Rental Housing Journal - On-Site - December 2013

December 2013 - Vol. 7 Issue 12

Rental Housing Journal On-Site

5 D&Z THINK This Holiday Season

17 Lessons from CT Fair Housing Case

6 Will the Home Sales Spree Soon Leave Owners Holding the Bag?

18 WASHINGTON APARTMENT ASSOCIATION

7 DEAR MAINTENANCE MEN

19 A Systematic Approach to Collections

8 Property Management Mind Mapping…And Loving It!

24 The Top 10 Apartment Resident Complaints

9 Are You Prepared for Winter?

O

14 WASHINGTON MULTI-FAMILY HOUSING ASSOCIATION – A Year in Review

ON-SITE

SEATTLE • TACOMA • OLYMPIA • EVERETT

Professional Publishing, Inc.

Gains Continue for Pierce, Kitsap and Thurston Counties Seattle - Apartment Insights 3rd quarter results show all three counties improving for the second straight quarter, according to Tom Cain of Apartment Insights. The data are from his Seattle firm’s statistics and trends on 50+ unit properties in Pierce, Kitsap and Thurston counties.

VACANCY: 5.10% The market vacancy for conventional, stabilized 50+ unit properties in all three counties is 5.10%, down from 5.59% last quarter. The vacancy rate was 6.74% a year ago. The vacancy rate for all properties including those in lease-up is 5.67%, down from 6.22% in the second quarter.

cy rate of any of the submarkets in Pierce County at 2.75%.

The University Place, Fircrest submarket has the highest rate at 5.47% vacancy.

Pierce: 4.86% This quarter's rate of 4.86% is virtually unchanged from last quarter.

This county has made steady improvement from the 6.74% vacancy rate a year ago.

Gig Harbor has the lowest vacan-

vacancy rate, 2.63%.

Professional Publishing, Inc PO Box 30327 Portland, OR 97294-3327

Kitsap: 6.47% The market in Kitsap County improved dramatically, down from 9.73% in the second quarter. A year ago the vacancy rate was 6.43%.

The most dramatic turnaround of any submarket in the three-county area occurred in Bremerton. The vacancy rate plunged from 14.11% to 8.31%. The Poulsbo/Bainbridge Island submarket has the lowest

Thurston: 4.97% Thurston County's vacancy rate dropped to 4.97% from 5.31%.

Thurston has had the best year-overyear performance. Its vacancy rate

Current Resident or

PRSRT STD US Postage PAID Portland, OR Permit #5460

was 7.36% a year ago.

Tumwater has the lowest vacancy rate of the three submarkets at 3.97%.

Lacy and Olympia are just over 5%.

RENTAL INCENTIVES Pierce: $13 per Month (1.51%) Kitsap: $23 per Month (2.52%) Thurston: $7 per Month (0.81%) The overall rate for rental incentives for the three-county area is 1.50%, down from 2.09% in the previous quarter. All three counties showed an improvement in this category.

Nearly 26% of the properties in the three-county area are offering incentives, an improvement from 30% last quarter.

Continued on page 3

www.RentalHousingJournal.com

SEATTLE • T

Be A Giving Landlord

T

he holidays are a time of giving and also a time of thanks.

To give to those, through gestures large and small, and thank others for their friendship, hard work, and good service. This holiday season I have decided to gift my tenants for their continued support and service.

Many landlords may consider this notion an absurd waste of money., and that is certainly their prerogative. But, I look at gifting the residents differently. I see this gesture as similar to a tip or a bonus. You tip for good service even though you’ve already paid for the meal. Most of us appreciate bonuses this time of year in our paycheck even though we have already performed the job that is expected of us. So, in addition to providing a nice place to live, why not give them a “thank you” for helping pay your mortgage, insurance, and property taxes?

I’m not talking about going in the red here. I have in mind a very corporate-like holiday card with a nice handwritten note inside.

Included in these generic cards will be a gift card of no more than $10$20 each for a local restaurant, coffee shop, or grocery store for which I will hand deliver. Hand delivered I said! Here is an opportunity to catch a glimpse of the outside of your property unannounced. Just because you’re doing something nice for the tenants does not mean you quit being a landlord.

Continued on page 13

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Rental Housing Journal On-Site • December 2013

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Rental Housing Journal On-Site • December 2013

RENTAL HOUSING JOURNAL ON-SITE

Gains Continue ...continued from front page RENTS: $869 per Unit Rents in the three-county area increased $8 to $869 per unit.

Pierce: $861 per Month Square Foot

$1.01 per

Kitsap: $911 per Month Square Foot

$1.07 per

Thurston: $869 per Month $1.02 per Square Foot Rents bumped up $16 per month in Kitsap, $10 in Thurston, and $6 in Pierce.

NEW CONSTRUCTION Featured in the photo, the 173unit Copperline opened in the second quarter. It is located adjacent to Puget Sound in Tacoma.

There are 800 units under construction in the three-county area, most of which are in Pierce. There are 580 units that have completed the design review process, and another 3,171 units that are in the earlier stages of the construction pipeline.

OBSERVATIONS This is the second straight quarter where all three counties showed improvement. The vacancy rate for the three-county area decreased to 5.1%. A 5% vacancy rate is considered a market that is in equilibrium, neither favoring owners nor renters.

We are about as close as we can get to this equilibrium point.

Rental Housing Journal On-Site • December 2013

The annualized rent increase this quarter is 3.7%. Rental incentives are down to 1.5%.

The level of new construction is modest, and shouldn't negatively impact the overall market.

Tom Cain of Apartment Insights Washington is a member of the nonprofit Central Puget Sound Real Estate Research Committee in charge of providing apartment rent and vacancy data. Tom has been a member of the Committee for over 25 years, and has been researching apartment market trends in the Seattle area since 1978. His company surveys the five counties in Central and South Puget Sound.

This article highlights survey results that subscribers can access from an online database of all 50u+ properties. Apartment Insights also provides customized rent reports and market reports. www.apartmentinsightswa.com 206-632-2220

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RENTAL HOUSING JOURNAL ON-SITE

THINK This Holiday Season

H

ello Property Management Industry! So, as 2013 comes to a close and we prepare for a prosperous 2014, the goal should be to minimize those “What Were You Thinking Moments”.

Budgets are complete, the cold weather and holidays are coming.

The office will be filled with deliveries of residents boxes with bows, complaints of appliances not working to prepare the holiday feast, slippery stairways, walkways and residents trying to heat their apartments with space heaters. Then you have New Years Eve and the day after, with remnants of sparklers (Fire Hazard) and recycling, guests sleeping it off at the pool, you know the drill. This is a “What Were You Thinking Moment” waiting to happen!

Dana and Zach, through years of experience navigating the end of the year blues while preparing to start the new year off with great success, have prepared a special holiday property wish list of things you hope will not happen; complete with helpful suggestions. This is a great way to provide your residents with helpful and needed information to have a wonderful holiday season!

D&Z – What Were You Thinking Moments

Dana’s list Remove the headache of the season for you and your residents by reminding them of best practices on the following: 1. All property staff should know all of this information as well as emergency shut off locations.

2. Office Hours – including holiday hours, when the resident can pick up packages and what they will need for verification 3. Rubbish & Recycling information – Remind residents of trash & recycling pick up days and if there will be additional pick-ups for trees and extra holiday recycling 4. Prepare Residents for Emergency – What to do in an emergency during business and after hours.

Incidents that can occur during the cold or inclement weather Emergency procedures and phone numbers, even if you think the resident has them, include: • Fire & Rescue for non-life threatening • Office and after hour contact

Instructions if no response in predetermined time • Home office contact • In case of a weather related power outage, have your electrical provider’s phone number available and remind residents not to use their stoves, or space heaters that do not automatically shut off if tipped over. Avoid candles and make certain they have working flashlights and batteries

sparklers (Fire hazard) remind residents to remember the quiet enjoyment for all residents • Parking is usually a headache over the holidays with visiting family and friends. Remind your residents the parking rules and guest parking Zach’s List

5. Hazards to Report for safety • Slippery walkways • Property lighting outages • Standing water that could freeze

8. Security- remember that even though you may feel safe and trust your neighbors always be diligent and smart. When unloading packages or groceries close and lock your car even if it’s a quick trip in and out.

6. Ventilation and moisture prevention suggestions due to cold outside weather & heated apartments • Fans in bathrooms • Wipe down window condensation

9. Unplug your Christmas lights at night, these little bulbs can get very hot and have a tendency to be in contact with flammable materials such as paper, needles, wood, and carpet.

7. Holidays – Each holiday presents its own harmful potential, we live with many on our properties and it is important to remind them of the following for a safe holiday season.

• Keep holiday trees watered, a dry tree is a fire hazard • New Years Eve present noise,

10. I am a big believer in AAA road service. If your car battery dies or you find yourself on the side of a road, you will have someone to call for help to get you and your car home safely. If you this is not an option for you, a pair jumper cables and a tow rope should be Continued on page 7

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RENTAL HOUSING JOURNAL ON-SITE

Will the Home Sales Spree Soon Leave Owners Holding the Bag?

H

as the housing market begun to plummet due to rising interest rates? Are rental housing values about to crash?

Those who read my articles know I’m frequently asking the questions that rental property owners and managers should also be asking. The answers are vitally important during these uncertain economic times. As of November 27, 2013 the yield on the 10 year Treasury bond sits at 2.74%. This is the benchmark interest rate impacting home mortgage rates, and it’s been stuck around this level for months.

This begs the question, “Will the Federal Reserve’s Zero Interest Rate Policy (ZIRP) prevent this important benchmark interest rate to move much higher?” Experts are divided on the answers. Only in hindsight do we really have a more accurate view of the numbers of houses that have been selling, whether ZIRP has contained longer-term interest rates, and whether rising mortgage rates have tamped down on new and existing home sales.

According to the National Association of Realtors’ (NAR) most

recent update and taking into account variations in all regions of the U.S housing market, pending home sales continued to move lower in October, marking the fifth consecutive monthly decline. The “Pending Home Sales Index, a forward-looking indicator based on contract signings, slipped 0.6 percent to 102.1 in October from an upwardly revised 102.7 in September, and is 1.6 percent below October 2012 when it was 103.8.

“The index is at the lowest level since December 2012 when it was 101.3; the data reflect contracts but not closings” according to the NAR. So the bottom line here is that housing prices continue to cool down after the big spike that began in the autumn of 2012 when Treasury bond yields and mortgage rates were at historic lows.

The NAR’s chief economist Lawrence Yun explained the situation this way, “…weaker activity was expected. The government shutdown in the first half of last month sidelined some potential buyers. In a survey, 17 percent of Realtors® reported delays in October, mostly

from waiting for IRS income verification for mortgage approval,” he said.

“We could rebound a bit from this level, but [the markets] still face the headwinds of limited inventory and falling affordability conditions. Job creation and a slight dialing down from current stringent mortgage underwriting standards going into 2014 can help offset the headwind factors,” Yun said.

A survey of real estate professionals validated the slowdown in market activity, but some surveyed view the slowdown as a “welcome brake” on the rapid home price growth that’s occurred when there’s been only modest growth in consumer incomes and jobs. Then there’s the all-important Housing Affordability Index.

Housing affordability decreased in the third quarter as home prices and mortgage rates were on the rise.

This left housing prices out of reach for more families, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index. The NAR also reported that housing affordability has fallen further to a five-year low

because home price increases have risen more than the average person’s income growth.

So if you’re a property manager and you have clients who have used leverage to finance their purchases of rental properties show your concern by asking if their financing interest rates will change soon. If interest rates on refinancing are much higher than when they originated their loans, it may be a good time to consider selling some rental properties to lock in gains and reduce their financing exposure.

Once again the housing sales numbers and the affordability index tell us all that fewer Americans can buy their housing and more will need to rent. That should be a big plus for the property management industry and their owner clients in the year ahead.

By Marc Courtenay in Real Estate PropertyManager.com a Service of AppFolio

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Rental Housing Journal On-Site • December 2013

RENTAL HOUSING JOURNAL ON-SITE

Dear Maintenance Men:

By Jerry L'Ecuyer & Frank Alvarez Dear Maintenance Men: Do you have a recommendation for exterior lighting that will make the property stand out from its neighbors?

Jorden Dear Jorden: We did a recent job involving half inch 120 volt LED rope light. The rope light was installed under the eaves and out of the way. From the ground the light appeared to emanate out from the eaves and down the walls. The light is indirect and made for a very interesting look.

The side benefit of the rope light was not only did it look great; it shed light in all the dark corners around the building. LED rope light is more expensive than the incandescent rope light, however, it is economical in the long run, it has a long service life and the rope does not get hot or even warm to the touch. (We DO NOT recommend incandescent rope light.) LED Rope light comes in 150 foot rolls and with the proper rectifier in place, up to 1200 feet can be used from one electrical source. The light comes in cool white, natural white and warm white along with a variety of colors. The rope light can be installed onto a plastic track to help keep it straight and to eliminate any drooping of the rope. Remember to pre-drill the track before installation. LED rope light is perfect for under stairs, balconies and anywhere you need soft indirect light. Keep in mind, it does not throw light very far and will not light up a courtyard, it is mainly for aesthetics.

Dear Maintenance Men: We are preparing to gussy up our rental property by adding crown molding in

each room. The quote I got from the contractor was astronomical! I want to teach my maintenance tech how to install crown molding, however after looking at molding how-to books and the internet, I am about to give up on the idea. It looks very complicated.

Can you help?

Ron Dear Ron: We know what you mean; anyone who has installed crown molding for the first time knows the frustration.

But it need not be! Crown molding truly is easy to install and yes, we said easy. Throw the book away; it only serves to show how smart the author is, but not very practical. We are going to describe a method that we learned long ago that absolutely simplified crown molding installation.

The key is to cut the molding in the same position that it will be install on the ceiling and to make visual samples.

It is important to make a set of sample pieces for reference.

1A: Inside corner: cut two 12-inch pieces of molding to use as a sample. Place that sample up on the wall and ceiling for a visual.

Now bring that sample to your saw and lay it to the left of the blade, against the vertical fence or backstop. Position the sample exactly in the same orientation or position as it was on the wall/ ceiling. (The sample piece will not be flat against the fence; it will stick out just like it does on the wall.) Now position your saw blade in the 45-degree posi-

tion and left of the center mark.

Cut the right side of your sample piece and label it Right Hand Corner Inside.

1B: Take the second piece of sample molding you cut and position it exactly like the first piece, but to right side of the blade. Put your blade in the 45-degree position, but this time it will be to the right of the center mark. Cut and label this piece Left Hand Corner Inside. Test your samples in an inside corner where the wall meets the ceiling. The two pieces should form a 90-degree corner.

2A: Outside corners: cut two 12-inch pieces of molding to use as a sample. Place that sample up on the wall and ceiling for a visual.

Now bring that sample to your saw and lay it to the left of the blade, against the vertical fence or backstop. Position the sample exactly in the same orientation or position as it was on the wall/ ceiling. Set the blade at the 45-degree position and right of the center mark. Position the sample to the left of the blade.

Cut and label Right Hand Outside Corner.

2B: For an outside left-hand corner, Continued on page 11

THINK ...continued from page 5 stored in your truck so that if a Good Samaritan is around to give assistance, you will have the right items. Don’t forget water, flashlights, batteries and a blanket, hopefully you won’t need any of these items, but just in case.

11.

Stay alert to those who take advantage of folks this of time of year when most of us are in a giving mood. Take your time and do some research to be sure that those who claim to be helping others and not just themselves.

12. Charge your cell phone and keep a mobile charger with you that you can use in your car or other power source. We are so connected to our phones, but all the browsing, GPS directions, downloading coupons, and seasonal event pictures can suck the life out of your battery, leaving you in a lurch late at night when you may need to make a real emergency call.

Rental Housing Journal On-Site • December 2013

13. Lastly be respectful of others. We tend to get going crazy and add stress to our days and many times the mass of people moving at different speeds throughout the city can cause us to be real Grinch’s.

Also, keep in mind that not everyone celebrates the season or have the same religious beliefs, so, just enjoy your family’s tradition whatever that maybe and be kind and courteous to others.

the crazy stories that can only happen in our industry. We would love it if you would share your stories and “WHAT WERE YOU THINKING” moments with us as well as questions that you need answers to. Dana can be reached

at: danabrown3321@gmail.com. Zach can be reached at: zach@aminstitute.net

Have a safe and wonderful Holiday season and a prosperous New Year!

Happy Holidays see you next year!

Dana & Zach

Dana Brown and Zach Howell have been working and training Managers and Maintenance staff in the property management industry for 20 + years.

They are excited to give back and share 7

RENTAL HOUSING JOURNAL ON-SITE

Property Management Mind Mapping…And Loving It!

by Ernest F. Oriente, The Coach {Article #213…since 1995}

T

he property management profession continues to be more complex and rapid planning seems to be a daily requirement.

When faced with a large project, when pressured to reach tall goals or even when you are trying to fix a reoccurring problem…Mind Mapping is the perfect tool. In this article, you will learn the three steps for creating a clear and well-organized front-end approach to resolving your most challenging problems or developing your most inspiring dreams! Mind Mapping will also allow you to discover new patterns, see untapped potential and link unforeseen ideas—an important concept we share in our book, SmartMatch Alliances.

Getting started: Begin by scheduling 15-30 minutes of uninterrupted time with no distractions such as ringing telephones, loud noises or knocks at your office door. Start with a blank sheet of paper and draw a large circle in the center of the page. Next, place the name of your project, goal, dream or problem in the center of this circle. Next, draw 10 or 15 lines around the circle, like the spokes of a bicycle wheel.

Lastly, on each spoke, list one idea or concept relating to the words inside the circle. Do not edit or judge the words you are placing on each spoke while you are brainstorming because you want to generate as many ideas as possible. Each spoke on your Mind Map will address: who, what, where, when, why and/or how.

Tip From The Coach: If you are an auditory learner rather than a visual learner you may want to use a tape recorder to build your Mind Map, then transfer your words to paper as the second step. If you find your ideas are not flowing, then take a break to refresh your mind or share

your progress with your manager, a peer or a close friend. Sometimes having another person’s perspective is just enough to get your creative juices flowing.

Developing your action words: With your initial Mind Map now complete, take a second sheet of paper and list the first “spoke” topic in the center of a new large circle and draw another five or seven lines around this circle. These lines are now the action words for completing your project, fixing a problem or realizing your dreams. When building these action words, do not make any quick assumptions but remain open to unusual ideas or solutions.

Try to look at this project or task from a different level by asking yourself, “How will this impact my residents, my property owner, the properties I manage or my leasing team?”

Tip From The Coach: Some of the best Mind Mapping is done when we look to other industries, other professions or other successful individuals and see how they have addressed a similar problem or opportunity. Many great ideas are just inches from where you are standing this very minute but you have to look closely and have your antenna up, to see and hear them. As a small step, try reading trade or business magazines unrelated to the property management industry and you will find that re-inventing the wheel is seldom necessary. Plus, exposure to new ideas in other industries will help you become a “Futurist” on your own behalf…a special trait!

Taking words to action: Now comes the fun part! Take each of your Mind Maps and put them in outline form. Next to each action word, place an action step and specify the exact date for completing each task or step. Also, if you are

going to delegate portions of this project, include the name of each person who will be responsible for a specific step and be certain they receive a copy of your Mind Map so they can be clear on the purpose of your request. Lastly, take the action steps you are going to personally complete and place them directly in your appointment book. By scheduling time for each step on your Mind Map you are bringing this project/dream/goal/problem to life.

Tip From The Coach: Once you have completed your first Mind Map, pause and reflect joyfully on what you have accomplished. This process is specifically designed to support your thinking process and will get easier and easier, with practice. Remember, Mind Mapping is meant to be fun and can be done in large groups, at your next big meeting or any time you need to visualize ideas quickly!

Want to hear more about this important topic or ask some additional questions about Mind Mapping? Send an E-mail to ernest@ powerhour.com and The Coach will E-mail back to you a free invitation to be a participant on a PowerHour conference call.

Author’s note: Ernest F. Oriente, a business coach since 1995 [31,120 hours], a property management industry professional since 1988--the author of SmartMatch Alliances--and the founder of PowerHour...[ www.powerhour.com and www.powerhourseo.com www.powerhourleadershipacademy.com and www.powerhoursalesacademy.com and www.pirmg.com ], has a passion for coaching his clients on executive leadership, hiring and motivating prop-

erty management SuperStars, traditional and Internet SEO/SEM marketing, competitive sales strategies, and high leverage alliances for property management teams and their leaders. He provides private and group coaching for property management companies around North America, executive recruiting, investment banking, national utility bill auditing [ www.powerhour.com/propertymanagement/utilitybillaudit.html ] national real estate and apartment building insurance [ www. powerhour.com/propertymanagement/ insurance.html ], SEO/SEM web strategies, national WiFi solutions [ www. powerhour.com/propertymanagement/ nationalwifi.html ], powerful tools for hiring property management SuperStars and building dynamic teams, employee policy manuals [ http://www.powerhour.com/propertymanagement/employeepolicymanuals. html ] and social media strategic solutions [ http://www.powerhour.com/ propertymanagement/socialmedialeadership.html ]. Ernest worked for Motorola, Primedia and is certified in the Xerox sales methodologies. Recent interviews and articles have appeared more than 7000 times in business and trade publications and in a wide variety of leading magazines and newspapers, including Smart Money, Inc., Business 2.0, The New York Times, Fast Company, The LA Times, Fortune, Business Week, Self Employed America and The Financial Times. Since 1995, Ernest has written 200+ articles for the property management industry and created 350+ property management forms, business and marketing checklists, sales letters and presentation tools. To subscribe to his free property management newsletter go to: www.powerhour.com.

PowerHour® is based in Olympictown…Park City, Utah, at 435-6158486, by E-mail ernest@powerhour.com or visit their website: www.powerhour. com

ON-SITE Rental Housing Journal Colorado Publisher Will Johnson • will@propubinc.com Designer Steve Olsen • steve@propubinc.com Advertising Sales Will Johnson • will@propubinc.com

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

8 #

Apartment Manager • October 2013 2008 RentalMetro Housing Journal On-Site • December

RENTAL HOUSING JOURNAL ON-SITE

Are You Prepared for Winter?

A

s the winter is upon us, it is prudent to ensure any wood-burning system in your multi units are clean and safe for the burning season.

As wood-burning systems leave creosote build-up (creosote is the residue left caused by smoke and chemical reaction of the burning). It is recommended these are checked for safety regularly, as creosote is a fire hazard. Also a build up of creosote can cause poor flow of the smoke out of the unit or home, causing smoke or odor to come back in.

Also, an upper multi-unit can get smoke from a lower unit when a fire is burning, and there are remedies for this.

These are problems that can be easily handled if caught in time. A Certified Chimney Sweep can inspect and clean the units to ensure any issue is addressed. Better safe than sorry.

Dryer vents are also important to keep clean, though not a seasonal issue, as dryer vents are used all year round.

A clogged dryer vent can decrease a dryer's efficiency markedly, causing the dryer to use twice the time

and energy to dry the clothes.

This can lose you a lot of money in the long run with the wasted electricity. Lint is also a highly flammable substance that can present quite a fire hazard to your property. Also, an inspection of the dryer’s airflow will help to discover that the dryer vent does vent outside of the building and not into the attic, for example, creating a fire hazard.

In most cases, when a complex has both fireplace chimneys and dryer vents to clean, it is much more cost effective to have them all cleaned at the same time (chimneys and dryer vents). Usually there are bulk cleaning rates available that will save you a lot of money on this important maintenance item.

So with this point of view, sufficient planning and effective action, you can rest assured that all your properties will be ready for winter!

P l e a s e Vi s i t u s at Article submitted by Portland Chimney & Masonry Inc.

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(206) 283 - 0816 / (800) 335 - 2990 / www.RHAwa.org Metro Apartment Manager • October 2008 2013 Rental Housing Journal On-Site • December

9

Creating a Sense of Urgency

A

vailable for a limited time!

Only one of its kind! Offer expires at midnight!

These and similar phrases are used to make people “spring boldly into action.” They conjure up images of people rushing into department stores and retail outlets to take advantage of incredible offers on quality merchandise, especially during the holiday season. The advertisers and merchandisers are trying to create a sense of urgency in the minds of their customers; which will motivate them to take immediate action. They are in the “sales” business and want the customer to immediately purchase a product and part with some of their money!

You may not have to meet monthly or quarterly sales “quotas,” but undoubtedly you have specific occupancy standards which must be met and maintained. Therefore, you need to rent a certain number of apartments each day, week or month to achieve the goals set for your community. It’s no secret that in the Pacific Northwest, many prospective renters decide to hibernate for the winter and dig in their heels until after the holidays. The phone isn’t ringing off the hook like it was in July, and the few people who are moving, may or may not make it to your community before they decide to rent somewhere else first. A vacant apartment TODAY, could be “ringing in the New Year” with you on January 1st.

The SECRET SHOPPER phoned three communities, looking for immediate availability. I told each consultant that I was new to the area and needed a place to live right away. Each leasing person seemed

10

interested in helping me, but only one motivated me to visit immediately.

My first call was answered promptly by a friendly voice. I stated that I was new to the area and needed to find a place right away. The consultant asked where I was moving from and what was bringing me to the area. She then asked for my name and began to inquire about the specific needs and requirements that I had. It was a pleasant exchange that went on for several minutes. Once the consultant learned what was important to me, she began to talk about various openings. She said that I had called at a good time because there were a couple of great apartments to choose from. The con-

sultant invited me to visit and told me the office hours. She said, “If I’m not here, anyone in the office can help you.” She gave me directions and closed with, “I hope to see you soon.”

The next call I made was answered with a great deal of enthusiasm. The consultant asked for my name right away, and I could hear the smile in her voice as she spoke and offered her assistance. I explained that I was new to the area and needed to find a place to live right away. The consultant asked questions to determine my needs and find out what was important to me. She told me there were only two apartments available, and briefly described the positive attributes of each one. She asked when I would like to come by, and we discussed the driving distance and the fact that it was raining. The consultant said, “It’s been kind of slow today because of the weather. If you want to wait and come by tomorrow, I’m sure the apartments will still be available.” I said, “I think I’ll do that.” The consultant said, “Great!

I’ll see you tomorrow!”

My final call was met with an energetic greeting and an immediate offer of help. When the consultant learned that I needed an apartment immediately, she said, “Well, you better get right over here because I only have one left!” I laughed and asked if she could tell me a little bit about it first. The consultant described the apartment interior, as well as the view. She explained that the “view apartments” don’t open up very often, and said this one was especially nice because of its southwestern exposure.

The consultant said she had a model to show, and she could take me by the location of the apartment for rent. She told me they were still getting it ready, but that I could move into it by the week-end. The consultant asked if I had time to come over right now. She said she had another appointment in an hour and if I waited, the upcoming apartment would probably be gone. I agreed to come over within the next twenty minutes. The consultant then gave directions carefully, since I had

stated I was new to the area. She suggested I bring along her phone number, in case I get lost so I could call from the road. Before we hung up, she asked for my number to be able to check back with me if I didn’t make it by. The consultant thanked me for calling and ended with, “I look forward to meeting you. I’ll see you when you get here.”

What are you doing to create URGENCY when the telephone rings at your community? How do you convince the caller that what you have to offer is worth their time and consideration? Your community may be just one of a dozen competing for their attention. Why should they visit YOUR place, and why should they DO IT NOW? Is there something about your apartments or community that stands out from all the rest? Could it be a unique floor plan or desirable location? What about the easy access to area conveniences or your sensational staff? Whatever it is, use it to create urgency to get your callers to visit TODAY! Tomorrow is TOO LATE! By then, they will have already rented from the leasing consultant who invited them to visit YESTERDAY!

SECRET SHOPPER Provided by: SHOPTALK SERVICE EVALUATIONS Phone: 425-424-8870 E-mail: Joyce@shoptalkservice.com Website: www.shoptalkservice.com

Rental Housing Journal On-Site • December 2013

RENTAL HOUSING JOURNAL ON-SITE

Dear Maintenance Man ...continued from page 7 set the blade at the 45-degree position and left of the center mark. Position the sample to the right of the blade. After the cut, label the sample Left Hand Outside Corner. Test your samples in an outside corner where the wall meets the ceiling. The two pieces should form a 90-degree corner.

The hard part is done; you now have sample cuts to refer to. After measuring the wall, place your measurements on the backside of the molding, the mark will be easier to see on the backside when cutting.

(Hint: Mark the molding where the saw blade will first touch the work piece.) Cut a little long at first, and then trim with the saw until the molding fits. And don’t forget to repeat to yourself … “caulking is my friend!”. If the corner is not quite perfect, don’t worry, caulk the corners, and the mistakes disappear.

Also caulk the top and bottom rails of the molding and it will look like an expert did the installation. Good Luck.

Dear Maintenance men: I am aware of having a disaster preparedness kit for my family, however, what do I do for my apartment building?

Jason

Dear Jason: A quick list of what should be in your family disaster preparedness kit: Flashlight with batteries, canned goods, a Gallon of water per person, a knife, Meds and blankets at minimum. Now this works ok for a family, but may not be appropriate for an apartment building. The residents may very well shelter in place during a disaster and be fine. What may be in danger is your property! Start with a bit of preventive disaster maintenance.

1: Locate the main water shut-off valve and any minor shut-off valves. Make sure the valves are in working order. If they are gate valves, it might be time to upgrade them to ball valves. old gate valves are notorious for breaking valve stems at the moment you need them to work.

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Rental Housing Journal On-Site • December 2013

RENTAL HOUSING JOURNAL ON-SITE

Giving Landlord ...continued from front page Now because I manage a small operation, this level of spending on my residents is feasible. For those of you who may be managing hundreds of units, a charitable donation in the name of your tenants, or a generous coupon towards a holiday ham may make greater sense for your business. As long as you’re gifting to others from a place of general goodwill, then the actual gift is secondary. And, who knows, the gesture may just be reciprocated whether it’s through a thank you note, a small gift, or the continued care of your rental property. Some small gifts may be tax deductible, so check with your accountant Giving to others without expectations can make us feel good. We’ve all heard of ‘paying it forward’. So,

why not make a small “investment” in others who help us throughout the year? A nice card and a little something to brighten their season is a small price to pay. I think that there is still something very important about interpersonal relationships, especially around the holidays.

Katie Poole – Hussa is a Licensed Property Manager, Continuing Education Provider and Principal at Smart Property Management in Portland, OR. She can be reached with questions or comments at Katie@ SmartPM.co.

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WASHINGTON MULTI-FAMILY HOUSING ASSOCIATION Executive Director • Jim Wiard President • Jay Olson Vice President • Joe Manca Past President • Cassandra Haavisto Secretary • Gail Duke Treasurer • Brett Stevens Vice President of Suppliers Council • Barry Savage

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

A Year in Review

O

ur 10th anniversary year has come and gone, and we have much to be thankful for as we look ahead to our next decade of service to the communities of Washington and our many wonderful member companies and their employees.

I am humbled at the passion, enthusiasm and commitment our members have in giving to the apartment industry and supporting each other and our mutual interests to promote the housing industry.

2013 was in many ways an extremely successful year for our association and industry, and 2014 will be an exciting year of growth, innovation and excellence for WMFHA as we continue to look for ways to bring value and relevance to those we serve.

Our association continues to look to define our role, who we are, what we do and how we serve. Our membership now exceeds 120,000 units and 850 members. Watch for new, updated branding for our association in 2014 as we continue to grow our resources and services.

One of WMFHA’s mission objectives is to lead legislative regulatory

policy that promotes and preserves quality rental housing for all. We employ the services of a Government Affairs team including lobbyists working to protect your investment.

The goals of our lobbyists are to act as a liaison between state legislators and the association, working to foster positive relationships with public officials, educating legislators on the needs and objectives of the housing

industry, and the importance of favorable legislation to the constituents served by the housing industry.

Our efforts here in 2013 resulted in many positive benefits to protect the interests of our members. I want to thank Joe Puckett, WMFHA’s Director of Government Affairs, for all his outstanding efforts the past year. As our membership grows, so does our collective voice and influ-

ence for the industry.

One our primary goals is to promote professionalism through education. A highly skilled staff ensures your operations are more cost efficient, residents and staff are more satisfied and a greater number of your apartments stay occupied. Simply put, a highly trained and developed team of property management professionals equals an improved bottom line and a substantial increase in your organization and property's value. Invest in your employees and see decreased turnover and improved financial performance, while reducing risk exposure to liability.

In 2013, we continued to enhance our educational training services. In addition to offering a variety of classes for property employees, we are privileged to offer nationally recognized professional designation programs through the National Apartment Association (NAA). These programs are widely respected for their rigorous and comprehensive approach to career development in the multifamily housing industry. continued on page 17

CONGRATULATIONS TO THE 2014 EMERALD AWARDS FINALISTS! After the initial judging process of over 260 nominations, the following have been selected as Emerald Finalists.

The winners will be announced at the Emerald Awards Gala on the evening of February 13, 2014.

COMMUNITY MANAGER OF THE YEAR (1-150 UNITS ) Charity Chrisman, CAM, The Artiste - Weidner Emily Foster, Bentley House/Borgata - Thrive Emily Svensson, 128 on State - Prometheus Katie Coleman, Axis - Prometheus Chinu Randhawa, Limestone Court - Prometheus

COMMUNITY MANAGER OF THE YEAR (151-300 UNITS) Melanie White, CAM, Allegro - Weidner Rhonda Everson, Heights at Bear Creek - Riverstone Sam Mullen, Villagio on Yarrow Bay - Prometheus Shannon Hammond, Rollin Street Flats - Riverstone Stacy Pegram, The Lyric - Pillar

COMMUNITY MANAGER OF THE YEAR (301+ UNITS) Delane Sidoti, Piedmont - Riverstone Jolene Brinkly, On The Green at Harbor Pointe- Madrona Ridge Judy Newman, Discovery Heights - HNN Kimberly Dvorcek, Madrona Pointe - Pinnacle Neely Stratton, CAM, Campo Basso - Epic

ASSISTANT COMMUNITY MGR. OF THE YEAR (1-300 UNITS) Angela Hayes, Balfour Place - Riverstone David Trybus, AMLI 535 - AMLI Katie Kucinski, Gilman Square - Madrona Ridge Lindsay Arey, Avia - Riverstone Mitch Sontra, Union at South Lake Union - Holland

ASSISTANT COMMUNITY MGR. OF THE YEAR (301+ UNITS) Annalisa Johnson, Bridges at Northcreek - Thrive Brenna Burbank, Bay Court at Harbour Pointe - Greystar Darkua Tagoe, Station at Othello Park - Pinnacle Edita Alumbaugh, Ashton Bellevue/Ten20 - UDR Eiren Alvarado, Piedmont - Riverstone

LEASING CONSULTANT OF THE YEAR (1-300 UNITS) Charlene Cameron, Portsmith - Weidner Crystal Lash, Ridgedale - Riverstone Hyan Ho, Emerson - Prometheus Lauren Reel, The Corydon/The Lyric - Pillar

Jim Clark, Liberty Ridge - ConAm Jorge Nunez, Ellsworth House/Chalet - FPI Marlon Isaacs, Cosmopolitan - Pinnacle Randy Cairnie, 128 on State - Prometheus Stephen Elder, Chelsea at Juanita Village - Thrive

MAINTENANCE SUPERVISOR OF THE YEAR (151-300 UNITS) Bill Holbrook, CAMT, The Lyric/The Nolo - Pillar Clayton Williams, CAMT, The Lyric/The Nolo - Pillar Eric St. John, Bremerton Gardens - Epic Erik Budenos, Adagio - Weidner Tony Vierra, The Seasons - Fairfield

MAINTENANCE SUPERVISOR OF THE YEAR (301+ UNITS) Casey Michel, Belara at Lakeland - Riverstone Steve Richardson, The Reserve - FPI Kelson Sabas, Cambridge Court - ConAm Roy Sowerby, Madrona Pointe - Pinnacle Walt Bogucki, Bay Court at Harbour Pointe - Greystar

MAINTENANCE TECHNICIAN OF THE YEAR (1-300 UNITS) Jack Baker, Brisa - Madrona Ridge Jason Morgan, Avignon Townhomes - Gables Miles Welch, On the Park - Madrona Ridge Paul Brandt, Skyline Park - Riverstone Robert Hopkins, Cottage Bay - Pinnacle

MAINTENANCE TECHNICIAN OF THE YEAR (301+ UNITS) Jake Vahle, Bridges at Northcreek - Thrive Rick Schwindt, Bailey Farm - Riverstone Terry Spivey, Keeler’s Corner - Prometheus Trevor Baker, The Ridgedale - Riverstone

ROOKIE OF THE YEAR—MAINTENANCE Anand Srivastava, Keeler’s Corner - Prometheus Jesus Rosales, 128 on Stage - Prometheus Roderick Gray, The Lyric - Pillar

COMMUNITY OF THE YEAR (1-150 UNITS)

LEASING CONSULTANT OF THE YEAR (301+ UNITS) Auti Zarrin, Bridges at Northcreek - Thrive Jennifer Erickson, The Carriages - Berkshire Sammie Pang, Metro 112 - Simpson Shera Byron, Fulton’s Crossing - Greystar

Chateau Woods - Pinnacle Vista Ridge - Pinnacle 128 on State - Prometheus

COMMUNITY OF THE YEAR(151+ UNITS)

ROOKIE OF THE YEAR—OFFICE

James Kim, Prometheus Mae Gomez, Skyline Park - Riverstone Matthew Bryjak, The Ridge & The Shores - Weidner Matthew Rankin, Pacific Walk - Pinnacle Miranda Dymond, Bailey Farm - Riverstone

PORTFOLIO MANAGER OF THE YEAR Billy Pettit - Pillar Sheri Druckman - Madrona Ridge Sumer Bradley - Prometheus

MAINTENANCE SUPERVISOR OF THE YEAR (1-150 UNITS )

NEW DEVELOPMENT OF THE YEAR (2010 0R NEWER, 1-150 UNITS) Brookstone at Edgewater - Pinnacle Joseph Arnold Lofts - Thrive Parkview - Pinnacle

NEW DEVELOPMENT OF THE YEAR (2010 0R NEWER, 151+ UNITS) Stack House - Indigo The Lyric - Pillar Union at South Lake Union - Holland Via 6 - Riverstone

RENOVATED COMMUNITY OF THE YEAR

(2011 OR SOONER, 1-300 UNITS) Neely Station - Pinnacle Parkwood at Mill Creek - BRE Station 9 - Thrive The Aviator - Pinnacle Waterford - Riverstone

RENOVATED COMMUNITY OF THE YEAR

(2011 OR SOONER, 301+ UNITS) Avana 522 - Greystar Campbell Run - Thrive Waterford at the Lakes - Pinnacle

CURB APPEAL(1-150 UNITS) Axis - Prometheus Collage - Pinnacle Compass - Pinnacle Greensview - SUHRCO The 101 - Pillar

CURB APPEAL(151+ UNITS)

BluWater - Riverstone Breckenridge - Weidner Dexter Lake Union - Prometheus Discovery Heights - HNN Evans Creek at Woodbridge - Riverstone Shorewood Heights - Pinnacle The Lyric - Pillar Willina Ranch - Riverstone

Belara at Lakeland - Riverstone Metro 112 - Simpson Shorewood Heights - Pinnacle The Lyric - Pillar The Post - Pinnacle The Reserve at the Landing - Fairfield

INDUSTRY PARTNER OF THE YEAR

COMMUNITY OF THE YEAR—AFFORDABLE

To be announced at the gala.

Brandenwood Senior Apartments - Guardian Coronado Springs - Indigo Windham Historic - Riverstone

EMERALD SPONSORS

Apartment Guide HD Supply Trash Transit

SAPPHIRE SPONSORS Alpha Ecological Executive Coatings & Contracting LeaseHawk On-Site.com

LIFETIME ACHIEVEMENT WMFHA VOLUNTEER OF THE YEAR To be announced at the gala

Rich Landscaping Sherwin Williams Wilmar

For information about the Emerald Awards, visit www.wmfha.org or call 425.656.9077 14

Rental Housing Journal On-Site • December 2013

A Year ...continued from page 16 Please review our website at www.wmfha.org periodically to keep up with all of the exciting programs we will offer throughout the year.

This year, we made a commitment to evaluate our events. In 2013, WMFHA conducted many different business relationship-building events to bring our membership together for the purpose to networking, socialization, sharing ideas, providing important information about our industry - and having fun!

Our major events include our Emerald Awards gala, Washington Apartment Outlook economic forecast luncheon, an education conference and trade show exhibition for management personnel (EdCon) and for maintenance service personnel (Maintenance Summit), a Business Exchange Reverse Trade Show, Day on the Hill lobby day in Olympia, and a charity Chili CookOff. Quarterly Membership Meetings and monthly after-hours socials were added to our event schedule in 2013.

As stewards of our industry and leaders in our community, we owe it to ourselves to work together to advance the benefits and reputation of multifamily housing. The association enlists the assistance of many member volunteers participating on

committees to review and help direct resources in order to conduct the business of the association.

We are lucky to have outstanding committee members doing great work. I would like to personally thank the volunteer efforts of all of our committee members, without whose time and devotion we could not provide such quality events and education to benefit our membership.

I would also like to extend a special thank you to our devoted staff Judy Bradley, Sloane Cerbana and Tricia Johnson. Their hard work and friendly service allows us the ability to meet the needs and expectations of our members. Our WMFHA staff have worked hard this year to serve our members. To explore avenues to get more involved in the association, please call us at 425-656-9077 or e-mail us at admin@wmfha.org.

I am proud to serve this association and wish everyone a safe and joyous holiday and a prosperous new year. We look forward to serving you in the coming year and making your housing association the best it can be.

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Rental Housing Journal On-Site • December 2013

RENTAL HOUSING JOURNAL ON-SITE

Lessons from CT Fair Housing Case

I

n May 2013, Connecticut complainants were awarded over $76K (before attorneys’ fees) by the courts in The U.S.A v. Hylton.

This is a rental case but the ruling holds several important legal lessons for any housing provider.

The complaint alleged that the Hyltons, a Black married couple, violated the Fair Housing Act1 (FHA) by refusing to allow a mixedrace couple, the Bilbos, to sublet their unit to a Black woman with children because they did not want "too many Blacks" at the property.

The decision awarded the following damages: • $31,750 to Mr. And Mrs. Bilbo because their landlord made discriminatory statements to them about being a mixed-race couple, and about the race of their prospective subtenant refusing to allow them to sublet the home to an African American woman and her children because of race.

• $10K of this sum was awarded for emotional distress.

• Because Ms. Wilson, the prospective subtenant, was denied the home she sought and was qualified for, she continued to live in a

Rental Housing Journal On-Site • December 2013

portal.hud.gov/hudportal/ HUD?src=/press/press_releases_media_advisories/2011/ HUDNo.11-198.

• A summary of the ruling is posted on the DOJ’s site: http:// www.justice.gov/usao/ct/ Press2013/20130812.html (DOJ). racially concentrated area of poverty. Her damages were awarded at $44,431.05

• The court’s decision can be read at http://law.justia.com/cases/ federal/district-courts/connecti-

cut/ ctdce/3:2011cv01543/94677/23 The Hyltons were independent Continued on page 22 rental owners managing their own property. They initially rented to the Bilbos; however, the Bilbos found that their personal circumstances required them to move and to break the lease agreement. The Bilbos

• As part her damages, the court awarded Ms. Wilson $20K for compensation for the lost opportunity to live in a neighborhood of lower crime, higher educational opportunities, and greater upward mobility.

• Nearly half of the judgment, before attorneys’ fees, was for punitive damages.

• An additional $37,422 in attorneys’ fees brings the total judgment against the defendants to over $113K. Details of the case can be found online.

• A summary of the case is available on the HUD site: http://

17

Changes in the Apartment Housing Market

M

any different variables drive the demand for apt. housing. Tenants consider location, tax policy, employment, tenant age, location of family members, availability of healthcare and education when making housing decisions.

Most importantly tenants look at affordability (of apartment housing).

In other words, can a tenant live in a city with great transportation infrastructure and not own a car, and

maybe bike or motor scooter to work? If so, tenants can fold this savings (lack of car payment, insurance, fuel expense) into a higher rental budget. For an older tenant the location of age specific infrastructure is more important. If you are older than 55 you may want to choose a community that is modern and handicap accessible, in a warmer climate close to shopping, medical services, and age specific activities.

Migration of tenants to the south

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and coastal communities reflects the shifting landscape of housing demand. Cities, multifamily landlords and developers are being challenged to keep housing habitable, modern, affordable and suitable to the appropriate age groups. The need for habitable, modern, affordable and age-specific housing continues to challenge cities, developers, and multi-family landlords. In this article we organize future housing demands into seven sections.

• Over 65 age group • Generation Y • Sunbelt population increase • Soaring construction costs • Rising Cost of Health Care • Housing Affordability • Taxation Climate Over 65 – Baby Boomers • The 65+ demographic will increase from a current 13% of total U.S. population to 19% by 2030.

• As aging populations increase senior citizens will continue to make difficult choices between rent, food, housing and medical care. Especially hard hit are the very low income senior citizens.

• As a result the demand for government subsidized low income housing will increase

• A 2013 Gallup poll found that 38% of non-retirees, a new low (down from 42% in 2012) say they will have enough money in retirement.

When Gallup first asked the question in 2002, 59% thought they would have enough savings for retirement. The percentage dipped below 50% during the 2008 recession and has remained below since (keep in mind; this will inch up as the stock market regains some of its recession induced losses).

• The growing over-65 demographic will want to move to warm climates, into age-appropriate communities that feature lower fuel and heating expenses (higher air conditioning and water expenses), great medical care, modern infrastructure and safe housing, and communities for those that are over 55.

• The nation’s 77 million baby boomers are reconsidering their housing needs.

• US Department of Housing and Urban development 52% of seniors between 65 and 80 who recently moved, became renters after moving, compared to 36%that rented before they moved.

Continued on page 20

Rental Housing Journal On-Site • December 2013

RENTAL HOUSING JOURNAL ON-SITE

T

he economic climate in recent years has hastened many property managers and owners to take a closer look at their bottom line. Many have determined the need to devote greater concentration on area that might have been overlooked in the past. One of the areas that property managers are focusing increased attention on is that of collections from former residents. In the past, collections on previously vacated residents was often viewed as merely “found money”. Some managers have discovered that an organized, systematic approach to the collection process can produce income that can be depended on month after month.

In-House System or collection agency?

Some companies have discovered that the implementation of an inhouse collection system sometimes can save the collection commission that would be paid to an outside agency or attorney. However, successfully collecting on accounts in this manner is the exception, rather than the rule.

If the implementation on an inhouse system is being considered, many factors should be taken into

A Systematic Approach to Collections account. These include the purchasing of specialized collection and skip-tracing software to track the progression of accounts, a system of data entry of all account information on he former resident, and training of personnel to adequately perform the collection function. Legal issues, such as the potential for lawsuits and Fair Credit Reporting Act compliance must be considered as well. As of this writing, only one of the three major credit bureaus permit direct reporting of collection accounts by landlords.

Simply sending a letter and making a phone call or two usually does not yield the desired end result I have personally seen many instances where such a haphazard “system” results in the account “falling through the cracks”, never getting worked properly, and never being turned over to a professional collection company. Frequent employee turnover increases the risk that this will occur.

Even with the implementation of a systematic, in-house program, all nonpaying accounts should be turned over to a professional debt collection company or attorney after a certain period of time. Some debtors simply refuse to pay until they

are contacted by an outside, thirdparty agency. In addition, a professional collection company can typically have more access and time to devote to skip tracing, which is required for those residents who are not locatable.

Many of the nation’s largest management companies are discovering that they net more money through increased recovery rates by placing accounts with a collection agency within days of move-out. Saving the costs associated with the implementation of an in-house system, combined with the prompt placement of accounts with a professional agency, has proven to be the most viable solution for the collection of former resident accounts.

Factors Affecting Recovery Rates Needless to say, we would all lie to collect 100% percent of the bad debt placed for collection.

Unfortunately, just like there probably never will be a baseball player who posts a batting average of .500, it is unlikely that a recovery rate for a typical property will be greater than 50 percent. However, several factors exist that will help increase the likelihood of collecting from for-

mer residents. It is important to be cognizant of these factors when establishing realistic expectations. In addition, this might maximize the results for a community.

Property and Resident Profile: In most instances, there will be a correlation between a resident profile on a given community, and the collection results that will be obtained. Generally speaking, properties where rents are higher and residents are better established in terms of employment, income and employment history, for example, will have fewer problem accounts.

They also will experience a higher success rate when it comes to collecting outstanding files.

Accuracy and completeness of paperwork: Be certain that rental applications are readable and leases are complete and signed by all appropriate parties. A collection company is at a severe disadvantage if the paperwork submitted is incomplete or inaccurate. If the charges include damages and/or cleaning, be certain a detailed, itemized move-out Continued on page 20

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RENTAL HOUSING JOURNAL ON-SITE

Collections ...continued from page 19 inspection list is attached. In many instances, these items are needed to substantiate a debt after the resident’s move out date.

Accuracy of Claimed Charges: It is very important that the charges itemized on the resident’s final “SODA” or account disposition be accurate and realistic. One common misconception is that the larger the stated balance, the greater the amount that will be collected.

Statistical models show that account balances between $500 and $1500 are far more collectible than those greater than these amounts. If the former resident feels that the balance is insurmountable, o that he or she is being “gouged”, it is likely that this person will avoid dealing with the debt at all costs. With national bankruptcy filings at an all-time high, many consumers find this route easier than dealing with a debt that seems overwhelming. If a management company accelerates rent through the end of the lease term, be certain to update balances with the collection company when the unit is being re-leased. These high balance accounts are more difficult to collect and will inaccurately skew bad debt figures.

Age of Accounts Prior to Placement (The Rule of

16’s): Studies conducted by the American Collectors Association (ACA), a collection industry trade association, conclude that for every 30 days an account remains unworked, it is 16% less likely to be collected. Thus, it is easy to see that when accounts are dormant for six months or longer, they are much less likely to be collected. Not only are debtors more difficult to locate, but there is a psychological barrier when trying to convince somebody to pay at such a late date. In the consumer’s mind, if he or she has not been contacted in the first 30 to 60 days after move-out , there is sometimes the thought (albeit incorrect) that the debt has somehow been forgiven or expunged.

Tenant Screening Standards: It should come as no surprise that the stricter the standards are for leasing an apartment, the fewer problem accounts there will be, and the more easily these accounts will be collected. During the screening process, it is important that all information on the rental application be completed.

Particularly important are emergency contact names and phone numbers. These will often be close family members or friends, and are important to the collection representative in the skip tracing process. If at all possible, include spaces for addi-

tional personal references and phone numbers on the application. Having more skip tracing resources will increase the likelihood of successfully locating the former resident.

Area of Country: Interestingly, the geographic region where a community is located could have an effect on collection results. For instance, in very transient, debtor friendly states, such as Texas and Florida, rates of recovery are lower, everything else being equal. In addition, several states, including Texas, do not permit the garnishment of wages, allowing debtors to legally avoid their obligations, if they so desire. In contrast Midwestern and Northeastern states yield higher rates of recovery, possibly attributable to a less transient population base. In many instances, rates of recovery in these states are double that in more debtor friendly, transient states.

Client Cooperation: Once the decision is made to place the account with an outside agency, property managers should avoid the temptation to become involved in the collection of the account with the former resident. Often, former residents, after being contacted by a collection representative, will call the management company or property in an attempt to draw them into the collection process. Although it is tempting to discuss the debt with the former resident, it is best to explain that the entire account, paperwork included, has been sent to the agency. It also can be politely explained that onsite personnel are not equipped to discuss collection matters, and that is why the account has, at this point, been referred to an outside agency. The collection process will proceed more smoothly if this policy is adhered to. It is important to remember that the former resident has nothing to lose by attempting to draw in the property manager, oftentimes by distorting the actions of the agency. The coalition should be between the property manager and collection agent, not between the property manager and the former resident who left with a balance due.

Results: Our experience has shown that by paying greater attention to these factors most management companies will see improved collections by up to 30 percent.

It is important for upper management to monitor what is being submitted for collection at the site level.

PROPERTY NAME

One management company discovered during an audit of their collection accounts that most of their property managers were accelerating rents through the end of the lease term, forgetting to notify the agency when the unite were released. This resulted in overstated charges, adversely affecting the amounts being recovered for this company.

In another instance, a property management company was able to improve collection results by implementing a centralized system of collections, whereby all properties are required to submit accounts in a timely manner to their corporate office. From there, accounts were dispensed to several collection agencies. Prior to this new focus on collections, upper management had been unaware of what collection process was used by its sites and how often (if ever) accounts were being placed with a professional company.

Even if upper management prefers that accounts be submitted directly to an agency from the site, the ability of management to track factors such as average age and account balance is essential. This service is often available online.

Selecting an Outside Agency: Several key factors should be considered when shopping for an outside collection agency: 1. Specialization. First and foremost, be certain that the collection company specializes in the collection of apartment related debt. It would be preferable that at minimum, 50 percent of the agency’s collection portfolio consists of property collections. Additionally, be certain that all collection representatives are trained by their agency on important aspects of landlord/tenant law, as well as laws pertaining to collections (Fair Debt Collection Practices Act). Collectors should be well versed regarding common provisions contained in lease agreements, as well as why they are contained therein. For instance, an agent that is accustomed to collecting medical or credit card accounts will probably lack the training to discuss a move-out inspection or why a written 30 day notice was required before moveout. Since most rent-related collection accounts are wholly or partially disputed by the consumer, this type of industry specific knowledge is imperative 2. Association Membership. Check to make certain that the agency is an associate member of the local Continued on page 21

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Changes in the Market ...continued from page 18 • Based on this trend, apartment firms are targeting this population segment. In 2011, 12% of completed apartment units were age restricted, meaning that residents had to meet a minimum age threshold, most often 55 years of age, to qualify. This is an increase from 8% in 2010.

• Although Medicare will cover the majority of health care costs for this demographic, which may give them more financial flexibility to pay higher rent from funds set aside to pay for retirement, very low income seniors will be seeking tax credits developed for low income housing (like section 42).

The 20 to 35 year old workforce – Generation Y • Studies indicate home ownership ties employees to a market place and makes it difficult for them to move. In contrast younger Americans want to live in apartments to protect their economic freedom, as they find their niche in life while moving frequently in search of the “perfect” job.

• Looking at homeownership in 2010, The US Census found that less than 40% of Americans under the age of 35 own their own homes.

• Men and women graduating college on average have 1 child, compared to their high school educated, or GED recipient, peers who have at least 2 children.

• Young workers are staying single longer than ever, extending their time as renters into their late 20s.

Only 51% of adults over the age of 18 are married, so for many building a family is not a priority in their 20s.

rienced contractors and sub-contractors will become more challenging, driving up the price of construction, and therefore rents.

• Building-material manufacturers “are raising prices dramatically, and once they’re convinced that these prices are going to stick, they’ll start reinvesting in those plants,” helping ease supply constraints, said John Burns, chairman of Irvine, California-based John Burns Real Estate Consulting.

Health Care Affordability • Rising cost of health care is affecting the ability to pay rent. The promise of potential cost savings with Obamacare looks like a boon for apartment tenants.

• Current renters are struggling with paying for the rising cost of health care necessities.Those with health care coverage experienced a 7.2% increase in costs between 2011 and 2012.

• Health care costs for American families in 2012 exceeded $20,000/ year for the first time ever.

Housing Affordability: • Currently the average wage amongst renters nationally is $14.32/hr. In 2013; however the housing wage, the amount a full time worker must earn per hour in order to afford a two-bedroom apartment in a given area, is $18.79/hr.

• In 2011 for every 100 ELI (extremely low income) earners there were only 55 units they could live in without spending more than 30% of their income on housing and utility cost.

• Approximately 11.2 million renters have a severe housing cost burden.

• Western state, like Nevada, California, Arizona and Colorado are seeing an absolute shortage of affordable units.

• The most expensive states for

Housing Wage for Two-Bedroom at fair market rents are in the north eastern part of the country.

• #3 New York - $25.25 • #4 New Jersey -$24.84 • #5 Maryland - $24-47 • #6 Massachusetts - $24.05

Population increases in Sunbelt urban areas will drive more apartment and home construction • Lower income (less than $55,000/ year) Americans are more likely to be renters than upper income Americans.

• Demand for apartments remains highly concentrated in urban areas close to employment centers, public. transportation and cultural outlets.

• In 2013 71.4% of all apartment permits issued were in the 50 largest US markets.

• Builders and bankers have been hesitant to build or approve loans in second or third tier marketplaces, if job opportunities do not exist.

Construction costs soar • As the economy rebounds the cost of construction has increased due to shortages from 2012 to 2013: • Softwood lumber costs up 30% • Drywall up 17.9% • Tar roofing up 8.6 • Insulation up 5.3% • Concrete up 2.2% • Labor shortages (for those with construction skills), are increasing as permits increase and construction volume grows. Finding expeRental Housing Journal On-Site • December 2013

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RENTAL HOUSING JOURNAL ON-SITE

Lessons...continued from page 17 agreed to find a suitable renter to sublease to. When they did the defendant asked if the person is white. When told she was Black, Hylton stated that he “did not want too many Blacks at the property” and that “the neighbors would not want to see too many Blacks there.”

The defendant also told the Bilbos the only reason they were rented the house was because his wife is white and it was “a good mix.”

There are several salient points in this case, none of them new but none-the-less noteworthy.

MRS. MURPHY’S EXEMPTION First, the housing providers in this case were ‘mom and pop’ landlords representing themselves. Their blatant disregard for the law and others’ civil rights is clear from the case but the harm they caused – to the complainants and to their own pocketbook – may have been avoided with fair housing education and / or by hiring a professional manager who’s practice it was to know and abide by all federal, state, and local laws.

As their defense, the defendants argued they were not subject to the Fair Housing Act given what is com-

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monly referred to as the ‘Mrs. Murphy’s Exemption’ which states: Any single-family house sold or rented by an owner provided that such private individual does not own more than three such singlefamily homes at anyone time… if such house is sold or rented (A) without the use in any manner of the sales or rental facilities or the sales or rental services of any real estate broker, agent, or salesman, or of such facilities or services of any person in the business of selling or renting dwellings… and (B) without the publication, posting or mailing, after notice of any advertisement or written notice in violation of [the FHA].

Put plainly, small, independent landlords can discriminate based on protected class only if they do not hire a professional (thereby enjoining someone else in the act of discrimination) and if they do not ‘advertise’ a discriminatory preference. Here, ‘advertising’ means, essentially, any outward expression ranging from verbal or written statements (ads whether printed or online, flyers, etc.). Interestingly, in this case the property in question was held by Hylton Real Estate Management, which only Mrs. Hylton had an ownership interest in. Because her husband, Mr. Hylton did not have an ownership interest in the company that owned the property only she,

not he, qualified for this exemption.

Mrs. Hylton argued that the Mr. acted as her husband and not as ‘someone in the business of renting dwellings’ in dealing with the Bilbos.

However, Mr. Hylton himself stipulated that he was in the business of renting dwellings and detailed the tasks he performs in such capacity and, indeed, his behavior substantiated this. All of that aside, his outward expression, or ‘publication’ of a discriminatory intent trumped the Mrs. Murphy’s Exemption binding him to the full responsibilities of the FHA, even if he had had an ownership interest in the property.

It should be clearly noted here that Oregon state law provides greater protection than federal and does not allow for the Mrs. Murphy’s Exemption. Essentially, all housing providers must comply with federal, state, and local fair housing laws in Oregon.

VICARIOUS LIABILITY Secondly, this case reaffirms what preexisting case law has already established in terms of vicarious liability. As stated in the court’s decision, “Although Mr. Hylton is the individual who directly discriminated against Ms. Wilson and the Bilbos, both Mrs. Hylton and [the company] Continued on page 23

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Lessons ...continued from page 22 may be held vicariously liable for this discriminatory actions.” …‘It is clear under the FHA, owners of real estate may be held vicariously liable for discriminatory acts by their agents and employees.’ Glover v.

Jones Therefore, if Mr. Hylton was acting as Mrs. Hylton’s agent, Mrs. Hylton, as sole owner of [the property] is also liable for his discriminatory actions. See Cabrera v.

Jakabovitz” DAMAGES FOR EMOTIONAL DISTRESS Here, the court said it best in its decision: “Third, as to the request for damages for emotional distress, ‘it is axiomatic that civil rights plaintiffs may recover compensatory damages for emotional distress.’

Ragin It is not necessary for a plaintiff to provide evidence of treatment by a healthcare professional or use of medication to be entitled to damages for emotional distress. See Parris v. Pappas… (distinguishing “significant” and “egregious” claims for emotional distress from “garden variety” claims…). In the context of Fair Housing Act violations, courts have ‘recognized the severe mental trauma associated with unlawful discrimination and have upheld large compensatory awards for the victims in such cases.’ Broome v.

Biondi ‘The key factors in determining emotional distress damages are the complainant’s reaction to the discriminatory conduct and the egregiousness of the respondent’s behavior.’ HUD v. Walker When claims have been categorized as “garden variety” – meaning the claim for distress is devoid of evidence of medical treatment or physical manifestation – the amount of damages authorized ranges from $5,000 to $125,000. Parris”

Collections ...continued from page 20 illegally discriminatory advertising, etc., should all be relevant to housing providers both at the company or organizational level and at the individual level. As this case illustrates, the owner was personally liable for her agent’s actions, even though she did not directly violate the law. This is true for ‘rank and file’ staff / employees / contractors as well, not just owners – that is, if a maintenance tech. or leasing agent violates the law, not only is the company and property owner liable, that individual may personally be sued as well.

It is important to follow fair housing case law and to commit to a regular educational routine for yourself and all who work with you.

Start today by signing up for our free, electronic, periodic newsletter (this you can do at the bottom of any page of our website, www.FHCO. org) and by following us on FaceBook or Twitter ( w w w. f a c e b o o k . c o m / FairHousingCouncilOregon and @ FairHousingOR, respectively).

We also invite and encourage you to check out the range of courses we offer at www.FHCO.org/pdfs/ classlist.pdf. Our classes include, of course, Fair Housing Basics, as well as Fair Housing BINGO, Fair Housing Jeopardy The Game and Fair Housing and Advertising. In addition, we have developed advanced classes for repeat trainees such as 50 Shades of Fair Housing and the RA/RM Intensive.

This article brought to you by the Fair Housing Council; a nonprofit serving the state of Oregon and SW Washington. All rights reserved © 2013. Write jbecker@FHCO.org to reprint articles or inquire about ongoing content for your own publication.

PUNITIVE DAMAGES As stated above, the judge found in this case that the defendant acted with evil motive and showed no remorse justifying an award of punitive damages amounting to tens of thousands of dollars.

LOST HOUSING OPPORTUNITY DAMAGES Finally, the issue of lost housing opportunity damages is also interesting. Here the court found that Ms. Wilson suffered based on key testimony from an expert in the field of “neighborhood effects.” The court concluded that there were “vast differences between the neighborhoods” in which she sought to leave and that which the subject property was located in amounting to “fewer ‘life chances’.”

It’s clearly not only important to be familiar with the federal FHA, but to know applicable state, local, and case law, as well. Issues such as vicarious liability, and what kinds of damages may be awarded, as well as other legal precedents such as disparate impact, what constitutes

Rental Housing Journal On-Site • December 2013

By Jo Becker, Education/Outreach Specialist, Fair Housing Council Serving Oregon and SW Washington To learn more… Learn more about fair housing and / or sign up for our free, periodic newsletter at www.FHCO.org.

Qs about this article? ‘Interested in articles for your company or trade association? Contact Jo Becker at jbecker@ FHCO.org or 800/424-3247 Ext. 150 Want to schedule an in-office fair housing training program or speaker for corporate or association functions?

Visit www.FHCO.org/pdfs/classlist.pdf

apartment association. This is evidence of a commitment not only to the association, but to the collecting of apartment related debt as well.

3. Insurance and Bonding. Be certain that the selected collection company is properly insured and bonded. At minimum, the agency should carry a $1 million Errors and Omissions insurance policy.

This specialized insurance is for the property’s protection, in the event that it is named in a lawsuit due to the alleged improper conduct of the agency. Just as it is foolish to permit a roofing company to perform work on a property without adequate insurance, it is unwise to use an agency that does not have proper insurance coverage.

4. Financial Stability. It is critical that the selected agency is both reputable and financially stable. It is recommended that the collection be a member of the American Collectors Association (ACA), an industry trade association based in Minneapolis. Be wary of companies whose memberships have been terminated or who have otherwise been sanctioned by ACA. 5. It also is important that the agency have a long-term track record of collecting for the apartment industry, with verifiable references. If an agency becomes financially insolvent, it is possible that they could disappear, not only with the collection accounts placed with them, but with unremitted collection proceeds as well.

6. Rate. While all managers certainly strive to receive the best possible rate, this should not be the primary consideration when selecting a collection company. Some property managers become overly concerned about rate, to the detriment of many of the previously mentioned factors. If the collection agency knows little about the intricacies of collecting rent related debt, it is highly unlikely that the lower rate will result in bringing more revenue to the respective community. For example, an apartment collection specialist, charging a rate of 40 percent and producing 25 percent recovery, will return $15,000 to the property on placements of $100,000. Another agency, charging 35 percent but only producing 15 percent recovery, will return $9,750 to the community. Likewise, the “great rate deal” that is negotiated with a small or unknown agency could easily backfire if the company is offering the rate because they are in a financially precarious position, or simply desperate for business.agency could easily backfire if the company is offering the rate because they are in a financially precarious position, or simply desperate for business.

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RENTAL HOUSING JOURNAL ON-SITE

The Top 10 Apartment Resident Complaints When experiencing an uptick in vacancies, most property managers ask themselves what could be causing their resident to leave. Without asking former tenants directly (or waiting for a bad review) how can you discover the reason for their discontent?

Thankfully, J Turner Research, a marketing research firm serving the multifamily industry has done just that. They surveyed 10,000 U.S. apartment residents regarding their satisfaction, and have published their results by ranking the top 10 apartment resident complaints:

3. Disorganized staff / lack of communication with staff

have been more unhappy about rental rates than any other issue. In fact, 4. Quality of response to mainte- residents mentioned the cost of rent more than twice as often as concerns nance requests about pet waste, which has been a 5. Overall customer service of man- big source of dissatisfaction in the agement staff past. Rent prices were nearly three 6. Quality of parking / parking avail- times more likely to be cited by disgruntled tenants than noise, which ability 7. Concerns over security / safety / surprisingly didn’t crack the top ten.

This could be proof of a softening in lighting rent fundamentals, which have been 8. Lack of upgraded amenities experiencing somewhat of a rebound 9. Pets not on leash / poor pet waste since the country began to recover from the recession. removal Aside from rental rates, residents 10. General lack of preventative are most often unsatisfied with on1. Rental rates maintenance site customer service from manageAccording to their findings, apart2. Poor grounds / common area ment professionals and members of ment residents across the nation upkeep the maintenance staff, which factored into three of the top five complaints.

How You Can Use This UndergroUnd detection Information & inspection services While there are a number of complaints that would be worth addressVALLEY, METRO, ARIZONA ing, APT. NEWS it seems the best opportunity to improve resident satisfaction levels Utility Design Surveys • Ground Penetrating Radar is by resolving any issues with the Structural Concrete Imaging • Leak Detection onsite staff’s response to resident Magnetic Detection • Metallic Line Detection concerns. And, because the relations Video Pipe Inspection • Non-metallic Pipe Detection between residents and community Electrical Fault Detection staff have such an impact on the Feb, Apr, Jun, Aug, Oct, Dec community’s reputation and online www.cnilocates.com Phone: 877-826-1177 • Fax: 253-826-2232 ratings, this should definitely be one

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Another way property managers can improve customer satisfaction is by completing any deferred maintenance, upgrading appliances, or updating amenities and commonareas. This is particularly important when a community’s curb appeal factors into online ratings and reviews.

Analysts go on to suggest that “communities with the highest levels of customer satisfaction also benefit from the best online ratings and reviews.” Therefore, as property managers continue efforts to maintain a positive reputation, it remains crucial to measure customer satisfaction—and dissatisfaction, and asses how well efforts to improve these issues are actually working.

Sara Thompson writes about property management in partnership with Zenith Properties NW, LLC in Vancouver, Washington. For more tips and advice, visit http:// www.zenithpro.com/blog/.

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Schedule your appointment now to receive a PSE Direct Install Sample Kit

PSE is offering Direct Install Sample Kits that include ENERGY STAR® qualified CFL and LED light bulbs, a WaterSense® showerhead, and a section of pipewrap that will aid in your review process.

Incentives apply to existing multifamily properties with five or more attached units located in PSE service area and dependent on installed equipment efficiency and energy type. PSE’s programs are tariffed services, and are subject to change or termination without prior notice. Always refer to our website for the latest offerings.

PSE.COM/MULTIFAMILYRETROFIT Rental Housing Journal On-Site • December 2013

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