Metro Rental Housing Journal August 17 by Professional Publishing, Inc

Rental Housing Journal Metro

2. Multifamily Market Will Hit Records in 2017 as Investors Return 3. Majority of Rental Property Investors are Small Entrepreneurs 5. RHA Oregon President’s Message

August 2017

6. Over-Automated Recruitment Processes can Leave Job Candidates Frustrated 7. The Secret to Creating a Successful Property Management Team

www.rentalhousingjournal.com • Professional Publishing, Inc

9. Midyear Report – Suburban Office Challenging CBD 11. Amazon Launches Delivery Locker Product for Apartment Buildings 14. Dear Maintenance Men

16. Seattle Tightens Rental Inspection Rules On Landlords 17. Seven Sins in Real Estate Investing 19. Apartment Pet DNA Testing Expands to “Travel Dog” Concept

Portland/Vancouver

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

Q&A

Portland Landlords Lose First Round in Suit Against Relocation Ordinance

judge has ruled in Circuit Court in Portland against landlords who had challenged the city’s relocation ordinance passed earlier this year. Judge Henry Breithaupt, a tax court judge sitting in Circuit Court, upheld the relocation assistance ordinance and ruled against the landlords’ argument that the relocation ordinance amounted to rent control and illegally sought to stop no cause evictions. The city’s law allows tenants to collect between $2,900 and $4,500 when landlords use no-cause evictions or raise rents more than 10 percent in a year. Portland’s ordinance is set to expire in

Canine Liability Insurance

by John Triplett

...continued on page 5

ebbie Turner got into the canine liability insurance issue after she adopted a schnauzer, named Jazz, who had personality issues. She began to learn the different aspects of canine behavior so she could try and figure out why Jazz was so broken. Jazz led a long and healthy life and ultimately died of old age. “But somewhere it just hit me that the insurance industry is not underwriting the canine exposure," she said. She became interested in canine behavior and "found insurance companies just do not know how to underwrite this risk,” she said in an interview about what led her to start Dean Insurance Agency and the website dogbitequote.com. “I started working on this pet insurance and canine liability issue in the summer of 2010 doing a research paper. When a friend read it and said, ‘That’s not a research paper that is an insurance policy.’ “For me this is a passion. As a child I saw my mother dump our family pet on the side of the road. I looked back and saw him trying to catch us. I can remember screaming and crying. I guess there were not a lot of options back them. I ...continued on page 8 Professional Publishing Inc., PO Box 6244 Beaverton, OR 97007

Real Estate Trust Buys Portland Apartments for $75 Million

ory Trail at the Grove, a complex of Class A apartments in the Portland, Oregon suburb of Wilsonville has been purchased for $75 million, according to a release. The purchase was made by JLL Income Property Trust, an institutionally managed, daily valued perpetual life REIT, according to the release. Wilsonville is a thriving suburb of Portland that features a robust apartment market, low market vacancy and no multifamily units under construction or planned in the submarket. Jory Trail has 324 units and is 95% leased, according to the release. The suburb is located along the I-5, providing access to some of greater Portland's major employment centers and is home to Xerox, Mentor Graphics, Rockwell Collins and Tyco. Wilsonville, which has attracted a growing population of affluent families, also offers an exceptional public school system that Niche.com and US News

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& World Report have ranked as a top school system both locally and nationally. Wilsonville's strong employment base and high barriers to entry should result in continued strong demand and future rent growth.

in the Pacific Northwest "The acquisition of Jory Trail at the Grove demonstrates JLL Income Property Trust's strategy to invest in high-quality apartment assets in strong-performing areas featuring a combination of top

Apartments are company's first

...continued on page 10

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

Rental Housing Journal Metro

Multifamily Market Will Hit Records in 2017 as Investors Return

est Coast markets will dominate the top 10 on gross income growth in

2017 for the multifamily market, led by Seattle, Sacramento, Tacoma, Portland and Colorado Springs, according to

the Freddie Mac Multifamily Research Group’s mid-year outlook. Outlook authors Steve Guggenmos and Sara Hoffmann find that the multifamily market will continue to grow for the rest of 2017 and into 2018. Although the market will continue to moderate from cyclical highs, demand for rental housing units will remain steady. As a result, Freddie Mac is predicting that origination volume is likely to hit another record in 2017, reaching between $270 and $280 billion, according to a release. Market uncertainty kept many multifamily investors on the sidelines in the first quarter of the year, but they are starting to return as interest rates moderate and the economy continues its steady upward trajectory. Multifamily performance, by most measures, remained near the historical average across the nation and in most

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markets in the first half of 2017. While results were mixed, the overall trend remained the same High levels of new supply, slowly increasing vacancy rates, and moderating rent growth. The rest of this year will bring more of the same. Some larger metropolitan areas that saw lower-thanexpected performance in 2016 – such as San Francisco, New York City, and Boston – will continue to re-balance this year. Freddie Mac is predicting that originations will increase and set another record this year but will be lower than originally forecasted. Higher interest rates and market uncertainty kept more investors on the sidelines during the first quarter of the year. As interest rates stabilized and economic growth continued, investors have become more active Due to steady economic growth and strong demand for multifamily units, rent growth is expected to be similar to 2016 levels and vacancy rates will increase more slowly than initially forecast. However, the number of construction projects are expected to peak in 2017 or early 2018, which will push vacancy rates higher. Absorption of new units in some areas will take longer than in prior years, putting some downward pressure on rent growth. "In the first half of 2017 multifamily performance, by most measures, remained near the historical average in the majority of markets across the country," Steve Guggenmos, Freddie Mac Multifamily vice president of research and modeling, said in the release. Some larger metropolitan areas -such as San Francisco, New York City, Washington, D.C. and Miami -- saw significant construction in the past year, which has pushed vacancy rates up and slowed rent growth. However, according to the Outlook, nearly two-thirds of metros will end the year with vacancy rates below their historical averages. In these areas, demand continues to outpace supply, which allows rents to keep rising. West Coast Metros Still Tops In Multifamily Rent Growth West Coast metros still will dominate the top 10 list based on gross income growth in 2017, but more secondary markets from across the South are also poised for strong growth through the rest of the year,. As vacancy rates remain tighter in 2017 than expected at the beginning of the year, areas including Nashville, Dallas, ...continued on page 15

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Rental Housing Journal Metro · August 2017

Rental Housing Journal Metro

Majority of Rental Property Investors are Small Entrepreneurs

ost rental property investors and owners are small landlords who own five or fewer singlefamily rental housing units, according to a new study. The study showed that landlords and real estate investors lease 44 million rental households that house about 60 million people across the U.S., according to a release from Real Property Management. The study found this means there are about 10 million real estate investors representing 98 percent of all rental property owners and about 80 percent of all rental properties. “The single-family residential investment market has long been misunderstood and dismissed as only an

option for those wealthy enough to use real estate investing as a business,” Bob Pifke, CMO of Property Management Business Solutions, LLC, the franchisor of Real Property Management, said in the release. “The results of this study have painted a clear picture that single-family residential investors are becoming more and more serious, and that rental properties are being recognized as a mainstream asset for investors building a portfolio for retirement,” he said. Pike was referring to findings from The Iceberg Report, an annual report and analysis of the American single-family residential investment industry. Real Property Management was a primary sponsor of the study, which was created in partnership with 2020 REI. “With the Iceberg Report, we now have a better understanding of this unique market including who they are, what they are interested in, how and when they buy properties, and the impact of their investment activity,” Pike said. Rental property investors find property managers through referrals In addition, the findings show that personal referrals from family, friends, and real estate agents were the primary

Rental Housing Journal Metro · August 2017

means by which more than half of rental property investors found a property manager – contrary to what most believe is internet-driven research and validation. There is an increasing level of sophistication amongst rental property investors and a higher level of financial acumen than previously thought, according to the study. Single-family residences second only to apartments as rental housing The Real Property Management organization, along with other sponsors, uncovered the following key information through the administration of this research study: 1. Types of Structures of Renter Households. Out of the 43.7 million rental households, 15.2 million or 35 percent are single-family residences that represent 43 percent of rental residences. This segment of the rental industry is second only to apartment buildings. 2. First vs. Subsequent Investment Opportunities. The first rental property investors purchase is typically found with the help of others. Real estate agents are the

leading source, followed by friends and real estate investment clubs. Real estate investment courses also play a major role. In contrast, subsequent investment property purchases involve a much greater variety of inputs including personal contacts and internet sources. Investors quickly learn how to leverage multiple information sources to build their portfolios. 3. Investor Location Preference. Two thirds of rental property investments are made in the investor’s local area and 52 percent occur in the investor’s city or town. The role of national investors who have no location preference remains a small segment of the market. 4. Price for Residential Property. Most investors buy rental properties priced below both the average new or existing home price. Only one-third are willing to pay for housing above $275,000. 5. Intent of Property Acquisition. Property investors play an important role in upgrading and improving housing. Two thirds of properties are renovated after purchase, and nearly half of all property investments are ...continued on page 18

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Rental Housing Journal Metro

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Rental Housing Journal Metro · August 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

ww, August. Finally, the dog days of summer have arrived! It’s time to sit on the porch with an iced cold beverage and relax as we idle away the afternoons. We can casually take stock of our year drifting by, and dream of good times to come. Sip. Sip. (Nap.) Summertime, and the living is easy… yawn… (….Oh gee, it seems that the 2017 legislative session ended in July and HB 2004 died… No new rent control bills got passed…. How sweet is that...Yawn…) Wait! Wake up! I think I was day-dreaming?? Maybe I fell off my rocker and bumped my head? I mean, really, did that just actually occur? Is it time to freshen up that iced cold drink and celebrate? Well, hold onto that thought. Yes, the 2017 legislative session ended in July and HB 2004 failed to pass. But if RHA Oregon members think their lawmakers are done trying to enact new restrictions on landlords, we are really living in a dream – and this one may

Past President: John Sage Office Manager: Cari Pierce

likely become a nightmare. The 2017 legislative session was one of the most arduous sessions ever. One thing is for sure: They have promised to revise their efforts in the 2018 short session which is really just a few months away. Think cold snowy winter nights. In February. Very scary. It is safe to say that with all that happened in the House and Senate this year, there is NO CAUSE to think we have STABALIZED our rental income or for us to RELOCATE our objectives to prevent RENT CONTROL. Maybe it’s no coincidence that the celebrated end of this current slack-filled season is called Labor Day. Because one thing is certain – members of The Rental Housing Alliance Oregon have a lot of work to do. We all need to write more letters and provide more testimony. We will need to re-emphasize our points. Bad housing policies hurt the very people they are trying to help. We all want safe and stable housing. Yet we all need to be able to articulate our concerns that

restricting our efforts to run our business as professional Rental Housing Providers is not the answer to an affordability crisis brought on by the same government that is now trying to blame us and make us pay for solutions that their bad policies created. We all need to spend some time this month, in our “relaxed” state of mind, to learn how to talk with a single, strong and convincing voice to urge our representatives to see beyond the rhetoric and extreme cases; to enact good, stable, reasonable policies that won’t provide merely perceived protections that solve nothing except to kick the can down the road at the expense of the group (Our Group) that carries the burden to make it work. In other words? Don’t make it so expensive or restrictive for us landlords to provide quality rentals that the only solution is to sell them to investors who will raise the rents higher! I know - I get worked up. Maybe somebody needs to give me something cool to drink to calm down! Hey, I have a great August idea. Let’s all

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

get together socially, and talk through this stuff, so we can actually come together as a united organization, and have a good time doing it. What do you think? Join me and other members and directors of the Rental Housing Alliance Oregon at Oaks Park on August 9th for our annual Picnic! Bring the gang and enjoy the last few good days of summer with a bunch of people who all share a common goal of working hard and enjoying what life has to offer. See you there! Ron Garcia, RHA Oregon President

Landlords Lose First Round in Suit ...continued from page 1 October along with the City Council’s housing emergency declaration. “There were three things happening at the same time to put it in perspective,” John DiLorenzo Jr, the attorney representing landlords, told Rental Housing Journal. “First of all we have a state law in Oregon that “pre-empts local governments from enacting ordinances which control rent so it is a prohibition on rent control. “We also have a state law that makes it clear that landlords have a right to issue no fault, or no cause, tenancy termination notices for month-to-month tenants,” he said. “The city believes that the state law prohibits it from banning no cause notices.” He explained that the city acknowledges that the state law imposes parameters on their ordinances that control rent or attempt to regulate no cause notices. They do believe that their home rule authority allows them to enact tenant relocation payment requirements, even if they tie them to rent increases or no cause notices. At the same time HB 2004 is now dead in the legislature. “That bill was a total failure,” he said. Relocation ordinance was disguised rent control “We argued in court that requiring landlords to pay relocation expenses that could amount to up to three times the amount of rent, when rent was raised 10 per cent or more, was tantamount to a penalty for doing what landlords have a perfect right to do under the state statute. And was in essence was disguised rent control,” DiLorenzo said. “The court just did not buy that argument. I think it is a good argument. And I think the Court of Appeals may be receptive to it,” he said.

for Commissioner Chloe Eudaly who was instrumental in bringing the law forward, issued a statement, according to the Portland Mercury saying: "At a time when the legislature has so blatantly turned its backs on tenants in Oregon, it is deeply gratifying to know that the only tool available to us has been upheld in the courts. Relocation assistance helps stabilize families and we intend to make sure as many tenants as possible know about it." In a letter to officials, Deputy City Attorney Dennis Vannier boasted that Breithaupt "just comprehensively rejected John DiLorenzo’s challenge to the City’s relocation-assistance ordinance enacted earlier this year, and conclusively ruled for the City on every claim...,” according to the newspaper. Landlords considering appeal “There are some complications. Under normal circumstance I would just tell you yes we are appealing. And we may in fact appeal,” he said. “But the ordinance is set to expire on its own accord in October. So it is going to be up to our city council to decide whether they are going to renew it, or change it. They might renew it, or they might change it. And it might be a different ordinance and so the likelihood is that we will appeal. “The appeal may be disrupted depending on what the city council in turn does. If they allow it to expire the appeal would be moot. In terms of whether we appeal or not, “We cannot wait until October. We have to decide within 30 days of the judgment. And the judgment should be finalized next week. So I would say by mid-August we should know what we are going to do.”

City officials cheered the ruling Jamey Duhamel, the policy director Rental Housing Journal Metro · June 2017

Rental Housing Journal Metro

Over-Automated Recruitment Processes can Leave Job Candidates Frustrated

ost job candidates find value in technology but they are frustrated when it supersedes the human aspect of the job search and hiring process, according to a new study. In fact, 82 percent of respondents agree they are often frustrated with an overly automated job search experience, according to a release from Randstad. The issue is around the role technology should play in the job search and hiring process. • 95 percent of workers agree technology should be used to aid the recruitment experience, not replace it. • 87 percent of responde Potential employees judge a company by the recruitment and hiring experience "Employers today, and in the future, will be judged by the experience they create for prospective new hires," Linda Galipeau, CEO Randstad North America, said in the release. "Job candidates are empowered to provide instant feedback on employers, rating a company's candidate experience just as they would rate a movie or a product. In a tightening labor market, companies cannot afford to lose potential talent due to a poor hiring experience. “And in a technology-driven world of

gender and region. About Randstad Randstad North America is a wholly owned subsidiary of Randstad Holding nv, a € 20.7 billion global provider of HR services. Through its unique approach of delivering HR innovation with human interaction at the center, Randstad secures and manages a workforce of more than 100,000 people for thousands of clients each week. The company employs more than 6,500 recruiting experts through approximately 1,100 offices and client-dedicated locations. talent, it's not only about how a company markets itself, but what others say about the company that has a positive impact on employer branding," she said. What created negative impressions of potential employers? While 91 percent of workers agreed technology has made the job search process significantly more effective, there are negative aspects as well. Respondents named "the length of the hiring process" and "the communication level throughout the selection process," as the top two aspects of job searching that created a negative impression of a

potential employer. That impression has lasting effects, as the survey found one-third of workers who had a negative experience during the job search process will never reapply to the organization, nor refer a friend or family member to the company. About the survey Research findings are based on an OmniPulse survey fielded by national polling firm Research Now on behalf of Randstad US. The survey was fielded between June 19th, 2017 and June 23rd, 2017. It included 1,200 respondents over the age of 18, and a nationally representative sample balanced on age,

Upcoming Events for August 2017 8/11/2017 8/16/2017 8/22/2017 8/23/2017 8/24/2017 8/29/2017 8/30/2017 9/6/2017 9/7/2017 9/8/2017

It's the Law: FEDs: Mastering the Evictions Process Handling Environmental Issues (Asbestos, Lead, Mold) CAMT: Heating CAM: Marketing SWV Charity Golf Tournament Winter Preventative Maintenance New Hire Landlord Study Hall: Domestic Violence Protections in Landlord/Tenant Law Fair Housing for Maintenance It's the Law: Bark and Bite: Tenant’s Requests for Service and Assistance Animals

Form of the Month

Notice of Violation Form M040 OREGON

NOTICE OF VIOLATION DATE __________________________________________ PROPERTY NAME / NUMBER ___________________________________________________________________________________________________________________________________________________________________ ___ __ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ __ ___ __ ___ ___ ___ ___ ___ ___ ___ ___ __ ___ RESIDENT NAME(S) ___________________________________________________________________________

___________________________________________________________________________ ___ __ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ __

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UNIT NUMBER ___________________________________ STREET ADDRESS ___________________________________________________________________________________________________________________________________________________________________________ ___ __ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ __ ___ __ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ __ CITY ___________________________________________________________________________________________________________________________________________________ STATE T TA ZIP _____________________________________________________________ ___ __ ___ ___ ___ ___ ___ ___ ___ ___ ___ __ STA ___________________________________ ___ __ ___ ___ ___ ___ ___ __ ___ __ __

SAMPLE

WARNING: Your Rental Agreement, the rental rules and regulations, gulations, and the landlord-tenant dlord-tenant laws require all residents to follow basic rules to protect the safety and quiet enjoyment of all residents, prevent damage da e to property pro y and retain a quality rental community. It has come to our NATURE OF VIOLATION (check all that apply): X

Disturbances

X Damage to property

X Unsightly patio/balcony/porch

SAMPLE

nee to be cleaned clean Unit needs

dis X Satellite dish

w dow coverings/signs cov X Unauthorized window

X Unauthorized occupant/guest

X Other

SAMPLE _________________________________________________________________________________________________ _______________________________ ______________________________________________ Date & Time of Violation: ________________________________________________________________________________________________________________________________________________________________________________________________________________________________ SAMPLE Location of Violation:________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ ___ __ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ __ __ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ __ Describe Violation:____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

SAMPLE

________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ ___ __ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ____ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ __ ___ __ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ __

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Describe Cure:___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

SAMPLE

________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ ___ __ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ __ ___ __ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ __ ___ ___ __ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ __

________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ ___ __ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ __ ___ ___ __ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ __ ___ __ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ __

SAMPLE

The violation(s) is/are (check which applies):

This notice wass served on the date not te set forth above (check which applies):

X a separate and distinct violation

Personally Perso lly on the Resident Residen att ______________________________ (time)

X a series or group of violations

If the written Rental Rent l Agreement Agreeme allows, posted on the main entrance to the dwelling dwe ng u unit and mailed first class mail

X a continuous or ongoing violation

Mailed first class mail only

e violation(s). violation( H We hope it was simply an oversight on your part that resulte resulted in the However, you are required to discontinue the conduct listed discontinu the conduct, conduct or correct the violation(s), or any reoccurrence of the conduct/ above or correct the violation(s) immediately. Failure to discontinue on of your tenancy. violation(s) listed above, may result in termination ffective for 12 months and may be renewed with a new warning prior to the end of the For a continuous or ongoing violation,, this notice willll remain effective 12-month period.

SAMPLE

that you are not complying with the following: SAMPLEattention SAMPLE

Holding tenants responsible for violations of the Rental Agreement is one of the most critical roles of a landlord or property manager. The Notice of Violation form provides an easy template to take the initiative to enforce the rules to help maintain peace and order to your property. Although this form does not terminate the tenancy, it does assertively and politely remind the tenant of the violation and creates a useful written record your response.

X OWNER/AGENT OWNE ____________________________________________________________________________________________________________________

THANK YOU FOR YOUR COOPERATION OOPERAT A ION AT

ADDRESS

SAMPLE

____________________________________________________________________________________________________________________

SAMPLE

____________________________________________________________________________________________________________________

TELEPHONE ON SITE

RESIDENT

SAMPLE

____________________________________________________________________________________________________________________

MAIN OFFICE (IF REQUIRED)

Rental Housing Journal Metro · August 2017

Rental Housing Journal Metro

The Secret to Creating a Successful Property Management Team

Any business leader knows that the secret to company success starts with a solid team. Well-equipped team members who possess the right attitude and can create value for a company are highly sought after – and rightfully so. They hold a large stake in the business, and as a property manager or owner, you also need to invest in the right talent. While you might be concerned with upgrading your technology, focus on building a

healthy team early on, and you’ll have the right foundation for success. Here are a three suggestions to get you started. Start with the right people. Human capital – your staff – can make or break an organization. Getting the interview process right is key to recruiting, hiring, and retaining a superior property management team. Screen candidates

thoroughly before scheduling a telephone or face-to-face interview. During the interview, try to identify team players – not just someone looking for another job. The following questions provide more depth than the traditional “Why should I hire you?” questions? • What is the hardest challenge you faced at your previous job? How did you resolve this issue? • Where do you want be in 5 years? In another position with this company? Running your own business? • What kind of company culture brings out the best in you? • Have you ever suggested a change that led to saved money, improved working conditions, or enhanced customer service for a past employer? • Become problem-solving experts. Every business is exposed to unusual circumstances. Sometimes there are dozens of things that come up in a single week that don’t fit the original job

description. Whether they’re dealing with renters, owners, maintenance issues, or the changing housing market, your team should be ready to face a problem head on so operational performance doesn’t suffer. A great way to help keep your team informed about past challenges and successful solutions is through regular round table staff meetings. Ongoing education and professional development opportunities that help with routine job responsibilities should also be available. For example, those looking to get their real estate license or expand their career within property management should be encouraged to consult trade schools, community colleges, and online resources. Make sure your company is a big encourager of employee advancement, which reduces turnover and sparks the continuous improvement model mentioned above. You can also take advantage of training offered by vendors. This could include IT training for computer systems, maintenance ...continued on page 18

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Rental Housing Journal Metro · August 2017

Rental Housing Journal Metro

Canine Liability Insurance ...continued from page 1

did rescue for 10 years. So my passion – I think I am still trying to save that dog that was dropped off by my mother in the wilderness. That is how it all came about," she told Rental Housing Journal in an interview. “Now I am saving pets every day all over the country,” Turner said because research shows the main reason pets end up in animal shelters is owners cannot find rental housing for themselves and their pets. Matthew Wildman, former pet retention manager for The Humane Society of the United States told Rental Housing Journal last year, “There is so much misinformation out there. Our position is allowing pets in rental housing is good for business. Hundreds of properties allow dogs and cats without restrictions on breed.” He said the number one reason animals are sent to shelters is

because of rental situations where they cannot keep a pet. Turner said she gets a lot of questions from multifamily property owners, landlords, apartment property managers and tenants. So she put together a list of seven of the most asked questions about pet insurance and canine liability insurance. Q: Can a landlord or property manager require that tenants buy canine liability insurance? What about service dogs, emotional support dogs and therapy dogs? A: Generally but they cannot require it if the dogs are any of the labels that the Fair Housing Act protects, like seeing eye or emotional support. The key to a true service dog, is one who has been trained to do one thing to improve the life of the owner. If it is a service dog you are allowed to ask what the dog does? If

it is a dog being used as any of the many titles now being used the landlord could agree to pay for the policy ( a reasonable accommodation) the policy would be in the owner's name but the landlord would still be named as an additional insured. I also think there may be different rules if there are less than four units. Q: How much does it cost a year? A: Each dog is rated as an individual so it varies, small dogs could be under $200 annually a Cane Corso just rated out, he weighed 130 pounds, for the $50,000 insurance limit at around $650 including the fees and taxes. Q: Can a landlord or property manager buy a canine liability policy to cover the whole apartment complex and all dogs in it? A: Right now the only way is to require each dog owner to purchase a policy and add the Landlord as an additional insured, much the way typical renters insurance works. Q: How many people with dogs in apartment complexes have canine liability insurance? A: More every day, the lawsuits are no longer just about bites. If your dog scratches, trips or knocks someone over you are liable. Worst one yet was a child who knew the dog lived on a nearby property. The child approached the property knowing the dog would be there. The dog never left its property, but when the child turned to run, he broke his ankle to the tune of $175,000. Q: Can you insure all breeds and types of dogs? A: Yes, but I do not insure wolf hybrids as they are not considered a "dog." Q: Can you insure a dog that has bitten someone in the past? A: I review the applications individually when certain behavior histories come up. For example, if the dog has killed another animal and the owner reached in to separate the dogs and was bitten, there is a surcharge but I would probably write the policy. Q: What important advice do you have for landlords and property managers? A: One of the most important things landlords should do is print out exactly what limit, $25,000, $50,000, $100,000, or $300,000 they want and the exact wording of the additional insured's information. Otherwise every tenant will buy $25,000 without an additional insured endorsement. We can change that but it can take several weeks to get the evidence from the insurance company. Also, all of these policies are not created equal I would urge the landlords to

review the coverages. It is great to say you have insurance but quite another to find out when there is a claim that the policy was so narrowly defined that there is no coverage. Dogs are still animals and they can bite in certain situations Turner says she has found out a lot from talking with animal control officers around the country. “Many people say, ‘oh my dog won’t bite, or my dog will lick you to death.’ There is a total innocence among dog owners that their dog won’t hurt or bite anyone for any reason. I had a trainer tell me his dogs were bullet proof. But they are still animals and given the right set of circumstances will bite. That is scary when people say their dog is bullet proof because means they do not have any concept their dog could bite,” Turner said. “I have written about 2,500 policies. The majority of the dogs insured are on the dangerous lists. I have very few little dogs. Turner can offer solutions for several different situations. “I tell landlords if they cannot get through my underwriting criteria, think twice about allowing that dog to come into the property”. Some commercial liability policies are starting to take canine liability insurance out of those policies so owners, landlords and property managers should check. Insurance companies and dog breeds they insure can vary “I started doing the statistics on what is the likelihood that any given dog will injure a person. There are 83 million dogs, more than 400 million people, and about 400,000 got to the hospital in a year because of an injury from a dog. “It was difficult to convince the insurance companies that this would not have large loss ratios because they are positive that this is all about pit bulls and the list of dangerous dogs has grown from one or two to 10 or 15. But they are not the same for every company. “One company will declare a Weimaraner is a dangerous dog. No other company will declare it a dangerous dog. So what that tells me is they had a really bad claim with a Weimaraner. Now to fix it they are not going to insure any more Weimaraners. There is no logic in that, but I think that is the way this all ends up,” she said.

...continued on page 10

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Rental Housing Journal Metro · August 2017

Rental Housing Journal Metro

Midyear Report – Suburban Office Challenging CBD Often-Overlooked Investment Quietly Gathers Traction; Reinventing Suburban Office Sparks Refreshed Perspective

BD led office recovery. Central Business District office markets garnered attention during the recovery as a variety of large companies announced relocations to downtown areas. Notable leaders in this movement included United Airlines, which moved its headquarters to downtown Chicago, and Expedia, which relocated to the

Seattle waterfront from its suburban office location. As millennials entered the workforce, access to transportation, walkability and retail topped priority lists, further benefiting CBD office demand. This noteworthy shift sparked an urbanization trend and drove increased absorption of office space. Subsequently, CBD office rents and vacancy were quicker

Key Observations CBD Improvement Tapering. While the CBD was quicker to recover from the Great Recession, improvements in office market fundamentals have begun to moderate. Vacancy remained fl at in 2016, while the pace of growth in asking rents slowed. Demographics Favor Suburban Demand. Nearly two thirds of households already reside in the suburbs, fostering demand for office space in suburban markets. Shorter commute times entice many workers to seek employment in suburban office locations. Suburbs Evolve to Meet Millennial Tastes. Suburban companies are seeking spaces in prime locations to

cater to the lifestyle that many young professionals enjoyed in CBD areas. As a result, many suburbs are transforming into their own urban environments with walkability, entertainment, and retail and dining options. Suburban Absorption Strong. Net absorption has maintained a vigorous pace over the last six years, pushing vacancy down nearly 250 basis points to 15 percent since 2011 and driving steady rent growth. ■ Cap Rates and Pricing Show Suburban Upside. First year returns up to 100 basis points higher in the suburbs. Additionally, peak-to-trough pricing signals additional room for improvement in the suburbs compared with urban assets.

to recover from the Great Recession than their suburban counterparts. Suburban office gathering momentum. Following the recession, many employers relocated to the urban core, capitalizing on reduced downtown office rents while reinforcing the trend toward urbanization. As the economic growth cycle gained momentum and office rents in core locations recovered, suburban office space once again became a more affordable alternative for many companies. Though lower costs catalyzed a shift in where companies located, tightening labor markets have reinforced the value of locating near the substantial suburban labor force featuring 70 percent of the millennial population. Though many millennials favor an urban live-work-play lifestyle, for many young adults, commute time is also a significant consideration. Evolutionary suburban office trends. The idea of working in an amenityrich office location with walkable access to shopping, restaurants and other recreational activities remains attractive to many professionals and still favors urban office space. Numerous suburban office locations have become increasingly competitive, however, by clustering in walkable villages featuring

many of the amenities and services of urban environments. These locations are generally more affordable than their urban counterparts while remaining attractive to employees seeking a variety of offerings that are within walking distance. Many of these areas are located on transit lines, allowing employers to draw from a broad labor force outside the urban core. Investors shift focus. The urban core comprises approximately 31.6 percent of the total office space in major cities, but in the wake of the recession just 17.3 percent of the 2009 office transactions were in downtown areas. As the urbanization trend gathered momentum, sales of downtown office properties increased to comprise nearly one fourth of the deals in 2014. Since then, investors have once again begun to focus on suburban options, restraining downtown activity to 21.7 percent of 2016 office sales. The fl ow of capital reflects the convergence of opportunity, yield and perceptions of future growth, and it appears investors’ attention is once again moving beyond the core.

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Canine Liability Insurance ...continued from page 8 “There are now a psychiatric care dogs and the things we are finding they can assist with grows by the day. Service dogs are considered by FHIA as a medical device. You cannot request a person with a service dog to do anything,” Turner said. “Landlords asked me how to do this. If they make it mandatory for tenants to buy canine liability insurance, most will be happy to do it because they are delighted to live there with their dog. There might be a small percentage that know they cannot be required to buy canine liability insurance in that case I have suggested – it says you have to make “reasonable accommodate” and I am writing pit bulls for $300 – would that be considered a “reasonable accommodation?” By a court? I am thinking so. “So I have suggested to landlords here is an option – if a tenant is resisting buying a policy go tell them what you would like to do is buy it on their behalf. It will be in their name and the landlord will be added as an additional insured and they will have the coverage for $300 a year. That is a huge solution to a major problem. I have talked to people with true service dogs who have said they know they cannot be required to buy the insurance, but they like the idea anyway because they will be protected and the landlord will be protected so “ I am just going to buy it,’ they said. “ Turner thinks most people will buy the policies because of the difficulty of finding a place to rent with a pet.

Education is a still a huge issue. Resources: Pets and rental housing The Humane Society of the United States The Fair Housing Act And Assistance Animals Recommended Pet Policies For Apartments and Condominiums Problems And Solutions For Renting With Pets Debbie developed the Canine Liability Policy offering protection for dog owners in the event their dog(s) injures a person or another animal. Each dog is individually underwritten examining those characteristics that play a part in the propensity for dog biting. Policy limits range from $25,000-$300,000. Debbie also has the ability to include additional insureds if required. In stark contrast to other programs, Canine Liability insurance does not exclude any particular breed of dog; this approach is central to Debbie’s unique understanding of dog behavior that has turned underwriting this risk on its floppy ear. You can contact her at 800-721-3326 ext 101 and reach her at www.dogbitequote.com.

Trust Buys Portland Apartments ...continued from page 1 incomes and school districts," Allan Swaringen, President and CEO of JLL Income Property Trust, said in the release. "Jory Trail is our first multifamily acquisition in the Pacific Northwest, and we continue to focus our apartment investment strategy on submarkets that showcase stability, growth and have high barriers to entry." This acquisition represents JLL Income Property Trust's ninth property investment in the apartment sector, bringing its aggregate apartment allocation to nearly $600 million and 25% of its overall property portfolio by valuation. JLL Income Property Trust is an institutionally managed, daily valued perpetual life real estate investment trust (REIT) that gives investors access to a growing portfolio of commercial real estate investments selected by an institutional investment management team and sponsored by one of the world's leading real estate services firms.

LaSalle Investment Management, Inc., a member of the JLL group and advisor to JLL Income Property Trust, is one of the world's leading global real estate investment managers with nearly 700 employees in 17 countries worldwide and approximately $58 billion of assets under management of private and public property equity and debt investments. LaSalle's diverse client base includes public and private pension funds, insurance companies, governments, endowments and private individuals from across the globe. For more information, visit www.lasalle.com.

Jones Lang LaSalle Income Property Trust, Inc. is a daily valued perpetual life real estate investment trust (REIT) that owns and manages a diversified portfolio of high quality, income-producing office, retail, industrial and apartment properties located primarily in the United States. JLL Income Property Trust expects to further diversify its real estate portfolio over time, including on a global basis. For more information, visit www.jllipt.com. About LaSalle Investment Management

Rental Housing Journal Metro · August 2017

Rental Housing Journal Metro

Amazon Launches Delivery Locker Product for Apartment Buildings

mazon has launched a new delivery locker product, called “the Hub,” for apartment buildings so residents can securely receive bulky packages and pick them up at convenient times for the tenants, according to Amazon. Amazon is promoting the service saying, “It’s your package. Pick it up on your schedule.”

The pitch to property managers to focus on residents Amazon is pitching the lockers to apartment owners and property managers saying, ”Your residents will thank you. “Accepting deliveries from all carriers, Hub by Amazon can free you and your staff from daily package management. It’s convenient and easy to use, making the Hub an amenity your residents will love. “Self-service delivery and trusted customer support come together to create a solution you can count on,” the company says. Hub by Amazon is your fast and easy way to receive packages from anyone, according to the company. 1. Just ship to your home address 2. Always open 3. Pick it up any time - The Hub keeps your package safe and sound Convenient - Located at your residence, making getting your packages a breeze.

more compartments. The modules link to each other to provide the right capacity for your property’s needs. See more details here. “All compartment sizes and layouts are pre-configured, so there’s no need to guess what type of compartments you’ll need,” the company says.

Configured for your apartment property Indoor and outdoor Hubs are available, starting at 6’ wide. Choose from three neutral colors that blend seamlessly with your property, the company says. The Hub appears to be a development on a service that Amazon has been running for several years now called Amazon Lockers, parcel delivery lockers that are located in public places and retailers to make delivering and picking up Amazon parcels more efficient, according to techcrunch.com. Significantly, both the Lockers and now

these Hubs underscore a bigger ambition that Amazon has to lock in a segment of the logistics and delivery chain that has largely been out of its hands: last-mile (and even more specifically last-feet) delivery. The company says on its website that “Hub by Amazon is a modular system that can be easily installed at a variety of properties.” The first module is the Starter Hub, a 6 ft. wide system with 42 compartments. The second module is the Expander Segment which you can use to add 23

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Rental Housing Journal Metro

Midyear Report ..continued from page 9

Suburban Office Outlook Improving Demographics Will Shift Office Tenants and Investor Attention to the Suburbs Well-located suburban Office properties benefit from forward-looking demographics. In 2015, the majority of U.S. households, 64 percent, resided in the suburbs and that number should rise as urban millennials form families and move to larger living spaces in suburban locations. Many Office tenants are tapping into this larger workforce already located within the suburbs, enticing employees with shorter commute times and revamped Offices. Moving forward, attention should continue to shift to suburban Office space as market demographics improve and absorption remains steady. Suburbs Dominate Household Location, Attract Tenants Office tenants seeking to capitalize on the many workers living in the suburbs have fueled net absorption of suburban Office space. As a result of robust tenant demand, vacancy has fallen nearly 250 basis points during the course of the recovery to 15 percent in the first quarter of 2017. In an effort to recruit and retain these employees, suburban tenants have been scouring the market for quality available space in locations near retail and transportation options. Subsequently, suburban Office construction has heightened during the last two years but remains far below the completions recorded during the previous cyclical peak. Minimal completions and steady absorption signal the potential for further vacancy improvement. Healthy demand has also spurred rent growth with the average asking rent up 7 percent from the 2008 peak. Asking rent is roughly half of the average rent in urban Office space, motivating tenants who may have been priced out of the urban core to move to the suburbs. The lower costs and relatively more land available in the suburbs have also resulted in the creation of large campuses catered to professionals. Many of these campuses offer on-site amenities like gyms or day care centers. Additionally, the cost savings allow some companies to renovate existing spaces into modern Office concepts.

span in March. Cap rates in suburban properties descended 150 basis points to the low-7 percent area during this same time. Higher returns in the suburbs and consistent tenant demand should create attractive yield dynamics, particularly for buyers attracted to value-add properties where increasing amenities and renovating spaces to cater to millennialsâ&#x20AC;&#x2122; tastes can increase marketable rents. While average first-year returns higher than CBD properties are garnering attention for suburban assets, peak-totrough pricing signals room for additional improvement. The average price per square foot for suburban assets is up 34 percent, while downtown properties are up 46 percent per square foot from trough to current peak. The lower prices in the suburbs provide potential opportunities for private investors who may have been priced out of core urban assets by institutional buyers. Additionally, as institutional foreign capital has typically gone to trophy CBD buildings, private foreign buyers are increasingly seeking out more affordable suburban properties.

Cap Rate Trends Show Upside Potential of Suburban Office Strengthening demand for Office properties compressed the average firstyear returns in both suburban and core Office assets over the course of the recovery. Initial yields in CBD Office space fell about 240 basis points from peak cap rates to the high-5 percent

Suburban Case Studies Suburban Office Landscape Changing to Meet Demands of New Workforce Office markets in the suburbs are transforming to meet the live-playwork lifestyle in order to secure and retain the next generation of talent. New projects often reflect the changes that millennials have brought to office and work culture. On-site amenities including access to recreational activities, healthcare clinics and day care centers have cropped up in many new suburban office developments, helping create the work-life balance desired by many professionals. Additionally, companies are targeting spaces with nearby access to dining, retail and entertainment, further generating the sense of community that young professionals value. Plano Texas Brings CBD Lifestyle to the Suburbs The evolution of suburban communities into amenity-rich environments is demonstrated in Plano, Texas. Located 40 minutes outside Dallas, Plano features numerous corporate headquarters including Toyota, Alliance Data, FritoLay, Pizza Hut and J.C. Penney. Residential and retail offerings, such as the Shops at Legacy, are available near these campuses to further augment a work-life balance. These types of shopping centers provide additional upscale dining and retail options to attract professionals in the area. Many corporations are also revamping their spaces. Toyota recently moved its North American Headquarters to Plano from Torrance, California. The new campus is built with collaboration, health and efficiency in mind. All departments are internally connected and collaborative areas comprise roughly half the workspace. Employees can choose to have standing desks, some on treadmills, and large community tables. The campus also has a wide range of amenities including various dining options, a jogging track, a rock-climbing wall and a two-story gym.

Tempe is filled with several high-rise residential developments that are within walking distance to local shops, dine-in establishments and events. For example, the Sixth Street Market is a Sunday morning pop-up that features shopping, art, brunch and yoga. Additionally, the light rail provides transportation to downtown Phoenix and Phoenix Sky Harbor International Airport. Other companies have taken notice of the success in downtown Tempe, including State Farm, which recently built its new regional headquarters here with young workers in mind. The campus features restaurants, a fitness center and an on-site primary-care doctorâ&#x20AC;&#x2122;s office. Additionally, break rooms that resemble coffee houses, wine bars, standing desks and conference rooms with 360-degree video-calling capabilities bring the collaborative environment young professionals desire. The company also recognizes the importance of a sense of community and hosts a free music festival every Thursday night in downtown Tempe called Beyond the Bricks.

Tempe Arizona Engages Millennials Tempe, a suburban college town east of Phoenix, Arizona, has a liveplay-work environment that attracts millennials. Several large employers are there, including Honeywell and Freescale Semiconductor. Additionally, Insight, a b2b tech Fortune 500 company, has its headquarters within the city and JPMorgan is building a 67-acre campus. The area incorporates a large university, creating a recruiting pool for nearby companies targeting workers in the region. ...continued on page 13

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Midyear Report ..continued from page 12

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Contacts and Capital Markets Debt Funding Availability Remains High; Fed Pushes to Normalize Rates Monetary policy in transition. Despite the Fed raising its benchmark short-term rate three times in seven months and signaling another rise before the end of the year, long-term rates have remained stable. The yield on the 10year U.S. Treasury bond remained in the low- to mid-2 percent range throughout the second quarter of 2017. The Federal Reserve wants to normalize monetary policy and, in addition to rate hikes, will likely start paring its balance sheet. Sound economy a balancing act for Fed. With unemployment hovering in the low-4 percent range, the lowest level since 2007, the Federal Reserve will remain vigilant regarding the possible rapid increase in inflation if wage growth takes off. Additionally, business confidence sits close to its all-time high. Businesses finally have the confidence to expand their footprint after years of tepid growth following the Great Recession. Office properties stand to gain significantly from this expansion with increased hiring adding to occupancy, in addition to expanding economic growth. The Fed, however, must now balance economic growth and job creation against wage growth and inflationary pressures. Underwriting discipline persists; ample debt capital remains.

on financial institutions, though, could liberate additional lending capacity and higher interest rates may also encourage additional lenders to participate. By Catherine Zelkowski For information on national office real estate trends, contact: John Chang First Vice President Research Services Tel: (602) 707-9700 john.chang@marcusmillichap.com © Marcus & Millichap 2017 www.MarcusMillichap.com

Overall, leverage on acquisition loans has continued to reflect disciplined underwriting, with LTVs typically ranging from 60 percent to 75 percent for most office properties. At the end of 2016, the combination of higher rates, conservative lender underwriting and fiscal policy uncertainty encouraged some investor caution that slowed deal fl ow, a trend that has extended into 2017. A potential easing of regulations

The information contained in this report was obtained from sources deemed to be reliable. Every effort was made to obtain accurate and complete information; however, no representation, warranty or guaranty, express or implied, may be made as to the accuracy or reliability of the information contained herein. This is not intended to be a forecast of future events and this is not a guaranty regarding a future event. This is not intended to provide specific investment advice and should not be considered as investment advice. Sources: Marcus & Millichap Research Services; CoStar Group, Inc.; Federal Reserve; Moody’s Analytics; Real Capital Analytics; Standard & Poor’s; U.S. Bureau of Labor Statistics.

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Rental Housing Journal Metro · August 2017

Rental Housing Journal Metro

DEAR MAINTENANCE MEN: Preventive Maintenance, Pipe Hammering and Sprinklers

By Jerry L’Ecuyer & Frank Alvarez Dear Maintenance Men: “Preventive Maintenance” is a term I hear a lot and don’t really understand. I do my own maintenance and fix issues as they come up and any “extra” maintenance just sounds like more work and expense! What am I missing? Bryan Dear Bryan: On the surface “preventive maintenance” may sound like unnecessary work done in an already busy schedule. However, that could not be further from the truth. Both on a large or small scale, preventive maintenance or “PM” for short is a huge money saver not only in parts, but also in time and labor. An unplanned breakdown is never convenient. The chances are high of a breakdown happening on a Friday or weekend evening after hours. This is the time when the building is under the most pressure as everyone is home. Planning for a breakdown is the first step in avoiding an unplanned breakdown. Look at your apartment building with

a critical eye and list everything that might go wrong at some point in time. This list would include: water heaters, hot and cold water supply lines, faucets, drains, garage door springs, heating and air conditioning, etc. At minimum you should have on hand repair parts for all the items on your list along with the tools to do the work. If you want to get ahead of a potential breakdown, figure out the estimated lifetime of each item and schedule either a service date for the item or replacement of the item before a potential breakdown. As an example: A one hundred gallon water heater without maintenance may last between six and eight years. The same water heater with yearly maintenance of cleaning out the calcium buildup in the tank, inspection of the Zinc rod and burner assembly might last as long as ten to fourteen years. Another less extreme example might be cleaning out the main drain lines once a year before the big holiday season. It is much cheaper to have a plumber service your building on a Tuesday morning than

on Thursday Thanksgiving night. Dear Maintenance Men: My apartment building has washer and dryer hookups in each unit. One of my Residents has installed a new fancy front-loading washing machine and now the pipes are banging. This did not happen with the regular top loading machines. Not only is the noise annoying, but also, I am worried this might cause a water line break. The resident’s love their new machine and I don’t want to tear into the walls, so what can I do to remedy the pipe banging issue? Victor Dear Victor: The reason for the pipe hammering is because of a rapid opening and closing of a water valve. Most washing machines and dishwashers use a fast acting solenoid to control the water valve. The water starts and stops very suddenly causing the pipes to move. The new popular front

loading washing machines also use a solenoid to control its water valves, but they open and close many times during the cleaning cycle, so the hammering is more noticeable and damaging. The simplest and least expensive remedy is to install what is called a “Mini-Rester” laundry hammer arrester. The “Mini Rester” is installed either at the washing machine’s hot and cold valves, or directly to the back of the machine’s inlet nipples. The job can be done in the time it takes to un-screw the hose from the hose bib or machine and reinstall the hose back onto the machine or hose bib with the Mini Rester in between. These hammer arresters can be found at any hardware store and should be about $20.00 each. You will need one for the hot-water side and one for the cold-water side. The “Mini Rester” is designed as a single fixture remedy. If the problem continues, a larger water hammer arrester will need to be installed. continued on page 15

Rental Housing Journal Metro · August 2017

Rental Housing Journal Metro

Dear Maintenance Men ...continued from page 14

Multifamily Markets Will Hit Records ...continued from page 2

Dear Maintenance Men: I am planning to install a new sprinkler system in the lawn area of my apartment building. How do I estimate the number of heads and how far apart do they need to be? John

and Raleigh/Durham are forecast to see stronger gross income growth. Looking beyond 2017, vacancy rates are expected to continue to trend up, but the economy’s overall performance will determine the impacts to rent growth. With good macroeconomic conditions, rent growth will continue near the current pace. However, any uncertainty about the economy’s well-being could change that. Guggenmos added, "All things considered, 2017 will be yet another good year for the multifamily market. And importantly, it will not be the market's last strong year. Strong demand, fueled by demographic changes and lifestyle preferences, will ensure the multifamily market's continued strength in the years ahead."

Dear John: First, get an accurate measurement of the area you want to install the sprinkler system. Transfer the measurements to graph paper. Decide on a scale such as one square of the graph paper equals one foot or maybe if you have a large area, one square equals five or ten feet. Draw the dimensions of the area you are planning to irrigate. Next decide what type of sprinkler head you will be using such as impact sprinkler (Rainbird type), brass heads or pop up, or rotary heads such as Toro offers. The manufacturer will list the water spray radius. If you want the diameter the head will cover, multiply by two. But, knowing the radius should be enough for this purpose. The spray coverage should overlap each head between 80 and 100 percent. What this means is; if the sprinkler head has a spray radius of 10 feet. Each sprinkler head should be spaced 10 feet apart. That is called head to head spacing. If you deviate greater than 80 percent, you may get dry spots at the times you need the water the most; such as during summer heat and windy conditions. Stated another way, sprinkler “A” should wet sprinkler “B” and so on. On the graph paper grid the circles should intersect and touch each sprinkler head. Don’t forget the more sprinkler heads you have the more you will need to pay attention to both gallons per minute (GPM) and water pressure supplying your sprinkler system. The sprinkler manufacture should have a

chart showing how many sprinkler heads can be controlled by one valve depending the GPM at a certain water pressure. Recommended reading: http://www.irrigationtutorials.com If you would like to see your maintenance question in the “Dear Maintenance Men:” column, please send in your questions to: BuffaloQuestions@ gmail.com If you need maintenance work or consultation for your building or project, please feel free to contact us. We are available throughout Southern California. For an appointment please call Buffalo Maintenance, Inc. at 714 956-8371 Frank Alvarez is licensed contractor and the Operations Director and 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.

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Rental Housing Journal Metro · August 2017

Rental Housing Journal Metro

Seattle Tightens Rental Inspection Rules On Landlords inspectors look at more units in the same building.

he changes reduce the amount of advance notice landlords get that their building will be inspected from two months to 10 days. They will receive a 60-day notice of a pending inspection, but no specifics on which apartments will be inspected. The city’s Rental Registration and Inspection Code requires landlords to register all rental housing units in Seattle, from single-family houses to large apartment buildings. The ordinance requires that all registered rental properties be inspected at least once every 10 years. The owner must hire a qualified rental housing inspector or City inspector

to do the inspections The RRIO is used to require landlords to register their buildings with the city. The city then randomly inspects those buildings to make sure they're up to housing codes, meaning they meet basic standards: working heating systems, no rat and roach infestations, no leaks, and so on. But the inspection program has significant shortcomings. The changes, led by Council Members Lisa Herbold and Rob Johnson, will also increase the number of apartments city staff will look at during random inspections and, if one apartment fails inspection, will require that city

New rental inspection rules Currently landlords can hire private inspectors rather than allowing city staff on their property and they do not have to turn over those private inspectors' reports to the city. The new rules will require that buildings that fail inspections turn over those reports. "We were excited that these amendments passed and it definitely does signal that the council is taking tenant rights issues seriously," Xochitl Maykovich, political organizer at the nonprofit Washington CAN, which organized tenants in a building with multiple code violations and lobbied the council for the changes, told thestranger.com. "But where we will really see that dedication will be in the budget." Maykovich says the city should hire more inspectors and do more proactive outreach to educate tenants about their rights. Currently, about 14 city staff inspect apartments, according to Maykovich. Meanwhile, about 42 percent of Seattle residents—or 280,600 people— are renters. The city council could continue to strengthen the inspection ordinance, but "if there's no enforcement or tenants don’t know what their rights are, then it doesn’t matter," Maykovich says. In the council meeting Monday,

Council Member Rob Johnson promised to "continue to do work in this fall's budget in order to make sure that we're adequately funding the department to continue to do their work." Seattle City Council Strengthens Failing Rental Inspection Program Rental Registration And Inspection Ordinance Photo credit Wavebreakmedia vis istockphoto.com

Rental Housing Journal Metro · August 2017

Rental Housing Journal Metro

Seven Sins in Real Estate Investing By John Wilhoit

hen the pendulum swings in real estate investing, it covers the entire reach of the pivotback and forth. Sometimes the pivot is pricing, another time occupancy, or availability of financing. Or just plain market stability. You will occasionally see a market in balance but this seems to be the exception to the rule. Wait, hold that thought. Let’s say your assets are in a stable market, expectations are for continued stability and the asset is meeting your financial expectations. Do you buy, hold or sell? This is where many people get that uneasy feeling. This can’t be right- stability? What an unusual thing! Many investors so are accustomed to constant flux that when stability arrives it is unrecognizable. Granted, real estate, does not love or feel. Nor should it be treated as a family member. But very often it can require only nominal tinkering. Not to be left alone unattended, of course, but unobstructed from producing positive financial results. Following are some of the things that people do related to their real estate investments that get in the way of success. Greed (ignoring the fairness principle). In life and real estate there is always potential for litigation. Setting this aside for a moment, staying away from the margins, some people operate under the

principle that a transaction that is fair to both parties is a quality objective. Other people, not so much. Their objective is to crush, diminish, and peel the deal to the nth degree to benefit their side. There is nothing you can do to stop such persons from acting in this manner other than decide, if you have this option, to pass on doing business with them and seek the next opportunity to buy/sell/transact with others operating more in alignment with the fairness principle. Nothing wrong with hard/tough negotiations. But there is a line that makes the entire process near impossible. Pick your fox hole and ready for a fight. Welcome to business as usual for many.

Rental Housing Journal Metro · August 2017

Boredom. Why are you selling/buying? Run out of things to do? Everything reruns on cable and the cash flow is just stable? This is why you are trading? Some owned deals are just stellar – as is – no changes necessary. Sure, there is always capital expenditures to address. Yes, bad debt and evictions occur (that’s part of being in this business). But please, do not sell for a non-business reason or to create some excitement in your life. Make a business decision, not an I-need-a-newproject decision. Over-leverage. Occasionally, overleverage is a post-acquisition knowledge event. Such as what occurred often in the depths of the great-recession where many

owners did not know they were overleveraged until it was too late and the rules of the game had changed. Pre-acquisition, it’s one thing to press the loan limits because of equity capital constraints; but there is a red line (different for every investor based on their risk tolerance). Corruption (larceny, graft, pay offs). Stuff happens- these things happen by design. The poor will always be with us. So will thieves and underhanded dealings. Addressing such sometimes requires forensic accounting, other times updated security protocols and modernday common sense. The simplest advice is to trust but verify. Inattention. Auto accidents and bad things on property both occur based on inattention. We often refer to this as taking your eye off the ball. Over-confidence. Heed the advice of Napoleon, a man with the greatest army of his time. “You don’t reason with intellectuals. You shoot them.” Thus, regardless of your reasoning and confidence, if the decision (to buy/sell/ hold) is not your decision to make, then perhaps it is better to keep your opinion to yourself. Presumed Liquidity. Equity is a gift not right (this is an ethereal statement). Rental property of size, even in a “hot” market can takes months to sell. That’s one of the misnomers about multifamily; continued on page 15

Rental Housing Journal Metro

Investors are Small Entrepreneurs ...continued from page 3

Successful Property Management Team ...continued from page 7

turned into rentals. Only a third of investors are “flippers”, who plan to sell the property as-is or with renovations. 6. Property Management Preference. Doing it yourself and having a professional property manager is not a black and white decision for investors. Although half of investors handle all aspects of property management, 22 percent enlist the aid of a third party for some aspects of property management (primarily leasing vacancies), while 28 percent have a professional do all the property management work. 7. Most Frequent Rental Problems. The number one problem for rental property investors is unexpected maintenance. Since most investors have full time careers outside of property investing, unexpected maintenance issues interfere with work and family activities. Secondly, one in four investors frequently deal with late or delinquent rent collection, and tenant damage to property is the third most frequently reported rental problem for investors. The Iceberg Report is a new annual study designed to understand the behavior of the American single-family residential investment industry from Steve Murray of REAL Trends and Andrew Waite of NEXZUS Publishing Group, former publisher of Personal Real Estate Investor Magazine. The authors pioneered studying this market in 2007 when Murray, a real estate brokerage consultant, questioned Waite about the market impact of intentional investors on housing resales. At the time, investors were

workshops offered by the appliance and HVAC companies that supply your equipment, or a Q&A with representatives who service your accounting or property management software.

considered an irritant to traditional real estate agents, yet little had been done to quantify the amount of recurring business opportunity real estate investment offered the real estate sales industry. After years of industry expansion, and no subsequent industry wide surveys, polls, or reports being published, the 2020 REI Group commissioned the authors of the previous reports to embark on this new format. Adding a qualitative aspect to the proven quantitate approach was a key factor to the mission of the project. To obtain the executive summary of the Iceberg Report, please visit www.propertymanagementfranchise. com/iceberg-report/. Real Property Management is a franchise organization owned by Property Management Business Solutions, LLC, a privately held corporation based in Utah. With over 30 years of industry expertise, Real Property Management offices provide full-service residential property management for thousands of investors and rental home owners from more than 300 independently owned and operated locations throughout the United States and Canada. For more information about Real Property Management or property management services, please visit the following link: www.realpropertymgt.com. For information on franchising opportunities, please visit www. propertymanagementfranchise.com.

Get organized. This should go without saying but a cluttered environment is not conducive to high performance. Clean out the clutter. Organize your files. Update your employee handbook and emergency preparedness plans. Post a list of contact information for key employees and vendors. Your staff and your customers will appreciate the effort and you will see positive benefits immediately. Your office design and organization should also reflect the core values of your property management company. Make sure you have sufficient collaborative space and private meeting rooms so employees can choose which environment works

best to tackle complex work or discuss sensitive issues with clients. Leading your team for a successful future. When you hire right, offer ample support, and host a well-organized space that inspires productivity and creativity, you position yourself and your team to succeed. Above all, represent your company well in the way you treat your employees. Instill a sense of honesty and openness that conveys your commitment to the community as a whole. As the team leader, you should encourage both positive and negative feedback so every member of your staff feels comfortable offering suggestions and ideas. This will lay a solid foundation for a long-term partnership with shared goals and a vision for success.

Seven Sins ...continued from page 17 that although it is the most liquid class of commercial assets, the timing of a specific sale is difficult to gauge. Just a note that considering equity as liquidity is a presumption until a liquidity event occurs. False expectations. Presumption killed the cat. Another quote from Napoleon: “If you wish to be a success in the world, promise everything, deliver nothing.” We are accustomed to politicians delivering half-truths, yet they are not the only ones to stand in front of a room of people or look at you eye-to-eye and

deliver promises. Best to keep your own counsel and that of those you trust. Regarding new acquaintances…time will tell. John Wilhoit is a real estate professional specializing in residential asset management and property management. John has an undergraduate Degree in Business and a Master’s Degree in Urban Studies. Learn more about John here.

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Rental Housing Journal Metro · August 2017

Rental Housing Journal Metro

Apartment Pet DNA Testing Expands to “Travel Dog” Concept Pet friendly apartments have turned to pet DNA testing to help keep common areas clear of dog poop. It has worked for many apartment complexes. By John Triplett – Rental Housing Journal

he company that started pet DNA testing for apartment buildings, PooPrints, has recently launched the Travel Dog membership program that allows pet owners to register their pets in the DNA World Pet Registry using a simple DNA sample, according to a release. “Due to the success of our PooPrints DNA testing program in multifamily properties, we are now looking to expand pet access to other types of properties. We are also receiving inquiries from cities and towns because they are looking for ways to promote responsible dog ownership,” David Woody, director of business development for BioPet Labs, told Rental Housing Journal. “Travel Dog is a voluntary program for the actual dog owner, because across the country dog owners are losing access to places they can take their dogs,” Woody said which is one reason the new program was started. However if a city was trying to require PooPrints, he said he was not sure how well that would work because “a typical city that requires pet registration is only going to get about 10 percent of the people to register their dogs, so from a compliance stand point it doesn’t really work.” From the apartment and condo standpoint, it can be difficult to find rental condos that are pet friendly. Woody said if a pet owner can show they have their pet DNA on file, that can help show the condo owner that they are a responsible pet owner. That is not the sole reason. But at least that gives the dog owner a little more ammunition to show the apartment or condo landlord or owner – who might consider being pet friendly - that they are a responsible pet owner. “For the multifamily industry in the United States we have the PooPrints program,” he said, but there are situations where private condos and apartments don’t have the ability to implement the program’s entire infrastructure, and dog owners want to make the rental housing owners more comfortable with being pet friendly.” So Travel Dog could be a step in that direction. Looking to promote responsible dog ownership through pet DNA testing “We are looking to promote responsible dog and pet ownership as a whole,” Woody said. “We want to give dog owners a way to be proactive” which they can do with Travel Dog. “We are focusing on the environmental side because we see article after article,” of pet owners being denied access to areas due to pet waste. “We saw there was a large dog park in Colorado that shut down due to pet waste,” he said. “Dog owners had been visiting this park for years, and the dog owners basically said we will DNA our dogs – we can show we are responsible and we are not causing this problem.” Woody said another problem is that

sometimes dog owners will bag the poop, and then drop the poop bag beside a trail or even leave it next to a garbage can, instead of putting it inside he said. This contributes to dog owners losing their access to public areas. “Every time we turn around we are seeing, for environmental reasons, dog owners are starting to lose their access to areas,” he said. “Frankly that extends to apartment buildings as well,” he said. “On the PooPrints side, we are in about 2,500 apartment buildings. We have tenants that go from one PooPrints property to another,” and they can transfer their world pet registry to the new apartment building, if it is pet friendly. Dog waste problems in Colorado parks The Denver Post reported earlier this year that for the second time in five months, the Railyard Dog Park in downtown Denver was closed because of piles of dog poop not picked up by pet owners. “Once it gets to the point where it’s unsanitary, we have to close it,” Yolanda Quesada, director of communications for Denver Parks and Recreation, told the newspaper. Another dog park in Evergreen, Colorado, Elk Meadow, was closed permanently, partly because Jefferson County Open Space officials had declared high levels of E. coli from dog waste. That, plus parking problems, forced them to permanently close Elk Meadow Dog Park. Dog waste environmental problem not new "The dog waste problem is not new, especially as a source of water pollution. The U.S. Environmental Protection Agency classifies dog waste as a major pollutant and most recently the University of Minnesota found dog waste is the third largest pollutant of the Mississippi River," J Retinger, President BioPet Laboratories, said in a release. "What is new, is that the strong human animal bond is creating dramatic growth in dog ownership, especially in urban areas. The result is a true dog waste crisis meaning many dog owners are banned from bringing their dogs to parks, beaches and even cemeteries. In extreme cases, such as Colorado's Evergreen Dog Park, permanent closures are occurring." Travel Dog is a membership club for responsible dog owners that will serve as a global brand representing responsible pet ownership and concern for the environment through pet DNA testing, according to the release. Each Travel Dog member registered through pet DNA testing, receives an exclusive Travel Dog tag and is registered in BioPet's 250,000 member DNA World Pet Registry. Travel Dog membership also enables each owner's dog to be recognized by pet friendly hotels, restaurants, attractions, and other businesses. Through the Travel Dog logo these businesses will display to pet owners that they are pet friendly. A percentage of Travel Dog sales are donated to animal welfare causes, according to the release. "Cities and counties also benefit from BioPet's Travel Dog and DNA World Pet Registry™ as they provide the basis and infrastructure for developing dog waste control programs," added Retinger.

Rental Housing Journal Metro · August 2017

Portland can fine dog owners up to $150 According to Portland’s Parks and Recreation Department, “Dog poop is essentially raw sewage; it contains harmful organisms like E. coli, Leptospira, and roundworms. These organisms can be contracted by other dogs, wildlife, and even children. Bacteria from dog poop can wash into rivers and streams when it rains. City Code also requires that all poop must be picked up and disposed of into the proper receptacle. Violation of either leash or scoop laws will result in a fine of up to $150.” Resources: • What pollutes the urban Mississippi? Lawns, dogs and lots of pavement runoff • Piles of poop shut down Railyard Dog Park in Denver — again • Popular Evergreen off-leash dog park closing for good despite efforts to save it • Seattle people, dogs and parks plan • Frequently Asked Questions about dogs in Portland's parks • The Scoop On How Pet DNA Testing Fixes Your Apartment Poop Problem • Why Are Some Property Managers Not Solving Pet Poop Problems?

service laboratory provides comprehensive DNA analysis, reporting, research and product development. BioPet Laboratories' mission is to promote responsible pet ownership, provide pet waste management solutions and to improve public facility access enabling owners to take their pets anywhere. For more information about BioPet Laboratories or its DNA-based pet products, contact us at www.biopetlabs.com or call (865) 546-2862.

BioPet Laboratories is an international biotechnology company specializing in animal genetics. The company's full-

Rental Housing Journal Metro

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Rental Housing Journal Metro · August 2017