Rental Housing Journal Metro Sept 2015 by Professional Publishing, Inc

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

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-

...continued on page 19 Professional Publishing Inc., PO Box 6244 Beaverton, OR 97007

• A baseline for management reviews.

property

• Income and expense projections based on market drivers and assumptions. by Theresa Bradley-Banta

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.

...continued on page 2

Spectrum Educational Conference See you on September 24th!

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

Rental Housing Journal Metro

Creating an Annual Operating Budget ...continued from page 1 projections profit • Future from increased revenue: This could include rent increases, increases, revenue laundry the introduction of a utility reimbursement program (tenant pays utilities), etc. Where are you able to increase revenue at your property? • Future revenue projections from new sources: Where can you find previously untapped revenue? Can you charge for amenities such as parking, storage, recycling or business/entertainment centers? Can you install vending machines in your common areas? • Cash flow projections: With accurate cash flow projections you’ll be able to make strategic decisions about the allocation of revenue for improvements. • Replacement reserves: Determine what percentage of gross scheduled income can be put aside for future use. For example, you might want to hold back 5% of all scheduled revenue or you can allocate a certain dollar amount annually per unit in your property.

Multifamily Property Expenses: • Projections for lowering current expenses: Are your mechanical systems operating at peak efficiency? You may be able to lower utility bills with systems that operate efficiently. Can you contest your current property tax payment amount?

• Review third-party vendors and service providers: Conduct annual reviews of your property vendors such as services that provide lawn care, cleaning, trash removal and property insurance. Let them know they will be up for annual review for cost and service. Do your service providers have pending increases? • Utilize the know-how of your service providers: Ask your efficiency/cost for vendors saving suggestions (property services or improvements they can provide) and budget accordingly. • Property management: Review all fees such as leasing, maintenance and on-site management (if applicable). Are you satisfied with the performance of your manager? Are their fees as projected? Most multifamily and apartment building management software programs will generate a budget-to-actual income and expense report for comparison. Ask for this report. A budget is nice but you must compare it to the actual property financials.

Investment Property Analysis Assumptions (Drivers) Using the following or similar assumptions, you or your property manager can project all income and expenses over a 12-month period beginning with the current month. You can change these variables at any time. It’s a good idea to

run several scenarios using both conservative and aggressive assumptions. The following assumptions are used for example only. You will need to determine your own variables based on your particular investment market. • Vacancy (7%) • Income Growth (5%) • Expense Growth (3%) • Cap Rate (7%) • Expense Ratio (40-45%) These assumptions will help you determine the best and worst case scenarios and will assist you in planning budgets for the long term. You can create 24-month, 36-month or 48-month projections using assumptions. For example, you can predict your property value over the long term at different cap rates and net operating income. This can help you set targets for increasing revenue and lowering expenses. For national averages read or download the National Apartment Association 2015 Survey of Operating Income & Expenses in Rental Apartment Communities at this link.

Investment Property Capital Improvements Planning and Projections In addition to predicting regular, recurring expenses your budget should include projections for major capital improvements. For example, you might want to paint your common areas (halls, stairs, entry, mail room, laundry, etc.) every three years.

Planning for long-term improvements allows you to stagger the improvements over time. By doing this you can avoid surprise expenses. These funds are commonly referred to as replacement reserves and include: • Common area improvements such as new paint, lighting, vinyl, carpet, parking lots and driveways. • Major building systems repair or replacement such as windows, roof, boiler and air conditioning. • Individual unit upgrades.

A Final Note on Your Annual Operating Budget Use your annual operating budget as a tool. Plan to hold quarterly budget reviews with your property manager and/ or your team at the very minimum. An annual budget can drastically maximize your profits when used as designed. Theresa Bradley-Banta is the founder and CEO of Denver, Colorado based Theresa Bradley-Banta Real Estate Consultancy, offering a highly skilled sounding board for the professional commercial real estate investor’s ideas and investment strategies. The company provides education and mentorship for entry to mid-level investors seeking reality-based strategies for buying and owning multifamily properties. Bradley-Banta is the author of the book Invest In Apartment Buildings: Profit Without The Pitfalls. Visit theresabradleybanta.com. Reach her at (303) 733-4400 or theresa@theresabradleybanta.com.

Rental Housing Journal Metro · September 2015

Rental Housing Journal Metro

Budgeting and the Beginner’s Mind

Your Strategy” (http://blogs.hbr.org/ cs/2011/01/is_your_budgeting _process_kill.html). This thought shines an entirely different light on the budgeting process. While it is important to work through the minutia of asset-specific teve Jobs had an affinity for Zen. budgeting, this process must also take One of the concepts he deployed in into account effects on the larger orgabusiness from this perspective was nization. How do we accomplish this? With “the beginners mind”. In its most basic form “the beginners mind” allows us to the beginners mind; by believing that believe that in any circumstance there are in any circumstance there are many many possibilities. Interesting. Can we possibilities. Static number crunching apply this to the annual budgeting pro- that entails moving last year’s actuals into next years column precludes origcess for our assets? The over-simplified budgeting pro- inal thought. The originality necessary cess: take last year’s budget, compare it in this process is taking current market with actual, split the differences and add dynamics into consideration during the 3% to revenue categories and 2% to ex- budgeting process. This view may require utilizing adpense categories. Done. Next! So much for thoughtfulness, professionalism or ditional facets of your existing “suites” being connected to reality. Budgeting soft ware, or re-deploying marketing can be a “value add” proposition, assist- savings into customer premiums to gain retention. Or, taking savings from utiled by the beginners mind perspective. ity usage reductions and deploying these In Any Circumstance there are Many dollars into staff training with measurPossibilities able results. Annual budgeting must take into Consider the annual budgeting proaccount the realities of each asset; the cess as more than a perfunctory, numphysical asset and its market. A picture ber crunching, exercise. There is more perfect asset with 300 newly built units to this than making assumptions and across the street in a market with slow passing them up the food chain. Thinkabsorption has to factor in the impact ing of budgeting as a “value add” proof the new competition. These factors cess makes the entire endeavor much should be reflected in the budget. more exciting, and potentially profitable. Tony Golsby-Smith wrote a blog Published with permission by MultifamilyInfor Harvard Business Review entitled sight.com “Is Your Budgeting Process Killing By John Wilhoit Jr.

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Rental Housing Journal Metro

Budgets: Don’t Miss Opportunities To Evaluate Employees and Vendors By Will Johnson

udget season is right around the corner. It’s that excruciatingly tedious time full of spreadsheets and brain cramps, take-out meals and extra pots of coffee, or glasses of wine, in some cases. Managers know budgets are critical to a successful business, but they are often difficult and can sometimes feel like a 1000 piece puzzle that’s missing a few pieces and has a few pieces from other puzzles mixed in. Often, we end up rushing at the end and relying a little too much on the budget and results from the previous year and can miss some other important opportunities to fine tune our business success pushing into a new year. Two such often over looked, or at least somewhat under appreciated opportunities are taking closer examinations of our personnel and our vendors. When it comes to budgeting for people, it can be very easy to look at our employees like commodities. For example, we often take a mind set like this: Based on projections, we have budget for 5 sales reps and 3 admins. Or, this complex is big enough for a manager, 4 leasing agents and 5.5 maintenance techs. While this sort of thinking is absolutely part of the equation, each year I like to dig a little deeper and consider the actual humans, their strengths and weaknesses in each position. Maybe Carlos and Tiffany make enough sales calls to adjust their programs to incentivize them to each produce 60% more this year, so you can cut one sale position and save a base salary. Perhaps Erin is better at multitasking than Joe, so she can handle the phones while also doing the account payable and allow him to focus on his sales support duties without distraction. Could this free up Joe for a few hours a week late in the day so he can make cold calls for Carlos & Tiffany? Or, is Joe just in over his head with the sales support regardless, and simply needs to be replaced?

bids from vendors, but so often it begins and ends with shopping your current providers against their competition on price. While price is important, quality, customer service, and terms are just as important. One maintenance company might charge $10 less than the others for basic maintenance and apartment turns, but if it takes them 25% longer or if you often have to bring them out to repair their own mistakes, then it’s not worth it. Similarly, if you have to wait on scheduling, a returned phone call in a time of need, or if you have trouble getting a vendor to make good on their word, you might want to consider interviewing other suppliers. When it comes to vendors, I like to examine what sorts of products and services I actually want and need for my business while looking at budgets.

Looking ahead into the next year, is there any products or services that your company is not currently using that could be a benefit? Is there any new technology or way of accomplishing some current business need that might be a better alternative to what you’re using now? What products and services have you been allocating budget to that you simply do not need? All of these are important questions to ask and do a little research on. Payment and finance terms are also an important thing to consider when choosing a vendor. Some vendors will require payment up front or at the time of service or delivery. Others will offer 30, 60 or even 90 days with varying interest rates. Make sure you take this into consideration with your projected cash flow situation. If all else is more or less equal having 60 days to pay rather than paying

Budgets are rarely fun, and can certainly be daunting, but it’s important to give them the time they deserve. While doing so, make sure you’re not missing any less obvious opportunities to examine what you might be able to tweak to make your operation more efficient and more profitable. By Will Johnson Publisher Rental Housing Journal

Property Management Industry Educational Conference & Trade Show September 24, 2015

FEATURING:

Ivan Joseph

I recommend doing employee reviews shortly before budget season. Often, I find that information gleaned from reviews helps with your staffing budget process. You not only get a sense of what each employee has accomplished since their last review, you can take their temperature on where they see themselves going and what else they might be able to bring to the table in the future. Employee reviews offer a wonderful opportunity to find out what your people think about the current operation of your business and what they feel might work better. We don’t always feel we have the time or patience to hear all employee suggestions or input, but we cannot deny the fact that such feedback can be invaluable. You never know when Erin stepping up to handle the phones, so Joe can focus on sales support will lead to an additional 3 appointments a week for Carlos and Tiffany and a nice increase in revenue while saving you in personnel expenses. The second area of opportunity that I often see overlooked at budget time is examining the vendors that you’re using. Again, it’s not uncommon to get annual

upon delivery allows for a lot of flexibility when managing your cash flow.

The Skill of Self-Conﬁdence

With a Ph.D. in sports psychology, Ivan Joseph shares studies that apply in business and life. He put these studies to use in his work – he coached at the World Championships and took a collegiate soccer team from a losing record to the National Championship in just 5 years.

28 great classes to pick from, including: Resident Retention Customer Service Leadership & Communication Single-Family Management Fair Housing Landlord Tenant Law Maintenance And more! spectrum_tradeshow_2015_ad_v2.indd 1

Ticket price:

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multifamilynw.org for more info and to sign up today!

Rental Housing Journal Metro · September 2015 7/9/15 6:47 PM

Rental Housing Journal Metro

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Rental Housing Journal Metro · September 2015

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Rental Housing Journal Metro

Get Ready for Spectrum 2015!

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 annual 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, portfolio managers and maintenance professionals. We are excited to kick off the 2015 conference with a general session featuring national speaker Dr. Ivan Joseph. Ivan will open the day with his exciting session “The Skill of Self-Confidence.” In this fun, session, Ivan Joseph will show you how self-confidence is a skill that can be built to bring out your best in the workplace and in life. The 2015 Spectrum curriculum focuses on the current market with several sessions dedicated to timely issues such as: “Customer Service in Today’s Market”, “Marijuana Rules & Regs” and “Public Relations 101: A Primer.” All of the classics are back. Including sessions on fair housing, landlord/tenant

law, resident retention and communications. We are also bringing national market perspectives with speakers on market trends from CoStar and marketing techniques from the National Apartment Association. For rental property owners, Spectrum has many outstanding workshops, including: “Best Practices for Single-Family Management” and “Where the Wild Things Are: Managing Single-Family Homes.” Spectrum’s maintenance offerings include: “Flooring 101”, “Plumbing Basics” and “Basic Electrical.” There is something for everyone – so get signed up today! Don’t miss this exciting day! See the full list of classes and register for the 2015 Spectrum show at www.multifamilynw.org. Admission to Spectrum includes lunch, workshops and access to the amazing trade show floor. Attendance is $100 for members and $150 for non-members. Most Spectrum classes qualify for Continuing Education Credit for Oregon Broker’s and Property Manager Licenses.

Multifamily NW says “Thank You!” to our Generous Spectrum Sponsors! • General Session Sponsor

• Conversion Logix

• ApTee LLC

• Classroom Sponsors

• Lanyard Sponsor

• AER Fitness

• Kennedy Restoration

• Energy Trust of Oregon

• Registration Sponsor

• Waste Management

• Wave

• Program Advertisers

• Lunch Sponsor

• AER Fitness

• Grow Construction

• ApTee LLC

• Coffee Sponsors

• Energy Trust of Oregon

• Elite Resurfacing

• Fresh Aire Office Fragrancing and Deodorizing Service

• On-Site • Shout-Out Sponsor

• J.R. Johnson, Inc.

• Fresh Aire Office Fragrancing and Deodorizing Service

• Lifetime Exteriors • Northwest Bank

• Exhibitor Spotlights

• Safe Sidewalks, LLC

• ApTee LLC

• Squires Electric

SPECTRUM is brought to you by Multifamily NW.

www.rentalhousingjournal.com

Rental Housing Journal Metro · September 2015

Rental Housing Journal Metro

Spectrum 2015 Classes General Session 9:00am to 10:00am

corresponding termination notices to serve, and explains refunding deposits and abandoned property rules.

state housing authorities, property management companies and others play in the process.

ing, fair housing and tenant screening processes to get those applicants approved and moved in!

Emergency Preparedness

Moot Court: Recreational Marijuana

Basic Electrical

Scott Rosendahl, SERVPRO of Tigard

Sponsored by: The Skill of Self-Confidence Dr. Ivan Joseph With a Ph.D. in sports psychology, Ivan Joseph shares studies that apply in business and life. He put these studies to use in his work, taking a collegiate soccer team from a losing record to the National Championship in just 5 years, as well as coaching at the World Championships. Ivan Joseph will show you how self-confidence is a skill that can be built to bring out your best in the workplace and in life.

Session 2

10:30am to 11:20am Maintenance Tips for the Office Staff Ryan Ridgeway, GSL Properties, Inc. As a property manager, you want ensure that your office team and maintenance team work effectively together. What would your maintenance team ask of you, the property manager? How can you help the maintenance department and your residents by helping your office team understand a maintenance person’s day?

Marijuana Rules and Regs Jeffrey S. Bennett, Warren Allen LLP

How will the new marijuana law affect your property? Come and hear about what this means for you and your business.

Insurance Spotting for Property Managers and Their Clients

Kyle Sturm & Phillip Joseph, Ball Janik LLP Attorney Kyle Sturm and Construction Litigator Phillip Joseph will discuss the evolving landscape of insurance coverage law in Oregon and Washington over the past two years - which has greatly benefited insureds in successfully pursuing claims through property insurance policies previously thought not to be covered. They will discuss how recent changes in property insurance coverage law can assist owners in offsetting the costs of repairs and capital improvement projects.

Oregon Landlord/Tenant Law Bittner & Hahs, P.C.

This course is an abbreviated version of our regular 2-part course. It will begin where all tenancies begin—with the rental application. Then, by chronological succession, the class takes you through rental agreements, various addendums, and special circumstances. Finally it will cover end-of-tenancy scenarios with the

Scott Rosendahl will be discussing risks and emergency responses for facilities and community management. With over 5 years’ experience in disaster mitigation projects and 5 years as a licensed insurance and risk advisor, Scott brings a number of unique perspectives and a great formula to follow should your properties ever experience major water damage, fire or worse. Scott has also been a key contributor with the local American Red Cross earning the “Community Engagement Champion” award for 2015.

Best Practices for Single Family Management Our single-family experts will give you an overview of their best practices for Single-Family management. Not to be missed!

No Marketing Department? No Problem! Easy Tips & Tricks Lauren Boston, National Apartment Association

Are you looking for new ways to market your property or company? Come hear our panel of experts as they give easy marketing tips and tricks that anyone can do.

Communication: What Your Body Language Is Saying About You Korah Young, GSL Properties, Inc.

Do you ever wonder what kind of impression you make? Does your team always understand what you say? Do you know when to trust what a resident is saying? Experts say that 55% of our communication is nonverbal and the foundation of any successful relationship is good communication. The goal of this class is to help you improve your nonverbal communication skills to apply in your personal and your professional life. Learn how to demonstrate more confidence and credibility in your daily interactions. Discover how to read what others are saying through nonverbal cues. Find out how to hear what isn’t being said.

Session 3

12:40pm to 1:30pm

Low-Income Housing Tax Credit Overview

Wayne Michael, Novogradac & Company LLP This session presents a basic overview of the low-income housing tax credit (LIHTC) program, which is widely regarded as the nation’s most efficient and effective tool in the development of quality affordable rental housing. Attendees will learn how the tax credit works primarily as it relates to the rental property generating the tax credits at the “lower tier” operating partnership. Attendees will learn the mechanics of the process and the role developers, investors, lenders, local and

Rental Housing Journal Metro · September 2015

Warren Allen LLP

Always a crowd pleaser! Warren Allen attorneys Jeffrey S. Bennett, Charles Kovas, and Anna McCormack will present a mock trial about recreational marijuana playing judge, tenant, and property manager.

Customer Service in Today’s Market Laura Rosales, Lease It Training

Joe Squires, Squires Electric Learn more about common safety issues associated with the electrical systems in your building that could potentially cause fires, injuries or death. Learn to deal with common unsafe conditions that we all run into.

Session 4

2:00pm to 2:50pm

Plumbing Basics

Just because the market is tight doesn’t mean your team should skip customer service training. Make sure your team is prepared to give the best customer service they can no matter what the market is like.

Dave Benson, Reliant Plumbing

Washington Landlord Tenant Law

Anna McCormack, Warren Allen LLP

Bittner & Hahs, P.C.

This course creates an interactive environment in which attendees can get specific questions answered on real-world situations that they encounter. The class begins where all tenancies begin—with the rental application. Then, by chronological succession, it takes you through rental agreements, various addendums, and special circumstances. Finally, it covers end-of-tenancy scenarios with the corresponding termination notice to serve, and explains refunding deposits and abandoned property rules.

Guns, Drugs & Money: What To Do When You Find Them in Your Units Zach Howell, Cascade Management, Inc.

What if your site staff walk into a unit and they see something suspicious or even illegal? This class will take a look at how to handle sticky situations. We will discuss how to recognize potential signs of illegal activity, safe approaches and protocols for addressing these situations and residents, and potential ways of removing these high risk residents from the property quietly and legally. This will be a fun and interactive session that addresses an extremely common occurrence that few people talk about.

Resident Retention

Emily Logue, Guardian Real Estate Services Getting a resident may be easy, but how do you keep one? Learn some great ways to keep your residents and get an edge on the competition.

Where the Wild Things Are: Managing Single-Family Homes

Sylvia Walker, Princeton Property Management & Kristi Martin, Background Investigations Managing single-family homes doesn’t have to be a “wild” experience. We will help you navigate the jungle of market-

Learn basic plumbing techniques and tricks to use on your property.

Crazy But True Stories from Landlord/Tenant Law Property managers have seen it all! This class will use real-world examples of off-the-wall scenarios faced by property managers—from pet squirrels to drug raids—to explore appropriate use of notices, termination strategies and challenges, and how to develop and document evidence.

Public Relations 101: A Primer LT Public Relations Firm

Do you have a media strategy? What is it? When was the last time is was reviewed? Does everyone know what the strategy is? Come and learn how to prepare yourself and your team.

Fair Housing for Suppliers Leah Sykes, Bittner & Hahs, P.C.

Exhibitors — don’t feel left out. We’ve got a class for you too! Do you and your team know the Fair Housing laws? Need a quick refresher? This is the course for you!

Fair Housing History & Current Trends Fair Housing Council of Oregon

Diane Hess, Education Director of the Fair Housing Council of Oregon, explores ghosts from Oregon’s history of discrimination, segregation and displacement for insights on fair housing challenges today. Topics include demographic trends, discriminatory policies, court decisions, social movements and fascinating anecdotal stories from our hidden past.

Crime Prevention Through Environmental Design (CPTED) Gresham PD Neighborhood Enforcement Team

CPTED is a multi-disciplinary approach to deterring criminal behavior through environmental design. CPTED strategies rely upon the ability to influence offender decisions that precede criminal acts. Generally speaking, most implementations of CPTED occur solely ...continued on page 8 7

Rental Housing Journal Metro

Spectrum 2015 Classes

...continued from page 7

within the urbanized, built environment. Specifically altering the physical design of the communities in which humans reside and congregate in order to deter criminal activity is the main goal of CPTED. Its principles of design affect elements of the built environment ranging from the small-scale (such as the strategic use of shrubbery and other vegetation) to the overarching, including building form of an entire urban neighborhood and the amount of opportunity for “eyes on the street.”

Flooring 101

Ryan Hammock, CriterionBrock & Ian Hintz, Sherwin-Williams Learn what the experts know about your floor covering and how to know if you are getting what you want.

Apartment Performance: Demographics, Location & Products

2015 Spectrum Conference & Trade Show Committee Chair

Brandy Guthery, Guardian Management

Co-Chair

Beth Stogsdil, On-Site Sabrina Paulson, For Rent Media Solutions Ed Winkler, Fresh Aire Oﬃce Fragrancing

Review the factors that affect apartment performance, at the national, metro, and submarket levels.

Technology Trends in Property Management Panel of Speakers

ON-SITE-NW SEA

Rose Morrison, WDC Properties

Luis Mejia, CoStar

VALLEY, METRO, ARIZONA APT

Salsbury Indu

Elee Schneider, WPL Associates Shay Ricar, Coast Real Estate Services Michelle Sherman, Greystar Erik Aldridge, HD Supply

Representatives from different tech companies will discuss current trends in PM technology including:

Leilani Stone, Pinnacle

• Online reputation management, driving traffic using local SEO for today’s mobile apartment hunters

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Rental Housing Journal Metro · September 2015

Rental Housing Journal Metro

Spectrum Educational Conference ...continued from page 1 portfolio managers and maintenance professionals. We are excited to kick off the 2015 conference with a general session featuring national speaker Dr. Ivan Joseph. Ivan will open the day with his exciting session “The Skill of Self-Confidence.” In this fun, session, Ivan Joseph will show you how self-confidence is a skill that can be built to bring out your best in the workplace and in life. The 2015 Spectrum curriculum focuses on the current market with several sessions dedicated to timely issues such as: “Customer Service in Today’s Market”, “Marijuana Rules & Regs” and “Public Relations 101: A Primer.” All of the classics are back. Including sessions on fair housing, landlord/tenant law, resident retention and communications. We are also bringing national market perspectives with speakers on market trends from CoStar and marketing techniques from the National Apartment Association. For rental property owners, Spectrum has many outstanding workshops, including: “Best Practices for Single-Family Management” and “Where the Wild Things Are: Managing Single-Family Homes.” Spectrum’s maintenance offerings include: “Flooring 101”, “Plumbing Basics” and “Basic Electrical.”

Don’t miss this exciting day! See the full list of classes and register for the 2015 Spectrum show at www.multifamilynw.org. Admission to Spectrum includes lunch, workshops and access to the amazing trade show floor. Attendance is $100 for members and $150 for non-members. Most Spectrum classes qualify for Continuing Education Credit for Oregon Broker’s and Property Manager Licenses. SPECTRUM is brought to you by Multifamily NW.

There is something for everyone – so get signed up today!

Continuing Education Credits

ttending the Spectrum Educational Conference & Trade Show can earn you up to four (4) CEUs. To receive your credits, submit your completed Spectrum Education Passport (available at registration) to the Multifamily NW booth by 4:00pm. Passports must be submitted at the show to be awarded credits. Questions? Stop by the Multifamily NW booth or look for the STAFF badges.

Rental Housing Journal Metro · September 2015

Rental Housing Journal Metro

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Rental Housing Journal Metro · September 2015

Rental Housing Journal Metro

2015 Spectrum Exhibits Conversion Logix.................................... 1

Reliant Plumbing....................................38

Squires Electric.......................................68

CenturyLink..........................................102

Rental Housing Journal.......................... 2

Bend Rental Guide.................................39

Waste Management................................69

HD Supply..................................... 103/104

Fair Housing Council of Oregon........... 3

Rodda Paint.............................................40

National Credit Systems........................70

Safe Sidewalks, LLC..............................105

Har-Bro 5.................................................. 5

Alpha Impressions..................................41

Lifetime Exteriors............................. 71/82

Bemrose Consulting.............................106

Finnmark Property Services.................. 6

Miller Paint Company...........................42

RealPage, Inc...........................................72

JD Fulwiler & Co. Insurance...............107

John’s Waterproofing Company............. 7

Retriever Towing....................................43

Pioneer Pest Management.....................73

Yardi Systems, Inc...................................11

Paul Davis Restoration Greater PDX & Vancouver.............. 44/45

On-Site............................................... 74/75

Rent Debt Automated Collections........................108

WASH Multifamily Laundry Systems....................................16

Background Investigations....................46

Snug’s Services........................................77

G&R Painting..........................................17

Rentping Media......................................48

PEMCO...................................................18

Rainmaker LRO......................................49

Cleaning and Laundry...........................19

Genesis Credit Management.................50

HandyTrac Systems................................20

Myhre Group Architects........................51

Northwest Pest Control.........................21

Northwest Bank......................................52

Apollo Drain & Rooter Service............................... 83/84

Coin Meter..............................................22

Mohawk Industries................................53

PG Long Floorcovering................... 85/92

Conservice...............................................23

Exercise Equipment NW................. 54/55

Fresh Aire................................................86

Valet Waste..............................................24

Wilmar.....................................................56

Grow Construction................................87

Otis Elevator............................................25

PayLease...................................................57

J.R. Johnson, Inc............................... 88/89

Entrata......................................................26

JC Carpet Cleaning................................58

Junk Away Hauling.................................90

The Detail Difference....................... 27/28

Orcas Development................................59

Apartments.com.....................................91

Easy Media..............................................30

Pacific Screening.....................................60

AER Fitness.............................................93

Perfect Surface NW................................31

Zillow.......................................................61

NWP Services.........................................94

Servicemaster by G3...............................32

Kennedy Restoration..............................62

Elite Resurfacing.....................................95

Pacific Breeze Products.................... 33/34

Compaction & Recycling Equipment.............................63

Alliance Flooring....................................96

WAVE G............................................ 64/65

Portland Construction Solutions.........99

Servpro of Tigard/Tualatin....................15

Energy Trust of Oregon.........................35 Northwest Playground Equipment, Inc.......................................36 Rental Housing Maintenance Services............................37

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RentPath Apartment Guide/Rent.com.................66 Ferguson Enterprise Inc........................67

CriterionBrock........................................76 Tenant Technologies, Inc.......................78 ApTee LLC...............................................79 Waste Recovery Systems........................80 ResMan....................................................81

Bugaboo Pest Control...................... 97/98 Bath Fitter..............................................100

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Clear Water Construction Services..........................101

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Rental Housing Journal Metro · September 2015

Rental Housing Journal Metro

Property Managers Prepare for More Renters and Fewer Vacancies

osted on 25. Aug, 2015 by Marc CourtenayIn today’s housing market there are some unmistakable trends that I’ve commented on in recent articles. The number of owner-occupied dwellings is dropping while rental vacancies are vanishing. Put another way, recent data from varying sources—including the Census Bureau—verifies that vacancy rates have fallen to a 30-year low. Residents are finding fewer choices available to rent than at any time since 1985. At the end of the 2nd quarter of 2015, the vacancy rate plunged to 6.8% while the year-over-year growth in the number of new households jumped from 115 million to over 117 million. No wonder rental housing availabilities are dropping! Some developers call it “The Perfect Storm.” In the aftermath of The Great Recession that began back in 2008, fewer and fewer adults can afford to own a home. Lending qualifications have tightened as well. At the same time, employment numbers took a huge hit. The number of unemployed soared while companies cut back on spending and operating costs. Employment numbers have improved during the last two years, yet the actual wages paid have hardly increased.

Wages and benefits paid by U.S. employers this past spring rose at the slowest pace since the second quarter of 1982, the Labor Department revealed. The employment cost index, which tracks salaries, wages, and benefits gained 0.2% in Q2, compared with a 0.7% gain in Q1. These factors contributed to a slowdown in new construction of multifamily complexes and apartments. While new buildings have begun to be built there’s a lag time before they’re ready to rent. The construction lag helps fuel demand and, subsequently, rental rates will continue to rise for at least the next five years as the Millennial Generation continues to delay entering the homeownership market. “Millennials” as they are often dubbed, mainly refers to the generation of people born between the early 1980s and the early 2000s. Perhaps the most commonly used birth range for this group is 19822004. The Millennials are also known as Generation Y, because it comes after Generation X—those born between the early 1960s and the 1980s. The population of Generation Y is believed to be over 80 million in the U.S. alone. This huge demographic group has been slower to leave home than their parents’ or grandparents’ generations. The economic fiascos of the past 15 years have made it more daunting for Millennials to strike out on their own.

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According to a Pew Research Center analysis, a young adult in the 18-to-34year-old age range is more likely to live with his or her parents now than in 2008. Reasons include student debt and increasing housing costs. This reality has powerful ramifications for the overall economy and for the housing industry specifically. As a result, property managers all across America are becoming active in the possible solutions. Working in close cooperation with local and regional housing authorities, property managers are networking to come up with viable ideas. Some are forming ad hoc task forces to make things happen. As a critically important election year approaches, property man-

agers are also letting political candidates know that landlords, property owners, and residents are deeply concerned. Historically low vacancy rates coupled with a rising number of motivated applicants leads to shortages and rental rate inflation. Consider taking an active role in offering ideas that will benefit all involved. Published courtesy of PropertyManager.com

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Rental Housing Journal Metro · September 2015

Rental Housing Journal Metro

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Renting Less Aﬀordable Than Ever Before, While Mortgages Remain Aﬀordable

ent is unaffordable in three-quarters of U.S. housing markets, especially high demand markets like Miami, San Francisco, and San Jose • Renters can expect to spend 30 percent of their income on rent, while buyers can expect to spend 15 percent of their monthly income on a monthly mortgage payment. • Rental affordability worsened year-over-year in 28 of the 35 largest metro areas covered by Zillow. • Denver, Los Angeles, San Francisco, San Jose, and San Diego are unaffordable for both renters and buyers. Paying for a mortgage is still affordable, while rent takes up more income than ever in most major metro areas, according to a Zillow® analysis of U.S.

Metro Area United States New York-Northern New Jersey Los Angeles, CA Chicago, IL Dallas-Fort Worth, TX Philadelphia, PA Houston, TX Washington, DC Miami-Fort Lauderdale, FL Atlanta, GA Boston, MA San Francisco, CA Detroit, MI Riverside, CA Phoenix, AZ Seattle, WA Minneapolis-St Paul, MN San Diego, CA St. Louis, MO Tampa, FL Baltimore, MD Denver, CO Pittsburgh, PA Portland, OR Sacramento, CA San Antonio, TX Orlando, FL Cincinnati, OH Cleveland, OH Kansas City, MO Las Vegas, NV San Jose, CA Columbus, OH Charlotte, NC Indianapolis, IN Austin, TX

rental and mortgage affordability in the second quarter of 2015.

should each plan to put about 42 percent of their incomes towards housing.

Rental affordability worsened over the last year, while mortgage affordability stayed essentially the same. Renters in the U.S. can expect to put 30.2 percent of their monthly income toward rent – the highest percentage ever. Before the real estate bubble and bust, U.S. renters could expect to spend about 24.4 percent of their incomes on rent.

“Our research found that unaffordable rents are making it hard for people to save for a down payment and retirement, and that people whose rent is unaffordable are more likely to skip out on their own healthcare,” said Zillow Chief Economist Dr. Svenja Gudell. “There are good reasons to rent temporarily – when you move to a new city, for example – but from an affordability perspective, rents are crazy right now. If you can possibly come up with a down payment, then it’s a good time to buy a home and start putting your money toward a mortgage.”

Buyers should expect to pay 15.1 percent of their income towards mortgage payments, which is still less than what they spent historically. From 1985 through 2000, homeowners spent about 21.3 percent of their monthly income on mortgage payments. In Denver and four California metros, both renters and buyers can expect to pay more of their income towards either rent or mortgage payments than in pre-bubble years. In hot San Jose, renters and buyers

Current Percentage of Monthly Income Spent on Mortgage Payment (Q2 2015) 15.1% 25.6% 39.9% 13.7% 12.2% 14.6% 12.2% 17.5% 20.5% 12.3% 21.7% 41.4% 10.0% 23.6% 17.3% 22.7% 13.7% 34.1% 11.0% 14.6% 15.5% 21.1% 10.7% 21.6% 26.0% 12.7% 16.1% 11.2% 10.8% 11.1% 16.2% 41.9% 11.8% 13.2% 10.9% 16.5%

next year, home buyers can still expect to spend 30 percent or less of their income on mortgage payments in 265 out of 290 (91.4 percent) of the metros Zillow analyzed, and mortgage payments will be considered more affordable than in pre-bubble years in 72.1 percent of metros. Rents, on the other hand, are already unaffordable compared to historic norms in 77 percent of metros, and with relatively stagnant wage growth, this likely won’t improve as rents keep climbing.

Mortgage payments will continue to be affordable even if mortgage rates rise as expected. If rates reach six percent

Historic Percentage of Monthly Income Spent on Mortgage Payment (1985-2000) 21.3% 32.2% 34.6% 23.1% 20.2% 20.7% 14.8% 23.3% 20.6% 19.8% 26.0% 37.0% 17.4% 25.8% 20.6% 25.7% 19.8% 32.8% 17.1% 18.8% 22.0% 21.0% 15.9% 22.2% 29.8% 18.6% 21.0% 19.8% 20.0% 21.2% 24.8% 35.1% 20.3% 18.8% 23.5% 18.4%

Forecasted Percentage of Monthly Income Spent on Mortgage Payment at 6% 19.5% 32.1% 50.2% 17.6% 16.5% 18.5% 15.9% 21.8% 26.2% 16.0% 27.2% 54.7% 13.1% 31.4% 22.4% 30.3% 17.5% 43.4% 14.3% 18.9% 19.4% 28.1% 13.7% 28.8% 34.1% 16.5% 20.9% 14.4% 13.9% 14.4% 21.4% 55.3% 15.3% 17.1% 14.2% 21.5%

Current Percentage of Monthly Income Spent on Rent (Q2 2015) 30.2% 41.3% 48.9% 30.8% 28.7% 30.0% 30.6% 26.8% 44.5% 25.8% 34.4% 46.7% 25.3% 36.2% 28.1% 31.6% 25.6% 43.7% 24.2% 32.4% 29.3% 35.0% 24.6% 32.1% 33.5% 29.6% 32.7% 26.9% 27.1% 25.5% 27.1% 41.5% 26.2% 26.8% 26.0% 31.6%

Historic Percentage of Monthly Income Spent on Rent (1985-2000) 24.4% 25.3% 35.6% 21.8% 21.5% 19.3% 23.5% 16.8% 27.5% 18.3% 27.0% 29.9% 17.7% 31.1% 21.7% 23.2% 19.7% 33.9% 20.1% 26.8% 24.8% 23.4% 26.9% 22.6% 31.1% 24.9% 22.6% 19.6% 21.2% 16.0% 22.9% 25.6% 19.8% 18.0% 18.6% 21.3%

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Rental Housing Journal Metro · September 2015

Rental Housing Journal Metro

Avoid Fair Housing Claims with Smart Practices and Consistent Education President’s Message – Sept 2015 Multifamily NW

working knowledge about fair housing regulations is an absolute essential for property managers or anyone practicing in the real estate housing profession today. The HUD website describes fairness in housing as a goal to eliminate housing discrimination and create equal opportunity in every community. Fundamentally, fair housing means that every person can live free. This means that our communities are open and welcoming, free from housing discrimination and hostility. It also means that each of us, regardless of race, color, religion, national origin, sex, familial status, and disability, has access to neighborhoods of opportunity, where our children can attend quality schools, our environment allows us to be healthy, and economic opportunities and self sufficiency can grow. The premise appears simple in its form and should intuitively be a very straightforward practice. However, the fair housing practices landscape is one that can be, and has been, interpreted in numerous and various ways… as a multitude of investigations, lawsuits and settlements have reflected over the years since the passage of the Fair Housing Act (Title VIII of the Civil Rights Act of 1968). Laws are constantly changing and new protected classed have emerged

on local, state and federal levels. It is essential that today’s housing professional be aware and educated in the fair housing arena. A lack of understanding and training can be extremely costly in many ways - particularly money, time and reputation. This month, I am focusing upon a few of the most common mistakes property managers and owners make in regard to fair housing practices. The following errors and missteps are far from all inclusive in covering all the rules but do represent a good start for understanding fair housing compliance. Employers should implement work practices, policies and procedures to help ensure that these violations are avoided.

Targeting specific people in advertising practicesIt is critical when advertising housing that focus is placed on the amenities and attributes of the property and NOT what is being sought in a resident. Do not state that the property would be “great for a family” as this would be discriminatory against people without children. Even stating that a location is “within walking distance” from shopping or other conveniences could be construed as discrimination against those with a disability that prevents walking. Stay away from ad words that say “safe” or “exclusive” as

these could imply that you rent to only certain groups. The inclusion of the fair housing logo and a disclaimer stating that you are an equal housing opportunity provider is always a good idea.

Declining an applicant due to an issue NOT stated in rental selection criteriaAlways have a written rental application policy that clearly outlines specific and objective criteria. Include occupancy limitations and fair and objective standards regarding income, credit and employment. Make certain the screening selection process is clearly outlined and state that all applicable fair housing laws will be adhered to and followed. Do not ask questions regarding disabilities, drug use or lawsuits. Questions regarding prior evictions or why they are leaving prior residence are acceptable. It is important to remember that declining an applicant based on something outside of your criteria could be construed as discriminatory and a violation of fair housing. It is highly recommended that your criteria be periodically reviewed by an attorney to ensure compliance with fair housing regulations. Steering prospective residents to specific properties or specific areas within a property-

It is imperative that all prospective applicants be provided an equal opportunity to select their housing location. When touring a prospective resident NEVER assume that they would best suited for a particular location or area to reside within and take them to it. “Steering” is the term used to describe such a practice and it is considered discriminatory. It is a clear violation of rights. In order to avoid this, ALWAYS show or make known all available units to an applicant and let them decide which to view or decline. Present only facts about the property. Never discuss details about residents or neighbors. Do not avoid showing recreational facilities or fitness centers to a disabled individual because you assume they would not use them. Show all the facilities unless the prospect them-self informs you of a desire to exclude. Remember - Do NOT make assumptions and treat everyone in consistent manner.

Playing favorites, applying rules to some but not all-

...continued on page 19

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Rental Housing Journal Metro

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Rental Housing Journal Metro

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Rental Housing Journal Metro · September 2015

Rental Housing Journal Metro

Avoid Fair Housing Claims ...continued from page 15 Community rules and regulations should be enforced uniformly with all residents. Make certain all rules are clear and simple to understand- and non-discriminatory. Always state the rules so they apply to ALL residents versus just specific groups. For example if skateboarding is prohibited in the parking areas than this must apply to all residents. Never say “children shall not use skateboards in the parking areas”. This targets a protected class and could be construed as discriminatory. Maintain records of rule violation for all residentsnot just some. Include date and description of violation and details of how the you were made aware and what was done in terms of rule enforcement.

Refusing reasonable accommodation requests: A reasonable accommodation request occurs when a resident asks that an exception to rules/policies be made in order to accommodate the resident’s disability. It is extremely important that such requests never be outright denied - and that a policy be implemented allowing careful consideration of the request. There are certain guidelines to follow surrounding when a request should be granted or if/when it should be denied. In certain instances a request may be denied if it creates undue financial burden to the property. However, given current focus upon such requests and exposure to fair housing violation risk, it is recommended that property managers and owners seek legal advice if uncertain in this realm. Inadequate record keeping practices: Document, Document, Document! If a fair housing claim arises nothing is more valuable than a set of carefully maintained records. This can make the difference between an easily defensible case with a favorable outcome for the landlord OR a lengthy case that is costly in terms of legal defense and settlement monies. It is imperative that management staff keep careful record of interactions with prospects, current and former residents. Note dates, time and details of what was said to prospects. Include which units were shown and all pricing information provided. Keep record of phone conversations. Keep the application on file, even if denied. This will help avoid any discriminatory issues surrounding criteria, as previously described. Always carefully document eviction procedures. Include any third-party complaints, warning notices, eviction notification, manager notes, photos of damages or items related to eviction, and any police reports if applicable. All such documentation provides proof of a legitimate reason for evicting a resident, should a fair housing claim arise. Failure to train staﬀ- all staﬀ ! Education is the primary key to prevention when it comes to avoiding fair housing practice violations. Every team member of a site property management staff comes into contact with customers – both prospects and residents. It is critical that all personnel – both leasing and maintenance – are fully informed and trained to Fair Housing laws, protected classes and the company’s performance expectations in this regard. Training is imperative at both time of hire and at

Portland Apartment Report

yearly intervals to ensure on-going practice compliance. Relevant to this last point, I invite and highly encourage all property management professionals to attend the upcoming annual Spectrum Educational Conference and Trade show. The conference will be held at the Oregon Convention Center, September 24th, 8:00am-5:00pm. The largest property management industry event in Oregon, Spectrum features numerous unique education classes taught by industry professionals. Renowned sports psychologist Dr. Ivan Joseph will be the featured speaker, sharing valuable insights to achieving success in business and in life. The trade show floor will be occupied by more than 150 exhibitor booths featuring services and products designed to serve every need in our profession. Join more than 1200 landlords, property managers, leasing and maintenance professionals, rental property owners and investors for this incredible opportunity to network and learn. I look forward to seeing you there!

work-play lifestyle. Those residents who are unable to lease one of these units will commute to suburban areas along major transportation routes, continuing to push down the metro’s average vacancy rate. Robust occupancy will boost average effective rent this year to a new peak. Apartment investment sales are strong in Portland’s core and along major transportation routes. Core-based assets were sold at higher price points, with the price per door generally rising as investors travel east of the river. The metro’s average first-year returns compressed to 6 percent in the past year, and assets traded 120 basis points lower in northwest and southeast portions of the city. Higher cap rates were obtained in properties purchased to the east of the core at an average of 60 basis points higher, while properties farther north on Interstate 5 and into the state of Washington sold at cap rates that were nearly 130 basis points higher. Tight operations will continue to draw buyers this year and drive down cap rates.

2015 Annual Apartment Forecast Employment: Expansions in payrolls will add 35,000 positions or 3.9 percent

...continued from page 1

to the employment level in 2015, which will be led by professional and business services. Employers created 31,000 jobs in the prior year. Construction: Developers will add 5,700 apartments to the metro, increasing stock by 6 percent this year; most projects are scheduled to be delivered in the second half of the year. This is the most deliveries in three decades and an acceleration from 2014, when 4,300 rentals were delivered. Vacancy: Strong hiring and household formation is adding residents to well-located apartments. Although many will lease up space in the core, other households will seek suburban units near transportation routes and other nearby employers. Yet, the most construction in years will add 50 basis points to vacancy, which will end the year at 3.3 percent. Rents: Average effective rent will advance 7.1 percent to $1,119 per month in 2015 as new units are quickly absorbed. Local average rent broke the $1,000 mark in 2014, rising 7 percent last year. Demand from new workers will continue to boost average rent in the long term.

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Rental Housing Journal Metro · September 2015

Rental Housing Journal Metro

Reasonable Accommodation/Modification Policies for Market Rate Tenancies By Cliﬀord A. Hockley, President, Bluestone & Hockley Real Estate Services

s the reasonable accommodation rules under the Fair Housing Act* continue to receive national press and more tenants use the rules to ask landlords to accommodate their special needs, it makes sense for landlords to codify their response to reasonable accommodation requests in order to maintain consistency. To ensure consistency when it comes to a property manager’s enforcement of reasonable accommodation policies, we have drafted a set of common sense rules to serve as a guide and adapted by landlords. Note: The suggested rules discussed below do not apply to low income government delivered or tax credit properties. Those properties have additional rules that need to be followed. Tenants may request changes in housing policies to accommodate disabilities Tenants and/or applicants have the right to request a change in the rules, regulations, practices, or procedures of the property they want to live in if they have a disability and the requested change will better enable them to use and enjoy the property they rent. Common reasonable accommodation requests include, but are not limited to: • Designation of a handicap parking space • Installation of grab bars in the bathroom • Installation of a wheelchair ramp • Installation of a flashing light smoke detector for a hearing impaired tenant • Accommodation of a service or companion animal • Release from a rental agreement without a lease break penalty If a tenant asks you if they can modify their unit or have an accommodation to a community rule because of their disability, your response should be: “We’ll be happy to consider that. Can you please submit a request for a reasonable accommodation/modification to help us understand the need better? We have a form to use for your convenience.” Make sure the tenant provides the name, address, telephone number and email address for the third party professional who will verify that the applicant/ resident is disabled and needs the accommodation requested. NOTE: You should never ask the tenant what their disability is. The tenant’s medical professional will indicate if the tenant has a disability, and if their request would help them to more fully use and enjoy the property that they are renting, or will rent. Keep in mind that just because a request has been made, it doesn’t mean the landlord has to say yes. The key word in this process is “reasonable.” Tell the tenant that once the completed reasonable accommodation request is reviewed by the corporate office, the tenant or applicant household will receive a written approval or denial issued from the corporate office. Make sure their current and correct contact information is in20

cluded in their request and in the property management client database. Procedures • Obtain the request in writing to ensure that all parties agree on the accommodation that has been requested and that the documentation of the request exists for future reference. • Address the request for reasonable accommodation/modification as soon as possible (within five days after receipt to the main business office). A significant delay can be viewed as denial. • Require verification for all requests if the need is not visually obvious. For example, when a resident who uses a wheelchair requests a parking spot close to the resident’s front door, the resident’s disability and need for accommodation is obvious. This situation does not warrant the need for obtaining verification from a third party. If a similar request is made by a person who does not have an obvious mobility impairment, you may need to request that the resident’s need for accommodation be verified by a third party professional. Create a policy that when the need is not visually obvious you will need to verify with a third party professional. Use a consistent form. • All reasonable accommodation / modification requests will be reviewed and approved or denied by the property/ portfolio manager, director of residential services and the upper management team of the property management company. Notification of approval or denial will be provided from the corporate office to the tenant or applicant household in writing within five working days after the request is received by the corporate office. • No request should be rejected without first offering an alternative in writing. Rather than merely rejecting the resident’s request, which might enable the resident to accuse management of failing to accommodate, it makes more sense to offer an alternative accommodation that can provide the landlord with a defense in the event of a complaint, even if the resident rejects the offer. • For conventional properties (not federally financed), landlords must allow the tenants/ applicant, to make reasonable modifications at their cost. Typically, modifications at the resident’s expense are approved unless the resident cannot verify his need for the modification, the modification creates a structural or safety problem for the building, or it makes the space unusable by other patrons of the property. • If the modifications of the property might interfere with

the next resident’s use of the apartment, the resident must agree to return the interior of the apartment to its unaltered condition upon the termination of the lease. • When the final determination is made on the resident’s request, the decision of the accommodation or modification will be documented by a letter to the tenant or applicant. • All requests (accepted as well as rejected) for accommodation or modification will be saved in the tenant’s file for future review if necessary. • Additions to Accommodation Policies

The following language can be adapted or added to existing policies and agreements: The Landlord (your company name here) complies with the Fair Housing Amendments Act of 1988, Section 504 of the Rehabilitation Act of 1973, and the Americans with Disabilities Act (ADA). This property will comply with any legislation protecting the individual rights of tenants, applicants, and/or staff that may subsequently be enacted. The Landlord (your company name here) does not discriminate against persons with disabilities in its services and structures, provides equal opportunity to all persons with disabilities, and provides accommodations to meet the needs of persons with disabilities upon request, if the accommodation is both reasonable and financially feasible.

Lease Break Fees: If a tenant has provided documentation of a Reasonable Accommodation being necessary by their medical professional, specifically with a need to vacate their unit due to medical reasons, it is common sense not to charge a lease break fee or require 30 day notice. Summary The purpose of this article was to help landlords and property owners plan, develop and implement policies that will guide property managers in the consistent support of tenants who qualify for reasonable accommodations due to disabilities. Consistency in polices translates into meeting fair housing requirements fairly and equitably for every tenant. I encourage you to be consistent with your policies and protect your onsite and portfolio managers by developing clear and easy to follow rules. P.S. Don’t forget to run your policies by your favorite fair housing attorney to make sure the rules have not changed as they so often do in Washington D.C. *Resources Authors Note: The author thanks the Fair Housing Institute for the use of their resources in the writing of this article. http://www.hud.gov/oﬃces/fheo/library/huddojstatement.pdf Joint HUD and Justice department release that clarifies reasonable accommodations under the fair housing act. http://www.fairhouse.net/library/article. php?id=39 Create a Reasonable Accommodations Policy for Your Property http://www.justice.gov/jmd/eeos/manual-and-procedures-providing-reasonable-accommodation http://www.fhrc.org/HRAC_Brochure.pdf

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Rental Housing Journal Metro · September 2015

Rental Housing Journal Metro

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Rental Housing Journal Metro · September 2015

Rental Housing Journal Metro

Taking Over an Existing Tenancy By Tia Politi

s a rental owner, most of the properties hubby and I purchased were vacant or were our primary residence before being turned into rentals. We did have instances however, when we purchased a property with a tenant in place, and in my career as a property manager, certainly it happens all the time. The procedures do vary depending on whether you have a monthto-month (MTM) agreement in place or a fixed-term lease (FTL). So, step by step, here’s how I approach the changeover. Whether the tenants are MTM or FTL, I send a nice letter introducing myself and letting the tenants know the effective date of the change, where they should pay rent in the future, and how to make maintenance requests. For MTM tenancies (or tenancies with only a verbal rental agreement), I also include a new rental agreement and addendums for them to sign and return to our office. I add a sentence that basically says, “Enclosed you will find a new rental agreement and addendums, please sign and return them to us within 30 days. Should you fail to do so, this is your official 30-day notice of our intent to change the terms and conditions of your rental agreement. Whether you sign and return the documents or not, all the provisions therein, shall take effect 33 days from the date this letter was mailed.” This is the easy part. More often, the difficult part is no application, uncommunicative or uncooperative tenants, or fixed-term leases that are contrary to your current practices. But in the case of MTM tenancies, this “official notice” will cure any waiver problems that could have been created by the previous owner or manager for failing to enforce their terms and conditions, and establish that there’s a new sheriff in town. Should your tenants decline to return the forms, there is also some risk that you would not have proof that they acknowledge receiving the forms. If you take over a property built before 1978, the EPA audits you, and you have no signed form from the tenant acknowledging that they have received the pamphlet, “Protecting Your Family from Lead in the Home,” they will not be happy about that, to say the least, and you could incur substantial fines. If the former owner/manager didn’t get one to them, you could inherit a major problem. So, can you make your tenants sign these forms? Not really, but you can serve a 30/14 (Notice of Termination with Cause), which would give them the choice to sign or vacate. Fixed-term leases present more difficulty as their terms are “fixed,” so while you can request that the tenants sign your lease, you cannot require it without agreement of all parties. For example, if you took over a lease that set the late fee at $25 and requires you to provide lawn care, you are stuck with those terms until the lease expires. You can, however, change things like where to pay rent and make maintenance requests. I have been pleasantly surprised on many occasions though, when tenants in a lease will agree to sign new forms. Also, if there was a 22

missed addendum such as the LeadBased Paint Addendum that never got properly signed, I believe you can press this issue as it is simply an acknowledgment, not a change in the terms. Illegal provisions in a rental agreement are another potential hassle that you may inherit from the previous owner/manager. Remember that a tenant cannot waive their rights under landlord-tenant law (even with their agreement), so if you have inherited a defective agreement, whether MTM or FTL, and the tenants won’t sign a new one, and you’re choosing to not push the issue, just don’t attempt to enforce those provisions. Some common illegal provisions that have crossed my desk include usurious late fees; premature grace periods, such as three days instead of the minimum four; allowance for abuse of access; and unreasonable restrictions on legal activities, such as no overnight guests or visiting children. Habitability issues can also rear their ugly head, so be careful in regards to the condition of a property you purchase or take over for management. If there are substantial problems, I would decline to purchase or manage until or unless the tenants were removed so that I don’t inherit a legal claim for damages from the prior owner/manager. Should you choose to take on that risk, deal promptly with all true habitability repairs. What if you take over a property containing a difficult tenant? If they are in a FTL, you will just have to find a way to put up with them through the term of the lease unless they directly violate their rental agreement. With MTM tenants, you can serve a no-cause notice of termination, as long as the termination is not retaliatory for any protected behaviors such as reporting maintenance issues, complaints about neighbors, organizing a tenant rights group, or for being a member of a protected class, among other things. I’ve had people (somewhat jokingly) say, “Well, I’ll just raise the rent $300 a month and they won’t be able to afford it and will have to move out!” Unless your unit was under-rented by that amount prior to your taking over, and you can prove that to a judge, this is called Constructive Eviction, and it is illegal. Just like other areas of life, courtesy and kindness go a long way to drawing people to your way of thinking. Transitions can be particularly difficult for some people and a pleasant, calm, helpful demeanor is always a good idea. I have occasionally had tenants who struggled with the transition at first, but then settled down, so don’t assume that the first reaction you get will be how things go forever. I also had a mentally ill tenant who refused to accept the transition, kept sending rent to the previous manager and was evicted by us for non-payment. You can’t make everything perfect, but in most cases, your attitude will definitely influence the response from your new tenants, so be mindful of that and your chances of a successful transition will increase exponentially. This column offers general suggestions only and is no substitute for professional legal advice. Please consult an attorney for advice related to your specific situation.

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Rental Housing Journal Metro · September 2015

Rental Housing Journal Metro

President’s Message

t was so great to see many of our members at the RHA Oregon Picnic at Oaks Park on August 12th. It was a warm day, but lots of fun was had by all. After the day was over, and clean up complete, I was in my car headed home when I realized that summer was drawing to a close. As I glanced over at my daughter, who attends the picnic with me every year, I wondered, What will she be learning in the coming year? What important life lessons had she learned over the course of the summer? What wisdom had she gained? Did she have good mentors for life’s journey? My thoughts then continued down this path, but in a different direction. I tend to think about RHA Oregon as something that is growing, changing, learning and even though we have been around since 1927, we still have new things to learn every day. Being a property owner and landlord is much diﬀerent today than it was in years past.

business. So now that I have made myself a little depressed, what do I do about it? Well, fortunately for me and our members, RHA Oregon has classes starting up again in the fall. September 10th at 6:30 PM at the RHA Conference Annex, Ron Garcia with the Garcia Group is teaching, Managing Rental Properties in Today’s Changing Market. If I may borrow his own words about the class: “We all know the rental market is hot and rents are escalating. But like all investments, the greater the profit, the higher the risk. Landlording today is not the same job as it was 10 or 20 years ago. I discuss tactics and strategies I have adopted in my day to day property management business (about 400 units) to accommodate the new rental property climate. Tricks and secrets or just plain common sense? Attend and judge for yourself ”. Not sure about you, but I am going to be signing up for this class!!

Next on September 17th at 11:30 am at the RHA Conference Annex, Vince Kingston with Eagle Home Mortgage will be the instructor for “The Get Rich Slow Plan”. This 1.5 hour class starts with a broad introduction to the fundamentals of real estate and financing options for acquiring residential real estate and goes on to elaborate specific strategies for safely acquiring and maintaining a modest rental property portfolio. Vince knows what he is talking about, so sign me up for another class. I will enjoy learning everything that I can from the aforementioned instructors. I have always enjoyed learning new things. As a young man, I remember spending an afternoon at my grandmother’s house. She was quite old to my thinking, and she didn’t do fun things that I liked but every once in a while she would tell me stories about her life. How she traveled in a covered wagon to the homestead that her family had in Kansas.

What it was like to live on the same farm that I grew up on back in her day. How she got her driver’s license in the 1920’s at the store and the cost was 25 cents. And I remember one day as we were talking the subject of learning came up. I don’t remember what I had said to trigger her response, but I distinctly remember the response. She paused and then slowly turned her head and looked at me and said, “If you’re not learning something new, then you’re dead”. As those words rang in my ears that day, they ring in my ears every day. So guess I will be signing up for some classes and going back to school, the same as my daughter will this fall. Sincerely, John Sage President RHA Oregon Stegmann Insurance Agency Inc.

The market and the rules have changed. New laws have been enacted and revised. Some of the ways we used to handle our business doesn’t work in the new marketplace. This can be a little scary for those of us who are used to doing things a certain way. Change is not always the easiest thing. However, change is inevitable!!!! Nostalgia is wonderful when you think back on your family. But being stuck in the past isn’t the best for you or your

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Rental Housing Journal Metro · September 2015 10695_NWN_MultiFamily-Rental_Housing_Journal-Builder_SNAP.indd 1

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