Rental Housing Journal Valley October 2016

Rental Housing Journal Valley

October 2016

2. Fix and Flip or Rent 4. 8 Ways to Profit By Properly Managing Your Commercial Leases 5. Dear Maintenance Men – Roofs and Winterizing

EUGENE · SALEM ·ALBANY · CORVALLIS WWW.RENTALHOUSINGJOURNAL.COM • PROFESSIONAL PUBLISHING, INC

As Increased Apartment Construction Catches Up With Demand and Political Pressures Stifle Rents, Google May Be the Best Way For Operators to Continue Raising Rents

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ll is fair in love and war, and portfolio managers that love revenue and rent increases are using Google (of all things) to win the war for the most profitable renters. And, its working!

Let’s take the bay area for example, easily one of the hottest markets in the United States. In 2015, San Francisco experienced double-digit increases in apartment rents with occupancy rates unaffected by these skyrocketing increases. This year has been a bit of a different story. Although rent increases are still at a more than acceptable 3.7% for most of the Bay, it’s a far cry from the boom of 2015.

With many renters unable or unwilling to pay premium rent in San Francisco choosing to look to the east in Oakland, the battle to capture renters willing to “pay-to-stay” has turned to SEO and Google search results to maintain high single digit and even double digit annual rent increases in the cooling San Francisco market.

The counter-pressure from construction completions on 2016-2017 San Francisco rent increases is turbocharged in the political arena with city leaders asking private developers in San Francisco to rent 20 percent of units in new apartment buildings at below-market prices. Requirements like this take an even bigger bite out of developers and property managers margins, placing even more importance on maximizing revenue from the market-rate 80%.

Search engine optimization or SEO in short, is a process that highly skilled dig-

T

Preparing Your Furnace For Winter

he weather is getting colder and colder out there. It’s time to break out the warmer jackets and turn on the heat. But before you turn on your heater, winterizing your investment properties (especially the HVAC system) should be at the top of your to-do list. Your tenants will rely on the heater throughout the cold months of winter, so it’s important to prepare the system for the upcoming winter days. Here are some helpful tips on how to get it ready.

Tip #1: Clean and replace filters.

Did you know that dirty and clogged filters can cause big problems? Furnace filters are incredibly important parts of

continued on page 7

5 Key Research Findings About Tenants And Rentals

By John Triplett, Rental Housing Journal

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new survey designed to help property managers and owners gain insight into what tenants care about the most in their apartments shows insight on: • What will they pay more for?

• What drives them crazy?

• What makes them happy?

• What makes them sign a lease or renew a lease?

• What makes them move on from a property?

The rental survey was done by Buildium in the summer of 2016 and the company said it was created because, “As property managers or owners, naturally you want to highlight the best assets of a rental, benchmark rentals against the competition, and discover which convenience features will encourage great tenants to stick around. That’s why this report was created.” continued on page 3

continued on page 7 Professional Publishing Inc., PO Box 6244 Beaverton, OR 97007

PRSRT STD US Postage PAID Portland, OR Permit #5460

Text REALESTATE-ROI to 44222 to receive a digital copy of this year's Real Estate Opportunities in Investing (ROI) Finding Investing Success in Today's Housing Market

Rental Housing Journal Valley

Fix and Flip or Rent

By Christian Bryant

W

hat is the better investment within the current market?

Do you ever find yourself wondering what the best investment is based on the current market and how long the current market will make that investment profitable? Most real estate investors typically have two main investments to choose from; fix and flip or buy, fix and rent. Through my position as president of IRC Enterprises (www.IRCEnterprises. com), I have the benefit of running companies that help investors in both of these markets from Portland down to Eugene.

My general advice is to always have a balanced investment portfolio, but the right timing can make you much larger profit margins, as well as save you from taking unneeded losses.

The fix and flip market has been very profitable for the savvy investors over the last few years. Our clients have typically seen 20 to 50 percent ROIs, but those margins are being squeezed. It has notably helped, though that Oregon has become a redemption rights state. This has kept most of the large, national investment companies out of Oregon, leaving plenty of deals for local investors to take on without too much competition.

While other markets around the nation are tightening up and Oregon continues to be one of the top places to live, this will start changing. We’ve also had the benefit of very low inventory on the retail sales market, which has helped keep the retail sales prices high enough to support fix and flip investments.

Currently there are still deals to be had as a fix and flip investor, but they are getting much harder to find unless you are willing to lower your profit expectations.

In my best professional opinion, this will continue for no more than one to two years, and two may be stretching it. This is why we have been suggesting that our investors start looking for properties that they can buy and hold as rentals.

As most long-term successful investors will tell you, you must be willing to be flexible and adjust your investment strategy along with market demand. Ideally, you will adjust before the market so that you can stay ahead of the game. I would suggest that all investors slowly add to their rental property portfolio over time as it will create a great, passive income stream.

If you want your primary long-term focus to be on the fix and flip market, then there is a way to work rental properties into the ongoing strategy.

Everyone is aware of the current rental market and how much rent has increased over the last couple of years. Most likely, rent will start to plateau within the next year or so, but it’s very unlikely that they’ll decrease. If you have ever wanted to start building a rental portfolio, now is the time to do so. Lending rates are still very low and rents are at an all-time high. This mix will make a lot of properties’ cash flow much better than in typical markets. Within our property management company, we see clients purchasing single family homes and walking into $300 – $500 per month net profits, even after paying our management fee. If you are unfamiliar with rental properties, this is unheard of. Typically, if you break even, you are doing well as you end up profitable after the tax write-offs and appreciation of property value.

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If you don’t like the idea of maintaining a rental portfolio for the long term and want to stick to fix and flip deals, you should consider it as a way to get through the times when the market squeezes the profits out of them. What I mean by this is that you can start holding some of your single family home deals as rentals. If you buy them and fix them up with cash, you should look at refinancing them into tra-

ditional financing and get your money back. Next, rent them out for a monthly profit as a holding strategy. The reason I only suggest using single family home rentals for this strategy is for the ease at which you can liquidate them in the future when the fix and flip market comes back. You are able to sell these to anyone, not just investors.

If you start taking on this strategy now, you’ll be able to pay higher dollar amounts on the wholesale market than the fix and flip investors you are competing with, almost guaranteeing that you will win at auction when you bid. You also get to profit off the monthly income and then profit again when you sell them in the future due to normal market appreciation.

The main takeaway is that as an investor, the best strategy you can have is a fluid one. Don’t get stuck in one form of investing. You should always be a student of the market, willing to adjust your investment strategy based on current and upcoming market changes. There really is a way to make a profit in all market types, it’s just a matter of recognizing the proper opportunity and seizing it when the time is right.

Christian Bryant President – IRC Enterprises President – Portland Area Rental Owners Association

Rental Housing Journal Valley · October 2016

Rental Housing Journal Valley

5 Key Research Findings ...continued from page 1 The study looked at regional differences, age and professional cohorts to look for trends.

“Overall, we came away impressed with the desire of tenants— particularly apartment tenants—to use digital communications, not only to find a place to rent, but also to keep in touch with property managers,” the company said in the report.

“Moreover, we noticed a direct connection between a tenant’s relationship with their property manager or landlord, and how they felt about their rental.”

There were 5 basic findings: • 74% of tenants like or love their rental, but 54% are likely to move out next year.

• Location. Location. Location.

Renters want (and will pay for) a great neighborhood.

• Most commonly sought amenities are washer/dryer in unit, highspeed internet and central air.

• Tenants seek online convenience features like ePay, tenant portals, and text alerts.

• Loving a rental and loving a property manager go hand in hand.

No. 1 - 74% of tenants like or love their rental, but 54% are likely to move out next year

More than half of the renters surveyed reported that they like their residence (52%), while nearly another quarter (22%) said they love it.

However, yet another quarter had a less positive feeling about their home, with 11% saying they don’t care, 12% saying they don’t like their rental, and 3% saying they actually hate where they live.

Unsurprisingly, a tenant’s likelihood of moving over the next year is in direct approximation to these feelings.

Those who loved their rental were least likely to report plans to move (only 17%).

When those tenants did plan to move, it was usually for reasons such as job relocation or moving in with a boyfriend.

Those who hated their rental, however, were most likely to report plans to move (58%). When tenants are looking for a new place, the most common place for them to look is to ask around with friends, family or colleagues. Next on their list is to hop online and look at listings: first on Craigslist, and then secondarily on Zillow, a Google search, or ApartmentList.

No. 2 - Location. Location. Location.

One clear trend that emerged from all of these questions was that location is key.

“When we asked renters what they most love about their homes, two of the top three answers were a great location and a nice, safe neighborhood,” the report says.

In fact, quiet emerged as a motif throughout the survey, with tenants indicating they would pay more for it, or that they seek it out in a new place to live.

6 things tenants would pay more for

The report says property managers and owners might consider six amenities the report found tenants say they do not have now but would pay more for: • Swimming pool • Fitness center • Designated pet areas • Onsite storage areas • Doorman or security access • Garden or community garden

No. 3- Most sought amenities are washer/dryer in unit, internet and central air

When it comes to the amenities inside of an apartment, renters leaned toward the all-inclusive the survey shows.

The most desired choice was an in-home or in-unit washer/dryer unit, followed by included high-speed internet, central air, and included heat and hot water.

These choices did have a bit more variety along generational lines, with the 70+ preferring included utilities as their top 3 (Internet, Cable TV and heat and hot water) while all three younger groups prioritized an in-unit washer/dryer and highspeed Internet.

Millennials wanted included heat and hot water, while those from 33 to 69 erred on the side of central air.

“If it makes sense to bundle services in with your properties and raise the rent, consider doing so. This is something tenants will expect to pay extra for, and could be a draw for your listing,” the report suggests.

No. 4 - Tenants seek digital convenience features

Another trend which emerged strongly in the report was the desire of tenants to conduct rental-related business online.

The report says, “Across the board tenants reported a lower level of access to conveniences than they desire. Offering options such as online listings, electronic leases, electronic payments, and online maintenance requests/tracking—in addition to waiving move in or pet fees and offering flexible leasing options—will likely increase your number of rental applicants.”

In particular, “We asked tenants about online portals (property management sites where they can connect, get information, file maintenance tickets and pay rent) and the option to pay rent electronically. In both cases, tenants showed a strong preference—regardless of age cohort—toward using portals and ePay.”

continued on page 8

Text REALESTATE-ROI to 44222 to receive a digital copy of this year's Real Estate Opportunities in Investing (ROI) Finding Investing Success in Today's Housing Market Rental Housing Journal Valley · October 2016

3

Rental Housing Journal Valley

8 Ways to Profit By Properly Managing Your Commercial Leases

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

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eal estate is a relationship-dependent business, and no relationship is more important to real estate than the landlord/tenant relationship.

Yet no relationship in real estate deals with more divergent interests. The lease is the bond that holds this crucial relationship together and selecting the right lease clauses and leasing approaches can add significant value to a property or prevent unnecessary losses. The following are some examples of lease clauses and leasing decisions that can help increase property value.

Even if you have the benefit of a very successful business interested in your space, it is equally important to make sure that the lease contains language that discusses what happens if the tenant sells the business or a portion of the business.

For example, if the owner of the business sells all or part of the business to a new president, this is a significant change in responsibility and you may want to include language that specifies that any new business owner be a party to the existing lease.

2. Clear definition of space being 1. Strong tenant screening stan- rented dards The Building Owners and Managers Leasing to quality tenants is the best way to maintain a successful investment. Not only should the tenant have a solid business plan that can operate in harmony with the rest of the tenants in the building, they should have some business experience, be well capitalized and have good credit.

If they have weak credit it makes sense to require a co-signor or guarantor on the lease. The guarantor should be responsible for paying the rent during the full term of the lease. After the end of the initial term, you may consider letting the co-signor/ guarantor off of the hook if you are confident with the business model and the rents have consistently come in on time.

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Association (BOMA) discovered years ago that negotiations are easier when both tenants and landlords use the same measurements to establish what is being rented.

Every lease should include a drawing, usually attached as an exhibit. This drawing typically spells out the total square footage being leased. Unfortunately, not all landlords have accurate space measurements available for every space they own. BOMA has drafted up standards for all building types to use as reference.

These standards are generally accepted. You can find them here: http://www. boma.org/standards/Pages/default.aspx.

Most importantly, one needs to establish the rentable square footage. The rent-

able square footage is typically more than the usable square footage. This is because many buildings have common spaces that tenants and their visitors use, such as restrooms, elevators, hallways, janitorial closets, electrical/phone communications rooms, and generator spaces. These areas are loaded into the rentable square footage. This additional percentage is called the load factor. Additionally, leases need to define the percentage of a building that is used, and if necessary, the percentage of a campus in a multi-building complex.

A well-organized landlord will have a current and accurate schedule of rentable and usable square footages and space that is added into the load factor. Ignoring the shared area that the landlord has to maintain is a boon for a tenant and a loss for a landlord.

For example, if an 11,000 square foot building has a useable square footage of 10,000 square feet and has a 10 % load factor, that 1,000 square feet needs to be added to the lease for a total rentable square footage of 11,000 to take into account all of the square footage the tenant is using.

3. Clear definition of what the rent includes

Landlords often leave money on the table due to sloppy or capitated leases.

Leases need to clearly define base rent, rent commencement dates, and who pays for operating expenses. In cases of tenant

improvement construction, the lease should address what happens if there is a delay with the construction. Delays are often caused by contractors not showing up, materials not being available and permits not being released by government authorities.

In today’s world rent is not just rent for the space being leased, but also includes parking bill backs, signage rental, storage space rental and overage charges for the extra use of utilities after hours (for office buildings). It is important to take all of these things into account.

4. Clear definition of who covers which expenses

Successful leases also include a clear definition of which party pays for what expense. The following is a list of potential expenses to consider:

5. Detail on the penalties for infractions and non-compliance

Landlords need to ensure their leases include penalties for late rents as well as penalties for non-compliance with other lease terms. If a tenant stays over the expiration of their lease term, penalties of 150 – 200% of the rent is typically charged. This may sound onerous but landlords need strong tools to help negotiate future rents when leases expire and need to be extended. It is expensive to move tenants in

continued on page 8

Rental Housing Journal Valley · October 2016

Rental Housing Journal Valley

DEAR MAINTENANCE MEN: Roofs and Winterizing

By Jerry L’Ecuyer & Frank Alvarez

Dear Maintenance Men:

When is the best time to do an annual roof inspection? Can you give me some pointers as what to look for when I inspect the roof?

Tom Dear Tom:

The best time is before it rains! However, we find summer and fall to be most the prudent time to inspect and repair the roof. In other words, don’t wait to do roofing work after the first rains of winter. The roofing contractors will be very busy and costs may go up or you may have to wait in line for the work to get done. Inspect the roof during the summer and fall and get the roofing work done before it becomes an emergency. During the roof inspection, pay close attention to the flashing.

Flashing is used to transition between the roofing material and the building or a change in roofing direction or angle.

Flashing can also be found where pipes or a chimney come up through the roof.

The flashing is sealed with roofing tar and water leaks can form when the sealing tar cracks or separates from the building or the flashing material. Look for curled up roof edges on composition roofs, low spots on flat roofs and bird nests in tile roofs. Check all roof drains and cut away any trees branches that are touching or overhanging the roof. While you are in-

specting the roof, check the gutters. Winter storms have a way of loosening gutters and filling them with gunk thereby causing them to lose their pitch and pool water. Pooling or overflowing gutters can deteriorate fascia boards and siding.

Dear Maintenance Men:

I’m getting my work check off list started before winter comes. Do you have recommendations of what should be on the check list?

Lisa Dear Lisa:

After checking and repairing any roof damage, we recommend looking at the outside walls of the property. Stucco, wood siding or other vertical surfaces, is the building’s skin. Cracks, breaks and other damage to the siding invite “infection” to your building. This “infection” can take the form of wood rot, mold, siding delaminating or separation from the subsurface, material breakdown of the stucco will cause discoloration and crumbling. Common siding material found in most buildings is stucco, wood, brick, vinyl or concrete panels etc. Water intrusion of the siding can find its way through the smallest cracks by capillary action or more directly from misaligned sprinklers or other water sources. A little known and often forgotten solution to leaky windows is the clogged weep

holes along the bottom of the window frame and track. These weep holes clog with dust and debris and very easily can cause water to enter the building through the window frame or even through small cracks in the stucco or siding at the edges of the window frame.

Dear Maintenance Men:

It won’t be long before we need to change our clocks for winter. I’m a bit concerned about the lights at my apartment building.

I have various fixtures, sensors and timers, not one of which turns on the lights at the same time. Some don’t turn off or on at all.

Any suggestions?

Brian Dear Brian:

There are two ways to effectively control exterior lighting: 1: A timer clock.

2: A photocell for detecting light and dark Both time clocks and photocells have been around forever. We prefer to activate landscape lighting with a photocell as it is virtually maintenance free. A photocell will ensure the property has light only when it is needed and turn off automatically with the approach of daylight. Be sure the photocell located where it can “see” ambient light and not near an artificial light source. A time clock needs con-

stant attention in order to keep up with the changing seasons and adjustments for longer or shorter nights. There is nothing more frustrating than seeing the property all lit up at 5pm and it only gets dark at 7pm or even worse; the lights turn on at 7pm and it has been dark since 5pm.

Remember: the safety of your residents is at its greatest risk when it is dark and the lights are out.

Bio: If you need maintenance work or consultation for your building or project, please feel free to contact us. We are available throughout Southern California. For an appointment please call Buffalo Maintenance, Inc. at 714 956-8371 Jerry L’Ecuyer is a licensed contractor & real estate broker. He is currently on the Board of Directors and Chairman of the Education Committee of the Apartment Association of Orange County. Jerry has been involved with apartments as a professional since 1988.

Frank Alvarez is the Operations Director and co-owner of Buffalo Maintenance, Inc. He has been involved with apartment maintenance & construction for over 20 years. He is also a lecturer & educational instructor. Frank can be reached at (714) 956-8371 Frankie@BuffaloMaintenance.com For more info please go to: www.BuffaloMaintenance.com

Advertise in Rental Housing Journal Valley Circulated to over 6,000 apartment owners, on-site and maintenance personnel monthly.

Call 503-221-1260 for more information Rental Housing Journal Valley · October 2016

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Rental Housing Journal Valley

IT’S JUST SMART BUSINESS IT’S JUST SMART BUSINESS IT’S JUST SMART BUSINESS IT’S JUST SMART BUSINESS 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 We’ll save over $16,700 in utility bills each year because we upgraded to a new energy-efcient, all day. Plus, Energy Trust of Oregon gave us over $47,900 in cash incentives just for water-cooled chiller that keeps our 382,000 square-foot building at a consistent temperature upgrading. all day. Plus, Energy Trust of Oregon gave us over $47,900 in cash incentives just for We’ll save over $16,700 in utility bills each year because we upgraded to a new energy-efcient, Marty Rowe, director of facility services upgrading.

Holladay Park Plaza Assisted Living,our Portland, Oregon water-cooled chiller that keeps 382,000 square-foot building at a consistent temperature

”” ”” ”

Marty Rowe, facility all day.

Plus,director EnergyofTrust of services Oregon gave us over $47,900 in cash incentives just for We’ll save over $16,700 in utility bills each year because we upgraded to a new energy-efcient, Holladay Park Plaza Assisted Living, Portland, Oregon

upgrading. water-cooled chiller that keeps our 382,000 square-foot building at a consistent temperature

all day.

Plus,director EnergyofTrust of services Oregon gave us over $47,900 in cash incentives just for Marty Rowe, facility Holladay Park Plaza Assisted Living, Portland, Oregon upgrading.

Get moreWe’ll from save your energy. over $16,700 in utility bills each year because we upgraded to a new energy-efcient, Martyvisit Rowe, director of facility services To learn more www.energytrust.org/multifamily water-cooled chiller that keeps our 382,000 square-foot building at a consistent temperature Holladay Plaza Assisted Living, Portland, Oregon Getcall more from yourPark energy. or 1.877.510.2130.

+ +

all day. Plus, Energy Trust of Oregon gave us over $47,900 in cash incentives just for

To learn more visit www.energytrust.org/multifamily Serving customers of Portland General Electric, upgrading. or call 1.877.510.2130.

Pacifi c Power, Natural and Cascade Natural Gas. Get more fromNW your energy.

Marty Rowe, directorGeneral of facility services Serving customers of Portland Electric, To learn more visit www.energytrust.org/multifamily Holladay Park Plaza Oregon Pacific Power, NW Natural andAssisted Cascade Living, NaturalPortland, Gas. or call 1.877.510.2130.

Get more from your energy.

ABOUT MULTIFAMILY PROPERTIES Serving ofCASE PortlandSTUDIES General Electric, To learn customers more visit www.energytrust.org/multifamily Energy and TrustCascade has helped hundreds Pacifi Power, NW Natural Natural Gas.of multifamily property owners and managers get more from their energy or callc 1.877.510.2130.

+ + +

CASE ABOUT MULTIFAMILY by saving STUDIES them thousands in operating costs and improving PROPERTIES their bottom lines.

Serving customers ofEnergy Portland General Electric, Trust has helped hundreds of multifamily property owners and managers get more from their energy Get more from your energy. by saving them thousands in operating costs and improving their bottom lines.

Pacific Power, NW Natural and Cascade Natural Gas. To learn more visit www.energytrust.org/multifamily CASE STUDIES ABOUT MULTIFAMILY PROPERTIES or call 1.877.510.2130.

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.

Serving customers ofCASE PortlandSTUDIES General Electric, ABOUT MULTIFAMILY PROPERTIES Pacific Power, NW Natural and Cascade Natural Gas.

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.

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.

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Rental Housing Journal Valley · October 2016

Rental Housing Journal Valley

As Increased Apartment Construction ...continued from page 1 ital marketers use to optimize apartment websites for search engines like Google, Yahoo and Bing, improving the community’s visibility with potential renters online. Apartment SEO is a bit trickier, as the SEO company must understand the complex arena that is multifamily real estate. The last thing a community wants to do is end up ranking for searches that only bring unqualified renters.

Apartment SEO that is done right puts developments miles ahead of their competition. If two apartment sites are promoting the same category of units in the same neighborhood, the search engine optimized community is far more likely to get leased in a shorter time and at higher rent rates. It quite simple, if the ideal renters can’t find you, they find someone else and somewhere to live.

Search engine optimization is essential to San Francisco apartment owners and managers because: The overwhelming majority of renters are more likely to choose one of the first five actual property website suggestions in the results page. 99% of all San Francisco apartment searches start online, with the majority of those powered by Google.

Renters trust Google and other search engines and operators that make sure their property website has a standalone presence in the top positions for the keywords Bay Area renters are searching, increases not only the property’s trust but the asset value as a whole. A property that is tops in Google has millions of dollars more in blue-sky value that can be cashed in at the time of a sale. Communities looking to take advantage of these facts and gain highly qualified visitors to their website, need to rank as high as possible on Google and other search engines for the most searched keywords.

In the San Francisco market, over 8,100 local people search the keyword “San Francisco apartments” per month. Even if a property only received a visit to their website from 10% of them that is 810 hot qualified visitors per month. If only 5%

of the 810 could afford the highest possible rent, that is 40 people who you want to talk to before they call anyone else. If you close 10% of those, you just leased 4 units at the highest possible rent. Now if you also take a hyper-focused keyword like “luxury apartments San Francisco” with 320 people locally searching per month and assume 10% of those contact you, you now have 32 even more qualified leads. If you close 10%, you just signed another 3 units. In only 2 keyword examples the property leased 7 units at the highest possible rate and MultiFamily Traffic ranks each client property website for 100’s of keywords with a focus on the 15 most searched.

Getting ranked on Google is game-changing for San Francisco communities that previously did not appear anywhere on search engines for any of the most searched terms before. This is why many operators in San Francisco are employing SEO and Google AdWords campaigns before anything else; they protect rent margins and 100% occupancy.

San Francisco is expecting to add over 9,000 new apartments to its market before the year is up with over 8% of these new units are with Management companies already working with MultiFamily Traffic. To be competitive in the City by the Bay you should have a plan on how to capture the most lucrative of renters before the property even enters lease up.

The fastest way to get units leased at a premium rent rate is to put your website in front of the hottest renters as they search Google for luxury (high-rent) apartments in San Francisco. The theory is simple, if you can put your community right in front of the 5% of renters who will pay the highest rent, you don’t have to worry about slowing down your increases to cater to the 95% that won’t pay that price. If you want to lease your units at the highest possible rent, it’s all about presenting to the best target demographic.

By developing customized SEO and Google AdWords campaigns the winners

in the San Francisco rent war are seeing ROI’s that cover the additional marketing expense in the rent rate difference of in many cases, only one unit.

The US apartment market is extremely competitive and a property’s online presence is more important in San Francisco than possibly any other city in the country, but the news is still good. In every case, in every market SEO can make a good market “great” for the top communities on Google. In many markets, a 1 or 2 percent increase in rents year over year is good, what we are seeing in San Francisco is unheard of, but it’s an asset managers job to maximize the opportunity presently in San Francisco and other Bay Area cities.

As far as the developments in Oakland, SEO is no less important. Rents may be lower but so is the cost of land and development so the importance on capturing the highest margin your property can demand is just as important.

Another hot market for apartment SEO is Sacramento because of its short supply for units and solid job growth the market, Sacramento has seen an 11 percent increase in rents over the past year. Much like San Francisco, if a Sac-town property wants the highest end of that 11% average they need to find a way to have their property stand alone in Google search results so they are called first by the big money renters.

No matter what Bay Area city your assets are in, if you only use ILS services that list your property on an aggregated page next to hundreds of other competing properties, you are essentially placing your property in a “bidding war” on a list of commoditized list and you had better

offer the most features to command your higher rent. But, if you can have renters calling your community before anyone else, you can fill your units and let everyone else slow their rent increases as they fight over the tire kickers.

The first step is knowing what the top searched keywords are in your city and where your website ranks for them. Multifamily Traffic has a dedicated research team that performs this as a free service for anyone. You can call that team directly and have your research back free of charge in less than 1 hour in most cases.

They are available at 888-683-5885.

The next step is looking for a partner that can drive renters to you without asking you to make changes to your website or overcharging you for the work they do. There are many SEO providers that charge thousands per month for a mixed bag of results. You want to work with a firm that understands the industry and can guarantee results for a price you can fit in your budget.

Once you get your property to the top of the search results you will hear the results in the form of hundreds of calls to the leasing office. Make sure your staff is ready to follow up quickly. If you wait to set an appointment the renter is likely to go back to square one and look at an ILS placing both you and themselves right back in the “cattle call”.

About the author: Matt Easton is EVP of MultiFamily Traffic the leading apartment SEO and digital marketing provider.

MultiFamily Traffic works with 500 communities across the U.S resulting in thousands of leases signed every day. Matt can be reached at 303-803-7372 or www.MultiFamilyTraffic.com

Preparing Your Furnace ...continued from page 1 the overall system and if they’re clogged with dirt, pet hair or debris, the flow of warm air can be hindered, which means that the heating system will work harder to keep areas warm and comfortable.

If this happens for extended periods of times, the system could break down.

Make sure the furnace filters are checked on a routine basis to ensure they are clean and they are replaced on a regular basis as needed.

Tip #2: Clean the inside of the furnace.

The inside of the furnace, often at the base of the heater, is where dust and other debris will start accumulating. You should consistently make sure this area is clean through routine maintenance of your heating system. Once it’s clean, it will function efficiently and will be less prone to breaking down in the future.

Tip #3: Keep vents clear of obstruction.

Tip #4: Get a professional tune-up.

Hiring a professional heating and cooling company to complete an annual maintenance of the heating system is a great investment and one that should be done at the turn of the season. An annual maintenance will ensure the furnace is in proper working conditioning and the HVAC technician can identify potential problems that are unseen that could cause expensive repairs down the road.

Rental properties require a little bit of attention to detail during the bitter cold of winter and taking the extra time to do that will keep your tenants comfortable and allows for the heating system to stay in good working order so you don’t have to plan for any unexpected repairs or premature replacement of the system.

Written by Brooke Strickland, freelance writer for Specialty Heating & Cooling. Specialty Heating & Cooling is a full service heating and cooling company in Tigard, OR

Obstructing furnace vents could cause your whole system to not work effectively and could cause it to break down so make sure vents are clear of furniture like couches or bookcases. While you’re looking at the vents, be sure to open them up and clean the insides so they are free of dust or other debris that may cause clogging or potential break down.

Rental Housing Journal Valley · October 2016

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Rental Housing Journal Valley

8 Ways to Profit ....continued from page 4

5 Key Research Findings ....continued from page 3

and out. Such expenses include brokerage commissions, tenant improvements and attorney fees. The time lost without revenue compounds the costs to building owners. Holdover penalties are preferable to default clauses. Default clauses in the end will force a tenant out of a building, while holdover costs are more likely to be used to negotiate a ‘peaceful’ settlement and a lease renewal.

out clauses, go dark clauses, and cancellation clauses tied to the success of other tenants. Landlords must carefully decide how to balance their needs against the tenant’s needs. This has a lot to do with the rental cycles. Whether signing during a landlord’s market or a tenant’s market, landlords need to optimize their lease to their benefit while still keeping or obtaining the tenant.

More renters want to pay rent electronically. Where 37% of renters indicate they can currently pay online, 59% indicated they like or would like to pay rent via ePay methods.

The report said this information on digital convenience is an opportunity for property managers and owners to gain a competitive advantage and differentiate their properties.

8. Keep the property attractive to Once the owner and the tenant have tenants

No. 5 - Loving a rental and loving a property manager go hand in hand

6. Don’t forget rent increases

agreed on a lease it makes sense to plan for the future. Costs of operating properties increase every year and landlords will want to recapture these operating increases.

It is not unusual for a Landlord to bill the tenant for additional costs outside of the base rent. Annual tax and insurance increases (over base year,) as well as increases in the cost of building operations should be passed through as well.

Often a landlord will also have negotiated an increase in the base rent either as an annual increase, or through the use of another mechanism, such as operating cost increase adjustments, CPI increases or through the use of a percentage rent clause.

Additionally, if the tenant is happy and pays on time, the landlord will want to keep them at the property for longer than the initial term of the lease and will want to pre-negotiate a renewal into their lease.

This is extremely beneficial to a landlord.

7. Optimize the lease terms

As a landlord tries to estimate their opportunity cost for each tenant they need to calculate the cost of free rent, tenant improvements, leasing fees, vacancy, early

Even the most well written lease will fail to obtain or retain a tenant if the landlord is not committed to the physical condition of their building. A landlord must continually improve the building to attract or satisfy quality tenants. Not updating or upgrading a building or its systems (on the inside and the outside,) is a prescription for lower rent and an excuse for a tenant to move out. Taking tenants for granted is a dangerous business.

Even with high moving costs, tenants will move if the landlord does not take care of their space.

A thorough lease should protect the business interests of both parties; it should clarify expectations and protect the integrity of the property. It should also allow for all contingencies to give both parties confidence in the success of the relationship. Landlords looking to maximize the income of a building must pay attention to the lease clause details and their obligation to take care of their tenants. That is the only way to ensure that the building continues to grow wealth.

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“Our data shows there is a direct correlation between liking a property manager and plans to move house in the next year. Making the extra effort to connect with tenants may significantly reduce repeat vacancies over time, and ensure you are holding on to the tenants you most value,” the report says.

Feelings about property managers tended to be significantly more negative overall than feelings about landlords and this “may present a real business opportunity for property management,” the report said.

The reason tenants may like landlords more, the study found, is that tenants of single-family homes may have been more likely to have found their rental through a word of mouth referral. Thus there was a potentially higher number of landlords with a personal relationship to their tenants.

pattern emerged from these findings.

Tenants—and in particular millennials— have growing expectations regarding the availability of online tenant services. This extends from initially finding a property to the leasing process and to ongoing payments, requests and communications.

“Overall, it seems to be worth the effort for property managers to build relationships with tenants, as that will potentially extend the vacancy cycle over time. Moreover, property managers and landlords should look carefully at what community and home amenities renters value most in order to prioritize property upgrades or to emphasize particularly appealing features in marketing vacant listings.”a Find the full report here- www.buildium. com/wp-content/uploads/2016/08/RentersSurvey-1.pdf Methodology: The 2016 American Renters Survey was conducted by Buildium from June 6-17, 2016.

The survey responses were a random sample commissioned from Market Tools. The survey had an incidence rate of 97%, with a 95% level of confidence and a margin of error of +/- 3.3%.

About Buildium: Buildium is a property management solution that helps real estate professionals win new business from property owners and community associations seeking services.

Summary

Buildium writes, “The 2016 American Renters Report gives us a lot of insight into what is going on in the minds of tenants in the U.S, but certainly one clear

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Rental Housing Journal Valley · October 2016