Member Services Specialist (Resource Desk) Sue Lewis: RHAwa.org/supportcenter
Member Services Specialist (Screening) Val Kushi: (206) 283-0816 | screening@RHAwa.org
CONTRIBUTE
Submit Educational articles featured in Current must be around 650 words, include a byline of the author, and a final paragraph with contact information. Deadline is 15 days before the print date (print date is approximately the 13th of the month proceeding the publication.) Submit to publications@RHAwa.org.
Advertise For advertising information (rates, production specifications, and deadlines), visit RHAwa.org/advertise
Instagram: Follow us at @RHA_ofWA LinkedIn: linkedin.com/company/rentalhousing-association-of-washington
Twitter: Follow us at @RHAofWA
Screening and Fair Housing
Fair Housing starts with your screening practices. We all understand the concept of fair housing; however, at times our own personal biases can filter through without even meaning to. To avoid accusations or issues that may be construed as discriminatory, RHAWA takes full measure in providing the resources that help housing providers to navigate the best practices when it comes to fair housing.
The purpose of fair housing is to ensure that individuals who fall within the protected classes are given opportunities to house their families. There are seven protected classes defined by the Federal Housing and Urban Development (HUD). Each state, county, and city have laws that protect the current and additional classes. Check with the local Office of Human Rights as each city and county may have additional information.
RHAWA provides throughout the year courses to keep housing providers up to date with the Fair Housing Laws. Whenever new changes come about with the Fair Housing Laws, RHAWA updates our forms, so they are current and meet the fair housing requirements. Communicating with your prospective tenants can be useful when deciding who is the most qualified to be a responsible and reliable tenant for your
rental property. RHAWA recommends caution when first talking with the applicants prior to giving them an application. Listed here are a few steps to take before you start vetting the applicant.
To ensure that you are following the Fair Housing requirements the first foundation is your screening criteria. The screening criteria will be crucial as it will create the setting of how you
to cover. The minimum standards you may want to consider putting in your criteria is employment history, income requirement, credit history, rental history, criminal records, sex offender records, policies like no-smoking, pets, etc., and required fee and documentation. (Note: In Seattle, a decision based on criminal records is prohibited due to the Fair Chance Housing Law). You can visit the RHAWA website and print out the ‘Application Criteria Guide-
will screen your applicants. It sets the stage for you and your applicant so you both know what is expected of each other. Providing screening criteria is a Washington State law (RCW 59.18.257). It must be in writing. Your prospective tenant will be able to determine if they meet your minimum qualifying requirements and what the screening fees are expected of them
lines’, which will go into greater detail regarding the minimum requirements of the Screening Criteria.
As you get ready to advertise your rental property, avoid using blanket statements or words like ‘good’ or ‘bad’, or ‘no criminal records’ (give the applicant an opportunity to explain the situation), and do not use words or
phrases that imply a preference for or against people from a protected class. For handling inquiries, create a script to follow so that you can stay within the same interaction with everyone you talk with. Focus on answering questions about the property, clarifying screening criteria and terms such as lease commencement date, rent and move-in costs. Take consideration of your answers with careful responses and respect. Avoid small talk with the applicant which could be perceived as discriminatory or preferential.
Certain topics may come up in the initial inquiry or throughout the screening process. Some of the most common fair housing issues that arise during screening are:
• The request for a disability-related animal even though you have a no pets policy
• Do you accept rent subsidized programs (ex. Section 8)
ALL CLASS SESSIONS ARE PRESENTED ONLINE ONLY UNLESS OTHERWISE SPECIFIED.
NEGOTIATING SOLUTIONS WITH YOUR TENANT
When: Wednesday, April 5 | 2-3pm
Cost: $30 Members | $200 Freemium Subscribers
Satisfied tenants lead to lower turnover and costs. Consider accommodating tenant requests for adding occupants, pets, or upgrades, especially if they have a good rental history. Work with tenants on rent payments or negotiate terms if needed. Learn best practices for negotiating with tenants from attorney Chris Benis, who will prioritize your goals while respecting the tenant's needs and rights.
PM SERIES-09: PARTNERING WITH COMMUNITY RESOURCES
When: Thursday, April 6 | 12-1pm
Cost: $30 Members | $60 Freemium Subscribers | $90 Guests
In this session, Audrey Riddle will review best practices for establishing effective working relationships with organizations that support tenants. We will explore:
• Your responsibilities when working with prospective tenants on rental assistance.
• Connecting tenants in crisis situations to appropriate support organizations.
• Partnering with organizations that place individuals in housing.
RHAWA MEMBERSHIP PREVIEW & ORIENTATION
When: Tuesday, April 11 | 1-2pm
Free | Registration Required
Join us for an overview of Member Benefits and Services offered by RHAWA. Education and Resources Director, Denise Myers will take you step-by-step through our checklist to fill a vacancy, demonstrating how to use RHAWA tools and answering related questions along the way. This meeting is designed for new and recently returning members, as well as those interested in joining RHAWA.
WA REAL ESTATE FAIR HOUSING (3 HRS)
When: Wednesday, April 12 | 1-4pm
Cost: $30 Members | $60 Freemium Subscribers | $90 Guests
This 3-hour course provides a comprehensive education on fair housing and meets the requirement for licensed real estate brokers continuing education. Instructors Michael Chin, JD/MBA, and Maxwell Glasson, Attorney will cover the following:
- Historical and Societal Context: A history of racial discrimination and segregation and the Civil Rights movement leading up to the Fair Housing Act of 1968.
- Legal Framework: Review and discussion of Fair Housing Law including protected group discrimination, retaliation, disability related accommodations, and policies with disparate impact on protected groups.
- Role of the Agent/Housing Provider: Best practices for working with clients/tenants to ensure equal housing opportunity and how to respond to a fair housing complaint.
3 Clock-hour certificate available for licensed Real Estate brokers.
*Meeting time and subject may change. Please check the calendar at RHAwa.org/events.
PM SERIES-11: EVICTION LAWS AND PROCEDURES
When: Thursday, April 20 | 12-1pm
Cost (class): $30 Members | $60 Freemium Subscribers | $90 Guests In this session, Christopher Cutting will review laws and best practices for enforcing compliance with rental terms and managing other circumstances that require ending a tenancy. We will explore: Notices and eviction procedures for rules violations.
• Notices and procedures for non-payment, including the Eviction Resolution Pilot Program.
• Good causes to end the tenancy and related procedures.
• Best practices when preparing for court, what to expect in court.
PM SERIES-12: HOUSING INDUSTRY LEGISLATION
When: Thursday, April 27 | 12-1pm
Cost (class): $30 Members | $60 Freemium Subscribers | $90 Guests In this session, Cory Brewer and Daniel Bannon will discuss how to participate as active stakeholders in setting housing policy. We will explore:
• Recent and pending legislative changes impacting Washington housing providers.
• The impact of voting and communicating with state and local representatives.
• How to actively participate through industry advocacy groups.
April is National Fair Housing Month
National Fair Housing Month (hud. gov/FHM) celebrates the passage of the Fair Housing Act in April 1968. What better time than to refresh our knowledge of Fair Housing laws and best practices in rental housing?
The Fair Housing Act is a nationwide Federal law that prohibits discrimination in the sale, rental, and financing of housing, initially based on race, color, national origin, and religion. The Act was amended to include protections based on gender, people with disabilities, and families with children. In the State of Washington, there are more protections for Creed, Immigration/ Citizenship Status, Sexual Orientation, including Gender Identity, Veteran/ Military Status, Use of Service Animals, Source of Income (i.e., Section 8), and Marital Status.
KEY LEGAL PRINCIPLES
Over the years, fair housing laws have become more complex. As with anything, it is easier to understand a few key principles of Fair Housing Laws instead of just memorizing a list of rules.
Principle 1: Protected Class Discrimination
In residential rental housing, protected class discrimination means to treat a tenant (prospective, current, or past) differently because of their membership in a protected group. This does
not mean you must accept any Housing Choice Voucher, aka Section 8, participant that applies. If they do not meet a rental criterion such as credit or rental history, you can still deny them based on that. However, you cannot legally advertise “No Section 8” (still found in listings today) and you cannot turn someone down because you feel working with the Housing Authority is too time-consuming. Learn more at RHAwa.org/support-center, by reading the Support Center article, Provide Fair Housing
Principle 2: Retaliation
It is illegal to retaliate against someone because they exercised a right under the Title Cap: Fair Housing Act. That means it is illegal to raise the rent, defer repairs, or give a negative reference to a tenant’s future housing provider because they filed a fair housing complaint. If a housing provider takes any adverse action within 90 days of the complaint, guilt of retaliation is presumed and the burden of proof of innocence is on them.
Principle 3: Making Accommodations
In order for many disabled persons to enjoy equal housing opportunities, accommodations may be needed. This concept and detailed guidelines are included in Federal Fair Housing law.
If a person with mobility issues needs some grab bars installed, you do not always need to pay for them, but you do need to allow it. If they need an Emotional Support Animal (ESA) because of a disability, you need to allow it and you cannot charge pet fees or deposits for the animal. Never ask about or make assumptions about the disability, such as “if they need an ESA, they shouldn’t leave it at home when they go out” … an ESA can help with anxiety about being at home alone at night. Treat the animal as an extension of the tenant – if quiet hours are broken, damage is done, or other tenants are threatened, the tenant can still be held accountable through a 10-day comply or vacate notice. Even though you need some information to accommodate disabled tenants, they still have a right to privacy and there are specific rules about what you can ask them. Learn more at RHAwa.org/support-center, Reasonable Accommodations for Disabilities
Principle 4: Neutral Policies with Disparate Impact on Protected Groups
In many ways, this concept is similar to making accommodations for disabled persons. Just like an unwillingness to make policy exceptions for the disabled, a strict ban on criminal history may unfairly limit housing opportuni-
ties for people of color, based on criminal justice statistics in the area.
In June 2015, the U.S. Supreme Court ruled that these "disparate impact claims" are recognized under the Fair Housing Act. Based on this and results from a study confirming disparate criminal justice treatment in Washington, the Attorney General's office began enforcing HUD guidelines for criminal history screening in 2017. See the Support Center article, Screening for Criminal History, also in this issue on page 14.
Washington State and local laws apply similar laws and guidelines for accommodating people in other protected groups. See Support Center articles on Working with Rental Assistance Programs and Screening Without Social Security Number
BEST PRACTICES
Now that you hopefully have a better understanding of the basic principles of the law, here are a few best practices you can apply in your day-to-day rental operations.
• Avoid the use of “code words” (e.g., "active professionals") and discriminatory phrases in ads.
• Use general-circulation advertising media (not just the church bulletin).
• Display the HUD Equal Opportunity Graphic when you can. Download from hud.gov/library/bookshelf11/hudgraphics
• Respond to every inquiry the same, preferably with a standard email response.
• Inform all prospective tenants of your standard screening procedures and qualification criteria.
• Take all applications and do not discourage anyone from applying.
• Inform prospective tenants of all available units, not only those you believe would suit their needs.
• Limit conversations to rental home features, rules of tenancy in the lease, printed screening criteria, rent, move-in costs, and move-in date. Do not ask other “pre-qualifying questions.”
• Avoid small talk with the applicant that could be perceived as discriminatory OR preferential.
• Follow the same screening, terms, and conditions when new occupants are added to existing tenancies.
• Respond appropriately to accommodation requests at any time during the tenancy.
Use the opportunity of Fair Housing Month to get more fair housing education for yourself, your employees, family business helpers, and anyone else who works with your tenants on your behalf. Sign up for the Fair Housing class to be presented live on Zoom, Wednesday, April 12, or subscribe to our OnDemand Library and go to Content Library/Collections – Fair Housing.
All written, presented and recorded content provided by RHAWA for this course are for the use of the participants enrolled in the course. Copyrighted course content may not be further disseminated. Formal legal advice and review is recommended prior to selection and use of this information. RHAWA does not represent your selection or execution of this information as appropriate for your specific circumstance. The material contained and represented herein, although obtained from reliable sources, is not considered legal advice or to be used as a substitution for legal counsel. Event Cancellation and other policies RHAwa.org/cancellation-policy.
CROSSWORD PUZZLE
ASSISTANCE ANIMALS IN HOUSING
ARTIFICIAL INTELLIGENCE: The Future Is Now
Cory Brewer, General Manager | Windermere Property Management / Lori Gill & Associates | Board of Director and Vendor Member
Cory Brewer
AI
I recently attended a webinar with a couple of colleagues to learn about ChatGPT and let me just say it absolutely blew our minds. There are so many unbelievable things that this technology can do … for example we watched it build code for a mortgage calculator to be embedded into a website from scratch (in under a minute!). It was equal parts impressive and scary, and a big part of me couldn’t help but think that SkyNet was taking over (for the Terminator fans among us).
Much has been made about the bizarre AI roll-out on the Bing search engine, but I won’t get into that. I wanted to
keting description, especially for those of us that don’t have the most eloquent style. This tool does an admirable job,
THE AI PROGRAM GENERATED FOR US A THOUGHTFUL LIST OF SEASONAL MAINTENANCE TIPS AS WELL AS
our human efforts? I wanted to focus on three key takeaways from this recent learning session; with the caveat that things may have changed significantly by the time this goes to print … the technology is moving incredibly quickly!
IDEAS FOR MARKETING AND PLANNING BASED ON THE TIME OF YEAR.
look at how AI can be implemented into our practices as Property Managers and Leasing Professionals.
The most obvious choice is to solicit help in writing a property listing mar-
and you can cater the results to a certain word-count, or to focus on certain aspects (such as location or Built Green features, etc.) … suffice to say, it’s pretty cool. But let’s dig a little deeper. How can AI help supplement
SEASONAL CONTENT: Every month we send out a resident newsletter, and depending on the time of year we will include maintenance tips whether it be about watering the lawn in the summer or covering the hose faucets in the winter. With a well thought out “input” to generate content, the AI program generated for us a thoughtful list of seasonal maintenance tips as well as ideas for marketing and planning based on the time of year. We found some
good content to add-on to our existing seasonal maintenance tips, and we have a few new ideas for resident engagement contests throughout the year. It can also be beneficial for internal planning purposes, from personnel reviews to tax planning to whatever else you can imagine.
PERSONAL / CORPORATE BIO:
Have you ever had trouble developing your “elevator speech” or a personal bio for your website? Well, AI is here to help. We watched in amazement as we briefly described ourselves to the AI input field and it proceeded to instantly write several flowing paragraphs about each of us. Another ability that the program has is to help build your resume’ … plug in a few bullet points about yourself or your company (number of units managed, average market times, etc.) and watch as the program crafts a beautifully formatted curriculum vitae that you can present to a prospective client.
VIRTUAL
STAGING:
Moving on from ChatGPT to some other programs that focus on visual rather than written content, I think this is going to be a huge game-changer in the real estate industry. In the experience I’ve had with virtual staging, I would hire an outside vendor to create a certain number of virtually staged photos for a certain price; sometimes it looks great, other times not so much. But the examples we saw from programs like Snap Snap Snap were INCREDIBLE, and in many cases these types of AI technologies are available for free and there are no copyrights or licensing to worry about.
All this being said, for the great benefits that AI can offer there are a few key things to consider when it comes to risk and liability. First and foremost, ChatGPT is NOT a search engine and it does NOT have real-time access to information on the internet; in fact its
knowledge of the internet cuts off at the year 2021 (it can tell you who won the Super Bowl in 2014, but not in 2023) – so be careful. I would also say this is absolutely NOT a 100% reliable tool with which to seek legal advice. I ran a few example inputs with legal questions that I know the answer to … it got some of it right, but also definitely got some of it wrong, and as laws change post-2021 it definitely won’t keep up. This technology might replace virtual staging, but it’s not ready to replace your favorite attorney!
On that note, even if you’re not relying on AI for legal advice (which again you should not be doing), you should always take the time to read, review, and edit the content it generates before simply copying and pasting and hitting SEND on an email. While you don’t have to credit the program, necessarily, for the content it creates, you are probably going to be found liable for sharing information that’s not accurate. So again, be careful.
This article isn’t meant to be a comprehensive guide to how you can use AI in your property management business, and I am certainly no technology expert. I’m just an old Gen X’er who recently saw this for the first time and thought it was really cool! This is me encouraging you to look into the technology and learn about it for yourself, and see how it can make your business practices more efficient.
Cory Brewer is the General Manager at Windermere Property Management / Lori Gill & Associates. His firm oversees management of approximately 1,500 residential rental homes throughout the Greater Seattle Area, as well as commercial & multi-family properties. He may be contacted via wpme@windermere.com. Visit their website wpmnorthwest.com.
PROFESSIONAL PROPERTY MANAGEMENT
7 Ways to Upgrade Your Real Estate Game with a 1031 Exchange
Austin Bowlin, CPA – Partner & Chief Exchange Strategist | Real Estate Transition Solutions | Vendor Member
Owning investment real estate can be an effective way to build wealth and create financial security. Done properly, it can even generate stable, predictable income without significant management responsibility. However, often property owners need to rebalance their investments to achieve their objectives.
Selling investment real estate to acquire different properties better suited to meet an investor's objectives sounds like a great idea until the taxes due upon the sale are considered. Unfortunately, the tax rate applied to sales proceeds can be as high as 28.8% at the Federal level, plus state income tax if applicable. However, one way to reposition real estate investments without taking a hefty haircut due to taxes is the strategic use of a 1031 Exchange. By performing a 1031 Exchange, property owners can sell investment property without paying capital gains tax or depreciation recapture tax, provided the sales proceeds are reinvested into
"like-kind" investment real estate of equal or greater value and the conditions of the IRS tax code are followed.
Although tax deferral is a key benefit of a 1031 Exchange, it is not the only advantage that appeals to property owners. A 1031 Exchange can also serve as a means to "upgrade" a real estate investment, so it meets the owner's objectives, whether that be larger properties, better locations, newer construction, higher income, reduced risk, or any other goals an owner may have. Below are seven ways the owners of a single investment property can upgrade their real estate investment utilizing a 1031 Exchange:
1. Exchange the current property with a more favorable property type. A 1031 Exchange enables investors to expand their real estate portfolio into nearly every property type and even different ownership structures that allow for fractional ownership of large income-producing "institutional"
investment property. Changing property types may make sense for an owner. For example, an investor experiencing challenges with their retail property due to the impact of e-commerce may prefer to invest in apartment buildings in a market with strong population growth. Alternatively, an investor seeking retirement income may sell and exchange an appreciation-focused multifamily property and exchange it into a different property type with higher cash flow.
2. Change the current location for a more favorable location. The location of a rental property can significantly impact its value, cash flow, and appreciation potential. A 1031 Exchange allows investors to reinvest in real estate with more favorable locations, such as states with lower taxes, accelerating growth, and more favorable landlord-tenant laws.
3. Increase the capital reinvested back into the next property. 1031
Exchanges offer investors the opportunity to retain all of the net proceeds from the sale of their relinquished property to reinvest in new property. This deferred tax can be viewed as an interest-free loan from the government, allowing for more significant investment in property and the potential for increased cash flow and appreciation.
4. Improve monthly income potential and returns. As a wealth-building tool, a 1031 Exchange gives investors access to their property's appreciation to increase buying power without a tax penalty. Armed with more buying power, investors can acquire properties focused on delivering income that is not only higher but passive as well. Additionally, preserving all the net sales proceeds allows for higher-value properties to be acquired. The ability to defer capital gains tax over a lifetime of real estate transactions enables you to methodically build wealth for yourself and pass on that wealth to your heirs.
Austin
Bowlin
5. Reduce risk on proceeds reinvested into real estate. Due to high entry price points for real estate investing, investors typically concentrate a large portion of their net worth on one or two properties that are often in the same city or town and are the same property type. A 1031 Exchange into Delaware Statutory Trust (DST) real estate allows investors to diversify their investments into several DST properties, property types, and geographic locations.
6. Reduce taxes and hassles for estate beneficiaries. By utilizing 1031 Exchanges and deferring tax until an owner passes away, investors can eliminate the deferred tax for their beneficiaries, enhancing the value of their investment for future generations. Upon the passing of an owner, the IRS eliminates capital gains, depreciation recapture, and net investment income tax, a process known as a "step-up in basis." In "community property" states, a surviving spouse is entitled to a full step-up in basis to the fair market value of the properties. Meaning the property could be sold the day after the stepup was received and pay none of the aforementioned taxes.
7. Reduce the time and investment in property management. A 1031 Exchange provides real estate investors with the opportunity to transition out of actively managed properties and into passive investment options, including institutional-quality DST real estate with highly experienced, professional institutional management teams.
estate planning attorney is essential. At Real Estate Transition Solutions, we work with our clients and their advisors to ensure that all parties are familiar with the rules surrounding exchanges, all relevant risks are discussed, and the transaction is executed correctly.
FIND OUT IF A TAX-DEFERRED 1031 EXCHANGE IS RIGHT FOR YOU
Selling an investment property with a 1031 Exchange has become a widely utilized tax strategy among investors. According to data from the IRS, during the ten years between 2004 and 2013, approximately $1.3 trillion of the property was exchanged in over 2.9 million transactions. The popularity of 1031 Exchanges often increases during a strong economy as owners take advantage of an appreciated real estate market.
Tax-deferred exchanges offer a flexible solution for real estate investors seeking to align their investments with their financial and lifestyle objectives. For investment property owners looking to reduce active management, increase income, or eliminate the tax for beneficiaries, the versatility of a 1031 Exchange can be a valuable tool for maximizing real estate investments.
1031 Exchanges by developing and implementing well-planned, tax-efficient transition plans carefully designed to meet their objectives. Our team of licensed 1031 Exchange Advisors will guide you through the entire process, including help selecting and acquiring passive management replacement properties best suited to meet your objectives. To learn more about Real Estate Transition Solutions, call (206) 502-4862 or visit us at re-transition. com/rhawa.
IMPORTANT INFORMATION
The information herein has been prepared for educational purposes only and does not constitute an offer to purchase or sell securitized real estate investments. Such offers are only made through the sponsor's Private Placement Memorandum (PPM), which is solely available to accredited investors and accredited entities. Case studies and examples are for illustrative purposes and are not representative of future results. There are risks associated with investing in real estate properties, including, but not limited to, loss of entire investment principal, declining
market values, tenant vacancies, and illiquidity. Because investor situations and objectives vary, this information is not intended to indicate suitability for any particular investor. This material is not to be interpreted as tax or legal advice. Please speak with your own tax and legal advisors for advice/guidance regarding your situation. DST 1031 properties are only available to accredited investors (generally described as having a net worth of over $1 million exclusive of primary residence) and accredited entities only. If you are unsure if you are an accredited investor and/or an accredited entity, please verify with your CPA and Attorney. Securities are offered through Aurora Securities, Inc. (ASI), member FINRA/SIPC. Advisory services are offered through Secure Asset Management, LLC (SAM), a registered investment advisor. ASI and SAM are affiliated companies. Real Estate Transition Solutions (RETS) is independent of ASI and SAM.
* Potential cash flows/returns/appreciation are not guaranteed and could be lower than anticipated.
Source: IRS.gov
UNDERSTANDING THE RISKS: THE DISADVANTAGES
CHANGE
OF A 1031 EX-
As with any investment strategy, it is important to understand the potential risks involved. Real estate is an inherently illiquid asset class and ensuring that it is suitable for an investor's financial position and objectives is important. One key consideration is liquidity - investors must have enough liquid assets to cover significant expenses, such as medical bills. However, there are ways to address this, such as refinancing a property or purchasing insurance.
Another potential disadvantage of a 1031 Exchange is the complexity of the process. If not executed properly, it can be costly. Therefore, working with a reputable 1031 Exchange company, a qualified intermediary, knowledgeable tax counsel, and a financial advisor and
Understanding the strengths and risks of 1031 Exchange options, locations, market conditions, and how they can be combined to achieve investment goals is a key focus of our firm. If you plan to sell your investment property and are interested in learning more about 1031 Exchange options, contact Real Estate Transition Solutions (RETS) to speak with a licensed 1031 Exchange Advisor. We offer complimentary consultations that can be done over the phone, via video conference, or in person at one of our offices. To schedule your consultation, call (206) 502-4862 or visit us at re-transition.com/rhawa.
Chief Exchange Strategist, Austin Bowlin, CPA, leads Real Estate Transition Solutions' (RETS) team of licensed 1031 Exchange advisors & analysts and provides consultation on tax liability, deferral strategies, legal entity structuring, co-ownership arrangements, 1031 replacement property options, and Delaware Statutory Trust investments. RETS is a consulting firm specializing in tax-deferred 1031 Exchange strategies and Delaware Statutory Trust investment property. For over 26 years, RETS has helped investment property owners perform successful
VENDOR MEMBER
Six Potential Benefits of Exchanging into Delaware Statutory Trust Properties
Dwight Kay, Founder and CEO, Kay Properties & Investments | (855) 899-4597 | Vendor Member
DST BENEFITS
There are a number of potential benefits associated with exchanging into a Delaware Statutory Trust (DST) 1031 property.
However, it is important to note that these potential benefits should also always be carefully weighed with the potential risks that are possible with DST investments, and as with all real estate investments, investors should consult their tax attorney and or Certified Public Account before investing in DSTs.
Still, DSTs continue to grow in popularity, especially among aging baby boomers who are tired of managing their own properties and are looking for a way to transition into a passive
income stream. DST investments not only provide investors the potential for passive income but also the following six benefits as well:
Benefit One: TAX DEFERRAL USING THE 1031 EXCHANGE.
Many real estate investors have wanted to sell their apartments, rentals, and commercial properties for years but haven’t been able to find a property to exchange into and just can’t stomach the tax bill after adding up federal capital gains tax, state capital gains tax, depreciation recapture tax, and the Medicare surtax.
The DST 1031 property solution pro-
vides investors the ability to move from an active to a passive role of real estate ownership on a tax-deferred basis.
Benefit Two:
ELIMINATING THE DAY-TO-DAY HEADACHES OF PROPERTY MANAGEMENT
Because many DST investors are at or near retirement, they are simply tired of the hassles that real estate ownership and management often bring. They are tired of the tenants, toilets, and trash and are wanting to move away from actively managing properties. The DST 1031 property provides a passive ownership structure, allowing them to enjoy retirement, grandkids, travel, and leisure, as well as to focus on oth-
er things that they are more passionate about instead of property management headaches.
Benefit Three:
INCREASED CASH FLOW POTENTIAL**
Many investors are receiving a lower amount of cash flow on their current properties than they could be, due to their properties having under-market rents, properties that have multiple vacancies and/or that are raw or vacant land sitting idle. DST 1031 exchange properties provide an opportunity for investors to potentially increase their cash flow** on their real estate holdings via a tax deferred 1031 exchange.
Dwight Kay
Benefit Four:
PORTFOLIO DIVERSIFICATION* BY GEOGRAPHY AND PROPERTY TYPES
Oftentimes, 1031 investors are selling a property that comprises a substantial amount of their net worth. They want to reduce their potential risk and instead of buying one property (such as another apartment building) or one NNN building (such as a Walgreens pharmacy or Taco Bell restaurant), they decide that invest in a diversified portfolio of DST 1031 properties with multiple locations, asset classes (property types) and tenants is a better fit for their goals and objectives.
This is similar to how investors tend to invest retirement funds in mutual funds and Exchange Traded Funds (ETFs), as opposed to placing their entire retirement savings into the stock of one particular company. However, it is important to note that there are no assurances that diversification* will produce profits or guarantee against loss.
Benefit Five:
LONG-TERM NON-RECOURSE FINANCING LOCKED AND IN PLACE TO SATISFY DEBT REPLACEMENT REQUIREMENTS OF THE 1031 EXCHANGE
One of the requirements for a 1031 exchange is to take on “equal or greater debt” in the replacement property to what you had in the relinquished property (the property you are selling).
In today’s lending environment, it is often hard for investors to obtain non-recourse financing at an acceptable interest rate and terms. Due to the DST 1031 properties’ sponsors typically having strong lending relationships, they are able to secure non-recourse financing at some of the best terms available in the marketplace. The DST 1031 investors are the direct recipient of these financing terms that they would otherwise often not be able to obtain on their own.
Benefit Six: ACCESS TO INSTITUTIONAL GRADE REAL ESTATE
DST 1031 properties provide access to large, institutional-grade real estate that is often otherwise outside of an individual investor’s price point. With the typical minimum investment of $100,000, investors are still able to purchase an ownership interest in large $20 million-plus apartment communities, $5 million-plus pharmacies or $15 million grocery stores, for example. This allows investors access to a level of real estate that they just would not have been able to exchange into before.
That being said, we also have had many clients with very large 1031 exchanges opt to invest in DST 1031 properties because they did not want to place “all their eggs into one basket” by purchasing one single, large investment property.
For more information about Kay Properties or to review a current list of 1031 Exchange eligible properties please visit kpi1031.com/rhawa, call 1 (866) 835-5549, or scan the QR code below to receive your FREE 1031 Exchange toolkit.
Kay Properties & Investments is a national Delaware Statutory Trust (DST) investment firm. The Kay Properties platform provides access to the marketplace of DSTs from over 25 different sponsor companies, custom DSTs only available to Kay clients, independent advice on DST sponsor companies, full due diligence and vetting on each DST (typically 20-40 DSTs) and a DST secondary market. Kay Properties team members collectively have over 400 years of real estate experience, are licensed in all 50 states, and have participated in over $30 Billion of DST 1031 investments.
Disclaimer: This material is not to be considered tax or legal advice. Please speak with your own CPA and attorney for all tax and legal advice prior to considering an investment. All real estate and DST properties contain risk.
*Diversification
Diversification does not guarantee returns and does not protect against loss. ** Past performance does not guarantee or indicate the likelihood of future results. Diversification does not guarantee profits or protect against losses.
All real estate investments provide no guarantees for cash flow, distributions or appreciation as well as could result in a full loss of invested principal. Please read the entire Private Placement Memorandum (PPM) prior to making an investment. This case study may not be representative of the outcome of past or future offerings. Please speak with your attorney and CPA before considering an investment.
Securities offered through FNEX Capital, member FINRA, SIPC.
Dwight Kay, CEO and Founder Kay Properties & Investments
Dwight Kay is the Founder and CEO of Kay Properties and Investments, LLC. Kay Properties is a national 1031 exchange investment firm. The www. kpi1031.com platform provides access to the marketplace of 1031 exchange properties, custom 1031 exchange properties only available to Kay clients, independent advice on sponsor companies, full due diligence and vetting on each 1031 exchange offering (typically 20-40 offerings) and a 1031 secondary market. Kay Properties team members collectively have over 150 years of real estate experience, are licensed in all 50 states, and have participated in over $30 Billion of 1031 investments.
Screening for Criminal History
Denise Myers | Education + Resources Director
Denise Myers
This month let’s skip our focus on local law summaries in support of National Fair Housing Month! The Support Center features many articles and discussions related to Fair Housing. In fact, if you search “Fair” over thirty results are displayed, a combination of Support Center articles and Community discussions. Overwhelming? Don’t worry, just start from the top down.
The most relevant Support Articles are displayed first. We’ll look at our latest addition this month on criminal history screening.
SCREENING FOR CRIMINAL HISTORY
2022 guidance from HUD explains how using criminal history to screen, deny lease renewal, evict, or otherwise exclude individuals from housing may be illegal under the Fair Housing Act. Based on studies showing inequity in its justice system, the State of Washington enforces HUD guidelines on using criminal records in tenant screening. Therefore, it is illegal to include any blanket bans related to criminal history in advertising, practice, or policy. Housing providers must not deny tenancy based on a person's criminal history without demonstrating actual safety risk or adverse impact on their business.
SET A POLICY FOR CRIMINAL HISTORY SCREENING
The following HUD guidance on using criminal history in screening is enforced by the Washington State Attorney’s office.
• Any criminal history screening policy must serve substantial, legitimate, nondiscriminatory interest, and must actually achieve the goal.
• No blanket bans, generalizations, stereotypes, or speculations.
• Denial based on individualized assessment must demonstrate actual safety risk and consider:
• Reliable evidence only (convictions, NOT arrests).
• Nature and severity of conviction.
• Rehabilitation efforts and length of time since conviction.
For sample criteria statements related to criminal history screening, login to RHAwa.org to view RHAWA form Application Criteria Guidelines or Application Criteria Guidelines (Seattle).
ASSESS CRIMINAL HISTORY
If considering denying tenancy to a person based on criminal history, the housing provider must use an individualized assessment to determine whether a business reason exists to deny tenancy.
• Only consider convictions for crimes committed as an adult.
• Only consider crimes where the sentence was completed within the last seven years.
• Discuss the conviction(s) with the tenant and references such as a parole officer to determine if there would be an adverse impact on your business or imminent safety concerns for yourself, employees, tenants and neighbors. Consider the following:
• the nature and severity of the offense,
• the number and type of convictions,
• the time that has elapsed since the conviction,
• the person's age at the time of conviction,
• evidence of good tenant history before and after conviction,
• any additional information showing rehabilitation, good conduct, or other factors.
UNDERSTAND DISPARATE IMPACT BACKGROUND
For many years, it had been argued in fair housing cases that a seemingly neutral policy can have a discriminatory effect (or disparate impact) on protected groups. In June 2015, the U.S. Supreme Court ruled that these "disparate impact claims" are recognized under the Fair Housing Act. In 2017, the Washington Attorney General's office began enforcing HUD guidelines for determining an actual safety risk before denying tenancy because of criminal history based on the results of a study showing that:
• Similarly situated minority juveniles face harsher sentencing outcomes and disparate treatment by probation officers.
• Disparate treatment found in pretrial release decisions, which systematically disfavor minority defendants.
• Defendants of color were significantly less likely than similarly situated White defendants to receive sentences that fell below the standard range.
• Among felony drug offenders, Black defendants were 62% more likely to be sentenced to prison than similarly situated White defendants.
All written, presented and recorded content provided by RHAWA for this course are for the use of the participants enrolled in the course. Copyrighted course content may not be further disseminated. Formal legal advice and review is recommended prior to selection and use of this information. RHAWA does not represent your selection or execution of this information as appropriate for your specific circumstance. The material contained and represented herein, although obtained from reliable sources, is not considered legal advice or to be used as a substitution for legal counsel. Event Cancellation and other policies RHAwa.org/cancellation-policy.
✓ Energy-efficient windows will give you the competitive edge to improve occupancy rates.
✓ Beautiful new windows from Milgard windows will increase tenant satisfaction by lowering their utility bills, increasing their comfort and reducing outside noise.
- Ed and Sharon Bezy via
✓ Milgard windows are virtually maintenance-free to save you time and money.
✓ If you have an electrically-heated
unit building in Puget Sound
Tacoma Power, or Seattle City Light’s service area, be sure to ask us about new window rebates!
2023 KING COUNTY TAX ASSESSMENTS
INCREASE ANOTHER 6.4% IN 2023 LOWERING
NET OPERATING INCOME
Brian Platt, Michael Urquhart and Ben Douglas | Paragon Real Estate Advisors | Vendor Member
King County’s aggregate property tax will increase by 6.4% in 2023. This comes after several years of additional increases. Most investors with long-term tenants keep rents reasonable to avoid vacancies or turnover. While this management style has worked in the past it is under pressure due to skyrocketing expenses, including the large increases we have seen in property tax bills over the last 5 years. However, there are some areas investors can trim expenses without disrupting the current tenant base. Whether it be tax property assessments, insurance premiums, maintenance, or unit turnovers, there are areas you can improve on expenses so you can improve your Net Operating Income.
One area we examine in this article is tax assessed values. Each year the County assigns an assessed value to both your land and the improvement of the value of your property. The assessed values are not always an accurate representation of true market value, they can be too low or too high. We recommend you do a search at http://blue.kingcounty.com/Assessor/eRealProperty/ default.aspx to determine your taxable value and contact a real estate broker to compare values.
If your 2023 tax assessed value is higher than your broker’s opinion of value, then you do have options to contest the assessed value. There are two main areas that will determine if your property taxes are too high. These will include a review of market sales of similar properties in your area as well as an income/ expense analysis to determine if your current Cap Rate is in line with the market. Additionally, there could be unknown circumstances relating to your property such as deferred maintenance, environmental concerns, or unbuildable land that could all factor into a potential property tax appeal.
While we would recommend hiring firms that specialize in this field, you can also appeal your assessed value directly with King County. The firms we work with can also run an analysis and determine if you have a solid case to lower your taxes. Please contact us if you are interested in reaching out to one of these specialists and we can pass along their contact information. If you do decide to appeal your taxes on your own, here is how to do it:
How to Appeal the Assessed Value of Your Property.
There are two options to file an appeal with the Board of Equalization:
1. File online using E-appeals. http://www.blue.kingcounty.gov/assessor/eappeals/index.aspx
2. Mail or hand deliver two sets of the BOE’s petition form, any attachments, and/ or supporting evidence to the following address:
King County Board of Equalization 516 Third Avenue, Room 1222 Seattle, WA 98104-2306
Petitions either must be postmarked, hand delivered to the BOE’s office, or filed online by the latter of July 1st of the assessment year OR within sixty 60 calendar days from the mailing date printed on the value notice (or other notice of determination).
Call us if you are curious about how seller financing would affect your property’s pricing. We would be happy to give you an updated market valuation and provide you with an array of exit strategies to help you make the best decision. Brian Platt at Brian@ParagonREA.com (206) 251-8483, Michael Urquhart at Michael@ParagonREA. com (425) 999-6650, or Ben Douglas at Ben@ParagonREA.com (206) 658-7247.
Brian Platt
Michael Urquhart
Ben Douglas
Industry in Motion
Submissions are compiled and printed, depending on space available. RHAWA does not guarantee submissions will be included.
ANNOUNCEMENTS
Interested in Submitting Your Announcement?
We welcome information about industry job postings, new employee and location information, and more. If you have questions, or would like to submit an item for consideration, email publications@RHAwa.org.
•
•
•
•
•
Submit your 'Industry in Motion' news to: publications@RHAwa.org
Business Checking
It’s that time of year again, Saturday, May 13, The Rental Housing Association of Washington (RHAWA) is hosting our Annual Spring Workshop and Tradeshow (SWTS). We can’t wait to share with you what we have in store!
Our SWTS is a variety of vendors in our Vendor Hall and classes covering a field of rental housing topics scheduled throughout the day. This year, for the first time, we will be hosting the SWTS at Cedarbrook Lodge near SeaTac. This beautiful lodge will provide rustic scenery and delightful eats along with a day of education and fun. Whether you need to navigate the complexities of notices, set your small business up for success, or the multifaceted world of pet screening and emotional support animals (ESAs), we will have the class for you!
The Cedarbrook Lodge, easily accessible by I-5 or Hwy 99, is located at 18525 36th Ave S, SeaTac, WA, and is thrilled to host SWTS this year. They can boast IACC certification, large floor-to-ceiling windows for natural light, convenient and free on-site parking,
and delicious food for the entire day. Doors will open at 8 am and when you arrive there will be coffee, tea, and continental breakfast waiting in the vendor hall before the conference formally commences.
Throughout the day, our vendors will be available to talk in our reception area in the Reflections Gallery. RHAWA vendor members offer an array of products and services to help maintain and grow your businesses. RHAWA will even have a booth to answer any questions you might have about our services as well!
many local government councils, most importantly what will directly affect you – the small housing provider, and what we can forecast for the rest of the year. Following the panel discussion, our breakout sessions will begin and are organized into 4 separate tracks:
• Laws – Prominent area attorneys and legal experts discuss key aspects of Federal, State, and Local law that impact you as a rental housing provider in Washington State.
• Tenants – Seasoned professionals will share best practices and lessons learned related to all stages of
This year we will start off with our Keynote panel discussion in The Summit Hall with RHAWA Board President and Executive Director, Sean Flynn, VP Christopher Cutting, and other attorneys giving a legislative update from the State Legislative Session; and
the tenancy lifecycle.
• Property – Rental property industry experts explain best practices for evaluating property value and condition, and things you can do to improve cash flow and return on investment.
• Financials – Experienced rental housing investors and business professionals help you understand finance and business issues related to rental property investing.
There will be three hour-long breakout sessions held simultaneously for each workshop track for a total of 12 hours of education taught by RHAWA’s most popular instructors. A complete list of breakout session descriptions and instructor information has been provided for your convenience. Since we know everyone will not be able to attend every session, we will be providing all our attendees with the slides used during every presentation as well as audio recordings of each of them so you can refer back at a later date. This will allow you to focus on the sessions you do attend without having to worry about missing out on other sessions.
The day will also include a beautifully catered lunch that will accommodate everyone and every dietary restriction in Tamarack Hall as well as an afternoon happy hour.
raffle!? RHAWA will have goodies to raffle off, with all proceeds going towards our Political Action Committee (PAC). The RHAWA PAC is more important now than ever, and we can’t continue our fight without your much-needed help.
You won’t want to miss out on this amazing day that will not only be a fun occasion to mingle and network
Tim Schondelmayer "Late Rent? What Next?"
Exhibitors + Bevs and PM snacks
Lawton Coursey "Pet Screening and Working with ESAs"?
Lisa Lotus "Don't let a $30 fix turn into a $10,000 Remodal"
Austin Bowlin "How to Conduct Due Diligence on New Properties"
Exhibitors + Beer and Wine Reception
with fellow housing providers, a chance to chat with our many vendor members and learn about the services they provide, but an exceptional educational opportunity to grow your knowledge and your business.
Please reach out to me directly should have any questions. Looking forward to seeing you there!
Eric Aasness "Financing 1-4 Unit Residential Real Estate"
Sharon Cunnington "Simple Bookkeeping for Rental Operations"
Session topics and speakers are subject to change.
Event Registration
Your $85 ticket includes access to all educational offerings (slides and audio recordings provided afterward), continental breakfast, lunch, happy hour, on-site parking, and more! Register at RHAwa.org/swts.
Session Descriptions & Instructors
PERIOD 1: 9:00 am – 10:00 am
LEGISLATIVE UPDATE PANEL | LAW
A panel of attorneys including Chris Benis and Christopher Cutting, and led by Sean Flynn will review and discuss the outcomes of the 2023 legislative session, summarizing new state and local laws and how to apply them to your rental policies and practices.
Sean Flynn is owner of Flynn and Associates, PLLC. His firm focuses on representing clients in real estate and trust and estate litigation, planning and transactions. He also manages several of his own rental properties and serves as RHAWA Board President and Executive Director.
PERIOD 2: 10:15 am – 11:15 am
LEASING REQUIREMENTS & BEST PRACTICES LTL-1* | LAW
Chris Benis will summarize key aspects of residential leases in Washington and discuss options housing providers can select based on their rental property and goals for the tenancy.
Chris Benis practices law with First Avenue Law Group, PLLC in Seattle, WA representing property management firms, individual real estate investors, and others in the real estate industry. Chris serves as Legal Counsel for the Rental Housing Association of Washington (RHA), is a frequent instructor and past-President of the organization.
DEPOSIT DISPUTES WITH TENANTS | TENANTS
Tenants need their deposit money back in order to move into a new home and often do not agree with their landlord’s assessment of damages. Enrique Jevons will share best practices for assessing damages and communicating with tenants throughout the process, plus when and how to go to court.
Enrique Jevons founded Jevons Property Management Company in 2008 with the goal to own and manage the best rental properties available for people living all across Washington State. Today, he owns over a hundred units and his company manages over one thousand rental units spanning from Pierce County to Yakima.
*Licensed RE agents can receive 3 clock-hour certificate by attending all three Landlord-Tenant Law (LTL) sessions.
SUBMETERING: THAT LEAKING TOILET IS KILLING YOUR CASH FLOW | PROPERTY
If you are unable to bill tenants directly for utilities in your duplex or a larger building, they are unlikely to conserve or even report a dripping faucet or running toilet which can seriously cut into your net income. Kelly Koontz will explain how submetering or ratio utility billing systems (RUBS) can simplify billing and make a big difference in your bottom line.
Kelly Koontz is the President of Submeter Solutions, Inc. based in Kent, WA. Since 1999, Submeter Solutions provides customized metering systems and utility billing services that empower you to manage, conserve, and recover utility costs.
SETTING UP YOUR FAMILY RENTAL BUSINESS FOR SUCCESS | FINANCIAL
Many rental owners end up including adult children in their rental operations at some level. Learn about the benefits of setting up an LLC and structuring a family business, including management of shares, work responsibilities, taxes, and other considerations.
Julie Martiniello, Estate Planning Attorney and Managing Partner of Dimension Law Group have focused her practice primarily on trusts & estates, real estate, and business transactions for the past 11 years. She is a frequent speaker and active member of RHAWA.
PERIOD
3: 12:45 pm – 1:45 pm
MANAGING RENT INCREASES LTL-2* | LAW
Rent increases are no longer a simple matter in Washington. Based on the city and amount of rent, notice periods and delivery requirements vary widely. Christopher Cutting will go over all the details, explaining the laws, best practices, and consequences of noncompliance.
Christopher Cutting has been practicing residential and commercial landlord-tenant law, judgment enforcement, and appeals since 2009. Christopher is the Vice President of RHAWA and is the Co-Chairman of the Legislative Committee.
EVENT SPONSORS
Continued on page 26
VENDOR LISTINGS
We encourage you to consider the vendors found within these listings for your rental business needs. When seeking competitive bids, be sure to mention your RHAWA membership as many offer member discounts. RHAWA does not specifically endorse any business listed herein. References are always recommended. If you would like to submit a customer testimonial for our records, please submit to publications@RHAwa.org. Please note that changes made to a vendor member profile will not be reflected in the CURRENT Vendor Listings unless the change is also sent to publications@RHAwa.org.
SRC Windows (253) 565-2488 | (800) 870-2488 srcwindows.com
Tacoma Public Utilities Power: (253) 502-8600 Water: (253) 502-8723
TacomaPowerRebates.com/multifamily
MAINTENANCE Echo Yard Maintenance (206) 909-6873
Continued from page 20
LATE RENT? WHAT NEXT? | TENANTS
Session Descriptions & Instructors
Managing late and unpaid rent has become very complex, with new and varied procedures for late fees, notices, mediation, and court. In addition to giving a review of state and local laws, Tim Schondelmayer will share best practices for communicating and negotiating with tenants for the best outcomes.
Tim Schondelmayer has almost 20 years of experience managing residential properties and currently serves as Regional Manager at Mullally Development Company.
DON'T LET A $30 FIX TURN INTO A $10,000 REMODEL | PROPERTY
You want a relationship built on trust and effective communication with your tenants, whom you depend on to care for your investment. Lisa Lotus will share best practices for enlisting necessary support and cooperation from your tenants to stay on top of maintenance and repairs throughout the tenancy.
Lisa Lotus is a licensed and certified residential home inspector and owns Taurus Home Inspections. She works with property managers and owners to comply with City municipality-required rental inspections and performs inspections for real estate transactions.
FINANCING 1-4 UNIT RESIDENTIAL REAL ESTATE | FINANCIAL
Learn how to finance 1-4 unit residential properties including loan and down payment requirements, using income from the property to qualify, how to analyze the income and cash flow, and evaluate alternative financing options, such as Investor Cash Flow Programs.
Eric Aasness is a mortgage lender with over 35 years of experience lending in the Pacific Northwest and across the country. He is a licensed Continuing Education Instructor with Washington State and is also certified with the Washington State Housing Finance Commission.
PERIOD 4: 2:00 pm – 3:00 pm
SERVING NOTICES TO END TENANCY LTL-3* | LAW
PET SCREENING AND WORKING WITH ESAS | TENANTS
Since 70% of U.S. households keep pets, it makes sense to welcome them but have systems in place to reduce to the risk of liabilities such as injuries and damages to your property. Learn how to set effective pet policies including screening, and how to handle accommodation requests for assistance animals.
Lawton Coursey currently serves as the President of the King County Chapter of The National Association of Residential Property Managers, Director of Sales at The Joseph Group, and Owner/ Operator of Highmark Property Management.
DUE DILIGENCE TIPS TO MAXIMIZE 1031 EXCHANGE SUCCESS | PROPERTY
Evaluation and analysis of investment property is vital to minimize risk, reduce uncertainty, and enhance the likelihood of meeting investment goals. Learn the best practices employed by RETS' due diligence team, as well as the objectives, necessary external resources, and common mistakes made when evaluating property.
Austin Bowlin, CPA is a Partner at Real Estate Transition Solutions (RETS), a national real estate investment advisory firm specializing in 1031 Exchange strategies and Delaware Statutory Trust investments. As Chief Exchange Strategist, Austin leads the firm’s team of licensed 1031 Exchange advisors and analysts.
SIMPLE BOOKKEEPING FOR RENTAL OPERATIONS | FINANCIAL
In addition to making tax returns easier, careful monitoring of income and expenses can help you improve cash flow, prepare for big capital expenditures, and gain leverage when financing future investments. Learn to download, organize and analyze bank data using nothing but Microsoft Excel.
Sharon Cunnington is a real estate investor, entrepreneur, and inventor. She specializes in helping people purchase and manage positive cash flow investment properties as a licensed real estate broker and consultant. She has served on the RHAWA board for many years and is a frequent speaker.
Consistently enforcing the terms of your rental agreement is your legal right and responsibility. Neglecting to do so opens you up to serious risks such as property damage, lost rent, and fair housing complaints. Under new laws, it is critical to adhere to specific procedures for posting notices involving the end of tenancy, including pay-or-vacate, comply-or-vacate, and other good causes to end the tenancy.
Travis Scott Eller practices with Eller Law Firm and owns Access Evictions, Inc. Travis has practiced landlord-tenant law for more than twenty years, representing both commercial and residential landlords. He has successfully represented clients in trials, arbitrations, mediations, administrative agencies, and appeals.
Continued from page 4
Screening and Fair Housing
• Applicant discloses they have a criminal record or a sex offense
• The applicant may not have a social security number Be prepared to reply to questions like these following the HUD requirements. It is best to accept all applications and avoid discouraging anyone from applying. Treat each applicant the same and run the same screening report for your prospective tenants. Give the applicant information on all available units. Don’t assume they will be a better fit for one unit, allow the prospective tenants to choose what is best for their needs.
During screening the prospective tenants, be consistent with your questions and responses.
RHAWA provides tools to help with your screening processes and allows you to keep up with the practice of consistency. The QuickApp Screening Portal gives you the tool to keep track of who has applied and paid for their screening package fee in the order they
are received. This complies with the First in Time Law based in the City of Seattle or for those who practice the first come first serve modal. The tools provide the ability to document your applications and screening reports. Remember to document everything! Fair and effective screening practices start with having a clear understanding of the Fair Housing Guidelines. To learn more about Fair Housing Guidelines check out RHAWA’s Education ONDEMAND.
Formal legal advice and review is recommended prior to selection and use of this information. RHAWA does not represent your selection or execution of this information as appropriate for your specific circumstance. The material contained and represented herein, although obtained from reliable sources, is not considered legal advice or to be used as a substitution for legal counsel.
Multifamily Real Estate Financing
• Tailored application process
&
•
•
•
Thinking Beyond Rent Control
Luke Brown | Business Development Specialist |
THANK YOU FOR COMING TO OLYMPIA – YOUR AMAZING TURNOUT MADE ALL THE DIFFERENCE
Since the COVID moratorium in 2020, we’ve seen an explosion in renter protections in Washington state. These protections have come at the expense of housing providers, specifically ones with 1-5 rental units. While this legislation has been harmful to housing providers, we’ve avoided the big one: Rent Control. For the past several years rent control bills have been shut down, in large part thanks to our members’ efforts in helping RHAWA advocate against them.
This year, rent control came back in full force. Our members went to Olympia in January to oppose house bills 1388 and 1389, which both aimed to impose rent control. Our efforts were successful, and no rent control bills were passed this year. Nevertheless, our work isn’t done as more rent control bills will come up in the future, and it will take our combined efforts to fight it. Thus, it is more important than ever to know how to advocate on your own behalf.
One effective approach to speaking up for yourself is by suggesting alternate ideas that focus on boosting the housing supply and reducing housing costs. This can help lawmakers understand that those who provide housing are
individuals determined to tackle the housing crisis. By presenting yourself as someone who is seeking solutions instead of just identifying problems, you are more likely to have your views considered. Fortunately, the housing market can be improved without implementing rent control, such as by creating aid programs or policies that aim to enhance the housing supply.
Increasing the supply of housing is the most direct way to improve our housing crisis. More housing will drop prices and lower market rents, which will benefit housing providers and tenants alike. Washington state is roughly 140,000 units short as of 2019, a number that is surely increased by now. The most direct way to affect the housing supply is to change zoning regulations. Currently, zoning regulations throughout the state restrict multifamily housing in neighborhoods with primarily single-family homes. In Seattle, for example, 80% of residential land is zoned as R1, which is single-family only. Furthermore, one-third of transit station-adjacent land is zoned only for single-family homes. Allowing townhomes and multifamily buildings with up to four units to be built in these areas would greatly increase the supply of housing, but the positive effects
don’t end there. Contrary to popular belief, property values rise in areas that experience gentle density increases. This is because of added amenities like new infrastructure, businesses in mixed use buildings, and parks adjacent to new developments. All of these end up increasing property values throughout the area. Lastly, we may even see less congestion on the roads in places like Seattle, as more people have access to a mass transit like the light rail.
Another way to help alleviate the housing crisis is through various assistance programs aimed at creating affordable housing while maintaining market rents. One such assistance program is housing vouchers, a tool to help low-income families secure adequate affordable housing in a private market. They work similarly to food stamps, a method we know to work. Low-income families that qualify receive supplemental income that allows them to afford otherwise unaffordable market rate units. Tenants benefit from their newfound access to affordable housing, and housing providers benefit by not having to sacrifice market rents to cater to low-income tenants.
The ongoing Multifamily Tax Exemption Program (MFTE) is another way
to provide affordable housing without sacrificing revenue. It offers tax incentives to housing providers if they commit to charging below market rents to some units in their building, typically 20-25% of units. It also restricts access to these units to individuals below a certain income level. As of 2019, this program had already generated 34,885 new housing units, with 82% being in Seattle, Spokane, Renton, and Tacoma. It directly boosts the supply of affordable housing in these areas, and housing providers can rest easy as losses in revenue on rent restricted units are directly offset by tax breaks. Cities with populations over 5,000 can adopt this program. Most major metropolitan areas in the state have adopted the program, with notable exclusions being Vancouver, Bellingham, and Spokane.
Rent control remains a contentious issue in Washington state, and while our efforts have been successful in preventing it from being implemented in the past, it will certainly continue showing up. As housing providers, it is crucial to continue advocating for solutions that benefit everyone involved and to be actively involved in shaping housing policy in our communities.
Luke Brown
SPONSORSHIP! Make an impact on our Members!
Brown
Business Development Specialist
RHAWA invites sponsorships for its 2023 events, which have 5 in-person events a year with three to four different sponsorship packages available per event. The events will be marketed in CURRENT newspaper and bi-weekly Connections email, providing up to 20,000 impressions. RHAWA also offers promotional email messages to over 5,000 members and supporters, giving sponsors over 50,000 impressions for the campaign.
RHAWA has various sponsorship packages available, including a Premier Level, Annual Sponsor, with recognition at every event, a vendor profile article, an ad on the events page, signage at the event, exhibitor booths, podium time prior to the keynote speaker, and more.
The live events for 2023 are: the Spring Workshop Tradeshow, the Live Legal Event, the Membership Appreciation Day, the Annual Business Meeting, and the Holiday Gala.
To learn more about sponsor benefits or to secure yours today, contact Luke Brown at lbrown@RHAwa.org
CLOGGED DRAINS: Truth Be Told.
Bruce Davis, Sr. | Day & Night Plumbing & Heating, Inc. | 2020 Vendor Member of the Year
There are few things as frustrating, filthy, and damaging as a clogged drain or toilet. Some systems seem to never have any problems, others seem to be constantly slowing or clogging and flooding things. What’s the reason for that?
In our experience it’s not just ‘a reason’… but a number of possible ‘reasons’.
• Something wrong with the system,
• The people using the system wrongly,
• Negligence in maintaining the system.
Of course, it could be some combination of all three. The truth is that a modern plastic (30 years or younger) properly designed and installed drain system, that is used correctly and maintained regularly should never clog…ever. (Older steel, iron or clay drain systems are another story and another article)
Something Wrong with the System
Whether it’s a toilet, kitchen sink drain, a main drain under the house, or any drain; it needs to be designed and installed properly according to the Plumbing Code. Over the years we have found so many different things wrong with drains and fixtures that it’s prohibitive to even begin to list the possibilities. Suffice it to say that if you have a drain or fixture that has reoccurring clogging problems, one of the first things to do
is have an experienced, Licensed Service Plumber to clear the problem and examine the entire system; inside and out. These days, the examination is a lot easier to do so with cameras that can go into any system and record what is there. Then, your plumber can show you if there is a problem that needs correcting like a bad fitting, belly in the line, etc. If something is wrong and it’s not repaired properly, it will always give you trouble no matter how much you ‘baby’ it.
The People Using the System Wrongly
If there isn’t anything obviously wrong with the physical fixture or system, then it is possible it’s not being used properly. Drains are designed to drain water and slurry from a garbage disposer with lots of water before, during, and after grinding up non-leafy, non-fibrous soft foods, nothing else. No grease, paint, chemicals of any kind, mortars, or calking of any kind, etc. Toilets, even the best quality ‘large throated’ toilets are not designed to take anything besides human waste and toilet paper, that’s it. They obviously can’t take foreign objects like toys and combs, but they also can’t take things like feminine products, paper towels, food waste (like extra noodles, chili, etc.), cat litter, or plant trimmings and litter, etc. An exception to this is we have seen that many ‘builder grade’ toilets won’t always stand up to basic, regular use and have to be
plunged often. This is due to an inferior fixture, and not the fault of the users.
Negligence Maintaining the System
Is it true that a modern, properly designed, and installed system needs maintenance sometimes, even when used properly? Yes, absolutely. Main drains in a system shouldn’t need maintenance, but kitchen sinks, bathroom sinks, tubs, and showers definitely need periodic maintenance. The frequency depends on who is using the systems and how they live.
There is really no getting around the fact that bathroom sinks, tubs, and showers need their drains kept clear of hair that will accumulate from normal use. A family with 4 teenage girls will need it more often than a senior couple, but it still is needed. Experience will tell you how often. It’s usually not necessary to cable, snake, or jet these drains, just a regular user of a commercial-grade sodium hydroxide drain cleaner (not Drano) will do a good job dissolving hair and soap scum. If misused, this chemical can be dangerous, so be careful to follow instructions and use gloves and face shields.
Kitchen sinks also need some maintenance due to grease build-up. The type of food that is cooked and eaten in the home will make a difference in the frequency of cleaning. The maintenance that is best for this is usually a small
Jetter, used by a professional who won’t end up flooding everything.
If any of your drains do need cleaning, snaking, or jetting, there should be an accessible clean-out available at the top or bottom of any drain to make it easy to service. If the installer cut corners and didn’t put in clean-out where they belong, it’s worth the investment to have your Service Plumber install them properly, to limit the intrusion and expense of maintenance in the future.
Toilets and drains; everybody has them. Poor construction, misuse, and neglect of these systems keep us very busy. We’re here to help you, if and when you need us, but if you, your family, or your tenants are reminded of these “basics”, hopefully, it won’t be quite as often.
Bruce Davis, Sr. is a Licensed Journeyman Plumber, Licensed Electrician, HVAC/R Electrical Administrator, HVAC/R ,and Certified WA State C.E.U. Instructor. Day and Nite Plumbing and Heating, Inc has been in Lynnwood serving Snohomish and N. King County for over 68-years, and Bruce Sr. has been President and working at this family-owned business for 36-years. Bruce can be contacted at: Email: Bruce@ dayandnite.net.Day and Nite Plumbing and Heating Inc. 16614 13 Ave. W., Lynnwood, WA 9803, (800) 972-7000.
With Legislative Session still underway, your RHAWA Government Affairs team is hard at work fighting to maintain your rights as small housing providers at the state level. Many of you have helped with our statewide advocacy efforts this year and we are so grateful for your support. However, it is important to keep in mind that changes to rental laws in your local governments continue to come up even during Legislative Sessions. Bellingham, Burien, SeaTac, Seattle, Spokane, and Tacoma have all either discussed or implemented renter protections or housing restrictions in 2023. As RHAWA strives to keep you updated on all changes in rental laws big and small, this article will provide a comprehensive update on all recent local changes.
BELLINGHAM
The City of Bellingham is following in the footsteps of cities in King County by voting in favor of renter protections on February 27. The policies in Bellingham are quite similar to policies already present in Seattle as well as the rest of King County.
Specifically, Bellingham City Council voted to enact a 120-day rent increase notice period. The Bellingham City Council voted unanimously in favor of these renter protections. These policies were discussed in City Council for a final time on March 14. At the time of writing this article, we do not yet know the outcome of this meeting, check our blog for the most up-to-date information.
BURIEN
In the City of Burien, multiple renter protections were passed in October of 2022. These renter’s protections are in line with the most invasive policies seen in other cities in the King County region. Like other cities, Burien added language to their municipal code prohibiting housing providers from ending a tenancy unless there was a just cause to end the tenancy. This applied to the end of a lease term as well, effectively creating perpetual leases that would not be allowed to naturally expire at the end of a term. This created an issue as requiring just cause at the end of a lease term is a conflict with a housing provider's rights under state law.
After a lengthy discussion, the Burien City Council removed one line from their Burien Municipal Code. The line that was removed stated: “[A Housing Provider may not] refuse to renew or continue the rental agreement after the expiration of the rental agreement” (Ordinance 811)
While RHAWA is pleased that the Burien City Council is attempting to bring their renter protections in line with state law, this minor revision does not allow us to safely assume that Burien housing providers will be able to serve a Non-Renewal End of Term notice without a just cause. The BMC still states: “Owners of housing units shall not evict or attempt to evict any tenant, or otherwise terminate or attempt to terminate the tenancy of any tenant [without Just Cause]” (BMC 5.63). RHAWA believes that this language will still restrict a housing provider's ability to serve a Non-Renewal End of Term notice without a just cause.
SEATAC
The City of SeaTac is hosting a com-
munity meeting on the 10th of March to gather input from both Housing Providers and Residents regarding their suite of ARCH-style renter’s protections.
The protections that will be discussed include:
• Requirement that landlords give renters a summary of all the existing rules in state and federal law that a landlord and a renter must follow. This summary will be prepared by SeaTac staff and will provide information related to:
。 Maintenance of rental homes.
。 Evictions.
。 Responsibilities of renters.
。 The rights of landlords and renters.
• The move-in fee does not have to be paid all at once. The total amount of the move-in fee cannot be more than one month’s rent.
。 If a renter is renting for six months or more, the move-in fee can be paid over the first six months.
。 If a renter is renting for less than six months, half the move-in fee can be paid at move-in. The other
Daniel Bannon
Burien Seatac
Tacoma Seattle
Bellingham
Spokane
half is paid on the first day of the second month.
• If the rent payment is late, the “late fees” cannot be more than ten dollars ($10).
• Before increasing rent, landlords must tell their renters:
。 120 days beforehand if the rent will increase by more than three percent (3%).
。 180 days beforehand if the rent will increase by more than ten percent (10%).
• A landlord cannot require a social security number from a renter or a prospective renter.
• Just Cause evictions: Actions by the renter. A just cause reason for eviction exists if the renter:
。 Does not pay rent for 14 days after receiving notice that rent is past due.
。 Repeatedly fails to pay rent on time (four or more times in a 12-month period).
。 Breaks a term in the rental agreement (e.g., does not remove trash from the rental unit) and does not comply within 10 days.
。 Repeatedly fails to meet terms in the rental agreement (three or more times in a 12-month period).
。 Engages in drug-related or criminal activity.
。 Resigns from a job working on the property, which was the reason the landlord rented the unit to the renter.
• Just Cause evictions: The owner/landlord. A just cause reason for eviction exists if the landlord or owner:
。 Intends to renovate the building, provides 120 days’ notice to the renter, and obtains a construction permit for the work.
。 Intends to demolish the building or intends to convert the building to non-residential use, provides 120 days’ notice to the renter, and obtains a permit for the work.
。 Must halt the use of the unit to comply with zoning, building, public safety, or emergency orders by the City of SeaTac (e.g., the building is unsafe to occupy).
。 Currently lives in the rental unit with the renter and wants the renter to move out.
This Community Meeting came about after the SeaTac City Council determined they had not adequately consulted both Housing Provider and Resident stakeholder groups.
SEATTLE
The City of Seattle discussed a cap on late fees in their City Council Meeting on Friday, March 17. The original proposed ordinance would implement a $10 cap on all late fees. Amendments to this ordinance were presented which would allow for a 1.5% cap on late fees, which is consistent with other cities in King County. The amendments also noted that means testing should be involved in the cap on late fees. Therefore, this late fee cap will only apply in tenancies where the resident’s income is below 80% AMI.
Once again, check RHAWA’s blog for the most up-to-date information on these proposed changes.
SPOKANE
In the City of Spokane, some renter’s protections were unanimously passed on February 27, while others passed with a split vote.
• The City of Spokane is authorized to use monies from the Legal Services and Relocation Fund to contract with another entity to provide attorney services for tenant legal services and mediation costs.
• The Department of Community, Housing and Human Services is authorized to operate a rental property mitigation program, which is intended to assist in the repair of residential rental properties that are damaged during a tenancy and where damage occurs through no fault of the landlord.
• Requirement of a Housing Provider to make all necessary repairs to keep the premises in habitable condition as defined by the Spokane Municipal Code before a tenant may occupy the unit.
• Requirement to provide a voter registration form, a change of address form, and a tenant information
MANY OF YOU HAVE HELPED WITH OUR STATEWIDE ADVOCACY EFFORTS THIS YEAR AND WE ARE GRATEFUL FOR YOUR SUPPORT. HOWEVER, IT IS IMPORTANT TO KEEP IN MIND THAT CHANGES TO RENTAL HOUSING LAWS IN YOUR LOCAL DISTRICTS CONTINUE TO COME UP EVEN DURING LEGISLATIVE SESSION.
The provisions that were passed unanimously included:
• $25 fee per residential rental unit per year for each residential rental unit owned by the same legal entity in excess of twenty-five residential rental units.
• Owners of residential rental housing units are required to register every rental unit and its street address located in the City of Spokane annually and certify that each property meets the requirements of RCW 59.18.060.
The provisions that passed with a 5-3 split vote included:
• Requirement to accept portable background and credit checks.
。 Portable screening reports are valid for 90 days.
• Rent Increase Notice
。 Update the notice requirements for a rent increase based on percentage of increase. Possible requirements include:
。 6% or less: 60 days written notice.
。 6-10%: 90 days written notice.
。 10+%: 180-220 days (6-7 months) written notice.
。 Update the service requirements for rent increase notices.
。 Written notice must be served in accordance with RCW 59.12.040.
。 Landlord cannot charge for rent increase notice to be served.
。 Provide options to tenants who cannot afford the rental increase and needs to vacate the unit.
。 Waive the requirement for the tenant to serve a proper 20-day written notice to vacate or the tenant will not be penalized if a tenant vacates based on the rent increase.
• Shared Housing Standards
。 Require the master leaseholder to provide contact information for the sublet tenants and the property owner at the time of tenancy.
。 Require separate leases when renting to four or more tenants.
。 Require the lease to state the legal number of occupants and habitable spaces in the unit.
。 Require housing providers to serve any notices that can lead to eviction to all sublet tenants at the time the master leaseholder is served.
packet about tenant rights and responsibilities to residents.
• Requirement of Housing Providers to inform residents of any mold, sale of property or methamphetamine contamination.
• Requirement to maintain all move-in and move-out inspection records for at least three years.
TACOMA
The City of Tacoma has proposed several changes to its Rental Housing Code (RHC) and hosted several meetings throughout the month of March to gather community input on these changes.
The proposed changes to Tacoma’s RHC include:
。 Prohibit housing providers from starting the Unlawful Detainer Action (eviction) if they cannot show notices were served to all sublet tenants.
It is important to note that while RHAWA is supportive of finding solutions for shared housing issues, some of the solutions currently presented will cause a significant administrative burden to housing providers.
• Late Fee Standards
Possible policy requirements include:
。 Require housing providers to actively take steps to recover late fees during tenancy, serving monthly or quarterly notices.
。 Prohibit housing providers who do not address late fees during tenancy from reporting them to a prospective housing provider at the end of the tenancy.
。 Limits to the amount of late fees a housing provider can charge
as outlined in RLTA: Possible caps:
‐ Cap late fee to $75 as outlined in Washington State Residential Landlord-Tenant Act (RCW 59.18, RLTA) OR
‐ Cap late fee to 3% to 5% of the monthly rental amount.
• Restriction of Evictions without a Rental Business License
The policy would ensure anyone operating a rental business in the Tacoma city limits is complying with City policies, which require all rentals to have a rental business license. It will ensure that housing providers are given the opportunity to provide input on all policies as the City uses the Rental Business License as an outreach tool. Possible policy requirements include:
。 Require a housing provider to attach a copy of the Rental Business License to the Show Cause hearing paperwork.
• Screening Criteria
Possible policy requirements:
。 Limits on the rent-to-income ratio (ex 3x monthly rent).
。 Limit on rent-to-income ratio on tenants who are on a fixed income (SSI, SSD, or retirement benefits).
。 Restrict housing providers from requiring a social security number to apply for housing.
。 Restrict housing providers from having a blanket criminal history policy.
The City of Tacoma hosted 3 events regarding these proposed changes throughout the month of March. These events included a presentation about proposed Rental Housing Code changes. Participants were able to provide their feedback and comments as well as ask questions.
Stay up to date on local policy issues, keep an eye out for our emails and calls to action, and check out the blog at RHAwa.org/blog to keep up to date on current proposals. If you would like to participate in our grassroots advocacy, but aren’t sure how to get involved, please contact me at dbannon@RHAwa.org.
MANAGE YOUR RENTAL WITH EASE
GAS LEAK?
Here’s what to do…
Phil Schaller, CEO | RentalRiff | RHAWA Vendor Member
A gas leak at your property is an emergency that requires immediate attention and action. This article will focus on what you or your tenants should immediately do if they suspect a gas leak.
Luckily it’s pretty easy to know if there’s a gas leak at the property. Gas companies inject a non-toxic odorant called mercaptan into the gas. This provides the rotten egg or sulfur smell to alert the resident that there’s a leak.
If you or your tenants smell gas, leave the property immediately. Once you can no longer smell gas, keep your distance from the property - if you smell gas outdoors, leave that area as well.
As you exit the property, leave the doors open if possible. This won’t stop the leak but it’ll allow some gas to escape and reduce the risk and potential damage to the property.
After you or the tenants are a safe distance away from the property and don’t smell any gas, call the fire department (911) and the gas company. They’ll be able to assist with shutting off the gas to the property.
Do not under any circumstances create a spark if you smell gas. Here are a few household items that can create a spark:
• A telephone, or any mobile device that has a battery
• Matches, a lighter, or another source of ignition
• Electrical switches, including lights
• Appliances
• Car ignitions/spark plugs
• Flashlights
• Garage door
Once the gas has been shut off, it’s time to call in a pro to assess and repair the piping or appliance that caused the leak. Leaks are most likely caused by faulty appliances or because someone hits and/ or ruptures a gas line. Your RentalRiff property specialist can help with this as can many HVAC companies.
Here is a checklist you can provide tenants on what to do if they smell gas (often we’ll print cards with these instructions for our customers/tenants to put on the refrigerator):
• If you smell rotten eggs or sulfur leave the property immediately.
• Leave doors open as you exit the property.
• Once you’re a safe distance away, call the fire department (911) and the gas company - they’ll be able to shut off the gas.
• Call in a pro (either your RentalRiff property specialist or an HVAC company) to assess your gas pipes and make the necessary repairs.
Hope this quick guide is helpful and provides a baseline for what to do if there’s a gas leak. Any questions on this topic please feel free to reach out any time - your local gas company will also be a great resource.
Happy landlording!
Any questions for us, please feel free to reach out anytime. Happy winterizing!
If you are interested in learning more about RentalRiff’s property maintenance service, give us a call at (541) 600-3200.
Phil Schaller
LOCALLY OWNED HIGHLY EXPERIENCED
CLIENT FOCUSED
Paragon Real Estate Advisors is the premier Seattle real estate investment firm for multi-family property sales in Washington State. When it comes to apartments and investment real estate in the Puget Sound region, we are the smart choice to partner with.
Call us today to speak with one of our experienced commercial brokers to start a free property evaluation.
Speak to a Licensed 1031 Exchange Advisor
Selling your rental property? Contact Real Estate Transition Solutions at 206-502-4862 to schedule a complimentary consultation with one of our licensed 1031 Exchange Advisors.
Licensed, Bonded and Insured Daily Job Site Cleanup
Up to 30-Year Material Warranty
Maintenance-Free PVC Material
Designed and Warranted for Ponding & Pooling Water Conditions
Complete Alternative to Hot Tar and Torch Down
About Us
We are very proud to be family owned and operated company. Our focus is to solve customers’ roof problems and concerns with a reliable, high-quality system. Our dedicated crews treat our customers’ roofs as if it were our own.
We Stand by Stability
Polyflex G (torch down) provides an exceptionally durable roofing product and will provide long-term weathering performance. With a granulated surface, Polyflex G exceeds all minimum ASTM standards for tensile strength, puncture resistance and flexibility. This roofing system won’t melt in the sun or become brittle like some other membranes. Torch down roof membrane is ideal for Northwest roofs; where common branches sometimes fall, residents want a roof-top patio and adding skylights are easy to do. Builders and consultants trust the quality materials that make up torch down roof system and the approved Contractors who install them.
We are a registered Polyglass Contractor (#5008).
Proud Sponsor of
About Elizabeth Gregory Home (EGH) EGH inspires homeless women to transform their lives. Through services offered, women can meet immediate needs, as well as long-range goals to break the cycle of homelessness.
Learn more about EGH and how you can help at eghseattle.org. Thank you.
Expertise in
Roof Replacement
Roof Repairs
Ventilation & Drainage Revisions
Preventative Maintenance
Specializing in
Apartment Housing
Condominiums
Commercial Property
Multiplex / Duplex
Special pricing for RHAWA members AND $100 donation toward EGH with paid re-roof contract!
