Rental Housing Journal On-Site September 2017 by Professional Publishing, Inc

Rental Housing Journal On-Site

September 2017

3. Two Washington State Landlord Associations Announce Merger 5. The Story of a Multifamily Investment Winner 6. 3 Low-Cost Incentives to Gain Property Management Training Completion

7. Seattle, Portland Tops in Rental Applications Approval Rates 9. Investing in Human Capital 11. 8 Big Housing Changes Driverless Cars Could Bring 13. Renter Demand for Houses Puts Upward Pressure on Prices

14. Study Shows Consumers Continue to be Too Optimistic with Anticipated Home Value 17. 3 Ins and Outs of Subletting You Probably Didn't Know

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

Risk In The New Washington State Squatter Law

What Is A Landlord To Do Now In Seattle? 3 Actions A Landlord Can Start In Seattle With Without Using Criminal Background Checks By David Pickron

W Rob W. Trickler

continued on page 20

5 Keys To Investing In Emerging Multifamily Markets By Vinney Chopra

think it is critical to a multifamily investor to choose the “right” multifamily apartment complex to acquire. One of the most critical aspects of this is to find the right emerging markets. I am diligent in my exploration of opportunities in markets where jobs and local economies are expanding. I will take six months to a year to do the research to determine an emerging market. What is one key? I follow the jobs. What are emerging multifamily markets?

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any of you may have heard that the Governor signed Senate Bill 5388 into law and that law, commonly known as the squatter’s bill, took effect on July 23, 2017. It sounds great, but I want to encourage our members to be cautious. This was a bill that the Washington Landlord Association, formerly the Washington Apartment Association, supported on behalf of the Rental Housing Association of Washington, who has been working on it for years. Its origins were in the Yakima area. Unfortunately, in my opinion the bill was not ready, and when I pointed out a flaw in the language, I was told that the coalition partners agreed that it needed to be fixed. But before we could get the proposed fix language on the table the bill got pushed out to the floor and passed as is. The new law is supposed to work as follows. A property owner may continued on page 22

hat can a landlord or property manager do to protect themselves now that there is a new ordinance coming in Seattle that bars landlords from using criminal background checks in screening tenants? The Seattle City Council has passed an ordinance 8-0 to bar landlords from using criminal records to screen tenants based on past arrests or criminal convictions, with the exception of sex offenders. Rental Housing Journal asked one of the foremost authorities in the country

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Rental Housing Journal On-Site Âˇ September 2017

Rental Housing Journal On-Site

Two Washington State Landlord Associations Announce Merger By Rob W. Trickler

wo statewide landlord-support associations have merged in Washington, resulting in an organization with almost 9,000 members across the state. The Washington Landlord Association and the Washington Rental Owners Association (including the Washington Apartment Association) are going forward together as the Washington Landlord Association, and will offer expanding benefits to its members. The former WROA was created in 1953, which means the newly formed association is now the oldest in the state. As the WLA, you now have an even stronger voice in Olympia and in our industry. Welcome to your new leadership role, and some of its benefits: We offer your choice of good comprehensive screening reports. You can check credit details personally or you can provide your personal criteria and standards and let our partners at the National Tenant Network (NTN) tell you if a candidate meets those standards. If you have a candidate that has moved here from elsewhere, you can do checks of court records, including courts in other states. And we maintain three offices where you can screen an applicant’s credit information without

having to have your home or office inspected for federal compliance with the Fair Debt Collection Practices Act (FDCPA). One office is in Olympia, one in Bremerton and one in Everett. We hope there will be more to come. We offer educational opportunities across the state. We have chapters and group members that provide dinner meeting opportunities and speaking events to support and educate landlords on many local, state, federal and industry issues. We offer an attorney help line. We know that help by phone was limited in the past. We now have three attorneys answering the help line who practice landlord tenant law; together, they almost cover the entire state. While the help line has some limits, most answers can be provided in a 10- or 15-minute call, which is free -- and which prevents you from having to Google legal topics and do guesswork. We offer free legal forms to our members that have been vetted by our attorneys. Most forms are available in both English and Spanish. They can be completed by hand or by computer. We have a 30-year history of successful lobbying efforts supporting landlords. Respect from lawmakers is not something that comes overnight.

HINGTO S A N W

LANDLORD ASSOCIATION "Working together to serve Landlords Statewide!" www.walandlord.org

It must be earned and nurtured, and we have done that. Everyone in our industry has an influential voice in Olympia, which can't be undervalued or easily replaced. For example, our teams have stopped a number of bills that would have had negative effects on landlords and rental offers, and have helped pass a number of helpful bills, such as our deceased tenant legislation. We have an active Political Action Committee (PAC) that helps elect and re-elect candidates who can help our industry. It is a bipartisan effort. We hold fundraising events for our candidates where we sit across the table from them, tell them our concerns, experiences and hopes, and then get up, shake their hands and hand them a check. This gets noticed, and makes a difference. As an example, the issue of rent control has been a battle for several years. New members may not be aware of this because our efforts to help elect landlord-friendly candidates have helped keep any bill allowing rent control from even coming to the legislative floor. We also are one of the owners of the Trends Trade Show held every December at the Seattle Convention Center. This is the largest landlordoriented trade show in the Pacific

Northwest, and possibly the largest in the West. Not only does it provide a tremendous wealth of information in the form of vendors and workshops -and a venue at which to advertise and market -- it also brings in significant revenue to our organization. All of these advantages come with our $50 member fee, the lowest compared with any similar organization. Do an internet search on organizations and the cost of their memberships, and you'll find this to be true. In effect, your $50 -- about the cost of one nice dinner with your significant other -- is the cheapest insurance you can buy to protect your hard-earned and hardkept landlord investment. It is our members that make all of this possible. So thank you for helping to protect our livelihood and industry. Rob W. Trickler President WLA Attorney and Counselor at Law

WLA has Merged with the Washington Rental Owners Association to be the oldest and "arguably" largest in the state!

What WLA Offers: · A Limited Free Attorney Helpline · Vetted Landlord Forms - Bilingual · Educational events across the state · Quarterly Newsletter · Strong Lobby Presence · Tenant Screening - See Locations Below

Locations for Tenant Screening: Everett, Olympia & Bremerton 3301 Rucker Ave. Suite A Everett, WA 98201 | P: 425-353-6929 | everett@walandlord.com 1428 4th Ave E Olympia, WA 98506 | P: 360-350-0753 | olympiaoffice@walandlord.com 645 4TH St #204, Bremerton, WA 98337 | P: 360-479-1683 | bremerton@walandlord.com Rental Housing Journal On-Site · September 2017

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253-565-2488 4

Rental Housing Journal On-Site Âˇ September 2017

Rental Housing Journal On-Site

By Vinney Chopra

The Story Of A Multifamily Investment Winner

he fire, at the Sienna Villas Apartment Homes, was caused by two kids playing with match sticks in the closet in the upstairs of a middle apartment. It quickly got out of hand. Fortunately no one died and everyone got out quickly. The complex was originally built in 1978 and had no sprinkler system. The owners of the complex, who lived in the San Francisco Bay Area, decided after collecting the insurance money that they would like to consider selling the complex to us, and they dropped the price. They explained there had been poor management of the complex and they would like to not own this asset as it required extensive rehab.

“Napkin Listings” can lead to great multifamily investment deals Many times with the network of brokers that I have relationships with, and constantly keep in touch with, I ask them for pocket listings. Pocket listings are a common term. But, I have invented my own name for this term which I call "Napkin Listings" because I found many brokers meet with potential sellers of commercial real estate at breakfast, lunch or dinner to discuss the terms and timing of a potential sale. They don't have anything in writing on a broker agreement yet,

so frequently sketch out the terms on a napkin. This stage is the very best spot to look at the rent roll and the profit and loss statement from the broker. This gets the research and due diligence, along with underwriting work, started quickly to help decide if this is a winner to syndicate! I make decisions fast with my quick number crunching techniques and with the detailed analysis tool that I have developed over the 10 years. One fine morning I received a call from my brokers, after their talk with the sellers, that this apartment community was on sale. I was in the car and offered $3 million for this burned complex. The seller countered within 20 minutes at $3.5 million and I accepted in one minute. I gave $50,000 extra later. Vinney’s points to remember in doing a multifamily investment winner In investing one should make good quick decisions if a pocket listing is shared by a broker. Don’t over analyze the deal which can lose time and essence of the purchase. Be objective. Do research fast and take “massive action.” Get your team informed (attorney, loan broker, underwriter) as soon as an

Rental Housing Journal On-Site · September 2017

opportunity comes to you. Vinney has been able to close on all 26 syndications, 100% closings, after the Letter of Intent was accepted. The value-add functions implementation is huge in the equity gains just like in Sienna Villas. It was about $3,625,000 in profit as it is being sold now after 2.5 years after the purchase. Renovations began to move it up from a “C” property to a “B” property We had to largely gut the building where the fire happened, but we were able to save some lower units. We replaced charred structures, built everything with new international safety codes, and spent $721,000 in repairs and upgrades. We rebuilt the 16 units to bring them back to be ready for lease by doing an “A” class rebuild. We added granite counter tops, tiled bath tubs, all steel appliances, moldings, upgraded carpet and coloring, fire sprinklers and more. We also lightly upgraded the rest of the 140 units with new interior lighting, cabinets, and celling fans in master bedrooms. We repaired the swimming pool and put in new fencing. We also renovated the interior of the leasing office and built a café area and a media center desk for the residents. We do

that in every community we purchase. Our emphasis is to bring greater value to our valued residents and make them feel proud to live in Moneil Investment Group and Moneil Management Group- managed communities. Then we also repaired and repainted the exterior of the whole complex. We also fixed the staircases, walkways, railings and foundations in two buildings.

How did the deal work out? Actual Performance: The returns to investors have been better than projected. The job market was and is very strong. We were able to increase rents as the leases came due for renewal. By bringing in our strong management team and our standards of operation, we were able to get the asset performing very well. As for it being a momentum play, the job growth has caused more demand, which, in turn, has pushed the rents higher. We did minor landscaping upgrades, upgraded parking, and small upgrades in a few units. We are now 95% occupied, with almost $300 increase in rent per month per apartment. Cash Flow Distributions: We are very excited that the asset is managed by a top community manger with a continued on page 23

Rental Housing Journal On-Site

3 Low-Cost Incentives To Gain Property Management Training Completion By Ellen Clark

e all know the value of training. For companies, it can reduce risk and increase the bottom line. For employees, it provides valuable job skills and opportunities for career advancement. For customers, good employee training improves their experience and overall satisfaction. But human nature is a funny thing. Even when we know something is good for us, we don’t always make the time or effort to do it. Did you eat five servings of fruits and vegetables yesterday? Did you get the recommended amount of exercise last week? Understanding the benefits of healthy habits doesn’t make it easier to fit them into our busy lives. The same goes for training. As with diet and exercise, some people are naturally motivated to do what’s good for them. In the training world, these are your superstars – the people you never have to beg to complete training. And then there are the rest of us, who need an external nudge to complete training on time (or maybe at all). Incentives can be an effective way to get employees to move training to the top of their priority list. When you hear “incentives,” you might see dollar signs. The reality is that most of us don’t have

the budget for, or even the authority to spend money on, incentives. However, things with monetary value aren’t the only way to incentivize people. Here are some low-cost incentives that can help increase your property management training participation rates. No. 1 - Create competition Set up a simple leaderboard on the intranet, in your LMS, or even through email. You might be surprised what a little healthy competition can do. No. 2 - Publicly acknowledge accomplishments Send a company-wide email, write a newsletter blurb, or say a few words at a team meeting congratulating people who completed training or attained a certain score. No. 3 - Praise effort in property management training Don’t forget the people who completed training a day late, or failed their first attempt. Praising their effort in a handwritten note, a personal email, or swinging by to encourage them face-to-face can be just the motivation they need to keep going.

As you put together a low-cost incentive plan, here are some additional things to keep in mind: What people need to do to get on a leaderboard or be acknowledged should be attainable. Creating too many hoops to jump through may negatively impact motivation. Update leaderboards often, and don’t wait for the annual retreat to acknowledge people. Too much time between meeting the goal and getting the reward could lessen the impact of the incentive. Finally, resist the urge to try a whole bunch of new incentives at once. Rather, try one at a time, use the strategy for a while, then look at data to see if it seems to have impacted training rates. Being as systematic as possible will help you find which low-cost strategies work so you can spend your time and effort on things that really make a difference in property management training. Read Ellen's full blog post here. About the author: Ellen Clark is the Director of Assessment at Grace Hill. Her work has spanned the entire learner lifecycle, from elementary school through

professional education. She spent over 10 years working with K12 Inc.’s network of online charter schools - measuring learning, developing learning improvement plans using evidence-based strategies, and conducting learning studies. Later, at Kaplan Inc., she worked in the vocational education and job training divisions, improving online, blended and face-to-face training programs, and working directly with business leadership and trainers to improve learner outcomes and job performance. Ellen lives and works in Maryland, where she was born and raised.

Rental Housing Journal On-Site · September 2017

Rental Housing Journal On-Site

Seattle, Portland Tops In Rental Application Approval Rates By The Editors

ental application approval rates for apartment leases are over 90% in the millennial hubs of Seattle and Portland, according to rentcafe.com. Seattle and Portland, along with San Diego, San Francisco, Los Angeles and Washington, D.C. are very active and high-priced rental markets with thousands of new apartments to fill every year, being in the top 20 cities in the country with most apartment units completed in the last two years.

Seattle is No. 1 in rental application approval rates Number one on the list, Seattle, is a popular city for millennials, with the highest share of Gen-Y rent applicants of all cities analyzed. In Seattle, 93.7% of rental applications end up in a lease. Being one of the hottest and most active rental markets in the postrecession years, Seattle is among the top cities in the country for both construction of new apartments and rent growth, according to rentcafe.com. Portland is No. 2 right behind Second on the list of cities with highest rental application approval

rates, with 91.1%, is Portland, according to rentcafe.com. Portland is also a millennial city, with 71% of renter applicants from Generation Y, as well as one of the fastest growing rental markets in the U.S. in recent years. San Francisco and Irving, TX, both in the top for highest approval rates, also have very high percentages of millennial rental applicants, about 74.5% each. Over 60% of rental applicants in 2017 are millennials and applicant profile data reinforces the claim that millennials represent the majority of the U.S. renting population, according to rentcafe.com. Seattle has the largest percentage of millennial rental applicants, 78.5% vs 60.3% the national average. According to a recent analysis of resident screening data provided by RentGrow, a tenant screening service, which includes lease applications processed between 2014 and 2017, the percentage of applications that are approved nationally is increasing, from an 81.7% approval rate in 2014 to 83.2% in 2017.

Scottsdale Arizona and cities with limited apartment inventory show more application rejections A quarter or more of people who apply for rent in Scottsdale, Arizona, Detroit, Michigan, Arlington and Garland in Texas, and Henderson, Nevada outside Las Vegas are rejected. With some exceptions, the cities with the lowest approval rates are markets where the apartment supply is more limited. With a lesser number of apartments to fill, landlords can be pickier, according rentcafe.com.

High income renters and higher credit scores “We know there has been a significant rise in the number of highincome renters in the last decade, as luxury rentals have become more commonplace,” writes Nadia Balint in rentcafe. Secondly, landlords are more motivated than ever to approve more applications in order to fill up the hundreds of thousands of new apartments opening every year. Additionally, a closer look at the screening data also shows that the average credit score of applicants has improved over time, from 612 in 2014

to 628 in 2017, a fact that supports an upswing in approval rates as well.

Why applicants get rejected “It’s not how much you make, nor how high your credit score is. Even with a good enough credit score, an applicant may still be rejected,” she writes. About 33% of applications are rejected because of accounts in default, collection, or charged-off, from minor to severe levels. Methodology: Analysis compiled by RENTCafé based on data from RentGrow, an online tenant screening system featuring comprehensive reports, reliable data and automated recommendations for property owners and managers. The lease applications analyzed were submitted between January 2014 and June 2017, in the largest 100 U.S. cities. Relevant income data was available for 60 U.S. cities only. Income amounts represent individual annual gross income.

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Rental Housing Journal On-Site

5 Keys to Investing

...continued from page 1

Emerging multifamily markets are metro population centers in the U.S., and around the world, where there is a strong demand for housing. And, properties are significantly increasing in value. In these areas, more jobs are being created and where you have more jobs, you have more people. This creates a pent-up demand for housing, including apartments and single-family homes plus other support services and businesses. What happens in areas where larger businesses are relocating or expanding? New jobs are being created Appealing lifestyles are emerging Rental potential increases Retail shopping centers and services are needed to meet growing population There may be 20 to 30 emerging multifamily markets across the U.S. at any one time.

No. 1 - How to analyze a market First, find the people who know the markets best. Commercial brokers, property managers and others. Start building relationships with these people early on. I may study a market for six months or a year or more before even approaching a broker. For example, when I thought I wanted to invest in the Atlanta area emerging market, I scheduled a four-day trip. On the trip, I talked to the top people at major commercial brokerage firms (presidents, executive VPs, etc.). When I returned home, I followed up with texts and emails with these new contacts every 10 days. We exchanged articles on Atlanta. I would send them articles and they would send me articles. I also sent gifts (chocolates, gift cards, etc.) to stand out and win favor. In the beginning, the properties brokers would send me were overpriced. I wasn’t interested. As the brokers started to see my property criteria and that I was a serious buyer, they started offering me “pocket listings” that better met my criteria. No. 2 - How to know a market has peaked and not buy there I am constantly doing research. I had been looking at the Atlanta area for more than seven months. In Cobb County cities, for instance, in Marietta and Smyrna (Actress Julia Roberts home town!) the properties were peaking and going for $100,000 to $125,000 a door. If I had bought three to five years ago in those areas, I would have done well today. I was not interested. No. 3 – My secret research trick I have signed up to receive Offering Memorandums (OMs) from multiple

brokers in my target areas. The great thing about OMs is that the big brokerage firms have extensive research budgets and resources. They do excellent market research. The OMs always have, in the last pages of the OM, a wealth of market information with extensive exclusive data. I use this data for my own research and share it with my investors. I will occasionally bid on OMs I receive via email (if the numbers make sense) but I do not often win the bid.

No. 4 – Sell properties after three to seven years The primary reason I only hold on to properties three to seven years is that investors generally do not want to invest for longer periods of time on any one property. In my Private Placement Memorandum (PPM) for each property with accredited investors, I usually say properties will sell anywhere from five to seven years. But if conditions are right and I can sell sooner, I will. I will sell especially if I can see the opportunity to double investors’ money. In those cases, each market hasn’t technically peaked, which is good because it’s much easier to sell. Other buyers still see the area as a “hot” market and I am able to get top dollar for the properties. When it reaches the top of the growth cycle bubble, prices will start declining and it is harder to sell. No. 5 – My emerging market buys Back in 2006, I started researching various population centers around the U.S. where unemployment numbers were some of the lowest. I identified areas such as Odessa and Midland in West Texas. I bought seven multifamily properties in those areas. Then I found similar employment numbers in Central Texas, in Round Rock , Austin and San Antonio. I bought eight more properties there. More recently I bought in an area south of Houston, a tertiary market where $110 billion was going to be spent in the next 15 years and I bought 10 more properties. In that area, I found a town 30 to 40 miles south of Houston, Angleton, that was not as dependent as Houston on the oil industry. At one of the properties, the property manager told me that the property had 100 percent occupancy and 25 families on a waiting list. I bought the property for $8.7 million and two years later it was worth $11.7 million. I bought another near there for $5,225,000 and recently got an offer for $7,225,000. I ended up buying 10 more properties in that market. All of these deals have been “pocket listings” (unlisted offerings that

brokers make available exclusively) from brokers with major commercial firms (ARA, Marcus & Millichap, TransUnion, Cushman Wakefield, etc.). Some big wins in Atlanta Over the last year, I have focused my research on parts of Atlanta that have emerging multifamily markets. I found 90 potential properties, made offers on 45, and was in best and final on four. Unfortunately, I didn’t get any of them. However, recently I was presented two great deals at $37,000 per door. One where the property across the street was just sold into syndication for $66,000 per door. I am currently buying two different properties in the Atlanta area comprised of 458 units cumulatively that I believe will double in value in the next few years. Summary: Steps in researching emerging multifamily markets Talk with local brokers. Do online research (IRR.com, data. gov, globest.com). In Google: type city name and write “economic growth” or “potential new business.” Put city’s name and Forbes, Wall Street Journal or WSJ, Fortune, US News & World Report. Research jobs numbers. Look at occupancy numbers and trends up or down – Is it 90% and above? Look at multifamily building permits being issued in the city. Migration information, such as who and how many are moving there.

Contact local Chamber of Commerce as they have great info on local business growth Visit the city – meet with chamber, brokers, others. Look for new employers in the area, such as new hotels, restaurants, or Walmart. About the author: Vinney Chopra is the Founder and CEO of Moneil Investment Group and President of Ideal Investments Group. His latest accomplishments include acquiring 12 multifamily assets in the last 28 months worth $132 million. His last two syndications were sold out in just a few hours, and one in 36 hours raising $4.7 million and another one $6 million in eight hours. Between the two syndication companies he founded, Vinney’s team is controlling over $200 million worth of assets. He is a mechanical engineer. After graduating from The George Washington University and finishing his Master’s in Business Administration in Marketing, he shifted his focus to marketing and motivation. He was a professional fundraising consultant and motivational speaker for more than 35 years. Vinney and his wife started their real estate investments in 1983. He currently owns singlefamily homes and multifamily units in Texas, California, Atlanta, Arizona and India. Many times, people call him “Mr. Enthusiasm” or “Mr. Smiles.” He likes to bring great value to everyone he comes in touch with.

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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

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

Investing in Human Capital

uman Capital – the set of skills which an employee acquires on the job, through training and experience, and which increase that employee’s value to their employer and in the marketplace. As our industry gets more complicated and competitive, it is becoming increasingly more difficult to find good talent. However, companies have a goldmine of skill and ability among their existing employees, if only they would invest more in their current employees’ development. The best investment a company can make is investing in their employees. The skills and attributes an employee brings to an organization and further develops during their employment produce an economic value that directly affects a company’s bottom line. Investments in education, training, empowerment and responsibility increases employee productivity, effectiveness, morale, and fulfillment. Increasing employee morale reduces employee turnover. An organization is only as good as its people. People always perform better when they’re motivated and engaged. They feel more personally fulfilled. Knowing that an employee’s company cares enough about them to invest in their future is a high motivation moment. They will tell others what a great company yours is to work for. They will want to excel in their jobs to pay you back for your support of them.

The best way to have engaged, loyal employees is to have great managers and leaders who truly care about their employees. Encourage your team to expand their skills and talents, not just try to fix their weaknesses. Give them the tools and the support they need to develop. This is a long-term approach to a successful business. As a mission, the Washington MultiFamily Housing Association provides educational opportunities to promote career development for our industry. Multifamily housing professionals face more challenges than ever before. Education is the key to meeting these challenges and taking your career to the next level. WMFHA is highly committed to the enhancement of skills and knowledge of our members and future members. Rental housing industry professionals look to WMFHA as a leading source for industry education. WMFHA offers a variety of educational offerings to fit the needs of rental property owners, mid to upper level management company executives, property supervisors, and onsite personnel at all levels. As the local affiliate of the National Apartment Association, we are proud to provide professional designation programs that are a recognized and respected mark of excellence throughout the industry. Each course and program has been carefully crafted and tailored to meet the everchanging needs of today's multifamily housing professional.

Why get a professional designation? It's simple: A designation puts you at the forefront from the rest of your industry peers. A designation shows that you are a successful and competent professional. It also signifies that you are not only committed to the multifamily rental housing industry, but also to developing your career. • 86.6% of supervisors noticed an improvement in their employee's work performance after completing the CAMT course. • 75% of students enhanced the ability to analyze the property's financial operations after completing the CAM designation course and community analysis project. • Upon completion of the NALP course, 81% of the supervisors of attendees reported an improved closing ratio. • Additionally, 57% reported an improvement in financial management, risk management, and portfolio management. In addition to the NAA designation programs, WMFHA offers a multitude of workshops, seminars and other educational opportunities throughout the year. We offer our programs in a number of formats including "in-class", online, as well as blended learning approaches. Our instructors are experts in the industry with proven success in their roles and we have invested in extensive

"train the trainer" development to ensure you have the highest quality experience in our classroom. Many companies provide for reimbursement of educational expenses for their employees when classes and courses pertain to their core duties. However, most companies bury their career development reimbursement policies in their employee manual and do not actively promote those available employee benefits. The Washington Multi-Family Housing Association provides scholarship opportunities for our members as well. WMFHA believes in the importance and impact that continuing education has on a career. Our industry is dynamic and always changing! The best way to stay ahead and keep the competitive advantage is to keep yourself well educated and knowledgeable about industry trends, practices, technology, legislation and more. There is a significant investment of time and money, and not everyone has access to the funds or education budgets to make the pursuit of this training a reality, so we are proud to award over $5,000 in full and partial scholarships annually. For more information about educational opportunities, feel free to contact the Washington Multi-Family Housing Association at 425-656-9077 or go to www.wmfha.org.

GIVING BACK IT’S THE WMFHA WAY! The Washington Multi-Family Housing Association has a long-standing and firm commitment to making a difference in the communities we do business in. We are proud of the charitable organizations we have partnered with and stand with them in their respective missions.

We hope you will join us this fall for one or both of our charity events!

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11th Annual Chili Cook-Off

3rd Annual Holiday Giving Gala

October 28, 2017 Tukwila, WA

November 16, 2017 Bellevue, WA

Benefitting the Domestic Abuse Women’s Network

Benefitting Childhaven and Toys 4 Tots

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Get More Information at wmfha.org/events 9

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Rental Housing Journal On-Site · September 2017

Rental Housing Journal On-Site

8 Big Housing Changes Driverless Cars Could Bring By The Editors

ully autonomous vehicles (AVs), or driverless cars, should become commonplace within 10 to 20 years, disrupting entire industries while triggering structural shifts in housing and the economy, according to new research from John Burns Real Estate Consulting. “The path to government approval and consumer acceptance of AVs will have hiccups no doubt, so we expect ride-sharing along with semiautonomous vehicles to kick-start the movement towards AVs,” writes Rick Palacios Jr. Director of Research. For consumers, the tipping point for large-scale adoption will come when not owning a car makes more financial and logistical sense than traditional ownership. Car enthusiasts, the affluent, and rural households will continue to own cars as AVs or driverless cars evolve. Regardless of the adoption rate, AVs are the future.

So what impact will AVs, or driverless cars, and ride-sharing have on the housing market? “We think a big one. Increases in disposable income and productivity from AVs should drive overall economic growth higher, a positive for housing,” Palacios writes. “A portion of the money once allocated to owning/leasing a car should also free up for owning/renting a home. Here are some of the additional

housing shifts we anticipate” as a result of AVs:

No. 1 – Prime real estate unlocked New land will be available for new home construction as parking lots, auto dealerships and gas stations become obsolete. Additional supply in historically supply constrained locations will likely dampen home price appreciation and alleviate housing shortages in many cities. Due to increased housing supply in good locations, there will initially be less demand for outlying locations, even though commutes will be easier. No. 2 – Drive-until-you –quality to reemerge Outlying drive-until-you-qualify housing markets will eventually reemerge once the majority of core infill markets have repurposed their prime real estate and consumers become more accepting of commutes given the option of working, sleeping, etc., while driving. No. 3 – Rise in urban employment Urban employment should rise as prime real estate is repurposed for housing, allowing more people to live closer to city centers. Those residing in tertiary areas will be more accepting of commutes into the urban core for job opportunities now that they can work/ sleep/etc. while en route. The commute

times should also be shorter when compared to traditional human drivers behind the wheel.

No. 4 – More homes per acre Get ready for more homes per acre, with the days of wide streets, massive driveways, and two-/three-car garages a thing of the past. Builders will be able to get significantly higher density, and consumers will be buying a home where 100% of the square footage is truly livable. We’re already seeing apartment developers shifting to zero parking. Innovative master-planned communities such as Florida’s new Babcock Ranch (eventually home to 50,000 residents) are already utilizing AV community shuttles, with the goal of having on-demand AVs that individual residents can use via smartphone apps. No. 5 – Declining construction costs Construction costs should decline as transportation costs plummet for moving building products from manufacturing facilities/warehouses to new home construction sites. Construction timelines should also improve for home builders as the transportation of building products becomes a 24/7 operation handled by AVs. Labor may also become more available due to mobility improvements brought about by AVs coupled with

displaced workers in other industries (energy, auto, trucking). These developments should allow for faster new home construction at a lower cost.

No. 6 – Fewer home sales Fewer homes sales will occur as the elderly will be able to stay in their existing homes long after losing their driving rights. No. 7 – Demand for assisted living facilities could fall Longer-term housing turnover will likely be suppressed as AVs enable the elderly to stay in their existing home while aging in place, maintaining independence despite losing their driving rights. Demand for assistedliving facilities could also fall as a result, especially when compared to past generations. No. 8 – Repair and remodeling increase There is a bullish case for repair and remodel industry, as AVs enable more retirees to age in place. Grab bars, slipresistant flooring, and wider doors/ hallways to accommodate wheel chairs are just a few examples of remodeling projects associated with aging in place. In addition, garages previously used to store cars will increasingly be converted to functioning living space, requiring complete overhauls. ...continued on page 23

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Rental Housing Journal On-Site · September 2017

Rental Housing Journal On-Site

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Rental Housing Journal On-Site · September 2017

Rental Housing Journal On-Site

Renter Demand for Houses Puts Upward Pressure on Prices

lmost half of all renters consider renting a single-family home, but less than a third actually do, according to the 2017 Zillow Group Consumer Housing Trends Report out this fall Rental houses have been in high demand since the housing market crashed, but a lack of supply has made renting those homes more expensive. According to a new ZillowÂŽ analysis, the median monthly rent for single-

family homes is rising faster than the median monthly rent for apartments. While rents for both houses and apartments have slowed significantly over the past year, median rent for houses rose 1.3 percent annually to a monthly rent payment of $1,404, but median rent for apartments rose 0.5 percent, to a monthly rent payment of $1,551. There are fewer single-family homes to rent than a decade ago. When the

Rental Housing Journal On-Site Âˇ September 2017

housing market crashed, investors scooped up many single-family homes lost to foreclosure and turned them into rentals. Almost 20 percent of all singlefamily homes across the U.S. were rented in 2016, up from 13.5 percent 10 years prior. Meanwhile, rentals are in increasingly high demand because many aspiring homeowners don't have enough money to buy a home. A 20 percent down payment on a typical U.S. home costs more than two-thirds of the median household income, but can cost up to 180 percent of the median household income in pricier housing markets like San Jose and Los Angeles. According to the 2017 Zillow Group Consumer Housing Trends Reporti (ZGR) coming out this fall, 45 percent of all recent renters consider renting a single-family home, but just 28 percent actually ended up renting one. The report also found that half of all buyers with children at home consider renting instead of buying during their home search, and according to the Census Bureau, 40 percent of families with children still living at home are rentersii. In half of the 50 largest U.S. metros, median rent for houses is rising faster than median rent for apartments. The most extreme example of this trend

is in Portland, Ore., New Orleans and Chicago. In Portland, monthly rent for houses is rising at almost 4.5 percent annually, but monthly rent for apartments is falling. Over the past year, median rent for Portland apartments fell just over 1 percent, to a monthly payment of $1,536. Median rent for Chicago apartments is also falling, while rent for houses is rising just over 1 percent annually. "When the market crashed, many families lost homes they owned during the foreclosure crisis, and now may not be able to afford to buy another as home prices rise," said Zillow Chief Economist Dr. Svenja Gudell. "Those who want to buy are finding it difficult to find the right one, or may need a bit more time to come up with a down payment, but still want the advantage of space that single-family residences often provide. This, coupled with the foreclosure crisis turning millions of homeowners into renters, is a big reason why demand for single-family rental homes has risen over the last few years. Even though rental homes are in high demand, apartment living remains an attractive option for many young renters who want to be close to work and amenities, like restaurants and grocery stores." ...continued on page 18

Rental Housing Journal On-Site

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Rental Housing Journal On-Site · September 2017

Rental Housing Journal On-Site

Study Shows Consumers Continue to Be Too Optimistic with Anticipated Home Value

ome values rose 0.19% nationally in August, with a 2.64% year-over-year increase, according to the Quicken Loans HVI Appraisals continued to lag homeowner expectations in August, although the difference between appraiser and owner opinions has narrowed. Quicken Loans' National Home Price Perception Index (HPPI), which compares homeowners' initial estimates and appraisers' opinions of home values, showed that appraised values were 1.35 percent lower than homeowners' expectations in August. This is compared to July when there was a 1.55 percent difference. While perceptions of home values vary, the values themselves are constantly changing. Home values ticked up 0.19 percent in August,

according the Quicken Loans' National Home Value Index. When viewed annually, values rose an average of 2.64 percent compared to August 2016. ome Price Perception Index (HPPI) A home's value, or its perceived value, can influence whether the owner decides to sell the home, refinance or even access some of their equity. However, the HPPI shows not all homeowners understand their home's current value. Nationally, appraisals in August were 1.35 percent lower than homeowners' valuations. Regionally, value perceptions vary widely across the country, from home values being 3 percent higher than homeowners estimated in the West, to 3 percent lower than expected in the Midwest and Northeast. A 3 percent difference

may seem small, but depending on the local market, it could make a significant impact on value. For instance, a homeowner in Denver may have upwards of $11,000 in additional equity they can access for home improvements or loan consolidation. "One of the biggest lessons from the HPPI, is highlighting how regionalized real estate is," said Bill Banfield, Quicken Loans Executive Vice President of Capital Markets. "Homeowners who have a better understanding of their local housing market can make more informed decisions about their home. After all, their house is not just where they live, but one of their bigger assets."

Home Value Index (HVI) Home values rose again in August, although at the slowest pace in 2017. The

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HVI, the only measure of home value changes based solely on appraisals, reported that home values increased 0.19 percent in August. Appraisals posted stronger growth when viewed at a year-over-year basis, increasing 2.64 percent. At a regional level, there was a slight downturn in home values in the South and East – dipping 0.52 percent and 0.58 percent, respectively. The Midwest and West regions each had rising appraisal values, increasing 0.16 percent and 1.34 percent. "As the sun sets on the summer, some of the intense competition for housing also winds down," said Banfield. "It's important to focus on the annual numbers with the HVI. While there can be some monthly variations in the data, especially as seasons start to change, the annual numbers show healthy growth across the country."

...continued on page 19

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Rental Housing Journal On-Site · September 2017

Rental Housing Journal On-Site

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Rental Housing Journal On-Site · September 2017

Rental Housing Journal On-Site

3 Ins and Outs of Subletting You Probably Didn’t Know By Christina Burch, www.appfolio.com

s a property manager, it’s your responsibility to manage all tenants in your properties – whether you’re dealing with complaints, finding new tenants to fill vacancies, or having to evict a renter for breaking the terms of their agreement. One thing to look out for is subletting. Some tenants might try to get away with illegally subletting their apartment, which can cause major problems for you as a property manager. It’s in your best interest to know the warning signs of a tenant illegally subletting to someone that doesn’t belong on the property. Protect yourself with these three important points on illegal subletting and how to spot it if it’s happening right under your nose.

Determine if an Illegal Sublet is Truly Taking Place Before you get too worked up about a situation that may not exist, determine if an illegal sublet is actually taking place in one of your rental units. You do not want to accuse a tenant of illegally subletting their place if it’s not happening. This will harm your relationship with the renter and potentially create a rift that you might never recover from.

all sorts of unwanted legal issues that you’d obviously rather avoid. Before you begin taking legal action, you can either contact a lawyer or research the laws in your state first. Since it’s an illegal sublet, it’s possible the person subletting the apartment may not have any legal credibility or support and will willingly vacate the premises once you notify them that you’ve sought counsel. If the subletter refuses, you should contact a legal professional. They’ll help you proceed quickly and fairly. Investigate the situation. It’s quite possible your original, contracted tenant may have gone on an extended trip and asked one of their friends to watch the apartment, feed the dog, bring in the mail, or do a number of other things to help while they are away. On the other hand, if this new person keeps going in and out of the apartment throughout the day, it’s quite possible they’re illegally subletting the place. At this point, you can introduce yourself and ask them some questions to find out more information. Based on their responses, you might know if they’re unlawfully subletting, and it’s time to do something about it.

Let Your Original Tenant Know about the Lease Agreement Breach The original tenant may not realize they’re breaching their lease agreement. Either way, it’s important to meet with the tenant and notify them that they’ve violated their lease terms. Let them know about the breach in writing and give them 30 days to fix the problem before you begin taking legal action.

Protect Yourself for the Future Equipped with these three tips, you can proceed with any illegal sublet situation knowing that you’re protecting your property and yourself from future conflict. As a property manager, you may not wish to ever use this information, however you’ll have the advantage if you ever run into this problem and need to solve it quickly.

Look into Potential Legal Options Now that you’re fully aware of the problem on your hands, it’s time to pursue potential legal options. If the tenant and illegal subletter do not take care of the situation, it can create

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Rental Housing Journal On-Site · September 2017

Rental Housing Journal On-Site

Renter Demand for Houses ...continued from page 13 Generation X rentersiii (ages 38-52) are significantly more likely to rent a single-family home than any other home type. Just over 40 percent of Generation X renters rent a single-family home, compared to 25 percent of millennials (ages 18-37) and just 10 percent of Silent Generation renters (ages 73 and over)iv. Single-family rental homes are a popular choice among Generation X, but millennial and Silent Generation renters are more apt to rent an apartment. Over 50 percent of millennials and 62 percent of Silent Generation rentersv surveyed in Zillow's 2017 Consumer Housing Trends Report currently rent an apartment. Zillow Rent Index vi (ZRI) Among Apartments United States $1,551 New York/Northern New $2,332 Jersey Los Angeles-Long Beach$2,455 Anaheim, CA Chicago, IL $1,543 Dallas-Fort Worth, TX $1,366 Philadelphia, PA $1,228 Houston, TX $1,285 Washington, DC $1,915 Miami-Fort Lauderdale, $1,596 FL Atlanta, GA $1,336 Boston, MA $2,240 San Francisco, CA $3,002 Detroit, MI $1,301 Riverside, CA $1,679 Phoenix, AZ $1,178 Seattle, WA $1,849 Minneapolis-St Paul, MN $1,387 San Diego, CA $2,220 St. Louis, MO $939 Tampa, FL $1,201 Baltimore, MD $1,586 Denver, CO $1,652 Pittsburgh, PA $1,084 Portland, OR $1,536 Charlotte, NC $1,208 Sacramento, CA $1,456 San Antonio, TX $1,146 Orlando, FL $1,160 Cincinnati, OH $1,025 Cleveland, OH $903 Kansas City, MO $1,022 Las Vegas, NV $979 Columbus, OH $1,102 Indianapolis, IN $1,018 San Jose, CA $3,101 Austin, TX $1,536 Virginia Beach, VA $1,236 Nashville, TN $1,419 Providence, RI $1,317 Milwaukee, WI $940 Jacksonville, FL $1,184 Memphis, TN $1,127 Oklahoma City, OK $784 Louisville-Jefferson $1,036 County, KY Hartford, CT $1,294 Richmond, VA $1,223 New Orleans, LA $1,434 Buffalo, NY $802 Metropolitan Area

Raleigh, NC Birmingham, AL Salt Lake City, UT

ZRI Among SingleFamily Homes $1,404 $2,408

Single-Family Home ZRI YoY Change 1.3% -0.9%

Share of Single-Family Homes that are Rentalsvii 19.2% 10.5%

3.4%

$2,815

4.0%

24.5%

-1.5% 2.8% -0.8% -3.2% 0.9% -1.7%

$1,694 $1,607 $1,694 $1,553 $2,295 $2,115

1.1% 2.6% 0.2% -2.7% 0.7% -1.5%

12.8% 17.0% 14.9% 16.0% 14.7% 20.8%

3.0% 2.8% -0.9% 0.6% 4.8% 1.1% 4.1% 1.7% 5.3% 0.6% 0.3% -0.8% 3.1% -2.0% -1.1% 1.4% 7.5% 1.1% 2.5% 2.9% -1.7% 2.5% 4.3% 0.2% 0.8% -0.4% -0.5% -0.6% 1.0% 1.9% -0.9% 0.3% -0.4% -1.1% 3.7%

$1,358 $2,428 $3,461 $1,141 n/a $1,371 $2,243 $1,645 $2,623 $1,166 $1,409 $1,746 $2,119 $1,078 $1,890 $1,280 n/a $1,340 $1,466 $1,296 $1,197 $1,295 n/a $1,373 $1,208 $3,583 $1,727 $1,454 $1,496 $1,700 $1,504 n/a $1,041 $1,101 $1,183

3.5% 2.0% -0.9% -0.3% n/a 2.5% 5.4% 3.9% 4.3% 0.6% 2.4% -0.2% -0.4% -2.4% 4.4% 3.1% n/a 1.0% 3.2% 1.6% 0.1% 1.4% n/a 2.2% -0.3% -0.9% -0.7% -0.8% 3.0% 2.2% 0.9% n/a -2.4% -3.5% 4.1%

19.3% 8.5% 20.4% 16.1% 24.8% 22.1% 16.5% 10.6% 25.2% 14.1% 19.2% 16.3% 15.9% 13.7% 16.9% 17.8% 23.7% 19.2% 20.4% 14.7% 15.3% 17.6% 28.5% 18.1% 17.1% 20.2% 16.0% 20.3% 14.5% 10.5% 13.1% 19.1% 22.2% 20.5% 14.5%

1.1% -0.4% -3.6% 1.4%

$1,678 $1,349 $1,392 $1,255

-1.9% -0.5% 0.8% -1.2%

7.8% 18.0% 17.5% 9.8%

tions Survey, which asks more than 100 leading $1,196 1.5% economists, real estate experts and investment $995 -1.2% and market strategists to predict the path of the Zillow Home Value Index 3.0% over the next five $1,386

About Zillow Zillow is the leading real estate and rental marketplace dedicated to empowering consumers with data, inspiration and knowledge around the place they call home, and connecting them with the best local professionals who can help. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow's Chief Economist Dr. Svenja Gudell. Dr. Gudell and her team of economists and data analysts produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expecta-

Apartment ZRI YoY Change 0.5% -1.1%

years. Launched in 2006, Zillow is owned and operated by Zillow Group, Inc. (NASDAQ: Z and ZG), and headquartered in Seattle. Zillow and Zestimate are registered trademarks of Zillow, Inc. i The 2017 Zillow Group Report on Consumer Housing Trends is the largest-ever survey of U.S. home buyers, sellers, owners and renters. The full 2017 Zillow Group Report – which examines the characteristics, aspirations and priorities of more than 13,000 U.S. residents aged 18 to 75 about their homes – will be released this fall. ii

According to the U.S. Census Bureau,

level is from 2015. $1,441 2.8%data available at the metro16.5% Renters who moved into their home in the -0.6% 13.2% past year. $1,062 iv 5.0% 12.5% According$1,567 to the 2017 Zillow Group American Community Survey, 2015.

iii

Consumer Housing Trends Report coming out this fall. Renters who moved into their home in the past year.

vi The Zillow Rent Index (ZRI) is the median Rent Zestimate® (estimated monthly rental price) for a given geographic area on a given day, and includes the value of all single-family residences, condominiums, cooperatives and apartments in Zillow's database, regardless of whether they are currently listed for rent. It is expressed in dollars. vii

National number is from 2016. The latest

Rental Housing Journal On-Site · September 2017

Rental Housing Journal On-Site

Consumers Continue to be Too Optimistic ...continued from page 12 HVI August 2017 January 2005 = 100

HVI August 2017 vs. July 2017 % Change

HVI August 2017 vs. August 2016 % Change

103.98

+0.19%

+2.64%

National Composite

HPPI August 2017 Appraiser Value vs. Homeowner Perception of Value* -1.35%

HPPI August 2016 Appraiser Value vs. Homeowner Perception of Value* -1.56%

*A positive value represents appraiser opinions that are higher than homeowner perceptions. A negative value represents appraiser opinions that are lower than homeowner perceptions.

Geographic Regions

HVI August 2017 January 2005 = 100

HVI August 2017 vs. July 2017 % Change

HVI August 2017 Vs. August 2016 % Change

West South Midwest Northeast

126.85 105.38 86.68 97.79

+1.34% -0.52% +0.16% -0.58%

+5.08% +3.77% +2.62% +0.34%

HPPI August 2017 Appraise value vs. Homewowner Perception of Value* -1.17% -1.32% -1.46% -1.48%

HPPI August 2016 Appraise value vs. Homewowner Perception of Value* -1.23% -1.60% -1.66% -1.76%

*A positive value represents appraiser opinions that are higher than homeowner perceptions. A negative value represents appraiser opinions that are lower than homeowner perceptions.

HPPI HPPI HPPI August 2017 August 2017 August 2016 Metropolitan Areas Appraiser Value vs. Homeowner Appraiser Value vs. Homeowner Appraiser Value vs. Homeowner Perception of Value* Perception of Value* Perception of Value* Dallas, TX +2.90% +2.83% +2.01% Denver, CO +2.66% +2.60% +3.09% Seattle, WA +2.17% +2.00% +1.00% San Jose, CA +1.55% +1.37% +2.33% San Francisco, CA +1.36% +1.37% +2.48% Portland, OR +1.34% +1.14% +1.71% Charlotte, NC +1.08% +0.82% -0.52% Boston, MA +0.89% +0.68% +0.59% Los Angeles, CA +0.86% +1.02% +1.35% San Diego, CA +0.76% +0.78% +0.52% Sacramento, CA +0.61% +0.42% +1.06% Miami, FL +0.57% +0.41% -0.14% Phoenix, AZ +0.36% +0.16% -0.73% Minneapolis, MN +0.32% +0.36% +0.15% Kansas City, MO +0.29% +0.35% -0.87% Riverside, CA +0.08% -0.02% +0.34% Las Vegas, NV +0.07% -0.12% -0.87% Houston, TX -0.05% -0.06% +1.08% Detroit, MI -0.37% -0.59% -3.03% Tampa, FL -0.51% -0.80% -1.60% Washington, D.C. -0.83% -1.08% -0.23% Atlanta, GA -0.93% -1.03% -0.85% New York, NY -1.46% -1.69% -1.57% Cleveland, OH -2.33% -2.63% -1.92% Chicago, IL -2.36% -2.65% -2.27% Baltimore, MD -2.82% -3.04% -3.03% Philadelphia, PA -3.05% -3.04% -3.24% *A positive value represents appraiser opinions that are higher than homeowner perceptions. A negative value represents appraiser opinions that are lower than homeowner perceptions. About the HPPI & HVI The Quicken Loans HPPI represents the difference between appraisers' and homeowners' opinions of home values. The index compares the estimate that the homeowner supplies on a refinance mortgage application to the appraisal that is performed later in the mortgage process. This is an unprecedented report that gives a never-before-seen analysis of how homeowners are viewing the housing market. The HPPI national composite is determined by analyzing appraisal and homeowner estimates throughout the entire country, including data points from both inside and outside the metro areas specifically called out in the above report. The Quicken Loans HVI is the only view of home value trends based solely on appraisal data from home purchases and mortgage refinanc-

es. This produces a wide data set and is focused on appraisals, one of the most important pieces of information to the mortgage process. The HPPI and HVI are released on the second Tuesday of every month. Both of the reports are created with Quicken Loans' propriety mortgage data from the 50-state lenders' mortgage activity across all 3,000+ counties. The indexes are examined nationally, in four geographic regions and the HPPI is reported for 27 major metropolitan areas. All indexes, along with downloadable tables and graphs can be found at QuickenLoans.com/Indexes. About Quicken Loans Detroit-based Quicken Loans Inc. is the nation's second largest retail home mortgage lender. The company closed more than $300 billion of mortgage volume across all 50 states be-

Rental Housing Journal On-Site · September 2017

tween 2013 and 2016. Quicken Loans moved its headquarters to downtown Detroit in 2010, and now more than 17,000 team members from Quicken Loans and its Family of Companies work in the city's urban core. The company generates loan production from web centers located in Detroit, Cleveland and Scottsdale, Arizona. The company also operates a centralized loan processing facility in Detroit, as well as its San Diego-based One Reverse Mortgage unit. Quicken Loans ranked "Highest in Customer Satisfaction for Primary Mortgage Origination" in the United States by J.D. Power for the past seven consecutive years, 2010 – 2017, and highest in customer satisfaction among all mortgage servicers the past four years, 2014 – 2017. Quicken Loans was ranked #10 on FORTUNE magazine's annual "100 Best Companies to

Work For" list in 2017, and has been among the top-30 companies for the past 14 consecutive years. The company has been recognized as one of Computerworld magazine's '100 Best Places to Work in IT' the past 13 years, ranking #1 for eight of the past twelve years including 2017. The company is a wholly-owned subsidiary of Rock Holdings, Inc., the parent company of several FinTech and related businesses. Quicken Loans is also the flagship business of Dan Gilbert's Family of Companies comprising nearly 100 affiliated businesses spanning multiple industries. For more information and company news visit QuickenLoans.com/pressroom. Twitter: @QLnews Facebook.com/QuickenLoans SOURCE Quicken Loans

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What is a Landlord to Do in Seattle? ..continued from page 1 on tenant screening and background checks, David Pickron, to give us his opinion – not legal advice – on what landlords could do to cope with this new Seattle ordinance. First, three actions a landlord could start with, if they cannot use a criminal background check and Pickron will explain more below: 1. Call the prospective tenant’s prior landlord for a reference 2. Verify the prospect tenant’s employment to make sure they have a job at the salary they report 3. Raise your credit criteria and require a higher credit score for prospective tenants Pickron wanted to put in perspective, his opinion in general, on some of the issues in Seattle that revolve around landlords and business, especially smaller mom-and-pops. “First of all Seattle has a $15-anhour minimum wage. That is way ahead of the national average. Most small mom and pops cannot absorb those massively increased expenses no matter what business they are in and still make a profit in the City of Seattle , so the City is telling small mom-andpop businesses to get out of Seattle if you want to survive,” PIckron said. So businesses will be shutting down, moving out to Kent, Washington or other Seattle suburbs to be competitive. Raising prices and offering less service is not something that keeps clients coming back especially if just down the road, the same service is being offered for much less with better service. This new landlord law is going down the same road, they are telling landlords ‘Hey we don’t care about your safety or your investments…. so you can go ahead and get out of town and go buy rentals in the suburbs around Seattle where you have more property rights as a landlord. “Then they are telling the families who are trying to raise their kids in a safe multifamily community who do not want to live next to criminals for the sake of protecting their kids and family, to get out of Seattle and move somewhere else – where it is safer because landlords can do criminal background checks on their neighbors who live next door,” Pickron said. “And then they are opening up their loving arms saying, ‘Come to Seattle those with a criminal record. We will protect you.” I love how they carved out the sex offender exception…of all the criminal records we look at only 6% are sex related and most of these will not be on the Sex Offender Registry so you will never find them. But what about the 37% theft, 26% drug, 10% assault charges we find everyday? Landlords come in contact with their applicants and residence all day long in private intimate settings. They hand over a $100,000 or more asset to their residents….If the majority of crimes we see are theft…will the dishwasher or stove be there when they move out. Will their units become drug hangouts with wear and tear on their rentals. Now I don’t want to lump all people who have had a run in with the law the same, but as a landlord we are vulnerable in so many ways….our personal safety and our financial investments are in jeopardy. “So in my opinion they are telling all 20

the responsible people like landlords who have worked hard, saved a little money, and bought an investment to get out of town. They are telling people who have kept their nose clean living in rentals, to get out of town.” “They are telling all the good to get out of Seattle. And, inviting all the bad to come in, its not the way a city should treat it citizens. And I think in 10 or 15 years – my opinion is – Seattle will become Detroit.” Pickron said.

If you stay as a landlord in Seattle what can you do? “I’m not attorney. I have read it and tried to understand it, but some things confuse me. This is what I would be looking into. – or have my legal counsel look into. – if I owned a home I would go to renting out by the room to individuals because as I understand it, if you share a kitchen or bathroom you can still run criminal background checks,” Pickron said. So if you have a property around a college, or a property that fits that model, you can rent by the room. You need to make sure everybody has separate leases for each of the rooms in the house. So that is one way to protect yourself and your property, he said. “Second, I would raise my credit criteria a little bit. You know, I haven’t seen a repeat offender very often have a 700 FICO score with their five felony drug , assault or bank robbery charges. So I would raise that bar a little bit if you really wanted to rule out some of the criminal elements in your property,” he said. Unfortunately now that will limit those good people with lower scores and no criminal history. The good news is there is help for them just over the city border. He said the issue could get a little muddy if someone owns multiple rentals, some in Seattle and some in nearby suburbs. “They have jurisdiction over you if your property is in Seattle, but right outside the city limits they don’t. But beware, I would only qualify someone for a specific rental in a specific city. Referring applicants in and out of Seattle rentals could cause problems. For example: if I ran a background on a tenant for a Kent property but in conversation they wanted a property I owned in Seattle. I would be breaking the rules if I allowed them to qualify for the unit in Seattle and accessed their criminal records. Or a criminal applicant on a Kent property asks you if you own any properties in Seattle that they would qualify for and you deny them the ability to qualify in Seattle could be a HUD violation because the argument could be you denied them for race, religion, familial status, etc. since you could not deny for criminal history. “ Here’s what I would do if I had rentals in Seattle I would be buying rental property like crazy just outside of Seattle city limits. I think those properties will go up in value and be desirable for landlords and tenants. On the other hand , you are going to see property values go down in Seattle because there are going to be vacancies and higher crime rates. It will take years before this will all happen and then the City Council will ask, ‘How did this happen?”

I think some people will hope for a change in future city councils…. I would not count on it. “Seattle will attract people who will vote to keep the current political leaders and policy in place. So things will not change. He said he read an article where a city council person said there had been no study done to say that a criminal would be a bad tenant. “There might not of been a study conducted with that exact title but I can tell you …All you have to do it look at recidivism rates, which are in the 60 percentile after three years from release from prison. What report do you need just look at the rate people return to jail or prison? As a landlord do you feel safe? Do you need any other study?” He said. A Bureau of Justice Statistics study finding shows inmates released from state prisons have a five-year recidivism rate of 76.6%, the U.S. Sentencing Commission study calculated comparable federal prisoners released have a 44.7% re-arrest rate after five years. Within three years of release, about two-thirds (67.8 percent) of released prisoners were rearrested, according to the National Institute of Justice. “When people get out of prison they have great intentions and feel they have changed their ways, and some do survive for a while – until something bad happens in their life Recidivism rates show us that the majority go back to what they used to do – that escape or survival mechanism. We have seen plenty of people survive for a year, a year and a half or two years, and then go back to their criminal ways. “Life coming out of prison with a criminal history is tough. And I get why the city council is not looking at the whole picture but just at the lives of the criminals. It’s hard to get a job. And if you can’t get a job or housing to support your family how are you supposed to be rehabilitated. It is a tough road that the City of Seattle is now putting on Landlords to figure out. “One solution: We need to be going into the junior highs and high schools and teaching our kids about credit and criminal consequences – to save future generations. But is Seattle worried about education like that? I don’t think so,” Pickron said. So to landlords who need to cope with the new Seattle ordinance, he says go back to the old way of doing background checks in the 70s and 80s before we had the internet to check records.

Options for landlords who have to deal with new Seattle ordinance Call the prior landlords. Even though some of them won’t tell you anything, some will, and make sure you go back and call the prior landlords but stay away from any conversation about criminal activity. Make sure you verify employment by getting a paycheck stub. A guy whose committing serious crimes probably isn’t going to have a solid full-time job let alone a career. Heighten that credit score up just a touch based on your property and who you can attract. Check the Sex Offender Registry at https://www.nsopw.gov/ Try to get the highest dollar out of your property right now , sell it and buy in the suburbs. About David Pickron For 25+ years, David Pickron has been working to make the process of finding and managing tenants easier. Drawing on his own experiences as a real estate investor, and thousands of interactions with his clients, he developed a series of custom solutions to help rental owners protect themselves, their properties, and the health of their ongoing investments. A worldclass creator and technology junkie, David brings two decades of experience as a licensed private investigator to Rent Perfect. During that phase of his career, he learned that prevention is the best medicine when it comes to dealing with dangerous or unreliable individuals. As a self-professed control freak and active investor, David often found himself re-imagining the tenant/landlord relationship. He started to envision a mobile-friendly renter screen program that would entail no more cords, no more paperwork, and no more problems. To that end, he has developed numerous products that help landlords navigate the tenant screening, property management, and eviction process seamlessly.

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Washington State Squatter Law...continued from page 1 complete a declaration that an occupant is a trespasser. Law enforcement “may” consider this declaration, along with any other paperwork or proof that the occupant presents, to decide if the occupant has the right to be there or is a trespasser. There are conditions, such as not having been a tenant within the previous 12 months, not having permission to enter, the property not being open to the public at the time the occupant entered, and some others. If the property owner that completes the declaration is not truthful, the law allows for civil liability for actual damages along with the criminal liability that exists. If law enforcement decides to remove the occupant, then the police or sheriff will be indemnified by the landlord for removing the occupant. Blacks Legal Dictionary has the definition of indemnification as “The action of compensating for loss or damage sustained.” In short, the law requires that for law enforcement to be able to exercise the option to remove someone, the officer must first functionally examine the evidence, make a factual determination as to the credibility and importance or weight of that evidence, and then draw a legal conclusion based on those findings. In other words, the law enforcement officer on the spot must be judge and jury as well. Let’s just say I don’t have high expectations that law enforcement is going to get comfortable in this expanded role, but that part is just my skepticism.

If law enforcement does remove an occupant, nothing prevents the occupant from filing a lawsuit against the law enforcement agency. The law does not provide immunity. That means when the occupant wishes to sue the deep pockets of the government agency, the landlord will be on the hook, in my opinion, to pay the agency back for defending and or settling the lawsuit. Nothing in this law gives the landlord the right to control any part of a resulting lawsuit against the government agency, yet the landlord may be required to pick up the entire tab. Landlords using this procedure should be accordingly insured. In my experience, it is and has been the case that law enforcement is tremendously reluctant to remove someone as a trespasser because law enforcement wishes to avoid the potential liability of making what amounts to a legal decision that may turn out to be wrong in subsequent litigation. They just don’t want to get sued. Currently the sheriff’s department will usually not conduct a physical eviction that requires them to supervise the removal of personal property of one or more occupants when that party or those parties are not the only ones living there. An example would be a roommate situation where there are no contractually defined separate areas. In other words, the unit is basically communal living. Good luck getting a sheriff department to stand there and be responsible for results of you saying this couch goes but that end table stays, etc. This new law leaves exactly that problem on the table. In fact, it’s even

worse, because there is less direction in this new law about the disposition of personal property than in the landlord tenant statutes. In fact, it says absolutely nothing about what law enforcement’s responsibilities are with respect to an occupant’s personal property. Nor does it say anything about what the property owner’s rights or responsibilities are with respect to the occupant’s (or squatter’s) personal property, or any other personal property that may be there. This bill puts law enforcement and property owners in the collective position of having to decide what to do with all the personal property located at a property but gives them no additional legal authority to make that decision. Again, good luck getting law enforcement to go out on that limb, and if they do, I would advise you to prepare for a lawsuit that you may have to pay for while having no control of it. I cannot advise that landlords take advantage of this law as it stands now. Another problem with the bill may be a finer legal argument but one that still has the potential to get a property owner in trouble. The bill requires that property owners acknowledge two statutes in the Residential Landlord Tenant Act that say, in a nutshell, that the “Landlord” understands that no “Tenant” can be removed without a court order. The problem is that the new law expands that language to not just “Tenant” but to “Occupant.” Well a squatter is an occupant. In

some respect that section would appear to undo the entire purpose of the bill. In another capacity, the language serves to put a landlord on notice. That may or may not be enough to motivate some eager attorney to sue a landlord for use of this statute (it probably is). Such a suit may or may not be successful (probably not) but do you want to be the test case for that? More likely, the expanded and conflicting language will just give law enforcement one more issue to be uncertain about. With the risk of potential liability and lawsuits, the easy response is the same one they have been relying on: “The occupant is your civil problem so take it to court.” I would be extremely cautious about using this statute in its present state. Maybe you won’t get sued for personal property disputes or stumble into criminal trouble for understanding the definition of a squatter differently than the law does while filling out your affidavit, but I would hate to see any of you become the guinea pig. Nothing indemnifies the property owner that uses this. Rob W. Trickler Attorney and Counselor at Law President Washington Landlord Association

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Multifamily Investment Winner ..continued from page 5 strong staff under our supervision. The investors have been getting regular quarterly cash flow checks since the purchase. Renovations: Since we bought the asset, the renovations have been going on constantly to make it an excellent community to live in. Multifamily investing summary: I have purchased 10 complexes, ranging from 60 units to 192 units in last 2.5 years -- all “Napkin Listings” in this emerging local area about 40 miles south of Houston. I like to do thorough research to decide on an emerging market and then purchase four or five assets to harness the economies of scale in the area. Fact Box: Sienna Villas Apartment Homes Number of Units: 156 Purchase Price: $3,550,000 Plus Renovations: $1,225,000 Sale Offer: $8,400,000 on Aug 8, 2017; in Escrow. Purchase Date: December 22, 2014 City: Freeport, TX. Area: B Date Sold: Sale Pending Equity Gain: $3,625,000 Pref. Rate Class A Investors: 9% per year Vinney Chopra is the Founder and CEO of Moneil Investment Group and President of Ideal Investments Group. His latest accomplishments include acquiring 12 multifamily investment assets in the last 28 months worth $132 million. His last two syndications were sold out in just a few hours, and one in 36 hours raising $4.7 million and

another one $6 million in eight hours. Between the two syndication companies he founded, Vinney’s team acquired and managed over $236 million worth of assets. He is a mechanical engineer. After graduating from The George Washington University and finishing his Master’s in Business Administration in Marketing, he shifted his focus to marketing and motivation. He was a professional fundraising consultant and motivational speaker for more than 35 years. He is a CA Real Estate broker also. He believes in total transparency of his businesses for the investors and holds quarterly investors meetings for his valued friend investors. Vinney and his wife started their real estate investments in 1983. He currently owns single-family homes and multifamily units in Texas, California, Atlanta, Arizona and India. Many times, people call him “Mr. Enthusiasm” or “Mr. Smiles.” He likes to bring great value to everyone he comes in touch with.

8 Big Housing Changes ..continued from page 11 Summary: Impact of driverless cars More money in consumers’ wallets As automobiles shift from a consumer good (owned/leased) to service (on demand), loan/lease payments, fuel, maintenance, and insurance costs will disappear almost completely. The boost to household disposable income will be significant once scaled. A productivity boost for everyone A jump-start in wage growth and overall economic activity will happen. Beyond shortening commute times due to better reliability and efficiency than human drivers, AVs , or driverless cars, will transform billions of commuting hours into time that can be reclaimed for remote working or personal recharging (which should boost in office productivity too). Some of this previously lost time will also be reallocated to media consumption and online shopping. Money that consumers previously spent on owning/maintaining their cars will now be spent on other things while riding in them. Industry productivity should also improve as 24/7 AVs enable more to be done in less time across various supply chains and logistics channels. “All in all, we expect the advent of AVs, or driverless cars, to benefit the overall housing market and greater economy,” Palacios writes. “How it shakes out and who the industry winners/losers will be remain up for debate. The above is our assessment based on what we know

today, which could quickly change depending on government policies, which are hard to predict. “For builders and developers not already doing so, it is imperative to begin strategizing on how your business may shift as AVs gain scale,” he said. This article courtesy of John Burns Real Estate Consulting. About Rick Palacios Jr. Rick, senior vice president and director of research, oversees subscription research conclusions, producing timely, accurate and thorough analyses. He is particularly well-known for quantifying the impact on housing of unique industry events, such as surging student loans or falling oil prices. Rick originally joined John Burns Real Estate Consulting in 2006, and then re-joined the company in 2014 after working as a home builder Equity Research Associate at Morgan Stanley in New York. He has also worked as an Analyst at the Milken Institute, and as a Senior Investment Banking Analyst. Rick holds a B.A. from the University of California, Irvine, and an M.S. in Real Estate Economics and Finance from the London School of Economics, and works in our Irvine office. If you have any questions, please contact Rick at (949) 870-1244 or by email at rpalacios@realestateconsulting.com.

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