Metro Rental Housing Journal June 17 by Professional Publishing, Inc

Rental Housing Journal Metro

June 2017

3 Top Regret for Home Buyers and Sellers is Not Prepping Soon Enough

10 Soft Landing Or Bumps Ahead for Multifamily Investment?

5 RHA Oregon President’s Message

11 Can I Say "No Pot In My Apartments" When It’s Legal In My State?

7 Win, Win: Improving Cash Flow for Renters and Property Managers

13 Tia’s Tips for Better Rental Management

8 Apartment Pet Amenities Draw Millennial Tenants

14 Is It Time to Upgrade Your Technology?

www.rentalhousingjournal.com • Professional Publishing, Inc

Portland/Vancouver

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

Five Ways Managers Can Perk Up Employees this Summer

by OfficeTeam uman resources managers report workers may feel less productive in the summer and want more flexible schedules, while fewer companies offer flexible schedules, according to a new research. In addition to wanting more flexible schedules in the summer, employees also want the ability to leave early on Fridays, a more relaxed dress code, and events such as company picnics. However trends involving those employee desires have reversed since 2012, according to the survey from Office Team, a Robert Half company. Now fewer companies are offering these benefits with a decline in flexibility of hours and leaving early on Fridays. Also the most common employee behavior that managers see is employees not planning well for vacations. "It's natural for employees to get distracted when the weather's nice and thoughts turn to plans outside the office,” Brandi Britton, a district president for OfficeTeam, said in a release. “But savvy companies maintain staff productivity and morale by embracing summer in the workplace. "Letting ...continued on page 4 Professional Publishing Inc., PO Box 6244 Beaverton, OR 97007

Why is It so Hard to Build Affordable Housing in Portland?

By John Triplett

leader in the Portland affordable housing industry talks about why it took four years to get 40 units of affordable housing done from concept to opening. Tom Brenneke has a passion for building affordable housing in the community where he lives and is proud to talk about his latest 40-unit project when recently opened – a triumph of affordable housing. “I have a particular passion for affordable housing,” said Brenneke, who is president of Guardian Real Estate Services LLC. “I enjoy the complexities,” he said in an interview with Rental Housing Journal.

“We are a housing organization that runs the range from very low income to market rate. We have the highest priced housing in town that we operate and

the lowest priced housing in town. In terms of affordable housing, I enjoy the complexities, I enjoy the mission. It is ...continued on page 19

Rents Rising in the Suburbs

ents are rising in the suburbs as many renters are looking outside of city centers for more affordable housing, causing rent payments to grow faster in the suburbs than urban areas As rents become more expensive, renters are starting to look for cheaper housing options outside downtown cores, according to a release from Zillow. For the first time in four years, suburban rents are rising faster than urban rents The monthly cost of a suburban rental in the U.S. is up 2.5 percent, while the cost of an urban rental is up 2.3 percent. This is the first time in four years that suburban rents are rising faster than urban rents. Suburban rents are outpacing urban rents in Nashville, San Francisco and Seattle, which are all hot housing markets. In Nashville, the cost of an urban rental is up 1.7 percent, but the cost of a suburban rental is up about 5 percent. In San Francisco, the price of an urban rental is falling, down 0.4 percent since this time last year, but suburban rental PRSRT STD US Postage PAID Portland, OR Permit #5460

prices are up almost 3 percent year-overyear "Because walkable urban centers close to amenities are typically a big draw for renters, you'd expect rents to rise faster in the city than in the suburbs -- which is exactly what we've been seeing until very recently," Zillow Chief Economist Dr. Svenja Gudell said in the release. "But a handful of factors are helping turn the tables and beginning to push suburban

rates up at a higher clip. These include: Deteriorating rental affordability in expensive urban cores New apartments, albeit high-end ones, opening downtown compared to relatively few in outlying areas Preferences among some renters toward the space offered by single-family homes in the suburbs. “Rents themselves are still lower in the ...continued on page 9

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Rental Housing Journal Metro

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Rental Housing Journal Metro · June 2017

Rental Housing Journal Metro

Top Regret for Home Buyers and Sellers is Not Prepping Soon Enough With the 2017 home shopping season approaching, Zillow reveals data-driven tips for buyers and sellers this spring

he spring home-buying season is gearing up to be one of the most competitive in recent history, as the shortage of for-sale homes is keeping inventory tight and prices high. Buyers and sellers hoping to be successful this spring should start the process early, according to the 2016 Zillow Group Report on Consumer Housing Trends. Of over 13,000 U.S. residents surveyed, the number one regret for both buyers and sellers was not starting their home search or prepping their home to sell soon enough. U.S. home values across the nation are up 7.2 percent over the past year, and there are three percent fewer homes to choose from than a year ago, according to the January Zillow® Real Estate Market Reports.i "This spring, both buyers and sellers should be prepared for fast-moving sales, intense negotiations, and even bidding wars," said Jeremy Wacksman, Zillow Group chief marketing officer. "Home shoppers and sellers are motivated to become more strategic and knowledgeable about what's happening in their neighborhood. Understanding whether you are in a buyer's or a seller's environment will help you manage your

expectations and will give you insight into what you're going to need to bring to the table in order to close the deal." The Zillow Group Report on Consumer Housing Trends reveal strategies for how to buy and sell in today's highly competitive market.

Buyers: • Keep your options open. More than half (52 percent) of buyers said they also considered renting, and more than one third (37 percent) of first-time buyers seriously considered continuing to rent. Savvy shoppers will have a Plan B in place, hoping to buy if it works out, but willing to sign a lease for a home if they don't make a deal by the time they need to move. • Be realistic with your budget. Once you set it, stick to it: first-time home buyers are more likely to exceed their budget than repeat buyers (39% vs 26%). Before you meet with a lender to determine how much mortgage you'll be approved for, take a good look at your individual finances and spending preferences to determine the monthly payment range that you feel you can comfortably afford. Use Zillow's mortgage calculator to help with you with

Rental Housing Journal Metro · June 2017

the math. • Get your financing squared away early. Plan to meet a few lenders four to six months ahead of when you're planning to buy to ensure you can make a competitive offer quickly when you find your dream home. The majority (82 percent) of buyers get pre-approved, with 77 percent getting pre-approval from a lender before finding a home on which they are interested in placing an offer. • Find an agent with a winning track record. Take the time to find an agent who has expertise in fast negotiation, leveraging escalation clauses, and winning bidding wars. Only 46 percent of buyers got the first home on which they made an offer, demonstrating that competition is now part of the process. Use search tools, like Zillow's Agent Finder, to choose an agent based on sales and listing activity, area of expertise and reputation. • Communication is key. Make sure your preferred method – and frequency – of communication matches that of your agent. One third (33 percent) of all buyers preferred phones call with their agent over emailing (21 percent) or texting (15 percent). Buyers can use

the agent reviews on Zillow to learn more about prospective agents and their clients' experiences.

Sellers: • Start Early & Be Strategic. Sellers consider putting their home on the market for five months before they list it. But the top seller regret is that they wished they spent more time prepping for the sale. Many cities have a magic window in the spring when homes have a higher likelihood of selling quickly for more money. • Work with an agent from the start. The vast majority (90 percent) of sellers who sold quickly and for more than list price worked with an agent, and two out of three (58 percent) began working with an agent at the very beginning of their selling journey. • Pay attention to your online curb appeal. The majority of buyers begin their search online. Sellers who sold their home for more than list price made imagery and home information available online: 48 percent had professional photos taken of the home, 30 percent shot video footage and 21 percent even shot drone footage. Zillow's video ...continued on page 10

Rental Housing Journal Metro

Perk Up this Summer...continued from page 1 (34 percent) feel workers are less productive during the summer months. Another 34 percent said there's no change in on-the-job performance. Not planning well for vacations (32 percent) and unexpected absences (22 percent) were identified as the most common negative employee behaviors at this time of year, ahead of dressing too casually (19 percent), sneaking in late or leaving early (15 percent), and being mentally checked out (12 percent).

employees modify their schedules, leave early on Fridays or dress more casually when it's hot out are easy ways to keep them loyal and engaged," she said in the release.

Which if any benefits are offered at your company? Additional managers survey findings More than one-third of HR managers

5 Ways Managers Can Perk Up Employees This Summer Perk up. Give employees more control over how they spend their time by offering flexible schedules and occasionally letting them leave early on Fridays. Just make sure policies are clear so business can continue as usual. Rally for rest: Remind workers to take time off, and set an example by doing so yourself. Bring in temporary professionals to fill in during absences.

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Venture out: Holding meetings outdoors or while taking a walk is a great way to get fresh air while accomplishing business objectives. Have some fun: Plan an ice cream break, picnic or group outing. Employees will appreciate being able to relax and bond with colleagues in a non-work setting.

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Dress down: Allow staff who aren't customer- or client-facing to wear more casual attire, as long as it doesn't detract from work. You might even consider instituting themed Fridays where Hawaiian shirts or sports apparel are encouraged. The surveys of HR managers and workers were developed by OfficeTeam. They were conducted by independent research firms and include responses from more than 300 HR managers at U.S. companies with 20 or more employees, and more than 380 U.S. workers 18 years of age or older and employed in office environments. OfficeTeam, a Robert Half company, is the nation's leading staffing service specializing in the temporary placement of highly skilled office and administrative support professionals. The company has 300 locations worldwide.

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Rental Housing Journal Metro · June 2017

President: Ron Garcia Vice President: Phil Owen President Elect: Mark Passannante Secretary: Lynne Whitney Treasurer: Sandra Landis

RHA Oregon President’s Message

Ron Garcia, RHA Oregon President

started off a class on property management recently with a question to the attendees: “What do Landlords and Tenants have in common?” I was surprised that most of the group thought I was about to tell a joke. “They both blame the property manager.” “Lawyers.” “They both eventually die…” Really? It struck me that if a sincere question sounded like a set-up to a punch line, it may be time to review a few basic housing principles. I submit that what Landlords and Tenants have in common is that both parties want (and expect) to have safe, stable, and affordable rental properties. This does not seem to be overly-idealist

Past President: John Sage Office Manager: Cari Pierce

or unattainable. In fact, in my 30 years as a rental property owner/manager, that pretty much describes my overall experience. Does it mean that I have never had a bad tenant? No. Does it mean that I have never worked with a problematic landlord? No. What it does mean is that when things go sideways, like a repair that hasn’t been done, or a tenancy that spirals out of control, or demands that seem out of the ordinary, I know there are remedies available and procedures to follow to get through the issues. When things go upside down and either party over-reacts, digs-in, or behaves in bad faith - there are still remedies… but they tend to get more costly. By the time the string gets too wound around the

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Rental Housing Journal Metro · June 2017

axle, it may just be too knotted up to do anything but replace the axle! How do we avoid this? Don’t allow that to happen. Minimize your risks and maximize your incentives. The best defense is a good offense. Landlords should maintain the property and budget for repairs and improvements. Replace that old appliance with something nice. They should also maintain their professional and legal boundaries to allow the Tenants’ right to habitability and privacy. Tenants should respect their home and communicate their needs courteously. And of course, they should stay current on their rent. Rather than focus only on their rights, both parties should spend time taking stock of their duties, and observe the Golden Rule. Like so many issues today, the extreme stories always get the most coverage. The only time landlords and tenants get in the news is because of outrageous conduct or bitter protests. Yet is that really a fair depiction of our industry? I don’t think so. The Rental Housing Alliance Oregon has been a resource for property owners for 90 years. Does it seem that Landlord – Tenant relations have deteriorated with

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

time? Maybe – but I can attest that if we went back in time to visit the rental conditions from both sides, it would be easy to see just how much better we all have it now. I recently spent a day on a bus tour with the Fair Housing Council of Oregon to view Portland’s history of discrimination. It was eye opening and heart wrenching. While we may all agree there is a lot more to do – it is quickly evident how much we have all improved our housing conditions, along with the infra-structure to continue to work for improvement. The Oregon Residential Landlord and Tenant Act can be intimidating to both sides, and it is not uncommon for either landlords or tenants to feel like they got the short side of it. Consider this story: A housewife called up a pet store and said, “Send me thirty-thousand cockroaches at once.” “What in the world do you want with thirty-thousand cockroaches?” asked the astonished clerk. “Well,” replied the woman, “I am moving today and my lease says I must leave the premises in exactly the same condition I found them…” Ha! Ha!

Rental Housing Journal Metro 16083 SW Upper Boones Ferry Rd, Suite 105, Tigard, OR 97224 503-213-1281 | Fax 503-213-1288 | www.multifamilynw.org

were held on Thursday, May 18th at the World of Speed Museum in Wilsonville. ACE is our annual night of honoring the hard working members of the rental housing industry and celebrating

Leasing Associate of the Year Rookie of the Year Single-Family Manager of the Year Senior Housing Manager of the Year Maintenance Tech of the Year (1-99 units) Maintenance Tech of the Year (100-199 units) Maintenance Tech of the Year (200+ units) Maintenance Manager of the Year (1-99 units) Maintenance Manager of the Year (100-199 units) Maintenance Manager of the Year (200+ units) Portfolio Manager of the Year Assistant Manager of the Year (1-99 units) Assistant Manager of the Year (100-199 units) Affordable Housing Manager of the Year (1-199 units) Affordable Housing Manager of the Year (200+ units) Compliance Specialist of the Year Property Support of the Year Property of the Year (Built within 1-10 years) Property of the Year (Built 10+ years) Renovated Property of the Year Property Manager of the Year (1-99 units) Property Manager of the Year (100-199 units) Property Manager of the Year (200+ units)

their achievements and outstanding service to their properties and residents. The categories at the ACE Awards recognize nominees in Leasing, SingleFamily properties, Affordable Housing

It’s truly an honor to spotlight the professionalism and dedication of all ACE nominees. Congratulations to all nominees and winners! Coming up on Thursday, July 20th the 31st Annual Multifamily Charity Golf Tournament will be held at the Reserve Golf Club in Aloha, Oregon. We’re thrilled to support our three housing charities doing great things for those with higher barriers to housing: Human Solutions, Hope Lift, and Housing Independence. Contact the Multifamily NW office to participate!

Christina Wroblewski, Sequoia Equities Myles Glover, Berkshire Communities Scott Lowry, Sleep Sound Property Management Kim Schellman, Cascade Management, Inc. Victor Pizarro, Cascade Management, Inc. James Darghty, Princeton Property Management Coty Kuhns, Sleep Sound Property Management Matthew Ruecker, CTL Management, Inc. Christopher Ludwig, Sequoia Equities Frank Grandstaff, CTL Management, Inc. Rita Crawford, Sequoia Equities Andrea Flores, Cascade Management, Inc. Vanessa Moreno, Prometheus Real Estate Group Katie Barber, Guardian Management Corina Ferris, GSL Properties, Inc. Allison Christensen, Guardian Management DeeDee Meisenbach, Sequoia Equities Hassalo on Eighth, American Assets Trust Harrison Tower, Sequoia Equities Canyon Creek, Greystar Residential Melissa Waters, Cascade Management, Inc. Nichole Pederson, Sequoia Equities Andrea Swensen, Wood Residential

Upcoming Events for June 2017 6/13/2017 6/14/2017 6/14/2017 6/15/2017 6/15/2017 6/20/2017 6/21/2017 6/28/2017 6/29/2017 7/11/2017 7/12/2017 7/12/2017

properties, Maintenance, Portfolio Management, Compliance, Property Support and more! Here are the winners in each category:

Law and Rule Required Course (LARRC) HR Issues: Internal Investigations Fair Housing Stereotyping and Bias CAM: Human Resources Fair Housing Basics with a Historical Perspective OSHA/Safety Prep Membership Luncheon - Legislative Update New Hire Class Client Trust Accounts Strengthening Front Line Skills for Maintenance CAM: Resident Experience HR Issues: Employee Coaching

Form of the Month Abandoned Property Release – M045

OREGON

ABANDONED PROPERTY RELEASE AS DATE __________________________________________ PROPERTY NAME / NUMBER ___________________________________________________________________________________________________________________________________________________________________ ___ __ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ __ ___ __ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ __ RESIDENT NAME(S) ___________________________________________________________________________

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UNIT NUMBER ___________________________________ STREET ADDRESS ___________________________________________________________________________________________________________________________________________________________________________ ___ __ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ __ ___ __ ___ ___ ___ ___ ___ ___ ___ __ CITY ___________________________________________________________________________________________________________________________________________________ STATE TAT TA ATE ____________________________________ ZIP _____________________________________________________________ ___ __ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ __ ___ __ ___ ___ ___ __ STA ___ __ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ __

I/we agree that all personal property left at the Premises mises upon termination rminatio of the he tenancy tena is or shall be considered abandoned and that Owner/Agent may immediately sell and/orr dispose dis se of the personal persona property in i any manner chosen by Owner/Agent without rty. Owner/Agent Owne Agent need not no comply with the provisions of ORS 90.425. giving notice or holding the personal property. Resident will be responsible for all costs incurred urred by Own /Agent to sstore and/or dispose of the personal property. Owner/Agent y all Reside s. If the abando ent is as the result of the death of a Resident who was the only Residents. abandonment This release has been executed by igned by the personal represent Resident, this release has been signed representative, designated person or other person entitled to possession of the personal property such as an heir or devisee. Facsimile, scanned and d e-mailed or electronic tronic signatures will be treated as original signatures. This release has been executed after termination term tion of the t tenancy or no more than seven (7) days prior to the t termination of the tenancy.

SAMPLE

_____________________________________________________________________________________ ___ __ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ __ ___ __ ___ ___ ___ ___ ___ __

RESIDENT NT

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RESIDENT ENT

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ON SITE

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pring into summer is always a busy time for our industry and the annual ACE Awards and Multifamily Charity Golf Tournament are highlights of the season. The 2017 ACE Awards

This forms allows both the landlord and tenant to mutually agree that any items left behind may be disposed of without the customary notice periods outlined in ORS 90.425. This release can only be executed after a tenancy has ended, or no more than seven days prior to the termination of the tenancy.

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Advertising Sales Will Johnson – will@propubinc.com Terry Hokenson – terry@propubinc.com Designer/Editor Larry Surratt – larry@propubinc.com Steve Olsen – steve@propubinc.com Rental Housing Journal is a monthly publication published by Professional Publishing Inc., publishers of Real Estate Opportunities in Investing & Real Estate Investor Quarterly

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Rental Housing Journal Metro · June 2017

Rental Housing Journal Metro

Win, Win: Improving Cash Flow for Renters and Property Managers Increasing acceptance of digital card payments is a giant leap forward for convenience and efficiency

n this era of digital payment for everything from groceries and plane tickets to city taxes and medical bills, the industries who have been early adopters have created a competitive dynamic over those who have not. One of the latest industries to expand their acceptance to electronic payments is the apartment rental industry. According to a survey by the National Multifamily Housing Council, almost 80 percent of renters would prefer to pay rent with a credit or debit card online or by smartphone. The industry is responding to these digital changes and is reaping the benefits of digital transactions. Over the last few years, apartment managers have taken heed to this statistic and are getting on board to implement a digital strategy. Card acceptance by apartment managers can provide a significant increase in overall convenience and efficiency. Payments that are processed digitally eliminate clerical work, freeing up staff and saving time and money. For tenants – especially millennials – who are used to paying their bills online, paying with a debit or credit card helps them pay rent on time and allows them

to budget and plan better. According to the 2015 Census Bureau Survey, one in three renter-occupied households are millennials. Responding to this emerging trend and opportunity, Visa and Entrata, a property management software company, are making it easier for property managers to accept and process digital payments, subsequently changing how renters are choosing and preferring to pay rent. Entrata enables property management firms to accept Visa cards, which significantly reduces the number of steps it takes to process rent payments. The partnership set an industry precedent that helped broaden acceptance and implementation of electronic payments. Entrata data shows that properties using online payment technology can spend 65% less time processing rent and will decrease rent delinquencies by 50%. One property management firm, Trinity Property Consultants, has had great success with the card payment program. As a national organization managing a geographically diverse portfolio of over 23,000 units in 13 states, Trinity was looking to increase operational

Rental Housing Journal Metro · June 2017

efficiency. Trinity had been accepting online payments since 2013 but they were interested in taking it to the next level by increasing adoption. Their goal in expanding acceptance to electronic payments was to establish a paperless office, with 100% of payments taken online. Trinity estimates they have saved more than 51 employee hours a month with the increase in online payment adoption they have seen since the roll out of the Visa pilot program. By lowering the fee renters incur when using a debit card, Trinity has been able to substantially increase the number of residents paying rent electronically. Trinity was also able to access the funds faster, than when paid by check, which has enabled better cash flow for their business. Over the year, the percentage of renters using cards to pay rose from two to 11%. Trinity reported that because of the program, they are able to focus on providing value-added services to their tenants instead of processing checks, which has led to increased customer and employee satisfaction.

“The staff loves it when residents pay rent online. The email notifications in Entrata’s technology has created instant transparency as to who has paid and who hasn’t,” said Trinity’s VP of Marketing and Training, Carla Alicea. As a result of all of the positive outcomes, Trinity staff across the country are now specifically trained to encourage all residents to choose to make online payments through Entrata. As early adopters, Trinity Property Consultants has benefited greatly from the convenience and efficiency of accepting electronic rental payments.

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Rental Housing Journal Metro

by John Triplett

Apartment Pet Amenities Draw Millennial Tenants

uxury style pet amenities are a new feature that apartment developers and property management companies are putting in place to draw the increasing number of younger tenants who have pets and want to rent. Apartment developers are creating new spaces both inside buildings and outside to build in more pet-friendly amenities and services for tenants. In a recent interview, Kristen Gucwa, vice president of national lease-up operations at Richman Signature Properties, talked about some of the top pet amenities in their pet-friendly properties in Florida, Colorado and Texas. “We have luxury rentals in several states and we do a lot of research when we go into these areas. What we are finding is that a pet is an incredibly important member of the family. So we do need to realize that and make them feel just as welcome as any other member of the family as they are moving in,” Gucwa said. 75 percent of millennials have pets “We work with BarkBox as one of our partners and they have some research that shows 75% of millennials currently have a pet – just a phenomenal number,” Gucwa said. ”And, most of our renters are

Photos copyright Richman Signature Properties

millennials and GenXers, so when you are working with them, you look for new ways to pamper their furry friends and put together pet-friendly living spaces. “Some of the things we do is put pet parks in our properties. You usually do not find great spaces for your pet to run around in downtown areas in apartment complexes. “We have a project in downtown Tampa called Aurora that has a fantastic pet park

so you actually have green space for your dog in a downtown location. Some of our locations have agility courses which are great because they get to run around and have fun. “We also do social events where they can come out with their pet for our ‘Yappy Hours’ which are always incredibly popular. We will do our pet dress up days where they bring them out for prizes. A lot of our events you can bring your pets

to. It is more of a social, inviting aspect that we want to have at our properties,” she said. Pet spas one of the newest apartment pet amenities "One of the newest amenities that we have are our pet spas. They have gotten more and more high-end, and more inclusive of some of the amenities you would find in an outside pet spa that you would pay for – but here it is right downstairs in you building,” Gucwa said. “These are walk-up tubs, a place to dry – huge spaces that we are dedicating in our buildings to these areas which are incredibly important to our renters. ‘They are huge spaces that fit both large and small dogs, and they do get used quite frequently.” She said most of their newer project properties now have the pet spas. Pet amenities and move-in gifts “We partnered with BarkBox, a popular pet toy and treat service, and our residents can choose it with their move-in gift. We have several different types of move-in gifts too such as the live healthier fitbit move-in gift, or an interior design option with an outside company called Laurel & ...continued on page 16

Rental Housing Journal Metro · June 2017

Rental Housing Journal Metro

Rising Faster in the Suburbs ...continued from page 1 suburbs, but if demand keeps growing for suburban rentals and supply continues to lag, that will also start to change,â&#x20AC;? Gudell said. â&#x20AC;&#x153; As more formerly urban renters move to the suburbs in coming years, we'll likely start seeing more apartment buildings and walkable amenities popping up in those communities." Multifamily construction a factor in rising rents An increase in multifamily construction has slowed rent growth across the country, with rents rising at their slowest pace in five years. The suburbs often offer larger apartments and more single-family homes for rent with more space -- about 19 percent of all single-family homes in the U.S. are rentals, up from 13 percent in 2005. In the U.S., the median monthly cost of a suburban rental is up about 2.5 percent year-over-year, while the median cost of an urban rental is up 2.3 percent. At this time last year, the median urban rental price was up 5 percent year-over-

year, while median suburban rental prices were up 3 percent. The trend is more pronounced in booming housing markets where rent affordability is worsening. Rental rates in the Nashville, San Francisco and Seattle metro areas are growing faster in the suburbs than in urban areas as rising costs force renters out of the city, increasing demand in the suburbs. Over the past decade, the share of income needed for the median rent payment in the San Francisco metro has increased from 34 percent to 44 percent. In the Seattle metro, the share has increased from 26 percent to 32 percent. Expensive coastal cities are coming off about a decade of rapidly rising rents. Years

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360-695-2847 Rental Housing Journal Metro Âˇ June 2017

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Rental Housing Journal Metro

by Yardi Matrix

Soft Landing Or Bumps Ahead for Multifamily Investment?

he economic forecast for multifamily investment for the next year or two is that it is good enough to maintain occupancy, but rents may not be what people are hoping for, according to a new report from Yardi Matrix. Jeff Adler, vice president and general manager of Yardi Matrix, said in a webinar that, “We are coming in for a soft landing – driven by supply. While demand is good, we are in for a busy 12 to 24 months,” he said. “Things are getting absorbed, but not at rents people were hoping for,” Adler said as multifamily supply will peak in 2017. “In my view the macro economic conditions are good, not great, but they are pretty good,” Adler said. “And they are generating good job growth with 150,000 to 200,000 jobs per month. This is good enough to maintain occupancy and decent - but continued deceleration of rent growth is happening. “You can clearly see we are coming in for what I hope will be a soft landing driven by supply – not by demand. Demand is still solid. It’s mostly on the supply side. Demand is a big tailwind, both short-term and long-term. It is still a fantastic demand story,” he said. “However, shorter-term, supply is peaking. So we are in for a bumpy 12 to 24 months. Supply surges are focused in major urban hubs. Seeing that, it is

coming at the top end which we are seeing through our pre-leasing data. Things are still getting absorbed, but not quite at the rents people were hoping for. “Higher cost of debt, higher cost of land are there, rents are not going higher to bail you out so all of that has made new construction tighter. Things will get built but the pipeline is peaking,” Adler said. There is still a housing shortage in midpriced apartments, he said.

Is this still renter nation, does that hold true? "Yes, but not in an accelerating way. I think the homeownership rate has stabilized around 63% so I think we still have great demographics because of the age of the group. But I do not think you are going to get more people renting as a percentage of the total. “So it has stabilized and we said we thought it would stabilize. I think we are in renter nation compared to where we were 10 years ago. I don’t think the rate of homeownership is going to go to 50%. I think that 63% is about where it is going to be. “I think we are still in good shape. We don’t have quite as many tailwinds. So that was a tailwind when we had the reduction in the homeownership rate. Each reduction of one percent added about a million households into the renter pool. I don’t think we get this extra

tailwind, but it is still pretty good,” Adler said. Suburbanized urban areas near large cities for multifamily investment “Depending on your investment strategy and your cost of capital, you are going to have to go one to two tiers down from your comfort zone in order to make deals pencil,” Adler said. “Wealth is created in this economy on the basis of ideas. And ideas in certain industries aggregate in certain locations where people can share ideas very quickly and knowledge is being generated in that particular industry. And, where the value of place increases. “If I am a real estate investor, I want to be in a rising tide where wealth is being created and where the value of place improves. That is a fundamental insight you can apply to a lot of different industries and lots of different locations,” Adler said.

Where does an investor go? “I think it is commercial real estate. I think high occupancy on stabilized properties is sliding. You can see in the data that the markets with high supply are impacted the most. Rents are decelerating. Wage pressures are finally catching up to rent growth,” Adler said. “So while we have a tough 12 to 24 months ahead, I think we still come out

the other side quite positive,” he said..

Rent growth and occupancy have crested "Central business district building is done for a few years," Adler said. “Leading edges of the millennials are moving out of the central business district to the suburbs, driven by the first kid or the second kid. “Central business districts have not solved their schools problem,” Adler said which is why this moving out is happening. Adler outlined the state of the real estate economy with the following: The state of the real estate economy summary • U.S. Multifamily Supply is peaking in 2017; but the next 18 months will be a bit rough • Development is buffeted on all sides, demand/rents, costs, financing, labor availability • U.S. Multifamily rent growth peaked in early ‘16 and has been decelerating since-with Class impacted more • The Deceleration is broad, and most pronounced in area of accelerating supply and/or decelerating demand (Houston, San Francisco) • Remaining bright spots are small, niche markets that draft off of larger markets-(Reno, Sacramento, ...continued on page 18

Top Regrets ...continued from page 3 walk-throughs gives sellers an easy way to show home features that are hard to capture in photos. • Home improvements can be a worthwhile investment. Sellers who fetched above list price tackled home improvement before listing their home, being 50 percent more likely to take on a large project like modifying an existing home plan and 20 percent more likely to renovate a kitchen than the average seller. • Don't be afraid to try again. In many markets, nearly half of listing views occur in the first week the home is on the market. Twenty-six percent of those who sold above list price took their home off the market once to adjust the sales price, opting to start anew rather than letting the home languish on the market with minimal activity.

The full 200-page Zillow Group Report on Consumer Housing Trends, which is free and available to the public, can be accessed through the Zillow website The Zillow Real Estate Market Reports are a monthly overview of the national and local real estate markets. The reports are compiled by Zillow Real Estate Research. For more information, visit www.zillow.com/research/. The data in Zillow's Real Estate Market Reports are aggregated from public sources by a number of data providers for 928 metropolitan and micropolitan areas dating back to 1996. Mortgage and home loan data are typically recorded in each county and publicly available through a county recorder's office. All current monthly data at the national, state, metro, city, ZIP code and neighborhood level can be accessed at www.zillow.com

Rental Housing Journal Metro · June 2017

Rental Housing Journal Metro

by John Triplett

Can I Say "No Pot In My Apartments" When It’s Legal In My State?

regon Governor Kate Brown this month signed a bill that prohibits marijuana retailers from keeping or sharing customer's personal information. According to reports, she said she was concerned about the Trump administration's future actions when it comes to the legalized pot industry which employs 13,000 people in Oregon. So when pot is legal in a state, what issues does this present to property managers and landlords of rental properties? Property managers are often confused and seeking to better understand how to handle the issues of legal marijuana and medical marijuana when it comes to tenants and rental housing in their states. Laws are changing all the time in many states as voters approve different levels of permission when it comes to marijuana. This leaves property managers trying to figure out what should be in their leases around the issue. You may be able to ban smoking, but do you really know what your tenants are eating or growing in their apartments? Do you really want to know if they are good paying tenants? Rental Housing Journal did a recent interview with Seattle, Washington attorney Bret Sachter, an expert in tracking the progression and transformation of marijuana laws, to discuss some common

No. 1 - Tenants with a disability and medical marijuana Question: If a tenant comes in and says I have a disability, here is a note from my doctor, I use medical marijuana, which is legal in this state, and I want to rent your apartment. Can a landlord prohibit that? Answer: “A landlord can absolutely prohibit that because marijuana is illegal under federal law.” The landlord can say, “I understand our state allows medical marijuana but as it is still a Schedule 1 drug and I prohibit it on my premises.”

questions property managers have about marijuana and tenants. “I’ve been asked this a lot,” Sachter said, “but it does not come up as often as you might think. The overarching issue here is that, with few exceptions, people can do what they want to protect their property, even if the prohibited behavior is not illegal. You can prohibit smoking, prohibit pets, but with marijuana it’s much easier because it is federally illegal. So you can pretty much prohibit it if you want to no matter what, even medical marijuana,” Sachter said.

4 Questions About Pot, Tenants and Apartment Leases Sachter says in terms of Fair Housing issues, and the U.S. Department of Housing and Urban Development (HUD) it is a situation where HUD wants it in the lease that marijuana is illegal but enforcement is another issue, he said. It is not so much that HUD wants landlords to evict over marijuana, but that you have something in the lease language that allows for eviction in the instance of marijuana use on the property. “So it is pretty clear as far as HUD is concerned,” he said. Here are his answers to four questions on pot and apartments.

No. 2 - Marijuana is legal in my state - but what does the lease say? Question: What if a tenant says marijuana is legal and they should be allowed to use it? Answer: “If your lease prohibits smoking and prohibits use of illegal drugs, then the legality of marijuana at the state level is irrelevant because under federal law marijuana is illegal. If your lease does not have those types of clauses, you should talk to an attorney in your state or city to find the best solution for your lease.” There is no law about reasonable accommodation for marijuana users, federal laws do not require it. As far as the federal government is concerned it is not ok. ...continued on page 12

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Rental Housing Journal Metro · June 2017

Rental Housing Journal Metro

No Pot In My Apts. ...continued from page 11 “One thing I would say, and it is important, I would encourage landlords just to make everything clear,” in the leases, he said. “Clarify in a lease that you must abide by all laws state and federal.” That is the case in residential. He said it can be different in commercial. (There was a commercial case in Oakland, California and you can read more about it here.) “But In residential it is not as tricky, and I am speaking very generally here,” Sachter said. “The states may have their own thing going on with legal marijuana laws, but it is still federally illegal. Make it crystal clear in your leases is my best advice,” he said. “How can you attract tenants in a state where it is legal yet protect the owners of the property? You cannot have it both ways.” “I know in Seattle there are Airbnb bed and breakfasts that specifically market themselves accordingly, as part of marijuana tourism to come and stay in our place where it is legal.” But if a property manager doesn’t want that going on, then they have to be up front in the lease. “If your tenant is Airbnbing to a tenant who is then using marijuana – well if you can’t catch them you cannot do anything about it. You have to prove they are doing this. They are going to be using marijuana regardless of what the lease says.”

No. 3 - What if the tenant using marijuana is a well-paying, good tenant? “Landlords can certainly put a nowaiver clause in the lease. If I say, ‘Here

is a list of prohibited things’ and if you do these prohibited things in the lease, you are subject to eviction,” he said. “However, any time I waive any of these things does not constitute an overall waiver. It basically means you should not ever do it again,” he said. “Just because you get away with it once, does not mean you get away with it every time,” Sachter said.

No. 4 - Can I say 'no pot in my apartment?" “Usually if you say, ‘No pot in my apartment’ and you find a tenant using marijuana and you haul them into court, more than likely the judge is going to say, ‘Have you stopped?’ to the tenant and ‘Are you going to do it again?’ and the tenant is going to say ‘No.” And then judge will say, ‘Ok, dismissed.” To put a more legalistic term on it, usually a court will be in favor of “allowing the tenant to cure the defect,” rather than evict for most things like that, Sachter said. Technically, in Washington, a landlord would serve a 10-Day notice to comply or vacate with the terms of the lease. This process, therefore, gives the tenant a chance to “cure” the violation before the landlord can evict. Check your local state laws on this. What one experienced property manager says about pot Sam Driver, Product Director for Buildium.com, and an experienced property manager at the property management software company, said as far as marijuana use in apartments, due to

the newness of the legislation, the federal laws that supersede state and county laws, and liability concerns, it is not a topic that comes up a lot - yet. “Generally, the safest solution is to choose the most conservative pathimpose a no-smoking policy, which can in some cased cover outside areas, and a crime provision that includes local, state and federal laws. In many states, there are setbacks from doors, and it is particularly important if the building is a place of work which a multi-unit apartment building certainly is. So your lease should contain a provision explicitly banning smoking and illegal activity. Because the feds still outlaw it, this should be sufficient,” Driver said. “This of course only covers the smoking angle. If a resident consumes it in another way, you'd likely never know,” he said.

Growing marijuana could put a power load on your apartments “As for growing, that's less clear. But in general, unless the electrical system is designed for it, the loads grow lights put on the apartment unit could be excessive. I'd consider a reasonable use clause that specifies all high load equipment, including lights, air conditioners and any kind of pump be approved by you. “This would put you in a position to take action if they are putting too much load, without specifically calling out the use of the equipment. Pumps are a good area for monitoring, because of the intermittent load, they trip breakers, and anyone who is using a hydroponic system would need several,” Driver said.

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What if I want to market my apartment to marijuana users? “If, however, you wanted to roll the dice and market to this crowd, assuming your state laws allow it, remember that the federal laws would cover any bank deposits from proceeds," Driver said. “In this case, you'd be able to do it, assuming no federal intervention, in compliance with local laws. No insurer would provide EO&E (errors and omissions excepted) insurance to you, and you wouldn't be able to deposit any funds into a federally-accredited bank. So you'd have to self-insure, and run an entirely cash business, but you could do it, risking only federal enforcement. “The big question is, 'Would the premium rents be worth the risk of forfeiture?' If you run afoul of the federal drug laws, the asset seizure possibility is a huge risk. You could lose the building. “If you're managing other owners' properties, then you'd be risking their assets even if you used different leases, unless you kept fully separate books, bank accounts, and co-mingled nothing. So I'd say it would be all-or-nothing," he said. “The timing is tricky, too. Leases contain a provision that stipulates that the contract is in force in a specific jurisdiction. If they change the laws rendering your lease out of compliance, what happens during the remaining time of the lease? Is it invalidated? Or does the contract remain in force until it expires? “Good questions for your lawyer,” Driver said. ...continued on page 16

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Rental Housing Journal Metro · June 2017

Rental Housing Journal Metro

MIND YOUR BUSINESS

Tia’s Tips for Better Rental Management By Tia Politi, Lane ROA President

s a property management consultant, I guide landlords through the processes of dealing with tenant noncompliance, termination, deposit reconciliation, eviction and small claims. Through the years, common themes have emerged regarding lack of knowledge in the following 10 areas:

1.) Fair Housing violations in advertising & first contact To stay out of trouble, follow the rule: Describe the property not the people. Don’t say things like, perfect for older married couple, ideal for single man who works nights, Buddhist vegans only need apply. And especially don’t say things like, no Section 8, no animals, and now - no criminal history. The HUD Memo of 2016, requires landlords to consider an applicant’s criminal history in context. Landlords need to look at whether the history presents an actual danger to themselves, the property or the neighbors, by considering such things as the type of crime(s), how many convictions, how long ago the crime(s) occurred, and the rehabilitative measures they have taken since. Residents can also request a reasonable accommodation for a waiver of poor history related to domestic violence, or criminal history related to a prior addiction when the applicant has received treatment and stayed clean. Don’t prescreen potential applicants when they call, or ask potentially illegal questions such as number of children, source of income, marital status, ethnicity, religious preference, etc. Everything you need to know will be on the application. Some landlords say they do a bit of prescreening so people won’t waste their time applying if they won’t qualify. Unfortunately, this opens the door to saying or doing something that results in a Fair Housing violation against an applicant in a protected class. Offer an application to any who indicate an interest in applying, even if at first contact it appears they might not qualify. All of the information regarding that applicant will be on the application, and that’s when the job of screening begins. Landlords also get into trouble when they answer questions by disabled applicants related to Reasonable Accommodation of the lease terms, or Reasonable Modification of the premises. The best way to avoid trouble in this regard is to create an auto-response, such as, “I do not discriminate based on any protected class. Would you like an application?” Don’t put the cart before the horse, it will only lead to trouble. If the applicant is approved, the landlord can then move through the request, verification, registration, modification process.

Top Ten Classic Landlord Mistakes

of achieving that is to actually screen potential residents. Require each adult applicant to fill out an application. Check all disclosure boxes for requirements like renter’s insurance, utilities or services that benefit the landlord or another tenant, or yard care. Require applicants to answer every question and fully complete the application before it is accepted, then verify the information. There are many fine screening companies that can help. Apply rental criteria fairly, without regard to race, color, national origin, religion, sex, familial status (families with children), disability, marital status, source of income (including housing subsidies), sexual orientation, gender identity, type of occupation, or domestic partnership. If applicants meet the criteria they are approved or conditionally approved; if not, they are denied. If a landlord charges a screening fee, there are extra requirements. The applicant must be provided with the landlord’s written screening criteria prior to applying, the landlord must have an available property or one that will be available soon, the applicant must be told where they are in line for an advertised property, the landlord must provide a receipt for the fee, and they must actually screen the applicant, or are required to refund the fee. The landlord must also issue any denials in writing separately to each applicant, and must reconsider the applicant if they provide evidence showing that the reason for denial is wrong in some fashion.

3.) Rushing the move-in process Don’t be pressured by applicants (or finances) into rushing the move in. When move in is rushed, it results in three fatal errors: 1) Failure to fully screen, resulting in poor quality tenants; 2) Failure to document the condition of the property, resulting in disputes over damages at the end of the tenancy; 3) Failure to ensure the property meets habitability standards, resulting in aggrieved tenants with a basis for complaint, and even counterclaim in a legal action. Diligence at the beginning of the relationship is rewarded at the end. It’s a big red flag when an applicant holds a handful of cash and pressures the landlord to move quickly. Haste makes waste. Prepare the property completely before handing over possession. Verify the transfer of utilities, and make sure the rental agreement and all addenda are completely filled out, initialed and signed by all parties.

4.) Confusing pets with assistance animals A pet is a pet; an assistance animal is a wheelchair. Too many landlords confuse the two, to their detriment. Landlords may restrict a tenant’s right to keep a 2.) Screening poorly or not at all pet in the rental property by limiting the If you have a decent rental property number, size, species, and breed of pets, and good people in that property, and charging increased deposits and rent there’s no easier job in the world than for the privilege of keeping a pet. being a landlord. And that’s the trick: An assistance animal is not a pet, but identifying people who will take care an assistive device that allows a disabled of the property, pay their rent in full resident the ability to occupy and enjoy and on time, and keep to the terms of the unit the way a non-disabled resident the rental agreement. The best chance could; therefore, landlords cannot Rental Housing Journal Metro · June 2017

require any additional deposits or rent for assistance animals, restrict size or breed of assistance animals, and must be cautious in regards to restricting number or species. It’s not unusual for tenants to have more than one animal, or even different animals for different family members. Landlords may require a third-party verification of disability documenting the need for the animal. They may also require that the animal be vaccinated and licensed as required by law or code, and may request that the animal be spayed or neutered. Be prepared for pushback if the surgery would be contraindicated due to the age of the animal or other considerations.

5.) Improper entry and abuse of access Prior to entering the rental property, the landlord or their agent must provide a minimum of 24-hours’ notice to enter. That notice can be in the form of a written notice that is either posted to the main entrance of the dwelling unit, or mailed first class (mailed notices must provide an additional three days plus the 24 hours required by law, prior to entry). A notice to enter may legally be delivered by

telephone or voice message, as well as text and email, if allowed by contract. What trips up many landlords is their belief that if they’re not entering the dwelling unit itself, it’s okay to drop by. Not so. A landlord has no right of entry to any portion of the premises under the exclusive control of the tenant, including the yard, lot, or land area itself, with specific exceptions. Common areas of a multiplex are exempt from notification requirements, as are entering to perform regular, ongoing exterior landscaping (if specified in a written rental agreement), to serve a notice to the tenant, or in an emergency. Abuse of access means what it says: Landlords cannot abuse their right of entry. There is no specific definition, so proceed with caution and respect.

6.) Creating Waiver Only landlords can waive their legal rights; tenants never can – even with their consent. A landlord’s failure to act upon knowledge of a breach of contract by the tenant for three separate rental periods or longer creates waiver. Whether that is an unauthorized occupant or pet; repeated late or partial payments of rent; ...continued on page 17

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Rental Housing Journal Metro

DEAR MAINTENANCE MEN: Faucets, Bathroom Storage & Good Maintenance

By Jerry L’Ecuyer & Frank Alvarez Dear Maintenance Men: When the bathroom faucet was new, turning off the hot or cold water knobs would cut the flow of water immediately. Two years later, upon turning them off, the faucet weeps a bit of water. Is this a sign the knob isn’t working? Can a clogged spout screen be fixed? With all these problems, do I need to buy an entire new fixture? Paul Dear Paul: Most types of faucets are repairable with standard tools and a rebuild kit. Note the brand and style of the faucet and find a corresponding repair kit at the local plumbing supply house or home improvement center. Repair kits often come with the specialized tool you may need to repair the faucet. The faucet screen can be cleaned and is housed in a removable assemble at the end of the spout. These can be spun off and the screens cleaned and replaced. Keep in mind the cost of repairs may rival the cost of replacement. If the cost of repair is more than fifty percent of the cost of replacement, we recommend the faucet be replaced with new modern fixture. Dear Maintenance Men: How can I add more storage to my utilitarian type bathrooms? The residents complain that they need to store their toilet paper in the hallway! Please list a few suggestions on what to do? Robert Dear Robert: It does seem bathrooms are sometimes designed as an afterthought. Sink, toilet,

bath and that is it. A modern bathroom will take into consideration the need for storage, electrical devises, personal hygiene etc. The first item that comes to mind is installing a bath sink cabinet. An old style cabinet might only have a set of doors under the sink. We find this is not adequate and a cabinet should have drawers along with access to under the sink. The drawers can store hair dryers, and all manner of personal bath items. A unique system we like utilizes the space between the studs in the wall. Cabinet doors or mirrors can be used to cover storage in the walls. The wall storage is perfect for toilet paper, rolled up towels, tooth brushes, and most other small items. Install multiple towel racks on the back of the bathroom door for additional towel storage. The space above the toilet can easily accommodate an overhead cabinet for larger items. Reversing the swing of the bathroom door from inward to outward will greatly increase the usable room and make the bathroom appear larger. Dear Maintenance Men: It is currently summer time and that is when we get the most vacancies. How do I keep my residents from moving? Denise

Online Renter," the number one factor in a resident's decision to renew a lease is "Quality of Maintenance Services." Additionally, the current SatisFacts Insite® Index for Work Orders indicates that 18% of all service requests are not completed right the first time. And of those, only one-third of residents received notification that there would be a delay in completing the request. What the above means is poor maintenance service can lead to higher vacancies. It does not matter if you have 10 units or 100 units; maintenance is a critical tool in the physical well-being of your property and the happiness of your residents. Think of it this way. A service call and parts may cost $250 to service a broken washing machine or water heater, resulting in a satisfied resident. However, a resident having to live with a broken washing machine or intermittent hot water may elect to move rather than dealing with the hassle of calling in repeated service requests. That resident vacating will now cost the owner thousands of dollars in loss rent and rehab work to bring the unit back to rent ready condition. Good maintenance is a year round tool to keeping your investment healthy and your residents paying the rent month after month.

Dear Denise: Often residents relocate during the summer months due to a change in schools their kids attend. They want to be close or within walking distance. The other more problematic reason is poor maintenance service. According to the 2011 national resident study, "Getting Inside the Head of the

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

Is It Time to Upgrade Your Technology?

by Mary Girsch-Bock

f your property management business is currently using the latest and greatest technology, congratulations! But for those of you still using technology from years ago, it’s time to start to take advantage of the benefits that today’s technology can bring to your business, and to your applicants and tenants. If you’re not sure where to start, here’s a quick list of items you may want to investigate in your quest to bring your property management business into 2017. Online photos and virtual tours. Remember years ago when searching for a home, you were presented with a photo of the outside of the home. If you wanted to see more, you contacted an agent, who took you on a tour. Those days are long gone, but sadly, some property management companies continue to offer potential tenants a very brief glimpse of an available property, and nothing more. Savvy property management businesses 14

know that viewing apartments and homes online is vital to their business. The more information you can offer applicants online, the higher likelihood that they will fill out an application, which brings us to my next suggestion… Online rental applications. You have a great inventory of photos and virtual tours that potential tenants can access at any time. A website visitor finds a property that he or she absolutely loves. The next logical step would be to fill out

an application – preferably an online application. One of the biggest advantages of offering online applications is the ability to channel the excitement that web visitors may experience when looking at your available properties. Do you really want them to have to stop and request an application, or worse, come into your office to complete the application? Chances are they will simply move on to another property that does offer that capability.

Online rent payment capability. Let’s face it , why wouldn’t you want a system in place that makes it easier for your tenants to pay their rent – and pay it on time. Today, checks have been widely replaced by online payment systems. Don’t force your tenants to write a check, and certainly, don’t force them to have to write a check and mail it! Make it easier on them, and on your property management business, and make online rental payment a reality in 2017. Make your property management business technologically savvy in 2017 by investing in these tech benefits that will reduce paperwork and make your tenants happy.

Rental Housing Journal Metro · June 2017

Rental Housing Journal Metro

ASK LANDLORD HANK

Do tenants normally interview me as a property manager?

ormally, I'd answer this question with “no.” The reason is that I usually have been instrumental in the rental process from the beginning Typically I have provided information about the unit and the development. I have shown the unit, helped with the application process for the owner and the Homeowners Association (if there is one). Also I provide the necessary contact information for utilities, TV and WIFI, trash removal, etc. I am also going to meet and welcome tenants on move-in day. I give them keys, fobs, remotes, etc and do an extensive walk through inspection of the property and contents. Any damage or problematic areas are photographed. Do the walk-through as if I were the tenant I do the walk through as if I were the tenant. I really do record all the issues so that the tenant is not charged for damage they did not cause. I want to be fair to tenants. Also, it is best to orient the new tenants to the property. I want tenants to know that if they have a problem or maintenance need, I want to hear about the issue as soon as possible so the issue can be repaired. I make sure they have my cell phone number as well as my email address. Problems that DEMAND an immediate call to me are:

A) Fire, after a call to 911. B) Water leaks, but not drips into sinks or running toilets. C) Perceived dangerous condition to people or property such as a downed tree, power line, animal, etc. I also show tenants where water main cut off is to the unit, as well as fire extinguisher and smoke detectors. I have the tenants sign paperwork stating they have received information on the fire extinguisher and the smoke detectors are functioning. I let them know where mail delivery is, garbage pick-up days, routine for landscapers, pool maintenance, parking spots, etc. At this point the tenants have also received community rules and regulations, if appropriate. What should be the No. 1 question tenants ask a property manager? Most tenants don't ask about safety. They've already determined in their minds that the property is in a relatively safe location. But that would be my No. 1 question a tenant should ask. Most properties are viewed during the day. And the night-time conditions could be markedly different. If a tenant does ask about safety, I can't really answer that question. So I refer tenants

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Rental Housing Journal Metro · June 2017

Rental Housing Journal Metro

Pet Amenities ...continued from page 8 Wolf. Or they can choose their move-in gift to go to their pet, such as BarkBox. “BarkBox is a little gift you get each month with different toys and treats delivered to your apartment that are customized to your pet. So each month for the first three months your pet gets that subscription we offer as a gift when you move in. She said tenants have been very excited about these amenities. “BarkBox has become one of the more popular move-in gifts.” And “our Yappy Hours” are one of the most well-attended events that we have each month. So it’s a great way for our residents to socialize. It is a little bit easier and less intimidating when you can bring your pet with you.”

She said some of their properties are also involved in monthly pet photo contests. And, all of their properties also do pet DNA testing. Richman Signature Properties has three properties in South Florida, four properties in the Tampa Bay area, opened the first one in Dallas last year across from White Rock Lake and the newest is in Denver in the LoHi area, she said, and more under construction. “Our property in St. Petersburg, Florida has an agility park and a place to do the dog wash right there in the park. So they really range between the properties,” she said.

Can I Say No Pot? ...continued from page 11 How to keep up with status of pot laws in the different states ProCon.org, a 501(c)(3) nonprofit nonpartisan public charity, provides professionally-researched pro, con, and related information on more than 50 controversial issues from gun control and death penalty to illegal immigration and marijuana laws across the country. "Using the fair, FREE, and unbiased resources at ProCon.org, millions of people each year learn new facts, think critically about both sides of important issues, and strengthen their minds and opinions," according to the company's website. Here are where the pot laws stand for medical and recreational marijuana in several states, how it was passed, and what is permissible in the possession limit, according to procon.org. You can see their excellent full chart here state by state. Keep this link as they update the ever-changing pot laws in the different states. Here are what some some states are doing with links to more information on each state's pot laws. • Oregon: Ballot measure 67, 24 oz usable; 24 plants, 6 matures and 12 immature • Washington: 8 ounces usable, 6 plants • Arizona:medical marijuana is legal 2.5 ounces usable, 12 plants

•

Colorado: 2 ounces useable, 6 plants, 3 mature, 3 immature • Utah: prohibited with a few narrow exceptions As a Presidential Scholarship recipient, Bret Sachter received his law degree from the Seattle University School of Law. In addition to his law degree, Bret holds a bachelor’s degree in evolutionary psychology and master’s degree in psychology. Bret has taken an interest in tracking the progression and transformation of marijuana laws, as they are among the most recent and highestprofile legal issues affecting entrepreneurs in Washington and, increasingly, all around the country. You can call him at 206-295-2547 or visit his website here. Resources: • Proposed bill would allow Washington residents to grow pot at home • Arizona weed laws, what to do about legislation after prop 205 defeat • 29 legal marijuana states and DC • Smoke pot in Oregon? Your name is now protected from the Feds • Retail marijuana use within the City of Denver • Utah marijuana laws • Real estate concerns in the cannabis industry: Case study

Rental Housing Journal Metro · June 2017

Rental Housing Journal Metro

Tia's Tips ...continued from page 13 accepting a payment of rent that extends beyond an outstanding no-cause notice of termination; or perpetuating any known breach, landlords must act or give up their rights. Waiver covers a lot of ground, and the further a landlord heads down the road of waiver, the harder it is to turn around, so act upon every breach, no matter how seemingly insignificant. Waiver can be cured with proper notice in a month-to-month agreement, but not in a fixed-term lease until it expires.

7.) Not having a good grasp on preparation and service of legal notice Selecting the correct notice for the situation is the first hurdle. The second hurdle is meeting the statutory requirements for its preparation and service. Proper calculation of time is essential, as well as specificity in regards to the breaches and cures in for-cause notices of termination. Perfecting service of notice is another minefield. Whether serving personally, by first class mail, or post and mail, each manner has specific requirements created by statute or case law. Notice to a tenant that could result in a filing of eviction must be perfect in every way, because the easiest win for a tenant in eviction court is a defective notice. The worst-case scenario results in landlords with valid claims paying for their tenant’s attorney, or having their credit damaged by an adverse court judgment. Learn how to serve notices legally and perfectly, or hire someone to do it. 8.) Maintenance, repair and failure to document Landlords must maintain rental properties within minimum habitability standards, respond reasonably to tenant maintenance requests, and maintain strict liability in terms of habitability issues – in some cases even when the tenant has deliberately or negligently contributed to the damage. A landlord’s failure to maintain habitability standards and supply essential services is a common successful tenant defense in eviction cases. At a minimum, a residential unit must provide adequate heating facilities; hot and cold running water furnished to appropriate fixtures, and maintained so as to provide safe drinking water; a sewage disposal system approved under applicable law; windows and doors that open, close and lock properly; a unit and grounds free of rubbish, trash and vermin at the outset of the tenancy; effective waterproofing and weather protection; properly functioning utility systems; a secondary escape route for each

designated sleeping place in case of fire or other emergency; and safety and security of all components, inside and out. Failure to document tenant maintenance requests and actions taken is another sticky wicket for landlords. If a tenant accuses their landlord of failing in their duty to provide essential services, and agitates for a diminution in value of the rental dwelling, either in or out of court, where’s the evidence to contradict their claim? In many cases, it’s nonexistent. Memories are fallible, and documentation is essential to proving the landlord’s response and actions.

9.) Being a pushover Excuses are the pavement that builds the road to failure. That’s a really mean thing to say, I know, but it’s based on experience. I’m the despicable character who has to put limits on tenant behavior, enforce compliance, and evict, if necessary. As a property manager, I operate as my clients’ fiduciary, so I must act within reasonable standards. Private landlords can always choose to capitulate to sad tales of woe, but heading down that path rarely ends well. It starts with the tenant making excuses and the landlord making allowances, and ends with the landlord losing time, money and self-respect. Providing housing for other humans is a privilege, but it’s a business, not a charity. 10.) Messing up move out and deposit reconciliation The end of tenancy is where a landlord’s shortcuts at the beginning of the relationship will come back to haunt them. Failure to document the condition of the property at the beginning, the end, or both, can lead to a losing lawsuit. The final arbiter of charges to a tenant’s security deposit is a judge, so charge appropriately, but be fair. Landlords may charge daily rent for loss-of-use, as long as repairs are performed in a timely fashion, as well as a reasonable hourly wage for their own performance of cleaning and repairs, but it can be best to hire out at least some of the work, to avoid accusations of “padding” and to provide a professional third-party who can testify to the condition of the unit, and the remediation required to correct the tenant’s deficiencies. When assessing charges to a tenant’s deposit, landlords must account for depreciation for the replacement of certain damaged components, such as flooring or appliances. It requires a good faith effort to take into account the age and useful lifespan of the damaged item,

versus the landlord’s cost of replacement. Other common errors with deposit accountings include lumping charges together in a general way that deprives the tenant of the detailed accounting the law requires, failing to meet the 31-day deposit accounting deadline, withholding the deposit monies in bad faith, or failing to send the accounting by first class mail, with penalties of twice the amount wrongfully withheld. Another common misconception is that if the tenant doesn’t provide a forwarding address, landlords are not obligated to mail an accounting. Not true. If no forwarding address is given, the accounting should be mailed to the rental property address with the expectation that the tenant will have their mail forwarded, and copies mailed to any other addresses on file, such as an employer or emergency contact.

contract law, as well as the obligation to be reasonable and act in good faith, require a broad base of knowledge and education, and are laced with multiple levels of statutory requirements. It is every landlord’s responsibility to stay abreast of law changes, and operate at the highest ethical and legal standards. Detailed articles addressing each of these topics in more detail can be found on the ROA website – www.laneroa.com – in the Members Only section. This column offers general suggestions only, and is no substitute for professional legal counsel. Please consult an attorney for advice related to your specific situation.

The Takeaway Like any specialty business, there is a lot to know about the landlord-tenant relationship, and the burden is on landlords to know the law and abide by it, or face painful and costly consequences. There is an inherent imbalance of power in the landlord-tenant relationship, so the law tilts toward protection of the weaker party. While tenants can suffer the ultimate indignity of eviction, landlords are held to a very high standard of behavior and action with severe financial penalties for violating a tenant’s rights. This article and the brief description of each of the Top Ten Classic Mistakes, is in no way a comprehensive educational description of the legal and ethical requirements of each topic. The nuances of landlord-tenant law, Fair Housing law,

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Rental Housing Journal Metro

Soft Landing ...continued from page 10 Colorado Springs,, Tacoma)—don’t expect it to last • U.S. Multifamily asset price growth has flattened—first time this cycle. • Sharks are circling waiting for blood in the water of soon to be broken lease-up deals—don’t bet on too much of it. “Where the units are going to come online is in these suburbanized urban areas,” he said.” That is where it is reoriented. I think the central business district building boom is done for several years. Everyone’s got what they want. It is great for society to have such wonderful, vibrant urban centers. But I think it’s going to take a pause for a few years. “Let’s acknowledge the fact that rent growth is decelerating. It is coming down. The ‘rent by necessity’ sector is performing better. But new supply has had an impact. “There is demand in the market, it is just a question of at what price point is it going to work. “The markets are all slowing down from where they were. Dallas went from 7% rent growth to 3% rent growth. Not bad, but not 7%. “I think it’s moving back to the long-term average. Until this supply pipeline gets absorbed. I think it’s a matter of absorbing the supply over the

next 24 months, as long as the demand continues. I think it will be higher than the long-term average” for rent growth, “but it’s not 7%.” You see some of the same things in the Western markets. Salt Lake City being a variance. “I would call out for example a couple of smaller markets that are doing quite well, but have a lot of volatility: Reno Sacramento Colorado Springs Tacoma “All of them have rent growth of over 7 or 8 percent, and they are all associated with a larger metropolitan area where there has been significant price discount trouble. Reno is a function of manufacturing coming into the market as a spill-over from the Bay Area – Tesla.

In summary now “The multifamily supply is peaking. Multifamily rents have peaked and are decelerating. But it’s not bad. It is more a return to normalcy. There are people circling waiting for blood in the water for what they hope soon will be broken leaseup deals. I don’t see it. It’s a possibility. I don’t see a lot falling out of bed, but some

people are hoping,” Adler said.

The longer term view for multifamily investment “If I were an investor, I want to position myself where the tide is rising. Why? Because even if I screw up on some underwriting or other variable, I am going to get bailed out. What I don’t want to do is put myself in a situation where everything has to go right, and I am swimming upstream,” Adler said. “There is still multifamily supply that needs to be added in the future in big cities, such as Boston, New York, Los Angeles, San Francisco and Chicago. Dallas also has a big supply coming on, but there is a demand there based on the jobs growth and industries across the metro. “There are areas where the growth is diminishing, and where the cost of housing has gotten ahead of the cost of labor, and so it is an affordability issue. We are seeing that in Denver and the San Francisco Bay area. “Look at the places where millennials and boomers are leaving. What do they have in common? They are all high tax states. So if someone tells you the high cost of living and taxes do not make a difference, the data says ‘Oh yes it does.’ And, you really have a set of winners and losers. The

winners are the West and the Southeast capturing the out flow from the high tax, highly regulated states. Same story on where people are moving to. Lower tax places fleeing higher tax places, Baby Boomers and millennials. “In the gateway cities of Boston, New York, Los Angeles, San Francisco, Chicago and the District of Columbia, out flow of domestic people to other parts of the country is being covered by the in-migration or immigrants coming in those cities. So if you are counting on investing in those gateway cities, you are betting on the immigration coming in. It may be a good bet. It may be a bad bet. “We as a country actually need the immigration if you look at the working age population. We really need immigration to be appropriately legalized. Immigration is not on the Hispanic side that is old news, it is actually from China and India,” Adler said. If you would like to learn more you can subscribe to Yardi Matrix or call 480-663-1149. You can also find out more about webinars here. Yardi Matrix, formerly known as Pierce-Eislen, Inc.®, was founded in March, 2000, and acquired in July 2013 by Yardi Systems, Inc., a Santa Barbara, California software company focused on commercial real estate industry applications. The Yardi Matrix apartment information service is a highperformance system with the sole function of supporting the commercial apartment industry’s dominant participants. The company's services monitor the 50+ unit apartment universe from the property level to the submarket/market level in a form unique within the commercial apartment information industry.

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Rental Housing Journal Metro · June 2017

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Rental Housing Journal Metro

a very high barrier to entry business. So it is what has distinguished us in the marketplace as a developer and operator. We love the concept of intergenerational housing. I think that’s a winner,” he said. Brenneke was discussing his most recent affordable housing project, the NAYA (Native American Youth and Family Center) Generations, in Portland’s Lents neighborhood. “At a time when affordable housing is a particularly controversial subject in Portland, we’re especially proud to launch NAYA Generations. This is more than housing, it is a true community that promotes stability, collaboration and caring relationships,” he said.

How did this all get started? There is a project in Portland called Bridge Meadows, 36 units of intergenerational and foster family housing and “we developed that for the Bridge Meadows organization,” he said. “This is how it kind of all started. They had an idea and we brought all the development expertise, we created the green project for them and it worked out great. That was in 2010. “After completion of that project, the NAYA group (Native American Youth and Family Center) approached us, took a look at Bridge Meadows, and said, ‘We want one of these for us’ – and I said, “Sure.” “So that is what we do. We take those kinds of wishes, wants and challenges” and turn them into a project like this. “We started looking for a site and connected with a city commissioner, Dan Saltzman, who helped us locate and acquire an old public school site in a neighborhood called Lents in Portland.” It is one of the poorer neighborhoods in Portland. Frustrations of getting the deal done

Getting the deal done between the Portland Public School district, the city, which are separate entities completely was frustrating. “It was piece of work. We ended up with a complicated master lease of the land, indirectly, from Portland Public Schools. The lease passes through the city and it goes to us.”

“I have a passion for the children. The foster system. And affordable housing at the end of the day,” Brenneke said. Naya Generations was developed as an intergenerational, cooperative community that supports families of foster children. Residents can contribute to this collaborative community in a variety of ways, including teaching cultural values and history, indigenous storytelling, being a mentor and more. “NAYA services Portland’s urban Indian population in many vital ways, from our precious youth to our respected elders, “Paul Lumley, NAYA executive director, said in a release. “We are blessed to have this culturally specific inter-generational housing that was made possible through this unique partnership.” The units range from one bedroom to four bedrooms depending on family size. The mission was to address the overrepresentation of Native American youth in the foster care system.

Gentrification is the buzz word

The Lents district historically is the lowest priced housing in Portland. “Guess what’s happening. In East Portland suddenly you get people going out and buying $250,000 starter-type homes, putting $50,000 in them, and flipping them for $400,000.” Brenneke said, “That is what is going on in that area. But gentrification is a concern. It makes the demands for affordability even higher. “These developers and these landlords. I am one of them who is acquiring buildings – substandard buildings - and putting them in good condition. And charging market rates. I do not have a problem with that. We see people living in squalor. Is that fair? Reasonable? No. “It certainly makes the demand for affordability even higher. We are seeing just huge demand for affordability here.”

I would not blame the landlordsbut some are doing “dumb stuff” “I blame some landlords because some landlords are doing dumb stuff. When you go into the middle of a school year in a building full of low-income households full of kids and you double the rent – that’s dumb stuff. You can do it. It’s just insensitive. It’s just dumb. You just don’t do that. A good landlord would not do Many of us do not know the foster that. system – it’s tragic “When you couple of the “He might put them on a path to intergenerational concept with both essentially improving their units and Bridge Meadows and now NAYA gradually increasing their rent over time Generations, it especially helps the foster or giving them lots of notice,” he said. families. We all love seniors. But many of “And, voluntarily paying relocation fees. us do not know or understand the foster We’ve done that before. system. And it’s tragic. And it’s not just “The other dumb thing these landlords Portland, Oregon, but everywhere. do, is they go in and clear the whole “So if you look at projects like Bridge building out with no-cause notice Meadows and NAYA Generations, Bridge evictions. That’s hard. I have mixed Meadows focused on the adoption process feelings about that. Once again – would so if you were living in Bridge Meadows you do that in the middle of a school as a foster family you got a break on your year? No. But if you give them six-months rent, but you had to agree to adopt up notice – six months from now I am going to three children in five years. We don’t to ask you to vacate your unit. I am going have that at NAYA Generations. But we to give you the opportunity to transfer to have a disproportionately high number of a new unit. We are going to put your unit Native Americans in the foster system. So in market-standard condition and charge there is a preference there. a market price for it. And I’m ok with that. Rental Housing Journal Metro · June 2017

It puts more burden on our city to figure out affordability. It offers opportunity for groups like ours to create affordable housing but it’s the market and the way the market works.”

Government getting in the way or our business “Unfortunately, our city and our government is kind of getting in the way of our business now. “Things like rent control. Those kind of things being floated. Inclusionary zoning. Those kinds of things are going to put a damper on the market and hurt us and at the end of the day hurt affordability,” he said. Four years to produce 40 units of affordable housing, really? Brenneke discussed the difficulty, the barriers and the time it takes to produce affordable housing as a reason more is not getting built. “It takes nine months to get a permit here. On the NAYA Generations project I bet we were four plus years from the conversation I had with the executive director to opening the front door on this thing. I was an honest four years. The construction process is the easy part. That’s a year. We know that. But if you back it up from there, it’s four years. He said in the case of NAYA Generations they were working on affordable housing in an area that is not even in what is called a design review district. “Those districts can be found in some of the nicer areas of Portland – closer in areas, Pearl district, in those areas you are going to see a design review process where we go through a commission of six or eight volunteer types – architects – that are going to critique your project. And I bet that process can easily take a year or two on its own. You have to sit there and hear commissioners give you conflicting signals on your own project. That is slowing the whole system down here. And God help you if you are in an historic district.” Challenges of affordable housing in Portland

rooted in sustaining tradition and building cultural wealth. The organization provides culturally-specific programs and services that guide people in the direction of personal success and balance through cultural empowerment. Find out more thorugh these Resources: NAYA Generations affordable housing Guardian Real Estate Services Bridge Meadows affordable housing Lents Neighborhood Association Five myths about gentrification Portland’s Pearl District NAYA Family Center

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“I do these grand openings,” Brenneke said in summary. “I stand on the podium and thank all the people. This is 40 units. Why is this such a difficult thing? “This is something we ought to be producing every day or every month – not a once every four years event. Why is it so damn difficult?” And that is another story at some point. Guardian Real Estate Services Locally owned and operated out of Portland, Oregon, for more than 40 years, Guardian Real Estate Services has evolved into a leading management, development and investment firm in the Pacific Northwest. Defined by a deep commitment to the communities in which it invests, Guardian continues to advocate for housing across the entire spectrum. About NAYA Founded by the community, for the community, NAYA is a family of numerous tribes and voices who are

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Rental Housing Journal Metro · June 2017