 6. President’s Message: The Word on the Street 8. Screening Without Social Security Numbers: There are Options! 9. Seeking Customer Loyalty? Build Good Business Relationships

March 2015 10. PAROA – Mind Your Business – Navigating Section 8 Forms and Processes

17. Commercial Markets Poised for Growth Despite Weaker Global Economy

11. 5 Innovation Killers that Lurk Within Businesses

18. New Residential Water Heater Efficiency Standards

12. Strong Job Growth Foreshadows Solid Full-Year Economic Growth

19. Spring Maintenance Checklist

14. National Survey Reveals 2015 Moving Plans For Renters

20. Inexpensive Ways to Attract Good Residents

15. Property Management: 16. SECRET SHOPPER Q&A

PORTLAND/VANCOUVER

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

After Four Years of Elevated Construction, Vacancy Will Finally Rise in Portland

trong job growth is sustaining considerable demand for apartments in the metro and pushing up rents. By the end of 2015, nearly 14,000 new units will have been added to rental stock over the past four years, yet market wide vacancy will remain below 4 percent for the fourth consecutive year. A large portion of apartment demand is coming from young professionals desiring to live in an urban environment. The higher cost of city living, however, is generating the need for more affordable housing options, including micro apartments. Micro units, which are typically less than 400 square feet, will soon be available in Northwest Portland, downtown and in the Hollywood District. At the other end of the spectrum, condo construction has resumed in the Pearl District. The well-appointed units will increase competition for nearby luxury rentals. Apartment construction is also picking up in suburban areas, especially where employment, transit, restaurants and shopping are close by. Marcus Millichap.com

Professional Publishing, Inc., PO Box 6244 Beaverton, OR 97007

Portland Among Fastest Growing Rental Markets

anuary's fastest growing rental markets included Denver, Colo., Kansas City, Nashville, Tenn., Portland, Ore., and Charlotte, N.C. U.S. rents were up 3.3 percent year-over-year in January, near the historical norm. But rents are rising much more rapidly in some markets. Annual rental appreciation peaked after the housing bust in September 2012 at 6.3 percent. In January, national home values rose at a slower pace, up 5.4 percent year-over-year, the ninth straight month of

slowing growth. Median rents continued rising nationwide in January, with rental appreciation in some small and even struggling housing markets catching up to the country's hottest areas, according to Zillow's January Real Estate Market Reportsi. In Kansas City, for example the Zillow Rent Index (ZRI)ii grew 8.5 percent year-over-year in January, more than twice the national pace and faster than markets where rapidly growing rents are ...continued on page 4

Multifamily Markets Salem-Keizer 2014 Recap Summary By: Anita Risberg, CCIM OmniVest LLC Commercial & Investment Real Estate

015 promises to be another good year in the multifamily sector. The market is supporting increasing rents and property values. Sellers are enjoying lower cap rates on dispositions and buyers are seeing low interest rates for acquisitions. Looking back at 2014 we can see a

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positive trend for the upcoming 12 months of 2015. In 2014 Salem-Keizer continued to experience a decrease in vacancy rates. The vacancy factor has adjusted from 3.85% in 2013 to 2.90% by fall of 2014. Average rent in Salem-Keizer for a 2 bedroom 1 bath unit with no amenities built 1990 or newer was $577.00. With amenities the rent was $691.00. Likewise average rent in Salem-Keizer for a 2 bedroom 1 bath unit with no amenities built after

1990 was $602.00. With amenities the rent was $654.00. Landlord concessions have decreased. Although not as popular in Salem/Keizer as it is in Portland, some landlords are starting to bill back to tenants charges for water, sewer and garbage. In properties where landlords have been successful in billing utilities to tenants, the overall cost for these utilities has decreased. Tenants appear to be ...continued on page 7

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RENTAL HOUSING JOURNAL METRO

Strong Job Growth Foreshadows Solid Full-Year Economic Growth

Robust Hiring and Firming Income Growth Expected to Boost Housing Recovery

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Rental Housing Journal Metro • March 2015

for the full year, up from 2.5 percent growth in 2014. "Our forecast calls for an increase in economic growth to 2.9 percent for 2015, which is a slight downward adjustment from our prior forecast but solid improvement nonetheless," said Fannie Mae Chief Economist Doug Duncan. "Although we are beginning this year at a more modest pace compared to the above-trend numbers seen at mid-year 2014, the country's aggregate income has benefitted from the improving labor market, which, combined with low gasoline prices, should help drive higher auto sales and overall con-

sumer spending throughout 2015." "We expect housing to shift up a gear in 2015 following the uneven and ultimately disappointing activity last year," said Duncan. "Our forecast calls for a number of factors, including strong hiring and income growth, stabilized housing affordability, and modestly easing lending standards, to translate into improving housing demand throughout the year. We continue to anticipate that the Fed will begin to hike short-term interest rates later this year, although weak global economic growth and geopolitical headwinds will likely limit the rise in long-term interest

Portland Housing Counselor Creates ‘Matching Service’ for Renters and Landlords

rates. We expect total home sales to increase by approximately 6.0 percent for 2015, with total single-family mortgage production climbing to approximately $1.2 trillion. Total single-family mortgage debt outstanding should be relatively flat this year before picking up gradually in 2016 and 2017." SOURCE Fannie Mae

A 21st century approach: NoAppFee.com

by Rix Quinn

yrone Poole stood in line, waiting for admittance to a Portland, Oregon homeless shelter. He looked around and wondered, “What in the world am I doing here?” How he got there was a series of odd events. How he got out, and rebuilt his career, is a great American success story. From constructing to firefighting From his earliest days, Tyrone says, he was an energetic worker. His mom – an artist who created blueprints for a large building firm – helped him get a good construction job right out of high school. “Soon I was making $17 an hour, much more than some of my friends who made minimum wage,” Tyrone says. “My next step was to train to be a mechanic, who made $20 an hour. “One of my friends had a relative who worked as a firefighter, and really loved it. He encouraged me to take the entrance tests. “I got admitted to the fire academy. But something terrible happened during my training.” Rehabilitation “I was working with some faulty training equipment several feet above the ground,” Tyrone remembers. “I took a bad fall. I tore ligaments and muscles in my left leg and thigh, and destroyed the lymph nodes in that leg. “I’ll be wearing compression stockings on that leg for

the rest of my life, because I can’t fight infections. I was in rehab several months learning to adjust to this. “After the injury, a career with the fire department was impossible. I got a small insurance settlement. But I had to give up my apartment, and my car was repossessed,” Tyrone continues. A ‘nightmare’ experience “How did I end up at a shelter? I was actually throwing up at a bus stop because I had been on my feet too long, and had lost too much blood in my leg. I was light- headed and nauseous. “I laid on the bus bench, and put my leg up on the arm of the bench. The police came, and thought I was drunk and trying to sleep there. “They were going to take me to detox, but I told them what the problem was, and they asked me where I wanted to go. I had no place to go. “So, they took me to a shelter. That was the lowest point in my life. From a great job with a bright future, I’d moved to no job and no place

to live. “I was depressed and angry, because I was a hard worker and eager to learn. Then I discovered something that changed my life.” From homelessness to hope “I made an important discovery during my first few days in the shelter. Most of the people were not druggies and alcoholics. They were just in a bad financial position. “Some were there due to domestic violence or abuse problems. Some had been denied for food stamps. But the bottom line was: we all wanted out! “So – because I wrote pretty well – I volunteered to work there as a housing counselor, writing letters to apartment complexes requesting housing. I became good at developing ‘award letters,’ helping folks find housing, and I was able to move out… but I continued to work as a counselor. “My first step was to find out why people were being denied. Those reasons ranged from utility debt to property debt to no rental history to criminal charges. “Working with families, I leaned all sorts of ways to give them second-chance opportunities. Then I wrote a workbook for the shelter about it. The book was a good idea, but new credit system changes demanded something more dynamic, more omnipresent…like a web site.” Bringing landlords and renters together Working closely with the

city of Portland, Tyrone Poole developed a remarkable system that’s growing every day. “NoAppFee.com removes the cost of multiple application fees for housing searches. Applicants pay a small onetime user fee that’s returned in the form of a discount certificate off the first month’s rent. That fee is returned upon accepting a property match,” Tyrone explains. “The program crosschecks the renter’s background with every single rental criteria, and tells each applicant which apartments are a match. “Landlords quickly find tenants that match their criteria, without the hassle of conducting background and credit checks and interviewing multiple unqualified tenants. “Every day, we find thousands of families in shelters who qualify for housing. Now, with this computerized system, we can help both the renters and the landlords.” Nationwide potential? Tyrone says that one day he hopes NoAppFee.com can benefit the nation’s housing crisis, and build better lives for thousands who live in shelters. For this creative thinker, a career setback became a lifechanger. And for thousands of Oregon families, Tyrone’s work has been a life-saver. For more details on the company, call Tyrone at 503-4210566, or e-mail him at tyrone@ noappfee.com. Or, go online to www.noappfee.com.

RENTAL HOUSING JOURNAL METRO

Portland Among ... continued from front page an old story, including Seattle, Boston and Los Angeles. Two years ago, when West Coast rents were already soaring, rental growth in St. Louis was flat and even falling. But between January 2014 and January 2015, rents there rose 4.2 percent. The fastest growing rent in the country in January 2015 was in San Francisco, where median rent was up 15 percent year-overyear for the fourth month in a row. U.S. rents were up 3.3 percent year-over-year in January, near the historical norm. The fastest growing rental markets in January included Denver, Colo., Kansas City, Nashville, Tenn., Portland, Ore., and Charlotte, N.C. Nationally, the Zillow Rent Index rose 3.3 percent year-over-year in January, and 0.4 percent from December, to a median of $1,350. For years, demand for rentals has driven up rents, and income has not kept pace. Currently, Americans should expect to spend roughly 30 percent of their incomes on rentiii as opposed to historic norms of around 25 percent. And the problem is far from over, according to more than 100 housing experts surveyed in the latest Zillow Home Price Expectations Surveyiv. More than half said they expected rental affordability to continue to be a problem for at least two more years. "Rental appreciation has been a freight train these past few years, chugging along without any appre-

ciable slowdown. Since 2000, rents have grown roughly twice as fast as wages, and you don't have to be an economist to understand why that is hugely problematic," said Zillow Chief Economist Dr. Stan Humphries. "More than one-third of Americans are renters, and today's renters are tomorrow's buyers. For many current renters, buying a home could mean both a lower and more stable monthly payment, but rising and increasingly unaffordable rents make it difficult to save for a down payment on a home. The rental market used to be and should remain a stepping-stone to homeownership. But given how widespread rental affordability problems have become, the rental market could be acting more like a barrier to buying. More supply will help ease the crunch, both from new construction and as current renters transition into homeownership, creating more vacancies in existing developments. But neither will happen overnight." Nationally, home value growth continued to level off in January. The U.S. Zillow Home Value Indexv rose 0.2 percent from December and 5.4 percent year-over-year, to a median value of $178,500. Home values are expected to grow another 1.9 percent through January 2016, according to the Zillow Home Value Forecastvi. By the end of the year, Zillow expects growth in rents to outpace growth in home values.

Metro Area

Jan.2015 ZRI

YoY ZRI change

Jan.2015 ZHVI

YoY ZHVI change

United States

$1,350

3.3%

$178,500

5.4%

New York/N. New Jersey

$2,331

2.1%

$382,900

3.7%

Los Angeles, CA

$2,460

4.9%

$529,600

4.3%

Chicago, IL

$1,609

-0.5%

$187,500

3.6%

Dallas-Fort Worth, TX

$1,443

4.9%

$153,600

8.3%

Philadelphia, PA

$1,546

2.1%

$203,500

4.2%

Houston, TX

$1,497

5.9%

$154,200

12.2%

Washington, DC

$2,103

1.3%

$363,700

3.7%

Miami-Fort Lauderdale, FL $1,779

2.8%

$212,400

13.2%

Atlanta, GA

$1,233

4.3%

$154,600

10.7%

Boston, MA

$2,149

4.6%

$365,400

3.2%

San Francisco, CA

$3,055

14.9%

$705,900

7.3%

Detroit, MI

$1,096

5.0%

$114,900

7.6%

Riverside, CA

$1,665

4.2%

$284,000

9.1%

Phoenix, AZ

$1,225

5.3%

$203,200

5.6%

Seattle, WA

$1,834

4.9%

$340,400

6.3%

Minneapolis-St. Paul, MN

$1,502

-0.3%

$212,600

5.9%

San Diego, CA

$2,293

4.5%

$470,600

4.1%

St. Louis, MO

$1,138

4.2%

$131,500

2.8%

Tampa, FL

$1,268

3.9%

$148,500

9.3%

Baltimore, MD

$1,713

1.5%

$244,800

2.7%

Denver, CO

$1,827

10.2%

$286,500

14.7%

Pittsburgh, PA

$1,124

4.9%

$125,400

4.4%

Portland, OR

$1,587

7.2%

$278,700

5.2%

Sacramento, CA

$1,629

4.6%

$333,400

7.4%

San Antonio, TX

$1,299

4.3%

$145,700

5.4%

Orlando, FL

$1,311

2.1%

$169,800

9.1%

Cincinnati, OH

$1,208

3.7%

$137,700

4.6%

Cleveland, OH

$1,167

4.2%

$120,500

2.2%

Kansas City, MO

$1,214

8.5%

$138,400

5.9%

Las Vegas, NV

$1,196

1.6%

$186,600

10.5%

San Jose, CA

$3,190

13.4%

$842,700

10.6%

Columbus, OH

$1,251

2.8%

$146,100

4.9%

Charlotte, NC

$1,235

6.1%

$158,000

5.4%

Indianapolis, IN

$1,193

1.6%

$128,200

-0.9%

Austin, TX

$1,657

7.0%

$222,600

10.8%

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Rental Housing Journal Metro â&#x20AC;˘ March 2015

RENTAL HOUSING JOURNAL METRO

April Showers, Bring May Flowers... and Moss By Brandon Vaughn, All-Clean! SoftWash Known by many property managers as the scourge of the Northwest, roof moss can be a formidable enemy. Every year, despite the brushing, and pounds of Moss-Off applied - the moss returns, seemingly stronger than ever. And it's more than just an aesthetic problem. "Moss can be detrimental to asphalt shingle performance," says a maintenance bulletin from ARMA (Asphalt Roofing Manufacturer's Association). "Moss build-up can cause lateral water movement resulting in moisture damage to the roof deck or may even cause leaks." So why is moss so prolific in the Northwest? About 40 years ago, roofing manufacturers began adding

Rental Housing Journal Metro â&#x20AC;˘ March 2015

limestone filler to roofing shingles, to help weigh them down and cut down the cost of using more expensive ceramic. The downside is that black algae and moss now feed on this limestone filler. Combined with our constant rain, we have the perfect damp environment where moss, algae and lichen can really grow. The Bigger Problem Roof manufacturers know that the moss plant's root systems can cause significant granule loss, leading to premature roof failure. It's for this reason that manufacturers will actually void the warranty on roofs that have been neglected. However, there is a bigger problem. Most of methods used to remove moss in the Northwest, also void the roof warranty. Brushing, scraping, pressure washing, even a low-pressure rinse of the moss, can void roof warran-

ties. The reason for this is premature granule loss. "We have seen granule loss from pressures as low as 150 PSI in previous claims," says a technical coordinator with GAF Roofing. While brushing, scraping or rinsing the moss may provide an immediate result, the damage done can take years of the lifespan of a roof. It's a short term solution to a long term problem. Frayed shingle edges, granule loss, pock marks - all hallmark signs of damage caused by manual moss removal. And the very next year, the moss will re-grow, requiring more brushing or scraping,

causing more damage. So the question remains, how can one effectively treat this moss without voiding the warranty? Winning The Battle First off, one needs to think of moss like a pest, not as a dirty stain that can be scrubbed or blasted away. Interestingly enough, Oregon requires companies who treat moss on roofs to be licensed with the Oregon Pesticide Division. One common method used and recognized as a pesticide for roof continued on page 5

RENTAL HOUSING JOURNAL METRO President: John Sage • President Elect: Ron Garcia • Past President: Elizabeth Carpenter • Vice President: Robin Lashbaugh Secretary: Lynne Whitney • Treasurer: Elaine Elsea • Office Manager: Cari Pierce 10520 NE Weidler Portland, OR 97220 (503) 254-4723 • fax (503) 254-4821 info@rhaoregon.org • www.rhaoregon.org.

ecently, I volunteered to help with the Homeless Street Count in Multnomah County. The count is conducted to gather the most accurate data for the delivery of services to the homeless. The federal government picks one night out of the year; this year it was the night of Wednesday January 28th. The volunteers are instructed to ask the first question on the survey which is, “Did you or will you spend the evening of Wednesday January 28th outside? Of course there are many variables to that answer and to what qualifies as having spent that night outside. But if they had, then there were a lot more questions to be asked if they were willing to participate. There are volunteers that go out to different areas of the county and the survey is conducted over several days. That is the short version to explain what the Homeless Count survey does. An explanation of how it is conducted and why can’t begin to tell you the effect that it can have on those who volunteer to make it happen. Since I was familiar with JOIN, I

President’s Message: The Word on the Street chose my volunteer shift at their location. I arrived at 10:00 am on Thursday January 29th. RHA Oregon has partnered with JOIN and has been serving lunches to the homeless at JOIN once a month for the last year. RHA Oregon also sponsored a family with children, moving them from the streets into a home. I have had the opportunity to volunteer my time at JOIN. I have met some interesting people, both volunteers and individuals who were there to use the services that JOIN provides. Everyone is always polite, helpful and really appreciative that you are there to help and give of yourself. However, I had never really had the opportunity to have a meaningful conversation with any of the individuals that I had met for the brief moment while they passed thru the line to get lunch. Usually it is just a quick “Hello”, or even just momentary eye contact and a nod of the head. So I really was looking forward to the chance to get to find out more about these people. And to be honest I was a little apprehensive as to what it could be like to ask some

of the rather personal questions that were part of the survey. Anyway to make a long story short, I spoke with many interesting and thoughtful people that day. There were various reasons that led them to the life that they are leading. Some had been on the streets from a very young age and others only recently. There were families with children; some with younger children and some with teenagers. They have the same concerns that we do. How can I improve my life? What will tomorrow bring? How is my family doing? Are the Federal, State and Local governments listening to what my concerns are for our country? As I left after having completed my small part, I reflected on the interactions and conversations that I had that day. What was the effect that this would have on my opinions and actions in the years to come? Well, I’m not sure that I will ever be able to give it a simple answer. What I do know is that once you have spent time talking and getting to know another’s struggles, you have

John Sage RHAOregon President

a whole different filter from which to view your own world. In some ways the world gets a little smaller and larger at the same time. Which leads to my last point: Our State legislative session has started in Salem this month. As always, we are getting reports from Cindy Robert, our lobbyist for RHA Oregon, about upcoming bills. Cindy does a great job keeping us informed about those bills, which can have an effect on how we conduct our business as property owners. I would encourage you to check your emails and read the UPDATE for important information. Also, please make sure that we have your current email address for alerts and calls to action that may be coming. With 1800 members we can be a strong voice in the state for our industry, but only if we are taking the opportunity to make our voice heard. Sincerely, John Sage President RHA Oregon Stegmann Insurance Agency Inc.

Rental Housing Journal Metro • March 2015

RENTAL HOUSING JOURNAL METRO

Multifamily Markets ...continued from front page more mindful of usage and report plumbing problems and leaks more frequently. With regard to sales activity, Salem/Keizer has enjoyed an increase in investor activity. Competition for apartment assets in Portland and elsewhere are driving investor demand to secondary and tertiary markets. Pricing seems to be less volatile in smaller markets outside major metropolitan areas. The overall days on market as well has continued to decrease. Addition Property Statistics • The average number of days vacant for 2014: spring 18 days and fall 49 days. • The average rent per square foot: $1.00. Up from 2013. • Landlords are billing back 56% of the tenants for utilities in the properties surveyed. • Tenant paid utilities: Water 56.6%, Heat 98.5%, Garbage 51.9% • Percentage of Landlord’s offering incentives: 22.7% Spring 2014, decreasing to 16.3% Fall 2014.

New Construction Projects Tenant demand for apartments has continued to be strong. Developers have continued to begin new construction of apartment properties in the Salem-Keizer markets. The following projects are a sample of the new projects being built: 108 units on Wiltsey Road, 134 units breaking ground on Davis Rd, 168 units on the former Boise Cascade site, 178 units off Gaffin Road and 204 units in Independence. There are 180 units proposed for Keizer Station. Absorption of new units is expected to be strong. Sales Comps for 2014: SalemKeizer 17 closed sale transactions. The following are a sample of transactions for 2014: Cambridge East and Stone Ridge Apartments, 226 units, $43,000.00 per unit, high level of deferred maintenance and high vacancy, sold for $9,718,000.00. Amber Manor Townhomes, 51 units, sold for $100,000.00 per unit or $5,100,000.00. Whitman Park Apartments, 92 units, sold for $46,904 per unit or $4,315,200.00. Logan Place, 86 units sold for $50,000.00 per unit or $4,300,000.00. Lastly Silverwood Apartments, 44

units sold for $68,182.00 per unit or $3,000,000.00. 2014 cap rates for recorded sales range from 6.44% to 8.0%. This is lower than 2013. Favorable interest rates and financing packages are fueling investor demand for quality multifamily properties. As investors and institutions chase and acquire Class A assets in the major metropolitan areas, the availability of these types of assets is decreasing. Competition for quality assets is high. Investors are beginning to look at secondary and tertiary markets to buy quality assets for their portfolios. This is a trend that is occurring nationwide. For the owners of large

properties of 100 plus units, who have been considering a sale, this is an optimum time to offer your property for sale. For more details on individual sales comps or property data, please feel free to call Anita Risberg, CCIM at 503559-8513 or email at adrisberg@ccim. net.

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Rental Housing Journal Metro • March 2015

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RENTAL HOUSING JOURNAL METRO The Fair Housing Council Of Oregon 1221 SW Yamhill St., #305, Portland 97205 503/453-4016 www.fhco.org

Screening Without Social Security Numbers: There are Options! By Jo Becker, Education/Outreach Specialist, Fair Housing Council of Oregon

HCO often receives questions from both housing consumers and housing providers about tenant screening for applicants who do not have a Social Security number (SSN). With President Obama’s immigration action, approximately 4 million U.S. residents who are currently undocumented will have the opportunity to apply for work permits and SSNs. The campaign around Measure 88 (the “driver card” measure) also brought discussions of immigration in Oregon to the forefront last this fall.

The FHA and Oregon antidiscrimination law apply to everyone present in the US, regardless of immigration status.

Whatever your personal political position is on these recent events, the fact remains that many Oregon housing seekers do not have an SSN, and many will still not even when the President’s programs are activated.

The fact is that the Fair Housing Act and Oregon anti-discrimination law apply to everyone present in the US, regardless of immigration status. FHCO recognizes the importance of thorough tenant screening. Did you know that criminal history information can be acquired without an SSN and, of course, current and past landlords can provide rental history and references? Applicants may be able to provide other information such as proof of "x" number of recent months’ paid utility bills, rent, or other regular monthly bills that can show a pattern of timely payment. Individuals who do not qualify for an SSN may often have an ITIN (Individual Taxpayer Identification Number). This number allows for reporting to the IRS and in some cases for opening other accounts. After having consulted with screening companies and the credit bureaus, it does not appear that this will allow a credit report to be pulled in the same way that an SSN does. What we suggest when an applicant has no SSN is to say “show me

what you can” rather than a flat “no.” At that point, your screening company should be able to give you an informed estimate about how much time and money an evaluation could cost. Costs may vary so shop your screening company. Once you have a cost estimate, inform the consumer and, if you wish and do so consistently, you may then pass this cost on to them if they want to continue with the application.

A refusal to review alternative documentation when a SSN is not available will have a negative & disparate impact on individuals whose national origin is not the US, thereby having a disparate impact on that protected class.

NOTE: This is a deviation from official FHCO opinion in the past that higher costs for manual screening without a SSN should not be passed on to the applicant. At this point there isn’t local or federal case law to provide guidance;

however, we feel our current position is a reasonable balance between consumers’ rights and housing providers’ concerns. Case law has well established that it is inappropriate and illegal for a housing provider to charge someone to have an assistance animal, or a change to a guest policy to have a caregiver visit however many days a week, etc. With respect to screening a tenant without SSN; however, we are not talking about a disability-related modification / accommodation. 1Federally protected classes under the Fair Housing Act include: race, color, national origin, religion, sex, familial status (children), and disability. Oregon law also protects marital status, source of income, sexual orientation, and domestic violence survivors. Additional protected classes have been added in particular geographic areas; visit FHCO. org/mission.htm and read the section entitled “View Local Protected Classes” for more information. It is still our position that a refusal to review alternative documentation when a SSN is not available will continued on page 13

April Showers... and Moss ...continued from page 5 moss is zinc or copper sulfate. Zinc or copper sulfate can be a great preventative if applied annually to the roofs, and should be considered as a regular maintenance method to keep roofs moss free. However it works poorly at removing moss that is actively growing. To completely remove the moss the first time through, ARMA recommends a "SoftWashing" treatment. If treated and killed properly, roof moss will weather off the roof naturally, typically within 6 months, without any need for brushing, scraping or rinsing. This method is the gentlest way of removing moss guaranteeing not to cause any roof damage. Thus the reason why the roof manufacturers recommend it. And because the solution can be pumped upwards of 30' by a technician with a hose and pump system, many roofs can actually be treated without walking on the roofs.

The best time of year to treat moss is in early spring before the moss begins to flourish with the spring rains. Once treated and killed, the pounding of the rains actually help speed up the moss decomposition and weather it off the roof quicker. Moss can be a tough enemy, but with the right strategy and tools in your arsenal, controlling it will pay off in the long run. Proper roof maintenance and cleaning can prolong the lifespan of a roof by double. Considering roof replacement is one of the most expensive maintenance items a property will encounter, some proactive maintenance is a worthwhile investment that will yield great returns.

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Rental Housing Journal Metro • March 2015

RENTAL HOUSING JOURNAL METRO 16083 SW Upper Boones Ferry Road, Suite 105, Tigard, OR 97224 503-213-1281, 503-213-1288 Fax www.multifamilynw.org

Scott Arena President, Multifamily Northwest

Seeking Customer Loyalty? Build Good Business Relationships consistent and meets expectations, they are happy. But satisfaction does not always equate to long-term devotion. Satisfied customers will stay – but only until a better alternative presents itself – even if their expectations are being exceeded. There is no emotional connection or investment – and, as such, no commitment. By contrast, customer loyalty is what drives customers to maintain your services, keep returning, and stay through thick and thin. Too many times we make the mistake of confusing satisfied customers with loyal ones. Much research over the years has indicated no connection exists between customer satisfaction and customer loyalty. None. Simply because a customer indicates high levels of satisfaction does not mean they are or will be loyal to you. Customer loyalty is anchored in emotional connection. They are invested, heart and mind, in what you are as a company and how they are a part of it. A sense of partnership replaces the customer definition. They are “all in” and committed to you. What drives customer loyalty? One could argue that business rela-

tionships are an essential component. These are the relationships that go beyond the standard mindset of “get the sale and just maintain the account”. The types of relationships that foster and nurture loyalty are those that are built with care, effort and sense of purpose. The following are five steps that can help individuals and organizations build strong relationships that breed loyalty: -Be likable. Go out of your way to be friendly and helpful. Customers and clients want to be around people that make them feel good and positive. Be real. Have a sense of humor and connect on more than just a business level. Use discretion, but connect with positive interaction. Ask about hobbies, trips, interests, family, etc. Find common ground, build chemistry, and connection will follow. -Earn respect with professionalism. Clients should look with admiration upon how you work, how you behave, and how you treat others. Are you competent? Organized? Do you follow-up? Are you among the Multifamily NW

Upcoming Educational Opportunities 2/24/2015 NALP: Marketing & Maintaining Your Community 2/25/2015 Basic Electrical for Spanish Speakers

Apartment Report Breakfast Mark your calendar for the Spring 2015 Apartment Report Breakfast on Wednesday, April 15, 2015 at the Multnomah Athletic Club from 7:30am-9:00am. Our distinguished panel of speakers will review the results of the latest Apartment Survey and share their valuable insights concerning various metropolitan markets. Multifamily NW would like to express appreciation to everyone who participated in the latest survey. Your cooperation makes this the most comprehensive study of its kind in the area.

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16083 SW Upper Boones Ferry Rd. Ste. 105 Tigard, OR 97224 ph: 503-213-1281 fax: 503-213-1288 info@multifamilynw.org Rental Housing Journal Metro • March 2015

best in your profession? Endeavor to earn and maintain respect through steady disciplined practices. -Be admirable in all you are as a person- not just who you are at work. Clients establish long-term devotion to people with whom they are proud to associate. Are you living a life worthy of other’s respect? How do you spend free time? Family events? Charity work? Relationships migrate to a deeper level when outside interests and causes are shared and intersect. -Be honest and forthcoming. Always. If a problem arises, catch it early. Communicate the details to a client or customer- and have a solution ready. Apologize when necessary. Business practices move quickly and are subject to both visible and unforeseen events. Anticipate it. Deception or dishonesty will only lead to suspicion and destroy trust. Avoid short cuts. Make smart decisions. Honesty in business dealings will earn you respect, devoted clients….and loyalty. ...continued on page 11

2/26/2015 CAM Human Resources Part 2 3/05/2015 New Hire Training (Portland, OR) 3/11/2015 CAM: Marketing 3/11/2015 Fair Housing 150

3/13/2015 It's the Law Lunchtime Series - Fair Housing Fundamentals: A Crash Course on Claims Avoidance 3/16/2015 NALP: Why Your Competition Matters 3/18/2015 Special Invite-Only Luncheon - "Follow You Anywhere: A tribute to the excellence exhibited by ACE Award nominees" 3/19/2015 Portland Maintenance Fair 3/25/2015 CAM: Property Maintenance for Managers 3/30/2015 Unit Inspections & Turnover Techniques

Form of the Month

M041 OR Notice of Tampering with Alarm/ Detector

This form was created to specifically to communicate tenant non-compliance regarding Smoke or Carbon Monoxide Alarms/Detectors. When tenants sign the Smoke/Carbon Monoxide Addendum they agree and acknowledge their responsibility to regularly test alarms, replace batteries when needed and to inform the landlord immediately in writing with any malfunction. Tampering, disarming, or removing batteries are subject to a $250 fine per alarm, per occurrence. This statutory set fine is meant to be a deterrent from tampering and to emphasize safety dangers and liability risks of noncompliance.

OREGON

NOTICE OF TAMPERING WITH ALARM / DETECTOR DATE __________________________________________ PROPERTY NAME / NUMBER ___________________________________________________________________________________________________________________________________________________________________ RESIDENT NAME(S) ___________________________________________________________________________

___________________________________________________________________________

UNIT NUMBER ___________________________________ STREET ADDRESS ___________________________________________________________________________________________________________________________________________________________________________ CITY ___________________________________________________________________________________________________________________________________________________ STATE ___________________________________ ZIP _____________________________________________________________

WARNING: Your Rental Agreement, the rental rules and regulations, and the landlord-tenant laws require all residents to follow basic rules to protect the safety of all residents, prevent damage to property and retain a quality rental community. It has come to our attention that you have removed or tampered with one or more properly functioning smoke alarm(s), smoke detector(s) or carbon monoxide detector(s). Date & time of discovery of removal/tampering:__________________________________________________________________________________________________________________________________________________________________________ Location of removal/tampering:____________________________________________________________________________________________________________________________________________________________________________________________________________ Describe removal/tampering:_________________________________________________________________________________________________________________________________________________________________________________________________________________ _______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

_______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Total number of alarm(s)/detector(s) that you removed or tampered with:__________________________________________ You must pay a noncompliance fee of $__________________________________________ per alarm/detector (not to exceed $250.00). The total fee for the above listed noncompliance(s) is $__________________________________________. Payment is due immediately. Make payment to Owner/Agent. This notice was served on the date set forth above (check which applies): c Personally on the Resident at

________________________________

TIME (am / pm)

c If the written Rental Agreement allows, posted on the main entrance to the dwelling unit and mailed first class mail c Mailed first class mail only You are required to discontinue the conduct listed above. Failure to pay any noncompliance fee, or any reoccurrence of the noncompliance listed above, may result in termination of your tenancy.

roperty management professionals operate within an industry based upon the delivery of sound and consistent customer service. We believe that when most effective, good customer service results in profitability and client retention. As such, we are constantly striving to deliver top-level customer service through our systems and practices. Ultimately we trust that this will lead to customer satisfaction. But is customer satisfaction enough to propagate long-term business growth and sustainability? Recent studies indicate that satisfaction alone will not lead to the ultimate goal: customer loyalty. So we have customer satisfaction on one side of the coin and customer loyalty on the other. What is the difference between these two concepts? Both relate to customer service but they are VERY DIFFERENT. Despite differences, the two are interdependent. Both relate to customer retention and both are driven by customer experiences. Customer satisfaction is simply a customer’s sense of being satisfied. When content with service that is

X OWNER/AGENT ____________________________________________________________________________________________________________________

THANK YOU FOR YOUR COOPERATION

ADDRESS

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TELEPHONE

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ON SITE

RESIDENT

MAIN OFFICE (IF REQUIRED)

RENTAL HOUSING JOURNAL METRO President - Christian Bryant, Vice President - Michael Ross, Secretary - Jill Maricich, Treasurer - Maren Winters

Mind Your Business

Portland Area Rental Owners Association www.PortlandAreaROA.com Membership questions - 503-364-5468 Email inquiries - Info@PortlandAreaROA.com

Tips for Better Rental Management

Navigating Section 8 Forms and Processes By Guest Editor Cj Mann, Section 8 Housing Inspector and ROA Board Member

single adult, over the age of 65 and living on Social Security benefits; a parent with two children under the age of six; a veteran that has served and sacrificed; a student trying to get the education needed to get a good job; a disabled individual or couple struggling to make ends meet on Social Security disability payments; and families with children, fraught with the stress of paying bills, affording food, utilities, rent, and day-to-day expenses – this is the population of people that our agency serves. The Housing and Community Services Agency (HACSA) is part of the vital safety net that thousands of your neighbors depend on for their economic survival. The most recent US Census estimated that one in four families here in Lane County are considered “low income.” That is, their income falls substantially below the median household income for their local

area. A direct result of the anti-poverty efforts nationwide beginning in the 1960’s, HACSA, has been contracting with the federal agency, Housing & Urban Development (HUD) to administer the Section 8 housing assistance program for decades. We began building and purchasing our own rental units for the Public Housing portion of our services way back then, and currently own and manage more than 1,000 units throughout Lane County. But our housing is not enough; we also rely heavily on private landlords like you. The Section 8 voucher program provides more than $10 million in rental payments to approximately 900 private landlords renting to more than 2,500 tenant families. To join the program, low-income individuals apply and have their names added to our waiting list. Once their turn comes, eligible clients are screened for income, criminal history, and citizenship status, and then are required to attend a series of educational classes to learn the rules and regulations of the

Section 8 program, the rental payment guidelines, and the basics of being responsible tenants. Upon completion of the final class the clients earn their voucher. The voucher is the family’s contract with the Housing Authority (HA), agreeing to follow the rules and regulations. In turn the HA agrees to make payments directly to landlords whose rental property has passed a Housing Quality Standards inspection. Prior to scheduling the property inspection, the tenant must be approved by you, their prospective landlord, through whatever screening criteria you use for your tenants. If the prospective tenant is already a voucher holder HACSA will provide, at your request, the tenant’s current address and the name and address of the tenant’s current and prior landlords, if known. When you are first approached by a prospective Section 8 tenant, they should have three forms in their possession to give to you: 1) their Voucher itself; 2) their Calculation Worksheet (which confirms the

amount of rent they can afford depending on rent amount and what utilities and appliances are included); and 3) their Request for Tenancy Approval (RTA). Once approved, you, the landlord, complete the (RTA) and fax or mail it to our office. If you need help filling out the form, please contact a member of the Inspection Team or the Housing Specialist listed on the voucher for assistance. After the completed form is received by the HA, the next step is the property inspection. The faster you get the form in, the sooner we can inspect. If you’re not sure that your property will pass the inspection or you want to do your best to ensure that it will, please check out our publication, “A Good Place to Live” available as a link on the ROA website (www. laneroa.com). This is a checklist of the items our team will be looking for. The Inspection Team (currently, Daniel Roth, Jon Wild and Cj Mann), makes every effort to inspect within 3-5 days of receiving the RTA. It may take a few more days if your propcontinued on page 19

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Rental Housing Journal Metro • March 2015

RENTAL HOUSING JOURNAL METRO

5 Innovation Killers that Lurk Within Businesses

he work of innovative thinkers is why the world has smartphones, laptop computers, toaster ovens and numerous other gadgets and creative approaches to problem solving. Yet groundbreaking ideas aren’t always welcome in the corporate world or within other institutions. Instead, those who suggest a different approach often find their ideas shot down by co-workers or blocked by an organizational system that is unwelcoming to change, says international speaker and innovation consultant Dr. Neal Thornberry. That doesn’t mean innovation can’t happen, though. “The innovator needs to know how to operate in these less than friendly cultures without waiting for some miraculous transformation in corporate policy,” says Thornberry, author of the book “Innovation Judo: Disarming Roadblocks and Blockheads on the Way to Creativity.” (www.NealThornberry.com) He says there are five innovation “killers” within organizations that a person with ideas can expect to confront. People. Sometime it’s an individual, sometimes it’s a group.

Regardless, people often resist innovation, and many times for illogical reasons. “The more rigid people reject innovation simply because they are uncomfortable with the new or don’t want to spend the energy to try something different,” Thornberry says. They may be quick to point out flaws in your ideas. One way to counteract that, Thornberry says, is to be your own worst critic. Discover those flaws first and highlight them yourself. Then you can address how you plan to mitigate them, thus stealing the critics’ thunder, he says.

Organizational design An out-of-whack organizational design usually is not generated on purpose or with malice, Thornberry says. Instead it develops over time, with one well-intentioned move after another leading to unintended consequences. Often the result is a proliferation of controls, along with structures and processes that create barriers to innovation. When an idea is blocked by layers

of decision-making, one solution is to use leverage, Thornberry says. Enlist the aid of a customer who would benefit from the innovation, he says, because paying customers have huge leverage. Company values Here the innovator has both a challenge and an opportunity. Many companies articulate their values, but don’t always live by them. “The upside for ...continued on page 21

Politics You can usually get around one or two individuals who try to block your idea, but it’s more challenging when the organization is rife with politics. “I hate working in highly politicized organizations,” Thornberry says. “They make work a lot harder and make you spend considerable time on non-value-adding activities.” In fact, Thornberry devotes an entire chapter in his book to “Right Mindedness” so that innovators practicing his seven secret judo skills are not seen as innovating for personal gain or exploitation, but as enablers of company success.

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RENTAL HOUSING JOURNAL METRO

Strong Job Growth Foreshadows SolidRobust Full-Year Economic Growth Hiring and Firming Income Growth Expected to Boost Housing Recovery

he economy is poised for a pickup in growth in 2015 amid a strengthening employment sector, rising income growth, and declining commodity prices, according to Fannie Mae's Economic & Strategic Research (ESR) Group. The labor market has started the year on an upbeat note and is expected to lift consumer confidence, in turn helping to boost consumer spending, manufacturing activity, and the pace of the housing recovery. Economic growth may face some headwinds as a strong U.S. dollar weighs on the trade deficit. However, the economy is expected to climb to 2.9 percent for the full year, up from 2.5 percent growth in 2014. "Our forecast calls for an increase in economic growth to 2.9 percent for 2015, which is a slight downward adjustment from our prior forecast but solid improvement nonetheless," said Fannie Mae Chief Economist Doug Duncan. "Although we are beginning this year at a more modest pace compared to the above-trend numbers seen at mid-year 2014, the country's aggregate income has benefitted from the improving labor market, which, combined with low

gasoline prices, should help drive higher auto sales and overall consumer spending throughout 2015." "We expect housing to shift up a gear in 2015 following the uneven and ultimately disappointing activity last year," said Duncan. "Our forecast calls for a number of factors, including strong hiring and income growth, stabilized housing affordability, and modestly easing lending standards, to translate into improving housing demand throughout the year. We continue to anticipate that the Fed will begin to hike short-term interest rates later this year, although weak global economic growth and geopolitical headwinds will likely limit the rise in long-term interest rates. We expect total home sales to increase by approximately 6.0 percent for 2015, with total single-family mortgage production climbing to approximately $1.2 trillion. Total single-family mortgage debt outstanding should be relatively flat this year before picking up gradually in 2016 and 2017." SOURCE Fannie Mae

Rental Housing Journal Metro â&#x20AC;˘ March 2015

RENTAL HOUSING JOURNAL METRO

Screening Without... continued from page 8 have a negative and disparate impact on individuals whose national origin is not the US, thereby having a disparate impact on that protected class. Therefore, a policy or practice of not accepting applicants because they do not have a SSN is not appropriate. That said, we feel that passing on actual additional costs of screening in a situation like this as a legitimate business expense that could be passed on to the applicant. It should be noted that we never recommend folks (whether they are immigrants or not) lie or use a false identification number. If applicants provide false information, they risk denial (or eviction) on the basis of having lied on the application. Technologies are changing, as are bank and lender policies, and it is important to be open to the opportunities that this may present for improved screening of individuals without SSNs. A presumption that those without a social security number cannot use a bank or get certain loans or credit cards is incorrect. There are both large national banks and smaller community credit unions that work with these individuals. Additionally, individuals without a SSN are able to request a copy of their own credit report through Experian (one of three main credit bureaus). Experian will attempt to use data points such as name, date of birth, current and last addresses, and any transactions with

an ITIN, to provide the individual with a report. The individual can then present this to a prospective landlord who is willing to accept a self-requested report. Housing providers need to be careful, too, of assumptions about household make-up based on race or national origin. If a landlord has a problem with residents who do not comply with the rental contract, they should deal with that appropriately under landlord / tenant law. Landlords should not assume “certain kinds of people” have larger or extended families that will exceed reasonable occupancy policies, or be louder or cause greater damage to the property than other households, etc. and base their rental decisions on such assumptions. Landlords should, instead, set reasonable occupancy standards (http://www.fhco.org/ occupancy.htm) and enforce them equally across all of their units with all applicants and tenants. Landlords should not presume “those people” (insert any protected class you wish) would necessarily behave inappropriately or violate contract terms. Enforcement of rules should be consistent, based on the behavior the housing provider is concerned about and, when the rules are violated, the situations should be handled consistently. We will continue to consult with other fair housing organizations and industry groups to assure we remain

confident that our position on nonSSN-screening is reasonable. If you have questions about a situation you have encountered, please consider us a resource and contact us! Start on our website at www.FHCO. org/national_origin.htm, as well as www.FHCO.org/hs_provider_info.htm. This article brought to you by the Fair Housing Council; a civil rights organization. All rights reserved © 2015. Write jbecker@FHCO.org to reprint articles or inquire about ongoing content for your own publication. To learn more… Learn more about fair housing and / or sign up for our free, periodic newsletter at www.

FHCO.org. Qs about this article? ‘Interested in articles for your company or trade association? Contact Jo Becker at jbecker@ FHCO.org or 800/424-3247 Ext. 150 Want to schedule an in-office fair housing training program or speaker for corporate or association functions? Visit www.FHCO.org/pdfs/classlist.pdf

See you at the 2015 Maintenance Fair Visit the City of Portland’s Multifamily Waste Reduction staff at Metro’s Recycle at Home booth. MF NW Maintenance Fair Thursday, March 19, 2015 7:30 a.m. – 4 p.m. Portland Convention Center, 777 NE Martin Luther King Blvd. Get free materials and support to make your job easier. Keep your garbage and recycling program working for you and your residents. Multifamily Resource Line: 503-823-7224 Online: www.portlandoregon.gov/bps/multifamily Email: multifamily@portlandoregon.gov

Rental Housing Journal Metro • March 2015

RENTAL HOUSING JOURNAL METRO

National Survey Reveals 2015 Moving Plans For Renters Affordability, Relationship Changes and More Space Top Reasons Why Renters are Moving; Despite Increasing Rents and Apartment Demand, Three Quarters of Renters Said They are Not Spending More on Rent

hile rents continue to rise around the country, the rate of growth is slowly decreasing. According to CoStar, the real estate industry's leading provider of information, analytics and online marketplaces, the average cost of rent nationwide increased by 0.64 percent to $1,194 a month in the fourth quarter of 2014—down from a .89 percent increase the previous quarter. At the same time, demand for apartments remains strong despite a slight uptick in the vacancy rate to 4.7 percent in the fourth quarter of 2014 from 4.3 percent the previous quarter. CoStar predicts new apartment supply will also peak this year at more than 300,000

units. Apartments.com conducted its annual survey of more than 5,200 renters nationwide to determine how the healthy rental market would affect their moving plans this year. The survey reveals why renters are choosing to move or stay in their apartments, why more homeowners are turning to renting and the most popular apartment amenities. Affordability, changes in marital and relationship status and wanting more space topped the list of reasons why respondents said they are moving this year. Three quarters of renters surveyed also indicated they are planning to spend either the same or less on rent despite current demand and increasing rents. When asked

how much renters are currently spending on rent, more than 60 percent said less than $1,000 a month— just under the national average— and 35 percent are spending between $1,000 and $2,000. "With new supply slated to hit this year, it is yet to be seen whether or not this will result in decreasing rents," said Brad Long, president of Apartments.com. "While construction is ramping up, demand is still strong, partly in response to many would-be homeowners turning to renting as a more viable financial option. In fact, the most popular reasons homeowners gave for why they are renting this year are because they lost their home to a foreclosure or

divorce (up 4.3 percent from 2014), they can no longer afford their home, or they are downsizing." Why are people moving in 2015? And, why aren't they? Affordability, relationship changes, more space and family played a big role in renters' decisions to move this year. Other reasons renters gave for moving include being closer to school, needing accommodations for senior living or retirement, and selling property. According to the survey, the top five reasons renters are moving in 2015 are: 1. More affordable apartment: 24.7 percent 2.

Change in marital/relationship status (getting married/breaking up): 9.4 percent

3. Moving into a bigger apartment: 9.3 percent 4.

5. Need a smaller apartment or want to live alone: 7.7 percent Location played a strong role in keeping renters in place, as seven out of 10 renters said they are not moving this year because they like their apartment building and neighborhood.

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RENTAL HOUSING JOURNAL METRO

Property Management:

Customer Loyalty? ...continued from page 8

-Maintain the relationship even after the business relationship ends. Even after a contract or service agreement ends (assuming upon good terms) stay in touch and communicate with the customer. Although your services may not be required now, let them know you are always available when needed in the future. Do not allow the relationship to disintegrate simply because the “business benefit” has disappeared. This a valuable time to show a client your devotion goes beyond just seeking remuneration for services. This demonstrates commitment and a willingness to be ready for service when needed down the road. In summary, good relationships with clients that are built upon a foundation of trust will help you weather the ups-and-downs of business cycles and minimize conflicts when problems arise. Such relationships are catalysts in a well-rounded life and successful career. Remain faithful to your principles, don’t compromise by seeking short cuts, heed your moral compass, and you will be rewarded with happy customers who are not only satisfied… they are loyal.

21 Low Cost Renewal Concessions

hat is your customer acquisition costs? What does it costs the property to obtain a new lease? There is advertising, overhead and staff time- all part of the expense for obtaining a new resident. Then there is the customer retention costs. This article is about retention costs and the use of concessions. I am not suggesting auto-offering concessions as a standard business practice. They are just another tool in our tool box for use when appropriate. Before getting to concessions an assessment of “why” is appropriate. Why is there vacancy of X? Is your advertising and web presence in order? What is your showing-tolease ratio? Is staff trained and up to date on tactics? Concessions for a multifamily assets are not a given. Concessions are often a function of competitive factors from competitive properties in the same submarket as the subject asset. For example, your property may have more in-place amenities than neighboring properties yet have a higher vacancy rate in 2-bed’s versus 1-bed’s. In this instance, your renewal concessions will be offered only on two-bed rooms with none offered on onebedrooms. Gaining further insight into what your competitors are offering requires surveying those properties. This is best accomplished by a thirdparty service provider to assure independent outcomes. Many “gift-

card” options can be purchased at a small discount to face value if purchased in bulk, particularly with local vendors that offer personal services. They are gaining a new customer, after all. There is a reason for the order of concession below; the top five add value to the property in some way; the first five concessions are either property upgrades or increase longevity of in-place fixtures. This list provides you with a starting point for selecting concessions to gain renewals. 1. Refresh paint or adding an accent wall 2. Replacing older living room or dining room light fixtures 3. Replacing standard light fixtures with ceiling fans 4. Carpet Cleaning 5. Replace older blinds 6. Car wash gift card 7. Restaurant Gift Cards 8. Spa treatments 9. Go phones / trac phones gift cards 10. A gift to a charity selected by the Resident 11. Free parking for one month 12. Dry cleaning gift card 13. Dog grooming 14. Cooking classes 15. Hair cuts 16. Shoe shines 17. Movie tickets 18. Specialty ice cream 19. Apple Store

20. Oil change 21. Wal-Mart/Target/Kohl’s/ Macy’s/ 22. Pizza (always popular) When selecting local vendors for concessions, consider proximity to the multifamily asset; the closer the better as these will be perceived as having high value because the Resident will know exactly where the vendor is located. Concession should have a similar perceived value- not necessarily an equal value. Offer no more than two at one time. Decide on an initial set of two concessions and test for responsiveness. Keep testing until you have two that people respond to equally well. There may be a difference in response rates due to the season or weather. People love cooking classes during cold months and car washes in summer, for example. Residents will give to a charity during the holidays or select the spa treatment to give as a gift. There is no reason to guess when you can test. Testing will lead you to the right offers at the right time. by John Wilhoit Jr. Published courtesy of MultifamilyInsight.com

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any apartment communities have staff changes on the weekends. Some property management companies use part-time leasing consultants or “floaters” to fill in on the weekends or to work back and forth between two or more communities. This can be a great partnership and help keep payroll expenses down OR it can cost rentals at your community. It all depends on quality communication, as the following question will attest: Q: I was hired to be a “floater” at

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several different properties. While I love the variety, I really don’t feel like I am an important part of the staff at any of the places where I work. I am not always kept current on apartment availability or the status of different problems that come up. When I ask questions to try to keep myself informed, many times I am told: “Don’t worry about it. You’re only here on the weekends.” I feel frustrated, but don’t know what I can do. A: It sounds to me like you are on a team that has not filled you in on the game plan! This is very unfortunate, especially in a business

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where there can be moment by moment changes, due to rentals, resident problems and maintenance emergencies. I would advise you to put your concerns in writing; in a positive manner; and share them with the manager and/or property supervisor. For those of you who actively employ “floaters” or who share employees between properties, I would recommend leaving detailed notes on a weekly basis to recap what has happened in their absence. Of course whenever possible, these employees should be included in staff meetings and receive copies of correspondence which will keep them up to date on the happenings at each of the communities where they work. How do you make sure that the same quality of service being provided Monday through Friday carries over on the weekend? What happens when a manager or leasing consultant goes on vacation or gets sick, and someone from another community fills in? Do you have an established way to communicate what is rent ready, as well as any pending resident issues? It’s hard to function as a team if all the players

are not “well-equipped.” Ultimately, the ability to communicate effectively with part-time or weekend staff could make or break your leasing ratio for the week. After all, the weekends are typically the busiest days for apartment hunting. Are your part-timers and weekend floaters fixing to “fumble the ball” or have they been set up to “score rentals?” If you are interested in leasing training or have a question or concern that you would like to see addressed, please reach out to me via e-mail. Otherwise, please contact Jancyn for your employee evaluation needs: www.jancyn.com ASK THE SECRET SHOPPER Provided by: Joyce (Kirby) Bica Former owner of Shoptalk Service Evaluations Consultant to Jancyn Evaluation Shops Phone: 425-424-8870 E-mail: shptalk2@gmail.com Copyright Joyce (Kirby) Bica

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Commercial Markets Poised for Growth Despite Weaker Global Economy sumers reap the benefits of cheaper gas and any accompanying wage growth from a tighter labor market," he said. "Furthermore, multifamily housing continues to be the top-performing sector with current rental demand exceeding supply – leading to rent growth that is easily outpacing inflation in many metro areas throughout the country." Although economic conditions are improving at home, Yun says weaknesses in the global economy will likely impact exports. "Sluggishness overseas alongside a strengthening U.S. dollar will widen the trade deficit and slow economic growth potential," he said. "However, GDP is forecasted to come in around 3 percent in 2015 – the highest since the recession. Improvements in housing and commercial real estate market activity will measurably help economic growth." NAR's latest Commercial Real Estate Outlook1 offers overall projections for four major commercial sectors and analyzes quarterly data in the office, industrial, retail and multifamily markets. Historic data for metro areas is provided by REIS Inc., a source of commercial real estate performance information. In partnership with Deloitte and RERC Situs, NAR released an annual joint report earlier this month – Expectations & Market Realities in Real Estate 2015 – which forecasts for

percent next year. Net absorption of office space, which includes the leasing of new space coming on the market as well as space in existing propOffice Markets Office vacancy rates are forecast to erties, is likely to total 47.7 million square feet this year andARIZONA 58.3 million slightly decline from 15.8 percent in VALLEY, METRO, the first quarter to 15.7 percent in the in 2016. Industrial Markets first quarter of 2016. Industrial vacancy rates are The markets with the lowest office vacancy rates in the first quarter are expected to fall from 8.7 percent in Washington, D.C., at 8.7 percent; the first quarter to 8.3 percent in the New York City, 9.0 percent; Little first quarter of 2016. The areas with the lowest indusRock, Ark., and Seattle at 11.5 perJan, Mar, May, Jul, Nov, vacancy rates currently are cent; and San Francisco, at 12.0 per- trial Sep, 1010 East 62nd Street, Los Angeles, 90001-1598 Orange County, CA Calif., with a vacancent. Phone: 1-800-624-5269 • Fax: 1-800-624-5299 Office rents are projected to ...continued on page 21 increase 3.3 percent in 2015 and 3.6 an expected increase in commercial real estate value and pricing in 2015.

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stronger labor market and stable U.S. economy should keep commercial real estate demand on the rise, but the pace of growth will likely be hindered by overseas weakness, according to the National Association of Realtors® quarterly commercial real estate forecast. Lawrence Yun is chief economist and senior vice president of research at the National Association of Realtors(r). Yun oversees and is responsible for... National office vacancy rates are forecast to slightly decrease 0.1 percent over the coming year as improved hiring increases the demand for office space. The vacancy rate for industrial space is expected to decline 0.4 percent and retail space 0.3 percent as manufacturers boost production for goods and services and consumers slightly accelerate their spending. A swath of new apartment construction coming onto the market is forecast to lead to an uptick (0.1 percent) in the multifamily vacancy rate. Lawrence Yun, NAR chief economist, expects commercial real estate activity to hold steady heading into the spring. "The demand for leases and new construction projects is expected to slowly climb as businesses add to their payrolls and con-

RENTAL HOUSING JOURNAL METRO

New Residential Water Heater Efficiency Standards By Heather Hill and Jason Campbell

n April 16, 2015, all residential water heaters manufactured for sale in the United States will be required to meet new efficiency standards as the third phase of a nationwide energy conservation effort takes effect. The National Appliance Energy Conservation Act regulates the energy consumption of certain household appliances including furnaces, boilers, refrigerators and water heaters. According to the Appliance Standards Awareness Project, water heating represents 20% of the total annual household energy consumption in the US, and on average 57% OLD STANDARD Product Gas-fired Gas-fired Oil-fired Electric Electric Tabletop Instant Gas Instant Electric

Volume 20-55 gallon 55-100 gallon 0-50 gallon 20-55 gallon 55-120 gallon 20-100 gallon 0-2 gallon 0-2 gallon

of this energy is lost in inefficient heaters. The US Department of Energy (DOE) released its first mandatory standards in 1990.The second phase, enacted in 2004, tightened standards the most significantly of the three phases, and was estimated to avoid 316.8 million metric tons of carbon dioxide emissions. The 2015 standards will avoid 172.5 million metric tons of emissions, equivalent to the annual greenhouse gas emissions of about 33.8 million cars, according to the DOE. The mandatory standards dictate that manufacturers meet the maximum energy efficiency levels technically feasible and economically justified. The DOE conducts product

EF .67 .67 .59 .97 .97 .93 .62 .93

reviews and updates the standards on a regular schedule. Note, that while the manufacturers cannot make any water heaters with the old standards after the April date, they will be allowed to continue to sell the old inventory until the supply is exhausted. As of the date of this post, manufacturers have not released the compliant replacement heaters for their obsolete products. Though energy efficient models do exist in the marketplace, they have been built and promoted as specialty products and priced accordingly. Conversely, the replacement heaters will represent the new normal. What is changing?

NEW STANDARD Product Gas-fired Gas-fired Oil-fired Electric Electric Tabletop Instant Gas Instant Electric

Volume 20-55 gallon 55-100 gallon 0-50 gallon 20-55 gallon 55-120 gallon 20-100 gallon 0-2 gallon 0-2 gallon

The Energy Factor (EF) represents the ratio of useful energy output from the water heater to the total amount of energy used to operate it. The higher the EF rating, the more energy efficient is the water heater. The type of fuel, volume and mechanics of the heater all factor into its rating and coinciding standard. For example, tabletop and instantaneous electric heaters already meet the EF standards and thus no changes will take place for those heaters. The new requirements will most significantly affect gas-fired and electric heaters over 55 gallons as well as all instant gas heaters. The chart below outlines how the standards apply to each style of heater.

EF .675 .8012 .68 .960 2.057 .93 .82 .93

DIFFERENCE EF .005 .1312 .09 -.01 1.087 0 .20 0

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RENTAL HOUSING JOURNAL METRO

Spring Maintenance Checklist

n spring, focus on freshening up your rental property and protecting the dwelling against the season's strong winds and rains. Use this time of the year to thoroughly clean and care for the home's interior. Outdoor Tasks: 1. Clean gutters and downspouts. 2. Inspect roof and chimney for cracks and damage. 3. Wash the exterior of all windows. 4. Install missing screens on windows and doors. Repair as needed. 5. Fertilize the lawn. 6. Check decks for loose boards, railings, or stairs.

7. Professionally service heating and cooling units. 8. Check the foundation for cracking as well as for insect damage. 9. Remove foundation vent covers and spigot covers. Indoor Tasks: 10. Test all smoke and carbon monoxide detectors 11. If the basement has a sump pump, test it by dumping a large bucket of water into the basin of the sump pump. This should activate the sump pump. If it does not switch on or if it's notpumping water, it may need to be serviced by a professional. Also, check for and remove any debris

and make sure there are no leaks. 12. Assess the need for blind repair, cleaning or replacement. 13. Repair or replace broken or missing kitchen cupboard hardware. 14. Check the attic for signs of moisture and water stains.

slow drips. Detach and flush aerators. 20. Maintain clean drains by pouring one-half-cup baking soda followed by one-half-cup white vinegar into each. After 10 minutes, flush with boiling water.

15. Check walls for condensation and mildew. 16. Check electrical panel for rust, make sure circuit breakers are operating correctly. 17. Clean dryer vents.

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19. Check all faucets for leaks or

Navigating Section 8 ...continued from page 10 erty is outside the metro area or in outlying areas such as Florence or Oakridge. You will be notified promptly if your property does or does not pass the inspection. If deficiencies are noted, it is then your choice to correct them or not. Depending on the type or severity of the repair, the Inspection Team will either conduct a second inspection, or will agree to accept invoices, work orders, photos, and receipts for materials and labor attached to a signed statement of completion. Once the unit is approved, you are then required to send the Agency copies of the standard lease documents signed by the tenant: the rental agreement, proof of the tenant’s receipt of the Lead-Based Paint pamphlet, Smoke and Carbon Monoxide Alarm acceptance form, Mold and Mildew agreement, and any other standard Oregon Landlord-Tenant forms that will be enforced during the lease term. Having this information on file, will help the assigned caseworker, known as a Housing Specialist, work with both you and the tenant, to provide guidance during the term of the lease. Housing Specialists may not give legal advice, or their interpretation of Oregon’s Landlord-Tenant Act, but can assist you with questions regarding the agency’s procedures and policies.

The eight specialists and their contact information can be accessed on the Housing Agency website at www.hacsa.org. So, you have an approved tenant, your unit has passed inspection, and you have submitted the required paperwork; rental assistance payments known as HAP monies will then be directly deposited into your chosen banking institution. The client, the landlord, and the Housing Agency will all have signed contracts that link us together in providing safe and affordable housing as our families strive for economic security. In addition to housing a qualified, paying tenant, you benefit from prompt direct deposit of HA rent payments, market-rate rent, and annual housing quality inspections. In addition, you are also able to access the Housing Choice Act mitigation fund should you experience damage from a Section 8 tenancy above and beyond the amount of their security deposit. And just like any other tenant, upon occasion there are issues with a Section 8 tenant. If there are problems, nothing in the HAP contract prohibits you from pursuing any and all legal avenues at your disposal. This includes a tenant’s failure to pay their portion of the rent, unlawful occupants or pets, damage to the property, disturbance of the

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peaceful enjoyment of others, etc. You may take any action, up to and including eviction, in accordance with the law and the terms of the lease. One caveat: You are required to send copies of any notices served upon the tenant to their Housing Specialist at the time you serve the notice upon the tenant. Thank you for your interest in the Housing Choice Voucher program known as the “Section 8” or “Voucher” program. If you would

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Inexpensive Ways to Attract Good Residents One inexpensive way to do this is to reward their good track record. This is an effective method to reinforce positive behavior as well. Offer an end-of-the-year “rebate” to residents who have an excellent record of paying rent on-time. You might also consider a “thank you incentive” at the end of their annual lease or start date. More owners are willing to consider offering an at least a 3% annual discount to prospects who either pay a year’s worth of rent or pay on a semi-annual basis. That’s

n the world of investing there’s an old adage: “Money goes where it’s treated best”. The same could be said for the best residents. As the world of rental properties become more competitive a new adage is “Good residents move to where they are treated best”. A “good resident” is one that has an outstanding credit history, takes good care of the places they rent, and tends to stay put for an extended period of time. Property managers want to find and keep them.

Effective January 1, 2015, Shoptalk has been acquired by Jancyn and they will serve your employee evaluation needs. It has been my extreme pleasure to work with all of you over the past 20 years. Yet, it is now time for me to move onto my next great adventure. I am willing to offer leasing training on a limited basis, as an independent consultant. However, I will no longer be involved in secret shopping. For now, your contact at Jancyn will be Vicki Dempsey, VP of Sales & Marketing and a managing owner. You can reach Vicki at: 408-267-2600 ext. 300 or Vicki@jancyn.com. I will be working closely with the Jancyn team as a consultant to help ensure a smooth transition. Thank you for trusting me with your employee evaluations over the years, and now with the transition moving forward!

better than the yield of a 10-year bond! Also make it a policy to discourage your owner-clients from renting to relatives or friends. Unless you don’t need the rent or the relationship reconsider such decisions which invariably backfire. One of my readers reminded me of this important, prudent policy when she wrote, “Five years ago I made a mistake letting my daughter move in to one of my rental units. “Half the time I am pulling and fighting for her to pay the $1000.00 rent for a two bedroom apt. I am planning to evict through a court order.” A no-cost preventive policy would have saved a small fortune. Here are some other ways to attract good renters to fill any vacancies you have. 1. Make the bathrooms look sparkling clean, sanitized, updated. Replace discolored caulking, grouting, rust, and deteriorating plumbing. Be sure the lighting is more than adequate. 2. One manager suggested tile backsplash be installed in kitchens and bathrooms. She said, “It looks awesome, cleans easily, protects walls, adds color/interest, reduces painting.” 3. Old English scratch cover and polish make wood cabinets,

wood floors look new again. Replace damaged areas, burns, stains, or other unsightly areas of the kitchen counters. You’ll recoup the cost with a justifiable rental rate plus attract more of the good residents. 4. Units that smell naturally pleasant are more inviting. A reader shared that they like to use subtle air fresheners/deodorizers with neutral smells like “clean laundry”, a very subtle pine, cinnamon, or gingerbread to make it feel homey. The key is to always keep the scent subtle. An overwhelming scent can be just as offensive as an unpleasant one. 5. Paint the unit numbers on designated parking spots. Make certain the parking area has good security lighting which also pertains to halls, landings, and all common areas. Outstanding residents will want to live where they are treated best. If you want to attract and keep them go out of your way as property managers to make them feel appreciated. by Marc Courtenay Published Courtesy of PropertyManager.com

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5 Innovation Killers ...continued from page 17 innovators is that values can be used as leverage for innovation even if they aren’t true,” Thornberry says. For example, if the company declares, “The customer is No. 1,” then it becomes difficult to ignore an innovation that is positioned as being for the customer. Corporate culture The corporate culture essentially is how the people, politics, organizational design and values interact. “The greatest challenge to any innovator, and to embedding and sustaining innovation over the long term, is culture,” Thornberry says. To make it even more challenging, often organizations have micro-cultures within the culture. That means, he says, you will need to adapt the use of innova-

tion judo principles depending on which micro-culture you are dealing with at any given moment. “Innovators throughout history have faced both roadblocks and blockheads on their path to creativity,” Thornberry says. “And so will you.” But with a little courage and some counterbalancing skills, he says, these challenges can be overcome.

vation, Thornberry is a highly soughtafter international speaker and consultant. He also 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.

About Neal Thornberry, Ph.D. 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 that create economic value by increasing an organization’s effectiveness and efficiency. A respected thought leader in inno-

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Poised for Growth ...continued from page 17 cy rate of 3.4 percent; Los Angeles, 3.7 percent; Miami and Palm Beach, Fla., both at 5.4 percent; and Seattle, at 5.6 percent. Annual industrial rents should rise 3.0 percent this year and 3.1 percent in 2016. Net absorption of industrial space nationally is expected to total 102.2 million square feet in 2015 and 104.8 million square feet next year. Retail Markets Vacancy rates in the retail market

lion square feet this year and jump to 20.6 million in 2016. Multifamily Markets The apartment rental market should see vacancy rates slightly increase from 4.1 percent currently to 4.3 percent in the first quarter of 2016. Vacancy rates below 5 percent are generally considered a landlord's market, with demand justifying higher rent. Areas with the lowest multifamily vacancy rates currently are Sacramento, Calif., 2.5 percent;

are expected to decline from 9.7 percent currently to 9.5 percent in the first quarter of 2016. Currently, the markets with the lowest retail vacancy rates include San Francisco, at 3.0 percent; Fairfield County, Conn., and San Jose, Calif., at 4.5 percent; Long Island, N.Y., 4.9 percent; and Orange County, Calif., at 5.0 percent. Average retail rents are forecast to rise 2.5 percent in 2015 and 3.1 percent next year. Net absorption of retail space is likely to total 15.7 mil-

Orange County, Calif., 2.6 percent; Hartford, Conn., and Oakland-East Bay at 2.7 percent; and Rochester, N.Y., at 2.8 percent. Average apartment rents are projected to rise 3.7 percent this year and 3.6 percent in 2016. Multifamily net absorption is expected to total 171,978 units in 2015 and 157,168 next year. SOURCE National Association of Realtors

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Water Heater Efficiency ..continued from page 2 Product Gas-fired Gas-fired Electric Electric Oil-fired Instant Gas

EF .62 (40 gal) .76 (56 gal) .95 (50 gal) 2.0 (56 gal) .62 (32 gal) .82 (0 gal)

Manufacturers can employ new technologies such as heat pumps, which help reduce energy use by 50%, to upgrade electric water heaters. Condensing technologies can reduce energy use in gas storage containers by 25%. The low-tech

Average Cost $1,072 $1,261 $554 $729 $1,974 $1,779 solution, adding more insulation, may cause more complications. While adding 1 inch of insulation would increase EF by .05, it would also broaden the heater by 2 inches in diameter. Knowing that water heater installations in multi-family

Cost Increase $92 $805 $140 $974 $67 $601

Cost Savings* $6 $77 $10 $626 $295 $6

structures are space defined, manufacturers may also reduce tank capacities to allow NAECAcompliant units to fit in predetermined spaces, as the floor plans and common plumbing designs typically found in multifamily units will prevent relocation of the water heater. What will this cost property owners? Since manufacturers have yet to release the new heaters, the only certainty for the owners of properties with large-volume gas or electric heaters is that those manufactured after April 16th will save money in operating costs. However, the improved technologies are likely to come with a higher price tag, as any new technology improvement usually does. Following the last major efficiency upgrade in 2004, prices for the new standard equipment increased 8-12%. The DOE estimated the following cost implications for the 2015 standards:

Payback Period 2 years 9.8 years 6.9 years 6 years .5 years 14.8 years

The cost savings refer to the costs of owning and operating the product after considering both the increased installed price and the lifetime operating costs. Maintenance costs may also increase due to the complex design of the new technology and the integration of electronics, blowers, fans, condensers, etc. Anyone who services water heaters may also struggle with a learning curve.

Considerations Residential property owners need to review their options carefully when replacing a large volume water heater in the near future. Don’t wait until the heater fails to plan for its successor. Being aware of the conditions of the current heater, including its footprint, both physical and carbon, can save property owners headaches and money down the road.

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Rental Housing Journal Metro • March 2015

RENTAL HOUSING JOURNAL METRO

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Do you have BED BUGS?

National Survey Reveals ...continued from page 14 3. More space for the same amount of money: 42.3 percent Why are previous homeowners choosing to rent in 2015? Underscoring a growing trend, previous homeowners are turning toward renting. Slightly more than 40 percent of total survey respondents say they have owned in the past. Interestingly, homeownership preferences are split right down the middle in 2015. • 49 percent of former homeowners still wish they owned a home • 51 percent of former homeowners prefer renting • 56 percent of renters (who have never owned a home) prefer renting • 44 percent of renters (who have never owned a home) would like to own a home right now

to feel tied down, worry about selling home, etc.: 39.3 percent 4. Renting is more affordable for me than buying: 38.4 percent 5. No unexpected tax increases for the duration of the lease: 30.7 percent 6. I don't want the responsibility of a mortgage (or, I cannot get one): 29.9 percent Urban areas are currently the main focus of developers targeting young renters willing to pay a premium to live in apartment communities decked out with lavish amenities. When asked which amenities renters are seeking during their apartment search, air conditioning and appliances topped the list.

1. Air conditioning

1. No unexpected repairs – I'm not responsible for a leaky toilet, clogged sink, etc.: 69.7 percent

4. Dishwasher

No/low maintenance – I don't have a driveway to shovel, grass to cut, etc.: 54.5 percent

3. Flexibility to move – I don't want

Rental Housing Journal Metro • March 2015

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Top five amenities renters are looking for during their apartment search:

When survey respondents were asked to select all the reasons they prefer renting to owning, the most popular responses are ranked below:

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Rental Housing Journal Metro • March 2015