Metro ( Portland ) RHJ February 2018 by Professional Publishing, Inc

February 2018

Rental Housing Journal Metro

4. Multifamily Managers and Marijuana: Caught in a Pot Crossfire

8. Have You Reviewed Your Criminal Background Checks Policy Lately?

12. The Scoop On How Pet DNA Testing Fixes Your Apartment Poop Problem

5. RHAO President’s Message

9. Rents Unchanged in December but Still Up 2.5% Year-Over-Year

13. Do You Know How to Respond to a Sexual Harassment Complaint?

10. HUD Charges Landlord With Discrimination Over Veteran's Emotional Support Dog

17. Liberty Rent Guarantee Partners with GreenPath Financial Wellness

6. Dear Maintenance Men: 7. How to Make Apartment Move-In Easier for Tenants and Managers

11. 7 Pest Preventative Maintenance Steps for Rental Housing

Portland/Vancouver

www.rentalhousingjournal.com • Professional Publishing, Inc

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

Regulatory Changes Bring Uncertainty Open House? to Portland’s Apartment Market Is Your Property Ready for an Apartment

Marcus & Millichap

P T

he maintenance check up this week, provided by Keepe, asks whether you are ready for an apartment open house at your property and provides a maintenance checklist for property showings. When looking for new tenants, ensuring that a property is in its best possible shape should be at the top of any property manager’s list. Serious prospective tenants will likely be able to look past the smell of freshly baked cookies and notice the property’s functional and structural details to ultimately decide whether a property it’s worth their time and money. The most effective approach for getting a ready for an apartment open house begins with highlighting its best qualities while making sure that those needing work are tended to - and this does not necessarily require expensive or drastic makeovers! The following guide includes the top maintenance jobs that - by improving both aesthetics and essential structural functions - are guaranteed to make every area of your property show-ready.

olicy change could exacerbate housing shortage. A moderating pace of completions and persistent rental demand will keep vacancy low in 2018. The rate has remained below 4.5 percent for eight years, pushing rent up to record levels. The shortage of units, particularly for low- and moderateincome households, led the city of

but builders may decide to hold off on these projects. Slowing completions in 2018 coupled with strong tenant demand will push down vacancy and drive a respectable increase in rent growth. Range of opportunities entice investors. Low vacancy and steady economic growth will maintain investor interest in Portland. Out-of-state buyers ...continued on page 2

New Tax Law Holds Favorable Prospects for Commercial Real Estate Potential to Boost Space Demand and Capital Flows

Marcus & Millichap

ew tax law retains key pro-

visions for real estate investors. The highly anticipated tax reform recently signed into law by President Trump retained numerous key commercial real estate provisions. The1031 tax-deferred exchange, the mortgage interest deduction for investment real estate and asset depreciation had few material changes. This consistency in tax law will enable investors to move forward with most of their existing investment strategies. That said, there Landscaping and exteriors are many provisions in the new tax • Hire a landscape professional: a prop- law that will have a more nuanced erty with a lawn looks best with freshly effect on the sector, and these more mowed grass, healthy plants, colorful flowers, neat pathways and well-kept subtle adjustments could create sigdecor (throw out those discolored gar- nificant new opportunities for real estate investors. den gnomes!) Finalization of tax rules to reduce ...continued on page PB uncertainty. Over the last year, elevated Professional Publishing Inc., PO Box 6244 Beaverton, OR 97007

Portland to pass the inclusionary zoning policy that required builders to set aside some units for low-income residents. The city estimates 23,000 units are needed to meet the need for low- to moderateincome housing. Many developers fear that the required affordable rentals will not generate enough returns to offset the cost. A surge in multi-housing permitting before the policy could bring thousands of new market-rate units to the metro

PRSRT STD US Postage PAID Portland, OR Permit #5460

uncertainty generated by the range of potential government policy changes, including tax laws, caused many investors to move to the sidelines. A more cautious outlook pervaded the industry as

investors awaited clarity on taxes, fiscal policy and a change in Federal Reserve leadership. This perspective could begin ...continued on page 14

Text REALESTATE-ROI to 44222 to receive a digital copy of this Real Estate Opportunities in Investing (ROI)

year's

Finding Investing Success in Today's Housing Market

Employment Trends

are increasingly competing with local investors for yields up to 100 basis points higher than other West Coast markets. Properties directly east of the Willamette River, where above-average rent growth has persisted for the previous two years, will continue to garner investors’ attention. Here, initial yields in the high4 percent band can be found, below the market average of 5.5 percent. Strong demand for assets has vaulted property valuations above the previous cycle’s peak, potentially moderating sales velocity as buyers become more selective in acquisition criteria. Additional risk factors include the tightening of lending requirements and proposed changes for retrofitting unreinforced masonry buildings (URM). The URM requirements may prompt some owners to list their assets. New investors may find it worthwhile to make the improvements as many of thesePortland apartment properties are in desirable areas.

2018 Market Portland Forecast

17*

18**

Quarterly Completions vs. Absorption

-1 09

Average Price per Unit (thousands)

Rent Growth

16%

Rate

8% 4% 0%

19% 14%

NMI Rank 5,$50 up 1 place

Units (thousands) Rate

Units (thousands)

Vacancy

44down 40 bps

Hiring above the national rate of growth will uppersist 6.0% this average effective rent will reach $1,400 per month this 15 16 17* year; employers add 22,000 jobs in 2018. year, building on a 5.5 percent gain recorded in 2017.

5 REASONS TO USE RENTEGRATION

17*

18**

Sales

$200

Roughly half of all completions will be in Investment Central and East Employment growth and tight vacancy generate new Portland. In 2017, of the 6,700 apartments delivered, housing demand, potentially pushing valuations higher units, providing little relief to in assets near major employment hubs. the shortage of low-income housing.

Construction 4,800 units

Sales Trends

* Estimate; ** Forecast; � Through 3Q;  Trailing 12-month average Sources: CoStar Group, Inc.; MPF Research; Capital Analytics 440 wereReal affordable housing

Price Growth

24%

$150

19%

Year-over-Year Growth

Average Price per Unit (thousands)

$100

Employment 13 up 1.9%

State specific forms for

ARIZONA, CALIFORNIA, COLORADO, INDIANA, Net absorption of 5,500 apartments will outpace completions, lowering vacancy to 3.9 percent. Last year, vaPortland ascends one spot in the NMI amid tight vacancancy ticked KENTUCKY, NEW JERSEY, NEW YORK, OREGON, up 10 basis points. cy and improving rent gains. PENNSYLVANIA, WASHINGTON & MORE. Strong demandTEXAS, for rentals UTAH, will spur rent growth. The Rent

$150

2018 Market Forecast

12%

Year-over-Year Growth

and proposed changes for retrofitting unreinforced masonryConstruction buildings (URM). Roughly half of all completions will be in Central and East Investment Employment growth and tight vacancy The URM requirements prompt some owners to list their 4,800 assets.units New in- Portland. In 2017, of the 6,700 apartments Salesmay Trends delivered, � Through 3Q;  Trailing 12-month average housing demand, potentially pushing va * Estimate; ** Forecast; vestors may find Sales it worthwhile make the improvements as many of these Priceto Growth 440 wereReal affordable housing units, providing little relief to Sources: CoStar Group, Inc.; MPF Research; Capital Analytics in assets near major employment hubs. $200 properties are in desirable areas.24% apartment the shortage of low-income housing.

Vacancy and Rents Vacancy

Rate

Units (thousands)

Net Absorption

Year-over-Year Growth

Completions Net Absorption Research Services 4545 E. Shea Boulevard, Suite 201 Phoenix, AZ 85028 (602) 687-6700 www.Mar3 cusMillichap.com Offices Throughout the U.S. 2 and Canada Marcus & Millichap is not affiliated with, sponsored by, or endorsed by any commer1

Total Nonfarm Jobs (thousands)

0% 14

Completions

Average Price per Unit (thousands)

Units (thousands)

Total Nonfarm Jobs (thousands)

Y-O-Y % Change Policy change exacerbateadd housing shortage. Range A mode Hiring above the national rate of growth will persist this year;could employers 22,000 3 completions and persistent rental demand will keep vacancy low in 40 4% ic growt jobs in 2018. has remained below 4.5 percent for eight years, pushing rent up t

Year-over-Year Growth

Employment up 1.9%

Absolute Change

Year-over-Year Change

Portland ascends one spot in the NMI amid tight

Year-over-Year Change

creasing 2 The shortage of units, particularly for low- and moderate-income h than oth the city of Portland to pass the inclusionary zoning policy that requ where a 1 Roughly half of20all completions will be in2%Central and East Portland. In 2017, of the set aside some units for low-income residents. The city estimates 2 continue Construction 4,800 units 6,700 apartments delivered, 440 were affordable housing providing little needed 0to meetunits, the need for low- to moderate-income housing. 10 1% band M ca Portland relief to the shortage of low-income housing. fear that the required affordable rentals will not generate enough for asser -1 0 0% the cost. A surge in multi-housing permitting before the policy co tentially 05 07 09 11 13 15 17 14 15 16 17* 18** sands of new market-rate units to the metro but builders may Regulatory Changes Bring Uncertainty tiondecid crite projects. Slowing completionsvacancy in 2018 coupled strong Net absorption of 5,500 Apartment apartments Market will out pacethese completions, lowering to withand pro To Portland’s Vacancy down 40 bps push down vacancy a respectable increase inThe rentUR gr Employment Trends 3.9 percent. Last year,Completions vacancyvs.ticked up 10 basiswillpoints. Vacancyand anddrive Rents Quarterly Absorption vestors Vacancy Rent Growth Absolute Change Y-O-Y % Change Completions Net Absorption Policy change could exacerbate housing shortage. A moderating pace of Range of opportunities entice investors. Low vacancyapartme and st completions and persistent rental demand will keep vacancy low16% in 2018. The rate 3 40 4% ic growth will maintain investor interest in Portland. Out-of-state Strong demand for rentals will spur rent growth. The effective rent will has remained below 4.5 percent for eight years, pushing rent upaverage to record levels. creasingly Rent30up 6.0% 12% competing with local investors for yields up to 100 bas 2 month 3% The shortage of units,this particularly low- and moderate-income households, led reach $1,400 per year,forbuilding on a 5.5 percent gain in 2017. 2018 than other West Coast recorded markets. Properties directly east of the W the city of Portland to pass the inclusionary zoning policy that required builders to where 8% above-average rent growth has persisted for the previousN 1 20 2% set aside some units for low-income residents. The city estimates 23,000 units are continue to garner investors’ attention. Here, initial yields in the 5, u 4% needed the need for lowto moderate-income housing. developers 0to meet and 10 1% Employment growth tight vacancy generate newMany housing potentially band can be found,demand, below the market average of 5.5 percent. S Investment fear that the required affordable rentals will not generate enough returns to offset pushing valuations higher in assets near major employment hubs. for assets property valuations above the previousEm cy 0% has vaulted -1 A surge in multi-housing permitting before the policy could 0 0% the cost. bring thoutentially moderating sales velocity as17*buyers18** become more selec 14 15 16 14 15 16 17* 18** 05 07 09 11 13 15 17 sands of new market-rate units to the metro but builders may decide to hold off on Regulatory Changes Bring Uncertainty tion criteria. Additional risk factors include the tightening of lendin these projects. Slowing completions in 2018 coupled with strong tenant demand and proposed changes for retrofitting unreinforced masonryCon bu To Portland’s Apartment Market will push down vacancy and drive a respectable increase in rent growth. Salesmay Trends Quarterly Completions vs. Absorption The URM requirements prompt some owners to list their 4a Vacancy and Rents Priceto Growth vestors may find Sales it worthwhile make the improvements as Completions Net Absorption Vacancy Rent Growth Policy change could exacerbate housing shortage. Range A moderating pace of of opportunities entice investors. Low vacancy and$200 steady economapartment properties are in desirable areas.24% completions and persistent rental demand will keep vacancy low in 2018. The rate 3 16% will maintain investor interest in Portland. Out-of-state buyers are inic growth has remained below 4.5 percent for eight years, pushing rent up to record levels.with local investors for yields up to 100 basis $150 points higher 19% creasingly competing 2 12% The shortage of units, particularly for low- and moderate-income households, led markets. Properties directly east of 2018 Market Forecast than other West Coast the Willamette River, $100 14% the city of Portland to pass the inclusionary zoning policy that required builders torent growth has persisted for the previous dow where above-average two years, will 1 8% NMI Rank Portland ascends one spot in the NMI am set aside some units for low-income residents. The city estimates 23,000 units investors’ are continue to garner attention. Here, initial yields in the$50 high-4 percent 9%gains. cy and improving rent 5, up 1 place needed 0to meet the need for low- to moderate-income housing. 4% band Many can bedevelopers found, below the market average of 5.5 percent. Strong demand fear that the required affordable rentals will not generate enough returns to offset $0 4% for assets has vaulted property valuations above the previous cycle’s peak, po-1 0% above the17* national rate of growth Employment 14 Hiring the cost. A surge in multi-housing permitting before the policy could bring thou16 tentially moderating sales velocity as17*buyers18** become more selective 13 in acquisi- 15 05 07 09 11 13 15 17 14 15 16 year; employers add 22,000 jobs in 2018 1.9% sands of new market-rate units to the metro but builders may to Additional hold off on risk factors include the tightening of lendingup tiondecide criteria. requirements these projects. Slowing completions in 2018 coupled withand strong tenant demand proposed changes for retrofitting unreinforced masonry buildings (URM). Roughly half of all completions will be in In C Construction will push down vacancy a respectable increase inThe rentURM growth. requirements prompt some owners to list their assets. New inVacancyand anddrive Rents Salesmay Trends Portland. In12-month 2017,average of the 6,700 apartm 4,800 units � Through  Trailing * Estimate; ** Forecast; 3Q; may findor it any worthwhile make the improvements as many of these Research; Real Capital Analytics Vacancy identified Rent Growth Sales Priceto Growth cial tenant or lessee in this advertise- vestors or subsidiaries, agent, product, service, or Sources: CoStar Group, Inc.; MPF 440 were affordable housing units, providi Range of opportunities entice investors. Low vacancyapartment and steady econom-are in desirable areas. $200 properties 24%and is ment. The presence of any corporation’s logo or commercial listing of Marcus & Millichap, 16% the shortage of low-income housing. ic growth will maintain investor interest in Portland. Out-of-state buyers are inname is not intended tolocal indicate or for imply affilsolely included for informational purposes only. 2018 Marcus & Millichap. All Rights Reserved. creasingly competing with investors yields up to 100 basis points higher $150 19% 12% iation with, or Coast sponsorship endorsement Marcus &Market Millichap is a service mark of Marcus & 2018 Forecast Net absorption of 5,500 apartments will Vacancy than other West markets.orProperties directlyby, east of the Willamette River, 44down 40 bps $100 14%Inc., © pletions, lowering vacancy • to 3.9 percent said corporation Marcus & Millichap, its affiliates Millichap Real Estate Investment Services, 8% where above-average rent growth has persisted for the previous two years, will NMI Rank Portland ascends one spot in the NMI amid tight vacancancy ticked up 10 basis points. continue to garner investors’ attention. Here, initial yields in the high-4 percent 5,$50 up 1 place cy and improving rent 9%gains. 4% band can be found, below the market average of 5.5 percent. Strong demand Rent Strong demand for rentals will spur ren for assets cycle’s peak, po- Hiring above the national $0 4% 0% has vaulted property valuations above the previousEmployment rate of growth will persist this average effective rent will reach $1,400 up 6.0% 13 14 15 16 17* tentially moderating sales velocity as17*buyers18** become more selective in acquisi14 15 16 year; employers add 22,000 jobs in 2018. up 1.9% year, building on a 5.5 percent gain record tion criteria. Additional risk factors include the tightening of lending requirements

Y-O-Y % Change 4%

Y-O-Y % Change

NMI Rank 5, up 1 place

Employment Trends

Employment Trends 40

Absolute Change

Year-over-Year Change

Regulatory Changes Bring Uncertainty ...continued from 1

Policy complet has rem 30 3% The sho the city 20 2% set asid needed 10 1% fear that 0 0% the cost 14 15 16 17* 18** sands o Regulatory Uncertainty vacancy andChanges improvingBring rent gains. these pr To Portland’s Apartment Market will push  Quarterly Completions vs. Absorption Total Nonfarm Jobs (thousands)

Rental Housing Journal Metro

Absolute Change

Regu To Po

5. Value - Large property management compa3.NetSimplified - will Owners absorption ofAccounting 5,500 apartments outpaceand com-managpletions, vacancy to 3.9 percent. Last year, vanies that use Rentegration.com for only forms ers can lowering track income and expense for each unit, Color Standards for National Tenant Network Logo cancy ticked up 10 basis points. generation will save time and money over other property and company. Perfect for mid and small • Logosmanagers provided on and the CDindependent in all three forms: methods. Mid and small size property managsize property Strong demand forarerentals will spur rent growth. The rental all black, reversed to white, or in PMS 280 Blue/PMS 7543 Gray spot or 4/color applications. average effective rent will reach $1,400 per month this ers and independent rental owners can manowners, who neither have the need or budget for Please see below for specific use examples. year, building on a 5.5 percent gain recorded in 2017. age their entire business at a fraction of the cost larger, more expensive • No other colors aresoftware. acceptable for use for the logo. Employment• No growth and tight vacancy generate new ofthatother altering of the logo is allowed. If you have a special circumstance requiressoftware something not and forms. housing demand, potentially pushing valuations higher provided on the CD, please call NTN NATIONAL HEADQUARTERS 1.800.228.0989 for assistance. 4. Management Database - Rentegration.com is in assets near major employment hubs. • Logos should not be put over a busy background. an easy to use, database driven software. Most form fields are auto populated from the database. The modules areBLACK all integrated and work WHITE (with 40% gray circle) together. For example, a customer can use the rent-roll function to identify all delinquencies, apply fees, and create eviction forms with a few simple clicks of the mouse.

1. Access - Rentegration.com is a web based, Vacancy $100 14% 40 bps 44down24/7 multi-user software offering customers access to forms generation, $50 9% archives, property management database, basic accounting, venRent $0 4% up 6.0% 13 14 15 other 16 17* dor ordering and services.

2. Rental and Lease Forms - Unlimited Investment use of a full line of state specific rental and lease forms. All Rentegration.com forms are created by attorneys and/or local rental housing 44 associations. * Estimate; ** Forecast; � Through 3Q;  Trailing 12-month average Sources: CoStar Group, Inc.; MPF Research; Real Capital Analytics

OR-RTG-20 Oregon

CHECK-IN/CHECK-OUT CONDI

TION REPORT

TENANT(S): __________________ ____________________________________ ____________ ADDRESS: ___________________________ OR-RTG-24 _________ Oregon ____________UNIT: _______________ CITY: ___________________________ ________ STATE: ________ ZIP: _________ ________ ____ Rating

Scale = (E)Excellent (VG) Very Good PET AGREEMENT

TENANT INFORMATION

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TENANT(S): ____________________________________________________ DATE:________ KITCHEN ADDRESS: ____________________________________________________ UNIT: _________ Walls Walls CITY: _________________________________________ STATE: __________ ZIP: _________ Windows

Out

DESCRIPTION OF PET(S)Blinds/Drapes

Refrigerator

landlord or the unit and premises their agents will be located at (Address) _______________ CHECK-IN/CHEC _______________ K-OUT CON Floor _______________ DITION_____ _______________ REP ORT _____________ on

2) Type _______________ Breed _______________ Size ______ Age __ Weight ___ Color ____ Name ________ Vaccinations: Yes____ No____ Carpet/Vinyl/Wo License Number: ______________ od

Disposal

Doors/Woodwork

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Locks

Ceilings

Tenant(s) certify that the above pet(s) are the only pet(s) on the premises. Tenant(s) Sink understands that the additional pet(s) are not permitted unless the landlord gives ten Electrical Outlets ant(s) written permission. Tenant(s) agree to keep the above-listedFloor pets in the premises Garbage subject to the following terms and Cans conditions: Windows TV Antenna/Cable

1) The pet(s) shall be on a leash or otherwise under tenant’s control when it is outside the Blinds/Drapes tenant’s dwelling Fireplace unit. 2) Tenant(s) shall promptly pick up all pet waste from the premises promptly. Cleanliness 3) Tenant(s) are responsible for the conduct of their pet(s) at all times. 4) Tenant(s) are liable for all damages caused by their pet(s). 5) Tenant(s) shall pay the additional security deposit listed above and/or their rental BEDROOM agreement as a condition to keeping the pet(s) listed above. 1 BEDROOM 2 6) Tenant(s) shall not allow their pets to cause any sort of disturbance or injury to the Walls Walls other tenants, guests, landlord or any other persons lawfully on the premises. Windows report to landlord any type of damage or injury caused by 7) Tenant(s) shall immediately Windows their pet. Blinds/Drapes 8) This agreement is incorporated into and shall become part of Blinds/Drapes the rental agreement exe -cuted between the parties. Failure by tenant to comply with any part of this agreement Rods shall constitute a material breach of the rental agreement. Rods Floor

_____________________________ Light Fixtures Landlord

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UNACCEPTABLE COLOR USAGE

Electricity

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Essential Service Plumbing

503-933-6437 Rental Housing Journal Metro · February 2018

written permission.

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may be reproduced without written

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TENANT(S)Fixtures between the hours : _______________ of (Date) and __________ Doors/Woodwork ADDRESS: . _______________ _______________ _______________ (Time) _______________ (Time) __________ CITY: _____ _______________ _ Locks __________ The entry will occur ___UNIT: __________ __________ for the following __________ STATE ____ purpose: _____ Rating Scale _______________ : ________ ZIP: Ceilings= (E)Exc ________________________________ ellent (VG) Very _____ __________ Good_____ _____ (G)Go _______________ od _____ _____ (F)Fai Electric Outlets r (P)Poo _______________ _____ IN __________ r Out ___ _______________ LIVING AREAS _______________ In Out ________ KITCHEN In Out Walls

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AGREEMENT

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Rental Housing Journal Metro

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Multifamily Managers and Marijuana: Caught in a Pot Crossfire accommodation to smoke marijuana might not be considered “reasonable.” For example, an accommodation that allows conduct in violation of a federal law constitutes an undue burden. Further, other problems exist such as secondhand marijuana smoke traveling through ventilation systems and bothering residents in common areas. However you proceed, be consistent with all prospects and residents in similar situations. This is just the tip of the iceberg on this topic, and a lack of relevant case law makes it tricky to navigate. The courts will likely address this issue in the coming years and provide some clarity. Until then, consider your policies carefully, and err on the side of consulting an attorney as you face marijuana-related issues at your multifamily properties.

Ellen Clark

he Grace Hill training tip of the week focuses on the issue of marijuana and multifamily property managers and owners. Editor’s Note: “Grace Hill worked with our attorneys at Haynsworth Sinkler Boyd on this piece. We are grateful for their insights and expertise in navigating this tricky topic!” Multifamily property managers are often caught in a pot crossfire between state and federal laws when it comes to marijuana use in apartments, especially in states where marijuana use is legal. Of course under federal law, marijuana possession is illegal. Pursuant to the Controlled Substances Act, it is classified as a Schedule I substance, which are defined as drugs with no currently accepted medical use and a high potential for abuse. According to the Office of National Drug Control Policy, marijuana is the most commonly used illicit drug in the United States. Multifamily housing providers are generally permitted to prohibit the use or possession of marijuana as part of a smoke-free policy, but consider being explicit about marijuana in your smoke-free policy. However, thirty (30) states plus the District of Columbia have

legalized marijuana either for recreational or medicinal uses. This conflict between federal and state law creates confusion in the multifamily property management industry. As you face questions about marijuana use, it may help to keep in mind that federal law supersedes state law. Among other things, this means that you are not obligated to “permit” breaking federal law to allow a resident to do something that is legal under state law. Marijuana and implications for multifamily properties

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• Multifamily housing providers are generally free to prohibit the use or possession of marijuana as part of a smoke-free policy, even in states where recreational or medical marijuana use is allowed (but see below explanation regarding accommodations). Consider being explicit about marijuana in your smoke-free policy. Articulate a clear enforcement plan and apply the policy consistently to all prospects and residents to avoid discrimination claims. • Under the Quality Housing and Work Responsibility Act of 1998 (QHWRA), many HUD-assisted housing owners must deny admission to assisted housing for any household with a member determined to be illegally using a controlled substance. The QHWRA also permits owners to evict current residents for their use of marijuana.

A Colorado law professor gives his view In addition to these tips above from Grace Hill, Sam Kamin, a law professor and director of the Constitutional Rights and Remedies Program at the University of Denver’s Sturm College of Law in Colorado, posed several questions on this issue for multifamily owners and property managers in a recent article from the Urban Land Institute. He states that getting a federally backed loan from a bank or lending institution means the property owner taking out that loan must agree to abide by all federal laws, such as those including marijuana use. “Could a federal agent arrest a property manager for knowingly allowing medical marijuana use in an apartment unit? If the owner established a policy that allowed for observation of state rights—despite the federal conflict—could the principals be arrested? The answer appears to be yes, albeit unlikely. Property owners who allow marijuana on their premises also risk losing their buildings to the federal government through civil forfeiture cases. “The federal government isn’t actively doing that, but it remains a remote possibility,” says Kamin. One might argue that “the safest course is to prohibit all marijuana,” says Kamin. “Amendment 64 explicitly gave property owners [in Colorado] the right to exclude

Marijuana and disability If you receive a request for an accommodation for medical marijuana use based on a tenant or applicant’s disability, you should proceed carefully. The law on this issue is evolving rapidly, and it is advisable to seek legal counsel on these requests. The FHA is clear that a disability “does not include current, illegal use of or addiction to a controlled substance.” However, a tenant may be taking medical marijuana to treat a condition that is considered a disability. Even if a person has a recognized disability, there are reasons that an

...continued on page 8

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Rental Housing Journal Metro · February 2018

President: Ron Garcia • Vice President: Phil Owen President Elect: Mark Passannante • Past President: John Sage Secretary: Lynne Whitney • Treasurer: Sandra Landis • Office Manager: Cari Pierce

RHAO President’s Message Decency and Dignity or Disrespect and Drama?

Ron Garcia, RHA Oregon President

ast month at the January dinner meeting, RHA Oregon had former newscaster Kelley Day speak. Kelley has spent her career in front of the TV cameras and is a consummate professional. It was great to have her share her insights and experiences on how to present a story in its best light. These days that seems to be getting more difficult. There is a new rancor now being substituted for communication over the cures to Portland’s housing crisis. As rental property owners, it’s no longer enough to provide quality housing. We all need to learn to be better story tellers.

Without owners willing and able to invest in properties we have no inventory. And without tenants willing and able to pay market rents we have no incentive to build more housing. Has our industry devolved into nothing more than crisis management trying to ward off government restrictions, collections and lawsuits? I often rely on basic rules to solve problems. One rule is what I call the ‘‘zipper theory of life’’: When a zipper disconnects, the solution is to move the clasp back to the point of separation and start over. How far back do landlords and tenants need to go in order to re-group?

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

As I move the zipper back further in time, I found a connection from the oldest book in print, the Bible: ‘‘Put away from you all bitterness and wrath and anger and wrangling and slander, together with all malice, and be kind to one another.’’ (Ephesians 4:31-32) Perhaps we can be encouraged with the fact that for thousands of years there has always been hope that people can overcome conflicts with decency and dignity in place of disrespect and drama. Those are the stories that should be really worth telling. •

Let’s consider the term ‘‘Landlord’’, a title that itself is stuck in the past. Who wants to be ‘‘lorded’’ over by a profiteer? We should re-brand ourselves as ‘‘Rental Property Providers.’’ We should ensure that our properties are safe and comfortably livable. We should make an effort to consider the needs ofour clientele ---because without good renters our properties soon become derelict. Tenants ought to consider their obligations as well. Normal wear and tear shouldn’t be an excuse to allow mold to grow, grease to build up, yards to grow out of control or smoke detector batteries that save lives to expire. Good Tenants respect and thrive in their homes and value Good Property Owners.

Let’s start off with a couple of observations: Portland is one of the world’s 10 most livable cities according to a recent list in Metropolis Magazine. Portland ranks alongside with Helsinki, Copenhagen, Sydney and Singapore. Additionally, Oregon is one of the fastest growing states in America, and it recently ranked # 2 for in-bound moving vans nationwide. There is no question that we need to come together to solve our housing needs. Yet Landlords are stunned that the government would interfere with contractual clauses that allow for the simple termination of an agreement. They are outraged that their income could be arbitrarily capped with no regard to the free market, (no matter how low they’ve been voluntarily kept for years past). They are flabbergasted to learn they must pay thousands of dollars for Tenant relocations. Tenants are also in conflict. Those that live in comfortable and affordable homes may not want to rock the boat. Many live with the anxiety that their safe haven could all come to an end with a single notice. Others personally feel the hardships of the rising economy around them, and have been forced to find substitute housing; to become roommates; move to less desirable locations. For them, that rental property is the center of their life… it’s not ‘‘just a business that should earn a profit’’. Meanwhile, however, tenant / landlord court cases are rife with accusations from both sides for unwonted damage and neglect left by the ravages and lack of care of that other party. So I ask myself: What’s a professional property owner to do?

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Rental Housing Journal Metro · January 2018

Rental Housing Journal Metro

Dear Maintenance Men: graffiti. Motion activated lights also work well to deter vandals. (If you have a sense of humor, install motion activated water sprinklers.) 3. Planting vines or bushes along a wall or the side of the building is a good longterm solution. As the landscape grows, it will make it more difficult to graffiti your walls. 4. Use an anti graffiti paint. The graffiti will easily wash or wipe off making repainting a thing of the past.

By Jerry L'Ecuyer & Frank Alvarez Dear Maintenance Men: One of the maintenance chores I do are caulking and sealing shower/tub fixture flanges and shower walls. My problem is getting the caulking to dry before a resident uses the shower. Any Suggestions? David Dear David: A lot of people will say: “Just tell the resident not to use the shower till the caulking is dry”. Well it doesn’t work and by the time you are driving away from the building, your resident is already taking a shower and your fresh caulking is washing down the drain. Your caulk should cure at least 24 hours before use. Water based latex caulking is easy to use, but very susceptible to water until it is cured. Try using a silicone or polyurethane based caulking for doing tubs, showers, toilets, sinks or other wet locations. It tends to set quickly and will repel water during its cure time. Another solution we have found works well with very busy showers is to remove all the fixtures, including the shower head & arm, valve handles and tub spout, before caulking. (A bit extreme, but effective) We then plug the shower head and tub spout with a capped pipe. Then caulk the tub/

shower. We come back 24 hours later and reinstall all the fixtures. One more thought; if you have sliding shower doors for your tub, check the bottom track. If it is loose, do not caulk until the track is removed, cleaned and dried. Reinstall the track with new adhesive caulk to hold it down and caulk the edges to keep the water out. Dear Maintenance Men: My building gets hit by graffiti on a regular basis. How can I stop this curse? Jim

Dear Jim: We understand. Our company maintains several properties that attract graffiti like a magnet. There are several solutions that may help. 1. Painting over graffiti as quickly as possible will help deter future vandalism. We recommend painting over the same day or within 24 hours of the graffiti appearing on your property. Graffiti vandals like to advertise. By removing the graffiti quickly, the less recognition the vandals will receive, thus making your building less attractive to graffiti taggers. 2. Install lighting in areas prone to

Dear Maintenance Men: I have a resident who is complaining the garbage disposal smells. I have tried running lemon slices and ice cubes to clean the disposal unit. It works for a short time, but the smell comes back. What steps do you recommend for resolving this problem? Barbra Dear Barbra: The smell may come from a number of places. 1: The first and easiest to check is the rubber splash guard that keeps things from falling into the disposal. Remove the rubber splash guard and turn it inside out. Clean out the debris that have collected and wash with soap and water. ...continued on page 19

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Rental Housing Journal Metro · February 2018

Rental Housing Journal Metro

How to Make Apartment Move-In Easier for Tenants and Managers By John Triplett

he apartment move-in process can often frustrate both tenants and property managers as it is not just the physical move-in. It is all the processes that need to be done before that moving truck ever shows up. Landlords and property managers know that tenant communication is one of their biggest challenges. Technology can improve that communication, including digital tools that improve the movein experience. Millennials especially appreciate easy-to-use technology from apartment management. “The issue for the resident is the average American takes 10 to 15 hours to just deal with the actual process of moving,” said Ash Bell, vice president and executive director of property management for moving website Updater.com, in an interview with Rental Housing Journal. “And it is not only the physical move, but the process of moving. Think of all the things from utilities, to forwarding the mail and the businesses you interact with on a day-in-day-out basis. All those companies need to be notified of your new address. You need to turn off utilities at your current place and turn them on at your new place. If you’re moving into an apartment that requires renter’s insurance, you need to get that renter’s insurance to protect your assets,” Bell said. And the list goes on. “You need to book a moving company. You need to reserve an elevator if you’re moving into a class A property in the city. There are just hundreds of tasks that a person needs to deal with when they look at moving,” Bell said.

Communication is key to solving apartment move-in issues

“Single-family management is the same as multifamily as far as some of the move-in problems,” Bell said. With larger multifamily properties, “maybe they have it on more of a mass scale because they may have a 400-unit property that has people moving in every day, where with a 50-unit property the likelihood is that we only have one or two moves a month. But it’s still all of the same issues. “There’s just a lot that every stakeholder in running a property encounters when it comes to moving,” Bell said. And it is what

he looked at in developing the technology. Three moving stakeholders in multifamily: • The resident • The site team • The ownership “Those are the only three stakeholders so any time you look at processes or technology, you have to filter through those three stakeholders. If it brings value to any one of them, it’s something you should consider. If it brings value to all three, you’ve got to do it,” Bell said.

An apartment move-in customer service tool

Vikki Sherman, senior director of marketing at Fairfield Residential said, “I think it’s a challenging time in a customer’s life, so we really approach the move-in process in particular, as well as the move out, in the eyes of the customer. We’re trying to make their lives easier, simpler, better, the whole process improved, so that they have a good experience when they’ve got a lot of other things happening. “Oftentimes there’s a big life event that is preceding the move, kind of causing a move, whether it’s an addition to the family, a marriage, a divorce, something big in their life that’s happening. So the move has different nuances depending on that, right? It could be a very happy occasion. It could be a sad occasion, and so, in essence, we just want to make sure that we’re offering them something and making that transition a smooth one, and a positive one for them. “The benefits from the property management side of a tool like Updater is, it’s very easy for us to onboard, and implement, and be able to quickly provide

the extra level of service to our customer,” she said regarding her company which manages 44,000 units across the country. “In 2017, Fairfield averaged about 1,500 move-ins per month across our portfolio.” “Updater is very quick. They do a lot of the heavy lifting. The email invitation for the resident to use the service is automated, so it’s not anything manual that the property manager needs to do, yet they’re able to give this time-saving tool to a future resident,” Sherman said. Jennifer Staciokas, senior vice president at Pinnacle, seconded what Sherman said about the customer service aspect, “I would say it’s saving more time for the renter than it is for the property manager. For the property manager, the value to them is that it’s an added amenity that they can offer to their renters to make their move-in seamless. She said the property managers are “making sure that they’re letting their clients, as customers, know, ‘Hey, you’re going to be receiving an email. This is the benefit that you’re going to receive from it, and this is what you should do to utilize that service,” Staciokas said.

How many tenants use Updater when it is offered?

Staciokas said Pinnacle saw more than 9,000 moves last November (they have 165,000 units) and invited a total of 9,799 residents to use the tool. She said about 70 percent of the tenants adopted and used at least some features of Updater. Sherman said that overall they have seen about an 80 percent adoption rate of the tool in their properties. “We actually see really good usage of the tool,” Sherman said. “I don’t have the official open rate for a whole year

but I would say in the last 90 days, we’ve seen about 80 percent of those emails get opened, which is an incredible open rate to begin with. We see about 60 percent of those invites be accepted. Meaning, someone opens it, they read the content, they say, ‘Yes, I’m interested in this tool.’ Then, the actual usage ends up being at about 50 percent, which is great. I mean, it’s hard to get a customer’s attention during that busy time. “You know, the really fun thing about Updater is, they give you a dashboard. So you can really kind of quantify the results. We find that residents are using about half of the services offered within the Updater tool because there’s things like connecting with utilities, there’s changing your address, there’s sharing your move digitally on social media, there’s moving services. “So when we quantify the tools that our residents are using, and the number of residents over the last 90 days, our residents have saved over 3,000 hours. If they had to manually change their address, if they had to call all these utility companies, they would have spent quite a bit more time,” Sherman said.

Three top items most tenants use in apartment move are:

• Change of address • Utility changes • Local offers where they can save money

Reducing frustration for the property management team

“Our customers, today, are expecting things to be frictionless. They like things to be easy. They like things to be quick. They’re used to doing things online. The ability to offer a customer what they want and need I think definitely reduces frustration for a property management team,” Sherman said. “We’re meeting the demands of today’s customer and it is also a feel-good, right? You’re saving your new resident time. You’re making their move-in experience better. Ultimately, you’re improving the satisfaction with the process. “Once you have happier customers, you yourself are able to focus on the things to make better next. I definitely think it reduces some frustration on the property manager side, in that aspect. “On the customer side, I think our ...continued on page 18

Advertise in Rental Housing Journal Metro Circulated to over 6,000 apartment owners, on-site and maintenance personnel monthly.

Call 503-221-1260 for more information www.rentalhousingjournal.com Rental Housing Journal Metro · February 2018

Rental Housing Journal Metro

Have You Reviewed Your Criminal Background Checks Policy Lately? By Ellen Clark

rest record. An arrest is not the same as a conviction. • A policy may use criminal convictions as a screening criterion because a conviction is sufficient evidence that someone engaged in criminal conduct. • However, a policy should not automatically exclude individuals because of a criminal conviction. Instead, it should consider factors such as the nature and severity of the crime and how long ago the crime was committed. Note that a policy can automatically exclude based on convictions for the illegal manufacture or distribution of a controlled substance. Related convictions, such as drug possession, are not covered by this exception.

federal lawsuit in New York is challenging a landlord’s blanket ban on leasing to people with criminal backgrounds. The federal government has advised landlords against such bans, saying they could violate fair housing laws, but the practice persists.

The lawsuit alleges that the landlord’s policy disproportionately affects black and Latino men, and thus violates federal law. The policy, although not discriminatory on its face because it doesn’t single out any protected classes, could still be illegal if it has a discriminatory effect. In other words, if the effect of the policy is discrimination, even if not intentional, it would be illegal. Review your policies regarding residents’ criminal histories to ensure they do not have a disparate impact on minority home seekers. Criminal background checks policies cannot intentionally or inadvertently make it more difficult for them to find housing. Some estimate that one in three Americans has a criminal record, and studies cited by HUD show that certain racial and ethnic minorities are arrested and convicted of crimes more than others.

This means certain criminal history policies could have a disparate impact on minority home seekers, making it difficult for them to find housing. Some individual cities have now gone even further in restricting what landlords can ask about a potential tenant’s criminal background. See related story from last year- Seattle bars landlords from using criminal records to screen tenants.

4 tips on criminal background checks

HUD has provided guidance for

developing, reviewing or revising a community’s criminal background checks policy. Here are tips to help you comply with the guidance. • A policy may use criminal convictions as a screening criterion because a conviction is sufficient evidence that someone engaged in criminal conduct, but may not use convictions to automatically exclude individuals. • A policy should not deny residency or otherwise discriminate against an applicant or resident based solely an ar-

No blanket denials

If a resident or applicant is denied housing because of a criminal history, you should be able to show how the criminal conduct affects your ability to protect residents’ safety and property. As HUD states, you must be able to show that a policy “accurately distinguishes between criminal conduct that indicates a demonstrable risk to resident safety and/ or property and criminal conduct that does not.” ...continued on page 11

Pot Crossfire ...continued from 4

Investment Real Estate Multi-Family I Commercial I Plexes

HOW THE DEAL GETS DONE.

marijuana from their premises. Landlords can put in the lease that a tenant [must] not possess marijuana, not grow marijuana, and not smoke marijuana, and that would be permissible.” Also in the article, Alex Kreit, a law professor at the Thomas Jefferson School of Law in San Diego and author of Controlled Substances: Crime, Regulation, and Policy (Carolina Academic Press, 2013), says, “I think it is a state-by-state question of whether there are any potential discrimination-type protections that might apply to medical marijuana patients. “In a state with explicit protection, there is the further question of, ‘Do you have to accommodate everything this patient wants to do, or would it be enough to say they have to consume the medicine in the

form of an edible product?’ And if so, are you discriminating by treating consumers differently in allowing exceptions to the lease limitations and compounding your potential liability?” For landlords and building managers dealing with complaints from tenants regarding marijuana smoke, stepping in as quickly as possible to work out a solution may be the best course of action to avoid an escalation of the situation. “My take is that it is probably not that dissimilar in many ways from any other kind of landlord/tenant dispute,” Kreit said. “At the end of the day, I imagine that to the extent it is at all possible, you’re probably better off trying to resolve the issue without it becoming •

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Receive a digital copy of Real Estate Opportunities In Investing Finding Investing Success in Today’s Housing Market Rental Housing Journal Metro · February 2018

Rental Housing Journal Metro

Rents Unchanged in December but Still Up 2.5% Year-Over-Year

he average multifamily rent

West Coast markets, specifically those in the Pacific Northwest, were the weakest on a T-3 basis. Seattle (-0.8%), Portland (-0.5%) and San Jose (-0.5%) saw rents decline due to a combination of oversupply and historically expensive rent levels About Yardi Matrix:

in the U.S. stood at $1,359 in December, unchanged from November but a 2.5% year-over-year increase for rents, according to a survey of 121 markets by Yardi Matrix.

Strong demand, the economy’s solid footing and a robust job market offer encouraging signs that growth will continue in 2018. Rents were down 0.3% in the fourth quarter, which is only the second negative quarter of growth nationally since the second quarter of 2010 (rents also fell 0.2% in the fourth quarter of 2016). “Although the results are somewhat negative compared to recent history, what’s notable is how consistently strong the market has performed during the entire recovery,” Yardi Matrix writes in the report. Outlook for 2018 rents still good especially secondary markets The question for 2018 is how much more steam is left in the market, whether the deceleration will continue or if it will level off or turn negative, the report says “Our view is that growth will continue at roughly the same rate nationally, led by strong demand. The economy shows no signs of slowing down, as GDP comes

off two strong quarters and should get at least a boost from lower corporate and personal tax rates, while job growth continues to impress. “Combined with the growth of the young adult population, household formation should remain robust. The consistent national numbers mask a great deal of movement on the metro and submarket level. Secondary markets such as Sacramento, Orlando, Las Vegas, Salt Lake City and

Colorado Springs with affordable rents and growing populations should see above-trend increases. Business-friendly markets such as Dallas and Atlanta should see a slowdown in rent increases, but see moderate gains nonetheless, while expensive coastal markets such as New York City and markets with excessive supply growth are likely to see little or no gains. West Coast markets saw weak fourth quarter

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Rental Housing Journal Metro · February 2018

10/25/16 4:45 PM

Rental Housing Journal Metro

HUD Charges Landlord With Discrimination Over Veteran's Emotional Support Dog

n Army veteran, who served

tours of duty in Iraq and Afghanistan, was told he could not keep his emotional support dog in an apartment complex and the U.S. Department of Housing and Urban Development has charged the owner and manager of the complex with discrimination, according to a release.

"Assistance animals play a vital role in helping our veterans cope with servicerelated disabilities," Anna Maria Farías, HUD Assistant Secretary for Fair Housing and Equal Opportunity, said in the release. "Housing providers have an obligation to permit these animals, and HUD ensures that they meet this obligation," she said. The veteran, who served tours of duty in Iraq and Afghanistan, receives disability benefits from the Veterans Benefits Administration for his major depressive disorder and also suffers from anxiety and post-traumatic stress disorder, according to HUD.

Apartment owner suggested veteran get a cat instead of emotional support dog

HUD filed the charge against a West St. Paul, Minn., apartment complex which ordered the veteran to remove the dog and suggested he get a cat instead as it was under the complex’s rule of 12 pounds for an animal. The veteran was told he was keeping a dog in violation of the lease. The letter stated that the dog should be removed immediately and warned that three lease violations could lead to eviction, according to the complaint. The veteran asked for reasonable accommodation for his emotional support animal and was denied. The veteran then filed a complaint alleging that the owner and manager of Westview Park Apartments denied his request to keep an assistance animal, despite the veteran explaining in detail his right to have the animal. In a letter responding to the veteran's request, the owner suggested the cat, citing the property's policy of allowing cats but not allowing assistance animals

weighing more than 12 pounds. The owner also stated that, even for an animal under 12 pounds, the veteran would need to provide proof that the animal was licensed.

Veteran provided proof and certificate of training of emotional support dog

The veteran responded by providing a copy of his license for the animal, a certificate of training, and additional information about the animal, but the owner still refused his request, stating the dog had to be removed from the property. He provided a letter from Sutherland Counseling supporting his need for the animal, along with his own written statement describing his symptoms and need for the animal, according to the complaint. He adopted the emotional support dog, a great Dane-golden retriever mix. In a subsequent letter, the manager notified the veteran that he was in violation of his lease by having the dog and that he had two weeks to vacate the unit. The eviction action was later withdrawn, but the veteran, still not being allowed to keep the animal, moved out of the apartment at the end of his lease. The complaint was amended to include apartment complex owner James Tilsen and rental manager Deborah Brookins, according to the Pioneer Press at twincities.com. Tilsen denied the discrimination charge and said he plans to fight the accusation. He questions the validity of the paperwork from the counseling firm. “Pretty much anybody can say that,” Tilsen told the newspaper about the veteran needing an emotional-support dog. “If he had presented something from the V.A. that said that he needed it, we would’ve treated it differently. We didn’t have that. All we had was an online (document) from an online psychologist that said he needed a dog. I went online and got the same thing.” The Fair Housing Act prohibits housing providers from denying or limiting housing to people with disabilities, or from refusing to make reasonable accommodations in policies or practices for people with disabilities. Allowing people with disabilities to have assistance

animals that perform work or tasks, or that provide disability-related emotional support, is considered a reasonable accommodation under the Act. Disability is the most common basis of complaint filed with HUD and its partner agencies. Last year alone, HUD and its partners considered more than 4,500 disability-related complaints, nearly 55 percent of all fair housing complaints. HUD's charge will be heard by a United States Administrative Law Judge unless any party elects for the case to be heard in federal court. If the administrative law judge finds after a hearing that discrimination has occurred, he may award damages to the complainant for his loss as a result of the discrimination. The judge may also order injunctive relief and other equitable relief, as well as payment

of attorney fees. In addition, the judge may impose civil penalties in order to vindicate the public interest. Resources: West St. Paul apartment owner sued over bias against Army vet, his support dog HUD charges Minnesota landlord with housing discrimination after deying veteran the right to keep his assistance dog Secretary, United States Department ) of Housing and Urban Development, ) on behalf of Complainant vs. Westview Park Apartments, LP; Tilsenbilt Homes, LLC; ) James Tilsen & Deborah Brookins

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Rental Housing Journal Metro · February 2018

Rental Housing Journal Metro

7 Pest Preventative Maintenance Steps for Rental Housing

he maintenance check up this week, provided by Keepe, asks whether you are taking the pest preventative maintenance you need in your rental housing to protect your investment and your tenants.

From mice to ants and cockroaches, pest infestations can cause serious property damage and traumatize tenants, significantly worsening their perception of their living conditions. Property managers need to be aware of what draws pests to rental homes and adopt simple pest preventive maintenance steps that can protect properties and tenants.

entryways can prevent branches from allowing pests to gain access to them. No. 5 - All pests are naturally drawn to food, both inside of homes and as found outside in trash cans and disposal areas. Investing in trash cans and bins made of heavy, tough materials that have tight, sealable lids works best for keeping pests from identifying a property as an attractive, food-secure nesting place. Heavy-duty containers also make it difficult for raccoons and possums to force their way into garbage storage areas. No. 6 - Some pests can utilize chimneys as access points and nest in attics and roofs. Having a professional install wiring or screens on chimney gaps can block access. No. 7 - It is fundamental to encourage tenants to be mindful about safe food storage and disposal of organic material. Inside the home, food should be properly stored inside tight containers and fridges. Garbage should be disposed of in a timely manner.

7 Types of Pest Preventative Maintenance Steps

No. 1 - To avoid any and all infestations, it is fundamental to regularly inspect properties for cracks, crevices and any kind of openings that would allow unwanted critters to access indoor spaces. This includes checking open vents and drainage pipes. No. 2 - Pests need a source of moisture to survive, so it is adequate to minimize the presence of standing water by regularly checking whether pipes, AC units, gutters or downspouts leak or allow water to accumulate; scheduling seasonal maintenance and timely repairs for those systems is ideal. No. 3 - Clogged and debris-filled gutters can make for a cozy hiding spot: making sure that gutters are regularly cleaned avoids this issue. No. 4 - Regular trimming of trees and plants located next to windows and

other ants in the colony. Infestations can easily get out of hand once the thousands of specimens from a certain colony learn where to go for food, which also increases the likelihood of indoor nesting.

Cockroaches

Cockroaches are nocturnal creatures, which makes them much more difficult to spot. Experts warn that in most instances, spotting a first cockroach is likely an indication of an entire colony having nested within the property. Aside from their unpleasant appearance, cockroach activity can severely affect the health of tenants as their droppings and cast-off skins are known to aggravate asthma, allergies and other breathing conditions. This is a pest preventative maintenance step you should take seriously.

and they feel trapped and threatened. For this same reason, they can endanger pets, especially cats and smaller dogs. Raccoons and possums can also carry rabies, which makes them that much more pressing to invest in proper pest preventative maintenance measures. Summary: These simple 7 pest preventative maintenance steps can save you a lot of headaches and keep your tenants happy and avoid over-reacting over pests in their rental housing., Keepe is an on-demand maintenance solution for property managers and independent landlords. Keepe makes hundreds of independent contractors and handymen available for maintenance projects at rental properties. Keepe is available in the Greater Seattle area, Greater Phoenix area, San Francisco Bay area, and is coming soon to an area near you. Learn more about Keepe at http://www. keepe.com

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Mice/Rodents

The lineup of unwanted potential pests Ants

Ants are drawn to foods that most humans tend to consume fairly regularly: meat, starches and sweets. While most types of ants nest and live outside, they can easily detect nearby food sources and once found, they return regularly. In fact, ants release a chemical designed to guide them back to the newly found food source, which also indicates this to

Just as for ants and cockroaches, food is the main culprit for attracting mice to human homes. Mice represent a serious threat for the safety of tenants as they can carry fleas and diseases that can be severely harmful to humans, such as meningitis. Tenants can be easily exposed to these harms as mice contaminate spaces with their fur and droppings. Mice can take over properties quickly because of their year-round, rapid breeding. Their presence can be quite destructive due to their chewing abilities, which can damage furniture, wiring, and even walls.

Raccoons and Possums

Due to their considerably larger size, those pests are better able to defend themselves once they encounter humans

Criminal Background ...continued from 8

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Rental Housing Journal Metro · February 2018

Attorney at

Finding Investing Success in Today's Housing Market Text REALESTATE-ROI to 44222

Ellen Clark is the Director of Assessment at Grace Hill. Her work has spanned the entire learner lifecycle, from elementary school through professional education. She spent over 10 years working with

am Jack GraLh aw

Real Estate Opportunities in Investing (ROI)

Don’t forget the importance of being consistent. If you make an exception to your standard policy for criminal background checks for one prospective or current resident, you must offer the same exception to other prospects or residents who are in similar situations. Take some time in this New Year to evaluate your screening processes to make sure they do not produce a disparate impact. Remember, policies may consider criminal history in appropriate way, but should not contain exclusions that are arbitrary or too broad. For more information, review the full text of HUD’s guidance here.

K12 Inc.’s network of online charter schools - measuring learning, developing learning improvement plans using evidence-based strategies, and conducting learning studies. Later, at Kaplan Inc., she worked in the vocational education and job training divisions, improving online, blended and faceto-face training programs, and working directly with business leadership and trainers to improve learner outcomes and job performance. Ellen lives and works in Maryland, where she was born and raised.

Finding Investing Success in Today's Housing Market

Be consistent

Rental Housing Journal Metro

The Scoop On How Pet DNA Testing Fixes Your Apartment Poop Problem By John Triplett

ets are a way of life in rental

housing and if you want your rentals fully leased, pet owners are a key tenant demographic you want to keep.

Look just at Millennials: 76 percent are pet owners and a majority are renters. You might have laughed at first at this headline on how pet DNA testing could fix your apartment property’s pet poop problem. But here is the reality. Your tenants may be leaving pet poop lying around for you and your maintenance crew to pick up, creating extra work and cost. The pet poop problem can affect your whole apartment community and pit tenant neighbor against tenant neighbor. Your city government may decide your pet waste is polluting the local watershed - which the Environmental Protection Agency will confirm - and decide to fine the landlord, not the tenant. Unreasonable burden on landlords? In Chicago, the city had been reviewing an ordinance that would allow city inspectors to fine landlords and property owners who didn’t pick up dog poop on their property up to $500. Cherie

Travis, former director of Animal Care and Control and the owner of a pair of two-flats in Chicago where she allows pets, told the Chicago Tribune, “I have multiple units — I can’t check every day. That’s an unreasonable burden to place on landlords. “The result of this ordinance, admittedly unintentional, is that landlords will not rent to people with dogs. If a tenant cannot find an apartment with a dog, they will either move out of the city or they’ll surrender their dog. Those are the two choices,” Travis told the newspaper. She suggested the ordinance be retooled to “keep the responsibility on the dog owner, which may or may not be the property owner.”

So a growing number of apartment complexes are finding a solution in a company that handles the pet DNA testing necessary to fix the poop pick-up problem.

How can you make the tenant responsible for the pet poop?

Here is how it works: Your tenants swab the inside of their dogs’ mouth and provide you that sample DNA for you to send to a company in Knoxville, Tennessee called Poo Prints. When you find poop in the yard that a tenant failed to pick up, you can send a sample to the company and they will identify the offending dog so you can then take it up with the tenant. “The number one thing for apartment complexes is, ‘How they can clean up the

property and make people responsible?’ for their dogs,” said Ernie Jones, sales manager for BioPet Laboratories, which manages the Poo Prints program. He said some have tried cameras, but that is a huge ongoing expense that requires employees to monitor. And sometimes the video is grainy and hard to see. “One of the biggest advantages is, it takes away the denial from the tenant about whose dog left the poop on the property,” Jones said. “And it helps avoid the neighbor vs. neighbor accusations about whose dog was responsible for the poop.” Poo Prints has more than 1,750 apartment properties in the program across the country. “We are growing steadily, adding three to six properties a day. We will be at 2,000 properties by the end of the year,” Jones said.

Who bears the cost of the pet poop program?

So how does the business model work for the company and the apartment properties? “The business model is a startup fee – the dog registration – and the poop processing is profitable at the start,” for us, Jones says. His profitability declines

...continued on page 16

Rental Housing Journal Metro · February 2018

Rental Housing Journal Metro

Do You Know How to Respond to a Sexual Harassment Complaint? By Ellen Clark HUD aggressively pursues violations of The Fair Housing Act (FHA) involving harassment in housing and complaints often name property managers directly, so do you know how to respond and stay on top of the situation? Remember courts have consistently recognized sexual harassment as a form of discrimination that violates the FHA. In addition to individual property managers directly, the complaint may name the corporate entity or owner associated with the complainant’s housing. Any individual or company that has witnessed or experienced housing discrimination, including sexual harassment, may file a complaint with HUD, free of charge

4 ways to respond if you find yourself facing a sexual harassment complaint

If a complaint has been filed against you, you will be notified by HUD, and you will have 10 days to respond. No. 1 – Prioritize mail from HUD Due to the tight window a company has for responding to a complaint, make sure anyone responsible for collecting mail at your facilities is trained to give mail from

allegations of the complaint. If there is coverage, the insurance company will only be there to help you if they are notified early. It is a situation we all hope we never have to face. However, in this time of increased awareness around harassment, it is important to have a game plan for a quick and appropriate response to harassment complaints.

HUD priority attention and to forward it to the appropriate person immediately. No. 2 – Respond to complaints Although filing an answer is not mandatory, it is strongly encouraged. Responding gives you an opportunity to give your version of the story and provide sufficient information that may convince HUD that it should not pursue the matter further. No. 3 – Involve legal counsel early Because your answer will become part of the official case record and any

representations can and will be used against you in future proceedings, it is strongly encouraged that you seek the assistance of legal counsel in responding to a HUD complaint. In addition, legal counsel can likely negotiate an extension of time to respond. No. 4 – Notify your insurance company early As soon as you know a complaint has been filed, you should notify your insurance company. There may be insurance to cover the

Ellen Clark is the Director of Assessment at Grace Hill. Her work has spanned the entire learner lifecycle, from elementary school through professional education. She spent over 10 years working with K12 Inc.’s network of online charter schools - measuring learning, developing learning improvement plans using evidence-based strategies, and conducting learning studies. Later, at Kaplan Inc., she worked in the vocational education and job training divisions, improving online, blended and faceto-face training programs, and working directly with business leadership and trainers to improve learner outcomes and job performance. Ellen lives and works in Maryland, where she was born and raised.

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Rental Housing Journal Metro · February 2018

Rental Housing Journal Metro

New Tax Law ...continued from 1 to ease as the implications of the new tax law firm up and investors better understand how the new rules will affect their investments. The new tax plan offers generous tax cuts to corporations and pass-through entities such as Limited Liability Companies(LLCs), and investors may see the new tax rules as an opportunity to reconfigure their portfolios. The new tax structure will apply to 2018 income for tax filings in 2019.

capital flows. Perhaps more important than the modest changes to the core commercial real estate tax rules that investors have been most focused on is the reduction of taxes on pass through entities. Owners of these types of companies will enjoy a 20percent deduction on passthrough income, though there are several restrictions that will apply to this deduction. This favorable tax treatment will encourage investors to increasingly focus on after-tax yields when comparing their investment alternatives. On

an after-tax basis,commercial real estate could offer a much stronger risk-adjusted return than options such as dividend stocks and bonds. This could entice additional passive capital to flow to the sector through syndicates, partnerships and other pass through funds. This influx of capital,should it manifest, could place downward pressure on cap rates.

commercial real estate investments,indirect effects could be equally important. The increased standard deduction and limits on local property and income tax deductions could significantly alter housing demand and behavior. At the same time, the elimination of the personal mandate of the Affordable Care Act (Obamacare) could impact long-term demand for healthcare real estate. The new rules could also spark increased consumption spending and more business investment into infrastructure.

Executive Summary

■ 1031 Exchange: Tax-deferred exchanges have been retained for real estate. ■ Business Interest Deduction: Interest on real estate loans remains deductible for real estate investments, but using this deduction will Tax-induced behavior lengthen the depreciation period for changes will be real estate assets. meaningful. In addition ■ Depreciation: Depreciation timeReduced taxes on passto the direct effect the line remains unchanged if mortgage through entities may boost new tax law will have on interest is not taken. If the mortgage interest deduction is used, then the depreciation time-line for commercial properties increases from 39 years to 40 years and for residential properties it rises from 27.5 years to 30 years. ■ Carried Interest: The hold time of assets increases from one year partment demand taxpayers received a reduction deduction has been raised to structured to capitalize on to three years to treat earnings as likely to rise. to their taxable income that $24,000 for married couples the pass-through advantages, capital gains. The previous tax effectively offset a portion ($12,000 for individuals), and but some new investors will ■ Pass-Through Income: Business as a result the threshold home enter the market with direct of the housing payment. rules created an economic owners receive a 20 percent deduction incentive to purchase a home The threshold home price to price to benefit from itemized acquisitions. The additional on qualified income generated by through itemized deductions. receive this benefit naturally deductions has increased to capital will undoubtedly pass-through entities such as LLCs, If the mortgage interest and depended on interest rates the $400,000 range for married fl ow across a variety of but there are some restrictions. For couples. Because the threshold property types including and local property tax rates property taxes exceeded the taxpayers earning over $157,500 has increased well above the apartments, self-storage but was in the $200,000 range old standard deduction of (single filers) and $315,000 (married median home price in most facilities, and retail, office for married couples. Under $12,700 for married couples couples), deduction is limited to metros, there will likely be a and industrial buildings, but the new tax law, the standard Tax Law Changes to Reshape Behavior, ($6,350 for individuals) then greater of 50 percent of the taxpayer’s modest reduction offor first-time a segment could attract Hold Implications Investment Realthat Estate share of aggregate W-2 wages paid home buyers, lifting apartment a disproportionate share Apartment demand likely to rise. Theofprevious tax rules created an economic by the business or 25 percent of the demand. the investment is singleNew Tax Law Savings incentive to purchase a home through itemized deductions. If the mortgage interest taxpayer’s share of aggregate W-2 tenant net-lease properties. Married Single Long-term prospects and property taxes exceeded the old standard deduction of $12,700 for married $30 wages paid by the business plus 2.5 These assets, often occupied of ($6,350 healthcare real estate couples for individuals) then taxpayers received a reduction to their taxable percent of the unadjusted basis of all by high-credit tenants on long income that effectively offset a portion $20 soften. The elimination of the of the housing payment. The threshold home qualified property (structures but leases, afford passive investors pricepersonal to receivemandate, this benefiat provision naturally depended on interest rates and local property not land). compelling yields that could tax rates but was in the $200,000 $10 of the Affordable Care range Act for married couples. Under the new tax law, structured to benefit from($12,000 ■ Corporate Tax Rate: Maximum the standard deduction has been raised be to $24,000 for married couples that required people to have the home new price pass-through tax itemized tax rate reduced from 35 percent $0 for individuals), and as a result the threshold to benefit from health insurance, will reduce rules. addition, because deductions has increased to the $400,000 range In for married couples. Because the to 21 percent. Generous expensing the total number of insured $-10 $0 $50 $150 $250 $350 $450 $550 $650 $750 threshold has increased well above the median most metros, there these home typesprice of in properties and depreciation rules on capital by be 13 a million people ofover will likely modest reduction fi rst-time homebuyers, lifting apartment demand. generally require minimal expenditures over short-term. Taxable Income (Thousands) the next 10 years. As a result, management and are available ■ Individual Tax Rate: Significant about 5prospects percent fewer people real estate soften. The elimination of the Long-term of healthcare in a wide range of price points, restructuring of personal taxes. personal a provision of the Affordable Care Act that required people to will mandate, have health insurance they are well positioned for Still uses seven tax brackets, but the havecompared health insurance, the total number of insured by 13 million people with will thereduce number passive investors. income span of each bracket has over that the next 10 have years.been As a insured result, about 5 percent fewer people will have health would changed and the marginal rates have insurance compared with the number that would have been insured if the personal Expanded expensing if the personal mandate were New Tax Law Makes Real Estate mandate were retained. This will modestly reduce the future demand for healthgenerally been lowered. Standard retained. This will modestly rules benefit niche real Yields Even More Compelling care, implying a slight downshift in demand for healthcare real estate compared with deduction has been increased Apartment reduce the future demand estate. Changes to the projections with the personal mandate. Nonetheless, the aging population will still ST-Retail and several deductions have been Section 179 10 depreciation rules for demand healthcare, implying a over Retail increase for healthcare services the next years, just not as much as eliminated or restricted. Self-Storage will favor several niche real slight shift would have down occurred withinthedemand personal mandate in place. Office ■ Estate Tax: Doubles exclusion to Industrial for healthcare real estate estate investments. Under the All Equity REIT Dividend $11 million for single filers and $22 revisions, business owners compared Market liquidity with could projections rise; net-leased properties positioned favorably. 10-Year Treasury million for married couples. S&P 500 Avg. Dividend The with newly introduced 20 percent deduction from pass-through willonbeincome able to fully expense entities the personal mandate.

Tax Law Changes to Reshape Behavior, Hold Implications for Investment Real Estate

Tax Savings (Thousands)

AAA Bonds Baa Bonds Money Market

0% 2% 4% Average Yield (Cap Rate)*

U.S. Commercial Real Estate Investment Trends Total Transactions (000s)

couldNonetheless, invigorate investment estate.upOn the yields offered toan $1 after-tax million basis, of depreciable the in real aging by the sector will be compelling than under the previous tax structures. This report is not intended and should not be tangible personal property population willeven stillmore increase New capital could enter commercial real estate through syndicators and investconsidered tax or investment advice. It prodemand for healthcare used to furnish lodgings. This ment funds that are structured to capitalize on the pass-through advantages,vides but an interpretation of the potential effects services over the next 10 years, change will allow investors some new investors will enter the market with direct acquisitions. The additional of the new tax law on the commercial real eswith investments such apartments, as just as much asflow would have tate market. A tax accountant should be concapital willnot undoubtedly across a variety of property types including hospitality, student housing occurred with the personal self-storage facilities, and retail, office and industrial buildings, but a segment sulted that for guidance on specific tax rules. housing to deductnet-lease place. couldmandate attract ain disproportionate share ofand the seniors investment is single-tenant cost of tenants furniture properties. These liquidity assets, oftencould occupiedthe by full high-credit on placed long leases, afMarket ford passive investors compelling yields that could be at structured to benefit from the in service their properties rise; net-leased properties new pass-through tax rules. In addition, because thesedepreciating types of properties rather than themgenerally positioned favorably. require minimal management and The are available in a wide range of price points, they over multiple years. The rules newly introduced 20 percent are well positioned for passive investors. also extend to roofs, heating,

deduction on income from

45 30 15 0 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17**

* As of December 28, 2017 ** Trailing 12-months through 3Q

ventilation

and

security

Expanded expensing rules benefi pass-through entities couldt niche real estate. Changes to the Section systems in non-residential 179 depreciation rules will favor invigorate investment inseveral real niche real estate investments. Under the reproperty. This provision is visions, business owners will be basis, able to fully expense up to $1 million of depreciable estate. On an after-tax largely targeted toward small tangible personal property used to furnish lodgings. This change will allow investors the yields offered by the sector businesses, so seniors the deduction with investments such as hospitality, student housing and housing to deduct will be even more compelling the full cost of furniture placed in service at their properties than depreciating phases out rather as business previous taxalso extend to roofs, heating, ventilation and themthan over under multiplethe years. The rules investment purchases exceed structures. New capital could security systems in non-residential property. This provision is largely targeted toward $2.5 million. commercial real estate smallenter businesses, so the deduction phases out as business investment purchases ...continued on page 15 through syndicators and exceed $2.5 million.

investment funds that are

Rental Housing Journal Metro · February 2018

14 2

Rental Housing Journal Metro

Tax Reform: 2017 Tax Law Vs. 2018 Tax Cuts and Jobs Act Provision

Old Tax Law (2017)

Tax Cuts and Jobs Act (provisions effective beginning 2018)

Like-Kind Exchanges

Available under current law for property held for investment

Retained for real property only (real estate).

Business Interest Deductibility

Fully deductible for all businesses

Fully deductible for real estate businesses with some exceptions. Limits on interest deductibility apply to firms outside of real estate with exception for businesses with average annual gross receipts of less than $25 million over past three years.

Depreciation of Buildings

Residential 27.5 years, nonresidential 39 years

If the mortgage interest deduction is used, then the depreciation timeline for commercial properties increases to 40 years and for residential properties it rises to 30 years.

Carried Interest

Taxed at capital gains rates if held at least a year

Taxed at capital gains rates if held at least three years.

Flow-through entity: Maximum rate of 39.6% REIT dividend maximum rate of 39.6% Corporation: Maximum Rate of 35%

Flow-through entity: 20 percent deduction available for qualified pass-through income with some exceptions. REIT dividends eligible for 20 percent deduction. Corporation: Maximum rate of 21 percent. Flow-through entity deduction sunset after 2025. Corporate rate cut permanent.

Active Losses

Fully deductible against active income

Deduction of net active pass-through losses against wage or portfolio income limited to $500,000 (married filers) and $250,000 (single filers). Disallowed losses may be carried forward as part of a taxpayer’s net operating loss. Provision effective through 2025.

Individual Tax Rates

Seven brackets ranging from 10 percent to 39.6 percent; highest rate effective at $418,400 (single filers)/$470,700 (married filers).

Seven tax brackets ranging from 10 percent to 37 percent. Highest rate effective at $500,000 (single filers)/$600,000 (married filers). Rate structure expires after 2025.

Standard Deduction

Single: $6,350, Married: $12,700

Single: $12,000, Married: $24,000.

Business Tax Rates

State and Local Taxes (SALT)

State and Local Taxes (SALT) deductible. Available deduction declines $10,000 limit on deduction of state and local taxes including property for income above $266,700 (single), $320,000 (married). tax and either income tax or sales tax.

Mortgage Interest Deduction (personal)

Deduct interest for primary or secondary residence up to $500,000 (single) or $1,000,000 (married). Home Equity Line of Credit deductible up to $100,000

Deduct interest for primary or secondary residence up to $750,000. Home Equity Line of Credit no longer deductible. Loans prior to Dec. 16, 2017, grandfathered.

Estate Tax

$5.49 million ($10.98 million per couple) exclusion, 40 percent rate, and stepped-up basis for inherited assets

Exclusion doubled. Stepped-up basis retained. Provision after 2025 and tax reverts to current law exemption amount indexed for inflation.

New Tax Law Offers Prospects of Economic Lift

conomy starts 2018 with formidable tailwind. The U.S. economy closed 2017 in a particularly strong position, having added jobs continuously for a record 86 months. Unemployment has settled in the low-4 percent

range, supporting stronger wage growth, and there are a near-record 6.0 million job openings awaiting qualified workers. Consumer and business confidence continue to hover near decade-high levels, invigorating retail sales

Core Inflation Rate / Wage Growth

U.S. Core Inflation vs. Wage Growth Core Inflation

Wage Growth

8% 6% 4% 2% 0% 01

17*

10-Year Treasury vs. 2-Year Treasury Yield Spread Tightens 10-Year Treasury

2-Year Treasury

50 pbs

200 pbs

280 pbs

Rate

200 pbs

2% 0%

04 05 06 07 08 09 10 11 12 13 14 15 16 17**

* Through 3Q ** Through December 29

Rental Housing Journal Metro · February 2018

growth and corporate investment into infrastructure. The new tax rules could reinforce many of these trends through the many tax incentives that were created.

last year and most anticipate an additional three rate increases in 2018. The Fed will also likely continue its efforts to reduce its balance sheet by allowing assets acquired during its quantitative Corporate tax reductions easing efforts to mature. Through likely to boost economy. Housing market slowdown this process, the Fed will make Although there is considerable an effort to put upward pressure debate howProspects much could offset growth. New Tax regarding Law Offers of Economic Lift The on long-term interest rates. The of the corporate tax savings restructuring of the tax rules Economy startsthrough 2018 with U.S. on economy closed central bank will vigilantly watch will filter to formidable workers tailwind. will likelyThe weigh the owner2017and in a particularly strong economy, position, having added jobs continuously for a for liquidity-sparked inflation. the broader occupied housing market, record 86 months. Unemployment in the low-4 percent range, supparticularly in states with elevated several provisions of the has newsettled porting wage spark growth,increased and there are a near-record 6.0 property million jobtaxes. open- Prepared and edited by John Chang First tax stronger law should home prices and Vice President, National Director Marcus ingscorporate awaiting qualifi ed workers. ConsumerThe andnew business dence continue investment. Accelerated tax lawconfi affects home sales & Millichap Research Services Tel: (602) to hover near decade-high levels, invigorating salesways: growth andincreased corporate depreciation and expensing rules in retail several The 707-9700 john.chang@marcusmillichap. investment into infrastructure. The new tax rules could reinforce many of these should encourage companies to standard deduction will modestly com © Marcus & Millichap 2018 www. trends through the many tax incentives that were created. increase investments into plants restrain first-time home buyers, MarcusMillichap.com and equipment, while reduced tax while limitations on the deduction Corporate tax reductions likely to boost economy. Although there is considrates on the repatriation of overseas of state and local property taxes The information contained in this report erable debate regarding how much of the corporate tax savings will filter through holdings should spark an influx of will weigh on upper echelon was obtained from sources deemed to to workers and the broader economy, several provisions of the new tax law capital coming back into the U.S.. housing, particularly in California be reliable. Every effort was made to obshould spark increased corporate investment. Accelerated depreciation and ex- tain accurate and complete information; Though this capital may and states ininvestments the Northeast. The pensing rulesmuch shouldofencourage companies to increase into plants however, no representation, warranty be used for stock buybacks and introduction of a lower limit on or guarantee, express or implied, may and equipment, while reduced tax rates on the repatriation of overseas holdings mortgage interest deductibility, dividends, increased should spark anthe influx of capitalliquidity coming back into the U.S.. Though much of this be made as to the accuracy or reliability now $750,000 instead $1 of the information contained herein. No should spark consumption and capital may be used for stock buybacks and dividends, the increased of liquidity support economic growth. The million, will also weigh on highershould spark consumption and support economic growth. The natural risk cre- representation, warranty or guarantee, risk by the inflow home Since the express or implied may be made as to the atednatural by the infl owcreated of so much capital will bepriced rising infl ationarysales. pressure. of so much capital will be rising recession, the housing market has accuracy or reliability of the information contained herein. This is not intended to inflationary about percent to be a forecast of future events and this is Lower personalpressure. tax rates should boostcontributed consumption. The 3actual tax savings that flow through to individual tax payers will naturally vary depending economic growth, about halfonofa not a guaranty regarding a future event. Lower personal tax rates wide range of variables, but the consensusthe is that mostcontribution people will see at least sector’s levels of This is not intended to provide specific should boost consumption. a modest reduction in taxes. This will increase discretionary incomethe that should investment or tax advice and should the early 2000s. Under new tax The actual tax savings that fl ow translate to increased retail sales. This will take time, as most workers will seewill only not be considered as investment or tax law, housing’s contribution through to individual payers in each paycheck, but in aggregate, it advice. Sources: Marcus & Millichap a modest change in their taxtax withholding likely weaken. will naturally vary depending ondriver Research Services; BLS, CoStar Group, should boost consumption, the primary of economic growth in the U.S. Fed to keep a watchful eye. Inc., Federal Reserve, Moody’s Investors a wide range of variables, but the The increased liquidity and consensus is that most people Housing market slowdown couldwill offset growth. The restructuring of the tax Service, NMHC, Real Capital Analytics, levels created by Standard & Poor’s, U.S. House of Repreleast a on modest reduction consumption rulessee will at likely weigh the owner-occupied housing market, particularly in states the new tax law the potential sentatives, U.S. Senate, U.S. Internal Revtaxes. This increasetaxes. The new tax lawhave within elevated home priceswill and property affects home sales enue Service, U.S. Bureau of Economic to raise inflationary discretionary that shoulddeduction in several ways: Theincome increased standard will modestly restrainpressure. first-time Analysis, policyuncertainty.com The Federal Reserve raised taxits translate while to increased sales. homebuyers, limitationsretail on the deduction of state and local property • benchmark rate three times es will weigh on upper echelon housing, particularly in California and states in the Northeast. The introduction of a lower limit on mortgage interest deductibility, now 15 This will take time, as most workers will see only a modest change in their tax withholding in each paycheck, but in aggregate, it should boost consumption, the primary driver of economic growth in the U.S.

$750,000 instead of $1 million, will also weigh on higher-priced home sales. Since the recession, the housing market has contributed about 3 percent to economic growth, about half of the sector’s contribution levels of the early 2000s. Under the

Rental Housing Journal Metro

Pet DNA ...continued from 12 as the residents and the complex keep things cleaned up, but it is never 100% and there are still cases of poop violations his company will handle. “The main objection for apartments is the start-up costs. If a complex has 100 dogs at $40 per dog to get started, then that is $4,000 that has to come from somewhere that is usually not in the property’s budget,” Jones said. However, “once a program is in place, it creates increased occupancy,” he said. “It is just in the beginning and the immediate roll-out that is sometimes an issue. In terms of roll-out when people want it, it takes about a year in an existing complex to get the program in place.”

“Typically the pet owner bears all the cost,” Jones said, and “not the apartment complex itself. Typical start-up cost is $40 to $60 per resident dog. Some apartments have to ‘grandfather’ in existing pet owners and gradually start the program with new residents and when leases come up for renewal.” Tenant fines are typically the way apartments handle the violations when poop is found. One Chicago complex fines tenants $250 for the first violation, and $350 after that, according to the Chicago Tribune. Depending on different state regulations, apartment managers may not be able to use the word “fine” when they discover the offenders and want to assess

a penalty. Apartment owners will need to check their state regulations on wording for how they can assess a monetary penalty. For instance, “Oregon is tight on how they let the apartments charge tenants for violations,” Jones said.

The environmental issue around pet poop

In addition to keeping apartment grounds clean, there are issues with the Environmental Protection Agency from a water pollution and safety concern. “Dog waste is thousands of times” more polluting than you may think, Jones said. “The average person today thinks of dog waste as simply a nuisance when they step in it. They are also under the assumption

that it simply turns into fertilizer, as other waste,” the company said in a release. “In fact, dog waste is not fertilizer and does not simply deteriorate; instead, dog waste is the most contaminated waste of any animal. Their bodies have adapted over the years to digest any type of foods; as such, they produce huge quantities of bacteria, including E-coli. “

Other pet facts from BioPet Laboratories:

Dog waste has been ranked as the #6 consumer complaint. The EPA ranks dog waste as an environmental problem equal to toxic •

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Rental Housing Journal Metro · February 2018

Rental Housing Journal Metro

Liberty Rent Guarantee Partners with GreenPath Financial Wellness

iberty Rent Guarantee, a cosign-

er for potential residents of multifamily properties who have less-than-perfect credit, is proud to announce that it is partnering with GreenPath, Inc., a non-profit, financial wellness organization that has been empowering people to lead financially healthy lives since 1961.

“I’m very proud, in this season of giving, that Liberty Rent Guarantee was able to launch its latest initiative for tenants with less-than-perfect credit,” said Liberty Rent Guarantee CEO Bubba Grimsley. “It has always been part of our mission to reduce the risk in the multifamily rental space. Now, we take it a step further by partnering with GreenPath. Our strategic alliance with GreenPath will allow all of our residents the availability of live, online, and web-based assistance in all of their financial endeavors.” GreenPath is a Michigan-based 501c3 with a 50-year history of teaching financial literacy to consumers. It offers live, certified financial analysts who can help tenants during times of financial crisis. Liberty Rent Guarantee is on a mission

to help build communities by reducing the risk of defaults in the multi-family market. The company is committed to helping its customers fill units at no risk and no cost to the property owners.

Liberty Rent Guarantee and GreenPath together help familes with finances and housing

GreenPath has engaged in a deep rethink of its work in the last two years, looking for ways to radically change the culture around personal finances in America. The company helps to improve financial security for the 54 million American households that do not have three-months savings. GreenPath is exploring new ways of influencing and measuring financial health for families, as well as looking for innovative ways to partner with organizations. Liberty Rent Guarantee is committed to increasing access to safe and affordable housing for economically vulnerable

Rental Housing Journal Metro · February 2018

individuals and families. They do this every day through their primary service, the co-signed rental guarantee agreement. However, they recognize that there is a need for improved financial literacy and improved financial behaviors among their customers, as well as the broader population in America. The company is contributing a portion of its profits toward the development and deployment of financial wellness programs as a way to give back to its customers and the broader community. GreenPath and Liberty Rent Guarantee recognize that there is clear mission alignment between the two organizations. “GreenPath is a leader in intuitive mobile-based programs that help consumers manage and improve their credit,” Grimsley said. “Through improving financial literacy, Liberty Rent Guarantee and GreenPath continue to further our mission of reducing risk, and helping consumers. It’s a huge win for the multi-family industry and a huge win for the consumers. We are all in this together.”

Liberty Rent Guarantee helps property owners fill units without risk of default, while simultaneously helping consumers find a good home and re-build their credit. Operating nationwide, Liberty Rent Guarantee has helped secure homes for thousands of families by serving as a limited co-signer on every lease it agrees to guarantee. To learn how it works, please visit www.libertyrent.com.

•

Rental Housing Journal Metro

Move -In Easier ...continued from 7 industry certainly has a reputation for doing things in an old-school manner. This is one more way that we are meeting that demand of the tech-savvy customer who finds doing things on paper in a manual process to be not in their normal day-to-day experience, right? “They’re shopping online. They’re having food delivered to their house. They’re doing all these things in a digital world, so it makes sense that not only can they lease online, and pay rent online, but they can coordinate some of their movein details, as well,” Sherman said.

Updater integrated with many companies

Bell said Updater is integrated with all of the major property management software companies. And Updater white labels (allows apartments to put their own brand) the service so the apartment community gets the credit and it can fit with core property management tools. “We’re doing all the heavy lifting. The property gets all the credit,” Bell said. He said having a good move-in process helps tenant retention and “statistics have shown that move-in experience - how things go during that time - increases the likelihood that they will renew. “Why waste all those dollars that you deal with from a marketing standpoint to get somebody attracted to your property and ruin it with a really bad move-in experience? If you give them a great moving experience, you’re helping there,” Bell said.

A sales tool for the property

Bell said Updater can serve as a sales tool for the property. “So if I were a leasing associate and I were taking you on a tour of apartments, I would let you know as I’m showing you a model unit,” Bell said. “I’m showing you the workout facility and the pool, and also say, ‘One of the things that we want to let you know is we understand that moving can be very time consuming and stressful. So one of the things that we do, is we provide a free moving concierge, digital moving concierge to every one of our residents that move in here, and it’s our gift to you. “ ‘It’s going to help you with sorting the mail, booking a moving truck, getting those utilities turned on, getting the renter’s insurance required, notifying businesses of your new address. You name it, you’re going to be able to handle it within Updater. And that’s just how much we care for our residents,’ “Bell said.

Cost of Updater to the property

In terms of the cost of Updater.com to the property, Staciokas said, “Using the app is a time-saver, and it’s really viewed as an amenity to make a seamless and successful move-in for the renter. “I had several meetings with Updater before we decided to move forward. To me, it was really a no-brainer decision, because it was low-cost for a high-value amenity, which is going to translate into potentially more rentals moving forward,” Staciokas said.

What size are the properties using Updater?

Bell said the company has many of the top industry leaders deployed. “We have 30 of the National Multifamily Housing Council (NMHC) top 50 fully deployed. I have another couple that are in partial deployment, meaning they’re doing it in phases. “We are all over the place from a standpoint of size, we can have anybody. Obviously as the NMHC top 50 goes, typically so goes the market. But we have some of the largest single-family providers in this space. We have some of the smallest single-family providers. We have people like myself that have a few properties that utilize our platform,” Bell said. “The average size I would say is probably the average size in the industry, which is 5,000-, to 7,000-unit portfolios. But again, we have people that have two properties, and we have single-family companies as long as they’re utilizing one of the single family property management providers we integrate with.” Bell said the site has features specific to property managers and others specific to residents. The site sorts them by login. “So residents see something different when they log in than the property manager,” he said. Updater, based in New York City, has just under 100 employees. “A lot of people often say with startups, “Are they going to be around, are they going to be here five years from now?” Bell said. “Well, absolutely yes we are. We’re a very stable company. But I think the biggest thing that I would want to stress is that we’re

really excited about some of the features that are coming down the pipeline.” The nation’s leading moving app for property management companies. The company works with real estate brokerages, mortgage lenders, student housing, and others to streamline the move-in and out process. The company describes its tool as “Turbo Tax for moving,” helping with all the tasks involved in a move. Updater works with over half of the NMHC Top 50 Managers and Owners, including full rollouts with Greystar, Fairfield, Pinnacle, Avalon Bay and Village Green, among others. The company was named NMHC’s Apartment Innovator of the Year in 2015, #3 Best Place to Work in NYC according to Crain’s in 2016, and Most Innovative Tech Company of the Year by the American Business Awards in 2016 and 2015.

•

FREE ENERGY-SAVING SERVICES ARE JUST SMART BUSINESS Improve your property and help your residents save on energy costs with free energy-saving devices (including LED bulbs, faucet aerators, showerheads and advanced power strips) from Energy Trust of Oregon.

Get more from your energy. Call us at 1.877.510.2130 or visit www.energytrust.org/multifamily. Serving customers of Portland General Electric, Pacific Power, NW Natural, Cascade Natural Gas and Avista.

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Rental Housing Journal Metro · February 2018

Rental Housing Journal Metro

Maintenance Men ...continued from 6 2: Use a small toilet type bush with soap and scrub the inside of the garbage disposal. This will remove any slime build-up. (For safety reasons, shut the garbage disposal off at the breaker or pull the plug.) 3: Remove the drain trap and clean out any sludge. Many times the horizontal pipe between the trap and the wall may have hard deposits coating the inside of the pipe. The deposits will collect food and debris that may slow the drains considerably. 4: If you have a dishwasher, check the drain line leading from the air-gap or dishwasher to the garbage disposal. It may be full of sludge that will cause a smell to come through the air-gap located next to the faucet. Clean or replace any pipes with deposits or sludge. Check both drain lines for the above problems. 5: Now if you wish, run the garbage disposal with a few slices of lemon and it should smell good and stay that way. Once in a while, throw some ice cubes in the garbage disposal unit to help scrape away any debris.

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.

Note: If you would like to see your maintenance question in the “Dear Maintenance Men:” column, please send in your questions to: DearMaintenanceMen@gmail.com Bio: 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 co-owner of Buffalo Maintenance, Inc. He has been involved with apartment maintenance & construction for over 20

Rental Housing Journal Metro · February 2018

•

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Rental Housing Journal Metro · February 2018