Rental Housing Journal On-Site May 2017

Rental Housing Journal On-Site

May 2017

3. The Informed Investor - Property Co-Ownership & Exchanges 4. First in Time Lawsuit - Yim et al. City of Seattle 5. How Stable is your Homeowner's Insurance Company?

6. Home Prices Up 7.1% In March and Strongest In The West 7. Multifamily Rents Up As Rate of Growth Continues to Slow

15. Most Renters Like Where They Live 8. Apartment Returns Shifting to and Do Not Plan to Move Secondary Markets 20. Creating a Buzz to Attract Renters to 9. Successful Education Conference Your Properties 11. Four Paint Trends for Property 21. Is Your Apartment Building the Hottest Managers this Spring Season New Hotel in Town?

14. Effortless Ways to Earn Extra Fees: Bike Rooms and Dog Park Equipments

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

Can I Say "No Pot In My Apartments" When It’s Legal In My State?

Immigrants' Strong Desire for Homeownership Will Shape U.S. Housing Markets

A

new report says the housing and neighborhood location choices of immigrants will have a significant impact on urban growth in the U.S. for decades to come, particularly as more foreign-born residents seek to own homes in suburban communities, according to new research from the Urban Land Institute's Terwilliger Center for Housing.

Immigrants seeking to own homes as well as those renting homes are increasingly drawn to the suburbs for employment and lower costs, the report says. Homebuilders and developers who can deliver the housing options immigrants want and need stand to

By John Triplett, Rental Housing Journal

O

regon Governor Kate Brown this month signed a bill that prohibits marijuana retailers from keeping or sharing customer's personal information. According to reports, she said she was concerned about the Trump administration's future actions when it comes to the legalized pot industry which employs 13,000 people in Oregon. So when pot is legal in a state, what issues does this present to property managers and landlords of rental properties?

Property managers are often confused and seeking to better understand how to handle the issues of legal marijuana and medical marijuana when it comes to tenants and rental housing in their states.

Professional Publishing Inc., PO Box 6244 Beaverton, OR 97007

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Sound Publishing Inc 98204

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continued on page 18

continued on page 12

How To Attract Renters With Premium Bicycle Parking Amenities Bicycle commuting is on the rise, especially with Millennials, and one sure way to attract their attention is by offering the best in bicycle parking amenities and bicycle racks.

By Robert Caston

A

ccording to the League of American Bicyclists, bicycle commuting has risen 62%. In bike friendly cities that have invested in their bicycle infrastructure and added safer bike lanes, the number of bicycle commuters has risen by an impressive 105%!

There are 62 million Americans who ride a bike today. Bicycling is particularly popular with Millennials, that huge demographic born between 1980 and 2000. In fact, in a surprising

trend, that group is now waiting longer to obtain their driver’s licenses.

According to AAA, the number of cars also purchased by people 18-34 dropped almost 30%.

How are they getting around instead?

Bicycles, trains, buses, Ubers and ZipCars.

Not only are Millennials interested in the benefits of bicycles, but so are municipalities. City administrators are building up their bicycle infrastructure

to encourage more bicycle riding and less automobile driving.

Transportation planners are adding more protected bike lanes, bike share programs and bicycle racks. Many have adopted a “road diet” planning strategy that places less emphasis on roads and designates more funds for alternative means of transportations, especially bicycles. continued on page 17

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Rental Housing Journal On-Site · May 2017

Rental Housing Journal On-Site

The Informed Investor Property Co-Ownership & Exchanges

Roger W. Bowlin | Real Estate Transition Solutions, LLC

C

o-ownership structure issues are one of the most common stumbling points for 1031 exchanges, however this need not be the case. With proper understanding and planning, most co-ownership structures can be worked through to satisfy the co-owner’s respective investment objectives.

Partnerships One common situation we advise clients in is the exchange of property owned by either a partnership or LLC in which one or more of the partners/ members intends to cash out their interest at the time of the transaction.

Determining the appropriate exchange method to address this situation depends on the number of partners in the partnership. If there are three or more partners and the partners interested in exchanging their proceeds own, in aggregate, more than 50% of the partnership, then exchange methods in which the original partnership is preserved as an existing entity are possible. One possible method is for the partner who wishes to be cashed out of the partnership to receive a distribution

of their partnership interest in the form of an undivided interest in the relinquished property in advance of the sale of the property, essentially creating a Tenant-In-Common ownership structure with two interests – the original partnership (less one partner) and the individual partner who wishes to receive cash proceeds from the upcoming sale of the property.

Due to the fact that an exchange can identify and close on multiple replacement properties, another approach arises. A partnership can exchange into multiple properties, then amend the partnership by-laws so

that the majority of the rights of each respective property are allocated to each individual partner with the other partners taking minority positions in all properties except that which they are allocated the majority of.

Other approaches such as direct partner buy-outs and partnership divisions consistent with IRC §708(b) (2) are also possible before, during, or after an exchange.

LLCs Sole-owner LLCs in which the property is held by an LLC in order to gain liability protection are considered to be sole proprietorships for exchange

purposes. A multi-member LLC that has not elected to be taxed as a corporation is considered to be a partnership for tax purposes and will be treated as such for exchanges as well, thus many of the entity restructuring techniques described earlier, as they relate to partnerships, are still possible and perhaps even easier within the context of a multi-member LLC.

Trusts Generally trusts fall in two overall categories, revocable and irrevocable.

Trusts in which the grantor of the continued on page 23

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Rental Housing Journal On-Site

First in Time Lawsuit Yim et al. v. City of Seattle

By Evan L. Loeffler

T

he First in Time lawsuit continues. The City of Seattle filed an answer to the plaintiffs’ complaint in early April essentially denying all relevant allegations and claiming the matter should not be litigated.

In 2016, the Seattle City Council enacted the “First in Time” ordinance restricting landlord’s tenant-selection process by requiring landlords to rent to the first applicant that satisfies the landlord’s advertised rental criteria.

A group of landlords sued the city, arguing that the ordinance improperly violates landlords’ constitutional rights.

The complaint argues that the First in Time ordinance improperly affects the rights of landlords by violating the constitutional “takings” clause, the landlords’ right to due process and the landlords’ right to free speech.

The plaintiffs’ first allegation is that the ordinance is an impermissible “taking.”

The Washington State Constitution provides that the government may not appropriate the property of a private citizen without just compensation. In other words, the government may not take a citizen’s property without paying for it. This is also a right protected under the U.S. Constitution.

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The plaintiffs allege that since the right to sell or lease property to a person of the owner’s choosing is a protected property right (the Washington State Supreme Court ruled as such in 2000), and since the First in Time ordinance curtails that right by requiring owners to rent to the first qualified applicant, the City has taken a property right without compensation. The City filed an answer to the complaint denying that denies this is a taking and therefore no just compensation is required. The City may argue later that, to the extent there may be a taking, it has a right to

do so in order to advance a legitimate public purpose whose importance outweighs the individual rights of property owners.

The plaintiffs’ second argument that the ordinance is unconstitutional states that landlords’ due process rights are violated. The complaint alleges the City Council improperly determined that unfair housing practices are prevalent in Seattle. Members of the City Council were quoted stating the intention of the First in Time ordinance is to curtail unfair housing practices by landlords who may unconsciously

make biased decisions when choosing tenants. The housing study relied on, however, concluded that the alleged bias was not a provable fact. Therefore, the First in Time ordinance is improper and not reasonably necessary as its goal is to police against an implicit bias that has not been proven. Further, the plaintiffs argue that the ordinance is overbroad and unduly burdensome to landlords because the First in Time ordinance would apply even if none of the qualified applicants belong to a protected class.

The third charge the plaintiffs make against the ordinance is that landlords’ free speech rights are improperly curtailed.

Landlords are already required by the City of Seattle to register with the City in order to be allowed to rent their residential property.

In order to keep one’s registration, each landlord must agree to comply with Seattle’s landlord-tenant laws including the First in Time ordinance.

The complaint alleges that complying with the ordinance in order to obtain a permit to conduct one’s business impermissibly infringes upon the landlord’s commercial speech rights. ...ontinued from page 16

Rental Housing Journal On-Site · May 2017

Rental Housing Journal On-Site

How Stable is your Homeowner's Insurance Company?

What to Look For

I

n early 2017, insurance agents – and Florida homeowners – received some unsettling news, according to Kelly Overcash, a Private Risk Advisor for Lykes Insurance, a premier Floridabased insurance firm.

Overcash explains that due to the ongoing abusive practice of assignment of benefits and some recent Florida Supreme Court decisions, Demotech, an organization that rates the financial stability of insurance carriers, announced they were suspending their company rating guidelines in Florida.

"Florida insurance companies were told to bolster their financial balance sheets or risk being downgraded to a 'B' rating," says Overcash. "This could have caused thousands of Florida homeowners to default on their mortgages since Fannie Mae and Freddie Mac require insurance from an 'A' rated carrier."

Fortunately, in mid-March, Demotech reversed their decision after most of the companies facing downgrades fortified their claims reserves and policyholder surplus.

Most Florida homeowner policies have been issued through Florida-

domiciled insurance companies, some of which opened for business after the 2004/05 storm seasons. Overcash notes that this breathed new life into a crumbling Florida property insurance market after many carriers had left the state. But there are some concerns.

"These days, the ability to purchase a homeowner policy issued through a national insurance carrier has been severely limited," she says. "Even carriers with national name brands have carved off their Florida business into a separate company to shield the assets of the parent company from catastrophic hurricane losses. Thankfully, we now have an abundance of options through Florida-only insurers, but some are better capitalized and have more claims handling experience in our State."

What does this mean for homeowners? Overcash suggests they ask the following questions before purchasing a policy: • How long the company has been in business: If they are a newer firm, there may be little to no history of their ability to handle and pay claims resulting from catastrophic events like the 2004/05

storm seasons. They may be perfectly fine, but it's something a consumer should know.

• Demotech or A.M. Best: A.M. Best reviews the financial stability of insurance companies once they have attained a certain size and number of years in business.

Demotech analyses new, smaller insurance companies. An "A" rating from Demotech does not necessarily carry the same weight as an "A" rating from A.M. Best.

• Whether they write in states other than Florida: Writing property policies in other states allows for a greater spread of risk. Therefore, the success and profitability of a given insurance company does not rely solely on the mercy of Florida weather and State politics.

• Ask to see their financial stability rating in writing, including claims reserves and policyholder surplus. Checking out the financial stability of an insurer is a critical step in securing a policy that protects what is arguably the homeowner's largest investment.

"The reputation and financial health of your insurance company should be more important than whether or not they have the cheapest premium.

A cheap price won't matter if they become insolvent," says Overcash.

"While options may be limited for Florida homeowners, ask your insurance adviser to help you make a better-informed decision so you can feel more comfortable about the insurance company you hire to protect your home."

About Lykes Insurance Lykes Insurance was founded in 1925 by Lykes Bros. Inc., a 101-year-old privately held Florida-based company. As a premier commercial insurance firm with offices in Tampa, Fort Myers, Winter Park and Sarasota, Lykes Insurance focuses on building long lasting partnerships with companies and individuals, providing protection for businesses, managing risk and designing innovative employee benefit solutions. For more information, please visit www. lykesinsurance.com.

Suzie Boland RFB Communications Group 813-786-1019 sboland@rfbcommunications.com SOURCE Lykes Insurance

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Rental Housing Journal On-Site · May 2017

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Rental Housing Journal On-Site

Home Prices Up 7.1% In March and Strongest In The West

by The Editors, rentalhousingjournal.com

H

ome prices jumped after strong job gains, household formation, population growth and still-attractive mortgage rates in the face of tight inventories drove the increase across the U.S. and especially in the West, according to a release from Corelogic.

The CoreLogic Home Price Index (HPI™) and HPI Forecast™ for March 2017 shows home prices are up both year over year and month over month.

Home prices nationwide, including distressed sales, increased year over year by 7.1 percent in March 2017 compared with March 2016 and increased month over month by 1.6 percent in March 2017 compared with February 2017.

• National Forecast Indicates Home Prices Will Increase 4.9 Percent by March 2018 • Home Prices Projected to Increase 0.6 Percent between March and April 2017 • Home Prices Increased 1.6 Percent between February and March 2017 The CoreLogic HPI Forecast indicates that home prices will increase by 4.9

6

percent on a year-over-year basis from March 2017 to March 2018, and on a month-over-month basis home prices are expected to increase by 0.6 percent from March 2017 to April 2017. The CoreLogic HPI Forecast is a projection of home prices using the CoreLogic HPI and other economic variables. Values are derived from state-level forecasts by weighting indices according to the number of owner-occupied households for each state.

Home prices index only 2.8% below 2006 peak “Home prices posted strong gains in March 2017, and the CoreLogic Home Price Index is only 2.8 percent from its 2006 peak,” Dr. Frank Nothaft, chief economist for CoreLogic, said in the release.

“With a forecasted increase of almost 5 percent over the next 12 months, the index is expected to reach the previous peak during the second half of this year. Prices in more than half the country have already surpassed their previous peaks, and almost 20 percent of metropolitan areas are now at their price peaks.

“Nationally, price growth has gradually accelerated over the past halfyear, while rent growth for single-family rental homes has slowly decelerated over the same period, according to the CoreLogic Single-Family Rental Index, recording a 3 percent rise over the year through March.”

Home prices gain strongest in the West “A potent mix of strong job gains, household formation, population growth and still-attractive mortgage rates in the face of tight inventories are fueling a continuing surge in home prices across the U.S.,” Frank Martell, president and CEO of CoreLogic, said in the release.

“Price gains were broad-based with 90 percent of metropolitan areas posting year-over-year gains. Major metropolitan areas were especially hot with CoreLogic data indicating that four of the largest 10 markets are now overvalued.

Geographically, gains were strongest in the West with Washington showing the highest appreciation at almost 13 percent, and Seattle, Tacoma and

Bellingham posting gains of 13 to 14 percent.” the newly released public data to provide updated results.

Methodology The CoreLogic HPI™ is built on industry-leading public record, servicing and securities real-estate databases and incorporates more than 40 years of repeat-sales transactions for analyzing home price trends. Generally released on the first Tuesday of each month with an average five-week lag, the CoreLogic HPI is designed to provide an early indication of home price trends by market segment and for the Single-Family Combined tier representing the most comprehensive set of properties (including all sales for Single-Family Attached and SingleFamily Detached properties).

Rental Housing Journal On-Site · May 2017

Rental Housing Journal On-Site

M

Multifamily Rents Up As Rate of Growth Continues to Slow

ultifamily rents rose slightly in April, but the rate of growth slid once again and now stands below the longterm average growth rate, according to the latest report from YardiMatrix.

Average U.S. monthly rents rose $3 to $1,314, according to Yardi Matrix’s monthly survey of 121 markets. On a year-over-year basis, rents were up 2.0% nationwide in April, down 50 basis points from March and well below the 5.5% growth rate of a year ago.

The 2.0% year-over-year increase is the lowest it’s been since April 2011, when rents were up only 1.5%.

“As we have said for months, the deceleration is expected, given the rapid increase in supply and the inevitable return to growth that is more in line with income gains,” YardiMatrix writes in the report. “Rents have (in most metros and most segments) far exceeded the rate of income growth in recent years, when the number of renters increased rapidly while supply nosedived in the wake of the last recession.

Multifamily rents peaking “Now rents are peaking and have become difficult to afford for the average resident in many metros, while supply is at cyclical peaks. We expect upwards of 363,000 units to come online in 2017,

with the number of deliveries declining in 2018 and 2019.

Evidence of the impact of new supply includes the difference in growth between property segments. Nationally, rents of working-class Renter-byNecessity (RBN) properties have increased by a solid 3.3% year-overyear, while upscale Lifestyle properties have risen by only 0.7%. Roughly 80% of the new supply is in the Lifestyle segment, which is aimed at highincome Millennials and downsizing Baby Boomers, while demand in many metros is driven by middle-class renters.

Rental Housing Journal On-Site · May 2017

Biggest impact on multifamily rents in metros with heavy apartment growth The biggest impact is being felt in metros that have heavy supply growth, and the effect is exacerbated when rents are above trend. Examples of the biggest differences between RBN and Lifestyle rent growth include: • Houston 5.3% (0.5% RBN, -4.7% Lifestyle) • Los Angeles 4.8% (5.8% RBN, 1.0% Lifestyle) • Dallas 4.4% (5.6% RBN, 1.2% Lifestyle)

• Charlotte 4.4% (6.3% RBN, 1.9% Lifestyle) • Sacramento 4.2% (10.1% RBN, 5.9% Lifestyle) • Miami 3.9% (4.7% RBN, 0.6% Lifestyle)

Seattle and the West still lead multifamily rents Sacramento (0.6%) once again led all markets in T-3 rent growth, and outperforming markets continue to be located in secondary cities in the Southeast and West. ...continued on page 19

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Rental Housing Journal On-Site

Apartment Returns Shifting To Secondary Markets

T

wo researchers report that secondary markets are becoming more attractive for apartment returns now, and for the next few years, according to John Burns Real Estate Consulting.

Adam Artunian, a senior manager, and Alex Wilson, research analyst, report that secondary apartment markets and “what we call surban locations - desirable suburban locations with urban amenities- have shifted to become outperformers.”

Secondary markets, determined by historical permit activity, have had less construction than primary markets and remain more affordable.

Secondary markets have highest year over year rent growth These secondary markets account for the largest current year-over-year rent growth, and “we forecast them to outperform through 2020. Primary markets include larger coastal cities that experienced greater levels of investment and construction earlier in the cycle,” they write in the report.

“We believe the markets below will outperform and underperform over the next several years,” Artunian and Wilson say.

Where apartment returns will outperform: • Southwest. Fourth quarter rent growth topped 5% in Las Vegas and Phoenix, and we expect rents to rise just under 4% annually through 2020. These markets continue to experience solid job growth and are relatively early in their respective apartment/economic cycles.

• Southeast. Strong fundamentals define Atlanta, with 4.7% rent growth and 2.7% job growth. Occupancy exceeds historical norms by nearly 1.5%.

Charlotte and Raleigh will also outperform with 3%+ annual rent growth through 2020.

• B-Class California markets.

Fourth-quarter rents rose 7% YOY in Riverside/SB, the strongest of any market in the country.

Riverside/SB is also one of the few markets where current multifamily construction is below its annual historical average. Housing unaffordability in coastal California is starting to show up in more inland locations, which will benefit apartment demand. The recent expansion of Highway 91 will ease

congestion to the job centers.

• Orlando. The Orlando market outperformed in the fourth quarter with rents up roughly 4% YOY and job growth above 4%, the best in the country.

We forecast a 4% annual rent growth from 2017–2020.

Apartment markets that will underperform • Tech markets. San Francisco rents dropped 2.3% YOY, and San Jose rents fell 2.5% in the fourth quarter. ...continued on page 23

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Rental Housing Journal On-Site · May 2017

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

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

Successful Education Conference

T

he Washington Multi-Family Housing Association (WMFHA) recently held its annual EdCon – Education Conference and Exposition, at the Meydenbauer Conference Center in Bellevue.

Nearly 1,000 attendees of property management operations and maintenance service team members were treated to an exceptional and successful day of learning and networking with industry peers.

Attendees had their choice from 28 skill-building classes that were presented by local, respected subject matter experts, including Budgeting and Financial Management for Maintenance; Hoarding Awareness for Multifamily Professionals; Converting Leads to Leases; and Dealing with Difficult Residents.

2017’s EdCon combined the annual education conference and trade show with Maintenance Summit, an event in the past just for maintenance service team members. This year’s EdCon featured the popular Maintenance Mania Skills Competition.

This year’s tagline was LEARN. CONNECT. GROW. and conference kick-off speakers Pam McKenna from Greystar, Kari Anderson from

Thrive Communities, and Lisa Ellis from Avenue5 Residential got the high energy conference started with motivational experiences from their respective career paths.

The combination of maintenance related classes such as Frigidaire Appliance Repair, Plumbing Tips & Tricks, Managing the Turnover Process and Renovation Management, alongside leadership and career development classes, made for a diverse and inclusive day of camaraderie and celebration of all things rental housing.

Dylan Simon from Colliers International spoke on the State of the Seattle Apartment Market. Vacancy rates remain low, new construction has increased, rent growth is moderating, and job creation is slowing, Dylan conveyed to the crowd. He predicted a continued strong market for local multifamily, however.

Joe Puckett, Randy Redford and Brett Waller held a Legal Issues Forum, where they explained critical information regarding protected classes, source of income discrimination, disparate impact, criminal records screening and the many new local laws impacting the housing industry, including several new laws implemented in Seattle.

GO

Zach Howell from BEAR Consulting Services presented two excellent classes, one discussing Property Inspections for Risk Management and one titled Time Management for Maintenance. Other popular classes included “A Day in the Life of a Maintenance Professional” and “Maintenance, the Key to Resident Satisfaction”.

Jessica Fern from FPI Management spoke on Leadership from a Balcony View – delving into leadership styles, values, motivations, inspirations and personal drivers. Participants were encouraged to broaden their view to the “bigger picture”.

Angela Flick, Director of National Property Marketing Programs for Greystar, expertly spoke on the top must haves and must nots of a modern social media strategy, how to align your social strategy with your business goals, and social media channels to focus attention on.

Ron Burkhardt from AMLI Residential gave an excellent presentation on how technology and sustainability practices are re-shaping the multifamily industry in the class titled Changing Trends in Multifamily Housing.

75 industry supplier partner companies exhibited the most updated products and services in the expansive EdCon Trade Show, meeting with attendees to offer advice and help solve daily problems. WMFHA has the best supplier members in the industry and the promotion of a Members Using Members philosophy ensures mutual support and value among our members.

Maintenance Mania is a national competition of 8 different timed skill tests, including ceiling fan assembly, faucet installation, toilet repair, and the grand finale, the racecar competition.

Participants built cars, ala soapbox derby-style, from maintenance parts found in their shops, and raced each other for bragging rights.

Maintenance Mania (and the $500 grand prize) was won by Max Foektistov from Pinnacle Management in a combined time of 1:33.56, narrowly missing qualifying for the national competition in Atlanta at NAA’s annual conference in June.

We can’t wait for EdCon 2018. In the meantime, WMFHA has plenty of opportunities for career and skill development and ongoing learning.

Quarterly Membership Meetings feature industry guest speakers, most recently on the topic of return on energy, sustainability and utility rebate programs. Classes on Fair Housing, Landlord Tenant Law, Certified Pool Operator, and Budget Management, allow members to grow their knowledge and talent.

National designation courses of Certified Apartment Manager (CAM), Certificate for Apartment Maintenance Technicians (CAMT), and National Apartment Leasing Professional (NALP) provide robust training in a classroom environment, with plenty of peer to peer networking opportunities.

By investing in your employees’ training and success, your company can increase property performance and improve your bottom line. To learn more about how WMFHA can improve your success, call us at 425-656-9077 or go to www.wmfha.org.

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Rental Housing Journal On-Site

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Rental Housing Journal On-Site · May 2017

Rental Housing Journal On-Site

Four Paint Trends for Property Managers this Spring Season

By Jud Walford, Pro Paint Merchant, The Home Depot

M

aking sure your property’s design is up-to-date and current is a major task for property managers, and often the simplest updates like a fresh coat of paint can be overlooked as a solution. Updating a paint scheme is relatively affordable compared to other renovations, and the effect is has on the overall feel of your property can help improve the mood for current residents and attract new ones. Set a new ambiance this spring season and check out these color trends and palettes to give your property a new veneer.

1. Start with the Basics: Primer When overseeing any paint job, ensure your team is using the correct primer.

Priming is a key component when

painting interior and exterior walls to increase adhesion, enhance the paint sheen, retain a uniform appearance and block stains. Water stains and knots in bare wood are a few examples of stains that may require specific formulations.

Also more vibrant paint colors may require a gray primer or one tinted with a small amount of the topcoat color to improve coverage.

The newest developments in this area are primers that kill odors and mold. If previous residents had pets or smoked inside, the scent will probably seep into the walls. In addition to a thorough cleaning, odor-killing primer and a new paint job may be necessary before new residents move in. Certain brands offer mold-killing primers that

contain a microbial registered with the Environmental Protection Agency (EPA) that destroys mold, mildew and other fungal organisms, as well as preventing future growth. If your property has issues with mold growth, these primers can be a lifesaver.

2. Neutralize Your Color Palette Neutral color combinations continue to dominate in multifamily homes, because they allow residents to put their own personality stamp on the interior.

Grays remain a top choice and are often paired with other light neutrals, such as taupe, for a more elegant feel.

Colors like white, off-white, beige, soft blue or black are trendy for areas where residents seek refuge and comfort, like bedrooms and family rooms.

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Rental Housing Journal On-Site · May 2017

In common areas, picking the right color combination is becoming more and more important, especially for Millennials who seek amenity spaces to relax and socialize. Those areas provide opportunities for property managers to get creative with different color combinations.

Every year major paint companies release their trend colors of the year, such as BEHR’s Color Currents, which are interchangeable and can be mixed and matched for every space. This year, palette trends range from ‘comfortable’ colors such as muted pastels to ‘composed’ colors featuring a mix of mysterious earth colors and deep jewel tones. There is also a ‘confident’ palette with bold options like citrus-inspired yellow and mid-century modern orange tones ideal for an accent wall.

This is a great guide to consult before embarking on a property-wide project.

3. Keep Health in Mind Many residents, especially those with children, may have concerns about the chemicals used on the property. One often cited concern are Volatile Organic Compounds (VOCs), which are emitted as gases from certain solids or liquids, notably paint. According to the EPA, VOCs include a variety of chemicals, some of which may have short- and long-term adverse health effects.

Remember to make sure painters are using low and/or zero VOC products all jobs on the property. This will help maintain healthy indoor air quality for residents.

4. Tech out Technology can help visualize and bring to life paint jobs both large and small. Use The Home Depot Project Color App to visualize, match or find the perfect colors for the property. The app allows phones to take pictures of actual spaces and display them with all of the new colors to find the perfect fit.

Once a color is chosen, bring a sample to the store to make sure you get the best paint match. The Home Depot now offers digital color matching technology that can duplicate any color, no matter the brand. Keep this in mind if additional touch up paint is needed.

Overall, it's important to stay up on the trends and work with your the maintenance team to ensure the correct materials are used. From new color palettes to premium primers, these updates are essential for resident retention and property aesthetics.

Jud Walford, Pro Paint Merchant, The Home Depot Jud Walford is a Pro Paint Merchant at The Home Depot. Jud has been with The Home Depot for more than 25 years and has over 34 years of experience in home improvement.

He started working in The Home Depot stores in the gulf region as a Store Manager, District Manager and Regional Merchandise Manager.

He then worked as a merchant in the regional buying offices prior to becoming the Pro Paint merchant for the last three years.

11

Rental Housing Journal On-Site

Immigrants' Strong Desire for Homeownership ..continued from page 1 opportunities, lower-cost housing and a higher quality of life. Suburbs Potential impact on apartments are home to high-income, highand multifamily housing skilled immigrants as well as lower"However, a substantial share income, lesser-skilled immigrants. of expected immigrantdriven • While immigrants represent a homeownership demand may be met key source of demand for new by the resale of existing homes in housing, a substantial share of established middle-income and highimmigrant housing demand end suburbs," the report says. will be met through purchases "The sellers of those homes (likely of existing homes. Sellers of including a number of higher-income, these homes – many of whom downsizing baby boomers) could then will be baby boomers seeking to constitute a new source of demand downsize – will create a strong for smaller single-family homes and market for smaller units. townhouses, condominiums, and • Urban areas experiencing multifamily rental apartments—in significant immigrant population suburbs as well as in cities." growth should explore how to Among the key findings from the best accommodate immigrants report on immigrants: and leverage the positive effect • Without growth of the foreignthey have on the housing industry and economy. Investments in housing, retail, recreational and Flood Damaged Floors? Call Our Insurance Specialists. cultural amenities, as well as social assistance and education programs can help forge a strong connection between immigrants, neighborhoods, and the greater community.

• Just as housing demand by immigrants was a key factor in tempering the worst impacts of the housing collapse, this demand is now helping to build housing market momentum. Demand for Flood Damaged Floors? Call Our Insurance Specialists. homeownership and for singlefamily housing, as well as the continued growth of both urban and suburban communities throughout the country, will depend on the trajectory of U.S. immigration policy.

The findings in Home in America are drawn in part from analyses of the housing and neighborhood preferences From Lacey to Bellingham, Silverdale to Bellevue, there’s a Great Floors showroom in your of immigrants in five metropolitan area. And we open early with one-stop staging for your flooring materials and sundries. areas that represent different types of immigrant gateways: • San Francisco – a major continuous From Lacey to Bellingham, Silverdale to Bellevue, there’s a Great Floors showroom in your gateway, with a large and sustained Over the years, Great Floors has attracted the best, most talented installers. That’s why we immigrant population throughout area. And we open early with one-stop staging forCarpet, your flooring can guarantee you’ll be satisfied with our work. laminate materials or vinyl, youand cansundries. the 20th century and into the 21st rest assured our pros will get your job done on time and within budget. century (other examples are New York City, Chicago, Boston) Over the years, Great Floors has attracted the best, most talented installers. That’s why we • Houston – a post-World War Incan each of our locations, identified or more of our sales associates guarantee you’llwe behave satisfied withand ourtrained work.one Carpet, laminate or vinyl, you can II gateway that has attracted to focus on the special requirements of ourthere’s property management customers.

From Lacey to Bellingham, Silverdale to Bellevue, a Great Floors showroom in your large numbers of immigrants rest assured our pros will get your job done on time and within budget. since the mid-20th century We’re experienced with yourstaging uniquefor needs here to help. and sundries. area. And we open early with one-stop yourand flooring materials (other examples: Los Angeles, Miami, Washington, D.C.) In eachOver ofGreat our we have andbest, trained or more of our sales • Buffalo -- a former gateway FloorsGreat carries the Northwest’s largest inventory of carpet, laminate and vinyl thelocations, years, Floors hasidentified attracted the most one talented installers.

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Carpet, laminate or vinyl, you can the early-to-mid-20th century due to its strong manufacturing We’re experienced with unique to help. rest assured getyour your job doneneeds on timeand andhere within budget.

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SqFt&& Burlington Hardwood at Bellingham $2.99 Federal Way, Way,starting Silverdale, Bellingham Burlington Federal Silverdale, Luxury Vinyl Plank starting at 75¢ SqFt Las Vegas, Orlando) www.greatfloors.com www.greatfloors.com Home in America notes that foreignGreat Floors Floors isis aa registered registered trademark trademark of of Great Great Floors Floors LLC LLC •• Contractor Contractor License License No. No. GREATF GREATF 955D4 955D4 Great Let us show you what BLUE can do. Contact your nearest Great Floors Showroom Property ** born population growth in most of Management Specialist for a great value and experience at 877/478-3577. gateways outpaced overall population growth between 2006 and 2014 (the period from just prior to the RESIDENTIAL • COMMERCIAL • BUILDER • INSURANCE time housing market collapse through the Downtown Seattle, Bellevue, Lynnwood, Kent, Tacoma,®Lacey, housing rally). Emerging gateways, Federal Way, Silverdale, Bellingham & Burlington which experienced strong overall RESIDENTIAL • COMMERCIAL • BUILDER • INSURANCE population growth, were the only www.greatfloors.com Downtown Seattle, Bellevue, Lynnwood, Kent, Tacoma, Lacey, exception. The report also looks at the Great Floors is a registered trademark of Great Floors LLC • Contractor License No. GREATF * 955D4 Federal Way, Silverdale, Bellingham & Burlington neighborhood choices of immigrants www.greatfloors.com within the five metro areas, focusing on

benefit in the years to come.

The report, Home in America: Immigrants and Housing Demand examines the influence of immigrants in shaping urban growth patterns, particularly those who have entered the U.S. since the Great Recession (since 2010, the number of immigrants from Asia has surpassed those from Latin America).

"Immigrants have helped stabilize and strengthen the housing market throughout the recovery," Terwilliger Center Executive Director Stockton Williams said in a release. "Immigrants' housing purchasing power and preferences are significant economic assets for metropolitan regions across the country. This suggests the potential for much more growth attributable to foreign-born residents in the years

ahead," he added.

population, regions with strong housing markets such as San Francisco would not have recovered as quickly following the recession; and markets that continue to struggle in the recession's aftermath such as Buffalo would have experienced even weaker growth.

• Immigrants have strong aspirations for single-family homeownership, and homeownership rates for immigrants rise with their length of time in the U.S. This suggests that immigrants will be a key driver for owner-occupied housing for years to come.

• Immigrants seeking to own homes as well as those renting homes are increasingly drawn to the suburbs in search of employment

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12

...contiued on page 22

Rental Housing Journal On-Site · May 2017

Rental Housing Journal On-Site

253-565-2488 Rental Housing Journal On-Site · May 2017

13

Rental Housing Journal On-Site

Effortless Ways To Earn Extra Fees: Bike Rooms And Dog Park Equipment Bike rooms and dog park equipment can be the type of amenities renters are looking for in apartments these days.

By Robert Caston

R

enters are willing to pay extra fees for bike rooms and dog park equipment because those amenities involve their favorite possessions – bicycles and dogs.

There are some simple strategies you can use to not only attract more renters, but justify charging them for extra services.

Let’s start with bike rooms. The number of bicycle owners in the United States is at an all-time high - 62 million.

More and more people recognize the benefits of exercising by bicycle.

In addition, according to the League of American Bicyclists, the number of people who commute by bicycle has risen by more than 105% in many bike-friendly cities over the past several years.

People have a certain affection for their bikes. It’s one of their prized possessions. Their bikes reflect their personalities. Today bicycles are also more technologically advanced with super lightweight carbon frames and leading-edge gear mechanisms. Some people are spending upwards of five

14

thousand dollars on a new bicycle.

What do renters appreciate in bike rooms?

With that type of investment, renters will appreciate the ability to store their bicycles in a secure, well-built bike room. They will be willing to pay a few extra dollars for this privilege.

In the past, landlords might have designated a dark closet in the corner of a basement for bicycle storage. However, today, savvy apartment owners are showcasing their bike rooms as a major feature in their buildings.

For example, the City Tower apartment building in Brooklyn, NY, features their bike room on the 19th floor with spectacular views.

The key to providing long-term bicycle storage is to use the right commercial bike racks. These specialized bike racks are designed to maximize space indoors. That means providing a secure way to lock a bicycle without the bikes banging into each other. In addition, you need to provide plenty of aisle space so bicyclists can easily move about the room.

One solution is to install vertical bike racks. These commercial bike racks can be either freestanding or wall-mount bike racks. The bikes are hung vertically upright, leaving much more room to move around or store a large number of bikes.

However, now that bikes are much more expensive, it is critical that the commercial bike racks allow for three points of locking contact. This means a sturdy U-lock can be passed through a locking arm, frame and front tire to ensure adequate security. The FBI estimates more than 1 million bicycles are stolen every year. Be sure you offer renters the peace of mind that their bikes are locked securely.

Think how impressed a potential renter will be when they see a row of vertical bike racks neatly lined up in your bike rooms, with bicycles stored in an organized manner without any frame to frame conflict.

One way to add more spark to bike rooms is by adding popular extra features that appeal to any bicyclist, without a large investment out of your

pocketbook.

Bike rooms plus more For example, add a public bike repair station. Bicyclists love this convenient apparatus because it enables them to make simple repairs or adjustments to their bikes.

Bike repair stations come with a handy set of tools that are tethered to the stand by a durable aircraft-grade wire.

There is a complete set of wrenches, screwdrivers and other items available that can be used on any bicycle. Some bicycle repair stations will also come with chocks to hold the bikes upright it is easier to make repairs.

• Another important yet simple amenity to include in any bike room is a bicycle pump. These pumps can be mounted into the floor so they can’t be removed, but will be welcome by bicyclists who might need to add a few extra psi to their tires before they head out.

• You can make a bike room even more attractive by adding a bike wash station. This allows ...continued on page 19

Rental Housing Journal On-Site · May 2017

Rental Housing Journal On-Site

Most Renters Like Where They Live and Do Not Plan to Move Most renters say they like where they live and don’t plan to move even if their rents rose, according to new research.

I

n the good news for landlords and property managers, 55 percent of all respondents, and 60 percent of 35to 49-year olds, say they like where they live and don't plan to move if their rents rose, according to the research from Freddie Mac done by the Harris Poll.

Also fewer renters say they are working toward homeownership and plan to continue renting.

Also seven in ten renters say they are willing to downsize in order to live in an urban area.

According to the latest Freddie Mac renter survey [PDF], renters today are also saying renting is a good choice for them. While sentiments differ among urban, suburban and rural households, nationally those saying they expect to rent their next home increased to 59 percent from 55 percent since Freddie Mac's last renter survey in September 2016.

"It would appear from our new survey that renters today feel better about their finances, like where they are living, and view renting favorably. This is consistent with findings from earlier surveys that show a steadily growing number of renters have a positive view of renting," David Brickman, executive vice president of Freddie Mac Multifamily, said in a release.

According to the survey, renter

sentiments about their financial situation have improved since our last survey in September 2016. Specifically, 41 percent of renters now say they have enough money to last beyond each payday, up from 34 percent in September, while those who say they cannot afford essentials fell from 20 percent to 14 percent. Those saying they have enough to cover their expenses from payday to payday is relatively unchanged at about 45 percent.

Financial confidence rose for all age groups no matter where they live. The biggest increases were among rural households, up from 27 percent to 46 percent, and Baby Boomers, up from 38 percent to 48 percent.

Fewer Renters Say They Plan to Move The increase in personal financial confidence, so far, has not triggered an increase in renter moving plans.

Rather, the number of renters who don't know when they expect to move rose to 37 percent from 30 percent while those who expect to move during the next two years fell from 38 percent to 33 percent since September. What's more, 55 percent of all respondents, and 60 percent of 35- to 49-year olds, say they like where they live and don't plan to move if their rents rose. ...continued on page 22

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Rental Housing Journal On-Site

First Time in Lawsuit ..continued from page 4 What the landlords are requesting is “declaratory relief,” which means that they want the court to issue an order that says the First in Time ordinance violates the Washington State Constitution. The plaintiffs further request an order prohibiting the City of Seattle from enforcing the legislation.

The City has not responded substantively to the pending action as of this writing. The answer filed with the King County Superior Court states only that the allegations are incorrect and that the controversy is not “justiciable,” meaning that the court does not have the authority to rule on the issues presented. As the case progresses through the system—a process that may take over a year—the plaintiff landlords and the defendant city will better define their arguments.

Once the trial court judge makes a decision, the matter may be appealed.

The appellate process may take another year.

As with nearly all litigation, the sides have staked out positions that are polar opposites. In their most basic form, the arguments may be characterized as follows: The City takes the position

that landlords cannot be trusted to not violate fair housing laws, so it is imposing requirements on Landlords to save them from making unconscious decisions that might be discriminatory.

The landlords opposing the legislation accuse the city lawmakers of enacting laws to stamp out “thoughtcrime,” a term coined in George Orwell’s novel, Nineteen Eighty-Four, where a repressive and overbearing regime criminalized unspoken beliefs and doubts that questioned the ruling party.

The final ruling on this is many months, maybe years, away. Unless a court makes a preliminary ruling concerning the enforcement of the ordinance—and no such ruling has been requested by the plaintiff as of this writing—landlords must comply with these requirements. Landlords unsure of how to comply should consult their legal representative for guidance to avoid fines and costly litigation.

41

Conserve Water and Save Money with a WASH Laundry Room

WASH provides eco-friendly and costeffective ways for its customers to do laundry. A long-standing ENERGY STAR Partner, WASH’s multifamily laundry rooms:

• Save water, gas and electricity • Reduce sewer costs and generate less sewage • Minimize CO2 emissions Plus, with our GREEN MACHINE program, WASH offers clients a choice of refurbished washers and dryers that helps the environment by reducing energy spent on industrial production, lowering greenhouse emissions and diverting the non-biodegradable waste from landfills. In addition, WASH’s plant operations and corporate practices support conservation and reduce our overall carbon footprint.

With WASH, you can rest assured that your shared laundry rooms are green and clean.

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Rental Housing Journal On-Site

Premium Bike Parking ..continued from page 1 New York City’s Mayor Bill deBlasio spent $100 million on bike lanes and making city streets safer for bicyclists.

In the next decade, Seattle plans to spend $1 billion on their bicycle infrastructure. Los Angeles created a “Green Streets” program to add more bike lanes.

To cover their investment in bicycling, most cities now are rewriting their zoning codes and requiring more short-term and long-term bicycle racks for parking. In fact, new or renovated apartment buildings in some cities are now required to add indoor bike rooms.

But rather than consider long-term bike racks for apartment buildings as an extra cost, the great benefit to landlords of adding a bike room is that this space can be a highly-marketable commodity to attract tenants.

For example, the City Tower in Brooklyn showcases their bike room located on the 19th floor so that cyclists can park their bikes in front of spectacular city views.

Best practices for bicycle parking According to the Association of Pedestrian and Bicycle Professionals there are two forms of bicycle parking - short-term and long-term.

Short-term bicycle parking is achieved by the installation of bicycle racks in front of retail stores or restaurants. Typically this would consist of u-shaped racks or wave bikes racks. This parking is generally considered to be for a limited time, say 1-4 hours.

Long-term bicycle parking is for tenants or employees who park their bicycles overnight or for several hours.

The ideal place for long-term bicycle parking is a secure, indoor bike room.

One of the big challenges that bicycle owners face today is the rising number of thefts. According to the FBI, more than one million bicycles are stolen every year. Thieves have become more adept on cutting through even the best of locks. Combine this with the rising cost of bicycles, especially bicycles with new lightweight carbon frames, and there is a real challenge for building owners to provide a secure means for residents to lock their bikes.

Dragging a bicycle up a flight of stairs to an apartment or on an elevator is not a pleasant experience. Bicycles scratch or dent walls. Dirty and wet bicycles create a hazardous messes on floors.

The best solution is to provide a bike room. Locate these bike rooms on the first floor to provide easy and quick access for bicyclists.

However, apartment space is at a premium. The average bicycle is 6 feet in length. Owners face the challenge of providing adequate parking in a limited space for a large number of bicycles.

There are new types of bicycle racks, such as the Uplift Bike Dock floor rack offered by The Park and Facilities Catalog, that offers high-density parking to maximize square footage.

Another solution is to consider vertical bike racks such as the DoubleUp offered by The Park and Facilities Catalog. For these bike racks, the bicycles are loaded standing up and suspended on hooks. They come available as either wall mount bike racks or freestanding bike racks.

This helps to utilize the floor to

ceiling space for bike storage as well.

Best practices for bike room parking is to provide at least a 6-foot minimum space for aisles on the sides of the bikes or down the center.

For vertical, wall-mount bike racks, a floor to ceiling space of 92-inches is recommended. There should be at least a 36-inch aisle space out from the handlebars and a total of 75 inches of space extending from the wall.

To provide the best in security, the APBP recommends that there be three points of locking contact with a bicycle – the frame, front wheel and the bike rack. A hardy U-lock is generally the best type of lock to use. Be sure the cyclist has the ability to pass the lock around those three points of contact.

How to add extra appeal to any bike room or bike storage area If a landlord wants to really create an appealing bike room or bike storage area, there are now products available that any cyclist would truly appreciate.

Adding these amenities creates even better marketing opportunities that will appeal to Millennials and all bike owners.

Here are a few: Bike Repair Stations – these public bike repair stations come with a variety of handy tools attached to a sturdy metal frame. The tools are connected by a tough airplane-grade wire that allows people to make repairs or adjustments to their bike, but keeps the tools secure for use by others. Some bike repair stands also come with a wheel chock to hold the bike upright.

Public Bicycle Pumps – there’s nothing more frustrating than walking out to your bicycle and finding a flat tire or tires with low air pressure. A landlord would be of great service in this case by providing a public bicycle pump.

Bike Wash Station – as you can imagine, bicycles get dirty from roads, snow and rain. These handy bike stations help remove the grime and dust off bike frames and gears.

Vending Machines – here’s a way for landlords to generate extra revenue.

Provide a bike vending machine with tire tubes, patch kits, etc.

Signage – for a busy bike room, add a sign that clearly states the rules. The message can also include tips on how to properly lock a bike, local maps, etc.

Bicycling is booming in America today. Millions of people now prefer getting around on a bicycle. For a small investment, savvy landlords will see this as a big opportunity to add bicycle parking amenities to make their property more attractive to this massive market.

Rental Housing Journal On-Site · May 2017

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Rental Housing Journal On-Site

No Pot In My Apartments ...continued from page 1 Laws are changing all the time in many states as voters approve different levels of permission when it comes to marijuana. This leaves property managers trying to figure out what should be in their leases around the issue.

You may be able to ban smoking, but do you really know what your tenants are eating or growing in their apartments? Do you really want to know if they are good paying tenants?

Rental Housing Journal did a recent interview with Seattle, Washington attorney Bret Sachter, an expert in tracking the progression and transformation of marijuana laws, to discuss some common questions property managers have about marijuana and tenants.

“I’ve been asked this a lot,” Sachter said, “but it does not come up as often as you might think. The overarching issue here is that, with few exceptions, people can do what they want to protect their property, even if the prohibited behavior is not illegal. You can prohibit smoking, prohibit pets, but with marijuana it’s much easier because it is federally illegal. So you can pretty much prohibit it if you want to no matter what, even medical marijuana,” Sachter said.

4 questions about pot, tenants and apartment leases Sachter says in terms of Fair Housing issues, and the U.S. Department of Housing and Urban Development (HUD) it is a situation where HUD wants it in the lease that marijuana is illegal but enforcement is another issue, he said. It is not so much that HUD wants landlords to evict over marijuana, but that you have something in the lease language that allows for eviction in the instance of marijuana use on the property. “So it is pretty clear as far as HUD is concerned,” he said. Here are his answers to four questions on pot and apartments.

No. 1 - Tenants with a disability and medical marijuana Question: If a tenant comes in and says I have a disability, here is a note from my doctor, I use medical marijuana, which is legal in this state, and I want to rent your apartment. Can a landlord prohibit that?

Answer: “A landlord can absolutely prohibit that because marijuana is illegal under federal law.” The landlord can say, “I understand our state allows medical marijuana but as it is still a Schedule 1 drug and I prohibit it on my premises.”

No. 2 - Marijuana is legal in my state - but what does the lease say?

Question: What if a tenant says marijuana is legal and they should be allowed to use it?

Answer: “If your lease prohibits smoking and prohibits use of illegal drugs, then the legality of marijuana at the state level is irrelevant because under federal law marijuana is illegal. If your lease does not have those types of clauses, you should talk to an attorney in your state or city to find the best solution for your lease.”

There is no law about reasonable accommodation for marijuana users, federal laws do not require it. As far as the federal government is concerned it 18

is not ok.

“One thing I would say, and it is important, I would encourage landlords just to make everything clear,” in the leases, he said. “Clarify in a lease that you must abide by all laws state and federal.”

That is the case in residential. He said it can be different in commercial.

(There was a commercial case in Oakland, California and you can read more about it here.)

“But In residential it is not as tricky, and I am speaking very generally here,” Sachter said. “The states may have their own thing going on with legal marijuana laws, but it is still federally illegal. Make it crystal clear in your leases is my best advice,” he said. “How can you attract tenants in a state where it is legal yet protect the owners of the property? You cannot have it both ways.”

“I know in Seattle there are Airbnb bed and breakfasts that specifically market themselves accordingly, as part of marijuana tourism to come and stay in our place where it is legal.” But if a property manager doesn’t want that going on, then they have to be up front in the lease.

“If your tenant is Airbnbing to a tenant who is then using marijuana – well if you can’t catch them you cannot do anything about it. You have to prove they are doing this. They are going to be using marijuana regardless of what the lease says.”

No. 3 - What if the tenant using marijuana is a well-paying, good tenant?

“Landlords can certainly put a nowaiver clause in the lease. If I say, ‘Here is a list of prohibited things’ and if you do these prohibited things in the lease, you are subject to eviction,” he said.

“However, any time I waive any of these things does not constitute an overall waiver. It basically means you should not ever do it again,” he said.

“Just because you get away with it once, does not mean you get away with it every time,” Sachter said.

No. 4 - Can I say 'no pot in my apartment?"

“Usually if you say, ‘No pot in my apartment’ and you find a tenant using marijuana and you haul them into court, more than likely the judge is going to say, ‘Have you stopped?’ to the tenant and ‘Are you going to do it again?’ and the tenant is going to say ‘No.” And then judge will say, ‘Ok, dismissed.”

To put a more legalistic term on it, usually a court will be in favor of “allowing the tenant to cure the defect,” rather than evict for most things like that, Sachter said.

Technically, in Washington, a landlord would serve a 10-Day notice to comply or vacate with the terms of the lease. This process, therefore, gives the tenant a chance to “cure” the violation before the landlord can evict. Check your local state laws on this.

What one experienced property manager says about pot Sam Driver, Product Director for Buildium.com, and an experienced property manager at the property management software company, said as far as marijuana use in apartments, due to the newness of the legislation, the federal laws that supersede state and

county laws, and liability concerns, it is not a topic that comes up a lot - yet.

“Generally, the safest solution is to choose the most conservative pathimpose a no-smoking policy, which can in some cased cover outside areas, and a crime provision that includes local, state and federal laws. In many states, there are setbacks from doors, and it is particularly important if the building is a place of work which a multi-unit apartment building certainly is. So your lease should contain a provision explicitly banning smoking and illegal activity. Because the feds still outlaw it, this should be sufficient,” Driver said.

“This of course only covers the smoking angle. If a resident consumes it in another way, you'd likely never know,” he said.

Growing marijuana could put a power load on your apartments “As for growing, that's less clear. But in general, unless the electrical system is designed for it, the loads grow lights put on the apartment unit could be excessive. I'd consider a reasonable use clause that specifies all high load equipment, including lights, air conditioners and any kind of pump be approved by you.

“This would put you in a position to take action if they are putting too much load, without specifically calling out the use of the equipment. Pumps are a good area for monitoring, because of the intermittent load, they trip breakers, and anyone who is using a hydroponic system would need several,” Driver said.

What if I want to market my apartment to marijuana users?

“If, however, you wanted to roll the dice and market to this crowd, assuming your state laws allow it, remember that the federal laws would cover any bank deposits from proceeds," Driver said.

“In this case, you'd be able to do it, assuming no federal intervention, in compliance with local laws. No insurer would provide EO&E (errors and omissions excepted) insurance to you, and you wouldn't be able to deposit any funds into a federally-accredited bank.

So you'd have to self-insure, and run an entirely cash business, but you could do it, risking only federal enforcement.

“The big question is, 'Would the premium rents be worth the risk of forfeiture?' If you run afoul of the federal drug laws, the asset seizure possibility is a huge risk. You could lose the building.

“If you're managing other owners' properties, then you'd be risking their assets even if you used different leases, unless you kept fully separate

books, bank accounts, and co-mingled nothing. So I'd say it would be all-ornothing," he said.

“The timing is tricky, too. Leases contain a provision that stipulates that the contract is in force in a specific jurisdiction. If they change the laws rendering your lease out of compliance, what happens during the remaining time of the lease? Is it invalidated? Or does the contract remain in force until it expires?

“Good questions for your lawyer,” Driver said.

How to keep up with status of pot laws in the different states ProCon.org, a 501(c)(3) nonprofit nonpartisan public charity, provides professionally-researched pro, con, and related information on more than 50 controversial issues from gun control and death penalty to illegal immigration and marijuana laws across the country. "Using the fair, FREE, and unbiased resources at ProCon.org, millions of people each year learn new facts, think critically about both sides of important issues, and strengthen their minds and opinions," according to the company's website.

Here are where the pot laws stand for medical and recreational marijuana in several states, how it was passed, and what is permissible in the possession limit, according to procon.org. You can see their excellent full chart here state by state. Keep this link as they update the ever-changing pot laws in the different states.

Here are what some some states are doing with links to more information on each state's pot laws.

Oregon: Ballot measure 67, 24 oz usable; 24 plants, 6 matures and 12 immature • Washington: 8 ounces usable, 6 plants • Arizona:medical marijuana is legal 2.5 ounces usable, 12 plants • Colorado: 2 ounces useable, 6 plants, 3 mature, 3 immature • Utah: prohibited with a few narrow exceptions About Bret Sachter: As a Presidential Scholarship recipient, Bret received his law degree from the Seattle University School of Law. In addition to his law degree, Bret holds a bachelor’s degree in evolutionary psychology and master’s degree in psychology. Bret has taken an interest in tracking the progression and transformation of marijuana laws, as they are among the most recent and highest-profile legal issues affecting entrepreneurs in Washington and, increasingly, all around the country. You can call him at 206295-2547 or visit his website here.

Rental Housing Journal On-Site · May 2017

Rental Housing Journal On-Site

Multifamily Rents Up ...continued from page 17 That said, Mid-Atlantic metros Philadelphia and Baltimore (both 0.2%) outpaced the national average. On the other end of the spectrum, Houston and Austin (both -0.3%) continue to decline on a T-3 basis, indicating that the combination of new completions and slower economic growth remains a headwind for the multifamily industry in certain markets.

The Twin Cities and Seattle (both 0.5%), as well as San Francisco (0.3%), had strong Lifestyle rent growth as job gains and income growth drove highend rents forward. Conversely, RBN rent growth in Charlotte (0.6%), along with Las Vegas and Miami (both 0.5%), outperformed as renters clamored to find more affordable housing amidst growth of luxury supply.

Sacramento, Seattle and Portland lead the nation On a trailing 12-month basis Sacramento (9.9%) led overall rent growth on a T-12 basis, as strong job growth, limited supply and relative affordability compared to the Bay Area supports the continued upward trajectory of rents.

These areas also led the nation as steady economic fundamentals and population gains support the multifamily housing market: • The Inland Empire (6.9%) • Seattle (6.6%) • Portland (6.0)

Multifamily rents gains could be rocky over next 12 months “We expect that rent gains will be rocky over the next 12 to 24 months as the market digests the wave of new supply coming online,” YardiMatrix wrote in the report.

“Apartment owners should moderate expectations during that time, even though we expect fundamentals to remain strong and the long-term demographic picture looks positive.

“Job growth remains robust and is supporting absorption of the new housing supply, although rent growth will be limited by slowly growing wages.

We anticipate 2017 will be the highwater mark for apartment completions, and given the strong pent-up demand for housing, the apartment market has significant long-term upside potential, but it may be some time before we see above-trend growth again.”

The Editors, rentalhousingjournal.com

Earn Extra Fees ...continued from page 14 bicyclists to clean off their precious bikes after a ride through mud, rain or snow and to keep their gears free of grime and dirt.

• Some bike rooms also feature vending machines, another nice source of revenue. Offer popular bike repair items such as tire tubes or patch kits.

• For renters who have very expensive bicycles or prefer the ultimate in bicycle storage, consider adding enclosed bike lockers. With these lockers, a bicycle is individually stored in a metal box and can’t be touched by anyone without a key. Bike lockers are becoming very popular with die-hard bicyclists. Many facility managers in office buildings or multi-family communities find a portion of bike riders are glad to pay fees for this extra security.

• Overall, quality bike storage can be an excellent source of ancillary income. Fees for bike-related services can range from $10 to $100 per month. Those fees and the extra appeal you will create for tenants will easily justify any initial investment in a bike room.

Make it easy for renters to exercise their pets Kids are not the only ones who love playgrounds. So do dogs and pet owners.

Many property managers charge tenants fees for their pets. You can make the proposition more appealing by adding a few simple pieces of dog playground equipment.

Think about the appeal.

Dogs are built to run and jump. But many times, they are stuck inside all day while their owners are at work or

running errands.

By adding dog agility equipment at your facility, a pet owner has no need to venture all the way to a park to exercise their dogs. They can do it right where they live!

The key with dog park equipment is to be sure you add devices that appeal to all dogs of assorted sizes and abilities. For example, a dog jump with three different hoops at various levels is a smart choice.

With these hoops, a toy poodle can enjoy jumping just as much as a golden retriever. Some of the more popular dog agility pieces include jumps, hurdles, ramps, crawl tunnels and weave posts.

Be sure the products you purchase come with a thermoplastic coating that is impervious to dog urine and provides a non-slip surface.

It is also smart to include a leash post and a bench for the owners to relax while their dogs have fun. And be sure you have plenty of dog waste stations with bags and trash receptacles to keep the premises clean.

According to American Veterinary Medical Foundation, in 2012 there were nearly 70 million dogs in the US. That’s an enormous market. Adding dog park equipment does not require a major investment.

But you can be sure that dog owners will be super-excited to see facilities where they can exercise and train their pets. That will easily justify any extra fees you need to charge. A properlybuilt dog agility area is also definitely an amenity that will draw the attention of prospective tenants.

People have a love affair with their bikes and pets. Provide amenities that help them enjoy this important part of their lives, and they will reward you for adding these services.

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Rental Housing Journal On-Site · May 2017

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Rental Housing Journal On-Site

Creating a Buzz to Attract Renters to Your Properties

by Mary Girsch-Bock, www.propertymanager.com

I

n the Chicago Tribune, the real estate section has a weekly feature that profiles an apartment community in their readership area, taking great care to describe the apartment in rich, picturesque detail. It’s one of my favorite parts of the newspaper; allowing me to experience a property that I may not typically visit.

While this may not be feasible for most apartment communities, there are ways to create a similar buzz about your own communities. These can range bolstering your social media profile to teaming up with area businesses that are willing to send applicants your way.

While the strategies may vary, all can work to drive more quality applicants to your properties.

• Ramp up your social media strategy. This can be anything from creating a Facebook profile if you don’t already have one, to posting more in-depth information such as photos and videos of your apartment community that can be easily viewed and shared.

Virtual tours of your community may also be useful. And don’t underestimate the value of Twitter, which can quickly get information out about your community

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and drive people back to your website for more information.

Encourage your residents to share their positive experiences on social media as well.

• Create a professional website that is loaded with tools that will appeal to those looking for a new rental home. This includes easy navigational tools, online photos and property tours and access to an online application option as well. If you already have a quality website, make sure that it is updated constantly, with fresh photos and new information.

• Get to know your neighbors.

Teaming up with area businesses can serve to drive a large number of applicants to your properties.

Consider giving any referred applicant an incentive, such as a 5% rent discount, reduced security deposit or other incentive such as a gift card.

• Encourage your current tenants to refer friends, family, and colleagues, and reward them with a gift card once a referral signs a lease.

rental information about your communities. Like your social media strategy, you’ll want to include photos and virtual tours of your properties that will entice readers to search out your property for more information.

While attracting quality tenants can often seem difficult, employing these strategies can provide you with a pool of applicants that will have your community leased up in no time.

• Take full advantage of free sites that will allow you to post

Rental Housing Journal On-Site · May 2017

Rental Housing Journal On-Site

Is Your Apartment Building The Hottest New Hotel In Town?

by The Editors, rentalhousingjournal.com

Y

our high-rise apartment building in the city may be the new hottest hotel in town for short-term rentals as downtown, luxury, high-rise apartment buildings have become a magnet for the popular online homesharing rental platforms such as Airbnb, VRBO, and Spokane-based Stay Alfred, according to several reports.

Because the luxury high-rise apartments typically have great city views, rooftop lounges, state-of-the art gyms and more to attract renters, they also attract the overnight guest.

The tenants are renting out these plush digs by the night under the radar many times of the property management and building owners.

The San Diego Union-Tribune recently published a story saying that thousands of vacation rentals scattered throughout San Diego communities are still dominated by homes, condos, duplexes and shared rooms, a rising number of amenity-filled apartment buildings are becoming a magnet for entrepreneurial renters and startups looking for handsome profits.

So much so that the frequency of vacation rentals at one downtown high-rise, the 46-story Pinnacle on the Park, led one Yelp user to joke it should be called “Hotel on the Park,” the newspaper reported.

It’s nearly impossible to quantify how many apartment units are actually being used as short-term rentals because the online platforms don’t identify the addresses of listings, and many, like Airbnb, don’t even specify whether a whole-home rental is a condo, apartment or single-family home.

Short-term rentals a frustrating situation for property managers and landlords “This is such a frustrating situation for landlords when you’re trying to protect your residents from an expectation of privacy yet you have a revolving door of people trying to enter the building,” Tracy Brunetti, an executive vice president with Alliance Residential Co., which manages the luxury Broadstone apartment complexes in San Diego, told the newspaper. “We now have a weekly audit where we’re going online looking for violators and photos of our buildings.”

However the newspaper said its investigation showed found two Broadstone apartment listings for short-term rentals, including one for a tastefully decorated two-bedroom apartment with an advertised nightly rate of more than $300 in a building where monthly rents for similarly sized units average more than $4,000.

Last month a Denver based apartment management company sued Airbnb in California and Florida state courts alleging Airbnb assists tenants in breaching their leases by subletting their apartments.

Apartment Investment & Management Company (AIMCO), one of the country's largest owners and operators of apartment homes, filed the suit seeking monetary damages as

well as court orders preventing Airbnb, Inc. from assisting Aimco tenants to breach their leases in order to sublet their apartments. Short-term rental arrangements, whether through Airbnb or otherwise, are expressly prohibited

by Aimco's lease agreements. Transient Airbnb clients have posed safety and quality of life concerns for Aimco's fulltime residents.

"Our residents are our top priority.

We are committed to providing them a safe and respectful environment," Aimco CEO Terry Considine said in a release about the suit.

"It is not acceptable to us that Airbnb actively promotes and profits from deliberate breaches of our leases, and does so in utter disregard of the disrespectful and unsafe situations created for our full-time residents and their families. We are asking the courts to compensate Aimco for our losses and to enjoin Airbnb from participation in further illegal activity at our properties so that our law-abiding residents can enjoy a high quality living experience," Considine said in the release.

“By contrast, those assisted by Airbnb to use Aimco property in violation of the Aimco lease are trespassers, with unvetted personal histories, and no vested interest in maintaining a peaceful community atmosphere.

On several occasions, these Airbnb supported trespassers have created safety, noise and nuisance concerns for Aimco's lawful residents, including incidents of public drunkenness and fighting requiring police assistance,” according two the release from Aimco.

Scott Shatford, co-founder of Airdna, a data analytics firm catering to vacation rental hosts and investors, told the newspaper, “I definitely see the trend toward more luxury units coming onto Airbnb because more and more people are seeing it as an alternative to fourstar accommodations. And with all this new apartment construction over the last couple of years, it’s much easier to take part of that and fill a property with short-term tenants tomorrow instead of finding long-term tenants right away.”

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Immigrants' Strong Desire ..continued from page 12 five categories of suburbs (typologies developed for ULI by RCLCO): • Economically challenged suburb – characterized by lower home values and little population growth • Stable middle-income suburb – having a wide range of home values, usually more centrally located • Established high-end suburb – having high home values, established development patterns, often near employment centers • Greenfield lifestyle suburb – close to the edge of metro areas, developed mainly in the past 15 years, typically adjacent to established high-end suburbs; and • Greenfield value suburb -- close to the edge of metro areas, often adjacent to stable or economically challenged suburbs, more affordable than greenfield lifestyle suburbs.

The differences in where immigrants are locating in the five cities is an indicator of how they could influence future growth within these markets, the report says.

• In San Francisco, they are spread across nearly all types of suburban communities, with the highest percentage, 35 percent, living in economically challenged neighborhoods.

• In Houston, the largest share of immigrants, 39 percent, live in stable middle-income suburbs, followed by 29 percent in economically challenged suburbs.

• In Buffalo, 30 percent live in established high-end suburbs (a greater share than the native-

born population) and 27 percent live in urban neighborhoods.

• In Minneapolis, the highest percentage, 32 percent, live in economically challenged suburbs, followed by 27 percent in stable middle-income suburbs.

• In Charlotte, 27 percent live in economically challenged suburbs. Nineteen percent live in stable-income suburbs and an additional 19 percent live in established high-end suburbs.

Home in America points out that the presence of immigrants could help boost revitalization in economically challenged suburbs; sustain the success of stable middle-income suburbs; and contribute to the growth and diversity of established high-end suburbs.

"If recent shifts in immigration flows continue, an increase in higher-income immigrants – including rising numbers from China and India – could accelerate the demand for homeownership among the foreign-born population," the report says. "Without sustained immigration, the housing market could weaken and in many markets the impact could be dramatic."

About the Urban Land Institute The Urban Land Institute 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 40,000 members worldwide representing all aspects of land use and development disciplines.

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Renters Like Where They Live ...continued from page 15 The number of renters who say renting is a good choice for them now rose to 52 percent from 46 percent since January 2016. Views on rent affordability have remained relatively flat at 68 percent.

The number of renters who say they plan to rent their next home rose from 55 percent to 59 percent since September 2016. The biggest increases were: Suburban households, up from 48 percent to 57 percent Younger Millennials (ages 18-24), which rose from 64 percent to 73 percent.

Millennials are more likely to continue to be renters While homeownership remains on the horizon, the percentage of renters who expect to own fell to 41 percent from 45 percent since September 2016.

Similarly, in response to a related question, the number of renters who say they are working toward homeownership fell from 21 percent to 15 over the same period.

The Freddie Mac survey also indicates a preference for living in urban areas even if it means moving into a smaller home. Seventy-five percent of the renters surveyed say they would consider downsizing in order to live in an urban area, with half of those saying they are either very or fairly willing to downsize.

Conducted in March for Freddie Mac by the Harris Poll, the findings are based on responses from 1,282 renters in urban, suburban, and rural markets, including Millennials (aged 18-34), Gen-X'ers (35-49) and Baby Boomers (50-68).

Additional details about the research, including charts, are on the Freddie Mac website.

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Survey Methodology Freddie Mac's custom renter research is based on a survey conducted online March 3 - March 6 among 4,283 adults aged 18 and over, including 1,282 renters, by Harris Poll, on behalf of Freddie Mac, via its QuickQuery omnibus product. The previous survey was conducted online within the U.S. Aug. 31 - Sept. 6 among 4,105 adults aged 18 and older, including 1,362 renters, by Harris Poll on behalf of Freddie Mac via its QuickQuery omnibus product. Figures for age, sex, race/ethnicity, education, region and household income were weighted where necessary to bring them into line with their actual proportions in the population. Propensity score weighting was used to adjust for respondents' propensity to be online.

About Freddie Mac Freddie Mac makes home possible for millions of families and individuals by providing mortgage capital to lenders. Since our creation by Congress in 1970, we've made housing more accessible and affordable for homebuyers and renters in communities nationwide. We are building a better housing finance system for homebuyers, renters, lenders and taxpayers.

Learn more at FreddieMac.com, Twitter @FreddieMac and Freddie Mac's blog FreddieMac. com/blog.

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Rental Housing Journal On-Site · May 2017

Rental Housing Journal On-Site

The Informed Investor ...continued from page 3 trust’s assets maintain their power of revocability through IRC §676 are considered to be “disregarded entities” for tax purposes, thus the grantor is considered to be the taxpayer exchanging the property. If the trust is irrevocable the trust itself is considered to be the taxpayer and any replacement property must in its entirety be owned by the same entity. Note, that trustee(s) are not considered to be the taxpayer(s) performing the exchange, regardless of whether the grantor is deceased or not.

The exception to this rule presents a unique ownership structure referred to as DSTs. Delaware Statutory Trusts (“DSTs”) are used to facilitate ownership of property by multiple owners. In a DST, a trustee holds legal title to a property, and investors can purchase “beneficial interests” in the trust. In Revenue Ruling 2004-86, the IRS determined that the owners of the beneficial interests are treated as grantors of a grantor trust, and for tax purposes own fractional interests in the underlying property held by the trust. Therefore, a beneficial interest in a DST that owns real property is of like kind to a fee interest in real property.

More information regarding DSTs can be found at our website: www.RETransition.com While there are numerous other coownership structures, many of which are nuanced, rarely is an investor’s particular situation insurmountable.

Do not hesitate to contact us if you have

Apartment Returns Shifting ...continued from page 8 REIT operators report negative lease growth along with two months of concessions. We expect rents to continue declining over the next several years as a large amount of Class A supply is delivered. Most new supply should be delivered in the second half of 2017.

any questions regarding the specifics of your ownership structure when evaluating your options.

Roger W. Bowlin, President of Real Estate Transition Solutions, LLC, provides exit strategy analysis, execution, income and equity replacement options for investment property owners. If you have questions relating to your investment property ownership, please email him at: RWBowlin@RE-Transition.com or call (206) 755-7068.

The information herein has been prepared for educational purposes only and does not constitute an offer to purchase or sell securitized real estate investments. DST 1031 properties are only available to accredited investors (generally described as having a net worth of over $1 million dollars exclusive of primary residence) and accredited entities only. There are risks associated with investing in real estate and Delaware Statutory Trust (DST) properties including, but not limited to, loss of entire investment principal, declining market values, tenant vacancies and illiquidity. Because investors situations and objectives vary this information is not intended to indicate suitability for any particular investor. This material is not to be interpreted as tax or legal advice. Please speak with your own tax and legal advisors for advice/guidance regarding your particular situation.

Securities offered through Concorde Investment Services, LLC (CIS), member FINRA/SIPC. Advisory services through Concorde Asset Management, LLC (CAM), an SEC registered investment adviser. R.W.Bowlin Investment Solutions is independent of CIS and CAM.

• New York City. Rents fell further in Q4, down 0.7% due to a wave of new luxury supply and muted demand. Fundamentals are expected to continue to soften over the next several years due to slower job growth and oversupply.

• Houston. Landlords in Houston continue to struggle with a historically large pipeline concentrated in energydependent / typically higher-end submarkets. Rents fell 3.6% YOY, and occupancy fell 1.7% in the fourth quarter. REIT operators note that concessions remain in the market but are optimistic that the worst is behind.

Migration trends and apartment demand Migration trends can be a great indicator of future apartment demand.

The graph below shows the average cost of taking a rental truck to a market from the other 24 markets, less the cost of returning the truck. A positive number implies net in-migration, and a negative number implies net out-migration. The dots compare this year’s premiums to last year’s. Of the 15 markets with net in-migration, 10 are secondary markets. The secondary markets of

Jacksonville, Orlando, Charlotte, and Phoenix all have higher rental truck premiums than last year. Riverside/SB is the only secondary market with net out-migration (negative premium).

Double-digit permit increases in 2014–2015 have brought a glut of supply to Class A apartment markets, which will take time to absorb. Going forward, investment capital should be focused in secondary markets which generally have fewer new buildings pressuring rent growth.

This article courtesy of John Burns Real Estate Consulting. Please contact them below for more information.

"Our recently published Apartment Analysis and Forecast (AAF) provides a detailed overview of apartment market conditions throughout the country. If you have any questions or are interested in the AAF, please contact Adam Artunian or Alex Wilson. apartment returns report by Adam Artunian with John Burns Real Estate ConsultingAdam Artunian Senior Manager If you have any questions, please contact Adam at (949) 870-1213 or by email.

Apartment returns research from Alex Wilson with John Burns Real Estate ConsutlingAlex Wilson Research Analyst If you have any questions, please contact Alex at (949) 870-1256 or by email.

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Rental Housing Journal On-Site

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Rental Housing Journal On-Site · May 2017