January 2018
Rental Housing Journal Valley
2 How Apartment Rules to Protect Children Could be Discrimination
5 Landlords Missing Rent Payments Online after Company Bankruptcy
3 President’s Message RHA Oregon Optimistic in 18
6 How Do You Practice Compliance in Apartment Leasing and Management?
4 Dear Maintenance Men
EUGENE · SALEM ·ALBANY · CORVALLIS WWW.RENTALHOUSINGJOURNAL.COM • PROFESSIONAL PUBLISHING, INC
The Best Cities to Invest in Apartment Buildings in 2018 By Vinney Chopra
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he best cities to invest in apartment buildings for 2018 and which markets will provide best returns is the subject of this blog by veteran real estate investor and syndicator Vinney Chopra. He takes a look at the best cities to invest in apartments as many begin to see a softening of rental rates and rising vacancies. We enter 2018 with a changing environment in multifamily investing, but some of the underlying keys for investors’ success are still there if you look closely. “The biggest challenge is going to be finding attractive places to put new money to work,” Brian Kingston, chief executive of Brookfield Property Group, one of the world’s largest real-estate investors, told the Wall Street Journal. “Investors need to be cautious about the prices they’re paying.” Add to that the likelihood that interest rates are going to rise this year, and 2018 is shaping up to be particularly precarious. But that doesn’t mean that Brookfield or any of the world’s other leading real-estate investors are going to be sitting on the sidelines this year. Rather, they are pursuing an unusually eclectic assortment of strategies spanning a wide range of geographies and asset classes. Start with emerging markets where you see job growth and a favorable local government environment that encourages business development. As big cities see more new high-priced apartments coming on board in 2018, those rents will likely stop rising. “Rents themselves are still lower in the suburbs, but if demand keeps growing for suburban rentals and supply continues to lag, that will also start to change,” Zillow Chief Economist Dr. Svenja Gudell said in a release. “As more formerly urban renters move to the suburbs in coming years, we’ll likely start seeing more apartment buildings and walkable amenities popping up in those communities,” Gudell said. As many of you know my companies ...continued on page 4 Professional Publishing Inc., PO Box 6244 Beaverton, OR 97007
Forget the Millennials, the Baby Boomer Renters Want Apartments
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he current trends in apartment development are suddenly attracting a new kind of renter, Baby Boomer renters over age 55 who want to live in apartments in the suburbs, according to a new study. These potential new tenants are highly educated and have no children in the household. “Whether driven by a change in lifestyle, a consequence of the housing crash, or an inability to downsize due to lack of ...continued on page 6
Can I Say “No Pot in My Apartments” When It’s Legal in My State? By John Triplett Rental Housing Journal
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alifornia just became the world’s largest legal marijuana market. When pot is legal in a state, what issues does this present to property managers and landlords of rental properties? This was Rental Housing Journal readers’ top story in 2017 Property managers are often confused and seeking to better understand how to handle the issues of legal marijuana and medical marijuana when it comes to tenants and rental housing in their states. Laws are changing all the time in many states, just as California did on January 1, 2018, as voters approve different levels of permission when it comes to marijuana. This leaves property managers trying to figure out what should be in their leases around the issue. You may be able to ban smoking, but do you really know what your tenants are eating or growing in their apartments? Do you really want to know if they are good paying tenants? Rental Housing Journal did a recent interview with Seattle, Washington attorney Bret Sachter, an expert in tracking
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the progression and transformation of marijuana laws, to discuss some common questions property managers have about marijuana and tenants. “I’ve been asked this a lot,” Sachter said, “but it does not come up as often as you might think. The overarching issue here is that, with few exceptions, people can do what they want to protect their property, even if the prohibited behavior is not illegal. You can prohibit smoking, prohibit pets, but with marijuana it’s much easier because it is federally illegal. So you can pretty much prohibit it if you want to no matter what, even medical marijuana,” Sachter said.
4 questions about pot, tenants and apartment leases
as HUD is concerned,” he said. Here are his answers to four questions on pot and apartments.
No. 1 - Tenants with a disability and medical marijuana
Question: If a tenant comes in and says I have a disability, here is a note from my doctor, I use medical marijuana, which is legal in this state, and I want to rent your apartment. Can a landlord prohibit that? Answer: “A landlord can absolutely prohibit that because marijuana is illegal under federal law.” The landlord can say, “I understand our state allows medical marijuana but as it is still a Schedule 1 drug and I prohibit it on my premises.”
No. 2 - Marijuana is legal in my Sachter says in terms of Fair Housing state - but what does the lease issues, and the U.S. Department of Hous- say? ing and Urban Development (HUD) it is a situation where HUD wants it in the lease that marijuana is illegal but enforcement is another issue, he said. It is not so much that HUD wants landlords to evict over marijuana, but that you have something in the lease language that allows for eviction in the instance of marijuana use on the property. “So it is pretty clear as far
Question: What if a tenant says marijuana is legal and they should be allowed to use it? Answer: “If your lease prohibits smoking and prohibits use of illegal drugs, then the legality of marijuana at the state level is irrelevant because under federal law marijuana is illegal. If your lease does not ...continued on page 7
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Rental Housing Journal Valley
How Apartment Rules to Protect Children Could be Discrimination
The Grace Hill training tip of the week focuses on how rules you think could protect children, could actually open up landlords and property managers to charges of discrimination.
By Ellen Clark
plies with fair housing law. When working with prospective residents, it is ok to ask about the number of people who will live in the apartment home, but do not ask questions specifically relating to children.
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ormally, when you think of familial status discrimination, you likely think of things like refusing to rent to families with children, charging families with young children higher deposits, or steering them to certain buildings. But what about rules or policies that are intended to protect children? Could these be discriminatory? A story from a condominium complex in Fremont, California brings to light the issue around policies or rules that are intended to protect children, but actually could subject the property management to discrimination charges. A condominium complex had a long-standing rule that tenants’ children could not run and play outside within the complex gates. The rule was set up by the homeowners’ association, citing safety concerns, and threatened to fine residents for violations.
Three questions to avoid asking: •
One of the residents claimed that she and her children were subjected to threats, intimidation, and harassment. A housing nonprofit called Project Sentinel brought a class action lawsuit pro bono and recovered $800,000 from the condo managers. Additionally, board members of the homeowners’ association must undergo fair housing training and post signs indicating that children are allowed to play outside.
Excluding children from areas other residents can use could be discrimination
This news item reminds us that excluding children from areas that other residents can use could be considered discrimination—even if the intent of the exclusion is to protect them. Here are some tips for working with families with children in a way that com-
How many adults and children will be residing in your apartment home? • How many children are in your family? • How old are your children? Instead, ask: “How many people will be residing in your apartment home?” Do not discriminate against families with children by stopping or restricting children’s use of community facilities or services. Safety and liability are still important, but you must create your community policies carefully. ...continued on page 7
Upcoming Events 1/10/2018
HR Issues: Overcoming Depression in the Workplace
1/10/2018
Landlord/Tenant Part I
1/12/2018
It's the Law: Starting on the Right Foot: Hot Issues for The Upcoming Year
1/18/2018
Strengthening Front Line Skills for Maintenance
2/7/2018
Landlord Study Hall: Housing Regulation, State & Local
2/8/2018
Fair Housing Fair Education Conference
2/9/2018
It's the Law: Wearing Multiple Hats: Understanding the Differences Between Commercial and Residential Tenancies
2/13/2018
Landlord/Tenant Part II
2/14/2018
HR Issues: Guarding Against Cyber Attack
Form of the Month Appliance Addendum – M078 OR-WA APPLIANCE ADDENDUM DATE __________________________________________ PROPERTY NAME / NUMBER ___________________________________________________________________________________________________________________________________________________________________ RESIDENT NAME(S) ___________________________________________________________________________
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UNIT NUMBER ___________________________________ STREET ADDRESS ___________________________________________________________________________________________________________________________________________________________________________ CITY ___________________________________________________________________________________________________________________________________________________ STATE ___________________________________ ZIP _____________________________________________________________
Resident hereby acknowledges that the appliances listed below have been provided by Owner/Agent to be used exclusively in the Unit. Resident agrees: (a) to use all appliances in strict compliance with all manufacturer’s instructions (which can be found online); (b) not to move, remove or alter the appliances; (c) to notify Owner/Agent immediately if any appliances are damaged, leaking or not functioning properly; and (d) to return the appliances at the end of the tenancy in the same condition as when provided by Owner/Agent, normal wear and tear excepted. Resident is responsible for all damages arising from failure to follow the rules above, or any improper use of the appliances. Resident certifies that he/she has inspected the appliances and that the appliances are properly installed and in good condition and working order. If signed at move-in, Resident agrees to notify Owner/Agent of any deficiencies within five days. APPLIANCE
(check if supplied)
MAKE
MODEL
SERIAL NUMBER
Refrigerator _________________________________________________________________________________________________________________________________________________________________
Dishwasher _________________________________________________________________________________________________________________________________________________________________ Range _________________________________________________________________________________________________________________________________________________________________
Microwave __________________________________________________________________________________________________________________________________________ _______________________ Washer _________________________________________________________________________________________________________________________________________________________________
Dryer _________________________________________________________________________________________________________________________________________________________________
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APPLIANCES SUPPLIED BY RESIDENT
Resident may not supply any appliance for use on the Premises. Resident may supply their own appliances, subject to the following rules: Resident agrees that for any appliances Resident brings on the Premises: 1. Resident must obtain prior written consent from Owner/Agent for any appliances supplied by Resident. See Air Conditioner Installation Agreement (Form M050) for rules related to air conditioners. 2. Proper installation is critical to avoid damages, costly repairs and great inconvenience. Therefore: A. Such appliances must be installed in full compliance with all manufacturer’s instructions. A professional is strongly recommended to perform any installation. B. Be careful when moving appliances as Resident is responsible for any damage to floors, walls, cabinets or any other part of the Premises damaged while moving an appliance. C. Written consent from Owner/Agent is required prior to installing any washing machine or any other appliance connected to plumbing. Owner/Agent has the right to inspect any installation, reinstallation, etc. or any adjustment of or to a washing machine or any other appliance connected to plumbing. D. For washing machines, an attachment must be installed to prevent the drainage hose from accidentally coming out of the drain pipe. E. Resident will be responsible for any damages resulting from any malfunction of the washing machine, leaking washing machine or the drainage hose coming loose from the drain pipe, or any malfunction of any other appliance attached to plumbing. 3. Resident must operate all appliances in full compliance with the manufacturer’s instructions. 4. Resident must maintain all appliances in good working order and Owner/Agent does not repair any Resident provided appliances. 5. Resident must remove from the Premises any appliances Resident provided upon termination of the tenancy and is responsible for any damages caused as a result of such removal. 6. Resident is responsible for any damages caused by appliances that are provided by Resident(s) on or about the Premises.
Form M078 OR-WA Copyright © 2017 Multifamily NW ®. NOT TO BE REPRODUCED WITHOUT WRITTEN PERMISSION. Revised 11/28/2017.
APPLIANCES SUPPLIED BY OWNER/AGENT
This brand-new form is designed to communicate expectations regarding appliances, whether the resident may supply any for use on the premises - including rules for installation and use. Appliances suppled by the Owner/Agent are cataloged and disclosed to the resident with responsibilities for proper use and liabilities for damage.
The provisions contained in this document are incorporated as part of the parties’ Rental Agreement. Failure to comply with any of the terms herein constitutes a material violation of the Rental Agreement. X
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X
RESIDENT
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RESIDENT
X
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DATE
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RESIDENT
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ON SITE
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MAIN OFFICE (IF REQUIRED)
Rental Housing Journal Valley · January 2018
Rental Housing Journal Valley
President: Ron Garcia Vice President: Phil Owen President Elect: Mark Passannante Secretary: Lynne Whitney Treasurer: Sandra Landis
W
atching all of the New Year’s Eve celebrations around the world on TV this month made me reflect on two things: First, that the optimism of a new year is a worldwide celebration with no social, political, or religious boundaries, limitations or qualifications. It’s truly a globally unifying event! Secondly, I realized that I’m home watching TV on that night when the rest of the world is out having a great time. Ugh. I suppose that’s the trouble with optimism - it tends to set up the cynical “yeah, but…” side of the issue. So to get back on track, I ask myself – Do I have a 2018 New Year’s resolution? Well, let me state that I do have a great deal of enthusiasm for this coming year as President of The Rental Housing Alliance Oregon. And yes, I am optimistic about who we are and what we do. So let’s consider: • Since 1927 RHA Oregon has set the standard for community participation by landlords providing Affordable, Quality and Fair housing. • Our Board of Directors is 18 people strong and committed to serving our nearly 2,000 members. • Our monthly education classes are taught by industry leaders on topics be-
Past President: John Sage Office Manager: Cari Pierce
President’s Message Optimistic in 18 ginning with Fair Housing and Landlording 101 to protecting the property, understanding the tenant relationship, and one-on-one mentoring to help members become quality rental housing providers. • Our monthly dinner meetings provide a forum for speakers that have included the Secretary of State, the Secretary of Labor and Industry, Mayoral candidates, top tier legal panels, recognized economists and tax specialists, as well as vendors and services that run the gambit from fire prevention and plumbing problems, to bed bugs, energy savings, handyman tips and even exit strategies for those who have spent their lives as rental property owners and facing retirement. • Our state lobbying efforts have won praise and respect from both sides of the aisle and from other housing and trade associations. RHA Oregon has participated in crafting housing policies and laws for decades. Nothing could be more important going into 2018 than building on the integrity of these years of efforts to help promote the rights of individual
Rental Housing Journal Valley · January 2018
property owners. • Our Owner Services include rental housing forms and tenant screening. These are accessible on line and used throughout the State of Oregon. • Our building is owned by the membership and open from 9 to 5 Monday through Friday. We have a large conference room used to house classes and meetings and it is available to rent out for private business events. • Our Vendor Services platform is crucial to our success and it is an expanding asset that allows our members to stay ahead of the curve and learn from the industry itself. Meeting the owners, operators, technicians and executives of services that cater to the needs of rental properties and investors is a specialty benefit that cannot easily be duplicated through any other venue. • Our Community Involvement has raised literally thousands of dollars to help put homeless families into safe housing, clothe and feed thousands of individuals, provide
Christmas gifts to children around the state, and assist Veterans in need. Service is a core value of The Rental Housing Alliance of Oregon. • Our annual picnics and “Starry Night Celebrations” and our holiday parties and Happy Hours are all times when we get a chance to meet one another and have special moments to enjoy ourselves in welcoming environments. They are never dull and always fun. So what is my New Year’s resolution for 2018? It’s this: If you find yourself at home, reading my message while on the couch and watching TV when we are all engaged in meaningful activities that support our association, industry and community at large, I resolve to meet you at our next meeting and invite you to join us to get more involved. We need you this year more than ever! See you then. Ron Garcia, RHA Oregon President •
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Rental Housing Journal Valley
Dear Maintenance Men:
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Courtyard Design, Disaster Preperation and Kitchen Remodel
ear Maintenance Men: I want to create a seating and relaxing area in the middle of my building’s courtyard. My thoughts are to use decomposed granite and eliminate the current grass area. How do go about installing the surface without making a mess or a future headache for myself. Bryan
Dear Bryan: Decomposed granite or DG for short is a great way to add a durable, natural and water wise surface. A few things you need to know before you get started. The key word in DG is “Decomposed”. In other words, this granite is decomposing. There are three options: raw DG for flower beds, stabilized DG for walkways and resin-coated DG for driveways. For your purpose you need to use a stabilized DG for walkways. It has a binder mixed into the DG. Non-stabilized DG is much cheaper, but will of course decompose, create dust when dry and slush when wet. To properly install DG, dig down three inches overall and use a wood, rock
or brick border to keep the edges of the DG from crumbling. As an option, lay down a weed barrier cloth under the DG. Apply DG in one and a half inch layers, water down (don’t flood) and tamp or use a heavy roller to compress the DG. Wait eight hours between layers to let the DG settle. Repeat the above for each subsequent layer. When installed properly, the DG surface will be rock hard, stable, dust free and will allow water to drain.
The Best Cities 2018 ...continued from 1 have been investing in emerging markets in Texas and Georgia for the last 10 years. Emerging markets consists of: Job growth Trending rental increases Absorption of supply Fewer permits issued for new construction New business moving in the path of progress for that local segment of the metro area We research to find these great main markets to invest in multifamily across the nation. A number of these apartment main markets and submarkets are emerging We feel that one should do even deeper research before investing. One hint, I can give you is to look for the operating memorandums of the
properties already on sale. In the front or back of this beautiful information brochure, usually are five to 10 pages filled with great economic data and news about the area. Brokers include that so Investors all across the world will know why investors should purchase that multifamily asset. You can take the sources of the economic news and growth of jobs articles and even do more research from those sites or publications. This just saves a lot of time. Rents Stay Flat In Large Cities As MidSized Cities See Growth Increases in national rents have flattened for the last four months and observers are witnessing the slowest annual growth rate in six years, according to a new report from Rent Café. The rental market is cooling down, with
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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
a 2.2 percent year-over-year increase, with the national rent reported at $1,354 in fall of 2017, according to Yardi Marix. “The housing market follows a cyclical path. The fact that the prime summer seasonality did not cause significant rental growth is the latest signal that the market may be cooling,” Doug Ressler, senior analyst at Yardi Matrix, a sister division of RENTCafé, said in a release. “However, these changes will be felt gradually, first in the largest and most expensive cities, followed by mid-sized markets, and eventually trickling down to smaller towns.” Ressler said. Bullish on Texas and Georgia to invest in apartment buildings for 2018 I am quite bullish on Texas. Houston, San Antonio and even some parts of Dallas, even though it’s very heated market. The other state I am bullish on is Georgia, especially Atlanta and vicinity. The third market for great growth in my research is North Carolina and South Carolina. In my thinking there are other markets worth looking at the growth potential that could be equally good to invest in: Cincinnati and Columbus, Ohio, Nashville, Tennessee, Birmingham, Alabama and St. Louis, Missouri. Some of you may say, “Vinney, what about Salt Lake City, and some cities in Arizona?” Please do your research and then decide. I can definitely say study the numbers from your stringent underwriting and don’t fudge or manipulate to make the opportunity work. Do extensive studying about the local market before you invest in apartment
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. 2. Locate and clearly mark the main electrical panel. 3. Locate and mark the main sewer clean-out. Run a mainline snake or hydro jet at least once a year. (A Friday evening main back-up is a disaster.) 4. Locate and mark the main gas or fuel oil shut-off valve. 5. Write down and post this information in a public area of your apartment building, including emergen...continued on page 8
buildings in 2018. But one thing is for sure, multifamily investing is the real game in town. Jump into it as quickly as you can. Better yet, there is so much money flowing all around you, that you may want to harness that through a syndication process like I have been successfully doing for the last 11 years with my teams. You can enjoy the bigger fruits of cash flow and equity gains for your valued investors and yourself. Happy Investing. Vinney Chopra is the Founder and CEO of Moneil Investment Group and President of Ideal Investments Group. His latest accomplishments include acquiring 12 multifamily assets in the last 28 months, worth $132 million. His last two syndications were sold out in just a few hours, and one in 36 hours raising $4.7 million and another one $6 million in eight hours. Between the two syndication companies he founded, Vinney’s team is controlling over $200 million worth of assets. He is a mechanical engineer. After entering USA with $7, he graduated from The George Washington University with Master’s in Business Administration in Marketing, he shifted his focus to marketing and motivation. He was a professional fundraising consultant and motivational speaker for more than 35 years with a wonderful private company. Vinney and his wife started their real estate investments in 1983. Many times, people call him “Mr. Enthusiasm” or “Mr. Smiles.” He likes to bring great value to everyone he comes in touch with. He likes to add value to everyone around him. You can also reach him at vinney@vinneychopra.com
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Rental Housing Journal Valley · January 2018
Rental Housing Journal Valley
Landlords Missing Rent Payments Online after Company Bankruptcy
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ozens of landlords around the country are missing rent payments online and still trying to collect funds tied up in an online ecommerce dispute that had led to a Kentucky-based online company bankruptcy last month. CC Operations LLC dba eCHECKit, filed a bankruptcy petition in October in Kentucky. eCHECKit is the payment processor for the 13-year-old Fort Collins, Colorado, company eRentPayment, which offers landlords and property managers the convenience of collecting rent payments online. According to eRentPayment’s website, tenants pay rent on the company’s secure website and it is processed in the automatic clearinghouse, or ACH, network and then deposited in the landlords’ accounts. It is still unclear how many landlords may have received some payments and how many are still missing rent payments online and seeking payments from reports. The Ft. Collins, Colorado newspaper reported, as an example, landlord Wes Kalter’s tenants paid their $3,200 rent on Oct. 5, the same as always. The money paid to eRentPayment.com should have made it to Kalter’s account within three to five days. It never showed up, according to the newspaper. Kalter says he has talked to 91 other landlords who are owed about $250,000 in rent payments, and to Fort Collins police. Kalter told the newspaper he is not holding his tenants responsible and blames eRentPayment for “not giving us a route to fix this. ERentPayment is blaming eCHECKit ... all they are telling us is eCHECKit is declaring bankruptcy, and we’re out $250,000. They’re just blowing us off.” But eRentPayment emailed customers, claiming that recent payments weren’t made because of issues with its payment processor, eCHECKit, which filed for bankruptcy protection. The BBB of Colorado and Wyoming said it started getting complaints about eRentPayment Oct. 12 and had received 41 complaints last month and has suspended eRentPayments’ accreditation.
Missing rent payments online
“In my husband’s and my case, it’s about $4,000 that we’re missing,” Sherrie Mills, a Denver Realtor who owns investment property, told the Business Den. Mills said she has used eRentPayment for three years. Mills told the newspaper she’s disappointed by what she sees as a lack of communication by the rent management company. Next month, she’s avoiding rent payments online and asking tenants to cut her a check. “I think it’s turned me off permanently,” she said. “At no point did we think our funds were at risk.” Multiple posts by various landlords around the country on Bigger Pockets discuss what has been happening with the payments. Rick Sands, president of eRentPayment, wrote on his company Facebook page, payments made through the site now are being processing by New York-based Esquire Bank, and those made after Oct. 12
are being processed without issue. The latest Facebook posts from the company, however, indicate that some payments from early October still had not reached landlords’ bank accounts. The posts have attracted dozens of comments from frustrated customers, according to Business Den. The issues faced by Kentucky-based payment processor eCHECKit, have put Tempe, Arizona’s Check Commerce in the middle of the dispute, according to a report by the East Valley Tribune. The newspaper reported the Tempe-based company, rent payment online processor for eCHECKit, froze over $4 million of eCHECKit’s funds in a reserve account due to irregularities it noticed in debit and credit instructions that eCHECKit submitted on behalf of its merchants. In a notice to consumers, Check Commerce stated, “At that time, Check Commerce believed that eCHECKit lacked sufficient available funds to cover the corresponding credit transactions for the debits it had submitted on behalf of its merchants,” according to the newspaper. The issue began when property owners using the eRentPayment online platform realized they had not received automated clearing house payments submitted by tenants in early October, the newspaper reported. It became clear that issue stemmed from financial problems faced by eRentPayment’s payment processor, eCHECKit, the newspaper reported. eRentpayment said on their website last month, “We regret to inform you that our payment processor, eCHECKit, has informed us that it expects to file for bankruptcy protection. We are told that it suffered losses due to a fraud and that its processor, Check Commerce, has held over $4 million of its funds and will not release the funds to the intended recipients at this time. Please note that eRentPayment had nothing to do with the fraud eCHECKit suffered. It was apparently caused by another client of eCHECKit, according to a statement on erentpayment.com. “The transactions potentially affected were submitted after approximately 7:31:00 PM (Pacific time) on 10/03/2017 through approximately 7:01:33 PM (Pacific time) on 10/12/2017. Any transactions submitted after this time period should not be affected as they are being processed through eRentPayment’s new direct bank relationship. Similarly, any future trans-
Rental Housing Journal Valley · January 2018
actions should not be affected as they will be run through the new direct processing relationship. “We do not know if or when Check Commerce will send the pending transactions to the recipients. Accordingly, you should consider your options including having the tenant contact his or her bank to request the transaction be reversed. Specifically, the tenant may initiate a re-
turn for an “Incomplete Transaction.” We understand that the return code for this is “R10” and the bank will require a written statement from the tenant. Also, the tenant will have a limited time period to request the return from his bank, usually within 60 days from the date of the transaction,” the company said on its website last month. “We are contacting the Attorney General of Arizona, the National Automated Clearing House Association, and reviewing legal action against the relevant parties,” according to eRentPayment. Resources for rent payments online Ft. Collins Company At Center of Rent Payment Dispute Disappearing rent payments frustrate customers of Fort Collins firm Tempe firm’s $4M dispute sticks landlords nationwide Kentucky Western Bankruptcy Court Case 3:17-bk-33389 Online rent payments to Virginia. Beach landlord held up by bankruptcy •
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Rental Housing Journal Valley
How Do You Practice Compliance in Apartment Leasing and Management? By Ellen Clark
C
an you imagine how delighted you’d be if all of your employees were compliance experts? Studies of top performers in music, chess, and sports point to the importance of practice in the development of expertise. With most skills in life, if you want to be great, you have to practice.
But how does one practice compliance?
As trainers, we sometimes fall into the “check the box” mindset. We are happy when all employees take their fair housing or harassment training once a year. Deep down, though, we know it takes more than that to be really good at compliance. It takes practice.
How can you create meaningful compliance practice initiative?
Here are some tips! • Creating a recurring monthly training scenario will help your learners to retain and transfer compliance lessons to their jobs. • Make a practice plan. Create an initiative around compliance practice. For example, create monthly compliance
refreshers where employees get a few scenario-based questions to answer. Build a course in Vision X to deliver and score the questions. • Create a little competition and make it fun. Set up a simple leaderboard or acknowledge participating employees in a company-wide email or with a few words at a team meeting. You might be surprised what some healthy competi-
tion can do. • Focus on meaningful, relevant scenarios • Use realistic scenarios and decisions that employees will encounter on the job. • Making the practice scenarios relevant will ensure employees don’t feel they are wasting their time. Use your experience to generate real scenarios, but also scan HUD, EEOC or state agency websites for important compliance news, recent claims and court decisions. These are great for developing scenarios. Learners tend to succeed when allowed to practice in a safe, low-stakes environment Create a safe space. In job training contexts, practice allows ...continued on page 7
Forget Millenials ...continued from 1 affordable homes, senior households are embracing renting in droves,” according to RentCafe.com.
Some highlights of the Baby Boomer renters report:
Between 2009 and 2015, the percentage of the renting population over 55 years old increased by a whopping 28% (vs. 3% increase in renters 34 or younger). By education, the biggest changes came from renters holding a bachelor degree or higher: up by 23% (vs. 17% increase in college graduates). Renter households with no children saw the most significant percentage increase when looking at family type: up by 21% (vs. 14% increase in families with children). Nationwide, the number of senior renter households saw a 2.5 million gain between 2009 and 2015, the largest net increase by age group, according to the study.
Baby Boomer renters choosing suburban lifestyle
Since 2009, 39% more Baby Boomer renters over 55 have chosen the suburban lifestyle for their rental housing. Among the 20 largest metros in the US, Riverside boasts the highest percentage increase in terms of senior renter-occupied households (63%), while Los Angeles posts the biggest gain (approx. 134,000). Comprised mostly of Baby Boomers, this generation has lived a big part of its life in the suburbs, essentially being responsible for the launch and prosperity of the consumer suburb. Owning a home and raising a family in a suburban community truly defined this age group. Now it finds itself in a big empty house, with too much space to keep up and high property taxes to pay. They are not moving into the city in an urban environment. “Lowering living expenses, looking for a different lifestyle, less house-related work and overall less responsibility can be achieved by downsizing, so a lot of retirees opt to rent,” Simona Solomie, a real estate broker with Remax Masters of Morton Grove, Illinois, who works with home sellers, buyers, and renters in
the western and northwestern suburbs of Chicago, told RentCafe in the study. Baby boomers also account for the highest increase in renters in urban areas, but the spike in numbers is much higher in the suburbs (21% vs 39%). The second highest increase comes from renters aged 35-54, 27% in the suburbs and 8% in the city.
Cities with largest increase in Baby Boomer renters
In all 20 largest U.S. metros in the study, without exception, the rate of increase in senior renters greatly surpasses that of younger renters. The two largest gains were in the Los Angeles metro and New York metro. The Los Angeles metro gained 134,000 new senior renter-occupied households and lost 26,000 renter households under 34 years of age. New York City gained an additional 124,000 renter households over 55 during this time period and about 54,000 under 34. While Los Angeles and New York had
the biggest numbers, the fastest growing areas Phoenix, Riverside and Tampa showed the biggest increases in Baby Boomer renters. Here are the top 10: Riverside, CA – 63% Tampa, FL – 61% Phoenix, AZ – 59% Dallas – 46% Seattle – 45% Atlanta – 44% Washington -44% Denver – 43% Minneapolis – 38% San Diego – 33% This Baby Boomer renter is interested to live in a place that offers a convenient, quality lifestyle, a comfortable living space, a place to exercise, and a place to socialize all-in-one. •
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Rental Housing Journal Valley · January 2018
Rental Housing Journal Valley
Practice Compliance ...continued from 6
Discrimination ...continued from 2
learners to succeed or fail in a safe, lowstakes environment. When presenting practice activities to employees, don’t penalize them for getting things wrong. People need to feel like they can try and fail without being afraid of consequences or feeling bad. Let them know that practice is low stakes because the high stake part is on the job! Practicing compliance strategies will not only keep things fresh in employees’ minds, but will allow them to apply their knowledge to novel situations in order for them to go beyond memorization to understanding. This is when you will start to see behaviors change on the job, which is what training is all about.
Avoid statements like: “Children may not skateboard on community property.” Instead say: “Skateboarding is prohibited on community property.” You may require direct adult supervision during children’s use of community provided services and facilities. However, the rules must not unreasonably restrict a child from using the amenities.
education. She spent over 10 years working with K12 Inc.’s network of online charter schools - measuring learning, developing learning improvement plans using evidence-based strategies, and conducting learning studies. Later, at Kaplan Inc., she worked in the vocational education and job training divisions, improving online, blended and faceto-face training programs, and working directly with business leadership and trainers to improve learner outcomes and job performance. Ellen lives and works in Maryland, where she was born and raised. For nearly two decades, Grace Hill has been developing best-in-class online training courseware and administration solely for the Property Management Industry, designed to help people, teams and companies improve performance and reduce risk.
•
Ellen Clark is the Director of Assessment at Grace Hill. Her work has spanned the entire learner lifecycle, from elementary school through professional
Don’t prohibit children from using amenities
Avoid rules such as: “Children under the age of 14 are prohibited.” Instead, say: “Persons under the age of 14 must be accompanied by an adult.” Familial status was added as a protected class in 1988 with the signing of the Fair Housing Amendments Act. This act made housing discrimination against families with children illegal and
protects not only married couples with children, but also those who are single parents, legal guardians, mothers who are expecting, and people in the process of obtaining legal custody of a child. Take time to review this important area of the law with employees so that families with children feel both safe and welcome in your community. Ellen Clark is the Director of Assessment at Grace Hill. Her work has spanned the entire learner lifecycle, from elementary school through professional education. She spent over 10 years working with K12 Inc.’s network of online charter schools - measuring learning, developing learning improvement plans using evidence-based strategies, and conducting learning studies. Later, at Kaplan Inc., she worked in the vocational education and job training divisions, improving online, blended and faceto-face training programs, and working directly with business leadership and trainers to improve learner outcomes and job performance. Ellen lives and works in Maryland, where she was born and raised.
•
No Pot ...continued from 1 have those types of clauses, you should talk to an attorney in your state or city to find the best solution for your lease.” There is no law about reasonable accommodation for marijuana users, federal laws do not require it. As far as the federal government is concerned it is not ok. “One thing I would say, and it is important, I would encourage landlords just to make everything clear,” in the leases, he said. “Clarify in a lease that you must abide by all laws state and federal.” That is the case in residential. He said it can be different in commercial. (There was a commercial case in Oakland, California and you can read more about it here.) “But In residential it is not as tricky, and I am speaking very generally here,” Sachter said. “The states may have their own thing going on with legal marijuana laws, but it is still federally illegal. Make it crystal clear in your leases is my best advice,” he said. “How can you attract tenants in a state where it is legal yet protect the owners of the property? You cannot have it both ways.” “I know in Seattle there are Airbnb bed and breakfasts that specifically market themselves accordingly, as part of marijuana tourism to come and stay in our place where it is legal.” But if a property manager doesn’t want that going on, then they have to be up front in the lease. “If your tenant is Airbnbing to a tenant who is then using marijuana – well if you can’t catch them you cannot do anything about it. You have to prove they are doing this. They are going to be using marijuana regardless of what the lease says.”
No. 3 - What if the tenant using marijuana is a well-paying, good tenant?
“Landlords can certainly put a no-waiver clause in the lease. If I say, ‘Here is a list of prohibited things’ and if you do these prohibited things in the lease, you are subject to eviction,” he said. “However, any time I waive any of these things does not constitute an overall waiver. It basically means you should not ever do it again,” he said. “Just because you get away with it once, does not mean you get away with it every time,” Sachter said. Can I say no pot in my apartments Photo by Raihan Rana via creative
commons
No. 4 - Can I say ‘no pot in my apartment?”
“Usually if you say, ‘No pot in my apartment’ and you find a tenant using marijuana and you haul them into court, more than likely the judge is going to say, ‘Have you stopped?’ to the tenant and ‘Are you going to do it again?’ and the tenant is going to say ‘No.” And then judge will say, ‘Ok, dismissed.” To put a more legalistic term on it, usually a court will be in favor of “allowing the tenant to cure the defect,” rather than evict for most things like that, Sachter said. Technically, in Washington, a landlord would serve a 10-Day notice to comply or vacate with the terms of the lease. This process, therefore, gives the tenant a chance to “cure” the violation before the landlord can evict. Check your local state laws on this.
designed for it, the loads grow lights put on the apartment unit could be excessive. I’d consider a reasonable use clause that specifies all high load equipment, including lights, air conditioners and any kind of pump be approved by you. “This would put you in a position to take action if they are putting too much load, without specifically calling out the use of the equipment. Pumps are a good area for monitoring, because of the intermittent load, they trip breakers, and anyone who is using a hydroponic system would need several,” Driver said.
What if I want to market my apartment to marijuana users?
Sam Driver, Product Director for Buildium.com, and an experienced property manager at the property management software company, said as far as marijuana use in apartments, due to the newness of the legislation, the federal laws that supersede state and county laws, and liability concerns, it is not a topic that comes up a lot - yet. “Generally, the safest solution is to choose the most conservative path-impose a no-smoking policy, which can in some cased cover outside areas, and a crime provision that includes local, state and federal laws. In many states, there are setbacks from doors, and it is particularly important if the building is a place of work which a multi-unit apartment building certainly is. So your lease should contain a provision explicitly banning smoking and illegal activity. Because the feds still outlaw it, this should be sufficient,” Driver said. “This of course only covers the smoking angle. If a resident consumes it in another way, you’d likely never know,” he said.
“If, however, you wanted to roll the dice and market to this crowd, assuming your state laws allow it, remember that the federal laws would cover any bank deposits from proceeds,” Driver said. “In this case, you’d be able to do it, assuming no federal intervention, in compliance with local laws. No insurer would provide EO&E (errors and omissions excepted) insurance to you, and you wouldn’t be able to deposit any funds into a federally-accredited bank. So you’d have to self-insure, and run an entirely cash business, but you could do it, risking only federal enforcement. “The big question is, ‘Would the premium rents be worth the risk of forfeiture?’ If you run afoul of the federal drug laws, the asset seizure possibility is a huge risk. You could lose the building. “If you’re managing other owners’ properties, then you’d be risking their assets even if you used different leases, unless you kept fully separate books, bank accounts, and co-mingled nothing. So I’d say it would be all-or-nothing,” he said. “The timing is tricky, too. Leases contain a provision that stipulates that the contract is in force in a specific jurisdiction. If they change the laws rendering your lease out of compliance, what happens during the remaining time of the lease? Is it invalidated? Or does the contract remain in force until it expires? “Good questions for your lawyer,” Driver said.
Growing marijuana could put a power load on your apartments
How to keep up with status of pot laws in the different states
What one experienced property manager says about pot
“As for growing, that’s less clear. But in general, unless the electrical system is
Rental Housing Journal Valley · January 2018
sionally-researched pro, con, and related information on more than 50 controversial issues from gun control and death penalty to illegal immigration and marijuana laws across the country. “Using the fair, FREE, and unbiased resources at ProCon.org, millions of people each year learn new facts, think critically about both sides of important issues, and strengthen their minds and opinions,” according to the company’s website. Here are where the pot laws stand for medical and recreational marijuana in several states, how it was passed, and what is permissible in the possession limit, according to procon.org. You can see their excellent full chart here state by state. Keep this link as they update the ever-changing pot laws in the different states. Here are what some some states are doing with links to more information on each state’s pot laws. Oregon: Ballot measure 67, 24 oz usable; 24 plants, 6 matures and 12 immature Washington: 8 ounces usable, 6 plants Arizona: medical marijuana is legal 2.5 ounces usable, 12 plants Colorado: 2 ounces useable, 6 plants, 3 mature, 3 immature Utah: prohibited with a few narrow exceptions As a Presidential Scholarship recipient, Bret received his law degree from the Seattle University School of Law. In addition to his law degree, Bret holds a bachelor’s degree in evolutionary psychology and master’s degree in psychology. Bret has taken an interest in tracking the progression and transformation of marijuana laws, as they are among the most recent and highest-profile legal issues affecting entrepreneurs in Washington and, increasingly, all around the country. You can call him at 206-295-2547
•
ProCon.org, a 501(c)(3) nonprofit nonpartisan public charity, provides profes7
Rental Housing Journal Valley
Dear Maintenance Men ...continued from 4 cy phone numbers and how to get hold of management. Alternatively; Post this information on the inside of a kitchen cabinet door in each rental unit. Dear Maintenance Men: I am starting my planning for a major kitchen cabinet remodeling project in my rental units. However, I am having a difficult time making material and design decisions. What recommendations can you give? Allen. Dear Allen, When doing a kitchen or bath material selection, cohesive and functional design is important. Kitchen and bath rehabs are some of the most expensive work you can do in an apartment unit and proper
planning is a must. In order to appeal to a larger segment of the population, try to keep the interior color scheme to neutral earth tones. Cabinetry quality varies greatly. Don’t let the cabinet fronts fool you. Manufactures designed their cabinets to look good at first glance. Keep in mind, being in a rental environment, the cabinets also need to hold up to abuse. Look at the actual construction of the cabinet box or frame. Keep in mind; you do not need to use custom cabinets to fit your existing layout. The use of prefabricated modular cabinetry can greatly reduce the time and cost to have a finished kitchen or bathroom. Using real wood cabinet fronts with 3/8” plywood sides is essential for durability. The drawer fronts and sides should be connected with a dovetail or other positive lock construction. Drawers that are held together by nails or cabinets built with particle board will not hold up
to tenant abuse. On a side note; if you are gutting the kitchen or bathroom, use this time to relocate and add more electrical outlets and under cabinet lighting. If you need maintenance work or consultation for your building or project, please feel free to contact us. 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 •
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PET AGREEMENT Rating Scale
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TENANT INFORMATION
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IN Out TENANT(S): ____________________________________________________ DATE:________ LIVING AREAS ADDRESS: ____________________________________________________ UNIT: _________ KITCHEN CITY: _________________________________________ STATE: __________ ZIP: _________ Walls Walls
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TENANT(S): ________________ between the hours of (Date) and ________________ Doors/Woodwork ADDRESS: . ________________ (Time) ________________ ________________ ________________ (Time) CITY: __ Locks________________ The entry will occur ________________UNIT: ________________ for the following purpose: ______________ ___ STATE: _________________ ________ ZIP: ________________ Rating CeilingsScale = (E)Excellent _________________ (VG) Very Good (G)Good _________________ _ _________________ _________________ _________________ (F)Fair (P)Poor Electric Outlets IN __________ _________________ Out _________________ LIVING AREAS In Out __________ KITCHEN In Out Walls
Cabinets Tenant(s) Tenant(s) certify that the above pet(s) are the only pet(s) on the premises. Ceilings understands that the additional pet(s) are not permitted unless the landlord gives ten Sink ant(s) written permission. Tenant(s) agree to keep the above-listed pets in the premises Electrical Outlets subject to the following terms and conditions: Floor
4. Management Database - Rentegration. com is an easy to503-933-6437 use, database driven softwww.Rentegration.com sales@rentegration.com ware. Most form fields are auto populated from the database. The mod-UNACCEPTABLE ules are allCOLOR in- USAGE tegrated and work together. For example, a customer can use the rent- roll function to identify all delinquencies, apply fees, and create eviction forms with a few simple clicks of the mouse. Garbage Cans
Windows 1) The pet(s) shall be on a leash or otherwise under tenant’s control when it is outside the Antenna/Cable tenant’s dwelling TV unit. Blinds/Drapes 2) Tenant(s) shall promptly pick up all pet waste from the premises promptly. Fireplace 3) Tenant(s) are responsible for the conduct of their pet(s) at all times. 4) Tenant(s) are liable for all damages caused by their pet(s). Cleanliness 5) Tenant(s) shall pay the additional security deposit listed above and/or their rental agreement as a condition to keeping the pet(s) listed above. 6) Tenant(s) shall notBEDROOM allow their pets to cause any sort of disturbance or injury to the 1 BEDROOM 2 other tenants, guests, landlord or any other persons lawfully on the premises. Walls 7) Tenant(s) shall immediately report to landlord any type of damage Walls or injury caused by their pet. Windows 8) This agreement is incorporated into and shall become part of Windows the rental agreement exe Blinds/Drapes -cuted between the parties. Failure by tenant to comply with any part of this agreement Blinds/Drapes shall constitute a material breach of the rental agreement. Rods
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Windows ©2009 NO PORTION
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Fan (Exhaust)
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