On-Site (Seattle Metro) Rental Housing Journal - September 2014

Rental Housing Journal On-Site

September 2014 - Vol. 8 Issue 9

3. Benefits of Hiring a Property Manager to Manager Your Single-Family Investment

18. The Coach: Three Important Steps For Building Property Management Compensation Plans

5. The Human Element: Behavioral Interviewing Skills

19. Dear Maintenance Men 21. Help Your Process Server to Save Time in Your Eviction

10. Five Ps for Your Social Media Marketing Success

22. Disposition of Personal Property of Deceased Tenants

14. WMFHA: Going Smoke-Free

23. How Do You Compete With the New Apartment Communities?

15. Mind Your Business

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Fund your Retirement with Seller Carry Back Financing

By Jade Bossert

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ulti-family property owners have several options, to generate passive income in retirement, that are unique to owners of income property. They include placing your residential income property under professional management and forgoing the day to day management duties, effecting a IRC 1031 exchange into a commercial triple net leased property, or taking on the role of a lender by providing seller financing, to the buyers of your income property.

Seller carry back financing is the most popular vehicle active owner/ managers of multi-family properties use to fund their retirement. The major benefit is“mailbox money”, which is a monthly check sent electronically or by mail to the seller every month, for a set period of time. The current market interest rate for seller financing is 5.5% to 6.5% interest.

A strong down payment, of 20% to 30% of the sale price, is recommended when financing a buyer.

Property tax, insurance and the monthly payment should be collected by a title company or bank and disbursed to the seller. The property should be collateralized by a note and deed of trust that detail the terms of the carry back. The terms should include a late fee. In the event the seller is concerned about being paid off, a steep prepayment fee of 12% to 20% of the principle continued on page 7 Professional Publishing Inc. PO Box 6244 Beaverton, OR 97007

to

Puget Sound Apartment Owners, Property Managers & Maintenance Personnel

Market Overview & Multifamily Housing Update Seattle WA RED Capital Group 2Q14, September 2014 2Q14 PAYROLL TRENDS AND FORECAST The Jet City economy remained in a steep ascent during the second quarter, adding payroll positions at a 42,800-job, 2.9% year-on-year pace, up from 1Q’s strong 39,800-job performance. Skilled service and consumer-driven sectors led the way.

Business, health care and education service employment increased at a combined 15,000-job, 3.6% rate (the education component alone advanced at an 11.8% pace), while construction, retail trade and leisure service headcounts expanded at a 5.2% rate. Conversely, aerospace manufacturing represented a small net employment drain as industry payrolls fell at a –2.5% y-o-y rate

during 2Q. Seasonally-adjusted data were commensurate, showing a solid 12,800-job net add April through June, up from 8,400 during the prior quarter and 9,800 in the year-earlier period. Preliminary July data were somewhat weaker as headcounts increased 900 from June, comparing unfavorably to a 6,100-job add in the previous month and July 2013’s 5,400-job performance.

RED Research’s Seattle payroll model employs U.S. payroll growth; S&P500 returns and interest rate variables to achieve a 95.1% adjusted-R2. The model produces a bullish outlook through 2016, with payroll growth rates remaining consistently above 2%. But our GDP model forecasts slower economic activity in 2017, which will bend the Seattle growth curve down.. The most probable outcome is for annual growth to

slow to about 25,000 jobs in 2017, down from 2014-16’s 35,000- to 45,000-job performances PAYROLL JOB SUMMARY Total Payrolls 1,544.9m Annual Change 42.8m (2.9%) 2014 Forecast 41.6m 2015 Forecast 42.2m 2016 Forecast 34.6m 2017 Forecast 25.2m Unemployment 5.0% (July) (NSA) 2Q14 ABSORPTION AND OCCUPANCY RATE TRENDS Households exhibited strong rental space demand during the second quarter as tenants net leased 1,689 vacant units, according to Reis, the highest absorption tally in any spring quarter since 2004. A correcontinued on page 9

3 Proven Management Techniques That Work in Any Business

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Identify the ‘Influencers’ on Your Front Lines, CEO Advises

n business, the only thing that matters is what works, says Peder Johnsen, a third-generation specialist in senior living communities.

“The people in your company who are dealing with your customers – the clerks, the caregivers, the customer service reps – are where

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the rubber meets the road,” says Johnsen, CEO of Concordis Senior Living, www.concordisseniorliving. com, which owns, operates and develops senior housing communities.

“That’s why it’s essential for the company leaders, the men and

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women in the offices that are often far from the front lines, to be where the action is on a regular basis,” he says.

Concordis’ specialties include managing senior-living communities for other owners and developers, an continued on page 7

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Benefits of Hiring a Property Manager to Manager Your Single-Family Investment

By Cliff Hockely

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uying real estate as an investment has been a well-established investment strategy for thousands of years. You purchased or inherited a home or condominium and now you have to figure out how to get your arms around it. Perhaps you were transferred and don’t think it is time to sell the home yet, you want its value to appreciate more.

From a management standpoint, you have two choices, manage the property yourself or hire a property manager to take care of it. This article will help you make a decision on which way to go.

Setting investment goals First of all, realize that you need to set investment goals. In other words, ask yourself what you intend to do with the property. If it is free and clear you could save the money you earn and invest in more real estate… or pay for college tuition for your children. When they are done with college you could use the cash flow to prepare for or amend your retirement plans. If you have a mortgage you have less cash flow to meet your needs which will affect your

Rental Housing Journal On-Site • September 2014

decisions.

A few investments goals to consider: • Hold the property until it is paid off and use the income for retirement • Hold the property until the marketplace appreciates – then sell the property and: • Reinvest in another property/ properties (maybe in better locations) • Take the money to the bank.

• Spend the money you made.

• Sell the property and use it to: • Buy another home in another part of the country.

• Refinance the property after some of the equity has grown and buy an additional home.

Making the decision If you have time and are a handson investor, you will want to screen the tenants, make the repairs, complete the tenant turns and do the accounting yourself. More often than not, you get busy with life and don’t want to deal with the investment yourself.

If you hire a property manager

they deal with the myriad issues involved with property management for you.

Property managers handle: Rent collection: They know what it takes to get the monthly rent collected from tenants. They deal with the tenants that won’t pay/ can’t pay, up to and including tenant evictions, something most landlords are unfamiliar with and very nervous about.

Tenant selection: More often than not they have screened the tenants before move in, evaluated their rental history and their credit history and established their ability to pay. Property managers are like you, the fewer tenant turns they have the better, and the more money you make.

Dealing with problem tenants: Sometimes a tenant goes through a divorce, a loss of a job, or some other crisis that turns them from being a cooperative tenant to an uncooperative tenant. Property managers know how to handle those situations and can typically solve problems related to difficult tenants.

Maintenance: Most property management com-

panies handle property management emergencies 24 hours a day. They either have their own maintenance department to take care of your property or they have a vast pool of vendors that are prequalified to take care of your property issues. These vendors deal with many property issues from basic carpentry to plumbing, electrical, roofing and mold remediation.

Vendor selection: Property management companies have an extensive list of vendors they have good experiences with.

Property managers need good results for their clients and take time choosing the vendors they work with. In addition, property managers are sensitive to property maintenance costs and look hard to find cost effective vendors.

Bill paying – financial reporting: Not only are property managers required by licensing laws to submit monthly financial reports to their clients, it just makes practical sense to know how your property is performing on a monthly basis.

Marketing of vacant units: Property managers have a deeper pool of tenants looking for rentals, continued on page 4

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Benefits of Hiring...continued from page 3 enabling them to rent units faster than an individual owner can. It is good to find a company that invests in its website and search engine optimization (SEO) to find as many tenants as quickly as possible for their clients. However it is good to diversify your presence with a wide variety of digital and traditional advertising including our website which easily guides prospects to our available units. vFlyer pushes out gorgeous digital flyers to many welltrafficked rental websites such as Craigslist, Hotpads, Zillow, Trulia and more. We also upload flyers to Postlets, Rent.com, etc. Good property signage draws many inquiries as well.

Tenant discrimination: Property managers are focused on equal housing opportunity. They do not discriminate on the basis of race, national origin, color, religion, sex, familial status, handicap, source of income or sexual orientation. This protects the landlord from federal, state, county and city fair housing investigations and litigation.

Watching Your Property: Property managers have local

offices so they can take care of your property and your interests when you are not available.

Compliance with laws: Property managers work hard to comply with the many federal and state laws. In that vein they have hundreds of forms that meet current regulations that are used in the day to day operations of managing properties.

Value: Property managers deliver a huge value for the small amount they charge. They pay for themselves every day the investor owns the property.

Choosing the right property manager Making the decision to manage a single family property is not easy. If you have the time and skills it clearly makes sense to manage your own property, but it is challenging and you would want to become a member of a local landlord association to stay on top of the ongoing business changes. If you don’t have the skills, consider hiring a property manager.

www. re ntalh o u s i n gj o u r n a l .co m

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The Human Element: Behavioral Interviewing Skills

s with most organizations, your people are your greatest asset. But it seems that in OUR industry, we still habitually hire out of desperation, a shortage of time to fulfill the position, from a seemingly dwindling pool of “really good talent”, AND with little forethought into what we actually NEED for the position we are trying to fill!

More importantly, we don’t hire people to FIT into our existing teams to make that team run more cohesively … more efficiently…more productive.

Hiring the RIGHT Person for the RIGHT Job! The skills, talents, abilities, personalities, and experiences that employees bring to your company are the “heart” of what separates your company from the competition.

Although competitors may have basically the same apartment styles, same amenities, same marketing advantages, same prices, they don’t have the same PEOPLE. Why bad hires are bad for your company’s reputation?

Rich Layton, Paul Shay, and Matt

Rental Housing Journal On-Site • September 2014

Terronez, from www.WalktheTalk. com, wrote a book entitled “Three Dimensional Interviewing” about the results of interviewing 500 companies in a nationwide, study, regarding hiring the wrong employee and what the effects it had on the rest of the team. Here were their findings: 1. 68% of the companies experienced a decrease in employee morale 2. 66% experienced a decrease in work productively 3. 51% had a dramatic increase in training costs 4. 40% increase in severance costs 5. 54% experienced a loss of customers or market share So what does this tell us? Actually it says a whole lot about trying to put the proverbially “square peg in the round hole”. By not finding out more about a new employee’s “historical work behavior background” we risk damage to our entire team’s performance, loss of our good customers (residents), and higher expenses to solve the problem of getting rid of the mistake.

The art of communication: What is behavioral interviewing?

How can we interview to find not only the best candidate for the specific job requirements, but the best PERSON that will help make the performance of that particular team more productive? What process should we follow? What questions should we be asking instead of those “vague, general standard” type questions that will solicit the “REAL” qualities we need to make a successful match? GREAT QUESTIONS! Behavioral interviewing is based on a singular premise: a technique used by employers in which the questions asked assist the employer in making predictions about a potential employee's future success based on actual past behaviors, instead of based on responses to “hypothetical questions”.

Questions such as “Tell me what are your top 3 strengths?” does not tell the employer if in fact those strengths are realistic, any examples of using those strengths, or just the employee’s opinion of themselves.

Questions can be categorized by specific skill sets such as honesty, time management, delegation, conflict resolution, or motivation. Here

are some great questions to solicit more realistic responses: • Computer Skills • What specific computer skills helped most with your last job?

• Describe what computer report you used to track renewals?

• Customer Service Skills • From your past experience, how did you handle an upset resident?

• How would you handle this situation…? ”you overheard another employee speaking unprofessionally to a resident” • Decision Making Skills • Was there ever a decision you made that you regretted making?

• Give me a specific example of a time when you had to conform to a policy with which you did not agree.

• Conflict Resolution Skills • What is your typical way of dealing with conflict? Give continued on page 8

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Five Ps for Your Social Media Marketing Success By: Jeremy Juhasz

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mall businesses and nonprofits face a different set of circumstances when it comes to social media marketing than their larger for-profit counterparts, namely, smaller budgets, fewer employees and a greater priority on traditional forms of marketing.

For those charged with marketing, the biggest first step toward making social media an integral component of the plan may be convincing your organization. Despite widespread use of social networks for personal connections, the leadership of smaller organizations often questions its effectiveness as a marketing tool and whether they’ll see a return on their investment.

I’ve developed and implemented social media strategies for a variety of organizations -- for-profits, nonprofits, and individuals. For all of them, I’ve discovered, when it comes to social media, it’s important to remember the 5 P’s:

Plan Identify what you hope to accomplish and create a strategy to take you there. Too many nonprofits and small businesses dive into social media because they “have” to and don’t consider a plan of action before they do so. Make a list of what you want to accomplish. Is it to gain

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more donors? Get a higher attendance at your annual fundraiser?

Increase sales?

Make it a priority to identify goals so you can create the social media strategies for meeting them.

Patience Nothing happens overnight. It takes time to develop relationships and establish credibility with your brand and your target audience.

Over time, events and a steady pace will win out. Rushing leads to mistakes.

The type of patience I’m referring to is a long-term mind-set. When day-to-day activities seem arduous and, at times, unfulfilling, know that each day builds to the greater goal.

March on.

your plan and in monitoring whether you’re reaching the objectives that will take you to your goal.

Pay (what you can) These days, especially on Facebook, it’s a pay-for-play landscape. Pay where you can, if you can.

The results can provide the spark you need to drive a specific campaign or to increase your overall visibility to your target market. It can also be a very affordable alternative to other digital advertising options.

Prioritize I can’t stress enough the importance of time management. If your marketing staff consists of only one or two people, it’s essential that you stay on top of your social media strategy by prioritizing your quarterly, monthly, weekly and daily objectives and goals. Nonprofits and small businesses face countless new daily challenges. Sometimes we lose track of what’s most important. Take continued on page 12

Persistence You must be stubbornly committed to your goals and your strategy.

Keep plugging away and give your plan a fair amount of time and analysis before you pull the plug. If you know the plan is a good one, it’s not a good ideas to panic and change course simply because you’re not seeing results as quickly as you’d like.

That said, circumstances change, not every strategy works, and you need to also be willing to recognize that it is time to try something new.

Be persistent in implementing

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Management Techniques ...continued from front page art it has perfected, Johnsen says.

“We developed certain practices over the decades, first by building assisted-living communities and then by operating them,” he says.

“These practices work in any business because they keep the leadership actively involved in what’s going well – and not – on the front lines, and provides a system for regular communication through all layers of the company.”

Johnsen offers these tips for management that produces excellent results: Identify the ‘Influencers’ in each work group.

As with most businesses, senior living communities require teams of staff, from administrators to housekeepers and everyone in between.

Within the various groups that make up your business, identify the key players – the people who influence others’ behavior, whether or not they

hold a title or official authority. Meet with them on a regular basis so you can stay plugged in to what’s happening on the front lines.

Identify areas that need improvement.

Talk to them about systems and areas that need to be fixed, overhauled or eliminated, and about how team members are working together. They’ll often have ideas for innovations. The idea is not to look for people or problems to blame, but to work together to develop solutions and improve the team’s overall efforts.

“The information you get in speaking with these key players is invaluable,” Johnsen says. “There may be nothing at all wrong, which is great, but these meetings give you, the CEO or manager, the information you need to constantly improve. It also reinforces the message to employees that they and their ideas

are valued members of the team.”

Figure out those “wildly important goals.”

You can have the best people in the field working for you, yet if they’re not specifically guided to a certain goal, they are putting their time and effort toward an end that they’re assuming is correct. CEOs and other upper-level managers have the 30,000-foot view, so it’s up to them to guide everyone beneath them.

“Short-term priorities may change slightly or drastically on a regular basis,” Johnsen says. “Your team may be self-sufficient, but their vision is limited to their daily duties.

If they don’t know that a goal or objective has changed, they can’t work toward it.”

cordisseniorliving.com, which owns, operates and develops senior housing communities. He’s a third-generation assisted-living specialist whose grandfather and father built one of the first contemporary-style ALFs in Florida more than 30 years ago. Johnsen took over administration of two small facilities at age 18. Today, he runs the full spectrum of ALFs – from “ALF lites,” where most residents live very independent lifestyles but know assisted-living services are available if they should need them, to homes specializing in care for residents with Alzheimer’s and dementia. He is an industry leader in staff development and training, and has overseen the development, acquisition and financing of several communities.

Peder Johnsen is the CEO of Concordis Senior Living, www.con-

Funding Your Retirement...continued from front page balance should be detailed in the note. If the property is 5 units or larger, it is considered a non-consumer transaction and not governed by federal Dodd Frank Laws.

Sellers are often able to get a sale price premium, when offering seller carry back financing. The loan can have a balloon payment or can be fully amortized. Fifteen year fully amortized loans are a great option for owners liquidating in their mid sixties. The monthly payments to the owners would probably be between 40% and 50% of the current gross rents. The first ten years of retirement are considered the go-go years, with retirees traveling, golfing and pursuing activities that are relatively expensive. Usually, by their late seventies retirees slow down. A fully amortized fifteen year loan could provide the income for active retirees to pursue many of their dreams worry free.

Rental Housing Journal On-Site • September 2014

Just as you pay mostly interest in the beginning of paying on a mortgage, when financing a buyer, you collect mostly interest. Therefore, the principle of the loan is preserved for an extended period of time. It is important to review a buyer's credit report and financial strength, just as would any prudent banker.

Once you sell the property, you don't want to foreclose and revert back to being a landlord. Put yourself in the buyers' shoes and structure the deal so it is a win-win. If you know the property will need a new roof in the next couple of years, put it on before offering it for sale, Likewise, if a few units are ready for new air conditioners, replace them before selling. You can recapture the cost in your sale price.

For generations, many people have funded their retirement and enjoyed their golden years by benefiting from seller carry back financ-

ing. It is one of the unique“ exit strategies” of real estate ownership.

apartment complexes. Contact her at 520-797-6900 or tucsonrealestate@ mindspring.com

Jade Bossert has sold real estate in Arizona since 1979. She is an Associate Broker with Tierra Antigua Realty in Tucson and specializes in the sale of

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Human Element ...continued from page 5 me an example.

• Tell me about a recent situation in which you had to deal with a very upset customer or co-worker.

• Initiative Skills • Tell me about a time when you had to go above and beyond the call of duty in order to get a job done.

• Team Building Skills • Describe a time when you anticipated potential problems and developed preventive measures.

• What was the best idea you ever had for building a good team?

So how can you hire the RIGHT people for your company?

It’s a simple three step process: prepare for the process, conduct the interview utilizing the behavioral interviewing questions, and evaluate the candidates.

Step 1: Prepare for the Interview Creating a detailed Job Profile • Use a common industry recognized job title to clarify the position. Summarize all tasks of that position in order of importance.

• Make sure to indicate if position

is full time, part time, seasonal, or temporary. Include working conditions such as travel time, physical abilities needed to do the job and a summary of the basic qualifications needed, education, skill specifications, licenses, software knowledge, etc.

Prepare the Room and Yourself for the Interview • Not in your office! Away from telephones and other interruptions. Even prepare by putting a note on the door, “Interview in Process: Do Not Disturb” • Have bottled water for both yourself and the applicant • Create a “note taking” page for your notes. Never write on the application or resume itself.

• Make a time schedule and stick to it. You need enough time to get to know the applicant as well as you can and get your behavioral interviewing questions answered.

• Finally, make sure you are mentally ready for the interview too. Sometimes we are so caught up in “other duties” we are physically there, but not mentally there. Remember you are looking for that “best fit” for your existing teammates.

Step 2: Conduct the Interview Which Behavioral Questions Will You Need?

• Determine which of the skill set areas from the Job Profile needs and match to the appropriate Behavioral Interviewing Questions. You don’t want to have too many questions, but you need to have the “right ones” to glean the right skills most valuable in this position.

• Use their application or resume information to help you formulate a “true picture” of this applicant actually doing the job for you.

Be Aware of RED FLAGS during the Conversation • Gaps in employment history, lack of clarification of previous job duties, or technical status can be areas of concern of behavior and skill abilities.

• Face to Face interviews allow you, the employer, to assess the candidates and give them a clear picture of the job expectations.

Give Them Time to Ask Their Questions too • Remember it isn’t all about “selling them on the job”, but allowing them to ask you questions about the position and the company. Letting them know they are part of more than just the job they are applying for will give them the feeling of how your company’s culture works together.

Step 3: Evaluation of the Information Analysis of Each Applicant • Putting all the information together including contacting references, background checks, etc. to make the best decision for the position.

• Review those Behavioral Questions and compare by asking yourself...

• “How will the person fit in with the other team members?”

• “Would the other teammates feel comfortable with them?

Respect their authority?

Compliment the shortcomings of the other teammates?”

• “Do they have the personality to work well with other, teammates, residents, corporate, vendors, prospects, etc.?”

• “Which applicant had the best all around skill set to add value to the position?”

• “Which applicant had the most believable response to the Behavioral questions?”

Finally: Why is Behavioral Interviewing So Important?

Companies go through thousands of applications and resumes each year. Many hire those who apply thinking they have found that “perfect fit” just to find out in a few weeks that they really didn’t find out enough about the individual and it wasn’t a good fit at all. And once again, the challenge of finding that good employee continues. How can you grow a business team if you constantly have to replace members of the team?

The key successful fulfillment of a position is to get comfortable with the interviewing process and these behavioral questions not only for new hires, but for annual reviews to support decisions to promote, reward, demote, transfer, or in some cases terminate.

Remember, the best indicator of future behavior is always historical behavior whether dealing with day to day operational situations or those emergencies that require quick, fast on your feet, logical thinking.

Dedicated, forward thinking, self motivated individuals have had those traits and skills all along. Our job is to differentiate these exceptional applicants with those historical traits from those who are just “great interviewees” with a good gift of gab. Time is the equalizer.

So, how do you build a high-performance team? One GREAT HIRE at a time!

Jackie Ramstedt, CAM, CAPS, CAS is a nationally renowned Motivational Keynote Speaker, National Trainer, Operations Consultant, and Performance Coach who has more than 29 years experience in the multi-housing industry. She may be reached at: Voice: 800-925-5169 ~ Web Site: www. jackieramstedt.com ~ Email: Jackie@ jackieramstedt.com

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Market Overview ...continued from front page sponding increase in new supply was at least part of the equation, as developers put finishing touches on properties encompassing a total of 2,164 units, representing the equal largest single-quarter vintage observed in the 16-year quarterly Reis data series. Occupancy declined sequentially to 95.8% as a result, consistent with levels observed over the past three years.

Axiometrics surveys of 359 stabilized properties recorded an 96.3% average occupancy rate, up 40 bps year-over-year. Class-B and C complexes reported comparable average occupancy rates (96.3% and 96.4%, respectively), while class-A properties posted a 95.8% metric. Lease-up at new properties was brisk, averaging 12 units per month. New Downtown and North Seattle midrise buildings seemed to encounter particularly avid interest from renters.

RCR’s Seattle absorption model relies on inventory and rent growth, S&P500 returns and vacancy variables to reach a 93.6% A -R2. This model foresees demand trailing supply in 2015 and 2016, resulting in a most probably 110 bps decrease in occupancy outcome. Firmer demand is projected in the forecast out-years, keeping occupancy steady at about 94.8% in 2017 and 2018.

OCCUPANCY RATE SUMMARY Occupancy Rate (Reis) 95.8% RED 50 Rent Chg. Rank 26th Annual Chg. (Reis) -0.3% RCR YE14 Forecast 96.3.% RCR YE15 Forecast 95.2% RCR YE16 Forecast 94.6% RCR YE17 Forecast 94.8%

2Q14 EFFECTIVE RENT TRENDS Reis surveys found that metro effective rents increased $23 (2.0%) sequentially, the largest quarterly gain since 1Q13. Expressed on a year-on-year basis, rents were 6.4% higher, up from 5.9% during the first quarter. Reis found most of the impetus coming from the class-A sector, where asking rents surged 2.2% sequentially, comparing favorably to a 1.0% gain posted among B&C properties.

Axiometrics surveys of 359 stabilized same-store properties recorded an average effective rent of $1,483, up 7.1% y-o-y. This service found that class-B apartments chalked down the fastest growth (7.4%), followed by class-C (6.9%) and class-A (5.8%). Reis report that the Downtown (10.7%) and North Seattle (9.5%) submarkets recorded the fastest annual rent growth rates, benefiting for the delivery of new luxury mid– and high-rise buildings.

Analysis of Axiometrics stabilized same-store property data suggests that the northern tier suburbs enjoyed the largest percentage gains, especially Bothell, Kirkland, Everett Rental Housing Journal On-Site • September 2014

and Edmunds.

RCR’s Seattle rent model employs five lags of the dependent variable, personal income, inventory and occupied stock growth, and home price variables to achieve a 97.1% A-R2. The model projects an above average 4.0% compound annual rent growth rate through 2018, ranking 9th among RED 46 peer group.

EFFECTIVE RENT SUMMARY Mean Rent (Reis) $1,174 Annual Change 6.4% RED 50 Rank 3rd RCR YE14 Forecast 6.0% RCR YE15 Forecast 5.4% RCR YE16 Forecast 3.0% RCR YE17 Forecast 3.1% 2Q14 PROPERTY MARKETS AND TOTAL RETURNS Sales velocity accelerated during the second quarter as integrated funds managers, pension funds, REITS and private equity investors stepped up Seattle buying programs.

A total of 22 properties valued at $5 million or more exchanged ownership, generating total sales volume of $840mm. By way of comparison, investors closed on 16 and 14 deals during 1Q14 and 4Q13, respectively, for aggregate proceeds of $497mm and $745mm.

The 2Q14 average price per unit metric was $178,792. This datum represents a small increase from the prior quarter ($162,633), but a sharp decline from 4Q13’s trophy-rich $256,293 result.

Cap rates appeared to drift higher, largely because property NOIs ascended at a faster pace than asset prices. Class-A properties traded to yields in the mid– to high-4% range, while going-in yields for class-B assets gravitated toward the 5.25% 5.75% area, in each instance about 25 bps above levels observed earlier.

To account for the NOI-driven increase in Seattle cap rates, we elected to increase the generic metro purchase yield by 25 bps for the second consecutive quarter, in this case to 5.25%. With a terminal cap rate assumption of 6.0%; model derived rent, occupancy and expense inflation forecasts; and Reis-based operating expense levels, we estimate that an investor would expect to achieve a 7.3% 5-year, unlevered total return from a Seattle asset, ranking 15th among the RED 46 peer group.

continued on page 10

TRADE & RETURN SUMMARY $5mm+ Sales 22 Approx. Proceeds $840mm Avg. Cap Rate (FNM) 5.4% Avg. Price/Unit $178,792 Expected Total Return 7.3% RED 46 ETR Rank 15th RED 46 RAI Rank 35th

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RENTAL HOUSING JOURNAL ON-SITE NOTABLE TRANSACTIONS Property Name Property Approx.

(Submarket) Class/ Date of Type Transac(Constr.) tion Collins on Pine (Downtown / Capitol Hill) Park South (Tukwila / Sea-Tac) Stream Uptown (Downtown / Capitol Hill) Rock Creek Landing North (West Kent) Light Box (North Seattle)

Total Price / Appr.

Value (in millions) $29.1

$383,115

Estimated Underwritten Cap Rate 4.7%

$29.7

$118,033

5.5%

$32.9

$273,956

4.8% / 5.3% p.f.

C / GLR 1-Aug(1986) 2014

$73.8

$128,150

5.7%

B+ / MR 27-Aug(2014) 2014

$45.3

$281,099

NA / 4.8% p.f.

A / MR (2014)

23-May2014

C / GLR (1986) B+ / MR (2013)

29-May2014 9-Jul2014

The information contained in this report was prepared for general information purposes only and is not intended as legal, tax, accounting or financial advice, or recommendations to buy or sell currencies or securities or to engage in any specific transactions. Information has been gathered from third party sources and has not been independently verified or accepted by RED Capital Group. RED makes no representations or warranties as to the accuracy or completeness of the information, assumptions, analyses or conclusions presented in the report. RED cannot be held responsible for any errors or

misrepresentations contained in the report or in the information gathered from third party sources. Under no circumstances should any information contained herein be used or considered as an offer or a solicitation of an offer to participate in any particular transaction or strategy.

Any reliance upon this information is solely and exclusively at your own risk. Please consult your own counsel, accountant or other advisor regarding your specific situation. Any views expressed herein are subject to change without notice due to market conditions and other factors.

SUBMARKET TRENDS (REIS) Effective Rent Submarket 2Q13 Auburn/Enumclaw $834 Beacon Hill/Rainier $999 Bellevue/Issaquah $1,324 Bothell $1,096 Des Moines/West Kent $878 Downtown/Capitol Hill $1,520 Edmonds/Lynnwood $925 Everett /Mukilteo $931 Federal Way $906 Kent $898 Kirkland/Juanita $1,287 North Seattle $1,104 Redmond $1,265 Renton $976 Tukwila/Sea-Tac $792 West Seattle/Burien $932 Metro $1,103

10

Price / <Appr.

Value> per unit

2Q14 $857 $1,033 $1,412 $1,150 $920 $1,683 $974 $982 $930 $925 $1,356 $1,209 $1,333 $994 $811 $987 $1,174

Change 2.8% 3.4% 6.6% 4.9% 4.8% 10.7% 5.3% 5.5% 2.6% 2.9% 5.4% 9.5% 5.3% 1.9% 2.4% 5.9% 6.4%

Physical Vacancy 2Q13 3.0% 6.3% 4.9% 3.2% 2.5% 6.2% 3.4% 3.0% 3.1% 2.6% 2.7% 4.2% 4.7% 2.7% 1.9% 4.6% 3.9%

2Q14 1.9% 5.5% 5.1% 3.5% 2.0% 7.6% 2.8% 3.3% 2.6% 2.0% 4.0% 6.3% 2.7% 2.1% 1.4% 3.9% 4.2%

Change -110 bps -80 bps 20 bps 30 bps -50 bps 140 bps -60 bps 30 bps -50 bps -60 bps 130 bps 210 bps -200 bps -60 bps -50 bps -70 bps 30 bps

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RENTAL HOUSING JOURNAL ON-SITE

For more information about red’s research capabilities contact: Daniel J. Hogan Director of Research djhogan@redcapitalgroup.com +1.614.857.1416 office +1.800.837.5100 toll free

Rental Housing Journal On-Site • September 2014

James P. Hensley Senior Managing Director Head of Multifamily Originations jphensley@redcapitalgroup.com +1.770.753.6472 office +1.800.837.5100 toll free

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Five Ps ...continued from page 6

the time to identify those tasks critical to your success and make them a priority.

You can succeed with social media even if your organization doesn’t have the brand recognition of a multi-billion dollar corporation.

If you remain even-keeled and set realistic goals, the return on investment will follow.

Jeremy Juhasz is a social media strategist at EMSI Public Relations and a panelist for the Tampa Bay Marketing Summit, (www.tampabaymarketingsummit.com) on

12

Aug. 8. Jeremy has years of experience managing social media marketing for the nonprofit sector, including launching social media and online strategies for Feeding America Food Bank and Goodwill affiliates. His multi-media background includes work as a newspaper reporter and as a marketing professional. He’s a graduate of Alfred University and attended Kent State’s School of Communication and Information, public relations.

Rental Housing Journal On-Site • September 2014

RENTAL HOUSING JOURNAL ON-SITE

Rental Housing Journal On-Site • September 2014

13

RENTAL HOUSING JOURNAL ON-SITE • Executive Director – Jim Wiard • President – Gail Duke – Vice President – Kris Buker • Secretary – Becky Sanders • Treasurer – Brett Stevens • Vice President of Suppliers Council – Barry Savage • Immediate Past President – Jay Olson

Going Smoke-Free A

t our recent Membership Meeting – “Residential Issues from Pets to Pot”, attendees were treated to expert speakers on the confusing subjects of animals, marijuana, domestic violence and smoking policies as they apply to our industry.

With Washington’s recent adoption of legalized recreational marijuana use under certain conditions, property managers are receiving more and more complaints from residents about the intrusion of not just cigarette smoke but now marijuana smoke. This is raising issues of habitability and health concerns.

One of the best ways to counteract these complaints regarding smoke and odors of either kind is to implement a no-smoking policy at your community.

Establishing a Smoke-Free Policy is becoming a growing trend with multifamily landlords in Washington and across the country. Property owners find this kind of policy is good for business and a clear winwin, lowering costs and risks for an owner and providing a healthier, safer, greener environment for happier residents.

Smoke-free policies can help land-

14

lords protect their residents from the dangers of second-hand smoke and provide benefits for their owners’ investments.

The benefits to owners include reduced cleaning and maintenance costs to turn over apartments at move-out, reduced vacancy loss resulting from shorter turnover time, fewer property fires caused by careless smoking, reduced insurance costs as a result of reduced insurance claims, lowered risk of resident warranty of habitability liability claims over adverse health effects caused by smoke, and the increased marketability of providing a healthier, safer living environment for residents.

No-smoking policies will also preserve and enhance property re-sale value. Surveys have shown that the vast majority of renters favor policies eliminating smoking in apartment homes, and they would pay higher rent to live in a healthier, greener community. It is widely accepted that no-smoking policies do not violate Fair Housing Laws.

Establishing a no-smoking policy in a newly constructed apartment community is relatively easy, compared with converting an existing

building to no-smoking. However, there is a market for healthy living homes created by no-smoking policies. If you don’t have a no-smoking policy in your community, now is the time to make a change.

Landlords nationwide and locally have developed a reasonable stepby-step process for implementing a smoke-free policy in their communities: Step 1 – Develop Your Policy

18300 Cascade Ave. S., Suite 130 Tukwila, WA 98188 (425) 656-9077 (425) 656 9087 (fax) admin@wmfha.org

The most important part of Step 1 is making the decision to go smokefree. Consulting with building owners, employees and residents will give you the initial buy-in needed to make the commitment. Then develop a clear policy and understand and communicate the reasons for the decision.

Step 2 – Develop a Transition continued on page 20

Rental Housing Journal On-Site • September 2014

RENTAL HOUSING JOURNAL ON-SITE

Mind Your Business Tia’s Tips for better rental management

By Tia Politi Damages, Depreciation, and Normal Wear & Tear Assessing charges to a tenant’s deposit is fraught with peril for many landlords. What are damages?

How do you calculate depreciated damages? What is normal wear & tear? These questions are common to our business as landlords and I hope that the following will help guide you in assessing fair and reasonable charges you are owed, without ending up losing a court battle because you assessed improper charges.

Damages in the context of landlord-tenant relationships are related to actual failure of the tenant to take ordinary care; accidental or intentional acts of violence to the premises by tenants or guests; or unpaid tenant charges related to the tenancy, such as rent, fees, and unpaid bills.

Damage charges can also encompass items which a landlord chooses not to repair, loss of use of the rental dwelling during repairs (as long as repairs are performed in a “timely fashion”), and depreciated value of the rental dwelling as a result of tenant destruction.

So, for example, say your tenant

Rental Housing Journal On-Site • September 2014

punched a hole in one of the walls.

You can patch it so that it is useful for another tenant, but your property has suffered depreciated damage as the wall will never be the same unless you take a large section down to the studs and repair it properly.

You may charge the full repair cost for this damage even if you choose not to fully repair it at this time.

I had a tenant who moved in to a unit with brand new linoleum, and when she moved out a year later, we discovered a large crescent-shaped burn in the new flooring. The owner chose not to replace the linoleum as it still had a lot of wear left in it, but we did fairly charge her as though we had replaced it. A tenant can also be financially responsible for failing to disclose repair issues that result in ongoing damage to the property from things like leaks; however, landlords can also bear at least partial responsibility if they fail to perform reasonable inspections during which damages could be noted and mitigated.

So, if your tenant lived in your property for eight years and you never inspected, but discover a leak on move out that has completely rotted the kitchen floor, how is it reasonable to charge the tenant 100%?

What is reasonable in a case like this is a difficult question to answer, but I always say that you should imagine explaining yourself to a judge in court, which usually clarifies the issue to some extent.

Depreciation is an honest attempt to assess charges for damages to a tenant while considering the age and prior condition of the damaged item.

So, in one case, I had tenants who left two damaged items in the house

they rented: the kitchen counter and the living room carpet.

The counter was brand new on move in and absolutely perfect on move out except for a large circular burn adjacent to the cook top where apparently the tenant set a hot pan.

As this was a laminate counter, there was no way to effect a repair and the entire counter needed to be replaced at a cost to the tenant of 100% using continued on page 16

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Mind Your Business ...continued from page 21 comparable materials.

The living room carpet had been burned when hot coals had popped out of the fireplace. There was no way to repair it; however, the carpet was six years old and had a lifespan of ten years under normal wear conditions.

In this case, we charged the tenants 40% of the replacement cost of comparable carpet. You may not use a tenant’s responsibility for damage to upgrade your home at their expense. So, if we had decided to replace the living room carpet with a high-end wool carpet, for example, we would have gotten a bid for replacement of the normal carpet, charged that amount and the owner would have absorbed the rest.

If you’re not sure what a fair charge is for a specific repair, contact an experienced contractor for advice.

Normal wear and tear first of all, depends on the length of the tenancy.

In a tenancy of 10 years, there will be much more wear and tear than there would be with a tenancy of only one year. Other factors would include the number of residents or animals living in a unit, the quality of the materials used in the property, the condition prior to move in, and the age of things like carpet and paint.

A good interior paint job can be expected to last 5-7 years, with some minor touch ups between tenancies.

The lifespan of flooring depends on its quality as well. Your average carpet can be expected to last between 7-10 years (or more for high quality carpet) of normal usage. Hard flooring can have a lifespan of 7-25 years, again depending on quality.

Normal Wear & Tear – Includes, but is not limited to: • Minor scuffs on floors or trim • Nicks on corners of walls • One or two pictures holes on walls • Minor scratches around knobs or handles • Wear patterns in flooring in hightraffic areas

• Caulking • Broken window seals • Aged fixtures • Replacement seals on appliance doors • Mold/mildew/peeling paint related to failure of housing components such as fans, leaky window, leaky roof • Damage to floors, counters, etc., from poor caulking Damages – Includes, but is not limited to: • Filth, grime, staining, trash inside or out • Gouges/scratches/burns/stains on floors, trim, counters, appliances, cupboards, walls, ceilings, etc.

• Chunks of drywall broken off • Multiple or extra large holes in walls, ceilings, or trim • Bent or missing hardware • Dented metal doors • Ripped, gouged, stained or frayed flooring • Unauthorized tenant “improvements” • Urine/feces • Unkempt yard • Broken globes or wrong wattage bulb in fixture that causes it to fail • Broken shelves, door guards, drawers on appliances • Mold/mildew related to tenant lifestyle (lack of ventilation, heat, circulation) Figuring out what is fair for each situation is at best an imperfect science. So, be reasonable and act in good faith and you should avoid many troubles. Please call the Help line if you need assistance with a specific situation.

Tia Politi, ROA Board Member, Rental Owner, Lead Property Manager at Acorn Property Management

• Dingy paint (depending on lifespan of paint & tenancy) • Cupboard finish deteriorating

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Rental Housing Journal On-Site • September 2014

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Three Important Steps For Building Property Management Compensation Plans ©

D

uring the course of your professional career as a property management executive, building new compensation plans will be one of the most important projects you ever undertake. In fact, this project has the potential to be an explosive issue for your team of SuperStars and must be designed with great care. The information in this article will outline three important steps for building powerful compensation plans and will share many secrets for your success. When a compensation plan is built right, your team will love you and your company success will soar!

Gathering information and setting objectives: Start by evaluating your current compensation plans to see how closely it aligns with the critical success factors for your property management company and your historical financial performance.

Next, review what percentage of each person’s compensation is salary versus commission/bonus and compare this to competitive positions within the geographical locations you manage. Lastly, develop specific compensation objectives, such as: performance to budget or goals,

18

By Ernest F. Oriente, The Coach {Article #221…since 1995}

occupancy for each apartment community, fiscal performance of this quarter compared to the same quarter last year, resident retention and/ or resident satisfaction surveys.

Tip From The Coach: Remember, each person on your property management team must see a direct connection between their efforts and their compensation plan. In addition, how you define the objectives for your compensation plans will be a direct reflection of the exact individual or team performance you will receive.

Developing performance measurements and plan options: Once you have defined your compensation objectives, the next step is to determine how you will measure performance. For instance, will your new compensation plan reward individual performance, team performance or a blend of both? In addition, your compensation plans should also consider how often commissions/bonuses will be paid and what will be the impact if an individual or your team does not meet or exceed their compensation objectives. Next, design several compen-

sation models on a spreadsheet so you can see how annual compensation will vary as you change or modify the performance/pay variables.

In addition, calculate the range of income your SuperStars will be able to earn over the next 12 to 60 months.

Lastly, test and run your historical results through your new compensation plans to verify performance levels and income expectations.

Tip From The Coach: Some of our property management clients like to confidentially share preliminary compensation models with just a few SuperStars in their company to gather some additional insight before finalizing their new compensation plans. In addition, some of our clients will grandfather the compensation for their current team but all newly hired team members will be paid based on the new compensation plan. Remember, there is no such thing as a perfect compensation plan, but there is a compensation plan that is well-suited for your property management company. Lastly, just because a compensation plan has worked in the past, does not mean it will work in the future as the prop-

erty management profession is changing and evolving rapidly.

Selecting and evaluating your options: Once you have tested your compensation plans for accuracy and performance expectations, select the plan that most closely aligns with your company objectives. Sometimes it can be helpful at this point to have another set of eyes, outside of your property management company, review your new compensation plan to ensure it’s clear and reasonable.

Next, consult with your internal resources to be certain they can design and produce the information required by your new compensation plan. In addition, your team will need a written description of their new compensation plans and a financial spreadsheet detailing exactly how this compensation will impact them over the next 12 and 24 months.

Tip From The Coach: Once you have presented your new compensation plan to your property management team schedule a monthly appointment over the next six months to vigorously review and evaluate the results. In addition, ask continued on page 25

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RENTAL HOUSING JOURNAL ON-SITE

Dear Maintenance Men:

By Jerry L'Ecuyer & Frank Alvarez

Dear Maintenance Men:

Can graffiti scratched windows be repaired? I have a number of windows that have been scratched or etched by graffiti vandals.

Replacing the window is very expensive. Do you have any recommendations?

Jessie Dear Jessie: Yes, graffiti damaged windows can be repaired. It is often a two step process involving removing the scratches or etching with a buffing compound and using anti-graffiti film over the glass. Cerium Oxide rubbing compound is typically used with an electric buffing wheel for getting the scratches or etching out of the glass. Cerium Oxide can be found on the internet, glass & stone shops or good hardware stores. 3-M makes a very good anti-graffiti film that can be used as preventive protection or as a sacrificial layer. If you decide to do the work yourself, be careful with the electric buffing wheel. Keep the buffing wheel moving over the scratches and never concentrate on one spot for long as it will burn the glass. Removing

Rental Housing Journal On-Site • September 2014

scratches from glass is a bit of an art and we recommend contacting a repair firm specializing in glass graffiti removal.

ommendation for peace of mind would be to repaint the patio floors using the above information as a guide.

Dear Maintenance Men: While getting a unit ready for rent, I painted the concrete patio with flat concrete paint. The patio looks much better; however I am worried the surface may be slick when wet. Should I be concerned and what can I do about it now?

Kristina

Dear Maintenance Men: I have a number of patio decks coved in artificial turf. Because of the sun and use, the “turf” is looking worn and tattered. What can I do to make it look better? Do I need to remove the old turf before putting down new artificial turf or can I glue down over the old? How do I remove the old turf and is it difficult? If I want to go back to a natural surface, how do I remove the adhesive?

KC

Dear Kristina: Concrete patios can be slick when wet and more so after they have been painted. A simple solution is to use grit mixed in with the paint to give the concrete surface a bit of grip when walked on. Look for a clear non-slip polymer grip additive. The additive is mixed in with the paint or sealer and applied to the concrete with a roller. The polymer grit can be found at any hardware store in either the concrete or paint departments.

Polymer grit infused paint can also be purchased if you do not want to mix in the grit. Avoid using silica sand or aluminum oxide; they both work, however they may change the appearance of the surface. Our rec-

Dear KC: Sounds like you have your work cut out for you! In order to get the new turf/carpet to look good on the deck, the old must be removed. The new turf/carpet will not stick to the old carpet and the old glue will need to be removed as well. If you have a small area of glued down turf/carpet to remove, use a hand scraper to pry the carpet off the surface. If you have a large area; use a roofing scrapper to quickly remove the carpet.

The old glue can be removed using a scraper and applying an adhesive

removal solvent or a heat gun. Never combine the heat gun and the solvent as the solvent is flammable. The solvent can be found at any hardware store and should be used in a well ventilated room. If you don’t want to use a solvent; use a heat gun to soften the glue and use the scraper to remove the glue. Both methods are messy and labor intensive; however the heat gun is the less toxic of the two. If you are not replacing the carpet and want to return to a natural surface; power sanding or media blasting may be needed to remove any trace of the glue. The surface will need to be sealed to complete the job.

Please call: Buffalo Maintenance, Inc for maintenance work or consultation.

JLE Property Management, Inc for management service or consultation Frankie Alvarez at 714 956-8371 Jerry L’Ecuyer at 714 778-0480 CA contractor lic: #797645, EPA Real Estate lic. #: 01460075 Certified Renovation Company Websites: www.

BuffaloMaintenance.com & www.

ContactJLE.com www.Facebook.com/ BuffaloMaintenance

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Smoke-free ...continued from page 14 Plan Determine when and how you want to implement your new policy.

What is the starting date for any new residents? When is the starting date for existing residents? Develop your legal lease language. Sample lease language to use either in a lease document or a separate lease addendum is available on many different websites such as www.smokefreewashington.com.

Residents Prepare your legal written notice to residents giving notification of the change in policy. It is best to give ample time, beyond the legal notice requirements, to give existing residents time to acclimate to the new policy and have time to meet with management if desired. You may decide to honor existing term leases in place and enact the new policy when those leases expire in the future.

Step 3 – Notify Your

Step 4 – Market the Benefits

of the Policy Train staff to be spokespersons for the new policy and the reasons the property has chosen this new rule.

Make sure in your leasing presentations that the benefits of the amenity of a no-smoking policy are promoted. Include “no-smoking” in your online and print marketing. The property offers a cleaner, healthier environment for all residents, free from smoke drift that can cause health issues for infants, children, elderly and those with existing health conditions. Sell this benefit. It may set you apart from the competition.

Step 5 – Enforcement of the Policy Enforcement starts by setting clear expectations at the outset of the tenancy. Then, enforce your new policy just as your management would any other policy, such as loud music, parking infractions, clutter, etc.

Document any potential violations, meet with residents to discuss any potential policy violation and follow your standard progressive discipline measures of resident notification.

Simply working with residents in a customer-friendly manner typically achieves the best results.

Keep in mind, residents who

20

smoke do not need to move out.

Smokers simply cannot smoke inside their apartments, in common areas or in proximity to buildings where smoke can drift into other apartments.

Studies have shown that in most cases, after implementation of a nosmoking policy, you will find that turnover costs will drop, fire claims will be reduced, resident complaints of smoke drift will decline, and insurance costs will ultimately go down. Customer and employee satisfaction will increase, and occupancy in many cases goes up due to the attractiveness of the amenity. You will have happier residents who will want to stay in your community.

Implementing a no-smoking policy may be in the best interest of a property owner and is not as challenging as one might suspect.

There is clear precedence and many resources for making this happen, and now may be the time to act.

For more information or for assistance, please feel free to call us at the Washington Multi-Family Housing Association at 425-656-9077.

Rental Housing Journal On-Site • September 2014

RENTAL HOUSING JOURNAL ON-SITE

Help Your Process Server to Save Time in Your Eviction

By Ted Kimball

O

ne of the longest delays in processing evictions occurs when not all occupants are served personally (hand to hand) with the unlawful detainer summons and complaint. More often than not, the occupants know they must be legally served in order for the court to award a judgment for possession of

Rental Housing Journal On-Site â&#x20AC;˘ September 2014

the subject property. If they are sophisticated, they know that they can delay the time for the eviction by two to three weeks if they successfully avoid the process server.

If the unlawful detainer is not served in person, it can be served on another person who resides at the property or on the person in charge of the place of employment of the occupant, so long as they are of

sound mind and at least 18 years of age. If no one can be found to substitute serve, then the court will allow the process server to post the unlawful detainer on the front door of the subject property and mail a copy by certified mail, but only after the court has signed an order allowing for this method of service.

Most courts also require process servers to attempt to serve the unlaw-

ful detainer personally for three consecutive days, with both morning and afternoon/evening attempts before the suit can be served by substituted service. Once served by substitution, the occupant has a total of 15 days to file responsive papers in court instead of the normal five days following a personal service.

Therefore it is crucial that the process continued on page 26

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D

Disposition of Personal Property of Deceased Tenants

ealing with the death of another is never easy. Dealing with the death of a single tenant living along in a rental property is made more difficult by applicable laws in Washington. Many landlords and property managers do not know what to do or how to handle deceased tenant’s property.

The existing statues are helpful when the deceased’s estate is probated but are painful in their application to small estates that frequently are too small to probate. A change in law is needed.

Contrary to popular belief, the death of the tenant does not automatically terminate the tenancy. In re Barclay’s Estate, 1 Wash. 2d 82, 95 P.2d 393 (1939). The Notation of con-

tinued tenancy is problematic when the tenant lives alone and the rental agreement prohibits assignment or subletting of the tenancy. It’s hard to envision the public interest in requiring the landlord to continue renting to a deceased person. It’s similarly baffling as to why the deceased estate should be required to continue paying rent for an uninhabited dwelling.

Synopsis The following is a synopsis of the current Washington statutory authority relating to the disposition of deceased tenants’ personal property.

Included is a summary of applicable statutes: RCW 11.08.300 Transfer of property to the department of revenue; RCW 11.42.010 Notice B

Qualifications; RCW 11.42.020 Notice to Creditors B Manner B Filings B Publications, and a Non-probate Notice to Creditors RCW 11.42.030; RCW 11.48.020 Right to possession and management of estate; RCW 11.62.010 Disposition of personal property, debts by affidavit, proof of death - contents of affidavit B procedures B securities; and RCW 11.62.020 Effect of affidavit and proof of death - Discharge and release of transfer or Refusal to pay or deliver B Procedure - False affidavit - Conflicting affidavit B Accountability.

RCW 11.08.300 Transfer of property to department of revenue provides in part: Escheat property may be trans-

ferred to the department of revenue.

The department of revenue shall furnish proof of death and an affidavit meeting the requirements of RCW 11.62.010 to any person who has possession of any personal property belonging to the decedent. Upon receipt of such proof of death and affidavit, the person shall deliver the personal property, or as much of either as is claimed, to the department of revenue pursuant to RCW 11.62.010.

RCW 11.42.010 Notice agent B Qualifications provides in part: (1) Subject to the conditions stated in this chapter, and if no personal representative has been appointed in this state, a beneficiary or trustee is qualified to give non-probate notice to creditors under this chapter.

(2) A person or group of persons is deemed to have received substantially all of the decedent=s probate and non-probate assets.

(3)(a) The Anotice agent@ means the qualified person who: 1) Pays a filing fee to the clerk of the superior court in a county in which probate may be commenced regarding the decedent, the Anotice county@, and receives a cause number; and 2) Files a declaration and oath with the clerk. a) The declaration and oath must be made in affidavit form or under penalty of perjury and must state that the person making the declaration believes in reasonable good faith that the person is qualified under this chapter to act as the notice agent and that the person will faithfully execute the duties of the notice agent as provided in this chapter.

RCW 11.42.020 Notice to creditors B Manner B Filings B Publications provides in part: (1) The notice agent may give non-probate notice to the creditors of the decedent if: 1) As of the date of the filing of the notice to creditors with the court, the notice agent has no knowledge of another person acting as notice agent or of the appointment of a personal representative; and 2) According to the records of the court, no cause number regarding the decedent has been issued to any other notice agent and no personal representative had been appointed.

(2) The notice agent must give notice to the creditors of the decedent, as directed in RCW 11.42.030, announcing that the notice agent has elected to give non-probate notice to creditors.

1) The notice agent shall first file the original of the notice with the court.

2) The notice agent shall then continued on page 24

22

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RENTAL HOUSING JOURNAL ON-SITE

How Do You Compete With the New Apartment Communities?

By Alexis Hammond

T

he Wall Street Journal recently noted that the share of new homes being built as rental apartments is at its highest level in four decades. While it certainly helps the economy, an increase in apartment homes can strike fear in the hearts of many property managers. After all, these newer units will likely boast state of the art features,

along with a long list of amenities designed to attract renters. So how does your (older) property compete with these sparkling new communities? Here are just a few suggestions: Play up your property’s best features. Does your community offer incredible views? Make sure you note that in your advertisements.

State of the art work out room? Brag about it to the health clubs in the area. Take whatever is the best part

of your property and make sure that you prominently display it at all times.

Keep your property pristine.

While it may be difficult initially to compete with a brand new property, letting your own become cluttered and dirty won’t do you any favors.

Always keep your windows sparkling clean, trash picked up and landscaping neat. Create your own good first impression.

Use their marketing efforts to your own advantage. New housing will likely drive more people to the area, providing a great opportunity to market the benefits of your own community to a new set of prospective tenants.

Consider a community facelift.

Has the arrival of a new property made you realize that it may be time to update your own? Even something as small as pruning overgrown trees, or a new paint job can make your property more competitive.

Focus on tenant retention. If your community has a high occupancy rate, you should concentrate on retaining your current tenants rather than worrying about the competition in the area. It costs less to

retain a current tenant than it does to find a new tenant. Keep the ones you have.

Embrace the challenge. We can all become complacent in our daily lives; both personally and professionally. Look at your new competition as a challenge to manage the best property you can in the best way you can.

Don’t compete. If you’re happy with your property, just continue to manage it the way you always have and don’t worry about the competition.

Let’s face it; there will always be competition for renters. By concentrating on making your property the best that it can be, you’ll be able to handle the new competition with ease.

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Deceased Tenant ..continued from page 22

cause the notice to be published once each week for three successive weeks.

3) The notice agent may at any time give actual notice to creditors.

4) The notice agent shall also mail a copy of the notice to the State of Washington department of social and health services=.

The notice agent shall file with the court proof by affidavit of the giving and publication of the notice.

RCW 11.48.020 Right to possession and management of estate provides in part: Every personal representative shall, after having qualified, by giving bond as hereinbefore provided, have a right to the immediate possession of all the real as well as personal estate of the deceased Y and shall keep in tenantable repair all houses, buildings, and fixtures thereon, which are under his control.

RCW 11.62.010 Disposition of personal property, debts by affidavit, proof of death B Contents of affidavit B Procedure B Securities provides in part: At any time after forty days from the date of a decedent=s death, any person who has possession of any personal property belonging to the decedent which personal property is an asset which is subject to probate shall deliver such property to a person claiming to be a successor of the

decedent upon receipt of proof of death and of an affidavit made by said person which meets the requirements of subsection (2) of this section.

An affidavit meeting the requirements of RCW 11.62.010 (2) shall state: 1) The claiming successor=s name and address, and that the claiming successor is a Asuccessor@ as defined in RCW 11.62.005; 2) That the decedent was a resident of the state of Washington upon date of death; 3) That the value of the decedent=s entire estate subject to probate does not exceed one hundred thousand dollars; 4) That forty days have elapsed since the death of the decedent; 5) That no application or petition for the appointment of a personal representative is pending or has been granted in any jurisdiction; 6) That all debts of the decedent including funeral and burial expenses have been paid or provided for; 7) A description of the personal property and the portion thereof claimed, together with a statement that such personal property is subject to probate; 8) That the claiming successor has given written notice, either by personal service or by mail, identifying his or her claim, and describing the property claimed, to all other successors of the decedent, and that at least ten days have elapsed since the ser-

vice or mailing of such notice; 9) That the claiming successor is either personally entitled to delivery of the property claimed on the behalf and with the written authority of all other successors who have an interest therein.

(A copy of such affidavit is attached for your review. Said affidavit upon receipt must be mailed to the department of social and health services, office of financial recovery. ) RCW 11.62.020 Effect of affidavit and proof of death B Discharge and release of transferor B Refusal to pay or deliver B Procedure B False affidavit B Conflicting affidavits B Accountability provides in part: The person delivering personal property pursuant to RCW 11.62.010 is discharged and released to the same extent as if such person has dealt with a personal representative of the decedent, unless at the time of such delivery, such person had actual knowledge of the falsity of any statement which is required by RCW 11.62.010 (2). Such person is not require to see to the application of the personal property, or to inquire into the truth of any matter specified in RCW 11.62.010 (1) or (2).

An organization shall not be deemed to have actual knowledge of the falsity of any statement contained in an affidavit made pursuant to RCW 11.62.010 (2) until such time as said knowledge shall have been brought to the personal attention of the individual making the delivery of the personal property claimed under RCW 11.62.010.

If any person to whom an affidavit and proof of death is delivered refuses to deliver any personal property, it may be recovered or its delivery compelled upon proof of their right in a proceeding brought for the purpose by or on behalf of the persons entitled thereto. If more than one affidavit is delivered with reference to the same personal property, the person to whom an affidavit is delivered may deliver any personal property in response to the first affidavit received, provided that proof of death has also been received, or alternatively implead such property into the court or payment over to the person entitled thereto. Any person to whom delivery, transfer, or issuance of personal property is made pursuant to RCW 11.62.010 is answerable and accountable therefore to any personal representative of the estate of the decedent or to any other person having superior right thereto.

The above statutes appear to indicate that upon the demise of a tenant

the landlord/management company has the ability to surrender personal property to an individual who possesses letters testamentary or other proof that he/she is appointed the personal representative, executor, executrix, or notice agent of the decedent’s estate. If there is no such personal representative or notice agent, the landlord/management company must wait forty (40) days after the tenant’s death prior to delivery of personal property of the decedent to an individual who furnishes and affidavit consistent with requirements set forth in RCW 11.62.010. If no such personal representative, notice agent or affiant claims personal property of the decedent then it appears that the decedent=s personal property may be transferred to the department of revenue pursuant to RCW 11.08.300. The current process requires either the costly probate of the deceased tenant’s estate or a delay of over forty days to claim tenant property. The current process is not helpful to heirs of very small estates not landlords.

Change in the Law There are different approaches to dealing with deceased tenant property. The national Revised Uniform Landlord Tenant Act (RURLTA) dictates a process similar to dealing with abandoned personal property.

The RURLTA process provides for a storage period of up to sixty (60) days. The RURLTA approach is likely better than Washington’s current law but a more efficient and expedited process is available.

Several states such as Oklahoma, Kansas and Texas provide for the appointment of a designated representative for the tenant at the onset of the tenancy. The WAA believe this type of statutory scheme is better than existing Washington law. Last year, WAA proposed a deceased tenant property initiative in House Bill 1520. Under his bill the designated person is empowered, upon the tenants demise, to access the tenants personal property and wrap up the tenancy. The designated representative remains liable and accountable to the tenant’s estates. If the designated representative fails or refuses to take possession of the deceased’s personal property after Notice the statue would allow disposal of the property by the Landlord.

Please contact Mark Gjurasic or Chester Baldwin at Public Affairs of Washington, LLC to pledge your support for this necessary change in the law.

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The Coach ..continued from page 22

for feedback on your new compensation plan and swiftly address any problems you or your teams discover.

Want to hear more about this important topic or ask some additional questions about how to build powerful compensation plans? Send an E-mail to ernest@powerhour.com and The Coach will E-mail you a free PowerHour invitation.

Times. Since 1995, Ernest has written 225+ articles for the property management industry and created 400+ property management forms, business and marketing checklists, sales letters and

presentation tools. To subscribe to his free property management newsletter go to: www.powerhour.com. PowerHour® is based in Olympic-town…Park City, Utah, at 435-615-8486, by E-mail

ernest@powerhour.com or visit their website: www.powerhour.com

Ernest F. Oriente, a business coach/ trainer since 1995 [31,500 hours], serving property management industry professional since 1988--the author of SmartMatch Alliances™, the founder of PowerHour® [ www.powerhour.com ], the founder of PowerHour SEO [ www. powerhourseo.com ], the live weekly PowerHour Leadership Academy [ www.powerhourleadershipacademy. com/pm ] and Power Insurance & Risk Management Group [ www.pirmg.com ], has a passion for coaching his clients on executive leadership, hiring and motivating property management SuperStars, traditional and Internet SEO/SEM marketing, competitive sales strategies, and high leverage alliances for property management teams and their leaders. He provides private and group coaching for property management companies around North America, executive recruiting, investment banking, national utility bill auditing, national real estate and apartment building insurance, SEO/SEM web strategies, national WiFi solutions [ www.powerhour.com/propertymanagement/nationalwifi.html ], powerful tools for hiring property management SuperStars and building dynamic teams, employee policy manuals [ www. powerhour.com/propertymanagement/ employeepolicymanuals.html ] and social media strategic solutions [ http:// www.powerhour.com/propertymanagement/socialmedialeadership.html ].

Ernest worked for Motorola, Primedia and is certified in the Xerox sales methodologies. Recent interviews and articles have appeared more than 8000+ times in business and trade publications and in a wide variety of leading magazines and newspapers, including Smart Money, Inc., Business 2.0, The New York Times, Fast Company, The LA Times, Fortune, Business Week, Self Employed America and The Financial

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Help Your Process Server ...continued from page 23 server is able to serve each occupant personally (hand to hand) to avoid a two to three week delay in your case.

The more information provided to the process server, the more likely he/she will be able to quickly serve all occupants personally with the unlawful detainer action. We recently polled our process servers to find out what is most helpful to them in serving all occupants personally with the unlawful detainer. Below are some of the most helpful ways you can assist your process server in achieving a personal serve on all occupants.

Places of Employment It is much easier to avoid a process server at home, rather at the occupant’s place of employment. To avoid the process server at home, they simply don’t answer the door.

Therefore, it is important to include the occupant’s verified place of employment to improve your chances of a personal serve.

Description of Occupant’s Vehicle and Parking Space Number It is easy for the process server to tell if the occupants are home by checking their parking space and/or description of their car with license plate. If a stake out is necessary, it is also a good place to wait until the occupant wants to leave in their vehicle.

Best Time to Find Home It is helpful to know the best time to find the occupant at home.

Occupants who work a late shift ver-

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sus someone who is unemployed makes a big difference as to the best time the process server can expect to find the occupants at home.

Security Codes or Keys Many times our process servers have to wait for someone to enter or exit the property before they can even get to the occupant’s door. It is very helpful to give the process server the gate code or keys so they can gain entry. Every process server we use is licensed and bonded.

Dangerous Animals or Conditions It is important to keep the process servers aware of any dangerous conditions or animals on the property so they can take necessary precautions.

Additional Descriptions of the Subject Property It is very helpful to identify the name of the apartment community in addition to the street address and unit number. If there are several buildings, describe the building where the subject property is located so the correct unit is easy to identify.

An important part of our unlawful detainer practice is to ensure the process server assigned to your case has all of the information necessary to serve each occupant in person. If your process server has all of this information, you too could save valuable time in the unlawful detainer process.

PropertyManager.com a Service of AppFolio

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