Rental Housing Journal - On-Site - January 2014 by Professional Publishing, Inc

Rental Housing Journal On-Site 3 How Deep are Your Pockets? 5 How to Ensure a Successful Business or Property Sale in 2014 6 Apartment Markets Soften Slightly According to NMHC Survey 5 Dear Maintenance Men 8 Double Your Management Productivity... In 30 Days! 9 Security Deposits 10 Shoptalk Are You Alive After Five?? 12 Bending the Cost Curve

January 2014 - Vol. 8 Issue 1 10 WMFA WMFA Brand Refresh 17 5 Questions with Multifamily Plumbing Expert, Stephen Poff 19 Resolve to Recycle 20 Increase Demand for Rental Housing Drives Global Residential Real Estate Investment Trusts 21 Property Insurance - The Basics on Insuring Your Property 22 How to Prepare for a Winter Storm 23Housing's Contribution to GDP PUBLISHED 21 YEARS

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Market Losing Steam, Rents Drop $5 Seattle - Apartment Insights survey shows the rental market reversing course after two consecutive hot quarters according to Tom Cain of Apartment Insights. The data are from his Seattle firm’s 4th quarter statistics and trends on 50+ unit properties in the King/Snohomish market. VACANCY: 4.63% The vacancy rate for conventional, stabilized 50u+ properties in the King/Snohomish market is 4.63%, up from 4.40% last quarter. A year ago it stood at 4.75%. The overall vacancy rate which includes properties in lease-up and out-of-service increased from 5.94% to 6.15%. King County has a vacancy rate of 4.59%; Snohomish County is at 4.77%. In the 4th quarter of 2012 we noticed that rents in each of three Eastside submarkets declined 3% when the overall market had not declined. We had never seen a time when Eastside markets performed so poorly relative to the overall market. We speculated that the then recently implemented SR520 bridge toll and its negative impact on I-90 and SR 522 which connects Bothell and Seattle was the cause. It turns out that we were barking up the wrong tree. For the second straight quarter, the two submarkets with the highest vacancy rates are both on the Professional Publishing, Inc PO Box 30327

Eastside. They are Bellevue East at 6.95% and Eastside South at 6.2%. Competition from new construction is not a factor in these two submarkets. All the other submarkets are below 6%. Bothell has the third worst vacancy rate, 5.57%. Rents declined in all three of these submarkets. We decided to dig further into

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the cause of the Eastside's unprecedented poor performance. We learned that three major companies had vacated a massive amount of space in the I-90 office submarket, leaving it with a vacancy rate of close to 20%. This is a huge submarket in terms of Continued on page 5

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Top New Year’s Resolutions for Property Managers Here is a list of four resolutions that property managers should have on their list for 2014. None of them are difficult or require an immense amount of work, and all of them would bring rewards throughout the coming year. Start the New Year off organized. An organized landlord is a more profitable landlord. File your documents and paperwork logically and neatly in a file folder with brackets on each side of the folder. Two-hole punch the top of each document and file them in a way that works for you. Some landlords put all “pre-move in” documents on one side, and all other documents on the other. Being organized is simply a good business practice. Whether you manage one rental unit or a thousand, being organized and consistent will make you a better landlord and put more of the profit in your pocket. Aim for more work/life balance. Build down time into your schedule. When you plan your week, make it a point to schedule time Continued on page 7

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How Deep Are Your Pockets? Liability Insurance is Important to the Financial Wellbeing of Your Business

By Ken Stewart, Capital Insurance Group Director, CIG Commercial Lines

arlier this year, a federal court judge ordered RadioShack to pay almost $675,000 to a 55-year-old employee who claimed that he was fired in retaliation after complaining of age discrimination. In February 2013, a Californiabased real estate services company agreed to pay $50,000 to settle claims that it fired an employee rather than extending her medical leave while she recovered from a stroke. And last year, a Nevadabased supplier of onsite portable toilets paid $50,000 to settle claims of racial harassment and retaliation filed by an African-American driver for the company. Discrimination, wrongful termination, sexual harassment, hostile working environment, failure to promote – the range of grounds upon which employees can file suits against their employers is vast, and employees are suing more often and receiving greater judgments and settlements than ever before. The U.S. Equal Employment Opportunity Commission (EEOC) reports that almost 100,000 discrimination charges were filed in fiscal year 2012 against employers under EEOCenforced statutes, leading to more than $365 million in settlements and judgments. Jury Verdict Research reported a median compensatory award for EPL lawsuits in 2011 of $291,500 (Punitive Damages may not be covered in certain states).

Your business is at risk. Whether you are a huge conglomerate or a small neighborhood shop, if you hire and manage workers, you are at risk of being sued by an existing, former, or prospective employee. Even when you consistently treat your employees fairly and professionally, have employment procedures, policies, and handbooks in place, and have known your staff personally for years – it could happen to you. And even when employers can prove that they are not at fault, the costs to retain legal counsel, prepare a defense, and face possible litigation can add up quickly. According to recent statistics, defense costs for employment practices claims can exceed $100,000 per claim. How can you protect your business? Employment Practices Liability Insurance (EPLI) provides protection for an employer against claims made by past or present employees, as well as prospective employees who were never actually hired. It covers a wide span of employmentrelated allegations – including discrimination (age, sex, race, disability, etc.), wrongful termination of employment, and sexual harassment. Increasingly, in fact, investors are requiring companies to carry EPLI coverage, since they can also be held liable in suits relating to employment practices. It can happen to ANY firm, large or small. Small business owners may be tempted to

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think that only large companies are at risk of EPL claims. In fact, EPL lawsuits are among the largest and most common risks faced by companies both large and small. A 2009 discrimination claims survey* found that two out of three small business owners were concerned that employees might bring discrimination claims or other employmentrelated charges against them. And 60 percent were continued on page 11

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How to Ensure a Successful Business or Property Sale in 2014 Surprise, It’s Not Only About The Price!

orporations are holding record levels of cash, interest rates are low and the housing market is rebounding. The result? Merger and acquisitions professionals are buying more businesses and high-end homes are selling faster -Silicon Valley had a 26 percent increase in sales of $1.5 million-andup houses in the first half of last year. If you’re considering selling a business or property in 2014 – while business is good and before mortgage rates climb – keep in mind: Focusing only on the price can shortchange you in the long run. “A lot of sellers are rushing to close the deal because they’re worried about what may be around the corner,” says attorney John Hartog of Hartog & Baer Trust and Estate Law. “My first rule: Sell smart, not fast.” Sales of commercial properties were up 11 percent in the third quarter of last year, notes wealth management advisor Haitham “Hutch” Ashoo, CEO of Pillar Wealth Management.

“These sales can constitute a significant money event, so you have to consider how they may impact your future lifestyle needs,” he says. Adds CPA Jim Kohles, chairman of RINA accountancy corporation: “And you have to factor in how the transaction will affect your tax position. A great sales price doesn’t look so good if it costs you more in taxes.” The three offer these tips for a successful business or residential property sale: Know the true value of your business! A surprising number of entrepreneurs have an unrealistic idea of what their business is worth, says attorney Hartog. He tells of a man who owned a large chain of fast-food franchises. “He told everyone he knew the business was worth $150 million. After he died … the business was sold for $35 million.” That resulted in a drawn-out lawsuit by relatives of the man who accused the

sellers of under-valuing the company. “Whether you’re selling a business or real estate, get it appraised,” Hartog advises. “It may sound obvious, but I’ve seen savvy business owners make big mistakes due to delusions of value.” How confident are you that the transaction will help you maintain the lifestyle you want? Before their clients take one step toward moving forward on a significant sale, wealth managers Ashoo and his partner, Chris Snyder, analyze how it might affect them in the future. “This is a must-do step. You need to have confidence that this money event will help you maintain your lifestyle until you’re in your 90s,” Ashoo says. He and Snyder run the transaction through an economic simulation factoring in major world and financial events since 1925, then use the information to project its future effect on the client. “If we’re not 75- to 90 percent confident that it will help them reach their goals and

maintain their lifestyle, we advise the develop a Plan B -- or not sell at all.” The pre-tax price and the after-tax price must both be part of the negotiations. Getting the highest price for your business won’t result in the most net gain if you end up paying a high tax rate on the proceeds, notes accountant Kohles. If you sell the shares in your company, you’ll pay a lower tax rate. If you sell the physical plant, you’ll pay a higher rate. In the first case the buyer is on the losing end of the tax question; in the second you are. “You have to package the deal so that there are some tax advantages for both of you; this is where having professional help is crucial,” he says. If you’ve taken depreciation on the equipment, you’ll pay a higher rate. Sales of some assets, such as patents, are taxed at the lower capital gain rate. Selling your goodwill – elements of the business that relate to Continued on page 7

Market Losing Steam ...continued from front page square footage. Size-wise, it runs a close second to the Eastside's biggest submarket, Bellevue CBD, which is performing relatively well. The heart of the I-90 office market sits right between our Bellevue East and Eastside South submarkets. Mystery solved. RENTAL INCENTIVES: $15 (1.24%) Rental incentives rose from $9 to $15 per unit. In the two-county area 24.0% of the properties are offering incentives, up from.21.6% in the third quarter. ABSORPTION: +1,030 Units There were +1,030 units absorbed this quarter, down from +1,875 units last quarter. RENTS: $1,214 per Unit $1.44 per Square Foot Rents climbed 3.0% in the second quarter and 2.4% in the third quarter for a total of $64. The market hasn't been able to sustain this velocity. Rents dropped $5 this quarter. Rents increased 6.5% over the past twelve months. The submarkets with the greatest rent declines are Bothell and Redmond. Capitol Hill, downtown Seattle and downtown Bellevue, which are among the priciest submarkets, all saw rents drop. Some of the largest rent gains Rental Housing Journal On-Site • January 2014

were recorded in two of the more affordable submarkets, Edmonds and Everett Mukilteo, where rents average $951 and $980, respectively. Though more expensive, the Seattle First Hill and Seattle Central, South submarkets were the other two registering significant increases of about 3%. NEW CONSTRUCTION There are currently 14,139 units under construction, down from 14,737 units last quarter, but up from 11,687 units a year ago. Sixty percent of these units are in the city of Seattle, 20% on the Eastside, 17% in Snohomish County, and 3% in South King County. There are 830 units under construction that are scheduled for completion this year. Together with those units that have already opened, the projected total is 6,596 units for 2013. This is the highest annual total since 1990. The Martin, a 188-unit building in downtown Seattle, opened this quarter. Featured in the photo, it was developed by Vulcan and is managed by Riverstone Residential. Next year will see even more new units. Our projection for 2014 is 9,734 units. For 2015 there are 3,476 units under construction and 871 units scheduled for completion for a total of 4,550 units. More will surely be added. Continued on page 9

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Apartment Markets Soften Slightly According to NMHC Survey By Jim Lapides WASHINGTON, D.C.— Apartment market conditions weakened a bit in January compared with three months earlier. The market tightness (41), sales volume (41) and debt financing (42) indexes were all a little below the break even level of 50, although the equity financing index rebounded to 50. Higher interest rates may largely explain the modest decline in both sales volume and debt financing. With considerable equity capital continuing to look for apartment opportunities, a number of respondents noted a growing divide between would-be buyers and sellers on pricing. “Apartment markets are little changed from October,” said Mark Obrinsky, NMHC’s Senior Vice President for Research and Chief Economist. “At least half of our respondents to each of our four main questions reported conditions as unchanged from three months earlier. Although markets are a little looser than in October, this is largely seasonal; overall markets remain

fairly tight. “New supply is finally starting to arrive at levels that will more closely match overall demand. In a few markets, we are seeing completions a little higher than absorptions, but this is likely to be short term in nature. Fundamentally, demand for apartment homes should be strong for the rest of the decade (and beyond) – provided only that the economy remains on track.” Key findings include:

• The Market Tightness Index

declined to 41 from 46. Slightly more than half (56 percent) of respondents reported unchanged conditions, and approximately one-third (31 percent) saw conditions as looser than three months ago. The index last indicated overall improving conditions in July 2013. Some respondents noted that the decline was typical for this time of year and that conditions remain fairly tight. • The Sales Volume Index also declined slightly to 41 from 46. This was the third straight quar-

ter that it was below 50. Half of respondents reported sales volumes were unchanged from three months earlier, while onethird reported lower sales than in October. These results were similar to responses from the previous two surveys in July and October 2013. • The Equity Financing Index rose to 50 from 39. The majority of respondents (58 percent) continued to report that the availability of equity financing remains unchanged from three months ago. This is the ninth time in the past 10 quarters that more than half of the respondents considered conditions unchanged (and in that other quarter, the figure was 49 percent). Approximately one-fifth of respondents (18 percent) believed that financing was more available than three months prior, essentially the same as the share of respondents (17 percent) that said financing was less available. • The Debt Financing Index was essentially unchanged at 42. This

was one point higher than the October index, which came in at 41. While this level was significantly below the year-ago figure of 74, half of respondents reported unchanged conditions for debt financing. Almost one-third (30 percent) regarded conditions as worse, in large part due to the rise in interest rates – and the prospect for further increases. Even so, 14 percent of respondents indicated conditions had improved. • Opinions continued to be mixed regarding the availability of capital for new development. The consensus was that debt financing was still widely available, but equity financing was perhaps a bit more constrained. Two-fifths of respondents reported both equity and debt financing as widely available, up slightly from October’s 34 percent. An almost equal percentage (39 percent) regarded debt financing as currently available but said equity financing was Continued on page 8

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Dear Maintenance Men: By Jerry L'Ecuyer & Frank Alvarez

Dear Maintenance Men: I have a large apartment complex that has become the nesting place for several groups of pigeons. I have used owls, the high pitch sound, and sticky feet; of course the entire place is covered with the metal spike strips. The pigeons walk thru them and build their nest on top of the bent down spikes. I cannot buy poison corn anymore. What can I do to get rid of the pigeons?? Jill Dear Jill: Thank you for a great question. Looks like you have tried most of the common antidotes for getting rid of unwanted pigeons. The key is to make them as uncomfortable as possible and not stopping until they are gone. First thing to do is clean the area with bleach to remove any pigeon nesting smells and spraying any stubborn pigeons with a water hose over and over. If the area lends itself to be closed off, put up netting

to keep the birds from entering the area. If the spikes are broken, replace with stronger ones. Check at your local farm supply or the internet for stronger better quality spike strips. Getting rid of pigeons is a war of wills. If you give up, they will return. The area most be monitored constantly until the birds have found a new nesting area. Dear Maintenance Men: The wood fence patios on my property are not very old, yet the posts appear to be rotting out in the ground. I feel they should have lasted much longer. The fence now leans and is a danger. I will be replacing all the posts soon and want to know how to stop the posts from rotting in the concrete footings. Do you have a suggestion? Mark Dear Mark: Your problem is most likely poor drainage. The posts rot away because of excessive moisture. For a long-term installation, use either

Rental Housing Journal On-Site • January 2014

management a little easier. Whether you manage one unit or 25, property management software can help you manage your rental properties more effectively and fill vacancies faster. With features like self-service customer portals, powerful accounting and advanced marketing, you’ll not only save time and increase productivity, but also reduce costs. Property management software helps you easily manage tenants, leases, contracts, documents, vendors and more. Go Green. One strategy a landlord can employ to stand apart is going green. Using environmentally responsible practices can save money, attract more prospective tenants and help the environment. A landlord's office should be as green as the rental units themselves. Using email and telephone to communicate with tenants saves paper and also speeds up the process. Energyefficient computers, fax machines and scanners all use less electricity. Print fewer checks and pay bills online or sign up for online bank statements. While you may have many other resolutions set for 2014, definitely consider these as they are simple to implement and will no doubt benefit your business moving into the New Year. Katie Poole – Hussa is a Licensed Property Manager, Continuing Education Provider and Principal at Smart Property Management in Portland, OR. She can be reached with questions or comments at Katie@ SmartPM.com.

Dear Maintenance Men: I am starting my planning for a major kitchen cabinet remodeling project in my rental units. However, I am having a difficult time making material and design decisions. What recommendations can you give? Allen.

Dear Allen, When doing a kitchen or bath material selection, cohesive and functional design is important. Kitchen and bath rehabs are some of the most expensive work you can do in an apartment unit and proper planning is a must. In order to appeal to a larger segment of the population, try to keep the interior color scheme to neutral earth tones. Cabinetry quality varies greatly. Don’t let the cabinet fronts fool you. Manufactures designed their cabinets to look good at first glance. Keep in mind, being in a rental environment, the cabinets also need to hold up to abuse. Look at the actual construction of the cabinet box or frame. Keep in mind; you do not need to use custom cabinets to fit your existing layout. The use of prefabricated modular cabinetry can greatly reduce the time and cost to have a finished kitchen or bathroom. Using real wood cabinet fronts with 3/8” plywood sides is essential for continued on page 11

Property Sale in 2014 ...continued from page 5

Resolutions ...continued from front page with your family and friends, and activities that help you recharge. Drop activities that zap your time or energy. Take stock of activities that don't enhance your career or personal life, and minimize the time you spend on them. You may even be able to leave work earlier if you make a conscious effort to limit the time you spend on the web and social media sites, making personal calls, or checking your bank balance. Rethink your errands. Consider whether you can outsource any of your household chores or errands. Could you order your groceries online and have them delivered? Hire a kid down the street to mow your lawn? Order your stamps online so you don't have to go to the post office? Even if you're on a tight budget, you may discover that the time you'll save will make it worth it. Get moving. It's hard to make time for exercise when you have a busy schedule, but it may ultimately help you get more done by boosting your energy level and ability to concentrate. Try to exercise at least 30 minutes 2-3 times per week. Don't assume that you need to make big changes to bring more balance to your life. Set realistic goals, like leaving the office earlier 1 night per week. Even during a hectic day, you can take 10 or 15 minutes to do something that will recharge your batteries. Increase Productivity. Move just one routine task online such as creating an online maintenance request form for your tenants. There is a host of property management software available to make every day

redwood or pressure treated lumber. Dig your posthole at least 6 inches deeper than normal. Fill the bottom six inches of the hole with ½” sized gravel. Then set your post in place, level it and pour in another 2 or 3 inches of gravel. Fill the balance of the hole with Ready-Mix or Post-Mix concrete. Taper the top of the wet concrete at a slight angle to the post; that will help drain water away from the post. For added protection, you may want to consider water proofing your post with Thompson’s Water Seal or roofing tar. That should help keep your post healthy for much longer.

the value of your relationships – allows your buyer to write off depreciation. About John Hartog, Haitham “Hutch” Ashoo & Jim Kohles: John Hartog is a partner at Hartog & Baer Trust and Estate Law in Orinda, Calif. He is a certified specialist in estate planning, trust and probate law, and taxation law. Haitham “Hutch” Ashoo is the CEO of Pillar Wealth Management, LLC, in Walnut Creek, Calif., specializing in clientcentered wealth management. Jim Kohles is chairman of the board of RINA accountancy corporation of Walnut Creek, Calif. He is a certified public accountant specializing in business consulting, succession and

retirement planning, and insurance. All three advise ultra affluent families. If you would like to run the above article, please feel free to do so. I am able to provide images if you would like some to accompany it. If you’re interested in interviewing any of the experts mentioned or having them write an exclusive article for you, let me know and I’ll gladly work out details. Ginny Grimsley National Print Campaign Manager News and Experts 3748 Turman Loop #101 Wesley Chapel, FL 33544 Tel: 727-443-7115, Extension 207

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Double Your Property Management Productivity… In 30 Days! By Ernest F. Oriente, The Coach {Article #214…since 1995}

By Ernest F. Oriente, The Coach {Article #214…since 1995}

ouble your personal productivity in 30 days? Is it possible? Absolutely! This article will provide three important steps for making the best investment you have ever made…an investment in you! Why is this critical? Because a small investment made today will yield huge dividends for you in the future. As a business coach since 1995, increased productivity is a popular topic with my property

management clients. Why? Because finding a way to leverage small shortcuts, which generate large results, continues to be an important theme in the fast-paced world we experience today and the pace we can anticipate in the future. Using a recorder: Begin by using the recording features in your Smartphone to capture your voice thoughts and ideas. This is the perfect way for taking voice-notes while you are walking/inspecting your properties and these notes can be used to develop a checklist for your

next team/maintenance meeting. Voice recordings are especially useful for dictating a company letter or memo as you can rapidly speak your ideas into your Smartphone and have a support person or your assistant actually do the typing for you, thus giving you the time to handle other more important tasks. Tip From The Coach: Your mind is a powerful tool but frequently it works in overdrive creating new ideas or solving problems, which distract you from fully concentrating on the task or person in front of you.

Use your voice recordings to dump all your thoughts/ideas and then return to the task or project you are working on with a clear head. Start by capturing a steady-stream of your powerful ideas as voice recordings, and watch to see how many of these turn into great ideas! On a personal note, voice recordings are great for making grocery lists, for building a list of errands, or storing the notes from a cellular telephone call you have just completed. Learning to speed-read: On a Continued on page 15

Market Softens ...continued from page 6 currently constrained; this figure was down from 43 percent in October. An additional 13 percent believed that both debt and equity financing are currently constrained, down from 21 percent. The remaining 8 percent reported equity financing as widely available, but debt financing constrained. [Note: These shares exclude respondents that

chose “Don’t know/not applicable.”] Full survey data are available at www.nmhc.org/goto/62008 About the survey: The January 2014 Quarterly Survey of Apartment Market Conditions was conducted January 6-13, 2014; 157 CEOs and other senior executives of apartment-related firms nationwide responded.

To view this release online, visit www.nmhc.org/goto/62005 *** Based in Washington, D.C., NMHC is a national association representing the interests of the larger and most prominent apartment firms in the U.S. NMHC’s members are the principal officers of firms engaged in all aspects of the apartment industry, including

owners, developers, managers and financiers. One-third of Americans rent their housing, and over 14 percent live in a rental apartment. For more information, contact NMHC at 202/9742300, e-mail the Council at info@nmhc. org, or visit NMHC’s web site at www.nmhc.org.

Rental Housing Journal On-Site • January 2014

RENTAL HOUSING JOURNAL ON-SITE

id you know that a recent industry survey determined that 1 in 4 renters do not receive their security deposit back after vacating a rental unit? Though reasons varied, one statistic in the survey clearly stood out – nearly 36 percent of renters claimed that they never received a reason why their deposit was withheld. Their deposit simply wasn’t returned – an act that is illegal in almost every state. The temptation to forego an explanation can be overwhelming when staring at a completely trashed unit or home. Faced with the task of completing several thousand dollars in repairs before the unit is rentable, property managers may feel that providing the former renters with

Security Deposits justification for retaining their security deposit is time-consuming and unnecessary. After all, the tenant knows they trashed the unit. But most states have laws that protect renters from unscrupulous landlords from keeping a deposit without justification; placing the burden of proving that damage occurred directly on the shoulders of the property manager. Today, most states have very specific laws in place for handling security deposits. While laws vary from state to state, in most cases property managers need to provide former tenants with a statement containing details on how funds from a security deposit are used to repair damages. Managers must also provide this

statement to former renters within a defined period of time – usually within 30 days of vacating the unit. It’s also important to note that simply providing former tenants with a brief explanation such as ‘cleaning’ or ‘damages’ is not sufficient – specific damages and repair/replacement cost must be included in the statement. It’s also a good idea to include a copy of the unit walkthrough that was completed when the tenant moved in. This will show that any damages being deducted are not for damages that were present at the time of the move-in. To avoid legal disputes and the very real possibility that you will have to return a security deposit to a tenant despite damages; be sure to

do the following: • Complete a thorough unit walkthrough with the tenant • If possible, complete a second walk-through with tenant after move out • If damages are found, document them thoroughly and list cost of repair on tenant statement • Be sure that the statement is sent out in the allotted time – usually 30 to 45 days after move-out • In Part 2, I’ll provide an example of what a tenant security deposit statement should contain.

movement of all the financial indicators is worrisome, especially when adding new construction into the equation. Price resistance is evident. Tenants are favoring less expensive apartments to expensive ones. The volume of new construction relative to job growth is such that it has been apparent for a while that the rental market will soften at some point. It has not been a question of if but when. Is this quarter's performance a pause in the market, or the beginning of a trend? We don't know. What does seem obvious to us is that the market will soften sometime next year.

Tom Cain of Apartment Insights Washington is a member of the nonprofit Central Puget Sound Real Estate Research Committee in charge of providing apartment rent and vacancy data. Tom has been a member of the Committee for over 25 years, and has been researching apartment market trends in the Seattle area since 1978. His company surveys the five counties in Central and South Puget Sound. This article highlights survey results that subscribers can access from an online database of all 50u+ properties. Apartment Insights also provides customized rent reports and market reports. www.apartmentinsightswa. com 206-632-2220

By Mary Girsch-Bock in Business in BusinessPropertyManager.com a Service of AppFolio

Market Losing Steam ...continued from page 5 In addition there are 6,888 units that are in design review and later stages. Lastly, rezoning has been granted to developers on sites totaling 16,939 units. The grand total for all the units under construction and planned for 2013 and beyond is 38,941 units, about the same as last quarter. This total is 7,500 units more than a year ago.

OBSERVATIONS Although the changes are in no way dramatic, all of the financial indicators are headed in the wrong direction this quarter. Rents dropped $5; vacancies edged up to 4.63%; absorption was down significantly, and there were more properties offering rental incentives at higher levels. Based on occupancy alone without considering the trend, one could assume we are in a very healthy market. But the negative

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Are You Alive after Five??

very day at five o’clock, people pour out of the work place, get into their cars and head for home. However, often times they have to run errands or make other stops after they have already put in a full day. Some people even have to schedule appointments to look at apartments when they get off of work because their week-ends are packed and they can’t take a long lunch break. Most leasing consultants have put in a full day by five o’clock too, but many rental offices are open until 6:00 or later. Do the prospective renters who come through your door after 5:00 get the same level of enthusiasm and quality of service as though who visit your community before noon? See what happens when the Secret Shopper looks for a new home at the end of a work day, and just “drops in” without an appointment. The beautiful landscaping and colorful flags caught my eye and

motivated me to stop in. It was about 5:40 when I entered the leasing office. I noticed the posted office hours sign indicating they are open until 6:00. The leasing consultant was alone and I could see that she was straightening up and had already turned out the lights in the connecting clubhouse. I told her that I had just gotten off work, and was driving by, and wanted to take a look at one of their apartments. The employee’s smile faded, as she sighed and practically groaned, “I just locked up the model and show apartment . . .” I apologized for stopping by so late, but explained that I was on my way home from work when I saw their sign. I told her there really wasn’t any other time that I could look for an apartment because I work during the day and am tied up on the weekends. She replied, “That’s okay. It’s not a problem,” but her body language communicated something entirely different. She asked what

size apartment I needed and for when, but did not inquire about my specific needs or even ask for my name. We walked directly to the model, with little conversation. My efforts at “small talk” were met mostly with silence. The consultant entered the apartment ahead of me and turned on the lights. She said, “Go ahead and look around,” and then stood to one side. I walked from room to room, but did not open anything as I felt like I needed to hurry up. I thanked her for showing me the apartment and she thanked me for stopping by. When we returned to the office, she did not invite me back in. Instead, she reached inside the folder she was carrying and handed me a business card and an application. She dismissed me with, “Let me know what you decide.” The next evening I visited another community that attracted my attention from the curb. As I pulled into the designated parking space for

future residents, I observed the leasing consultant locking up. When I got out of my car and approached the office, she tried to avoid eye contact with me. It was 5:30 and the closing time was posted as 6:00 p.m. I asked if she worked there, and if the office was still open, even though I could see that everything was dark. The consultant unlocked the door and invited me inside. She apologized for closing early and said that it had been so slow that she had decided to lock up a little bit early and go home. The consultant tried to stifle a yawn and said, “Slow days always make me sleepy.” She asked what I needed, and then said she could show me a model apartment. However, I felt like I would be “putting her out” and offered to come back the next day. She smiled and looked relieved. The consultant handed me a brochure and a business card and said, “Give me a call in ...continued on page 13

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RENTAL HOUSING JOURNAL ON-SITE

Dear Maintenance Man ...continued from page 7

Deep Pockets ...continued from front page

durability. The drawer fronts and sides should be connected with a dovetail or other positive lock construction. Drawers that are held together by nails or cabinets built with particle board will not hold up to tenant abuse. On a side note; if you are gutting the kitchen or bathroom, use this time to relocate and add more electrical outlets and under cabinet lighting.

aware of new employment laws and legislation that could make it easier for workers to file an employmentrelated claim or lawsuit. The survey also revealed that 60 percent of those responding vastly underestimated how much it would cost to defend and settle an employment-related charge. In reality, it’s the smaller companies, with fewer resources, that are most vulnerable to the potentially significant financial hit of an EPL suit.

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RENTAL HOUSING JOURNAL ON-SITE

Bending the Cost Curve A New Report from The Urban Land Institute and Enterprise, Explores Solutions to Expand the Supply of Affordable Rental Housing WASHINGTON – Solutions to increase the supply of affordable rental housing are explored in a new report from the Urban Land Institute’s (ULI) Terwilliger Center for Housing and Enterprise Community Partners, Inc (Enterprise). Bending the Cost Curve: Solutions to Expand the Supply of Affordable Rentals outlines factors that impede the development of affordable rental housing – causing the supply in many markets to fall far short of the demand – and offers specific, actionable solutions to overcome the barriers. Nationally, there were only 6.9 million rentals affordable to 11.8 million extremely low-income renters in 2011, a supply gap that grew by

three million renters between 2001 and 2011—and continues to grow. "In an era of growing demand and declining government financial support for affordable rental housing, it is more important than ever to deliver affordable housing as effectively as possible,” the report says. “Bending the cost curve will enable developers to deliver additional affordable rental homes and help jurisdictions provide more housing choices, meet the growing need for affordable rentals, and ensure that individuals and families across a range of incomes have a place to call home within the community.” The report, released in Washington, D.C. at the ULI/ Carolyn and Preston Butcher Forum Continued on page 18

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Rental Housing Journal On-Site • January 2014

RENTAL HOUSING JOURNAL ON-SITE

Alive ...continued frompage 10 the morning. I’ll be here at nine with bells on.” (I wondered what time she took her “bells” off!) On my third evening out, I stopped by another community that caught my eye. It was just past 5:30 when I entered the rental office. The leasing consultant greeted me with so much enthusiasm, that I was actually startled. She apologized and said, “I’m sorry. Did I startle you?” She extended her hand and introduced herself and asked for my name. She offered me a seat and asked how she could help me. I remarked that she sure seemed to have a lot of energy for the end of the day, and she said, “Not always, but I work at it.” She explained that sometimes the leasing staff staggers their start times so that the person who opens early, leaves earlier, and the person who comes on shift later locks up. The consultant said, “On the days I work alone, I take a couple laps around the property around 4:30 for a ‘pick me up’ and that seems to give me the extra energy I need to finish my day.” She was animated and enthusiastic as she spoke and seemed eager to help me. The consultant filled out a guest card for me, determined my needs and then gave me a thorough tour of the community

amenities and a vacant apartment. At the end of the tour, we returned to the leasing office where she made several attempts to close the sale. She presented me with a brochure, community newsletter and an application, and asked if she could follow up with me in a couple of days to see if I had reached a decision. When I left, it was 6:15 p.m. Are you still “alive after five,” with enthusiasm to burn? If not, what can you do about it? Can you adjust your lunch hour or your work schedule so you have more energy at the end of the day? What about your attitude? Can you adjust that? If your office is open for business after five, shouldn’t YOU be open for business too? If you cut corners after five and don’t give EVERY prospective renter a “full meal deal,” they are going to go away “hungry” and end up renting elsewhere!

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• Executive Director – Jim Wiard • President – Gail Duke – Vice President – Kris Buker • Secretary – Becky Sanders • Treasurer – Brett Stevens • Vice President of Suppliers Council – Barry Savage

WMFHA Brand Refresh

s we move forward as an association serving multifamily property owners, managers, developers and industry suppliers, the Washington MultiFamily Housing Association (WMFHA) is the member-driven professional trade association that advances the interests of the multifamily housing industry because we are connected and in communication with stakeholders at the local, state and national level. The Washington Multi-Family Housing Association promotes the interests of its members by engaging in the legislative process, providing professional development opportunities and organizing events that help members connect with each other. Evaluating how we can best serve the industry and our members, we embarked on a brand refresh initiative in 2013, meant primarily to focus on WMFHA’s core values and prioritize resources for the near future. We are excited to roll out a renewed brand identity, including a new mission statement, logo, and a new website coming soon. Our new logo better reflects our revived energy and commitment to relevance. In the coming months, we will also increase our industry outreach to seek new members to join our current membership of 115,000 rental units and over 850 members throughout the state. OUR NEW MISSION STATEMENT The Washington Multi-Family Housing Association is committed to:

• Advocating for legislation favorable to our industry. • Providing educational opportunities to support career development. • Celebrating and supporting the work of our entire community. ADVOCATE. EDUCATE. CELEBRATE.

GOVERNMENT AFFAIRS As an affiliate of the National Apartment Association, we have opportunities to become involved in various issues throughout the country. Policies emanating from both Washington, D.C. and our state capi-

tol will play a key role in either assisting or hindering our industry from being able to continue to provide safe and decent housing to America’s workforce and to help create vibrant communities. Together with NAA, WMFHA invests in “political capital”, how well we, together, influence decision-making with the resources we use to advocate and encourage Congress to address the long-term needs of the apartment industry. As an affiliate of NAA, and through a joint legislative alliance with the National Multi Housing Council (NMHC), we are able to speak for the industry in both regulatory and legislative bodies at the federal and state government levels. We make sure our members stay informed of regulatory requirements that affect their businesses. In addition, WMFHA has a Political Action Committee (PAC), which raises money and works to help elect those public officials who will work with us on multifamily housing policy issues to affect favorable change in the lawmaking process. One of our primary objectives is to actively monitor and influence the legislative process. WMFHA has lobbyists representing the multifamily housing industry in Olympia and Seattle. These lobbying efforts proactively represent the interests of WMFHA members on the issues that will change or affect our customers, our careers, and the way we do business. Their role is also to be aware of any legal or political trends, policies, bills or ordinances which might affect the apartment industry, and advocate support of or opposition to any policies that impact our members. EDUCATION WMFHA offers apartment industry personnel and supplier representatives invaluable educational career development opportunities in the form of courses, seminars, certifications and designations created to increase their professional development, industry knowledge and job performance. Due to our membership affiliation with the National Apartment Association, WMFHA is able to offer nationally accredited educational and career development classes. These valuable classes promote opportunities for industry professionals to enhance their knowledge and skill in order to advance their career in the industry and serve their companies with greater effective-

ness. WMFHA also coordinates dozens of timely, skill specific workshops and seminars for our members and future members on topics such as fair housing, finance management, human resources, maintenance operations, landlord-tenant law and marketing. With classroom, online, and blended learning options - we have many ways for members to achieve recognition for a higher standard of excellence. NETWORKING EVENTS To meet our members’ growing needs, WMFHA holds several meetings and events per year with programs on a variety of timely, industry-related topics. At these meetings, members can learn industry current trends and best practices, ask questions, offer suggestions, and obtain support and coaching. The meetings also offer an opportunity to meet and get to know other professionals in the industry and share information helpful in the daily operation of your rental properties. Watch for our quarterly Membership Meetings, as well as exciting events such as

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

Emerald Awards gala, EdCon education conference and exposition, Maintenance Summit skills workshop, Business Exchange reverse trade show, Washington Apartment Outlook economic forecast luncheon and Chili Cook-Off charity event in 2014. In 2013, WMFHA celebrated its 10th year anniversary. As we embark on our second decade serving the rental housing industry in the state of Washington, we are excited about our opportunity to position WMFHA as the “must join” association in our industry and the go-to resource for multifamily professionals on issues and trends impacting the industry. For new membership information, check us out at www.wmfha.org. I’d like to thank our board, all our member volunteers and our excellent staff for leading us into a bright new year for the Washington MultiFamily Housing Association. Jim Wiard – Executive Director

Market Trends and

Development Update With Mike Scott of Dupre + Scott

March Membership Meeting Tuesday March 18, 2014 11:30am-1:30pm

A Luncheon at the Seattle Renaissance Hotel $49 Members | $69 Non-Members

Agenda Luncheon Topic: WMFHA updates Multi-Family Market Trends Development climate of the Puget Sound region Who Should Attend? Regional Level Multi-Family Management Professionals On-site Multi-Family Professionals Marketing and Social Media Managers

Mike Scott

Principal, Dupre + Scott Mike Scott is president of Dupre + Scott Apartment Advisors in Seattle, Washington. Mike’s company conducts research and has provided advisory services to both public and private clients on real estate investment, market, and development issues in the Puget Sound region of Washington State. Major public clients he has advised include: City of Seattle, City of Tacoma, Seattle Housing Authority, and United States Army. Major private clients include many of the largest local, regional, and national apartment develop-

Registration and Details available at WWW.WMFHA.ORG

www.RentalHousingJournal.com 14

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RENTAL HOUSING JOURNAL ON-SITE

Productivity ...continued from page 8 daily basis you are bombarded with thousands of words/images/text messages and E-mails and it can be overwhelming just trying to keep up. Yet keeping up becomes more and more challenging with the pace of technology and the increased performance expectations in the property management profession. The solution…take a speed-reading course and learn how to triple your reading velocity and improve your learning comprehension, at the same time. Organizations, such as Evelyn Wood, offer one-day seminars for $149 and will teach you how to become a more powerful reader and give you a step-by-step plan for increasing the comprehension of what you read and see. Tip From The Coach: Once you have learned to speed-read, you will no longer experience informationoverload because you will be able to grasp concepts and learn new ideas at a more joyful and fun pace. On a personal note, learning to speedread will help you become a dailylearner which will be critical to your continued success in the property management profession. Those who understand this important concept will be the future leaders in this industry. So…become a speed-reader and learn at least one new idea every day because one year from

today, you will own a treasury of 365 new ideas! Developing a database: A database manager is powerful software that stores important information that can be quickly accessed, can easily store a person’s name, phone number, address, his/her type of business, and will even remind you when a variety of projects/tasks are due. The real power in having a database is being able to access a vendor, a supplier, a prospect or an industry expert in just seconds. Plus, you will be able to sort your database and print an endless variety of reports, telephone numbers, mailing labels and resident/prospect lists, which will increase your daily closing ratio and resident retention. Tip From The Coach: For database software consider purchasing ACT, Goldmine, Telemagic, Maximizer, Sharkware or Salesforce. com. Most database programs perform similar functions so ask those in your property management company which software they use and ask them to show you how they use it. On a personal note, a database is great for birthday reminders, for printing labels when mailing holiday cards or for planning a family reunion. Want to hear more about this ...continued on page 16

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Productivity ...continued from page 15 important topic or ask some additional questions? Send an E-mail to ernest@powerhour.com and The Coach will E-mail back to you a free invitation to be a participant on a PowerHour conference call. 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 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

Rental Housing Journal On-Site • January 2014

RENTAL HOUSING JOURNAL ON-SITE

5 Questions with Multifamily Plumbing Expert, Stephen Poff Rental Housing Journal sat down with Stephen Poff of STOP, Inc. Here’s what Stephen had to say about plumbing for the apartment and rental housing industries. Rental Housing Journal: What are the 2 or 3 most common plumbing issues you run in to while servicing apartments? Stephen Poff: The most common issue we encounter servicing apartment complexes would be plugged kitchen sinks. These are problematic because they can cause multiple sinks on a single stack to back-up, and possibly flood out a lower unit. Another very common issue would be main water line breaks between the water meter and the building. Most of the time a plumber is able to make a temporary repair to slow the leak down, or stop it completely. By doing this we can give the apartment manager the 24 hour notice needed to shut down the water and make a final repair.

Rental Housing Journal On-Site • January 2014

RHJ: When it comes to plumbing, what is the biggest concern that property managers and owners should have in the Puget Sound region? SP: In the Puget Sound area, we seldom have long or deep freezes like a lot of other parts of the country. This can be a problem, because every couple years, when it does happen, people are often unprepared. It’s always a good idea to insulate any exposed piping from the elements, even if you have never had a problem.

RHJ: What's the craziest situation you've ever come across while working at an apartment? SP: One of the most costly and messy jobs I've encountered at a complex was in the Tacoma area. A large building at an apartment complex had a main sewer line break in

the crawl space. This break went unnoticed until 5 footings in the crawl space had completely filled with sewage. It was to the point where sewage was overflowing at an access in a tenant’s closet. We had to remove upwards of 100,000 gallons of raw sewage using vacuum trucks just to access the crawl ...continued on page 19

RHJ: Do you have any simple tips for landlords in regards to preventing plumbing issues at their properties? SP: Removing garbage disposals from kitchens can save a lot of headache by avoiding back-ups. Disposals can be a great convenience, but are often abused and used to send large quantities of food and debris down the line that would otherwise be discarded in the trash.

RENTAL HOUSING JOURNAL ON-SITE

Bending

...continued from page 12

on Multifamily Housing, is based on a series of interviews and roundtable discussions co-hosted by the Terwilliger Center and Enterprise over the past 16 months with nearly 200 developers, financiers, and policy makers in ten markets – Chicago, Denver, Los Angeles, New York City, San Francisco, Boston, Houston, Minneapolis, Pittsburgh, and Seattle. Conclusions drawn from the discussions formed the basis for the research, which is intended to help fill the void of material examining how to overcome regulatory barriers to affordable rental development, such as land use, zoning and building code restrictions, processing delays, and financing obstacles. While economic conditions and demographics vary widely among different markets and play a significant role in local affordable housing development, the report identifies several over arching cost drivers, including:

• Project scale–Fixed costs such as

land, legal expenses, and funding application fees, are not correlated to the number of units and often make smaller projects less economical on a per unit basis.

• Project design and construction – Community concerns, site selection, the price of construction labor, and state and local regulations affect the ability to produce high quality units at an

affordable cost.

• Financing and underwriting – Because affordable rentals produce a lower level of profit, developers face several financing obstacles, such as difficulty attracting investors who are strictly yield driven; complicated deals requiring multiple layers of funding; and limited or no availability of financing for smaller projects and for mixed income projects.

• Complex deal structures – Project fees, timing of tax credit use, higher risk, greater due diligence, longer time lines, and the need to set aside capital reserves all drive up costs. “Drivers of cost come at all points in the development process and are deeply intertwined, but the need for more affordable rentals compels us to take on the challenge of understanding the drivers and work to mitigate them,” said Lynn Ross, executive director of the Terwilliger Center. “Enterprise and ULI will use the joint research to spark federal, state and local conversations that lead to policy change and financial innovation, ultimately stretching limited resources for affordable housing,” said Ali Solis, senior vice president of public policy and external affairs at Enterprise. “At the same time, we must maintain high quality, green

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standards so that affordable homes can be sustainable for the long haul. That is our challenge as an industry.” To address the cost drivers, the report offers several recommendations:

• Promote

cost-effectiveness through consolidation, coordination, and simplification. This includes consolidating monitoring and due diligence activities; coordinating competitive funding competitions; improving codes, zoning and regulation; and streamlining HUD financing.

• Remove barriers to reducing construction costs and delays. This includes implementing smart parking requirements; reviewing unit size and amenity requirements; reforming codes and other rules that make rehabilitation difficult; finding ways to better coordinate development teams; and supporting innovative building techniques like micro-units and prefabricated housing.

• Facilitate a more efficient deal assembly and development time line. This includes eliminating zoning barriers to by-right housing development; creating clarity and structure in the public engagement process; adopting state and local policies to streamline local development; promoting consistency in state Qualified Allocation Plans (QAPs); and adopting efficient deadlines for deal assembly and project development.

• Improve and align incentives. This includes evaluating lifecycle cost considerations in the underwriting process; creating incentives for green building and energy-efficient design; incorporating cost considerations in the QAP process; assessing the time frame in which costs are evaluated for the purpose of underwriting; providing local incentives for affordable housing development (such as land acquisition subsidies, property tax abatements, fee waivers and expedited permitting); and removing perverse incentives that can increase costs (potentially by adopting alternate compensation models or flexible tax credit allocations).

• Improve the flexibility of existing sources of financing and create new financial products to better meet needs. This includes exploring entity-level financial products; facilitating the acquisition of existing multifamily properties through direct subsidies, public-private partnerships or regulatory flexibility; facilitating more efficient use of project reserves; and providing greater flexibility in 4-percent LowIncome Housing Tax Credit allocations (such as alternate sources of debt financing, private place18

ment of bonds or direct bond purchases).

• Support the development and dissemination of information and best practices. This includes creating a cost competition to support innovative practice; determining appropriate units of measurement and comparison to guide decision making (such as costs-per-unit or costs-per-person); building a community of practice; and creating a forum for sharing data and best practices. In addition to the recommendations, the report identifies three lessons drawn from the research – 1) Cost drivers come at all points in the development process and are deeply intertwined; 2) Mitigating the cost drivers requires collaboration efforts involving multiple stakeholders from the private and public sector; and 3) Leadership is essential to implement the recommendations. About the Urban Land Institute The Urban Land Institute www. uli.org is a nonprofit education and research institute supported by its members. Its mission is to provide leadership in the responsible use of land and in creating and sustaining thriving communities worldwide. Established in 1936, the institute has more than 30,000 members worldwide representing all aspects of land use and development disciplines. About the ULI Terwilliger Center for Housing The ULI Terwilliger Center for Housing engages in a multifaceted program of work that furthers the development of mixed-income, mixed-use communities with a full spectrum of housing affordability. The center was established in 2007 by J. Ronald Terwilliger, former ULI chairman and chairman emeritus of Trammell Crow Residential. About Enterprise Community Partners Enterprise Community Partners works with partners nationwide to build opportunity. Enterprise creates and advocates for affordable homes in thriving communities linked to jobs, good schools, health care services, and transportation. Enterprise lends funds, finance development, and manage and build affordable housing while shaping new strategies, solutions, and policy. Over more than 30 years, Enterprise has created 300,000 homes, invested nearly $14 billion, and touched millions of lives. Join us at www. EnterpriseCommunity.com or www. EnterpriseCommunity.org.

Rental Housing Journal On-Site • January 2014

RENTAL HOUSING JOURNAL ON-SITE

Resolve to Recycle in 2014 New Year’s resolutions start in January and are often forgotten by February – without making a difference in our lives. But there is an easy resolution that saves you money, will

make you feel good and best of all – it doesn’t involve the bathroom scale. Recycle more “stuff.” There are recycling options – most at no cost – for many things you might consider

to be garbage and for other things you are just not sure what to do with. For instance, TVs, computers and monitors can be recycled/reused in Washington and Oregon for free whether they are working or not. Laws in both states require the manufacturers of TVs, computers and monitors to provide consumers with free and convenient recycling of these products. In Oregon it is illegal to throw them in the trash. To find free drop-off locations in your area go to: Washington residents - www.ecyclewashington.org Oregon residents - www.oregonecycles.org Apartment and rental housing managers do not have to get stuck with the cost of disposing of TVs and computers abandoned by tenants. Use the E-Cycle program in your state to save money. And it’s not just electronics you can easily recycle. In Washington you can find recycling options for

appliances, batteries, motor oil, plastic, metal and glass containers as well as “household hazardous waste” such as paints, pesticides, fluorescent lights and mercury containing devices like thermostats. To find recycling options in Washington for these household items go to the searchable recycling database (1-800-RECYCLE Online) found in the link above. For the Portland metro area in Oregon, go to www.oregonmetro.gov/index.cfm/ go/by.web/id=1383. So the next time you are trying to figure out what to do with the unwanted stuff in your house – maybe even that bathroom scale – or stuff left behind by a tenant, look to recycle it and you’ll feel good about yourself. If you have questions about recycling in Washington or you would like to distribute electronics recycling information to your tenants, contact Miles Kuntz (360) 407-7157, Miles.Kuntz@

Bathtubs..Countertops..Surrounds 5 Questions

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space to make a repair on the sewer line. RHJ: What advice do you have for apartment managers or rental owners when choosing a plumbing company? SP: I would recommend a company that has a fair hourly rate and truck/travel charge. Check to see if they charge any port-to-port fees, and if they charge by the hour, half hour, quarter hour. Also, stay away from flat rate companies. Flat rates are typically used to hide high hourly rates, and will often be in the favor of the company. Flat rates are nice to be able to know the cost up front, but any hourly rate com-

pany can give you a bid with a not to exceed clause before starting the work.

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Increased Demand for Rental Housing Drives Global Residential Real Estate Investment Trusts Key profitability ratios such as return on equity and EBITDA margins expected to witness an increase

MOUNTAIN VIEW, Calif., Jan. 14, 2014 /PRNewswire/ -- Higher interest rates, rising house prices, better employment ratios, and reluctance to own houses due to prior foreclosures, are pushing up the demand for rental housing. This is opening up opportunities for residential real estate investment trusts (REITs) globally. Rent growth and decreasing vacancy rates will further boost the profitability of REITs. New analysis from Frost & Sullivan, Global Residential REIT Industry, based on a study of 108 REITs, reveals the market earned revenues of $23.23 billion in 2012. Key profitability ratios such as return on equity and earnings before interest, taxes, depreciation and amortization (EBITDA) margins rose in 2012, and this trend is expected to continue.

"North American companies dominate the list of top performers in the global residential REIT industry, which is not surprising given that they have been in the industry longer than their European and Asian counterparts," said Frost & Sullivan Financial Analyst Bharath Meenakshi Sundaram. "In the next three to five years, however, countries such as Australia, France and Belgium are expected to witness more activity in this industry." Successful companies in the REIT domain follow several best practices. One key factor is selecting the right location and properties for acquisitions. Leading firms have in-house acquisition teams that are always on the lookout for properties that are located in areas with easy access to workplaces, schools and retail markets.

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Property Insurance – The Basics on Insuring Your Property by Leonard Baron

hen you own real estate – whether an investment or a personal residence – you should procure the proper type and dollar value of insurance needed for your property. Unfortunately, many people don’t understand the basics of how insurance coverage works, and many individuals just want to spend “as little as possible” on insurance. The trouble comes about when there is an problem, like a fire, slip-n-fall, or lawsuit. If you don’t have the right type of insurance, nor enough coverage, it could end up costing you a lot of money. So let’s go over the basics herein, plus we’ll discuss renter’s insurance basics and tenant liability insurance basics too. A standard dwelling insurance policy will cover losses on the building, separate structures, personal property, loss of use, liability, and a few other optional coverages. The one’s that are more important to focus upon are: 1. Coverage for your physical assets – building, separate structures, and personal property 2. Liability and lawsuit coverage. Physical Assets Each year when you renew your policy it comes with limits on how much coverage you have in case your physical assets are destroyed. These are listed on your policy declarations page. For example you might have a 4,000 square foot structure – like a five unit building – and if it costs $100 per square foot to rebuild that structure, you should have $400,000 in dwelling coverage. Note that only the structure is covered by insurance, not the land because typically land isn’t destroyed. If you also have separate

structures like pools, unattached garages, or significant personal property like appliances, you need to have your insurance agent add up the total value and procure enough coverage for all of your assets. What happens if there is a fire and you only have $250,000 worth of coverage but it will cost $400,000 to rebuild and replace assets? You’ll get a check from the insurance company for the $250,000 dollars, and that’s all. You’ll have to spend your own money to rebuild it. So pull out your declarations page and make sure you’ve got enough coverage based on what it costs to rebuild.

ance agent, plus do your own research on the Internet and talk to other property owners. Also shop around every few years to make sure you are still getting a fair deal.

Liability Protection Insurance also provide liability coverage in case there is a lawsuit related to your property. If a tenant’s dog bites a neighbor, you’re going to get sued too. If you do get sued, your insurance company will step in and provide a lawyer to negotiate, defend, settle, or pay a judgment – up to your policy coverage limits. So if you have $300,000 in liability coverage, that is the maximum they will pay out – you’re on the hook for the rest. You can up that coverage amount with a Personal Umbrella Policy, and you should consider doing this. You can increase your liability coverage in increments of $1,000,000 for between $300-$600 per year. So estimate your net worth and your earning potential, and make sure you’ve got enough on this issue too in case the worst occurs. Other types of coverage that are typically not included in your regular policy are earthquake coverage, flood coverage, and others depending on the state within which you live. And, of course, discuss all insurance issues with your insur-

Tenant Liability Insurance You should also consider Tenant Liability Insurance. This type of insurance protects you, the landlord, in many instances including if a tenant lets their renter’s insurance lapse or they didn’t procure the right type or enough insurance. You pay for it, or assess it to your tenants, and it protect you against lawsuits filed against your tenants, against property damages caused by your tenants, it may protect your from frivolous lawsuits from your tenants, or insurance deductible you might otherwise have to pay when your property is damaged. This coverage costs around $120-$150 per year per unit. Make sure to fully

Renter’s Insurance As a landlord you should also work towards moving all your tenants to having Renter’s Insurance when they renew their leases. This insurance protects the tenants from theft, water and fire damage, and liability issues. And it also protects you as claims should first go against your tenant’s policy, not your master policy. A typical renter’s policy runs about $125-$175 per year.

understand the policy and what is and what isn’t covered, because coverages can vary by carrier and policy. Here’s more information on Tenant Liability Insurance from AppFolio. Conclusion Having the proper type and amount of insurance in place isn’t needed, if nothing bad ever happens. Unfortunately, we all know, things happen! So take a day each year, meet with your insurance agent, do some research, look at your current policies and limits, to make sure you are property covered. Because, when something does occur, you’ll breathe easier knowing you’ve got the appropriate insurance policies in place.

Leonard Baron is America’s Real Estate Professor – his unbiased, neutral and inexpensive “Real Estate Ownership, Investment and Due Diligence 101” textbook teaches real estate buyers how to make smart and safe purchase decisions. He is a San Diego State University Lecturer, blogs at Zillow.com, and loves kicking the tires of a good piece of dirt! More at ProfessorBaron.com. Source: PropertyManager.com

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How To Prepare For A Winter Storm by Mary Girsch-Bock

ith one winter storm already recorded in the books; there’s no doubt that it’s getting cold. Today in the desert southwest it’s a balmy 27 degrees. Even a sub-tropical paradise is no longer immune to the effects of a winter storm. In a typical season, winter storms can wreak havoc, causing billions of dollars in damages. While not every region in the U.S. will bear the brunt of a major winter storm, we’re all vulnerable to freezing temperatures, brutal, hurricane force winds, and freak blizzards. If your region typically sees a storm or two during the winter (think Midwest) you’re probably already doing most of the prep tips listed below. It’s much more difficult to prepare for a potentially catastrophic storm when you’re in a region in the U.S. not typically affected. Regardless of where your properties are located, the following advice can help you to be prepared – just in case that big storm makes a bid for your vicinity. Check and maintain an adequate supply of snow and ice removal tools. This includes salt or sand for melting ice, snow shovels, and pos-

sibly a snow blower to remove large amounts of snow.

In case of a power or gas outage, you should be prepared with flashlights, bottled water, and blankets as well. Keep an extra stockpile of those supplies in case a tenant needs them. A warm blanket can go a long way toward making a miserable night a little bit better. Check your properties for loose or low-hanging tree branches. Gusty winds or ice build-up can cause loose branches to fall, presenting a hazard to both tenants and employees. Keep an eye out for loose roof tiles or faulty furnaces. While this should be a part of your annual winter inspection, it’s imperative that these items continue to function property throughout the winter months. Heavy snow build up can quickly

lead to damaging leaks in a unit, and you certainly don’t want a furnace to stop working during a winter storm. Make sure that tenants have removed any potential hazardous items from their patio or balcony. A chair can quickly become airborne in 40 mph winds, creating a potential hazard to those in the area. Stay on top of the situation. With 24-hour weather available via television and the Internet, it’s easily than ever to track storms and their potential to hit your properties. While nothing can prevent a winter storm from hitting your area, being prepared can go a long way toward lessening the impact of the storm, and returning to business as usual, sooner rather than later.

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The statements and representations made in advertising and news articles contained in this publication are those of the advertiser and authors and as such do not necessarily reflect the views or opinions of Professional Publishing, Inc. The inclusion of advertising in this publications does not, in any way, comport an endorsement of or support for the products or services offered. Metro Apartment Manager is produced monthly and is published by Professional Publishing Inc. PO Box 6244 Beaverton, OR 97007. (503) 221-1260 (800) 398-6751 © 2013 All rights reserved.

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Housing's Contribution to GDP Expected to Improve from 2013 WASHINGTON, Jan. 13, 2013 / PRNewswire/ -- An abatement in economic policy uncertainty surrounding fiscal and monetary issues is expected to lay the foundation for improved private sector activity and accelerated economic growth in 2014, according to Fannie Mae's (OTC Bulletin Board: FNMA) Economic & Strategic Research Group. With growing momentum in economic activity, including a notable rebound in consumer sentiment following a dip associated with the government shutdown in the fall, as well as expected labor market improvements that are likely to support income growth, the group forecasts an increase in consumer and business spending that will serve to boost economic growth throughout the

year. For all of 2014, growth is expected to accelerate to 2.9 percent from an estimated 2.6 percent in 2013. "Our full-year 2014 economic forecast accounts for three key growth drivers: an acceleration in spending activity from private sector forces, waning fiscal drag from the federal government, and continued improvement in the housing market," said Fannie Mae Chief Economist Doug Duncan. "Much of the policy uncertainty we saw in 2013 has cleared to some degree, which raises the possibility for a pick-up in growth as consumers and businesses, who held back on their spending amid those policy concerns, might loosen their purse strings this year. We expect the contribution from consumer spending to rise to about 2.0 percentage

points, up from an estimated 1.6 percentage points last year. In addition, as consumer demand climbs, business confidence should improve and add to growth in the form of stronger hiring and capital investment." "The continued housing recovery also is expected to contribute to GDP, doubling from 0.3 percentage points in 2013 to 0.6 percentage points in 2014, due in large part to new homebuilding activity," said Duncan. "Despite the rise in mortgage rates since the spring, many housing indicators posted strong gains at the end of 2013 and consumer housing attitudes are strengthening, all of which bodes well for continued but measured housing recovery in 2014. Overall, although we don't expect growth to break the 3 percent barrier

this year, we believe the economy is on a sustainable path for continued growth with upside potential." For an audio synopsis of the January 2014 Economic Outlook, listen to the podcast on the Economic & Strategic Research site at www.fanniemae.com. Visit the site to read the full January 2014 Economic Outlook, including the Economic Developments Commentary, Economic Forecast, and Housing Forecast. Opinions, analyses, estimates, forecasts, and other views of Fannie Mae's Economic & Strategic Research (ESR) Group included in these materials should not be construed as indicating Fannie Mae's business prospects or expected results, are based ...continued on page 27

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lower tenant turnover. By doing so, they also build a sense of community around their brand. Customer service, including having a 24-hour call center, maintenance of apartments, and seasonal requirements such as regular clearing of snow, play a key role in retaining tenants and maintaining higher occupancy rates. Global Residential REIT Industry is part of the Business and Financial Services subscription. Frost & Sullivan's related research services include: Geographic, Technological, and Financial Portfolio Analysis of Top 30 Fastest-growing Automotive Suppliers, Funding Patterns in the Power Systems Industry, Analysis of North American and European Healthcare REITs Industry, Analysis of the Socially Responsible Investing Funds Market, and Funding Patterns in the Global Energy Industry. All research services included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants. Frost & Sullivan's Business and Financial Services group serves clients around the world in all aspects of financial analysis, market research and monitoring, due diligence, idea generation, opportunity analysis, investment valuation, and other proprietary research.

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GDP ...continued from page 23 on a number of assumptions, and are subject to change without notice. How this information affects Fannie Mae will depend on many factors. Although the ESR Group bases its opinions, analyses, estimates, forecasts, and other views on information it considers reliable, it does not guarantee that the information provided in these materials is accurate, current, or suitable for any particular purpose. Changes in the assumpJan, Mar, May, tions or the information underlying these views could produce material-

ly different results. The analyses, opinions, estimates, forecasts, and other views published by the ESR Group represent the views of that group as of the date indicated and VALLEY, METRO, ARIZONA do not necessarily represent the views of Fannie Mae or its management.

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