Rental Housing Journal On-Site
May 2018
4. Potential for Higher Returns Lures New Buyers, Generating Competition
10. How to Save Money and Water in Apartments
6. Social Media Tenant Screening Risks and Fair Housing
15. Accommodating Disabled Tenants in Your Rental Property
11. Dear Maintenance Men
7. Application of Payments and 72 Hour Notices 8. Are LED Light Bulbs the Best Option for Your Rental Property? 9. WMFHA – Eviction: The National Debate Heats Up
17. Real Estate Exit Strategies 21. Can Tenants Have Multiple Assistance Animals?
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
4 Outdoor Flooring Options for your Rentals
Landlords Sue Seattle
Over Criminal Background Check Restrictions By John Triplett Rental Housing Journal
T D
amaged or worn outdoor flooring, pavement and surfaces can be responsible for making your property look poorly kept. These surfaces can also endanger the safety of your tenants as cracks, holes and general wear make it easier to slip, trip and fall. Our expert contractors have provided a breakdown of common materials for outdoor flooring. We have included the pros and cons of each material to help you choose what works best considering your design preferences, pricing, weather-resistance and overall longevity.
Professional Publishing Inc., PO Box 6244 Beaverton, OR 97007
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Sound Publishing Inc 98204
PRSRT STD US Postage
1 - Natural stone is a beautiful outdoor flooring option Natural stone can present unique variegations in a variety of colors, which results in a beautiful, one-ofa-kind accent in your outdoor space. It can be custom-cut to be arranged accordingly to a preferred pattern and look, with irregular shapes being used for meandering mosaics and modular stones being used when a more regular and symmetrical appearance is desired. ...continued on page 5
hree small landlords have banded together with two organizations to sue the City of Seattle over a criminal background checks ordinance that keeps landlords from considering certain criminal histories of tenants during the tenant screening process. The Pacific Legal Foundation and the Rental Housing Association of Washington (RHAWA) have filed suit against the City of Seattle over the ordinance which bans landlords from ...continued on page 18
most criminal background checks when screening an applicant. The suit argues the ordinance violates due process and free speech. Seattle’s Fair Chance Housing Ordinance, passed by city council in 2017, forbids landlords from considering applicants’ criminal histories when selecting tenants. In other words, landlords cannot base a rental decision on concerns over their own safety or the safety of other tenants and neighbors. Violators face fines and penalties of up to $55,000. The Rental Housing Association of
Washington said in a release, “The ordinance is based on the flawed reasoning that inequities of our criminal justice system can be solved by limiting the rights of property owners from making informed decisions about the person(s) with whom they enter into rental agreements. “Rental property owners recognize the struggle for applicants with criminal convictions history and the industry supports measures like Certificates of Restoration of Opportunities and simple “ban the box” legislation to ensure that an individual’s full list of qualifications are considered. However,
Smaller Cities may be Pushed to Follow Portland Tenant Relocation Payments Ordinance,
A
Landlord Attorney Warns
Portland landlord attorney has written to other city attorneys in Oregon warning them that they could soon see a push in their city for an ordinance similar to Portland’s requiring landlords to pay for tenant relocation. Portland attorney John DiLorenzo, who represents landlords in a lawsuit on appeal challenging the Portland tenant relocation ordinance, said he wrote the letter because “all kinds of city attorneys are interested in our case. “We have heard there are tenant advocacy groups approaching smaller cities in Oregon,” he said and he wanted the other city attorneys to have the background on the case and the filings.
DiLorenzo letter to Oregon city attorneys on tenant relocation payments ordinance
“You are no doubt aware of the efforts by the City of Portland to require landlords to pay “relocation payments” to tenants when their tenancies are terminated by use of “no-cause stated”
notices, when landlords refuse to renew leases, or when landlords raise rents 10 percent or more over any one-year period. On March 7, 2018, the Portland City Council made this ordinance ...continued on page 14
Rental Housing Journal On-Site
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Rental Housing Journal On-Site
Potential for Higher Returns Lures New Buyers, Generating Competition Supply of For-Sale Listings Remains Tight, Boosting Prices
Marcus Millichap National Manufactured Housing Research
A
Report
–
ffordable housing need bolsters operations. Manufactured home communities are benefiting from rising single-family home prices and escalating apartment rents that are creating a shortage of affordable housing alternatives. This is especially prevalent in urban areas with strong employment gains, such as Salt Lake City or Denver. In these two metros, vacancy in manufactured home parks posted triple-digit drops to average below 2 percent. The lack of new communities and the redevelopment of older parks also contribute to a tightening vacancy rate as displaced tenants seek alternative placements for their homes.
An aging population benefits manufactured home parks. During the next 10 years nearly 18 million additional people will reach age 65. Many of these seniors will move to resort or retirement manufactured home communities, many of which are in the Sunbelt. The number of people age 65 and older will continue to swell through 2045 as the baby boomer generation ages. This bodes well for age-restricted communities. Operations tighten across the nation. During 2017, vacancy in all subregions reached a 10-year low, boosting rent growth and raising NOI. These factors combined with higher cap rates than many other real estate product types are intensifying competition for manufactured home communities and pushing prices up.
Investment Highlights
• Buyers are flush with capital amid a scarce supply of available listings throughout most areas of the nation, which has resulted in more off-market transactions. Heightened demand is producing aggressive pricing that keeps cap rates steady despite the rise in interest rates. • In some areas of the country, for-sale listings are further reduced by resident groups in manufactured home communities exercising their right of first refusal and making offers to purchase the park. • Exchange buyers remain active. Many of these investors are trading out of other commercial real estate product types, such as apartments, and are unfamiliar with owning a manufactured home community. In many instances the potential for higher returns is luring them to consider park ownership and they are willing to pay a premium to own, helping to drive prices higher. • Communities on well and septic are still slower to trade. Some buyers are searching for a value-add opportunity in parks that have the potential to be hooked up to these city services.
The information contained in this report was obtained from sources deemed to bereliable. Every effort was made to obtain accurate and complete information; however,no representation, warranty or guarantee, express or implied may be made as to theaccuracy or reliability of the information contained herein. This is not intended to bea forecast of future events and this is not a guaranty regarding a future event. This isnot intended to provide specific investment advice and should not be considered asinvestment advice. Sources: Marcus & Millichap Research Services; Datacomp-JLT;CoStar Group, Inc.; Institute for Building Technology and Safety; U.S. Census Bureau. Manufactured Home Communities Group
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Rental Housing Journal On-Site · May 2018 ©2018 PROFESSIONAL PUBLISHING, INC
Rental Housing Journal On-Site
Potential for Higher Returns ...continued from 5 Michael L. Glass First Vice President National Director 216) 264-2000 Prepared and edited byNancy Olmsted Senior Market Analyst Research Services For information on national manufactured housing trends, contact: John Chang First Vice President, National Director Research Services Tel: (602) 707-9700 © Marcus & Millichap 2018 www.MarcusMillichap.com
•
Advertise in Rental Housing Journal Onsite Call 503-221-1260 for more info
Flooring Options ...continued from 1 Pros • Extremely durable - natural stone is rather tough. It stands strong against the elements and wear and tear, usually requiring little to no maintenance. • Environmentally friendly and safe - as a natural material, stone is not engineered utilizing chemicals or other substances that can be toxic to humans and the environment. • Affordable when local - a unique quality of natural stone is that local varieties are generally more affordable. Purchasing a type of stone that is characteristic to your area gives you the option to source materials in a more eco-friendly and affordable way. • Versatile - natural stone can be used to pave a variety of outdoor spaces - from driveways and walkways to pool decks. While some materials are particularly sensitive to temperature and moisture, making it necessary to consider whether using them in a particular area of your property will make them more prone to damage, stone does not make this a concern. Cons • Longer installation time - installing stone pavements requires very precise planning and is typically a rather labor-intensive project, which means that completing the project will generally take longer. • Can be pricey - considering that, as mentioned above, installation is labor intensive and that certain varieties of stone will have to be sourced from places that are not located nearby, a natural stone pavement project can be more expensive.
2 – Wood is a common outdoor flooring Wood is one of the most common flooring materials utilized for decks and porches, and has been a favorite for generations. Pros • Visual appeal and versatility - the natural look of wood - with numerous colorations and designs made available by all the different varieties of wood that exist - is preferred by those wanting to achieve a warmer or one-of-a-kind, custom look. • Local is more affordable - as for natural stone, turning to locally-sourced varieties of wood will make it more affordable to opt for wood. Cons • Vulnerability and durability - wood is one of the most sensitive materials, being vulnerable to scratches, discoloration from prolonged directed sunlight exposure, as well as rotting and warping following moisture exposure. Opting for wood will mean keeping in mind that you will need to plan for protecting your investment. • High maintenance - as a delicate material, regular preventative maintenance will become a necessity, especially with wood requiring to be regularly sealed. To avoid letting wood pavements to become damaged and worn, it is fundamental to be ready and expect to be investing in regular maintenance help frequently.
wanting their outdoor flooring to be a more visible accent piece. Pros • Accessible - concrete slabs are inexpensive (generally costing a third of what natural stone would cost) and can be laid out by most contractors. • Durable - overall, concrete requires little to no maintenance. Concrete pavers are most resistant and preferable to slabs. • Customizable - while this comes at an extra cost, modern advancements in manufacturing have made it possible to stamp concrete to resemble the textures of other types of pavements, such as brick and stone. Cons • Cracking and chipping - prolonged exposure, especially to cold or harsh weather, can result in concrete chipping and cracking on the long run. Those cracks can be difficult to repair in a way that does not make the space look “patched up.” Our experts point out that while this is common for concrete slabs, concrete pavers are less likely to exhibit this quality. • Slipping hazard - concrete can easily freeze when temperatures drop. Slipping becomes a serious concern during the winter months. • Simplicity - to some, the look of concrete is rather bleak. Indeed, the simplicity of concrete might not be ideal for those wanting pavements to contribute to the overall aesthetics of their exteriors by adding a unique touch of color or texture.
3 – Concrete outdoor flooring Concrete pavements are simple. Their simplicity can make them the ideal element to feature along with minimalist, modern décor. Or, make them a definite “no-no” for those
4 – Tile outdoor flooring Tile is a common pavement type. It allows you to achieve both uniform, subtle pavements but also incredibly intricate decorative designs and contrasts.
Rental Housing Journal On-Site · May 2018
Pros • Design potential - tile is highly-customizable and makes it possible to create beautiful accents and designs for your outdoor areas. • Easy to install - unless one opts for a more elaborate design, installing basic tile is an easy project that contractors can complete quickly. Cons • Slipping - tiles freeze easily and become incredibly slippery when wet. To avoid dangerous falls, our experts highly encourage considering highly slip-resistant types only. • Cracking - freeze-thaw cycles take a serious toll on ceramic tiles, which can easily crack and chip following repeated exposure. Again, our experts find it best to only consider denser tiles that are formulated for the outdoors. • Grout maintenance - on top of concerns that have to do with maintaining the tiles alone, the grout joining them together adds an extra element to take care of. Grout can crack, stain and chip off over time, which is why consulting the manufacturer or a trusted contractor on what an ideal upkeep schedule would look like is necessary. Summary: As the weather starts to warm - and dry - up, there is no better time to tend to the needs of your property’s outdoor flooring. The weather should make it easy and usually fast to complete flooring projects, but it also should be a reminder signaling that now is the best time to check your property to assess whether any wear or damage has occurred over time. • 5
Rental Housing Journal On-Site
Social Media Tenant Screening Risks and Fair Housing By Ellen Clark
H
ave you thought about using social media tenant screening as a way to checkout potential tenants on social media or checking on current residents on social media? The Grace Hill training tip of the week focuses on this issue and the Fair Housing Act. Social media can be a tempting tool to find more information about tenants and prospective tenants, but the information you find can leave you vulnerable to discrimination claims. But what about looking up applicants or residents on social media? Can that be problematic from a fair housing perspective? Let’s take a look. First some background as the topic of social media and fair housing is back in the headlines. In March, fair housing organizations filed a lawsuit against Facebook, accusing the company of allowing real estate companies and landlords to exclude women and families with children from seeing certain housing ads. The lawsuit, filed by the National Fair Housing Alliance in U.S. District Court in the Southern District of New York, alleges that the world’s largest social network still allows advertisers to discriminate against legally protected groups, including mothers, the disabled and Spanish-language speakers. Diane Houk, lead counsel for the alliance, told ProPublica this type of discrimination is especially difficult to uncover and combat. “The person who is being discriminated against has no way to know” it, because the technology “keeps the discrimination hidden in
hopes that it will not be caught,” she said. Facebook disputes the housing groups’ allegations. “There is absolutely no place for discrimination on Facebook. We believe this lawsuit is without merit, and we will defend ourselves vigorously,” said Facebook spokesman Joe Osborne told ProPublica. A few weeks ago we talked about how social media communications are often considered advertisements, and discrimination in advertising is prohibited by the Fair Housing Act. It is illegal to create, publish or distribute housing ads that discriminate, limit or deny equal access to housing because of membership in any federally protected class. Using social media tenant screening It may be tempting to use social media to learn more about prospective residents during the screening process. However, on social media you are likely to find out information that defines someone as protected class, such as their religion, that they have children, or that they have a disability. This could make you more likely to deny someone housing based on those characteristics, which could make you more vulnerable to discrimination claims. If you think what you find on social media could influence, or even appear to influence, your decision about leasing to someone, then steer clear of investigating on social media. The best thing to do is follow your standard application and qualification procedures consistently for all prospects.
Higher Returns Lures New Buyers
...continued from 4 West Region – Mountain Trends Vacancy: The vacancy rate contracted 110 basis points to 6.4 percent during 2017. The rate has fallen 490 basis points from the cyclical peak in 2011. The Denver market recorded the tightest vacancy among U.S. metros at 1.2 percent. Rents: The average monthly rent posted a 3.7 percent rise to $528, up 17percent during the last five years. Denver holds the highest average rent in the subregion at $660 per month, after a 5.4 percent gain in 2017.
Pacific Trends^ Vacancy: Rising home prices and strong job growth created a tight housing market in the Pacific, 6
resulting in the lowest vacancy among subregions at3.2 percent in 2017.Rents: Monthly rent surged 4.2 percent to an average of $549 in 2017, the highest rent by subregion. Rent in coastal California properties can be double the average.
West Sales Trends Cap Rates: Buyer demand for communities remains intense, though a lack of marketed properties reduced trading activity last year. Cap rates for quality assets typically begin in the 4 percent range. Prices: The average price jumped 30 percent to $52,600 per unit in the West. Assets in the desired coastal communities can top $100,000 per unit.
If you connect with residents on social media, think carefully before acting on information you find. Using social media to check on current tenants Imagine you have a couple living in a one-bedroom apartment home. Your occupancy limits specify two people per bedroom. On social media, you learn that the couple is in the process of adopting twins. What should you do? In this case, it is best to not take any action. Even making a note of this in the residents’ file could be problematic if you face a fair housing claim. It could appear as though you used the couple’s familial status in making decisions, which could violate fair housing law. What if you come across something concerning about residents on social media, such an indication that they lied on their application or weren’t honest in an accommodation request? Consult with your supervisor and legal counsel before taking any action. If you act on information and are wrong about what you found, you may put yourself at risk for a fair housing complaint. Summary on social media tenant screening and fair housing In this age of social media, it is important to understand that you are responsible for acting in a nondiscriminatory way, no matter what form of communication you are using. You must be just as mindful of fair housing laws when sharing information and interacting with customers online as you are when sharing information
and interacting in print and in person. 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. For nearly two decades, Grace Hill has been developing best-inclass online training courseware and administration solely for the Property Management Industry, designed to help people, teams and companies improve performance and reduce risk. •
Metro
Vacancy
Y-O-Y Basis Point Change
Average Rents
Y-O-Y % Change
Denver
1.2%
-280
$660
5.4%
Long Island
1.5%
-110
$661
1.4%
Salt Lake City
1.8%
-100
$541
4.0%
Seattle
2.0%
0
$637
2.9%
Baltimore
2.5%
-20
$638
5.1%
Houston
3.2%
-170
$370
6.3%
Fort Lauderdale
3.4%
-110
$651
3.7%
Portland
3.6%
80
$577
4.3%
Austin
4.1%
-50
$514
5.5%
Dallas
4.7%
-160
$427
4.4%
Albuquerque
4.9%
-130
$438
3.1%
Phoenix
6.3%
-70
$520
3.6%
Tampa-St. Petersburg 6.3%
-90
$469
3.8%
Charlotte
7.1%
-40
$344
4.9%
San Antonio
7.6%
-230
$399
5.0%
Minneapolis/St. Paul
8.4%
-40
$421
3.4%
Orlando
8.7%
-110
$471
4.2%
Cleveland
9.2%
-110
$347
2.4%
Las Vegas
15.5%
40
$572
2.3%
Atlanta
18.3%
-200
$449
3.5%
Indianapolis
18.3%
-190
$346
3.9%
Rental Housing Journal On-Site · May 2018
Rental Housing Journal On-Site
Application of Payments and 72 Hour Notices by Brad Kraus Attorney at Law Warren Allen LLP
I
see it at least once a week. Bewildered landlords painfully discovering recently enacted laws governing how and where to apply tenants’ payments. I’m talking about ORS 90.220(9), affectionately known as the “application of payments statute” in the ORLTA. Believe it or not, due to this statute, many of those landlords’ NonPayment of Rent Notices may have been defective, without them even knowing about it. Prior to ORS 90.220(9), any payments received from tenants could be applied in manner described in the Rental Agreement. If the Rental Agreement was silent, the Landlord could simply “fill the bottom of the barrel first.” In amending ORS 90.220, the legislature forced Landlords to apply payments received by tenants in a predetermined order. Pursuant to ORS 90.220(9), any payments received from your tenants must now be applied as follows: “A. Outstanding rent from prior rental periods; B. Rent for the current rental period; C. Utility or service charges; D. Late rent payment charges; and E. Fees or charges owed by the tenant
under ORS 90.302 or other fees or charges related to damage claims or other claims against the tenant.” At first glance, the statute is pretty straightforward. However, when put into practice, the statute causes waiver problems galore, especially when tenants carry arrearages from one month to the next. A simple example will illustrate the waiver problem: Terry’s monthly rent is $1,000.00. If Terry pays only $500.00 in January, and the Landlord accepts it, a partial payment has been created. If Terry thereafter pays $1,000.00 in February, $500.00 of that would first go to January’s outstanding balance. The remainder could then either be applied to February’s rent (thereby creating another partial payment issue) or returned pursuant to ORS 90.414 (thereby preserving the Landlords Non-payment termination rights under ORS 90.394). Simple enough… right? Not so fast! Here’s where it could get complicated . .. Terry’s monthly rent is $1,000.00, but Terry also owes the Landlord utilities every month (and hasn’t paid them for over 10 months, causing a utility arrearage of $600.00). Terry also hasn’t paid his rent on time for the past 10 months, incurring a $100.00 late fee
Publisher Will Johnson – will@propubinc.com
each month. Accordingly, Terry’s ledger balance, including his January and February unpaid rent, is $3,600.00. Yikes! Let’s say that Terry tenders a payment of $1,500.00, which the Landlord accepts. The Landlord wrongly assumes that, due to Terry’s large balance, $2,100.00 (of the $3,600.00 balance) is still owed for rent. Accordingly, the Landlord serves a Non-Payment of Rent Notice, Terry fails to cure, and the Landlord files an FED. The parties then appear at the First Appearance, and a Tenants’ attorney appears on Terry’s behalf, demanding a dismissal (due to the waiver problem) and $750.00 in attorney’s fees. Unfortunately, the Tenant’s attorney’s position is legally sound, and the Landlord is in trouble ... Why? Remember, due to the application of payments statute, the first $1,000.00 applied to January’s outstanding rent due. The remaining $500.00 then applied to February’s outstanding rent, regardless of how much money Terry owed. Maddening, right? So what can be done to prevent such a disastrous outcome? While every situation must be analyzed on its own merits, some best practices can be articulated. First, Landlords must know how the application of payments
statute works in practice. This can be difficult when the Landlord’s ledger software merely throws payments at the oldest (or total) balance. Second, Landlords should protect themselves (and their books) by serving valid For Cause notices. Third, if the Landlord desires to accept a partial payment, the parties should execute a partial payment agreement, in order to protect the Landlord. Finally, prior to service of any Non-Payment of Rent notice upon tenants who carry a substantial balance, Landlords should look at their ledger and determine whether or not, in the current month, a payment of larger than the outstanding previous months’ rent was made. If so, the application of payments statute may negate the Landlord’s ability to serve a Non-Payment of Rent Notice, and a For Cause notice may be the only remaining option. While it’s difficult to discuss and outline every possible way ORS 90.220(9) can complicate your life, knowing that the statute exists is half the battle. Once you acclimate yourself with the statute, and understand its practical effects, you can better protect yourself from potential waiver issues. •
Advertising Sales Will Johnson – will@propubinc.com Terry Hokenson – terry@propubinc.com Janet Nilsson – janet@propubinc.com
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Rental Housing Journal On-Site is a monthly publication published by Professional Publishing Inc., publishers of Real Estate Opportunities in Investing & Real Estate Investor Quarterly
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Rental Housing Journal On-Site · May 2018
7
Rental Housing Journal On-Site
Are LED Light Bulbs the Best Option for Your Rental Property?
L
ED light bulbs, whether replaced by the landlord or the tenant in your rental property, is the maintenance checkup from Keepe this week as we look at the pros and cons. Going green is also important for some properties and something to consider for LED light bulbs. LED light bulbs have become popular with industry professionals. So we asked our electricians to give us some tips as we explore what is best for our rentals.
How LED light bulbs work LED light bulbs produce light by conducting electrical currents through a microchip that powers a small, lightemitting diode. Their popular counterpart incandescent light bulbs - rely on electrically-produced heat instead: electrical currents heat the metallic filament found inside the glass bulb, which becomes luminous after being brought up to a high, incandescent temperature • Efficient: LED light bulbs have been found to be up to 90% more efficient than incandescent light bulbs. This is because LEDs require much less energy to power up and produce light than it takes for an incandescent
8
light bulb to reach the temperature necessary to emit light. Consuming less energy to illuminate a space will translate in lower utility bills. • Long-lasting: While incandescent light bulbs will stop working when their filaments wear out, the microchips and diodes in LED light bulbs last much, much longer. Some LED bulbs can last up to 10 years and produce over 40,000 hours of light before needing to be replaced. Additionally, instead of suddenly “going out” like incandescent light bulbs, LED nearing the time of replacement will visibly becoming dimmer, which makes it more practical to be
prepared for their replacement and not experience a sudden loss of light. • Stylish: Since their introduction in 1995 and especially during the early 2000’s, compact fluorescent lights (or CFLs) became the best available alternative to incandescent light bulbs; while they certainly allowed for reduced energy consumption - fluorescent technology requires from a third to a fifth of what an incandescent light bulb would need to work they came in a one-of-a-kind, rather impractical design: a curly or long twisted tube. Most people find the tubular design to be unappealing and difficult to incorporate in most light fixtures, especially decorative ones, like chandeliers and pendant-type pieces. While General Electric announced that it would stop producing curly CFLs altogether back in 2016, they can still be easily found and purchased: today, LED offer a much more practical and aesthetically pleasing alternative. Not only are LEDs widely available in the “classic” round and bulbous design - which is easy to incorporate in light fixtures but manufacturers have been able to develop different shape variations to satisfy a wide range of design preferences. • Safe: LEDs surpass both incandescent and CFL light bulbs when it comes to safety. The main flaws of incandescent light bulbs are their frail glass exterior that can shatter
easily and the way they heat up; in fact, they can generate enough heat to get the entire light fixture to reach dangerously high temperatures that can damage heat-sensitive surroundings and in some cases even cause injury when touched. Their fluorescent technology requires CFL light bulbs to incorporate mercury, which is a toxic material that cannot be disposed of alongside “regular” trash and needs to be handled with care. LED light bulbs resolve both issues as they do not generate heat when turned on nor utilize toxic materials. • Increasingly affordable: when LED light bulbs were first released, they were quite pricier than other available light bulbs. Their price has dropped ever since and today is considered to be rather accessible. It is possible to easily find LED light bulbs at most hardware stores at a variety of price points. • Directionality: LED light bulbs are versatile; they now can produce a diffused glow for a large room or can also create a spotlight effect in a certain space, such as below a bathroom vanity.
Cons of LED light bulbs • Light spectrum: LED light bulbs produce a white light, which is rather “bright” and cold. Some people find this light spectrum to be unappealing in spaces that they prefer to be dimmer. While investing in a light dimmer would solve this issue, it nonetheless requires an added step and expense. • Temperature-sensitivity: While LED bulbs don’t generate heat or temperature variations themselves, they are sensitive to the temperature of the space they are found in. LED bulbs have been found to fail when placed in an environment presenting a higher temperature. In some spaces, LED bulbs will need a heat sink to be added so that they can be kept cool. •
Rental Housing Journal On-Site · May 2018
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T
Executive Director – Jim Wiard • Board President – Sheri Druckman, CAPS • Vice President – Laura McGuire, CAPS Treasurer – Mike Simons • Secretary – Shar Eller • Vice President of Suppliers Council – Kenneth Baff Immediate Past President – Becky Sanders, CAPS
Eviction: The National Debate Heats Up
he rental housing industry understands that supply-demand imbalance has caused rents to rise faster than wages in many areas of the country in recent years, including Seattle and elsewhere in our state. In addition, unnecessary building regulations, outdated zoning codes, increases to expenses such as property taxes and utilities, high land prices and general opposition to apartments raise construction costs, which in turn leads to increased rents. Affordable housing is a significant and growing challenge for Americans. The demand for affordable housing cannot be met by government programs alone. Partnerships between the public and private sector are critical in reaching the shared goal of providing safe, affordable housing for all Americans. 39 million Americans call an apartment home. Today, demand for apartments is at unprecedented levels as the number of renters has reached an all-time high. America’s affordable housing shortage is both an income and a supply problem. The U.S. will need at least 4.6 million new apartments by 2030 to meet the anticipated demand from
those wishing to rent their home. The need is for all types of apartments and at all price points. The growing demand for apartments - combined with the need to renovate thousands of apartment communities across the country – will make a significant and positive impact on our nation's economy for years to come. The apartment housing industry provides 512,000 apartment homes to more than 946,000 residents in Washington state. The apartment industry contributes $20.7 billion to the economy in our state and supports almost 200,000 jobs. The need to address housing affordability has policymakers looking for symptoms to address rather than addressing the need for more housing. A trend the National Apartment Association (NAA) is witnessing across the country is a new publicized criticism of evictions and their effect on a local community. Some jurisdictions are targeting owner and operators’ eviction screening policies and the laws that allow an owner to deny housing based on eviction history. According to tenant advocates, eviction laws are barriers to
housing choice and opportunity and could have fair housing or disparate impact implications. The eviction process has long since been a focus of tenants’ rights activists and state and local policymakers. It has gained renewed fervor following the release of Harvard sociologist Matthew Desmond’s book, “Evicted: Poverty and Profit in the American City.” In the words of Desmond, “If incarceration had come to define the lives of men from impoverished black neighborhoods, eviction was shaping the lives of women. Poor black men were locked up. Poor black women were locked out.” This book is generating widespread media attention of evictions and eviction policy and serves as a call to action to both tenants’ rights groups and elected officials to examine current laws. There has been recent coverage in the New York Times and other outlets concerning the nation’s “evictions crisis”. The overarching theme of these articles is to promote Matthew Desmond’s newly released research on evictions. Through Princeton University’s Eviction Lab, Desmond and his team have unveiled a national
database of eviction records across the country. The public website instructs users to utilize the tools on the site to “Find out how many evictions happen in your community. Create custom maps, charts, and reports. [And] [s]hare facts with your neighbors and elected officials.” The NAA expects an increase in media attention and possibly a legislative reaction as the national debate over evictions heats up. After the original release of Desmond’s book, NAA saw an increase at the federal, state and local levels of government to change eviction policy. Apartment owners and operators are in the business of providing safe, professionally maintained housing of good quality to renters. Owners and operators enter into contractual agreements (rental agreements) with renters to provide this service in exchange for rent. These contractual agreements require both parties to abide by certain obligations that protect and secure owners’ assets against damage or loss and ensure the safety and security of its ...continued on page 17
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Rental Housing Journal On-Site
How to Save Money and Water in Apts. By John Triplett Rental Housing Journal
H
ow to save money and water in apartments is the passion of entrepreneur Richard Lamondin Jr., who has founded a company to take on the challenge of both saving water and helping apartment owners, landlords and property managers make their apartment communities more green and eco-friendly. In an interview with Rental Housing Journal, one entrepreneur, who is in the middle of a large 10-property project in Dallas to help the Dallas-Fort Worth area with water conservation, talked about his passion and his company. The project is expected to save multifamily properties there an estimated 108 million gallons of water this year alone. The company is expecting to save two billion gallons of water over time.
How leaking toilets are key to saving money and water in apartments “My brother and I grew up with a father who is a real estate developer, so we basically grew up on construction sites,” said Richard Lamondin Jr., CEO of Ecosystems. “But we are also environmentalists. We began researching the water situation here in the U.S. and found that 20 percent of all toilets in the U.S. right now are leaking as much as 200 gallons of water a day. “I can go on with the numbers, but homes waste one trillion gallons of
The Ecosystems team in Houston where they did 1,300 bathrooms. Lamondin is back left top.
water every year. So while we're trying to find solutions on the grand scale, a lot of times what's being overlooked is the basic building block of water usage in apartment communities, which is the bathroom,” he said.
Seattle and Atlanta two of highest cost cities Atlanta, Georgia and Seattle, Washington have some of the highest water rates in the country at $325.52 and $309.72 per month for a family of four, respectively, according to a Michigan State University study. “These rates are based on 100 gallons (378.54 liters) of water per person per day including water, sewer and storm water for 5/8 inch (15.875 mm) meters. It is likely these rates will rise as the cost of providing water increases.” The Michigan State University study, called “Affordable Water In the U.S. – A Burgeoning Crisis,” says “If water rates continue rising at projected amounts, the number of U.S. households unable to afford water could triple in five years,
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to nearly 36 percent.” So Lamondin said it's actually a growing problem not just for apartment owners but “pretty much anyone paying their water bill right now because of our aging infrastructure and certain stresses on the water supply.” “I think part of the reason why we've actually seen a lot more interest in water conservation over the last few years is the fact that it's hitting people's pockets in a meaningful way,” he said.
Apartment bathrooms are the initial focus “We audit a property’s water usage,” Lamondin said. The audit is based upon the building structure plus any potential local incentives and other contributing factors. Then they create a program based upon that property. “Most of the time what that includes is full replacements of all water-using fixtures in the bathrooms and kitchens. So we'll change out toilets, shower heads, sinks, or even just the sink aerators ,” Lamondin said. They also inspect the apartment community looking for: • Any sinks, tubs, valves and supply lines that may have an existing leak • Any ground leaks throughout the property ”It’s very common to come across toilets that use three-and-a-half gallons per flush. Now those toilets were manufactured usually in the 70's and 80's and haven't been changed since.” And when the company is done, “We're really saving anywhere from about 30 percent to as much as 68 percent off of water bills,” Lamondin said. Installing new toilets without disrupting tenants “These days, you're getting toilets that are flushing 0.8 to one gallon per flush with more power than those big guzzling fixtures. It is basically a simple math problem. “If you take a three-and-a-half gallon per flush toilet and cut 75% off its water use, it's going to save you money. The same thing in the shower heads. A typical shower head uses two-and-ahalf gallons per minute. We typically put in one-and-a-half gallon per minute shower heads, and that saves 40 percent off their shower usage right there. “We try to make conservation unavoidable. We do not seek to disrupt any person’s daily routine, that's really embedded in our philosophy,” Lamondin said. “Sometimes we find some fun things when we lift up the toilets. And, that is another added value of the program. “For instance, we may lift up the
fixture and find there's a rotted floor under there. Or, there's some cracked item or a leaky valve that may in the future cause a catastrophic leak. So we go in and harden those properties against those leaks in a multi-floor building. “We're in and out usually within half an hour or 45 minutes, very quickly. We try to disrupt residents as little as possible. I would say that a lot of times the management, especially property managers on site, really appreciate the efforts we go through to handle that. We have their maintenance teams opening doors for us. We have a member of the staff with us at all times so residents see a friendly face. We really make an effort to make this a positive project,” Lamondin said.
Big projects around the country to save money and water in apartments Lamondin said his company works with another company called BH Management Services, LLC which has expanded to a nation-wide project. “We're doing more than 14,000 bathrooms with them over the next year nationwide. In Arizona, we did 4,400 bathrooms in the fourth quarter of last year. We're still working on getting the savings numbers off of that, but they're going to be saving hundreds of millions of gallons of fresh water. I have no doubt about that,” he said. Denver project provided return on investment in nine months “Last year we did a project in Denver for one property.” Lamondin said. “It used to be called the Breakers and now it's called Tava Waters,” and is managed by BH Management Services. “It was about 2,500 bathrooms in one shot. We did it in three months. Denver Water didn't think we could do it in five months. They gave our clients the largest rebate in Colorado history. it was about $376,000 on that project. Their return on investment (ROI) was about nine months. “This was the largest toilet rebate we’ve ever done,” Jeff Tejral, Denver Water conservation manager, said in the great toilet payback on the Denver Water site. “It was an impressive project, and they’re saving a lot of water by using some of the most efficient toilets available.” Denver Water estimates that Tava Waters will save around 33 million gallons of water each year by making the changes. Before the changes, Tava Waters residents were using about 51 gallons per person, per day; after the renovations, each person is using around 33 gallons per day. The practical side of working with a single vendor Mike Watkins, Director of Construction, West, for BH Management Services, said, “In the very beginning of an acquisition or refinance, we're working with an engineer on a green study report to identify the different items and areas where there could be efficiencies, electrical or water. A lot of our projects to date have been focused around water savings. ...continued on page 13
Rental Housing Journal On-Site · May 2018
Rental Housing Journal On-Site
Dear Maintenance Men By Jerry L'Ecuyer & Frank Alvarez Dear Maintenance Men: I own a small apartment complex that I manage myself. The property is starting to experience repetitive sewage backups. I’ve called the plumber several times and the problem is never resolved. The plumber is recommending the installation of a 4-inch main line clean out, running a camera down the line and few other things. It is all starting to sound expensive and I don’t know what to do. Why can’t the plumber just do the job right the first time? Bryan
Dear Bryan: Your plumber is giving you good advice. Using the camera will determine exactly what the problem is and will help you decide the best course of action to solve your plumbing problem. We highly recommend adding an exterior mainline clean out. In the long run, a 4-inch clean out will save you money by making the plumber’s job easier to do. The plumber can run a larger snake without going on the roof or removing a toilet or disturbing the residents. The 4-inch clean-out is key to help keep your drains clear on a preventive maintenance basis. We would follow the advice of your
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plumber and get bids on: 1. Running a camera down the line to determine the actual cause of your problem i.e. Roots, sewer line break, corroded pipe or cracks, etc. 2. Install a 4-inch main line clean out with street sweep and repair the sewer line as needed. 3. On a preventive maintenance basis, Hydro-jet annually to clean your main line. This work may not be cheap, but in the long run you will benefit from lower plumbing bills, late night emergency calls and happier residents. Dear Maintenance Men: How do I safely remove a large mirror from a bathroom wall without shredding myself or my helper in the process? Tom Dear Tom: Removing a large piece of glass or mirror can be spooky. Safety first, be sure you are wearing eye protection, gloves and a sleeve long sleeve shirt or jacket. Next, use duct tape diagonally in both directions on the face of the mirror. This will help keep the mirror whole if it cracks or breaks. If the mirror is glued to the wall; cover the glass with a blanket or tarp and tape it to the top edge of the mirror. Be sure to cover the entire mirror top to bottom. You are now ready to remove the mirror and should it shatter, the blanket will contain the shards, protecting you and making the clean-up much easier. Dear Maintenance Men: What is the normal time frame for a one or two bedroom make ready? I have always heard the three-day rule to get an apartment ready for rent. My units seem to be on the three-week rule! How can I tighten up the process and turn my units faster? Martin Dear Martin: The “Three-Day Rule” is a nice goal to strive for and can be done. But, most units are not in rent ready condition when we get them back from our departing residents. Here’s a useful
Rental Housing Journal On-Site · May 2018
time table and work schedule for a one or two bedroom apartment requiring complete paint, carpet, flooring, minor repairs, window coverings and cleaning. Day 1 & 2: Paint prep, trash out, minor repairs, removal of blinds, drapes, switch outlet plates etc. Day 3: Paint Day 4: Carpet/Flooring Day 5: Installation of window coverings, doorstops, switch/outlet plates, fixtures, accessories, toilet seat etc. Touch up paint if needed. Day 6: Cleaning – General cleaning including windows & final inspection. If you have done a per-inspection of the unit before the resident moves out. You can plan what needs to be done before the unit is vacant. Organize the maintenance techs and contractors ahead of time. Have all the repair and replacement parts ready to go. The key is to plan each day and try to stick to the plan. WE NEED Maintenance Questions!!! If you would like to see your maintenance question in the “Dear Maintenance Men:” column, please send in your questions to: DearMaintenanceMen@gmail.com If you need maintenance work or consultation for your building or project, please feel free to contact us. We are available throughout Southern California. For an appointment please call Buffalo Maintenance, Inc. at 714 956-8371 Frank Alvarez is licensed contractor and the Operations Director and co-owner of Buffalo Maintenance, Inc. He has been involved with apartment maintenance & construction for over 20 years. He is also a lecturer & educational instructor and Co-Chair of the Education Committee of the Apartment Association of Orange County as well as being Chairman of the Product Service Counsel. Frank can be reached at (714) 956-8371 Frankie@BuffaloMaintenance.com For more info please go to: www.BuffaloMaintenance. com Jerry L'Ecuyer is a licensed contractor & real estate broker. He is currently on the Board of Directors and Past President and past Chairman of the Education Committee of the Apartment Association of Orange County. Jerry has been involved with apartments as a professional since 1988.
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Rental Housing Journal On-Site
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Rental Housing Journal On-Site · May 2018
Rental Housing Journal On-Site
Save Money and Water ...continued from 10 “EcoSystems really stood out to me,” Watkins said. “I was involved in the Denver project where we had a short time frame of less than 90 days to do about 2,500 bathrooms. When I got involved with the program, and looked at how to roll this out nationally, we asked ‘Does it make sense to have multiple different vendors throughout the country doing it, or does it make sense to work with one vendor who has it down?’ “Based on their response and how they performed on the project in Denver, it was a no-brainer to work with them on the project nationwide That way, we have similar crews going on site and into tenant’s units, rather than having multiple different vendors. This has allowed EcoSystems to become more efficient working with our projects and our managers to continue to deliver a high level of customer service to our residents. ,” Watkins said.
Freddie Mac Green Up Program for borrowers “BH Management has the Denver property but also 269 properties and just over 80,000 units under ownership and management,” said Kate Miller, Senior Asset Manager for BH Management Services. “We started participating in the Freddie Mac Green Up program when it was initiated in early 2017. The benefit here is Freddie Mac recognized that in most multifamily apartment communities, the tenants paid their own utilities such as electric, gas, water, etc.. Previously, multi-family investors didn’t have a strong motivation to focus on green improvements. However, Miller said, “We are always cognizant of our footprint. We want to save resources, both utility-wise and financially, and we're always trying to do the right thing. We’ve taken full advantage of the Freddie Mac loans since they were introduced, which provide for funds to be rolled into the loan at favorable loan rates to implement green initiatives within the individual units. “It's a program that we're really excited about,” she said. Of their 269 properties “we've got 55 properties to date that are participating in the Green Up initiative. It's really something that we're proud of. It takes a lot of work. It takes a lot of logistics. But it's fun to see these projects wrap up. EcoSystems been very helpful to us in tracking, so going forward we'll be able to see the benefits of the investments being made in these properties,” Miller said. City rebates make a difference “Municipalities often offer rebates to encourage owners to participate in energy saving practices ,” Watkins said. “Denver had a phenomenal rebate. It basically paid for more than half of the project, which was fantastic.” “In Phoenix, we've taken advantage of smaller rebates; every market and county has their own standard for what is offered. But as far as all the cities, between Phoenix and Tempe, everything was fine. I can’t think of anything that stood out to me, where it didn't go smoothly,” Watkins said. Return on investment for apartment owners Apartment owners can finance much of the cost for the water saving initiatives.
“Right now, there's a fantastic financing opportunity through Fannie Mae and Freddie Mac for any owners purchasing or refinancing,” Lamondin said. The programs go by different names, but “they all boil down to basically green loan programs.” “And for owners, that can save 25 percent on their utility costs. They're able to receive significant reductions of up to 30 basis points on the loan in basis points, basis point discount, sa well as receive back much of the cost of the project that they implement through rebates.” Whose quote is this? “So, for example, that project in Denver was one of the early ones for that program, and they received, I don't know officially how much, but I think about 30 basis points off of their loan in addition to the water savings. We've seen a lot of growth and a lot of large owners taking advantage of this program lately,” Lamondin said. “I'd say about 18 months is our average ROI. We've had as quickly as three. When we do our due diligence, we ask the owner what their tolerance is in terms of an ROI. And if it goes above that - it's the least favorite part of my job - but we recommend not performing projects if something doesn't meet roughly about a 24- to 36-month ROI. “We really understand the importance from a business perspective in doing this work. But I would say right now anything built before 2000 has significant potential from a conservation standpoint. And there's about 20 million or so bathrooms in the U.S. that meet that criteria just in the multifamily industry,” he said.
Owners saving 35 percent to 68 percent “It really all depends in terms of consumption, the amount of gallons saved, but we're pretty steady on that savings number,” Lamondin said. “A lot of times the way bills are structured and this is something that we teach our partners - is a large determining factor in how much savings in dollars are achieved. “For example, you have things on your bill like a storm water charge that no one can affect. However, you also have consumption charges based on the number of gallons. That's where we really hone in. And a lot of times people don't understand how much of the bill they can actually affect. And so we do a lot of educating on understanding both opportunity and liability from a utility standpoint,” he said. Millennials like apartments to focus on green initiatives So for example, for BH Management, “We did a projection that they're going to save about 400 million gallons of fresh water annually and just from the projects we're going to do for them within a calendar year,” Lamondin said. “Those are significant numbers that continue to build on each other. “I'm 30. A lot of times people in my generation do care that the place they live is doing their part to keep and stay green,” Lamondin said, and the key is to save money and water in apartments.
Rental Housing Journal On-Site · May 2018
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Rental Housing Journal On-Site
Portland Tenant Relocation ...continued from 1 permanent and extended its application to landlords who own as few as one rental unit. “A copy of the ordinance is available at Ordinance 188849 . (“The Ordinance”). Last year, my clients initiated an action challenging the ordinance on several grounds. The Multnomah County Circuit Court dismissed those claims, but the judgment is currently on appeal. My clients have recently filed our opening briefs with the Court of Appeals. An amicus brief has already been filed on our behalf. The following is a summary of our more significant points: “The legislature has determined that rent control is a matter of statewide concern and proclaimed that no local government may enact any ordinance that either “controls the rent that may be charged for the rental of any dwelling unit,” ORS 91.225(2), or that is inconsistent with that prohibition, ORS 91.225(7). Notwithstanding the legislature’s unambiguously expressed intent to preempt local rent control legislation, the City enacted the Ordinance, which requires landlords to pay thousands of dollars to tenants upon the tenants’ demand when a landlord gives notice of a rent increase of 10 percent or more in a 12-month period—meaning the Ordinance penalizes rent increases that cumulatively total 10 percent or more in any rolling 12-month period.
Tenants not required to use the money for relocation “The Ordinance calls the payments “relocation assistance,” but tenants are not required to use the money for that or any other designated purpose. Further, the requirement to make the payments is triggered solely by the size of the rent increase and is intended to limit those rent increases. By penalizing rent increases greater than a certain size, the Ordinance is designed to control the rent that may be charged. Accordingly, the Ordinance runs afoul of ORS 91.225(2) and ORS 91.225(7) which forbid the rent control aspects of the Ordinance. “In a separate provision, the Ordinance also imposes payment requirements when a landlord issues a “no-cause stated” termination; that is, the landlord exercises her state-granted right to terminate a periodic tenancy by giving notice without having to state a reason for the termination. See ORS 90.427. Under the Ordinance, a landlord cannot give notice and regain possession of the property at the end of the notice period, as the legislature has chosen to allow. “Instead, the Ordinance requires a landlord to give more notice than state law requires and also to pay thousands of dollars to the tenant before the landlord may regain possession. Given those requirements, the Ordinance is incompatible and with and contrary to
ORS 90.427 and is preempted for that reason. “The Ordinance has yet a third provision that state law preempts. Where a landlord and tenant have a fixed-term lease, the Ordinance requires the landlord “to renew or replace an expiring fixed-term lease on substantially the same terms except for the amount of Rent or Associated Housing Costs” or pay relocation assistance to the tenant. That requirement destroys the very essence of a fixed-term lease, which by definition terminates without further notice or obligations. The Ordinance’s fixed-term provision is incompatible and cannot operate concurrently with state law authorizing fixed-term leases. “Finally, the Ordinance, in violation of the Oregon Constitution, impairs existing contracts because it applies retrospectively to contracts entered into before the Ordinance was adopted. “Before the Ordinance, landlords could raise rent or issue a no-cause stated termination without penalty. Tenants also had an obligation to vacate the premises upon expiration of a fixedterm lease. The Ordinance dramatically changes the landlords’ rights and tenants’ obligations by imposing significant penalties if landlords exercise their preexisting contractual rights, unconstitutionally impairing the parties’ contracts. “Needless to say, we feel we have a
good chance of prevailing in the Court of Appeals. We anticipate that your City Council members might be approached by tenant advocacy groups urging they emulate Portland’s current regime. We therefore thought you would have an interest in following the progress of our appeal since the outcome will, no doubt, impact whatever proposed ordinance your city might consider. Below are links to our opening brief and to the amicus brief which has recently been filed. •
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Rental Housing Journal On-Site · May 2018
Rental Housing Journal On-Site
Accommodating Disabled Tenants in Your Rental Property
A
s a property manager it is fundamental to understand the laws pertaining to disability and accessibility for prospective disabled tenants. The maintenance checkup from Keepe this week involves 15 maintenance ideas to make your property more accessible to disabled tenants. Researching and studying actual accessibility law should be a priority to prepare and protect yourself. The Fair Housing Act and the Fair Housing Amendments Act make it unlawful to reject a prospective tenant because of their disability as you know. However it also prohibits asking a prospective disabled tenant about whether they are disabled and about the nature of their disability, visible or not. While such questions are unlawful, the law allows for clarifying whether a prospective tenant qualifies for demanding a rental unit designed for disabled tenants only, or for a unit designed to accommodate certain disabilities in particular. Accommodations are a core element to accessibility law. The law states that disabled tenants may request reasonable accommodations to be provided, added or allowed for them to use and access their living space and common areas
within the property. Disabled tenants request for accommodation should be reasonable Accommodating Disabled Tenants In Your Rental Property The nature of the accommodation requested should exhibit a reasonable relationship to the disability. Such reasonable requests include allowing a service animal to live on the property or a designated parking space. To handle requests properly, it is fundamental to have an open discussion with a tenant regarding their needs. Deciding what represents a “reasonable” request can be challenging considering that it can vary from case to case and property to property: the US
Rental Housing Journal On-Site · May 2018
Department of Housing Development requires a “interactive process" for reaching a reasonable compromise between a tenant and property manager/landlord/owner, generally justifying the rejection of demands for certain accommodations only when they represent an “undue” financial burden. Accessibility Through Property Modifications Requesting or making changes to a property fall into the category of “reasonable” requests that may or may not be granted. Before any modifications can be made, they must be approved by a property manager/ landlord/owner in charge, who can
ask the tenant to provide information regarding how proposed changes are necessary and/or ideal for them. State laws can also apply to residential requirements, and should be considered when handling a request for building modifications. Why You Should Invest In Accessible Modifications Accommodating Disabled Tenants In Your Rental Property Generally, unless a property is considered to be federally assisted housing, disabled tenants are expected to arrange and pay for necessary modifications to the property. This being said, the following 15 tips have been provided to make residential units safe and accessible for prospective tenants who are disabled or who have particular needs pertaining to mobility and access. These changes can be significantly beneficial. It can make a rental property particularly appealing for tenants who value living in an accessible and safe space. Considering that disability law is more lax and challenging to apply uniformly for residential spaces, disabled tenants will likely also value ...continued on page 22
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Rental Housing Journal On-Site
253-565-2488 16
Rental Housing Journal On-Site · May 2018
Rental Housing Journal On-Site
Real Estate Exit Strategies By Cliff Hockley, President Bluestone and Hockley Real Estate Services
available to an investor as they plan to exit their real estate investments. • They can pay taxes when they sell it • They can hold on to their property (not sell it) and leave to heirs • They can use a 1031 exchange to trade into another property • They can sell their property and trade into a Delaware Statutory Trust • They can trade their property into a Tenant in Common (TIC) investment • They can donate to a Charitable Remainder Trust • They can sell and carry the paper (using a contract or a trust deed) also known as an installment sale
Holding the Property Retaining your investment: Most investors have had success with this over the last 10 years, as the Federal Reserve kept lowering interest rates and they could refinance at equal or lower rates. As we move forward, and inflation looms and interest rates increase, this strategy may not be as viable or profitable.
Paying taxes The investor can convert their assets to cash and reinvest. Pros: 1. The investor does not have to manage those assets anymore or deal with the property problems, tenant issues, and ever-changing laws 2. They have cash to gift to their heirs
Use a 1031 Exchange Selling your property and purchasing another using a 1031 exchange will delay the capital gains and other taxes you might have to pay. Pros: The investor can go about this in many ways using: 1. Forward exchange
incentive for owners and operators to file for eviction except as a last resort when a lease has been breached, most often for nonpayment of rent, or for jeopardizing the safety or disturbing the quiet enjoyment of others at the apartment community. An owner or operator must fulfill their financial obligations, including, but not limited to, maintenance expenses, capital improvements, mortgage payments, utilities, insurance premiums, payroll and property taxes, even if a resident fails to pay rent or fulfill their agreed upon responsibilities under a lease. The National Apartment Association opposes all efforts to seal records or limit property owners and managers’ ability to screen applicants for evictions, which is a fundamental right of property owners and a reasonable practice to ensure availability of good housing opportunities for all. The rise in rent is not directly tied to the number of evictions. Everyone deserves a safe, comfortable place to live, which is why the industry is committed to working with lawmakers at every level to boost construction and meet the country’s demand for apartments. The apartment housing industry works with many community organizations to prevent and end homelessness. Residents facing eviction may choose to hire an attorney to help them navigate the legal system. There are many resources available to residents who may be facing an eviction. Housing providers screen prospects to maximize the likelihood that a Lessee will honor the entirety of the lease term. Violations of the lease, either through prohibited behavior or violation of the obligation to pay rent, adversely affect both landlords and tenants. Rental Housing Journal On-Site · May 2018
No housing provider wants to evict their resident. Advocates claim that there could be disparate impact implications from evictions, having a disproportionate negative impact on protected individuals under the federal Fair Housing Act. The American Civil Liberties Union (ACLU) of Washington emphasized this point, even citing Desmond, in their complaint against a Renton property owner in federal court. The case was the first to challenge apartment owners’ screening policies related to evictions. The ACLU argued that an owner should not have the ability to deny housing indiscriminately based on any prior eviction proceedings of the resident. In an ACLU press release, a senior attorney with the ACLU Women’s Rights Project said, “These unjust screening policies mean that doors are slammed shut for families based on a prior landlord’s decision to file an
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eal estate investors are facing the interesting challenge of where to put their money once they have sold their real estate assets. As most of us have experienced when selling real estate outright, there are always the significant state and federal tax bills to be considered. Unfortunately, there is virtually nothing to trade into because investors are making money and are hesitant to part with a good thing. Many of these investors are baby boomers who are expected to live for another twenty or thirty years. Baby boomers are currently an average age of 55-70 years old, or birth years ranging from the 1940s to 1964.
What is an investor to do if they want to exit their real estate investments? Options There are other several options
or spend 3. They can gift the money to a charity Cons: 1. Capital gains taxes (federal and state), transfer taxes, depreciation recapture, and the 3.8% net investment gain tax add up.
2. Reverse exchange 3. Construction exchange Cons: 1. They only have 45 days to identify a property and 180 days to close, and that may not be enough time in a supply constrained market. 2. With the current supply being so limited, they might buy a lower yielding property or a property that is not of a quality (or in as good a location) as the property you are selling.
Trade into a DST The investor can place their money in a Delaware Statutory Trust also known as DST - similar to a tenant in common investments. Delaware Statutory Trusts or DSTs are an alternative for 1031 exchange investors seeking replacement properties offering the potential for monthly income and diversification without any on-going landlord duties. Pros: 1. They don’t have to worry about their sale creating a taxable event , since they can use a 1031 exchange to get into ...continued on page 20
Eviction ...continued from 9 residents, staff and property. As we’ve seen in the recent legal challenge to the City of Seattle’s First in Time Law, which was recently overturned by a judge as an improper government overreach, property rights are a fundamental pillar of our legal system and are commonly associated with the discretion to protect and secure those assets against loss. Seattle’s law prohibiting a landlord’s right to consider past criminal conviction history is also being legally challenged as unconstitutional and counter-productive to its stated goals. Prior eviction screening is a necessary function of the application process which helps owners and operators mitigate risk and ensure safety for its residents. In some jurisdictions, rental housing providers are obligated under nuisance abatement ordinances to screen and/ or evict individuals who engage in criminal behavior on the property or in activity that increases the need for response from law enforcement. Owners and operators require full access to a complete and accurate eviction history of an applicant without limitation on pending or previous filings. A full and accurate record gives owners and operators the most comprehensive picture of the applicant’s past behavior to determine his or her ability to pay rent. Rental history, including evictions, is just one part of the overall screening process. Limiting access to eviction records would have unintended consequences that will adversely impact low-income residents, such as greater reliance on financial records and credit history. The eviction process can be costly and protracted, and there is no economic
eviction case, not the applicant’s own actions. Qualified tenants should not be blacklisted because of an eviction case that lacked merit or is several years old.” The case was ultimately settled. NAA and WMFHA expects the issue of evictions to remain a top priority and will continue to monitor this emerging issue on behalf of our members. WMFHA remains open to continuing to work with our elected officials and policymakers to get housing policy right and to stop the band-aid patchwork of local and state policies that adversely impact the rental customers we serve. To get involved in helping to enhance our industry, call us at 425-656-9077 to join with us or go to www.wmfha.org to see how you can help. •
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Rental Housing Journal On-Site
Sue over Criminal Background the ostensibly blanket restrictions imposed by the City put rental property owners at too high of a risk of exposure to the safety of other tenants and their property,” RHAWA Interim Executive Director, Sean Martin, said in the release. “RHAWA supports second-chance housing and educates its members on HUD guidelines and state law which restrict how criminal records history may be considered, including an individualized assessment which consider factors such as the nature and severity of a criminal conviction,” Martin said in the release. The RHAWA and the Pacific Legal
...continued from 1
“Our members live, work, and own rentals in the local community. Our average member has roughly two rental properties, and are very much part-time landlords. They teach our children, they design our planes, and they drive our buses. Many who were born and raised in this area purchase property in Seattle to help put their kids through school and provide for themselves in their old age. “Our members provide the only organically affordable housing left in the city,” Shadbolt said
City has dropped the ball on housing affordability
pop landlords can no longer afford to operate their units,” Shadbolt said. “They're being forced to sell their rental properties in the thousands. Fatigued by over regulation and demonization, they've thrown up their hands and voted with their feet. “It's important to recognize that these tens of thousands of units have gobbled up by developers in large corporations, and turned into fancy condos and boxy town homes. The city council needs to understand they're causing a reduction in the number of housing units by these actions. “These laws are destroying the affordability in our city. Making criminals a protected class, and other ordinances like it, that makes the city council directly responsible for increasing people's rent,” Shadbolt said.
Questions and answers at the press conference Q: And what's our timeline? How long do these things take? What are our next steps? What can we expect going forward? Sean Martin of the RHAWA, left, Ethan Blevins and William Shadbolt Foundation held a joint press conference where they set out the reasons for the lawsuit and took questions from the media. “Pacific Legal Foundation filed a complaint to King County Superior Court challenging Fair Chance Housing Ordinance on behalf of the Rental Housing Association of Washington and three small time landlords: Chong and MariLyn Yim, Kelly Lyles, and Scott Davis,” attorney Ethan W. Blevins with the Pacific Legal Foundation said at the press conference. “The Fair Chance Housing Ordinance forbids landlords and organizations like RHA from asking about criminal background of housing applicants or denying someone tenancy on the basis of their criminal history. The law's intent is to help former convicts reintegrate. It's effect, however, is to deny landlords and screening organizations of their basic constitutional rights,” Blevins said. Blevins also explained the due process and free speech aspects of the complaint. “The due process claim argues that the Fair Chance Housing Ordinance pursues its objective in an unreasonable and unduly oppressive manner. The free speech argument says that the First Amendment embodies a right to receive information, and landlords rely upon that right when selecting their tenants. The city can and should help those emerging from criminal confinement, but it cannot do so at the cost of others' constitutional rights,” Blevins said.
Average RHAWA member landlord owns two rental properties William Shadbolt, President of the RHAWA Board of Directors, said at the press conference, “I'm a small time landlord. The Rental Housing Association represents the interests of independent rental owners. We're the small mom-and-pop landlords. 18
“Over the last few years, we're seen a barrage of legislative attacks on our industry by the City of Seattle,” Shadbolt said. “Rather than crafting policies to combat real housing issues, such as affordability and homelessness, the City of Seattle Council is more inclined to pass legislation that forces small mom-and-pop landlords to struggle to deal with larger societal ills that they're just simply not able to cope with. “If the city of Seattle is serious about reforming the criminal justice system, it should focus on reforming the criminal justice system. Continually adding regulations and cost to our local landlords does nothing to resolve the root causes of the injustices we all seek to remedy. “Prior to the passage of this legislation, the Rental Housing Association reached out to the city of Seattle and suggested a variation on a local Certificate of Restoration of Opportunity. This was something that RHA supported on a state level, and it was passed on the state level. So a person with a criminal record could apply to an impartial panel and get a certificate. They could then take that certificate to a small landlord. Unfortunately RHA found no willing partners on this solution,” Shadbolt told the press conference. “Our members are long time citizens of this city. Most of whom are concerned about reforms of the criminal justice system, and finding better opportunities to provide safe and affordable housing to everybody. We believe the best was to increase a housing opportunity is through partnership and the exchange of honest information, not through the concealment of public records,” he said.
Small landlords forced to sell their rental properties “The impact of this and other shortsighted ordinances passed by the city council is that thousands of mom-and-
the federal level, of why this country imprisons more people per capita than any other developed nation. It's just wrong. But putting the burdens on small landlords to deal with that symptom, rather than dealing with the cause, is not the way to do it. Q: The ordinance … makes no differentiation, in terms of criminal convictions, for, say, a pot conviction of a 21-year-old or a repeat assault conviction or domestic violence, somebody who's got multiple offenses, for example, who would have a serious impact on the way that you'd be able to operate your apartment building. There's no differentiation there? A: Blevins said, “That's correct. There's no consideration of the gravity of the offense. The only, very limited, exception is if someone's on the sex offender registry, and they committed the related crime as an adult, then if you can prove to the CR office for civil rights you have a legitimate business reason for denying them tenancy, then you can deny them tenancy because of that criminal background.” Q: But only for sexual offenders? A: Blevins said, “That's correct. Only if they're on the sex offender registry, and only if they committed that crime as an adult, and only if you can prove to the Civil Rights Office you have a good reason. In that context gravity of
William Shadbolt President of the RHAWA Board of Directors
A: Blevins said, “Well, this is a fairly straight-forward legal issue, so we don't, hopefully, have to go through the long process of discovery that you might typically have to go through. It's going to depend somewhat on the city's willingness to move forward at pace, so it may depend on the particular Deputy City Attorney that we have, but if it moves at the pace, for example, that the First-in-Time litigation went, then I would anticipate we probably have a summary judgment hearing in about six months or so.”
Sean Martin, Interin Executive Director, RHAWA
the offense is one of the factors the civil rights office will consider, but it's in this very, very narrow context.” Martin added, “I think one thing that people need to understand is that this is not the Wild West out there in the screening world, where landlords can just deny someone and have a blanket policy to say, criminal records I'm not going to even look at anything. We have the Federal HUD Guidelines that make it very prescriptive, and already you have to make the business case Q: In the media all the time you hear justification outside of Seattle, where constantly about the issues that special this law is not in place, as well as state populations not being able to find limitations on how far someone can housing. If this isn't the policy to help look back. So really if someone's saying folks with criminal records get more they were convicted of an offense 20 housing, what are the solutions? years ago, that's really not even in the A: Shadbolt said, “You know, we have discussion for being denied tenancy at an affordability issue because there just this point. It's too old of a conviction. simply is not enough housing. There So there are a lot of restrictions and is just not enough supply to meet the regulations in place already for how demand that we have in the city. So people are using criminal records.” that's kind of the affordability issue Q: How does this law affect the side of it. But if the city is serious about roommate situation? people with criminal records, they A: Shadbolt said, “We actually had a need to look at the criminal justice member who had a senior citizen, she system. Rather than going and putting was in her 70s, her rent had gone up, the burdens on small landlords, they mainly because of the property tax need to be asking questions, and on increases, and she asked her landlord Rental Housing Journal On-Site · May 2018
Rental Housing Journal On-Site
if she could have a roommate. The properties, and prior to the sale she landlord said, ‘Yep, that's fine.’ And the actually took three of her tenants to find tenant turned around and said, ‘You new places. That was their relationship. do a background screening if I find What happened after the sale, is that the somebody?’ And because of this law, rents went up because the new owner she couldn't do a background screening suddenly had a very large mortgage on criminal records, so they turned payment to make. Whereas prior, they around and said, ‘What happens if didn't. So those affordable units have we do a formal sublet. Can you do a just disappeared out of there. screening on that?’ And the answer “For the people that want to keep to that was ‘No’ because the only their rental units, I think they just need exception is owner occupied. So if you to contact their city council members. have a roommate situation where it's a Put it in writing that they're upset rental property, you cannot screen. So with these issues. We're open to any literally the people that you're sharing discussion of solutions that work for very close space with, you can't do it. both sides, but what it seems with the The upshot of what happened with that city council is ‘Let's put the burden on person, she moved out of the city. She the mom-and-pop landlords and let loved living in West Seattle. She could them deal with it.’ And the reality is, we walk to her doctors, she had all the supported the Housing Levy strongly. facilities here, but she ended up moving We think that the whole of society to Maple Valley to a small accessory should take responsibility for the issues dwelling unit because of this law.” that we have in the city, not just this one Q: Is the city considering any segment,” Shadbolt said. protections for landlords with regard Q: Did the city council come to RHA to potential civil action from a tenant and try to get input and sort of work who is harmed by a former criminal together on this Fair Chance Housing who has a violent past? issue, or did they just act alone in their A: Blevins said, “I certainly haven't offices? heard of any. One of the great ironies A: Martin said, “The ordinance behind this is the studies that the city was kind of born out of the process relies upon, one of the things that originally, and so a sub-committee is suggested by those studies, is that was formed. We're at the table for before this kind of burden can be placed that, but we're one of many voices, and on landlords, tort reform has to occur, when you have dozens of advocates because landlords can be criminally and one landlord organization at the or civilly liable for crimes committed table, you're not going to see equitable by tenants against other tenants. And legislation. And, in fact, what happened so, a lot of these studies have said, ‘If with this ordinance in particular, was we're going to do something about this, that council took the draft proposal, and force landlords to take individual which would have allowed a twocriminal backgrounds, or not allow year look back to still consider recent them to look at that, then we need to at convictions, they took that and just least reform tort law, so that they're not said ‘We're going to wipe everything going to be liable for crimes committed out altogether.’ So it actually was maybe by those tenants.’ “ even worse after hearing what our Martin added, “I would add to concerns were.” that ‘No’ there are no considerations Shadbolt added, ”So there was for landlords coming from the city, actually a panel public hearing last year and that's not something that's been that I was the only landlord on that discussed. And I wouldn't anticipate panel, and there was, I think there was the city going that direction, at least not about six or seven activists. I was quite in the current setting that we're in.” horrified that when a particular council Q: What can we, as citizens and member started to speak, her reaction landlords, do to express our discomfort was, ‘Isn't there anybody else other than the Rental Housing Association that and concern with this law? A: Shadbolt said, “Ultimately, a lot could be here?’ She simply just did not of our members have simply just sold want to listen to the small landlord's their properties in the City of Seattle. point of view.” Q: The criminals as a protected class So they just left the city. So that is a reduction of housing. And the impact in the ordinance, and combined with of that is quite dramatic. The people the series of other things that have that have single-family homes, they're been passed in recent years, do you see invariably becoming owner-occupied that affecting the standard that small as post rental properties. So they're landlords are using, for the criteria gone. The small two, three, four-unit that they're using in selecting tenants? buildings are getting scraped and For example, is the landlord making townhouses going up. You can go along it more difficult for maybe a middle of California and Fauntleroy Way and see the road tenant to access housing? tons of them have been built. And even A: Shadbolt said, “Absolutely. I'm a the small apartment buildings, what small landlord, and my rental criteria typically happened was that they were before First-in-Time came into effect artificially low rents. was half a page and it was pretty “There's a former board member that liberal. I've housed former offenders, had two small apartment buildings I've housed people in Section 8, people in Queen Anne, and her rents were with the Landlord Liaison Project. significantly below market. In reality, When First-in-Time came into effect she was subsidizing her tenants’ rents our half page of rental criteria went for a period of time. And she and her to five pages long. And I legally could family that had owned them for 40 or not rent to somebody if they didn't 50 years, just turned around and said, meet that threshold of those criteria. ‘We just can't continue.’ It's not just So even though the city has lost the the regulations that have already been First-in-Time lawsuit, but the house passed, which are onerous, it's what's appealed it, I'm looking at those and I'm going to be next? So she sold those actually probably going to keep most of Rental Housing Journal On-Site · May 2018
those additional rental criteria. I have to protect my property, and I have to protect the residents that are in my duplexes and the other units.” Q: So this is limiting access for maybe the middle- of- the-road tenants? Not just the criminals? A: Shadbolt said, “Yes very much so.” Martin added, “I hear that every day from our members. ‘If I can't run a criminal background check, and that was one of the criteria I relied upon, what can I look at instead?’ And things like credit score, that requirement goes up, employment references, income, things like that. So now not only is it probably still difficult for an ex-offender to qualify, you don't get to have the conversation with the person because the criteria are so much higher that they're not going to apply in the first place. And now you're disadvantaging other people who aren't even in the category that this law is intended to protect. Lower income individuals who effectively are being priced out, or kind of regulated out by the unintended consequences that we have.” Q: Why are the constitutional challenges important here? A: Blevins said, “The Constitution is a particularly good format for this kind of a law, because we have what I think are ultimately good intentions, where a city is so committed to its particular end that it's willing to go through an extraordinary means to get there. “And that's what the Constitution's built to prevent. So the Constitution limits the means the government can use to achieve certain ends. So there's no question that the government has a legitimate interest in preventing recidivism, helping people reintegrate into society who have been in criminal confinement for a long time, but to do so while imposing this extreme burden on a particular segment of society is directly contrary to what the Constitution built, which is a situation in which everyone's rights are due equal respect by the government. “Here, with this particular challenge, we're raising two constitutional issues: the speech issue and the due process issue. Due process just says you can't deprive someone of a property interest, like the right to lease their property to an individual that they choose with an informed decision making process. You can't take that property interest away from them without due process
of law, which means you can't do so in an arbitrary or unreasonable or unduly oppressive way, which is what occurs here, because there's no question that this is vital information that landlords want, and they have a right to access it. “And that's very similar to the speech claim, which is just that First Amendment has consistently been interpreted to mean you have a right to receive information, you have a right especially to receive information from public records, and that's consistently been held to be part of the First Amendment. And landlords rely upon that information to make really important long term decisions. And so they have a First Amendment right to seek that information, and screening companies have a First Amendment right to share that information, which they can't do under this ordinance,” Blevins said. Q: Are there any other cities or counties who've attempted this type of overreaching law? A: Shadbolt said, “Nope. First in the nation.” Martin added, “An outright ban of the use of criminal records, this is the first in the country. And we're seeing council push the envelope. Firstin-Time, first in the country. This is first in the country as well. That's just kind of the environment that we're in right now,” Martin said. Rental Housing Association of Washington with 5,300 members, is a statewide trade association representing landlords and property managers. RHAWA has existed in some form or another since 1935, starting out as a Seattle based association that grew into a regional resource throughout the Puget Sound area. In an effort to serve all those in the rental housing industry regardless of geographic location in Washington, RHAWA expanded to become a statewide association in 2012.
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Rental Housing Journal On-Site
Exit Strategy ...continued from 17 the DST. Cons: 1. 1031 DST properties are illiquid 2. 1031 DST investors invest in a pool with a sponsor and lose day to day control of their asset and money 3. Once the DST offering is closed, there can be no future contributions to the DST by either current or new investor. If there is a shortfall in cash or a need to deal with major capital improvements, such as a new roof or parking lot cash profits that should be going to your pocket, will be kept by the sponsor to bulk up reserves or to fund these capital improvements. 4. DSTs are hard to exit because the investor needs to find a new investor to take their position. There might be a discount from a buyer because they are a fractional investor and have no power to make any decisions.
Trade into a TIC They can trade into a “tenant in common (TIC) partnership, where a sponsor will assemble a group of accredited investors to share in the ownership of a property or properties. Pros: 1. Shared risk 2.Ususally an experienced sponsor 3. The investor does not have to be involved in the day to day operations of the property 4. There is usually an agreement when investors will exit the investment. 5. Regularly scheduled cash payments (return) and depreciation shelter for the investor 6. For an example of a lower risk TIC, logon to www.RockwellTIC.com They have two models: a. Invest cash and own a property with others that has no bank
loan on it b. Properties to invest in using money out of a 1031 exchange Cons: 1. Lack of investor control 2. Illiquid 3. No ability to impact the management of the investment
Donate to a Charitable Remainder Trust Charitable remainder trust: A charitable remainder trust (CRT) is an irrevocable trust that generates a potential income stream for the donor to the CRT, or other beneficiaries, with the remainder of the donated assets going to a favorite charity or charities. Pros: 1. First, after the investor has set up and donated to a charitable trust, they are allowed to take an income tax deduction and spread it over five years, for the value of the gift to charity. However, they do not get to deduct dollar for dollar the amount that they initially gave. Instead, the IRS calculates the total deduction as the amount they originally gave minus what they can expect to receive as a return through interest payments. For example, if they gave $200,000 but are expecting to get back $100,000 in interest over the course of their life, their total deduction would have to be $100,000. 2. Second, because the property given to the trust will go to the charity outright upon the investor’s death, the property will not be included in their estate for the purposes of determining their estate tax. 3. The charity will pay them, or someone they have named, a portion of the income that the trust funds accumulate. These payments will last for a set number of years, or for the
remainder of their life, depending upon how the documents were drawn up. The trust will end at the time of their death and the donated property will go to the charity. 4. It’s a perfect place to place assets if there are no heirs. Cons: 1. Its irrevocable – in other words it cannot be reversed.
Installment Sale (carrying the paper) Carrying the paper is most effective if a property is owned free and clear and not wrapped around an existing financial ( i.e. mortgage or trust deed) instrument - like a note and trust deed, or a mortgage - especially since most financial instruments prohibit the wrap. Pros: 1. The investor pays taxes only on the income received: Tax on the income received on the interest charged and capital gains taxes (on the reduction in principal of the investor note.) If the investor is retired and this is their major source of income, they might be in a lower income tax bracket for the investor income tax as compared to when they were working. 2. The investor’s tax on the principal will be the same but it is spread out over many years and by default puts the investor in a lover tax bracket if they are selling an expensive piece of property like a small office, retail or industrial building. 3. With a strong down payment (20 or 30%) investors have a solid income stream that they can control and thereby control your taxes as well. 4. The property typically will go up in value and so the risk reduces over time 5. If banks are willing to take the risk, why shouldn’t the investor? 6. Heirs can inherit the note. 7. In an emergency, the note can be sold on the secondary market with a discount if the buyer has been paying on time and the note is seasoned. Cons: 1. If your sale results in a loss, the investor can't use the installment method. If the loss is on an installment sale of business or investment property, they can deduct it only in the tax year of sale (unstated interest.) 2. They need a strong buyer 3. The investor needs to aggressively manage the terms of the installment sale to prevent a prepayment penalty when they are not ready to cash out 4. The investor has to keep an eye on the property to make sure the Buyer is taking good care of the investment - if the property needs to be repossessed for non-payment on the note, then they will not have to repair the property 5. The investor is the bank and need to be comfortable with foreclosing on the note if the Buyer does not pay 6. They need an experienced real estate attorney and may need a collection escrow account. Summary Taxes play a large role for most investors (especially if they have successfully traded up more than one time) - their existing basis is then carried forward to the next property
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and will affect the residual return when they want to sell. There are many ways for an investor to exit from an existing property. If they don’t want to pay capital gains taxes, their options are: • They can use a 1031 exchange to trade into another property • They can sell their property and trade into a Delaware Statutory Trust • They can trade their property into a Tenant in Common (TIC) investment • They can donate to a Charitable Remainder Trust • They can sell and carry the paper (using a contract or a trust deed) also known as an installment sale But, most investors have limited choices: • They can use a 1031 exchange to trade up • They can refinance to take out cash and purchase other investments • They can leave their properties to their heirs • They can use a charitable remainder trust to create an annuity • To carry the note, the property being sold needs to be free and clear of other encumbrances, most existing trust deeds and mortgages do not allow a wrap around the existing financing Every investor has a different set of circumstances that drive their decision-making process. It all depends on where an investor is at in their personal or business investment cycle. Are they holding on to the property? Reinvesting? Stepping up to larger or different property? Working through a partnership split? Diversifying or liquidating? Tired of owning the property? Investors must take the time to look at the various options, meet with real estate attorneys, CPAs, and real estate agents to listen to the many different ideas that are in the marketplace today to develop a successful strategy to exit their investments. Finally, I want to mention that when trading into another property via 1031 exchange, and trading up or into a different product class, an investor must make sure to do their research as they move into a product type they may not be familiar with. Not all NNN investments are great, not all mobile homes are home runs, nor are investments in other not as popular products, but a patient and thoughtful investor will see the best results. •
Text REALESTATE-ROI to 44222
Rental Housing Journal On-Site · May 2018
Rental Housing Journal On-Site
Can Tenants Have Multiple Assistance Animals? By Ellen Clark
B
y now you’ve probably figured out that complying with assistance animal requests is confusing and difficult. One of the situations that many people find particularly confusing is when there are multiple animals involved and an apartment complex that may have a one-pet rule. • Can residents have more than one assistance animal? • Can residents have pets and assistance animals?
Can a resident have more than one assistance animal? The Fair Housing Act (FHA) and Section 504 of the Rehabilitation Act of 1973 (Section 504) do not limit the number of assistance animals one person can have. Consider these assistance animals scenarios: • A person with a visual disability and a seizure disorder may use a guide dog to get around and another animal to be alerted to oncoming seizures • A person might need two assistance animals for the same task, such as two dogs for stability when walking If a resident requests multiple animals,
you may request documentation to show that each animal provides disabilityrelated assistance or emotional support. Remember that you can only request documentation for the animals where the disability-related need is not obvious or known to you. What if I have a one-pet policy and a resident with a pet requests an assistance animal, too? If a person with a disability has a pet and makes a reasonable accommodation request to have an assistance animal too, you cannot deny the request just because of your one-pet policy.
Remember, assistance animals are not pets. If the number of animals requested becomes unreasonable or you think it presents an undue hardship to your community, consult with your legal counsel to see if you can legally deny the request. Open communication with residents is best solution Remember, evaluating a reasonable accommodation request should be an individualized process with an ongoing dialog between you and the resident. Often people file discrimination claims because they don’t feel heard, don’t understand the process, or aren’t kept in the loop.
Don’t underestimate the importance of good communication as you navigate these complicated issues. 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. For nearly two decades, Grace Hill has been developing best-in-class online training course ware and administration solely for the Property Management Industry, designed to help people, teams and companies improve performance and reduce risk.
Capt. Robert Baldwin and 1st Lt. Gregory Caliwag, 88th Medical Center clinical nurses pet Bailey, a pet therapy dog from the Miami Valley Pet Therapy Association on July 21, 2017. Pet therapy dogs visit the medical center seven days a week to provide comfort to patients and staff members. (U.S. Air Force photo/Stacey Geiger) via creative commons.
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Rental Housing Journal On-Site
Accomodating Dissabled Tennamnts ...continued from 15 their ability to find a welcoming space that they can trust to accommodate their needs, often becoming long-term tenants. Finally, addressing accessibility improvements to a property in a proactive manner makes it possible to avoid being unprepared when a prospective disabled tenant makes requests down the road. 15 Maintenance Tips For Making a Property Safe And Accessible For Disabled Tenants 1. Repair or remove carpet flooring that has become loose, broken tiling and/or any kind of uneven, damaged pavement. 2. Pave all walkways and driveways to render them regular and obstaclefree. 3. Enlarge all doorways on both interior and exteriors to at least 36 in. wide 4. Consider installing automatic systems allowing remote opening of doorways, garages and gates 5. Install ramps on all multileveled access points; our experts encourage having a qualified urban planning professional inspect the property and recommend adequate placement of ramps 6. Replace door knobs with accessible flat handles 7. Install non-slip flooring in bathrooms, kitchens, exterior walkways and any other surface that is likely to become slippery when wet 8. Install grab bars in the bathroom, ensuring that they are placed at the correct height and that can support the weight of an average adult 9. Consider installing particular accessible fixtures - such as toilets
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and showers - or begin by lowering toilets and lavatories. 10. Accessible faucets are ideally switched on by motion sensors 11. Light switches should be lowered to be accessible for wheelchair users, or substituted for a motion-sensing lighting system 12. Mailboxes should be lowered or substituted for accessible models 13. If the unit is furnished, furniture arrangements should allow enough clearance for users of assistive devices to travel around comfortably 14. Consider implementing Smart technology home system; Smart tech automates several in-home, everyday tasks, which renders them accessible. Additionally, Smart tech is generally a worthy investment as it is a unique and practical asset for most tenants - regardless of ability. 15. Upgrade to a side-by-side refrigerator: especially if your property is due for replacing outdated appliances - which is a beneficial investment considering that most newer appliance models feature energy-saving features - side-to-side refrigerators are ideal as they allow easy access to both refrigerating and freezing compartments Keepe is an on-demand maintenance solution for property managers and independent landlords. The company makes hundreds of independent contractors and handymen available for maintenance projects at rental properties. Keepe is available in the Greater Seattle area,
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Rental Housing Journal On-Site ¡ May 2018
Rental Housing Journal On-Site
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Rental Housing Journal On-Site
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Rental Housing Journal On-Site · May 2018