Rental Housing Journal Metro
September 2015
3. Budgeting and the Beginner’s Mind
9. Spectrum 2015 Education Credits
4. Budgets: Don’t Miss Opportunities to Evaluate Employees and Vendors
11. Spectrum 2015 Exhibitor List
6. Spectrum 2015 Sponsors
12. Property Managers Prepare for More Renters and Fewer Vacancies
7. Spectrum 2015 Classes
14.Renting Less Affordable Than Before, While Mortgages Remain Affordable
8. Spectrum 2015 Committee
15.Avoid Fair Housing Claims with Smart Practices and Consistent Education 20.Reasonable Accommodation/ Modification Policies for Market Rate Tenancies 22.Taking Over an Existing Tenancy 23.Presiden’ts Message
PORTLAND/VANCOUVER
www.rentalhousingjournal.com • Professional Publishing, Inc
Published in association with: METRO Multi-Family Housing Association; Rental Housing Association of Oregon; IREM & Clark County Association
Creating an Annual Operating Budget for Your Multifamily Property
Portland Apartment Research Report
This article will give you some great ideas for using a budget to your advantage.
Portland Metro Area, Third Quarter 2015
Benefits of Creating an Annual Multifamily Investment Property Budget A budget allows you to establish or identify: • Performance targets.
Published Courtesy of Marcus & Millichap
V
ibrant Tech Scene Invites New Workers to Portland Demand for Portland area apartments is booming as new employees and job seekers rush to the metro, and completions are barely keeping pace with demand. Already-tight occupancy will be further heightened by job growth in the area’s tech, manufacturing and health care employers, which include the likes of Intel, Oregon Health & Science University and a variety of startups. These industries are drawing young professionals to the Portland metro who hope to be hired by the large number of expanding startups and other technology companies. Potential and new hires are adding households and increasing demand for local apartments, as net absorption tops prior peak levels, and further momentum is expected in the long term. Developers are responding with a new high in apartment completions, which may slightly exceed annual demand for the first time in the recovery. This is likely to occur just in the short term, considering the area’s job market and the tight vacancy rate that is below replacement. Construction is concentrated in downtown to just west of Interstate 205 to meet demand for a live-
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• A baseline for management reviews.
property
• Income and expense projections based on market drivers and assumptions. by Theresa Bradley-Banta
A
multifamily real estate annual operating budget allows you to compare the actual financial performance of your property to your longrange projections for future income and expenses. It’s important to prepare an annual income and expense forecast for your property whether you manage it yourself or if a professional third party management company manages it for you. Important: Do not prepare an annual operating budget for your multifamily property or apartment building and then file it away and ignore it.
• Capital improvements planning and projections. • Problems that need to be resolved. Importantly, a budget can help you maximize profitability and avoid unforeseen major repairs and expenses.
Third Party Property Manager Performance Baseline The best use of a property budget is to track how your manager is performing. Ask your third party property manager to prepare an annual budget forecast with side-by-side comparisons of actual vs. budgeted income and expenses.
This budget then establishes a baseline for your property manager’s performance reviews. It’s a great idea to have regular meetings with your manager to review these comparisons. How are they doing in meeting projections? What can be done to course correct when and if your targets are not being met?
Some of the items to review are: Multifamily Property Income: • Vacancies against leasing projections: Is your manager on target for leasing new units or maintaining the average occupancy rate in your market? • Lease renewal (rollover) projections: These are leases that are due for renewal during the budget period. Make initial contact with residents no later than 60 days prior to lease expiration. If there is not a renewal commitment from your tenant there should be a follow up in 45-days.
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Spectrum Educational Conference See you on September 24th!
S
pectrum is the largest rental housing educational conference and trade show in Oregon. It will be held September 24th at the Oregon Convention Center in Portland from 8:00am to 4:00pm. Spectrum is the premier anPRSRT STD US Postage PAID Portland, OR Permit #5460
nual educational conference for rental housing ownership, management and maintenance. This year’s show features a bustling trade show floor of both local and national exhibitors. The event draws over 1,000 attendees and offers 28
unique education workshops. Everyone looks forward to Spectrum addressing the needs and issues of our region’s rental property owners, on-site leasing agents, ...continued on page 9