Rental Housing Journal On-Site December 2016 by Professional Publishing, Inc

Rental Housing Journal On-Site

December 2016

3. Apartment Rents Weakening? 4. Survey Reveals What Millennial Renters Want in 2017 5. How Will a Donald Trump Presidency Impact Real Estate?

6. Dear Maintenance Men – Water and Wax Removal

13. How to Create a Quality Property Management Team

7. Short-Term Home Rentals Have Little to No Impact on Housing Availability

19. Tiny Houses Approved and Incorporated Into the International Residential Code

9. Promoting Quality Housing – The Year in Review

www.rentalhousingjournal.com • Professional Publishing, Inc 17,000 Papers Mailed Monthly To Puget Sound Apartment Owners, Property Managers & Maintenance Personnel Published in association with Washington Association, IREM & Washington Multifamily Housing Association

2Q16 Market Overview Multifamily Housing Update

Seattle, WA Payroll Job Summary Average Payrolls Annual Change RCR 2016 Forecast RCR 2017 Forecast RCR 2018 Forecast RCR 2019 Forecast

1,666.6m 58.7m (3.6%) 55.6m (3.5%) 60.3m (3.7%) 55.8m (3.3%) 45.4m (2.6%)

RCR 2020 Forecast 40.0m (2.2%) Unemployment (NSA) 3.8% (Oct.)

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3Q16 Payroll Trends and Forecast Seattle job creation accelerated during the third quarter, rising from 2Q16’s 55,500-job, 3.5% year-on-year rate to 58,700 (3.6%) jobs in 3Q16. Firmer conditions in the education and health care services were primarily responsible, as sector establishments expanded at a 7,400-job, 3.7% rate, up from 2Q’s 3,800-job metric. Faster growth also was observed in transportation, construction and personal services. Conversely, weakness in the key durable goods manufacturing sector accelerated to a –4,900-job, -3.4% annual pace, the weakest quarter since 2Q10. The aerospace sector contributed the lion’s share of factory losses (-3,600 jobs), comparing unfavorably to continued on page 8

Landlords and Property Managers Bullied and Harassed Over Rent Increases By John Triplett, Rental Housing Journal

Portland landlord says he and his property managers have been bullied and intimidated over rent increases after he purchased a small apartment building and had to raise existing rents to afford his new mortgage payments. He said demonstrators have picketed his personal residence. The have placed notices on the doors of neighbors, camped overnight on his lawn, defecated on his lawn and marched into his property managers’ offices scaring the staff, according to his spokesman, John McIsaac. continued on page 11

Residential Landlord Tenant Update 2016 By: The Loeffler Law Group PLLC

here have been several important changes in landlord-tenant law in 2016. First, the Seattle City Council enacted an ordinance to require landlords to rent premises on a first-in-time basis. Second, HUD officially took the position that it is improperly discriminatory to adopt a policy rejecting all tenants with a criminal history. Third, Seattle enacted legislation prohibiting discrimination based on source of income. The Washington legislature extended the time period for providing an accounting of security deposits to 21 days and created a mechanism for sealing.

The First-in-Time Ordinance The Seattle City Council enacted ordinance 125114 in August. The “First in Time” Ordinance requires landlords to offer a rental property to the first qualified applicant based on who submitted the completed application first. The stated purpose of the ordinance is to reduce discrimination by limiting the landlord’s ability to choose to whom to rent. To comply with the ordinance, Landlords are required to process completed applications chronologically in the order in which they are received and keep records of each application’s

date of submission. Landlords also should list their tenant selection criteria. The city intends to hire specialized officials to develop and implement an enforcement strategy. This likely will include “sting” operations. This ordinance will be effective January 2017. Landlords are strongly advised to revise their tenant selection criteria and procedures accordingly.

Criminal Background Checks In April 2016, the United States Department of Housing and Urban Development (HUD) published a continued on page 18

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Rental Housing Journal On-Site Âˇ December 2016

Rental Housing Journal On-Site

Apartment Rents Weakening? Rent growth Slowing

By: Cliff Hockley, President, Bluestone & Hockley Real Estate Services

n September 14 of 2016, Mark Barry, MAI local apartment appraiser, updated brokers and investors at a local Morgan Chase Bank presentation. In his speech he highlighted the significant sales volume in 2014, 2015 and 2016, but issued warning signs. He indicated that apartment rents were beginning to flatten as vacancies were beginning to increase. He said: Vacancies are beginning to rise mainly in the urban core as new construction goes up, which equals more competition. In Portland we are seeing significant rent concessions in class A properties within urban core. There are many properties offering first month rent concessions with one year leases. (Some are even offering two months free.) Properties on the outside (farther East, South and West) have more stable rents. As inner core prices begin to rise people will be moving outward. Currently, 9,000 units are under construction, mostly in the 30 units and under range. With 25,000 more currently proposed, competition is increasing no matter what. Not all new construction currently proposed will be built as not all will be

2.4 million population mark, with 2,389,228 residents as of July 1, 2015. Most of the immigrants are from California, followed by immigration from the rest of the US. Additionally most of the immigrants have a higher education and are root seekers (from 25 -35 years old).

able to get the rents they are planning on. Properties that are pushing rents are seeing higher vacancies because the market is so competitive. According to Mark Barry’s research, Studios have the highest vacancy rate at 5% with 1, 2 and 3 bedroom units around 2%. (In a recent phone survey (early October 2016) of local residential property managers the vacancy rate has increased to over 3 %.)

Important statistics to consider: Population In 2010, The Portland–Vancouver– Hillsboro Metropolitan Statistical Area (MSA) was the 23rd largest in the United States, with a population of approximately 2,226,009. Since then, the Portland metropolitan region added 40,621 new residents from 2014 to 2015, a growth rate of 1.72 percent. The new estimates show the 7-county greater Portland region just shy of the

Employment Despite the increase in new residents, unemployment in the Portland Metro areas has stabilized. Household income is averaging $64,000 a year, slightly above the national average of $56,516. The US economy is slowing down, with a particular focus in the manufacturing sector. American manufacturing barely grew in September as a broader swath of of a strong dollar and faltering overseas markets. The Institute for Supply Management’s factory index reflects this decrease in activity. The index fell to 50.2, from 51.1 in the it has been since May 2013. Fifty is the dividing line between expansion and contraction. Out of eighteen industries, only seven grew in the past month, the fewest since December 2012. Oil-related weakness among energy companies is now spreading continued on page 22

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Survey Reveals What Millennial Renters Want in 2017

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illennials recently surpassed Baby Boomers as the largest living generation on Earth, and with millions continuing to put off traditional life milestones like home ownership, property owners are taking note. To reveal just what Gen Y looks for in a rental, Schlage®, a brand of Allegion which creates technologically advanced lock products to help multifamily property owners secure and manage their units while streamlining operations, has announced the results of a nationwide survey conducted with Wakefield Research of 1,000 U.S. renters in multi-family dwellings. Results include a desire for tech upgrades and the integration of next-generation access control systems as critical elements to entice renters. Of millennial renters who live in multi-family dwellings, 86 percent are willing to pay more for a "smart" apartment, meaning one that is equipped with automated or remotely controlled devices, compared to 65 percent of Boomers. This is big, considering nearly half of American renters in multi-family dwellings expect to be renting an apartment for the next five or more years. "As the multi-family marketplace continues to evolve with flexibility being a key factor in most living situations, consumers can feel confident that Schlage's latest door hardware offerings are paving the way for a new era of convenience and security," said Ann Matheis, marketing director, Allegion. "Apartments won't look the same in 10 years, from the inside or the outside, and with our long-established position in both the residential and commercial sectors, we have a unique vantage point that helps bring targeted, outcome-driven innovation to multifamily facilities because electronic access is the future." Results of the industry survey include six key insights into the millennial renter. • Lock Down: Millennials want tech upgrades right down to the locks, as more than 61 percent are likely to rent an apartment specifically because of electronic access features, including keyless entry doors. In fact, 55 percent are likely to pay more for an apartment that had "high-tech" door locks compared to ones that did not.

• Smart Renters: On average, millennial renters would pay about a fifth more for smart home features. • Tech vs. Parking: 44 percent of millennials would give up a parking space to live in a "high-tech" apartment. • Advanced Security: 63 percent would move out of an apartment due to lack of security. • Work/Rent Balance: 64 percent feel that being close to work is more important when choosing an apartment than being close to friends and family. • The Future: 45 percent of renters feel that physical door keys will be obsolete in the next 10 years. Schlage continues to innovate with smart multi-family technology, including its latest launch, Schlage Control™ Smart Interconnected Lock, recently named a "Top 101 Product" for 2016 from Building Design+Construction Magazine. Featuring ENGAGE™ Technology, this new offering provides multi-family property owners with highly scalable, efficiency-boosting capabilities with a greater appeal for residents. Schlage Control™ Smart Deadbolts and Schlage Control™ Smart Interconnected Locks are available in the Greenwich and Addison styles, with finish options including Satin Nickel, Aged Bronze, Satin Chrome and Bright Chrome. To learn more about Schlage and its offerings, please visit www.Schlage.com/Multifamily *Survey Methodology This survey was conducted by Wakefield Research among 1,000 U.S. renters in multi-family dwellings, between Oct. 1224, 2016, using email and an online survey. Results of any sample are subject to sampling variations. For the interviews conducted in this particular study, the chances are 95 in 100 that a survey result does not vary, plus or minus, by more than 3.1 percentage points from the result that would be obtained if interviews had been conducted with all persons in the universe represented by the sample. About Allegion™ Allegion (NYSE: ALLE) is a global pioneer in the field of safety and security. We keep people and their property safe, wherever they are, bringing together simple solutions and advanced technology. Allegion is a $2 billion company, with products sold in almost 130 countries. For more, visit www.allegion.com.

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Rental Housing Journal On-Site · December 2016

Rental Housing Journal On-Site

How Will A Donald Trump Presidency Impact Real Estate? By Zachary Harrison, President, Platinum Drive Realty

number of clients have asked me how a Trump presidency could impact property values and real estate markets. Putting aside the politics of the election, real estate is a critical sector of the economy that affects buyers, sellers, renters, landlords and homeowners. The unexpected election of Donald Trump to the presidency will have profound implications in the United States and around the world. From a high level, a centerpiece of Trump's campaign has been curbing immigration and deporting undocumented immigrants. However, cross-border transactions and international buyers have been key to the bull market in U.S. luxury real estate from coast to coast for many years. A 2016 study by the National Association of Realtors found that international buyers typically purchase more expensive properties. Furthermore, from April 2015 through March 2016 overseas buyers purchased $102.6 billion of residential real estate with New York being one of the five largest markets for purchases by overseas buyers.

International buyers and investors have been instrumental to the success of new construction projects, including Trump's own endeavors, accounting for approximately 15% of the New York buyers in recent years. An environment of mass deportations and highly restricted visas could trigger a chain of events that could reduce real estate investment and increase construction costs. The construction labor market is already tight and eliminating millions of workers from this sector could yield labor shortages and impede building activity thereby increasing both labor and construction costs. As a result, developers could bestow the cost implications upon homebuyers or alternatively pull back on projects. A decrease in the labor pool could also shrink the U.S. economy. A 2015 study by the American Action Forum found that deporting 11.2 million undocumented immigrants would reduce real GDP by $1.6 trillion. A decline in economic activity could cause real estate prices to dip, resulting in higher rental yields and position buy to rent investments as more attractive.

Rental Housing Journal On-Site Âˇ December 2016

What about interest rates? The Federal Reserve has signaled a rate increase in December although Dow futures were down 800 points the evening of Trump's election before rebounding in the days that followed. Market volatility could influence the Fed to delay a rate hike extending what has been a stronger than usual real estate market this fall. However, treasury yields have been higher on expectations of tax cuts, infrastructure spending, and inflation, which may lead to higher rates and deficits. Fortunately, the timing of the presidential election and subsequent results fall in November, traditionally a quieter period on the U.S. real estate calendar. Will a Trump presidency lift real estate to even greater heights? Once the surprise of the election results wears off, the hope is that there will be a stable real estate framework in which buyers, sellers and renters can best operate. Only time will tell, but it will be interesting to see how everything plays out.

About Platinum Drive Realty Platinum Drive Realty is a leading real estate firm servicing Westchester County, NY and Connecticut. The firm prides itself on delivering exceptional service to everyone from first time buyers and sellers to experienced homeowners, builders and investors. Platinum Drive Realty was recently named The Inc. 5000's Fastest Growing Real Estate Brokerage in the Tri-State area (NY-NJ-CT) and One of the Fastest Growing Companies in America for three consecutive years (2014, 2015, 2016). For more information about Platinum Drive Realty, please visit www.platinumdr.com. SOURCE Platinum Drive Realty Related Links http://www.platinumdr.com

Rental Housing Journal On-Site

DEAR MAINTENANCE MEN Water and Wax Removal

By Jerry Lâ&#x20AC;&#x2122;Ecuyer & Frank Alvarez

Dear Maintenance Men: I have a bathroom sink that is slow draining. I have already snaked the drain and found no stoppage. When I remove the pop-up assembly and have an open drain, water whooshes down with no problem. However, with the pop-up in place, water backs up into the sink and drains very slowly. Paul Dear Paul: Most bathroom sinks have an overflow hole near the top edge of the sink. This hole serves two purposes; 1: Acts as a safety drain to keep the sink from overflowing should the water rise above a certain level in the sink. 2: The overflow hole also serves as an air vent for the sink when the water levels are above the pop-up plug. The overflow hole allows air to escape through the drain and the water to evacuate more efficiently. What has happened is hair, toothpaste, grime etc. have builtup and sealed off the overflow drain where it exits just below the pop-up assembly plug. Most snakes are too big to go through the overflow drain.

Alternatively, a speedometer cable will work great or even a long zip tie will work. Push the cable or zip tie down through the overflow hole at the top of the sink and push any gunk out into the drain. Use water to help push the debris out the overflow drain, a funnel works great to direct a good flow of water. If you cannot get the overflow to drain, disassemble the main drain assembly to gain access to the overflow drain exit. Once the overflow drain has good airflow, the sink should drain a bit faster. If this does not solve the problem completely, look at restricting

the water flow coming out of the faucet. Use a restrictive aerator to cut down on the GPM of the faucet.

Dear Maintenance Men: My property has 100-gallon gas fired water heating that serves four units. It is about 8 years old. The tenants are complaining of very little hot water. I have checked the tank and the thermostat is working, the water is hot. Are my residents making up stories? What am I missing? Thorne

Dear Thorne: The water heater may need a bit of maintenance. The first thing to do is clean out the sediment at the bottom of the tank. This will require a shutdown of the heater for a couple of hours and some hands and knees work. Most 100-gallon gas water heaters have a clean-out port at the front of the tank. The port is either round or oval. Be sure to get a new clean-out port gasket before starting this job. Once the water is drained and the port opened, remove all the sediment from the tank. You can expect to haul out one to two buckets of calcium buildup. (Sediment removal should be done once a year.) Removing the sediment will greatly improve the heating efficiency the water heater. Because of the age of the tank; while you have the port open, check the inlet dip tube and the anode rod inside the tank. If the anode rod is corroded, replace it by pulling it out from the top of the tank and inserting a new one. The anode rod is a sacrificial zinc rod that helps keep the tank from corroding. The second item to check continued on page 22

Rental Housing Journal On-Site Âˇ December 2016

Rental Housing Journal On-Site

Short-Term Home Rentals Have Little to No Impact on Housing Affordability

early all housing experts surveyed last month in Zillow's quarterly survey agreed shortterm home rentals like those offered on Airbnb® and HomeAway® do not have a meaningful and large[i] impact on housing affordability, according to the latest Zillow® Home Price Expectations (ZHPE) Survey. Respondents to the quarterly survey, sponsored by Zillow and conducted by Pulsenomics LLC[ii], were asked about the impact of short-term home rentals[iii] on supply and housing affordability. Half of the experts surveyed said the impact is meaningful, but small[iv]. Just over 40 percent said the impact is not meaningful[v], and about 5 percent said short-term home rentals have a large impact on housing affordability. Just 3.8 percent responded as unsure. Cities across the country are debating the role short-term rentals play in housing affordability. One view suggests short-term rentals subtract from the supply of long-term rental homes and contribute to rising rents. Others argue short-term rental units give homeowners an additional source of income, allowing them to more easily afford a monthly mortgage payment. "Cities across the country are grappling with housing affordability

issues, especially in places with rapidly rising rents and home values," said Zillow Chief Economist Dr. Svenja Gudell. "In some hot West Coast markets, it's not uncommon for renters to spend 40 percent or more of their income on a monthly rental payment, when historically that number was much lower. Inventory plays a large role in this affordability crisis; there simply aren't enough rentals on the market to keep prices low. Clearly experts aren't convinced that short-term rentals are the cause of our problem." Only 7 percent of homeowners rent out, or are planning to rent out, all or a portion of their primary residence, according to the Zillow Group Report on Consumer Housing Trends. Overall, the experts surveyed – which include economists and researchers -- said they expect home price appreciation to be at almost 5 percent by the end of 2016, and slow down to 3.6 percent by the end of next year. Zillow forecasts rents across the U.S. to appreciate 1.6 percent from October 2016 to October 2017. "More than 90 percent of the 111 panelists who participated in this quarter's survey expect home value growth to be slower next year, and more than 85 percent of them foresee home

value appreciation rates flat or lower compared to 2016 in every year through 2021," said Pulsenomics founder Terry Loebs. "While those figures represent a clear consensus that home value growth will moderate in the coming years, there is no consensus concerning the pace of the expected deceleration. For example, the most optimistic experts project that U.S. home value appreciation will average more than 4 percent annually through 2021, while the most pessimistic expect an average annual rate of just 1.1 percent for 2017 and beyond."

About Pulsenomics:

Zillow

Airbnb is a registered trademark of Airbnb, Inc. HomeAway is a registered trademark of HomeAway, Inc.

Zillow® is the leading real estate and rental marketplace dedicated to empowering consumers with data, inspiration and knowledge around the place they call home, and connecting them with the best local professionals who can help. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow's Chief Economist Dr. Svenja Gudell. Dr. Gudell and her team of economists and data analysts produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home Value Index over the next five years. Zillow also sponsors the bi-annual Zillow Housing Confidence Index (ZHCI) which measures consumer confidence in local housing markets, both currently and over time. Launched in 2006, Zillow is owned and operated by Zillow Group (NASDAQ: Z and ZG), and headquartered in Seattle. Zillow is a registered trademark of Zillow, Inc.

Pulsenomics LLC (www.pulsenomics.com) is an independent research and consulting firm that specializes in data analytics, new product and index development for institutional clients in the financial and real estate arenas. Pulsenomics also designs and manages expert surveys and consumer polls to identify trends and expectations that are relevant to effective business management and monitoring economic health. Pulsenomics LLC is the author of The Home Price Expectations Survey™, The U.S. Housing Confidence Survey, and The U.S. Housing Confidence Index. Pulsenomics®, The Housing Confidence Index™, and The Housing Confidence Survey™ are trademarks of Pulsenomics LLC.

[i] Meaningful and large is defined as: shortterm rentals significantly reduce the supply of long-term rental units and are compounding today's rent affordability problems. [ii] This edition of the Zillow® Home Price Expectations Survey surveyed 111 experts between October 28 and November 15, 2016. The survey was conducted by Pulsenomics LLC on behalf of Zillow, Inc. and asked the experts about their expectations for the housing market. [iii] Short-term home rentals are classified as a full apartment, single-family home, or auxiliary unit. A short-term room rental is classified as a room in an otherwise occupied unit. [iv] Meaningful but small is defined as: shortterm rentals reduce the supply of long-term rental units only marginally and contribute little to today's rent affordability problems. [v] Not meaningful is defined as: short-term rentals do not have a meaningful impact on the supply or affordability of standard, longterm rental units.

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Rental Housing Journal On-Site

Market Overview

...continued from page 1

2Q’s –2,200-job setback. Seasonallyadjusted data ran along similar lines. Seattle picked up 15,800 jobs from July to September, up from 10,700 during the same period last year and 15,200 in 2Q16. Likewise, 4Q16 got off to a quick start as SEA generated another 4,300 jobs in October, topping the year before add of only 500 net jobs. RED Research tweaked the SEA payroll model, replacing the S&P 500 returns variable with the second lag of personal consumption expenditure growth, reflecting the large role retail sales now play in the Puget Sound economy. The switch boosted the adjusted-R2 about 0.2% to 95.4% and reduced standard error. The resulting forecast remains virtually unchanged for the near term, with 3% or faster job growth through 2018; but the 20192021 outlook is more optimistic as consumption spending growth holds up better than equity returns in the out-years when U.S. growth falters. Potential pro-growth changes in policy may extend strong growth. Occupancy Rate Summary Occupancy Rate (Reis) 94.9% RED 51 Rank 38th Annual Chg. (Reis) -0.1% RCR YE16 Forecast 94.0% RCR YE17 Forecast 93.2% RCR YE18 Forecast 93.4% RCR YE19 Forecast RCR YE20 Forecast

93.3% 93.7%

3Q16 Absorption and Occupancy Rate Trends Households net leased 1,556 vacant units during 3Q16 (Reis), up 24% from the year-earlier quarter. Demand was concentrated in the class-A sector (1,471 units), while tenants absorbed only 86 class-B&C units, where vacant inventory dipped to the lowest level in 15 years (2.9%). By contrast, conditions were loose in the well supplied A-segment, where occupancy held steady at 92.9%. Overall metro occupancy was 94.9%, down 0.1% year-on-year. Axiometrics surveys of stabilized, same-store assets recorded average 3Q16 occupancy of 95.3%. Like Reis, average occupancy fell –10 bps over the year. Class-C assets recorded highest occupancy (95.5%), with class-B (95.3%) following. Stabilized class-A assets maintained a solid 95.0% rate, but the class-A inventory was only 92.9% occupied when properties in lease-up are considered. Supply was

heaviest in Bellevue, Downtown and North Seattle, where stabilized and total occupancy statistics were 95.4% / 93.8%, 95.6% / 93.1% and 95.9% / 95.5%, respectively. RCR’s demand model now uses supply (+), occupancy change (+) and industrial production (+) as independent variables. Occupied stock growth (absorption) remains above the 1.8% 27-year average in the base case through 1Q19, before gradually slowing to less than 1% in 2021. Occupancy falls to as low as 93.1% in 2019 under heavy supply pressure but recovers to 93.9% by end of the 5-year forecast interval. By way of comparison, Reis project occupancy to declines to the high-92% area in 2019 and 2020. Effective Rent Summary Mean Rent (Reis) Annual Change RED 50 Rent Change Rank RCR YE16 Forecast RCR YE17 Forecast RCR YE18 Forecast

$1,435 10.1% 1st 8.6% 4.5% 4.9%

RCR YE19 Forecast RCR YE20 Forecast

3.7% 3.2%

3Q16 Effective Rent Trends Reis report that sequential rent growth cooled off during the summer but continued at a torrid pace. Average rents increased $28 (2.0%) to $1,435 quarter-on-quarter, down from $40 (2.9%) and $37 (2.9%) gains in the prior and year-earlier quarters, respectively. Class-A asking rents increased $30 (1.7%), while comparable B&C rents climbed $24 (2.1%). Expressed on a yearon- year basis, effective rents were 10.1% higher, down from 11.1% in 2Q16. Still, Seattle retained the #1 ranking among the RED 47. Stabilized same-store trends captured in surveys conducted by Axiometrics were moderately weaker. This source recorded average y-o-y growth of 7.2%, remarkably the smallest advance recorded in nearly two years. Class-C (8.6%) notched first honors for the sixth consecutive quarter, leading classes-B (7.4%) and –A (5.4%). Three South Puget Sound suburban submarkets posted double digit gains (Auburn, Federal Way, SeaTac), while supply stifled rent growth in some infill areas. Bellevue (4.2%), Downtown (5.1%) and No. Seattle (5.7%) were among the rent laggards. Our rent model now uses occupancy(t-1) (+), job growth (+), home appreciation(t-6) (+), income (-)

and Baa bond rates(t-2) as independent variables to achieve a 97.2% ARS and 0.7% standard error. The forecast reveals some mean reversion tendencies but takes its time about it, leisurely slowing to the 3.7% long-term SEA average over three years. Forecasted rents grow at a useful 3.9% compound annual rate through 2021 ranking R47 #12. Trade & Return Summary $5mm+ / 80-unit+ Sales 33 Approximate Proceeds $1.2bn Average Cap Rate (FNM) Average Price / Unit Expected Total Return RED 46 ETR Rank

4.7% $239,305 7.0% 23rd

Risk-adjusted Index RED 46 RAI Rank

3.03 38th

3Q16 Property Markets and Total Returns Property market velocity regained momentum over the summer, rising from 2Q16's uncharacteristically low 20 transactions to a robust 22 trades. Proceeds totaled almost $1.2 billion, an increase of 116% over the prior quarter. The average price per unit sold was $239,305, a decrease of -6% quarter-over-quater, reflecting a higher concentration of older suburban valueadd trades in the mix. Fourth quarter velocity is on track for a still stronger performance. By December 12, 18 transactions were in the books totaling $1.2bn of the proceeds. Notable among these were three acquisitions valued at $130mm or more, each ranking among the 15 largest

apartment sales in Seattle history. The average price per unit was $259,908, the highest figure recorded since 1Q15. No dramatic change in yields was evident. The average Seattle property continued to trade to an approximate 4.8% cap. Infill class-B+/A- assets remained comfortably in the low- to mid-4% range. Older properties were valued in the 4.9% to 5.2% region. Value-add plays may have crept closer to the curve, as most were priced to sub-5.5% yield levels. For valuation purposes we elected to continue to use a 4.8% cap rate proxy. At this level, model derived rent and occupancy point estimates and 5.4% terminal cap, we conclude that a SEA investor would expect to earn a 7.0% total return over a 5-year hold, up from 6.4% in 2Q16. This places Seattle at #23 among the RED 47. The metro riskadjustment return index ranks #38 in the peer group.

By Daniel J Hogan

Director of Research djhogan@redcapitalgroup.com 614-857-1416 Office 1-800-837-5100 Toll Free

continued on page 17

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Rental Housing Journal On-Site · December 2016

Executive Director - Jim Wiard

711 Powell Ave. SW, Suite 101 Renton, WA 98057 (425) 656-9077 • (425) 656-9087 (fax) admin@wmfha.org

Treasurer - Sheri Druckman

Board President - Brett Stevens Vice President - Becky Sanders Vice President of Suppliers Council - Rob Pendleton Immediate Past President - Kris Buker

Secretary – Laura McGuire

Promoting Quality Housing The Year in Review

s the year comes to a close, we have much to be thankful for as we look ahead to another year of service to the communities of Washington and our many wonderful member companies and their employees. I am humbled at the passion, enthusiasm and commitment our members have in giving to the apartment industry and supporting each other and our mutual interests to promote quality housing in our state. 2016 was in many ways an extremely successful year for our association and our industry, and 2017 will be an exciting year of growth, innovation and excellence for WMFHA as we continue to look for ways to bring value to those we serve.

Membership: Our association continues to grow and strengthen our role as a leader in housing for the state of Washington. Our membership now exceeds 1,300 members, including multifamily properties, property management companies and products and service companies.

WMFHA is on pace to end the year with an 8% year-over-year property unit membership growth, having increased membership in 2016 from 950 properties with 164,000 units to 1,011 properties and 178,000 units. Management company membership has increased from 92 companies to 101 companies. Industry supplier partner membership increased to nearly 200 companies in 2016. The National Apartment Association awarded the Washington Multi-Family Housing Association as one of the top 10 NAA affiliates across the country for membership growth in 2016. Our Members Using Members (MUM) campaign emphasized the importance of members supporting other members in our efforts to grow and prosper. It is our culture for our property management members to use our supplier members for their products and services.

Government Affairs: Our Director of Government Affairs, Joe Puckett, was honored with the National Apartment Association’s

Grassroots Advocate of the Year Award. We thank Joe for his many years devoted to improving housing opportunities in this state and look forward to continuing our work to be the voice of the industry. In March, WMFHA staff and board members traveled to Washington D.C. to meet with our state’s members of Congress to build on our relationship with our legislators and to convey important positions of the housing industry on federal issues. The legislative session in Olympia was successful in that no bills aimed at restrictions or limitations on the housing industry passed the legislature. One bill promoted by the housing industry passed, changing the time allowed to send out a security deposit accounting from 14 days to 21 days, a much needed relief. Association members joined together on our annual Day on the Hill Legislative Day to meet with our state legislative members to educate them on the valuable benefits the housing industry provides to local

communities in our state and the need for appropriate legislation to allow us to continue to provide affordable and quality housing for all. Elections for the Seattle City Council in late 2015 changed the make-up of the Council, with several council members now working directly with tenant advocate activists to pass burdensome legislation adversely affecting the housing industry in Seattle. WMFHA advocates for less restrictions and more incentives to new housing development, as opposed to misguided government constrictions that would curb new development and erode affordable housing. Policymakers need to work on long term and creative solutions that involve the housing industry in the planning process.

Education: One our primary mission goals is to promote professionalism through education. A highly skilled staff ensures your operations are more continued on page 21

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Catherine Johnson, Residence at Mill River - Prodigy Sarah Knutson, Ashton Apartments - Avenue5 Staci Grogan, Fairwood Apartments - FPI Taylor Winebarger, Jake at Indian Trail - Greystar

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NEW DEVELOPMENT OF THE YEAR Drew Smith, Forest Creek - FPI Joe Calia - Douglass Properties John Calico, The Residence at Tullamore - Prodigy Tom Clark, Prarie Hills - Greystar

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Rental Housing Journal On-Site · December 2016

Rental Housing Journal On-Site

Landlords and Property Managers Bullied ...continued from page 1 The landlord, Landon Marsh, raised rents “only to the lower end of current market rates in Portland,” said McIsaac in a recent interview. McIsaac said the rent increases came after Marsh purchased the small apartment complex, did substantial work to improve the condition of the building and raised rents to cover his costs and mortgage. Unfortunately the rent for one tenant went up by 40 percent and the tenant complained to the Portland Tenants United group.

Telling the landlords’ side of the story McIsaac said he is speaking out because many in the landlord and property management industry do not feel their side of the story has been told, and that more attention has been focused on what the activists’ demonstrations, and what the tenants say. “I represent the landlords and property managers who do not want to have exorbitantly high rents, we want more housing stock,” McIsaac said. “In Portland, 85 percent of the landlords are small operators. They might have their retirement tied up in these properties, but they don’t make a ton of money off of them. So the stereotype is that all of the

property owners are huge, out-of-state multimillion-dollar concerns. That is not the case. A lot of these property owners have day jobs,” McIsaac said.

The story of one small landlord McIsaac said that with the hysteria over rent increases, “the activist group has targeted a couple of landlords in particular. They are not going after the big guys who own thousands of units. They are going after the little guys who own like 20 units. “And this one guy, Landon Marsh, who is my client, is in the hospital interior-design business. He is a oneman consulting business. He does not do property development for a living. He has investment properties. They are small ones. All three buildings he owns combined make up 20 units.” Where this all started with apartment building purchase “He bought one building around seven or eight months ago out in a semi-blighted part of East Portland, a working-class area,” McIsaac said. “It was built about seven years ago. And it needed some repairs just from wear and tear. The tenants asked him to make these repairs and he said, ‘Yes I will do that.’ “ “So he set to making the repairs. But he had bought the building at market value. And market value right now is a hell of a lot higher than it was seven years ago – it’s a lot higher. “He said that he was going to have to raise the rent. But he said he would keep the rents – and he stuck to this – at the very low end of market rates. So

he’s not a profiteer by any stretch of the imagination,” McIsaac said. He said in his opinion, “This guy is a liberal, progressive classic Portlander. He is a caring, altruistic, sensitive man.”

Group pushing rent control and end to no-cause evictions for Portland Portland Tenants United is a growing tenants union dedicated to organizing tenants to take action to strengthen and enforce tenants’ rights and protections, according to their Facebook page. At a recent press conference, Portland Tenants United and City Commissioner-elect Chloe Eudaly, promoting something called “Keep Portland Housed,” called for a freeze on rent and an end to no-cause evictions in Portland until there is a policy in place to improve conditions for renters. Leader says group wants municipal disobedience and rent control “We’ve been in an officially declared housing emergency for over a year. Despite that, tenant protections – the most critical component to preventing homelessness – have not meaningfully improved, and conditions continue to worsen,” Eudaly said in a press release. “My election, and the passage of Portland’s housing bond, present a clear and obvious mandate to City Council to act.” Eudaly admits state laws prohibit local rent control measures. But she wants city commissioners to commit “municipal disobedience,” do it anyway and fight the resulting lawsuits, she told the Portland Tribune.

Portland Tenants United is focused on lowering the eviction rates in Portland by organizing tenants to vocalize their concerns. Gabriel Erbs, organizer for the group, insists the fight is far from over, according to a report on Portland Patch. "Tenants can be evicted, for whatever reason or no reason at all, at the landlord’s whim," he said.

Landlord and tenant activists have clashed Tensions escalated late in 2016 at the Portland Art Museum during an awards ceremony. Multifamily NW, an association promoting quality rental housing, was holding its annual ACE awards ceremony for its members when protesters from Portland Tenants United showed up. Dozens of protesters gathered across the street from the museum. It didn’t take long for tempers to flare, according to koin.com. The television station reported that, “Tensions were high. Some choice words were exchanged as well as some apparent shoving as protesters came face to face with ceremony attendees. Shouts calling the multifamily association attendees ‘parasite’ and ‘bloodsucker’ rang out from protesters.” continued on page 23

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How to Create a Successful Property Management Team By Mary Girsch-Bock, www.propertymanager.com

hat is the magic formula for a successful property management team? Like any other workplace, a property management office functions much more efficiently when employees function as a team with each member contributing their particular talent and expertise. When an office functions as a true team, everything runs smoothly. When it doesn’t, even the slightest bump in the road can quickly become a pothole. If you have staff members fighting, tenants complaining, and work not being completed properly (or at all) you staff is not functioning as a unified team.

So how do you do it? How do you get the right team in place, and ensure that they’re working together? Here are a few suggestions: • Start with hiring the right people. This may sound simple, but having the right group in place goes a long way to creating a strong working team. (It helps to start by identifying what you are looking for as a company in your team members–what are the characteristics you find valuable?) • When you interview potential staff members, interview them

holistically. In other words, interview the whole person, not just the person on the resume. That can mean taking the time to introduce potential employees to key staff members to see how they interact. Find out what their personal goals are; not just what they did at their last job. Do they work better alone? Do they enjoy being part of a team? None of these attributes means that they’re the right fit for your office, but knowing these things up front helps you and your team make a hiring decision that will

be the most beneficial to the needs of you and your office. • Offer educational and advancement opportunities. While opportunities may be limited in smaller offices, those managing multiple properties can mentor and groom selected employees for management opportunities, either at that property or another. While not all employees will likely take advantage of the opportunity, those that do will be more likely to stay. • Cross train your staff. Most employees are eager to learn or perfect new skills and you just might be surprised at the results • Have an open door policy and truly honor it. While many managers may profess an open door policy, few actually put those words into practice. Take the time to listen to your employees without judgement and without repercussions.

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Market Overview

...continued from page 8

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.

continued on page 20

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Residential Landlord Tenant ...continued from page 1 memorandum opining that tenant screening criteria discriminating against tenants and applicants based on their criminal history is a violation of the Fair Housing Act. HUD observed that minorities have a disproportionately higher rate of arrest, conviction and incarceration rates than the general population. A screening program or criteria prohibiting all tenants with any criminal history is therefore prohibited as it is more likely to affect minorities. This does not mean all criminal screening is banned or that a landlord is required to rent to all convicted criminals. To satisfy HUD requirements, screening criteria must be carefully tailored to prevent discrimination. This will require Landlords to review tenants’ criminal history on a case-bycase basis. Landlords are advised to consider the nature and severity of the crime, the time that has passed, and whether the tenant has complied with terms of any sentence (i.e. paid fines, completed probation, etc.).

Source of Income and Place of Employment Discrimination The Seattle City Council enacted an ordinance prohibiting landlords from discriminating against tenants for their source of income or place of employment. Landlords may not refuse to accept a tenant who receives a rent subsidy from a public entity such as Section 8 or a private entity such as the YWCA. Landlords are also prohibited from favoring tenants based on employer, such as providing rental incentives for employees of Microsoft or Amazon. When calculating rent for a tenant receiving a rent subsidy, the rent is effectively reduced by the amount of the subsidy. For example: a landlord requires tenants to have a monthly income three times the amount of rent, the rent is $1,000.00, and Section 8 provides monthly $800.00 subsidy. The tenant needs to only show income of $600.00, or three times the rent after applying the subsidy payment. Lengthening the Time to Account for a Security Deposit In late 2015, the Court of Appeals ruled that the landlord’s “passive delay” in accounting for the security deposit at the end of a tenancy “falls woefully short” of showing that circumstances beyond the landlord’s control prohibited it from accounting for the

security deposit within 14 days. The landlord, therefore, must demonstrate that it actively attempted to determine its damages at the end of the tenancy within the statutory deadline. The Washington State legislature subsequently determined to lengthen that deadline from 14 days to 21 days. While the additional seven days is helpful, landlords are advised that the courts will look more carefully at how the landlord used the time allotted in determining whether the landlord properly and timely accounted for the tenant’s security deposit.

Order of Limited Dissemination The Legislature added a new section to the Residential Landlord-Tenant Act. RCW 59.18.367. This new section authorizing the court to order an unlawful detainer action to have limited dissemination if the case was without basis, the tenant reinstated its tenancy by law, or for “other good cause.” The tenant has the option to move the court for an order that effectively prohibits tenant screening service providers from disclosing the unlawful detainer action in a tenant screening report or using the report as a factor for determining whether to recommend that tenant for future tenancies. An order of limited dissemination does not prohibit a landlord from doing its own court search for an eviction and using that information. It only limits a screening company’s ability to disclose the information to the landlord. This new rule may be used as a negotiation tool for existing and past tenants. Tenants who desire clean rental histories may be more willing to pay old judgments or pay their rent current in order to get a landlord’s cooperation for an order of limited dissemination. Evan Loeffler is the principal at the Loeffler Law Group PLLC in Seattle. Mr. Loeffler’s practice emphasizes landlord-tenant relations and real estate litigation. He is the author of several chapters on landlord-tenant law in the Washington Lawyers Practice Manual and is on the faculty for several landlord-tenant CLE programs.

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he International Code Council (ICC) reported that public comment RB168-16, the tiny house appendix, passed their final round of voting, receiving the required 2/3 majority vote. As a result, a tiny house specific appendix will be part of the 2018 International Residential Code (IRC), allowing people to receive a Certificate of Occupancy (COO) for their tiny house when built to meet the provisions of the adopted code appendix. A lack of recognition of tiny houses in the IRC had been a major hindrance to the creation of legal tiny houses in communities across the United States. The approval of RB168-16 is a culmination of the efforts of Andrew Morrison (www.TinyHouseBuild.com) and a team of architects, builders, designers, and educators. The team initially defended the proposed appendix at the ICC public comment hearings in October 2016 at which time they received the first 2/3 majority vote necessary to place RB168-16 on the official ballot. Tiny houses have gained popularity in the last few years as a result of historically high housing costs, flat lined wages, and a grassroots movement towards minimalism. A tiny house specific code helps not only those wanting to build tiny but also local

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Rental Housing Journal On-Site · December 2016

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Rental Housing Journal On-Site

Market Overview

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Rental Housing Journal On-Site · December 2016

Executive Director - Jim Wiard Board President - Brett Stevens Vice President - Becky Sanders Treasurer - Sheri Druckman Secretary – Laura McGuire Vice President of Suppliers Council - Rob Pendleton Immediate Past President - Kris Buker

Promoting Quality

...continued from page 9

cost efficient, residents are happy, staff are more satisfied in their roles and a greater number of your apartments stay occupied. NAA’s Education Institute designation programs offered by WMFHA were successful this year, with 94 property management professionals who attended either the Certified Apartment Manager (CAM) designation, the Certificate for Apartment Maintenance Technicians (CAMT) course, National Apartment Leasing Professional (NALP), Certified Apartment Portfolio Supervisor (CAPS), the Certified Apartment Supplier (CAS) or the Specialist in Housing Credit Management (SHCM) affordable housing designation. In addition to the National Credential programs, WMFHA hosted 24 other educational events in both Western Washington and Eastern Washington providing training attended by 680 students. WMFHA’s Career Development Committee also launched our first annual Career Fair and developed the Residential Property Management JumpSTART program, bringing value to members by attracting new talent to the industry and giving the new hires the skills to be successful from their first day of work. Our goal for 2017 is to continue to recruit new talent to our industry. Please review our website periodically to keep up with all of the exciting educational programs we will offer throughout the year, either online or in the classroom.

Events: The annual Emerald Awards recognition gala set a record with over 1,000 attendees. The three signature trade shows – Education Conference (EdCon), Maintenance Summit and Business Exchange reverse trade show continued to set records for attendance and drew many compliments from property management and supplier member attendees. EdCon continues to be the most valuable education conference and trade show for attendees in our market and will be held on April 19, 2017 in conjunction with Maintenance Summit and the thrilling Maintenance Mania competition. The Washington Apartment Outlook economic forecast luncheon continues to be the industry’s most successful and beneficial economic conference event. 700 attendees were treated to experts Mike Scott and Greg Willett discussing economic trends in our industry. Joe Puckett, Brett Waller and Senator Joe Fain offered tremendously valuable information on current political trends.

711 Powell Ave. SW, Suite 101 Renton, WA 98057 (425) 656-9077 (425) 656-9087 (fax) admin@wmfha.org

over $32,500 for Childhaven. In addition, our 10th annual Chili CookOff event raised a record $25,000 for DAWN this year. WMFHA members worked with Rebuilding Together in our annual Community Impact Day. Member companies volunteered to renovate four homes owned by low-income veterans, including needed roof repairs, kitchen countertops, new appliances, a new gas furnace, gutters, windows, new carpet, landscaping and repairs. Members in Eastern Washington also conducted a similar volunteer day. Apartment communities throughout Puget Sound are conducting ongoing food drives for Northwest Harvest. To date, WMFHA members have worked to collect 18,000 pounds of food for Northwest Harvest.

Leadership As stewards of our industry and leaders in our community, we owe it to ourselves to work together to advance the benefits and reputation of multifamily housing. The association enlists the assistance of many member volunteers participating on committees to help direct resources in order to conduct the business of the association. We are lucky to have outstanding committee members doing great work. I would like to personally thank the volunteer efforts of all of our committee members, without whose time and devotion we could not provide such quality events and education to benefit our membership. I would also like to thank our Board of Directors and our Executive Officers for the leadership and guidance to keep this association on our successful path. I look forward to working with several new board members and officers in 2017 as we collectively advance the interests of our association. Lastly, I would like to extend a special thank you to our devoted staff – Jessie Kotarski, Brett Waller, Sloane Cerbana and Tricia Johnson. Their hard work and incredible service allows us the ability to meet the needs and expectations of our members. Our WMFHA staff have worked hard this year to serve others. To explore avenues to get more involved in the association, please call us at 425-6569077 or e-mail me at jim@wmfha.org. I am proud to serve this association and wish everyone a safe and joyous holiday and a prosperous new year. We look forward to serving you in the coming year and making your housing association the best it can be. Jim Wiard – Executive Director

Community Service: WMFHA has increased its charitable service footprint at its events, including Toys For Tots, Northwest Harvest, Rebuilding Together, the Domestic Abuse Women’s Network and Childhaven. The Holiday Giving Gala, with its silent auction, raised Rental Housing Journal On-Site · December 2016

Rental Housing Journal On-Site

Apartment Rents Weakening? ...continued from page 3

Dear Maintenance Men ...continued from page 6

to computer, plastics and machinery makers. The stronger dollar combined with slower growth in emerging markets hurts foreign sales. Auto dealers and construction companies are insulated by the spending of American consumers.

is the cold-water inlet dip tube. Cold water entering the heater is routed to the bottom of the tank by the dip tube. If the tube is corroded, broken or missing, the tank will develop hot and cold areas, leading to complaints about short-term hot water. The dip tube is located inside the cold-water inlet pipe. Replacements for both the anode rod and dip tube can be found at most plumbing supply houses.

Summary We are at the top of the market. In Oregon 3 -3 ½ % growth rate is expected due to the relocation of many businesses from out of state. The glut of new developments and lower demand for Class A multifamily properties has increased competition between units as demonstrated by the amount of free is can it continue to grow? With increased vacancy rates it’s hard to judge if we are seeing pre-election jitters or the beginning of an economic downturn? I am not sure facing a rejection of ever increasing rental rates. Clifford A. Hockley is President of Bluestone & Hockley Real Estate Services, greater Portland’s full service real estate brokerage and property management company. Founded in 1972, Bluestone & Hockley’s staff totals nearly 110 employees, including 20 licensed brokers. The

company’s property management division serves commercial buildings, apartments, condominium associations and houses in the Portland / Vancouver metro area, while the brokerage division facilitates both leasing and sales of investment properties throughout Oregon and Washington. Cliff earned a degree in Political Science from Claremont McKenna College and holds an MBA from Willamette University. He is a Certified Property Manager and has achieved his Certified Commercial Investment Member designation (CCIM). Bluestone & Hockley Real Estate Services is an Accredited Management Organization (AMO) by the Institute of Real Estate Management (IREM). Cliff is a member of the Institute of Real Estate Management and was named Certified Property Manager of the year in 2001 and 2003. Cliff is a frequent contributor to industry newsletters. Bluestone & Hockley offers customized brokerage, property and asset management, as well as maintenance services to property owners and investors throughout the Portland/Vancouver metro area. The company’s full-service approach benefits busy property owners and investors, who know they can count on Bluestone & Hockley for high quality real estate services start to finish. A Better Real Estate Experience. 503-222-3800

Dear Maintenance Men: How do I remove candle wax or gum from my rental unit’s carpet? Janet Dear Janet: The best way to remove candle wax from a carpet is to use a hand held clothes iron. Put an absorbent paper towel over the wax and heat the area with a hot iron. The paper towel will absorb the wax as it melts. Be careful not to burn the carpet as an iron can melt certain carpet fibers and scorch others. Start on the lowest setting. Remove any left over stain by blotting the area with a small amount of dry-

cleaning solvent. (Dry-cleaning brand names to look for: Guardsman Dry Cleaning fluid, Woolite Dry Cleaning Secret, Dryel or any dry fabric cleaner and in a pinch; lighter fluid.) Also, blotting with a mild detergent mixed with warm water may work. Make sure the detergent does not contain any alkaline or bleaches. Remove gum by either freezing the gum and removing it by pieces or using peanut butter to loosen the gum’s grip on the carpet. A product known as “Goo-Gone”, found at Home Depot, may be used to remove gum, tar, grease and glue. Use Goo-Gone sparingly Bio: If you need maintenance work or consultation for your building or project, please feel free to contact us. We are available throughout Southern California. For an appointment please call Buffalo Maintenance, Inc. at 714 956-8371 Jerry L'Ecuyer is a licensed contractor & real estate broker. He is currently on the Board of Directors and Chairman of the Education Committee of the Apartment Association of Orange County. Jerry has been involved with apartments as a professional since 1988. Frank Alvarez is the Operations Director and co-owner of Buffalo Maintenance, Inc. He has been involved with apartment maintenance & construction for over 20 years. He is also a lecturer & educational instructor. Frank can be reached at (714) 956-8371 Frankie@BuffaloMaintenance.com For more info please go to: www.BuffaloMaintenance.com

Rental Housing Journal On-Site · December 2016

Rental Housing Journal On-Site

Landlords and Property Managers Bullied ...continued from page 11 A small group of protesters stormed past security into the museum to disrupt the event. They were soon removed by security, according to katu.com. Deborah Imse, executive director of Multifamily NW, said in response to the protest, “Over the past few years, rents in Oregon have risen while incomes have lagged behind, creating an urgent housing crisis. In order to thrive, the region needs to work together to create more quality housing options for families of all incomes. “With demand for housing continuing to increase, we must take action to reduce rental costs by increasing the variety of housing types available to people of all incomes and creating more subsidized affordable and market-rate units,” Imse said in the statement.

Property management groups say more apartment units needed Any solutions to the Portland housing issue, property management organizations say, should be marketbased. A spring 2016 apartment report released by Multifamily NW says that “Portland’s current development pipeline includes an impressive 21,600 proposed units.” “More housing is the solution, and our priorities are to help increase supply and educate politicians on the fact that simply adding fees and making business harder has the reverse effect on the problem they want to solve,” Multifamily NW’s Imse wrote in an email to the Portland Mercury. “As the organization representing property owners and managers, Multifamily NW has adopted a

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solutions-oriented approach to address the housing shortage. The market data we collect, along with reviews of affordable housing policies across the country and the experience of our members, have shown us the best way to create affordability in the housing market: adopting proven strategies that add to the housing supply,” Imse wrote in an article on Oregonlive. com in early 2016.

them. And he has bent over backwards, and so has the rental company, to make it easier for tenants,” McIsaac said. “So it is interesting here in Portland the media has not jumped on him, they have been extremely neutral on him. The head of the tenants union has taken it upon herself to negotiate with landlords on behalf of the tenants and she is not a lawyer, not a property owner, she’s just an activist,” McIsaac said.

Barrier to constructing new apartments need to be removed “To increase the overall housing supply, we need to remove barriers to building. This includes updating zoning codes to allow for a wider variety of housing types at a range of price levels. “At the same time, we should streamline the process for development review and permitting new construction while retaining standards for high-quality buildings. Under the current process, approvals can take a year or more, adding to project costs and delaying the construction of muchneeded market-rate and affordable units,” Imse wrote.

Activists marched into property management office Activists were protesting at one event and then went over to the office of the property management company Marsh had been using to handle his rentals. “They marched into the A&G Rental Management LLC office and intimidated the people working there. Drove some of them from the main area back into their offices. They had to lock themselves in their offices. And the principals were not in the office at the time, so they basically attacked the support staff – not physically – but screaming, bullhorns, stomping, just marching through this office. It’s not very big, maybe a grand total of 1,000 square feet. So 30 of them came in there so it was pretty unpleasant,” McIsaac said.

Landlords Trying To Do The Right Thing Caught in the Middle McIsaac said Marsh tried to work with the existing tenants on payment plans and provide plenty of lead time and help moving if they decided not to pay the rent increases. Most tenants decided to stay, he said. No lawsuits have been filed. “But they have come up with some non-factual statements about how he has treated tenants and what he has said to

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Challenge of buying apartments at market rates “The bottom line is, if somebody buys a new rental property at market rate from somebody else who owned it for 10 years, the owner is going to sell it at market value. The new owner is going to have to raise the rents to make

the monthly mortgage. If you do away with no-cause evictions, then you also do away with the ability to evict bad actors who are drug dealers or domestic abusers, because that is what the law exists for,” McIsaac said. “His (Marsh’s) other properties have long-term tenants – his other two properties – and so it’s just a crazy, uncomfortable situation. I think the property managers and the landlords are really willing to work with tenants because of the type of city we have here – but the tenants union has refused conversations and any negotiations that are not absolutely in their favor,” he said. “And they have a couple of politicians on their side,” McIsaac said. “Some politicians support no-cause evictions and rent control. But they don’t know the facts. If they did, they would not do it. The Portland Tenants Union is funded by the national Service Employees International Union (SEIU). No-cause evictions are No. 1 and rental control is No. 2 but I think there are other things lurking underneath if they can get these laws passed. “If you have rent control you cannot improve your buildings. You have to be an altruistic millionaire to improve a building with rent control because rent is where you derive your income.”

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Rental Housing Journal On-Site · December 2016