Valley Rental Housing Journal May 2015 by Professional Publishing, Inc

May 2015

Rental Housing Journal Valley 2. Training the Next Generation of Real Estate Investors 4. A Little Recognition Can Go A Long Way! 6. Ask The Secret Shopper 7. Home Buying Pays Off Fast, but Hurdles Remain for Renters

EUGENE • SALEM • ALBANY • CORVALLIS

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WWW.RENTALHOUSINGJOURNAL.COM • PROFESSIONAL PUBLISHING, INC

EUGENE • SALEM • ALBANY • CORVALLIS

Fair Housing and Advertising

By Jo Becker, Education/ Outreach Specialist, Fair Housing Council of Oregon

recently reread a 2009 report produced by the National Fair Housing Alliance (NFHA) on how internet housing ads perpetuate discrimination (http://www.nationalfairhousing.org/LinkClick.aspx?filet icket=zgbukJP2rMM%3d&tabid=251 0&mid=8347). As we can attest to from our own office’s investigations, illegal ads are prolific online, decades after Congress and the Fair Housing Act1 made them illegal. Following are some highlights from the report. The Fair Housing Act covers all housing ads and, while there’s confusion over liability online services face when illegally discriminatory ads are posted on their sites, it is clear that the poster – that is, the housing provider doing the advertising – is most certainly liable. Be sure you’re up-to-speed with the letter and the spirit of the law, as well as developments in the fair housing world.

• There is no disagreement that

landlords, real estate agents, and others who create and place these discriminatory ads are legally liable for violating the Fair Housing Act. In passing the Fair Housing Act in 1968, Congress wanted to hold publishers responsible for third parties as a way of eliminating the problem most efficiently.

• Every day in the United States,

thousands of people view rental continued on page 3

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

Property Management Panic Mind your Business – Tia’s Tips for Better Rental Management

By Tia Politi, Rental Owner, ROA Board Member, Lead Property Manager for Acorn Property Management.

hopping for a property manager may seem like an odd topic to address in a publication designed for rental owners who manage their own properties. But on a regular basis, I get asked by friends and acquaintances about professional management and what things should be considered when shopping for a management company. Maybe you are considering taking that once-in-a-lifetime trip around the world, or you are experiencing a health crisis and need a professional manager to step in just for a period of time. Maybe, like me, you hope to retire someday and not have the day-to-day hassles of rentals in your golden years. Whatever your reasons, I felt it would be helpful, especially in light of recent local events, to share

my experience and give you some ideas for finding a good match for you and your rentals. The devastating news received by property owners in Eugene and Corvallis regarding a high-profile property management company have highlighted the risks for property owners within our state system of real estate management and licensing. Management clients were stunned to learn that not only did they lose one or two months of rent income, cash reserves, and pre-funded maintenance projects, they also remained liable for their tenants’ security deposits. But the spectacular fall of one large company is the exception, not the rule. Property management licensing in Oregon is regulated by the Oregon Real Estate Agency (OREA). Their rules dictate the ethics, requirements and responsibilities of assuming the

duties of a property manager. To obtain a license, an individual must complete 60 hours of classroom education with a certified instructor, obtain their approval to take the state licensing exam, pass the exam with a minimum score, be fingerprinted, pass a criminal background check, and pay the required fees. Upon renewal of a property management license every two years, licensees must prove that they have completed a minimum of 30 hours of Continuing Education provided by certified instructors in topics related to the field, including a required course on OREA Rule and Law. A property manager operating under a license granted by the OREA must prominently display their license in their place of business. Except in very limited circumstances, an unlicensed individual may not conduct continued on page 7

How to Profit in Real Estate Without Flipping, Renting or Beating Bubbles Investment Banker Advocates for Lost Art of The ‘Second Oldest Profession In The World’

ost people believe that making a profit in real estate means buying and selling at the right time, or renting their property and profiting over the long term, says investment banker Salvatore M. Buscemi. Being handy with property renovations and having a great relationship with a bank can also prove essential. But what if you’re better suited for a straightforward approach to short-term, high-interest financing for higher-than-normal returns – independent of the established banking norms? What if you want to build better relationships for safer investments? That answer may be found in

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hard money lending, the “second oldest profession in the world, right after that other one,” says Buscemi, managing director of Dandrew Partners LLC in New York City and author of “Making the Yield: Real Estate Hard Money Lending Uncovered” (www.MakingTheYield. com). Hard money lending is a type of community lending and here’s how it works, Buscemi says. Investors act like a bank and make short-term loans to small businesses that buy and repair distressed properties, refinance them with conventional bank loans and repay the short-term loans at higher interest rates, generating more profitable returns for the origi-

nal lenders. “Cash flow is something everyone needs yet few people have – that’s been true since Bronze Age Sumerians were writing in cuneiform on clay tablets,” Buscemi says. “But in the 18th century such community lending was vilified, leaving a massive gap that banks have absorbed.” Also called bridge loans, hard money loans are a specialized type of real-estate backed loans and fall within the peer-to-peer lending category, he says. As a lender, if you have a “cash-strapped” client who has missed several payments, then you have their collateral to resell and continued on page 5

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Training The Next Generation of Real Estate Investors

By Clifford A. Hockley, President Bluestone & Hockley Real Estate Services

ou don’t feel any older... but who is that person in the mirror? After fifty years of investing you have grown a portfolio that nets over $25,000 a month and you feel good about what you have accomplished. You ‘retired’ years ago when you hired a real estate property management company to handle the day to day upkeep of your investments and prior to that you made sure to build up significant reserve accounts for each of your properties, planning ahead for taxes, major capital expenses, vacancies that might require significant remodeling, and (in the case of commercial buildings) large leasing commissions. This allowed you the time to check off items on your bucket list while maintaining the income to finance each adventure. Whether you’re in a Paris hotel room or on a lounge chair at a beach resort, you still carefully review each monthly

property report to keep apprised of your investments. Life is pretty good, but you know it can’t go on forever. You are aging; you may have small memory lapses now and then or a lack of stamina to keep up with rapid change. You know that you need to get young blood involved in your investments. You don’t need to hire another service provider. You need to recruit another you. Everyone you talk to offers the same advice, “Do you have kids?” they ask, “Are they interested in taking over?” You know you should have asked yourself this question earlier but somehow the opportunity escaped you. Even the closest families sometimes shy away from sharing financial details with each other. Maybe your kids were free spirits in their younger years and you questioned their judgment, maybe they never seemed interested in real estate, or maybe they were focused on their own career path and you didn’t want to complicate their lives. Maybe you don’t have children but some capable nephews and nieces you never approached. In any case, you have

no idea if these potential successors are interested in real estate or investing for that matter. You also need to understand that just because these people are related doesn’t mean your successor(s) have real estate in their DNA or the ability to collaborate well with each other. You need to identify people who are passionate about real estate investing, like you are. They will need the ability to work cooperatively in a way that will last into the future. How do you gauge interest, compatibility and aptitude for a job they will assume after you are gone? Introducing the next generation to real estate At this point, the best approach is a fairly direct one. Invite your potential successor(s) to visit you for a planning session on the future of your real estate investments. Give them some idea of the nature of your real estate holdings, your intentions of passing it on to the next generation, and explain why their involvement now will help make the transition a successful one. Let them know

to expect something more like a workshop and less like a family reunion and discourage them from bringing their spouses or children. In preparation for the planning session, have your property manager prepare a briefing book for each property which includes the property histories, tenant information, condition of the property, latest capital improvements, individual balance sheets and income statements on a year over year basis, and then schedule him or her to take your group on a tour of your properties. After your tour, break down the business details to your successor(s). Explain the LLC structure of your investments, the trust structure of your estate, and what that would mean to them. Review the potential estate taxes that might arise as a result of your passing and how you propose they manage that burden. If you have a number of successors, you will need to designate one to work with the property manager on day to day decisions. It is important, however, to train all successors so they can create a process of deci...continued on page 6

Rental Housing Journal Valley • May 2015

RENTAL HOUSING JOURNAL VALLEY

Fair Housing Advertising... .continued from front page advertisements that illegally deny housing to families with children and others protected by the federal Fair Housing Act. Although newspapers have been held liable under the Fair Housing Act for publishing discriminatory housing advertisements with statements such as “no kids,” or “couples only,” the publishers of similar ads on the Internet have not been held to the same legal standard.

• In order to address this disparity in the law, which holds print advertisements and online advertisements to separate and unequal standards, the National Fair Housing Alliance (NFHA) urges Congress to amend the Communications Decency Act.

verbiage. Either way, whether or not a site is liable in a given situation (we feel it is), the poster most certainly is! As a housing provider advertising residential properties you should know that fair housing advocates such as our office and others, including national groups, periodically comb sites and publications for violations. Our advice: treat any possible form of advertising – whatever your role in it – as if it falls under federal, state, and / or local fair housing laws. This includes written, printed, online, posted signs, oral statements, etc. – whether free or paid.

• During the past year, NFHA

and <several of its members> identified more than 7,500 discriminatory ads placed by housing providers on various websites. Yet, only 1,000 complaints have been filed with U.S. Department of Housing and Urban Development (HUD) because both HUD and private fair housing agencies lack the staff and time to work through the cumbersome process required to identify and bring these landlords to justice.

• The federal Fair Housing Act

makes it illegal to make, print or publish or cause to be made, printed or published housing ads that discriminate, limit or deny equal access to apartments or homes because of race, color, national origin, sex, religion, familial status and disability <There are, of course, additional state and local protected classes1.>.

• In order to comply with the

Fair Housing Act, newspapers utilize screening systems to keep advertisements containing discriminatory statements from being printed. <And they’re often much more conservative than fair housing advocates are! Take a look at FHCO’s popular article, “The List” (www.FHCO.org/ pdfs/article_thelist.pdf) for more this and related urban legends).> However, a legal interpretation of the Communications Decency Act (CDA) holds that interactive Internet providers, like craigslist, are not publishers and, therefore, are not liable for violating the Fair Housing Act if discriminatory housing ads are published on their sites.

Sadly, these ads reinforce the message to public readers that refusing to rent, or sell, or lend, or insure based on any of the protected classes is acceptable and even legal. What’s more, it confuses those who wish to follow the law or would be inclined to if they were better informed. All the more reason for the proactive stance the FHCO has always taken on education as a tool to eradicate illegal housing discrimination coupled, of course, with enforcement activities because the battle won’t be won with a ‘carrot’ alone.

• The Fair Housing Act covers

all advertising for the rental… or sale of homes as well as advertising for home loans, homeowners/renters insurance, and any service related to housing. Language in the Fair Housing Act and in the regulations implementing the law makes it clear that the law

Yet it needn’t be difficult. Internet providers can implement filtering systems just as print publications can (arguably it’d be all the easier for them to do so) to prevent individuals from posting illegally discriminatory

CITY

I am an: OWNER

STATE INVESTOR

VISA

The NFHA report identified thousands of ads that violate the Fair Housing Act—in all 50 states and the District of Columbia, including Portland and Bend, Oregon. As a result, the national organization filed over a thousand complaints with HUD against posters.

• The most common Fair Housing

Act violation that NFHA and its members found on the Internet was advertising discriminating against families with children. NFHA found ads stating preferences for tenants who were “single” or “a couple of individuals.” Phrases such as “perfect for young couple” or “three adults” were found in ads for houses or apartments with multiple bedrooms. These ads indicate an illegal preference or limitation and discourage families with children from even considering contacting a landlord. <Note: This is different than occupancy standards. To read up on the subject visit www. FHCO.org/discriminationin-oregon/protected-classes/ familial/occupancy.>

• Many of the properties with

such discriminatory language have multiple bedrooms, and would be ideal for families with children. Some examples of discriminatory language identified include:

• 2BR: “Mature couple or single with no children” NY

• 3BR: Duplex: “Christian atmosphere” IN

ADULTS….seeking a maximum of 2 tenants” CT

ZIP

PROPERTY MANAGER

*Print subscriptions $25/year $15 each additional market $8 each additional market I would like: PRINT Editions: ARIZONA SALEM/EUGENE OR

It shall be unlawful to make, print, or publish or cause to be made, printed, or published any notice, statement, or advertisement, with respect to the sale or rental of a dwelling that indicates any preference, limitation, or discrimination based on <protected class> (emphasis added).

• 2BR: “PERFECT FOR 2

NAME

ADDRESS

is also intended to prevent newspapers and other media from publishing advertisements or notices that limit housing to specific individuals or indicate a preference for certain people. The law states:

VENDOR

• 2BR: “Couples preferred” Chicago, IL

• 4BR: “Looking for responsible adults to enjoy home” VT

Even if these happen to be located in designated senior communities, the description of the community as an “adult community” or the advertising of “no kids allowed” is specifically disallowed by HUD. (Visit www.FHCO.org/discrimination-inoregon/protected-classes/familial for more on this subject.) A couple of my favorites that touch on other protected classes include:

• “Looking for a white lady who

has a car and that's drawing a check. No Children, teenagers" TN

• “We’re trying to make cheaper

rent available for able bodied people who can do a few things for themselves.” GA, and from here in Oregon…

• RV Hookup “Hopefully we can

find someone that is a Christian and loves God with all of their hearts” OR

Be sure you’re well informed and complying with both the letter and the spirit of fair housing laws. Schedule a fair housing class for your staff or members today, or ask your local trade association when FHCO will be offering a class with them. In the meantime, visit our newly revised website and make full use of the information and resources posted there. While on the site, sign up for our free e-newsletter to keep up-to-speed with developments in the fair housing world. This article brought to you by the Fair Housing Council; a civil rights organization. All rights reserved © 2015. Write jbecker@FHCO.org to reprint articles or inquire about ongoing content for your own publication. 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

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Rental Housing Journal Valley • May 2015

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RENTAL HOUSING JOURNAL VALLEY 16083 SW Upper Boones Ferry Road, Suite 105, Tigard, OR 97224 503-213-1281, 503-213-1288 Fax www.multifamilynw.org

Scott Arena President, Multifamily Northwest

A Little Recognition Can Go A Long Way!

ppreciation is a basic fundamental human need. Each of us can likely remember a time- perhaps in early stages of childhood, schooling, sports, or career– when someone told us “great job!” It is likely that it made you feel a certain way. Hopefully it was motivating, energizing, empowering and encouraged you to follow a path that would lead to obtaining more positive feedback. We feel good when we are praised because it makes us feel valued. When employees receive confirmation that their work is valued, productivity and satisfaction levels rise. Morale is enhanced and a positive energy flows throughout the workplace. So why is it important to feel good at work? I will suggest that attitude determines output. Employees are people - and provide the core of any business structure (we have not yet, thankfully, reached the era of total automation, depending on robots for every part of the business model). Apathetic or disgruntled employees can drain the energy out of any production or service function. Conversely, energetic

and engaged employees will pass on enthusiasm to the client or customer. Customers are more likely to establish and maintain relationships if they are served by passionate employees. As such, engaged employees are a boost to any business’ bottom-line. As leaders and managers how should we best practice employee recognition? First of all, remember that employee recognition is not complex or difficult – it is an obvious thing to do. In spite of the benefits of employee praise, it is surprising that so many businesses today either do not do it at all or do it poorly. Many office environments inspire apathy rather than excitement. It is crucial that managers receive coaching and reinforcing. Employee recognition must not be an undervalued management technique. Staff appreciation activities do not have to be expensive to increase engagement and boost morale. The simplest of practices can often produce the most noticeable favorable results. The following are ten ideas that can be easily and quickly implemented by any organization with relatively little cost or complexity.

• A sincere verbal word of thanks.

• A small gift (book, flowers, a

Call the employee in and shake hands with the person you appreciate and tell them you are grateful for their efforts.

card with movie or lottery tickets inside). The occasional token of appreciation shows you are paying attention and not taking for granted the dedication of loyal employees.

• Make work fun. Have a weekly

event to raise morale. An example: Have employees bring in baby pictures. Have a contest to see who can match the most pics with co-workers.

• A framed photo of the team or

certificate of appreciation (both can be signed by the team) A collective “thank you” form coworkers definitely conveys value for contributions.

• Acknowledge their efforts/

accomplishments in a companywide e-mail. Spread the word. This sends a strong message that hard work and accomplishment are appreciated and recognized.

• Frame it! Have employees

write on a scrap of paper one thing they really like or admire about a co-worker. Frame these along with a photograph of that employee. A gift that truly promotes appreciation and connection.

• A write-up about them in

the company newsletter. Showcase your star-players. This demonstrates you are an employer who wants to share people’s accomplishments with the team. And motivates others to reach similar goals.

• Remember the “significant other”

vacation time. A certain number of days they can use without feeling guilty. Tie it to accomplishment or extra work put in.

• Applause! A standing ovation

A thank you note or gift basket sent to the spouse. This sends a strong message that a company understands work impact to those significant people around the employee.

• A free pass for some additional

...continued on page 7

Multifamily NW

Upcoming Educational Opportunities

The 9th Annual Southern Willamette Valley Charity Golf Tournament This is your chance to make a difference in our community while you enjoy a great day of golf! To date, Multifamily NW on behalf of its generous members, has raised over $300,000 for local housing charities. Join us on Thursday, August 20, 2015 at Emerald Valley Golf Course. Register Now! First-come, first-served basis (Maximum 144 golfers)

WHEN:

Thursday, August 20, 2015 12:00pm Registration & Putting Contest 1:00pm Shotgun Start

WHERE:

Emerald Valley Golf Course 83301 Dale Kuni Road Creswell, OR 97426

WHY:

Raise money for the Relief Nursery Get your registration form and check out golf and sponsorship opportunities at Multifamilynw.org or email info@multifamilynw.org. 4

Multifamily NW | 16083 SW Upper Boones Ferry Road, Suite 105, Tigard, OR 97224 TF 800-632-3007 | Fax 503-213-1288 | www.multifamilynw.org

5/18/2015 EPA Lead-Based Paint Renovation Certification 8-Hour

5/7/2015 Forms and Notices 101

5/19/2015 Basic Plumbing Repair for Spanish Speakers

5/8/2015 It's the Law Lunch Time Series: FEDS: Mastering the Evictions Process 5/11/2015 CAMT Electrical Repair and Maintenance 1&2 5/11/2015 Low Income Housing Basic Tax Credit Two-Day Course

5/26/2015 CAMT Air Conditioning Maintenance and Repair 5/27/2015 Understanding Maintenance for Managers 5/27/2015 EPA Lead-Based Paint Refresher Course 4-Hour

5/18/2015 OR Landlord Tenant Law Part 2

Form of the Month

Single Family/Condo/ Multiplex Exterior Care Addendum M205 OR The Multifamily NW Exterior Care Addendum is a brand new form designed to address the many unique variables present in the exterior care of a rental home. Specific expectations are detailed concerning property landscaping, vehicles & driveway care, deck/patio maintenance, barbecue safety, trash protocol and more! This form is ideally signed along with the Rental Agreement and other essential move-in documents.

OREGON SINGLE FAMILY / CONDO / MULTIPLEX

EXTERIOR CARE ADDENDUM DATE __________________________________________ PROPERTY NAME / NUMBER ___________________________________________________________________________________________________________________________________________________________________ RESIDENT NAME(S) ___________________________________________________________________________

___________________________________________________________________________

UNIT NUMBER ___________________________________ STREET ADDRESS ___________________________________________________________________________________________________________________________________________________________________________ CITY ___________________________________________________________________________________________________________________________________________________ STATE ___________________________________ ZIP _____________________________________________________________

1. If the yard is to be maintained by Resident: =

= = =

It must be maintained in a clean and well groomed manner, including but not limited to, adequate watering of all lawns and planted areas, mowing and edging the lawn(s), fertilizing the lawn(s) and all plants as needed, removing invasive weeds, and properly trimming shrubs and trees. Lawns should be mowed to never exceed a height of 3 inches. If the Premises are in a city that issues leaf clean up notices, Resident must timely comply with such notices. If yard is not adequately maintained, in addition to all other remedies for material non-compliance, Owner/Agent may, after at least 10 days’ written notice, perform maintenance work on the yard and bill Resident for such work. If the lawn or planted areas die due to inadequate watering, or other actions or inactions by Resident, Resident will be responsible for all costs to replace the dead lawn and/or plants.

2. All vehicles on the Premises must be parked only in spaces designed for vehicle parking. Absolutely no cars or other vehicles may be driven or parked on the lawn or planted areas. All vehicles owned by Resident or their guests must be legally parked if on a public street adjacent to the Premises. All vehicles on the Premises or parked on an adjacent public street must be in working order, properly licensed and insured. 3. Resident will keep the driveway free of oil spots. 4. Resident will keep all garbage areas cleaned up. All approved curbside trash and/or recycling receptacles may not be visible from the street any time other than collection day. 5. If pets are allowed, or Resident has an assistance animal, all animal waste must be promptly picked up and disposed of properly. Any damage caused by such pet/assistance animal is the responsibility of the Resident. 6. If smoking is permitted, cigarette butts must be deposited only in fireproof receptacles. BARK DUST IS COMBUSTIBLE AND CAN BE IGNITED BY CIGARETTE BUTTS. 7. Resident will keep all decks and patios properly maintained, including sweeping leaves. 8. All barbecues must be kept at least 10 feet from the exterior of the home and any combustible materials, and operated in compliance with all manufacturer’s directions, to reduce the risk of fire. 9. Clutter on the outside porches and yard is not allowed. No indoor furniture is allowed in the yard, on porches/patios (front or back), alongside the residence or anywhere on the exterior of the Premises. 10. Resident will notify Owner/Agent of all needed fence repairs. 11. Resident is responsible to winterize the Premises by placing faucet covers on all exterior hose bibs, draining sprinkler systems and ensuring proper heat of the interior of Premises during the winter months. If the Premises include sidewalks, walkways and/or driveways, Resident is responsible for keeping the sidewalk, walkways and driveways free from snow and ice. Resident will be responsible for damages caused by inappropriate use of chemicals for snow and/or ice removal.

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RESIDENT

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RESIDENT

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RESIDENT

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_____________________________________________________________________________________

DATE

X X X

RESIDENT

_____________________________________________________________________________________

ON SITE

RESIDENT

OWNER/AGENT

Multifamily NW & the SWV Council Present

5/6/2015 May Landlord Study Hall

_____________________________

DATE

_____________________________

DATE

_____________________________

DATE

_____________________________

DATE

MAIN OFFICE (IF REQUIRED)

Rental Housing Journal Valley • May 2015

RENTAL HOUSING JOURNAL VALLEY

Profit In Real Estate ...continued from front page

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Rental Housing Journal Valley • May 2015

claim back your money with interest, he says. “It’s a safe, short-term investment with nice returns, but doing without the established criteria on loans established through banks poses certain risks,” says Buscemi, who offers some need-to-know tips for navigating hard lending. • Avoid hazards with insurance. When you know that the hazard insurance is in place – with adequate coverage – make sure that you are listed as the mortgagee. A little mortgagee clause that shows you are the mortgagee wit your name and address on the policy matters. This clause should also show that you are in first position to be paid, should the property be foreclosed on. • Know the many different types of insurance. They include policies: hazard, vacant dwelling, flood insurance, builder’s risk and loss of rents coverage. A very large part of your job as a hard money lender is to minimize the risk in a high-risk field. You are already doing all you can to reduce the risk of lending to a particular individual, which is great. But now you need to acknowledge that there are external factors that can affect your investment. • Build in prepayment penalties. Lenders want to make money on loans, which is not possible if the loan is repaid in full almost immediately after one is provided. The penalty would only apply for the first few months of the loan; after that,

the borrower will not incur a penalty if they want to settle the debt. You don’t want to distress borrowers, but you also want to protect lenders against losses from ultra-short-term loans. • What you risk without agreedupon prepayment penalties. If you do not build in prepayment penalties as part of a promissory note or mortgage, you are potentially leaving money on the table. Without such penalties you are giving an opportunity for unscrupulous borrowers to come in and take advantage of your lending system. Don’t leave yourself vulnerable.

Salvatore M. Buscemi, author of “Making the Yield: Real Estate Hard Money Lending Uncovered,” is managing director of Dandrew Partners LLC in New York City (www.dandrewmedia.com).The company specializes in placing capital from prominent institutional investors into middle-market distressed commercial real estate investments. He began his career at Goldman Sachs, where he worked four years as an investment banker. A frequent speaker on hard money lending, Mr. Buscemi also co-founded Dandrew Strategies LLC, a $30 million real estate solutions provider in the secondary mortgage market specializing in non-performing residential mortgage portfolios.

RENTAL HOUSING JOURNAL VALLEY

T Ask

Every apartment community has its own personality, as well as features and benefits that are unique to that particular property. Yet some smaller buildings find themselves trying to compete with larger communities with bigger budgets and all the “bells and whistles.” A manager of a smaller apartment community posed the following question:

I don’t have a pool, exercise equipment, etc., like a lot of the larger places in my area. How can I possibly compete with them? The answer is: You can’t! Your community has other benefits and advantages that larger apartment buildings cannot offer. Focusing on those benefits and highlighting them to your prospective renters will give you the opportunity to sell what is special and uniquely different about your community and apartments. Smaller apartment communities typically have a closer, tight-knit

neighborhood where most of the residents know each other and look out for each other. Also, the staff at a smaller builder may be better acquainted with the residents and more in tune to their specific needs. In addition, you can regularly do something special for your residents in the way of gifts, lease renewal open houses and community gettogethers. (i.e. Hosting a resident appreciation party for 50 people is much more affordable than for 250!) If you find that the same objections keep coming up with regards to the lack of specific amenities and benefits that are available at your community, then CREATE some! If there is no additional storage on your property or you are getting requests for boat and RV storage, then obtain information on public storage facilities in your immediate area that can offer these benefits to your residents. You could even work out a deal where you agree to refer your residents to a particular ministorage if they will be given a dis-

count just for being a resident of your community. In fact, you can work out merchant discounts with almost any local business in your area. In exchange for the discount, you can give the local merchant advertising space in your newsletter and/or pay them a referral fee. The same thing can be done with area recreational facilities and/or health clubs. Most health clubs are eager to work out special memberships and discount plans in order to obtain new members and increase their word of mouth advertising. You could agree to place their literature with other new resident information in a welcome packet, and actively promote membership at this particular club. Then, when you get an inquiry about “amenities,” you can describe all the recreational facilities that are available to them through a special club membership they are eligible for as a resident of your community. Remember: All businesses benefit by working together and helping

each other. Networking to create additional “amenities” for renting at your community will take an investment of your time. However, the extra benefits and added sense of value to your residents: PRICELESS! If you are interested in leasing training or have a question or concern that you would like to see addressed, please reach out to me via e-mail. Otherwise, please contact Jancyn for your employee evaluation needs: www.jancyn.com ASK THE SECRET SHOPPER Provided by: Joyce (Kirby) Bica Former owner of Shoptalk Service Evaluations Consultant to Jancyn Evaluation Shops Phone: 425-424-8870 E-mail: shptalk2@gmail.com Copyright Joyce (Kirby) Bica

The Next Generation ...continued from page 2

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AFTER

1. Pay for your successor(s) to take basic real estate courses, either online, or at a college/community college near them. They will need to pass with a B or better.

VALLEY, METRO,

ON-SITE

2. Put together an orientation so your successor(s) understands the current condition of the properties, how and why you bought ARIZONA APT. NEWS them and put five-year plans in place for each property. In this way they will also be setting long term and short term goals for asset growth and repositioning of the portfolio.

Salsbury Industries

Jan, Mar, May, Jul, Sep, Nov,

1010 East 62nd Street, Los Angeles, CA 90001-1598 Phone: 1-800-624-5269 • Fax: 1-800-624-5299

Octoberp

September

The Industry Leader in Quality

deals, how the financials work, what pro formas are and how to evaluate property financing so they can make informed purchase, sale and refinance decisions. Evaluate the purchase of potential properties together. 4. Review and role play how to make decisions regarding leasing commercial space and how to handle commercial leases, commercial brokers and their commissions and how to evaluate tenant improvement expenses and lease rates. 5. After all of this training, allow them to take a key role in decision making for your portfolio. (Remember to modify the LLCs to take their involvement into consideration!) All this may overwhelm your successor(s) at first, especially if they had no previous exposure to your investments. Allow them to air their concerns and coach them best you can. If you plan carefully you will have the added bonus of more quality time spent with your loved ones. You will be able to connect with them as adults, and enable them to prepare for their retirement as well as the future of other family members down the line. With the right planning and training, everyone wins.

3. Teach them real estate mathematics, how to underwrite real estate

Rental Housing Journal Valley • May 2015

RENTAL HOUSING JOURNAL VALLEY

Home Buying Pays Off Fast, but Hurdles Remain for Renters

any U.S. homebuyers can break even in less than two years if they buy a home instead of renting it, but financial barriers and preference are big factors in the decision to continue renting. - Homebuyers can break even on a home purchase in less than two years in 66 percent of U.S. metro areas, according to the Zillow fourth quarter Breakeven Horizon report. - Twenty percent of renters say they prefer to rent than buy. More than half (53 percent) say financial limitations keep them from buying. - The point at which homebuyers can expect to break even on a home purchase - Zillow's Breakeven Horizon - lengthened in many markets in 2014 as home value growth flattened. Even though buyers in most markets can break even on a home purchase in less than two years,i nearly half of renters in a newly released survey said their credit or finances keep them from buying a home.ii

Of renters surveyed by Zillow, 16 percent said they can't qualify for a home loan, 18 percent said they can't afford taxes, maintenance and other costs associated with homeownership, and 13 percent said they don't have enough savings for a down payment. About a quarter said they struggle to pay their rent. According to the survey, 82 percent of renters are long-term renters, and 57 percent are long-term renters who have lived for a long time in the same home. Just 14 percent of renters said they aren't staying long enough in the same place to buy. Zillow's survey sheds light on why some renters are not buying homes, despite historically low interest rates, prices that remain below peak levels in many areas and rising rents. Mortgage math aside, 20 percent of renters said they simply prefer to rent. "If the buy versus rent decision were about simple math, we'd likely have millions more homebuyers in

A Little Recognition ...continued from page 4 from the entire team at the start of the next staff/company meeting. Recognition by peers and colleagues is extremely powerful and a public display of appreciation can be a valuable motivator. Consistent practice is key to success with effective employee recognition programs. Also remember to spontaneously praise employees. This is highly effective. For many employees, receiving a simple and sincere “Thank You” is more important than receiving something tangible. Never underestimate the value of recognition through personal, written, electronic and public praise from those they respect at work especially when conveyed in specific, sincere, timely manner. Managers and team leaders have a given responsibility to obtain

Rental Housing Journal Valley • May 2015

the market, because the equation is tilted heavily in favor of buying," said Zillow Chief Economist Dr. Stan Humphries. "But no matter what the numbers say, buying a home is a huge commitment. Every day, Americans make decisions to buy or rent based on any number of personal dynamics, including preference, flexibility needs, family factors and, yes, financial considerations. There is no right or wrong choice, and it's important that America's housing market maintains a number of affordable options for renters and buyers, no matter their preferences." Over the last year, as home-price appreciation has slowed down, the length of time it takes to break even on a home purchase grew slightly in most major metros. The breakeven analysis looks at how long it takes to come out ahead on a home purchase versus renting the same home, recouping the costs of buying, including taxes and maintenance. Among the top 35 metro areas in the U.S., Dallas-Fort Worth had the

lowest breakeven horizon, at 1.2 years. Indianapolis, Ind. and Detroit were next at 1.3 years. The highest breakeven horizons were in Los Angeles, at 5.1 years, Washington D.C. (4.2 years) and San Diego (3.8 years). The national average is 1.9 years. Zillow's breakeven horizon incorporates all costs associated with buying and renting, including upfront payments, closing costs, anticipated monthly rent and mortgage payments, insurance, taxes, utilities, maintenance, and renovation costs. The horizon also factors in home equity growth for buyers, and, for renters, income earned if they invested the same amount of money into an interest-bearing account. It also factors in historic and anticipated home value appreciation rates, rental prices and rental appreciation rates.

...Panic ...continued from front page

results. We are components of a team –a collective group of individuals –all working to achieve a common goal or purpose. The power and effect of a simple “thank you” or a “good job” conveyed by word or deed should never be avoided or forgotten. Effective and successful business leaders understand this -and consistently practice it. It directly impacts the bottom-line. And it’s always nice when the bottom-line mirrors “good job”. Just don’t forget the people who helped get those results. Especially when their efforts helped produce that “good job”! By Scott Arena

any professional real estate activity in the state of Oregon. Acting as your fiduciary, your property manager is charged with maximizing revenue and minimizing expenses and risk. This means charging market rate rents, screening prospective tenants, responding in a timely fashion to maintenance requests, inspecting regularly, dealing with habitability or safety issues, and finding the least expensive solutions to problems within the area of their expertise. Your manager is also required to distribute funds and reports in a timely fashion, enforce the terms of the rental agreement by taking immediate action when there is a breach, reconciling tenant deposits, and issuing tenant reports and refunds in the time allowed by statute. Your property manager should have high-level knowledge of the parameters of landlord-tenant law. If you are shopping for a property manager, you should be concerned about the reputation of the company and its principal broker, including the broker's track record, base of knowledge and industry involvement. You will want details about the company structure and financial oversight process, the licensing and qualifications of those charged with direct oversight of management duties, and company policies and procedures that protect and restrict access to your personal information. You will want to check out the company's financial and reporting systems and avoid those whose systems are antiquated. Property management software has grown by leaps

and bounds. In addition to attracting and serving a new generation of tech-savvy residents, your management company’s data will be more secure if stored in a cloud-based system. If the building burns, the data does not. On the people side, property management is a customer-service business and residents are our customers; those who are treated well tend to take better care of the property they rent. You should be concerned about the experience residents will have with the company you select, so check out the office environment. In addition to harmony among the staff, tenant customers should be welcomed and treated with courtesy and respect, not as an annoyance. Property management is a people-intensive activity staffed by fallible humans. Even excellent managers and companies occasionally make mistakes, but there are signs that could indicate your management company is in real trouble. Lack of timely reporting, repeated failure to distribute funds when due, failure to respond to inquiries, failure to respond to maintenance requests by tenants, and failure to promptly advertise and fill vacancies are all very bad signs, not to mention a breach of fiduciary duty. If you are a management client and these things happen to you, don't wait for things to go from bad to worse, find another company pronto!

RENTAL HOUSING JOURNAL VALLEY

IT’S JUST SMART BUSINESS

“

We’ll save over $16,700 in utility bills each year because we upgraded to a new energy-efcient,

water-cooled chiller that keeps our 382,000 square-foot building at a consistent temperature all day. Plus, Energy Trust of Oregon gave us over $47,900 in cash incentives just for upgrading. Marty Rowe, director of facility services Holladay Park Plaza Assisted Living, Portland, Oregon

”

Get more from your energy. To learn more visit www.energytrust.org/multifamily or call 1.877.510.2130. Serving customers of Portland General Electric, Paciﬁc Power, NW Natural and Cascade Natural Gas.

CASE STUDIES ABOUT MULTIFAMILY PROPERTIES Energy Trust has helped hundreds of multifamily property owners and managers get more from their energy by saving them thousands in operating costs and improving their bottom lines.

Rental Housing Journal Valley • May 2015