American Apartment Owners Association

A Smarter Approach to Property Management

9 hours 49 min ago

One of the biggest issues managers of large property holdings encounter is the lack of a clear line-of-sight into the assets within their property portfolio. This lack of clarity can affect anyone from individual investors with a handful of properties in their portfolio, all the way up to institutional owners such as Fannie Mae and Ameritrust.

Owners of portfolios of properties often do not have an up-to-date status of the equipment on their properties, and this makes it difficult to plan and prioritize for their upkeep and repair.

In turn, poorly planned repair and replacement jobs on “behind-the-wall” assets such as HVAC systems, electrical systems, and plumbing can lead to bloated maintenance expenses. However, these can be pared down with asset tracking and planned replacements. Performing planned replacements during the lower-cost offseason, rather than performing expensive emergency repairs during the peak heating or cooling seasons, can make all the difference.

Asset tagging or tracking—the logging of age, model, and warranty status of services—helps owners know what systems are most likely to fail and then plan their budgets accordingly.

An asset-tagging project typically involves a contractor or technician going into a property and labeling existing behind-the-wall assets with a unique identifier, which can then be scanned and logged by the technician via a mobile application.

To use HVAC as an example, once asset data is gathered on all properties of a portfolio, a 360 profile is built showing the brands of the equipment, efficiency/SEER ratings, tonnage, the types of refrigerant used, and the condition of the equipment. Once the data is collected, a report is generated that shows the overall health of a given property and the portfolio as a whole.

Additionally, the technology can be merged with home automation solutions such as smart thermostats to provide additional benefits such as remote monitoring of an entire portfolio of properties, managing heating, and cooling efficiency.

With this asset report in hand, the property owner or investor then is able to optimize their capital expenditure with planned replacements, avoiding both fluctuations in HVAC equipment prices and labor costs.

 

Source: dsnews.com

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In unlikely alliance, PhRMA sides with landlords in Calif. referendum on rent control

9 hours 51 min ago

SAN FRANCISCO — The pharmaceutical industry’s most powerful lobbying group is opening its war chest to try to sway a policy fight with no clear connection to medicine or health care, spending a half-million dollars here to oppose a California ballot measure that would expand rent control protections across the state.

PhRMA’s contribution is unusual not for its size — $500,000 is a relatively small sum for the trade association — but because the group typically only involves itself in policy issues likely to impact its bottom line. In this fight, it is siding with landlords, developers, and real estate investors, mainly in California but with some headquartered in other states; PhRMA is the only large donor opposing the measure without ties to the housing industry.

The group says that it’s getting involved in the ballot measure at stake, called Proposition 10, because it fears passage could make housing harder to find for the nearly 900,000 employees who work in biopharma in the state. Some economists have expressed concern that it could discourage the construction of new housing and make life harder for low-income renters in the long-term.

But some people here suspect that PhRMA is using its financial clout to settle an old political score with Michael Weinstein, a longtime HIV/AIDS activist who has repeatedly tangled with the drug industry, most recently by bankrolling a set of state-level ballot measures aimed at capping drug prices.

The AIDS Healthcare Foundation, which Weinstein leads as president, has provided the vast majority of the financial backing for Proposition 10: over $12 million, according to the latest campaign finance disclosures. The nonprofit, which runs clinics across the globe, sees housing policy as key to promoting health, saying the measure would prevent displacement and expand protections for low-income renters in a state with few affordable housing options.

And as Weinstein sees it, PhRMA’s involvement looks like payback.

“They consider us an enemy, and they have unlimited money to spend on anything they want,” he said in a phone interview with STAT. “It’s preposterous for them to say they have an interest in this issue.”

He added, with an air of disbelief: “It’s a very strange coincidence.”

Dr. Adams Dudley, director of the Center for Healthcare Value at the University of California, San Francisco, said he thinks “it’s hard to imagine that [PhRMA’s] stated reason is plausible.”

The more plausible explanation, as Dudley sees it, is that PhRMA is “sending a signal: If you get on our bad side, we’ll keep opposing whatever you do, we’ll try to make your life difficult for a very long time, even if you do something else.”

Whether or not it accounts for PhRMA’s involvement in Proposition 10, the drug industry’s distaste for Weinstein is easy to explain. He has sued GlaxoSmithKline over its prices, Pfizer over its marketing, and Gilead over its patents.

In the past few years, Weinstein has further angered drug makers — and even a number of patient advocates — by funding ballot measures in California, Ohio, South Dakota, and the District of Columbia that would have prevented state and local health authorities from paying more for drugs than the discounted price the Department of Veterans Affairs received. None of them has succeeded.

The most significant such push came in 2016 in California, where drug makers contributed a record-setting $109 million to oppose the measure. PhRMA itself didn’t contribute cash, but it did log an additional $650,000 in non-monetary contributions, a category that includes labor and services. In that fight, the drug industry found allies in the California Medical Association and a surprising number of patient groups, including some that have taken money from pharmaceutical companies; they called the measure flawed, saying it would have failed to bring drug prices down for most Californians.

The AIDS Healthcare Foundation brought in Sen. Bernie Sanders (I-Vt.) to stump for the measure, but voters defeated it by a 53-47 margin in the election that sent President Trump to the White House.

In 2017, Weinstein tried again in Ohio with a nearly identical ballot measure, where the drug industry — and over 79 percent of voters — opposed it. And in the lead-up to the 2018 general election, PhRMA has won legal challenges in South Dakota and D.C. that prevented similar measures from even reaching the ballot.

Despite its rich history with Weinstein, PhRMA denied the contributions had anything to do with past political entanglements.

“The research-based biopharmaceutical industry supports nearly 900,000 jobs and $2.6 billion in economic output in California,” PhRMA spokeswoman Priscilla VanderVeer said in a statement. “The industry’s investment in the state is threatened when our employees cannot find housing and Prop. 10 could make the situation much worse. That’s why we are opposing Prop. 10 and contributing to its defeat.”

The opposition to Proposition 10 in California this election season has so far raised more than $20 million. While the largest donors opposing Proposition 10 are in the housing industry, a political action committee backed by the California Business Roundtable is also pledging to defeat it. The group’s members include several real estate developers as well as the drug makers Eli Lilly and Boehringer Ingelheim.

Proposition 10 is not the first time PhRMA has waded into local housing policy — nor is it the first time it’s opposed the AIDS Healthcare Foundation in such a fight.

In 2017, Weinstein was the driving force behind Measure S, a local ballot measure in Los Angeles County that would have tightened zoning laws in an effort to prevent new market-rate construction. The AIDS Healthcare Foundation provided almost all of the $5 million funding to support it, saying the proposed law would prevent displacement.

But just like with Proposition 10, critics countered by calling the measure anti-development and saying it would freeze the city’s efforts to lower prices by expanding its housing supply. PhRMA contributed $25,000 to the opposition to Measure S. And in what has become a familiar result for Weinstein-backed initiatives, the measure failed by a 30-70 margin.

In that same March 2017 municipal election in Los Angeles County, PhRMA contributed $10,000 to support a separate referendum, called Measure H. Voters passed the measure, which levied a 0.25 percent sales tax increase to fund mental health, housing, and other services for the homeless.

PhRMA says its contributions to local efforts surrounding housing, homelessness, and urban development may not be directly related to the business of manufacturing pharmaceuticals but are important to the industry nonetheless.

Just about everyone agrees that California is in the midst of a housing crisis. As the state’s coastal economies boom, construction of new homes and apartment buildings isn’t keeping pace. The result: Residents are paying more for monthly rent, commuting longer distances to work, and packing into increasingly cramped quarters.

“That something has to be done is already pretty well established,” said Melissa Michelson, a political science professor at Menlo College in Silicon Valley. “The question is whether rent control is the answer — or whether will it make things worse.”

Proposition 10 would repeal a state law enacted in 1995 that limits the type of rent restrictions local governments can impose. Its passage would allow local governments to impose rent control more freely, giving them a tool housing advocates say could go a long way toward preventing evictions and rapid gentrification.

Expanded rent control, however, is not seen as a slam-dunk win for affordable housing advocates, and opponents argue it could discourage new construction.

The measure is dividing California’s opinion makers, in some cases along party lines. The state’s Democratic Party has endorsed the measure, while its Republican Party opposed it. The state’s major newspapers are split, too: The editorial boards of the Los Angeles Times and the Sacramento Bee have come out in favor of the measure; those of the San Francisco Chronicle and the San Jose Mercury News have opposed it.

How Proposition 10 fares in November will come to down to a few factors, Michelson said. One is how effective the opposition’s ads prove to be in sowing doubts in the minds of voters that the measure is flawed. And another is whether progressive voters come out in full force to pass the measure as part of a blue wave.

Regardless of what California voters decide, the AIDS Healthcare Foundation is expected to continue prioritizing the affordable housing issue.

The group last year created a new division called the Healthy Housing Foundation. The offshoot, designed to provide affordable housing, has acquired four hotel properties on Los Angeles’ Skid Row and in Hollywood, altogether totaling more than 600 units. It’s also planning of the construction of 680 units in Fort Lauderdale, Fla.

Said Weinstein: “We’ve jumped in whole-hog into this issue, because it’s a crisis of the kind that we confronted at the beginning of AIDS, which was a vulnerable population whose needs were being ignored.”

 

Source: statnews.com

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FTC shuts down real estate websites that allegedly preyed on Section 8 renters

10 hours 7 min ago

The Federal Trade Commission shut down a series of real estate websites that allegedly targeted Section 8 voucher recipients and falsely promised “exclusive” access to rental listings in exchange for a monthly or weekly subscription fee.

According to the FTC, two brothers, Steven and Kevin (Kaveh) Shayan, owned four companies and operated a series of real estate websites that offered prospective renters “hundreds of thousands of accurate, up-to-date, and available listings” if they paid a fee to access the listings, when the opposite was allegedly the case.

The FTC claims that the Shayan brothers’ companies, Apartment HuntersReal Estate Data SolutionsRental Home Listings, and UAB Apartment Hunters, and their websites, WeTakeSection8.comApartmentHunterz.com, and FeaturedRentals.com, actually offered out-of-date listings, including many that did not accept Section 8 vouchers as promised.

“Today’s housing market is historically tight, and affordable rentals are harder to find than ever. Section 8 voucher recipients have it even harder: they have fewer rentals from which to choose and their vouchers expire if not used within a specified period of time,” said Andrew Smith, the FTC’s director of the bureau of consumer protection.

“In this case, we allege that defendants misled consumers—including Section 8 voucher recipients—into purchasing subscriptions to worthless lists of stale apartment listings, and the consumers then wasted their valuable time shopping for rentals that were not in fact available,” Smith added.

According to the FTC, the websites charged $49 for two months of access to contact information for the property managers of the rental listings on the sites, and $14.99 for a weekly subscription.

For those fees, renters were promised access to rental listings that weren’t available on other free listings sites, but the FTC alleged that those claims were “misleading, false, or unsubstantiated.”

The FTC also claims that WeTakeSection8.com falsely claimed to have access to listings that would accept Section 8 vouchers, which are used by low-income families, elderly, and disabled persons to gain access to affordable housing.

From the FTC’s complaint:

Defendants charge consumers a fee to access contact information for property managers of rental units listed on their websites. Defendants represent to consumers that the listings on their websites are accurate, up-to-date, and available, that consumers are likely to find suitable housing within a short time, and that consumers cannot find these listings on free websites. These representations are misleading, false, or unsubstantiated.

For example, the majority of the listings on WeTakeSection8.com are not available for rent, and most of those units that are available for rent do not accept Section 8 payments. Consumers lose money and valuable time because of Defendants’ deceptive marketing.

The FTC also noted that the California Department of Real Estate revoked Apartment Hunters’ business license in 2015, but the company has continued to operate since then without a license.

At the request of the FTC, a federal court issued a temporary restraining order prohibiting the Shayan brothers and their four companies and their associated real estate sites from making false claims in the marketing of rental listings.

 

Source: housingwire.com

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How Investors Get Burned Following the 2% Rule in Low-Income Neighborhoods

10 hours 12 min ago

As a new investor, I lost a stunning amount of money on low-end properties.

On paper, the numbers look gorgeous: “I can charge $1,000 in rent for a $30,000 property?! What can go wrong?”

A lot, it turns out. But these costs are not always obvious, and even when they are, they’re not always politically correct to talk about.

The “2% Rule” claims that a property that rents for more than 2% of the purchase price is usually a good deal. But these sorts of shorthand rules can be deadly, especially for new investors. I touched on this as one of the 7 Lessons I Wish I’d Known When I Started Investing, and it’s worth a closer look.

Here’s how low-end real estate can end up ravaging investors and how to avoid losing your shirt.

A Tale of Two Properties

These numbers may look imaginary, but they’re actually rounded versions of real properties I’ve owned.

  • Francis Street (or “Francis” for short): The purchase price and closing costs totaled roughly $15,000, and it needed around $25,000 in repairs ($40,000 for the non-mathematically-inclined). It’s in a rough neighborhood and rents for $1,000/month.
  • Chester Street (henceforth “Chester”): With a purchase price and closing costs of $160,000, Chester needed roughly $15,000 in repairs ($175,000 total). Young professionals live in this neighborhood, and Chester rents for $2,000/month.

At first glance, you could buy nearly four and a half Francises for the price of one Chester and earn over double the cash flow. You could also diversify your investments, with four or five properties spread across different neighborhoods rather than all that capital tied up in one property.

But here’s the thing—cash flow involves a lot more than just the cost of the property and the rent.

Cash Flow & The Real Cost of Ownership

There are entire articles, entire chapters in books devoted to how to calculate cash flow properly. We’re just going to hit the highlights here.

Cash flow is not rent minus mortgage. Beyond the principal and interest of the mortgage payment, here are just a few of the most common costs:

  • Property taxes
  • Insurance
  • Vacancy rate
  • Property management fees
  • Maintenance
  • Repairs (turnover costs)
  • CapEx (capital expenditures)

There are other costs that sometimes apply. For example, some properties have homeowners’ association or condominium fees. But you get the idea.

These costs are almost always higher for low-end properties in “tough” neighborhoods. The vacancy rate for Francis is a whopping 20%. But Chester’s vacancy rate? A mere 4%. That’s a difference of five times.

It doesn’t stop at vacancy rate, either. The last time Chester turned over, there was zero damage. The renters were attentive in patching the nail holes from their decorations and even painted over the patch marks. Floors, kitchen, bathrooms? Clean as a whistle. Chester needed about two hours’ worth of work on my part to get the house ready for the next tenant to move in.

The last tenants at Francis left the property needing $9,000 in repairs. New paint throughout. New carpets throughout. Damage to the cabinets. Filthy bathrooms. Abandoned trash (some of it bulk trash and furniture) littered throughout. Broken bannister spindles. The list goes on.

The Higher Costs of Lower-End Properties

Those tenants at Francis had to be evicted because they stopped paying the rent. So, in addition to the $9,000 in damage, they also cost $5,000 in unpaid rent, legal fees, and court fees.

But it doesn’t stop at the higher risk of rent defaults. Once Francis was vacant, it was broken into by junkies for use as a drug den. We had to call the cops, then board it up. Needles, used condoms, and mostly-empty 40-oz. bottles were strewn all over the floor. It was subsequently broken into again (presumably by the same junkies). I had to board it up again, this time with special screws with a non-standard head.

Francis is inside city limits, where the property tax rate is double the surrounding county’s tax rate. Even though Chester is assessed at a much higher value, its property tax bill is only marginally higher than Francis’s.

Regulation is much higher in cities as well. That means more inspections, more work orders from the city government, more registration fees, more headaches. Chester has never once had a city inspector walkthrough, nor does it need them. It’s in pristine shape because the renters keep it that way. Francis has had plenty of inspectors come through, and they never fail to slap me with work orders. Why? Am I a slumlord who leases out a ramshackle, falling down building? Of course not. But most of my renters have abused the living heck out of the property.

The insurance premium is also higher for Francis. It doesn’t matter that the policy is for a far lower coverage amount; statistically, there are many more insurance claims in these low-end areas. (Look no further than the break-in above for an example of why.)

We’ve touched on the financial costs of crime, but that doesn’t cover the personal safety risk. When I was 24, I thought I was tough and brave walking through these bad neighborhoods. Now I look at the violent crime rates in those neighborhoods and wonder, “What was I thinking?”

Here’s another question for you: What kind of property managers accept the lower commissions and greater labor involved in managing low-end properties? Usually bad property managers. I lost nearly $40,000 due to my last property manager. His casual indifference to my properties’ performance was staggering.

Riches in Niches—If You Know What You’re Doing

That $40,000 property, Francis, has ended up costing me closer to $100,000 over the last decade. It’s been a thorn in my side and a constant source of stress.

All the while, Chester has purred along smoothly, with clean, respectful renters who pay their rent on time every month. They leave it just as they found it. When a turnover comes along (far less frequently than at Francis), there’s no shortage of prospects eager to sign a lease with me.

Is all this candid talk comparing low-income neighborhoods to middle-class neighborhoods making you uncomfortable? Good. Perhaps if we had a more candid conversation about the problems plaguing low-end neighborhoods, we might make more progress in solving them. In my experience, the first people to reflexively defend low-income neighborhoods are the last people to invest their own money there.
Buying and managing rental properties in bad neighborhoods can be a lucrative niche for investors who know what they’re doing. It comes with dozens of risks, each of which must be mitigated. Understanding how to mitigate those risks takes experience and usually some hard knocks. Even Nakeisha Turner, who has aggressively invested in low-income neighborhoods surrounding HBCUs, has learned some hard lessons.

If you’ve done a handful of deals and have started gaining a firm grip on how to forecast cash flow, you can always ease your way into lower-end properties by gradually buying lower-cost properties.

But take it from someone who’s been burned countless times: Low-end properties come with higher risks than you realize.

 

Source: biggerpockets.com

 

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L.A. commission says Airbnb rentals should be allowed in rent stabilized housing

10 hours 16 min ago

Los Angeles moved one step closer Thursday towards imposing new rules on renting out rooms or entire homes for short stays, a phenomenon that has boomed with the rise of Airbnb and other online platforms.

The Planning Commission, whose members are appointed by Mayor Eric Garcetti, voted to back a proposed law that would limit Angelenos to renting out their own primary residence to short-term guests — a rule meant to stop corporate entities from buying up housing and running it like a hotel.

But the commission balked at another proposed restriction that had gotten traction at City Hall: Banning such rentals in any housing that falls under rent stabilization rules, which cap annual increases for tenants.

“Why are we excluding people who are in rent stabilized housing as a class?” asked commissioner David Ambroz. “It’s almost as if we pick people of lower economic means and say, ‘You do not get to participate in the future economy.’”

The decision is the latest turn in the lengthy debate over how Los Angeles should regulate such rentals. More than three years have passed since Councilman Mike Bonin and Council President Herb Wesson first vowed to impose new regulations on the industry, arguing that the city needed to rein in the practice to protect its rental housing.

The debate has pitted Airbnb, which has mobilized its hosts and lobbied at City Hall, against a politically muscular coalition that includes tenant activists, neighborhood advocates, and the hotel industry, along with the members of Unite Here Local 11, an influential hotel workers union that has scored previous victories at City Hall.

Tenant activists have grown increasingly frustrated by the delay in imposing new rules, arguing it has exacerbated the housing crisis as more and more apartments are taken off the market for ordinary tenants. At Thursday’s hearing, they urged the city to ensure such rentals are barred in rent-stabilized units, describing them as a precious and endangered pool of housing.

“It is vital to keep [rent stabilized] units available for low-income families who have no need to rent out extra rooms because they have no extra space,” said Cynthia Strathmann, executive director of Strategic Actions for a Just Economy, a nonprofit that works with poor families.

Strathmann said after the hearing that rent stabilized housing is not supposed to “provide an economic windfall for people who can afford to live in larger spaces than they need.”

Airbnb and its hosts, in turn, argued that the proposed rules and fees were too hard on homeowners who rely on such rentals to make ends meet, and charged it would be unfair to exclude apartments that fall under rent stabilization.

Several said the rooms they rent out to travelers would never be suitable for longtime tenants. And many argued that proposed caps on such rentals could put them in financial jeopardy.

“This is not a hobby for us,” said Ed Colman, a Venice resident who said he relied on renting out his guest room after he lost his job five years ago. “This is our livelihood.”

Under the proposed rules approved Thursday, hosts could rent out their homes to short-term guests for up to 120 days annually.

If they have a clean record with no violations from the city or can make a successful case to planning officials that it would not harm the area, they would be able to exceed that cap and rent them out to travelers all year. Exceeding the 120-day cap would not be an option, however, for rent stabilized housing.

The latest version of the rules still must be vetted and approved by City Council before it can become law. If approved, it would go into effect in July.

The new law would also require rental hosts to register with the city. Online platforms such as Airbnb or HomeAway could be fined if they advertise illegal listings or refuse to hand over addresses of scofflaw rentals.

Earlier this year, Councilman Gil Cedillo floated the idea of another ordinance to allow “vacation rentals” — short-term rentals of properties that are not the primary residence of the host — but that plan has yet to be taken up at City Hall.

Samantha Millman, who heads the planning commission, recused herself from the Thursday discussion because her husband had done work for the California Hotel and Lodging Assn., which has lobbied the city on the proposed rules.

Two other commissioners, Renee Dake Wilson, and Dana Perlman, disclosed that they had met and listened to representatives of the hotel industry ahead of the meeting.

Source: latimes.com

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Get Ready for a Winning Open House

Tue, 09/18/2018 - 8:07am

Photo Credit: Pexels

Whether you are selling your house on your own, or you are using a professional but want to have a hand in the process, a successful open house involves planning, preparation, and marketing. An open house is your best opportunity to highlight the selling points of your home, but if you drop the ball in preparation, it can be a chance to scare away buyers. Here are some tips on how to plan, prepare, and execute the best open house possible.

If you don’t have a plan, you won’t know where to begin

In today’s real estate market, you must have a defined marketing plan for your home. Everything from the minimum price you’ll accept, to your future moving needs, should be written down and considered with every decision you make along the way. Planning involves, at a minimum, researching your price. How are comparable homes in your area priced? Can you justify asking a higher price, and if so, why?

And your marketing plan should be more in-depth than just your asking price. Consider the selling points of your home and neighborhood. If there are a lot of neighborhood kids, that may well be the best selling point for a prospective buyer with elementary school children. Are there little-known neighborhood pluses, like a great restaurant or quiet park down the road? A plan fills in all these little details so you can do more than just showrooms to a buyer, but give richly detailed information.

As part of your plan, you should identify any potential problems that visitors might raise at an open house. If there are neighborhood nuisances, such as a nearby highway, be prepared to bring the issue out in the open. If there are structural or cosmetic issues that cannot be mitigated, make sure you can explain how you factored those into your asking price.

Through prepping, bring a dream house to life

In most circumstances, however, your open house is your chance to let your house shine. Curb appeal will drive buyers to your front door, and once inside, you can give potential buyers an opportunity to picture themselves living in your home. Curb appeal can be achieved in a day or as part of a more involved project. Here are some proven ways to get your house noticed:

  • Make your front door Replacing or painting a front door is one of the best returns on investment a homeowner can make, and it’ll lure buyers to your open house as well. You can also get a significant return by installing new door hardware.
  • Front-yard landscaping. Edge flower beds, add new annuals, and give it all a fresh topping of mulch. The crisp look will enliven any front yard.
  • Upgrade your mailbox. For a few hundred dollars, you can make a big impact right at the end of your driveway, which might be the first thing buyers see as they approach your open house.
  • Install outdoor lighting. Prospective buyers will often drive by homes at all different times of day, including nighttime, and a lit path or spotlit front door makes a great first impression.

Marketing: getting the word out

If no one shows up at your open house, then you will have wasted one of your best sales opportunities. The purpose of the open house is primarily to get a buyer, but if that fails, you want to get your house in front of as many agents as possible. Yours may not be one person’s dream house, but their realtor may have another person in mind. Carefully consider a marketing plan that maximizes your house’s exposure through these methods:

  • Leverage social media. Connect immediately to thousands in your area by posting information about your open house on Facebook. Share with your friends and family, and if you have any connections who may know realtors, ask them to share with those friends as well.
  • Create a good website. A simple landing page with the details of your house is a must. Upload pictures and facts about the property, such as square footage, taxes, and school district.
  • Don’t forget old-fashioned methods. As connected as social media can make us, some people can gloss over your listing in their ocean of daily content. Call anyone who you think might be interested, or who might know someone looking for a house, such as family or neighbors. Put the information from your website on flyers and post them in area community boards.
  • Open house signage. Make sure your house is well-marked with an open house sign. Don’t forget to place signs around your neighborhood as well.

An open house is a great chance to sell your home. With some upfront work planning and preparing, you can ensure maximum impact and bring your house alive for potential buyers.

Author

Suzie Wilson is an interior designer with more than 20 years experience. What started as a hobby (and often, a favor to friends) turned into a passion for creating soothing spaces in homes of every size and style. While her goal always includes making homes look beautiful, her true focus is on fashioning them into serene, stress-free environments that inspire tranquility in all who enter. The Ultimate Guide to Prepping Your Home for an Open House is filled with tips, tricks and other advice based on Suzie’s years of experience in interior home design that will set you up for success.

 

 

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Tips for landlords: how to set your rent

Mon, 09/17/2018 - 12:05pm
The science and art of rent setting

Smart landlords keep a close and constant eye on their local rental market. Optimizing your revenue stream so it’s sustainable isn’t the same as always maximizing it for short-term gain. These tips for landlords will help you establish a rent in that sweet zone for long-term profitability.

Read on to explore your rent-setting options and discover whether you’re a real estate scientist or artist —or maybe a property polymath.

Smart landlords as scientists

One definition of a scientist is someone who gains knowledge through experimentation and observation. So, when it comes to setting rents for her tenants, just about every landlord is a scientist.

You’ll be gaining an intimate knowledge of your local rental market based on observation and you’ll doubtless end up doing some experimenting.

Normally, what you charge for rent depends on the property’s market value. In typical US markets without rent control, landlords get between .8 percent and 1.1 percent of the home’s value for their monthly rent. A home valued at $100,000 would commonly fetch between $800 and $1,100 per month. You’ll need to do a little work to discover which end of that range is in your strike zone.

Source: Abodo

 Observation

The more successful you become, the more time you’re likely to spend observing your marketplace. Only by knowing the going rate for rental units can you be sure you pitch your price correctly.

Charge too much, and you risk not attracting tenants. That means longer periods when your units are empty and costing you money.

But pitch your rents too low and you’re giving money away.

Market intelligence

Gaining market intelligence isn’t hard but it does take time. The most accurate source of market data is an appraisal with a rental schedule. Most mortgage lenders require this when you purchase a rental property for good reason. The appraiser does all the hard work for you — valuing the property, providing an estimated rent, and comparing its desirability to other nearby competitors.

Or you can check online home valuation tools, and monitor ads placed by your competitors. You’ll benefit from networking with other local landlords so you can pick each other brains. You’ll also want to visit plenty of open houses.

Comparisons

All this is to allow you to compare a unit you own with ones locally that others own. When you know a one-bedroom apartment has just been rented for $1,200 a month, that helps you set the rent you want for your one-bedroom apartment.

You may think that a unit’s square footage and the number of rooms it has are the two critical factors when comparing homes. You’d be right as they’re often the most critical but they’re far from the whole story

Not just number of rooms

There is a whole slew of other factors that can affect rental values, including:

  • The neighborhood — Rundown, gentrified or up-and-coming
  • The location — Whether the unit is close to major employers and local amenities such as parks, schools, trendy restaurants and so on
  • The view — People will pay more to look out over an attractive landscape or cityscape
  • The unit’s fixtures and fittings — Renters value modern or new appliances, HVAC, and good kitchens and bathrooms. But you need to be sure your tenants will look after them
  • Whether or not units are furnished and to what standard — Yours and the ones you’re using as comparisons
  • Storage and other features — Havings lots of closets is great, as are bay windows and balconies or roof terraces
  • Floor — In most buildings with elevators, the higher the unit, the higher the rent. But with walk-ups, values tend to drop above the third floor
Still science?

Over time, you could probably build an algorithm that would score those variables and calculate the best rent to ask for each unit. Indeed, some of the really big rental companies already use computer applications to help them set rents. So, maybe this is still science?

You could certainly learn from experimentation. The mistakes you make when choosing units to buy and deciding on the level of finish when making improvements are likely to remain with you.

Most appraisers know there’s an x-factor involved in setting a home’s sale or rental value. Being able to identify that comes with an intuition that develops with experience.

Smart landlords as artists

Whether or not you count that intuition as an “art” is up to you. There’s one area of rent setting that feels even more art-like, which is, about optimizing rather than maximizing rental income.

Let’s look at an extreme example. You could maximize your rent by catering to tenants who are organized criminals. Many would pay way more than market rates for an incurious landlord who would turn a blind eye to drug dealing, prostitution, people trafficking and so on.

You don’t knowingly do that because you don’t want to risk jail time and the forfeiture of your property. So you’re already optimizing rather than maximizing your rental revenues.

Maximum vs. optimal

However, there are much less dramatic — less “Chicago P.D.” — ways in which smart landlords favor the optimal over the maximum on a daily basis. Maximizing rental income over the short term can quickly damage your long-term profitability and optimizing almost always pays off. Optimizing means sacrificing some short-term potential profit in order to make your income more secure and sustainable.

The most obvious example is when you have a perfect tenant. You always get your rent on time and you’re only aware she exists because you receive her checks. You’re also confident she cares as much about your unit as you do.

Valuing what’s important

What do you do when it comes to renting reviews? Do you increase the rent to its maximum market value, risking forcing your perfect tenant out?

You may find yourself with expenses for redecorating, replacing carpets and having a fallow period between tenants when you’re finding someone new and when your unit is earning you nothing. Worse, that new renter may pay late, complain all the time, damage your asset and cause nuisance.

There’s a balance here. An art, if you will. Most smart landlords value their golden tenants and cut them some slack — sometimes quite a lot — over rent rises. They see that as good business.

It is still a business and sentiment is a luxury many landlords simply can’t afford. Only you can decide where (standby for art allusion) to draw your lines.

 

Source: themortgagereports.com

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Can You Actually Turn a Profit Flipping Homes in Today’s Market?

Mon, 09/17/2018 - 11:21am

Back in 2012, house flipping seemed like the perfect opportunity for a person with extra cash and an eye for remodeling. The market was flush with homes left vacant from waves of foreclosures prompted by the housing bubble that burst a few years earlier. You could buy a home from a bank, make any necessary repairs, install hardwood floors, splash on a fresh coat of paint and then sell it at the top of the market.

Nowadays, with a strong economy, more and more potential flippers have that extra cash in hand. And they’ve been studying TV shows like “Flip or Flop” on HGTV and “First Time Flippers” on the DIY Network, just waiting to find the right bargain to start their flipping career.

But with the housing market back to pre-recession levels, the number of homes coming on the market each month is low. Bidding wars are beginning the day a property is listed, driving home sales above asking prices in many cases. Buyers willing to pay more to occupy the home they purchase are having a tough time finding affordable real estate, which means it’s even tougher for investors looking for houses at rock-bottom prices.

With a tight inventory and no expectation for single-family home development to catch up with demand any time soon, is it still possible to make money in the house-flipping game?

“Absolutely,” says Vincent Harris, CEO and co-founder of Hoozip, a startup that creates productivity and lead management products for real estate investors, but the way you find those profitable investments has changed.

The old recession-era practice of buying a house at auction for cheap, doing a light rehab and selling it for a profit a month or two later is far less likely these days. In the second quarter of 2018, just 32 percent of home flips nationwide were purchased as a distressed sale – a foreclosure or bank-owned sale – according to ATTOM Data Solutions. That’s down more than 6 percent from the same period in 2017 and less than half the rate in the first quarter of 2010, when purchases of distressed properties for flipping peaked at 68.2 percent of all purchases.

It’s not just a matter of fewer homes going on the market – the home-flipping industry has transformed in the last few years. You’re not just competing with local professional flippers; bigger companies and even giant investors, often referred to as iBuyers, have come on the scene.

Flipping has become a much more mainstream endeavor, as more and more companies such as Opendoor, Offerpad and even Zillow are offering quick, all-cash purchases for homes with the intent to flip and sell them for a profit. These companies certainly offer more options to home sellers, but their presence creates a more competitive atmosphere for other investors.

But that’s still not stopping people from trying to flip homes – it’s just changing what’s required of an investor to be successful. You not only have to be able to find the right house with an owner who is interested in selling, but you also need the financial means to be able to get through the actual work and marketing stages before you can see a payout.

Ted Karagannis, a licensed real estate broker for Warburg Realty, says the New York City market slowed in the earlier parts of this summer where buyers showed interest in properties but didn’t make offers. Sellers were left waiting, either looking at reducing the asking price or taking the property off the market until it picked back up later in the season.

“If you do have to carry [the property] for three to six months, you have to estimate that all into the purchase price as well,” Karagannis says.

There is an advantage to being a part-time flipper, however. While bigger investors must compete with companies of all sizes to stay afloat, a weekend warrior hoping to put his DIY skills to use for a profit doesn’t see a smaller payout as detrimental to his livelihood. “If he makes $20,000 on a deal, that’s great,” Harris says. That $20,000 could be a year’s worth of college tuition for the flipper’s child or a new roof on his own home.

Some good news for those who want to begin real estate investing, either by flipping homes or serving as a landlord: You don’t necessarily need to have the capital to buy property with cash. Susan Naftulin is the owner and president of Rehab Financial Group, a lender for real estate investors in Rosemont, Pennsylvania, and she says her firm takes the pace of the market into account to help borrowers remain competitive with cash-heavy buyers.

“We work as hard as we can to wrap up our side of it and underwrite as quickly as possible so as not to be an impediment,” Naftulin says. Whether you finance or use your own cash, Naftulin says first-time investors should check their expectations before jumping in for the sake of their own finances. “Better to make your mistakes with a smaller rehab and a smaller loan than bigger,” she explains.

Here are three things you can do to increase your chances of earning money through house flipping.

Invest small and smart. If you still want to try flipping a home, don’t go for the former crack den with burst pipes and a hole in the ceiling. Naftulin says you’re more likely to turn a profit with a home that doesn’t need much work, but can sell at a higher price point with minor fixes and some skillful staging. It’ll also be easier to entice a lender when less risk is involved, especially if it’s your first dive into real estate investing.

Your profit won’t be gigantic, but you won’t have inadvertently bought a money pit, either. “You don’t make a lot on each property, but you can do a lot of houses,” Naftulin says.

Once you’re able to ensure the house doesn’t have problems lurking beneath the surface through an inspection and you’ve checked on the title for liens or other legal issues tied to the property, adding smaller cosmetic changes can draw buyers in. “Make it a little more special than the norm,” Karagannis says. “That can be done easily with good hardware or plumbing, sink faucets [and] things like that that can attract people.”

Both Naftulin and Karagannis stress the importance of doing more research and digging deep on a property before you’ve even put an offer in. You want to know that the home, the property history and the neighborhood all lead to a good investment in the end.

Karagannis says in New York City, knowing the ins and outs of a condo or co-op building’s management and fees is a must to avoid a failed investment. “Is the building a healthy condo, or is the condo like a hotel where people are coming and going every six months to a year? What are the qualities you’re buying when you’re looking at real estate?” he says. “A lot of newcomers don’t know any of that, and they make huge mistakes.”

Invest in a different way. Rather than looking for properties on the local multiple listing service, try finding properties that aren’t on the market but have owners who are more likely to be interested in a sale proposition. Part of Hoozip’s offering is to help customers analyze property data and determine which homes are a worthy investment. In addition, property records available through local assessor’s offices can provide property tax information and show how long the property’s been owned by the same person, though conducting such searches on your own may be time-consuming.

Harris says that can range from high equity in a home to delinquent property taxes or an owner who recently moved out of state. But because you’re dealing with individual owners – who are possibly facing financial issues or just suffered a death in the family – empathy becomes are a big part of being a successful investor.

If you can balance the ability to make the seller feel valued while also coming off as a professional, you’re more likely to see success. “They want to deal with someone who’s credible,” Harris says.

You could also try purchasing and holding onto your property for rental income, though you would also take on the role of landlord – and all the maintenance and management responsibilities that come with it.

Wait for the economy to tank. It’s not an optimistic approach to real estate investing, but when it comes to flipping houses, you need a surplus of homes for sale to be able to snag good deals on properties to flip. The only way to really guarantee an excess supply of homes is when people can no longer afford to live in them. And that means an economic downturn. But the current outlook remains bright for real estate values and the larger economy.

Source: realestate.usnews.com

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California Has Largest Public School Real Estate Premiums in U.S.

Mon, 09/17/2018 - 10:22am

Many children in the U.S. head back to school this week, and it’s likely their parents paid a premium if their drop-off is only a few short blocks away.

It costs millions of dollars to live within walking distance of some of America’s most well-rated public schools, according to data from Realtor.com, which ranked the most expensive neighborhoods within steps of a highly-rated public school. To come up with the list, they looked at home prices within a mile radius of most public primary and secondary schools across the United States to find out which have the priciest environs, and then narrowed the list down to schools scoring eight or higher on GreatSchools.org.

Coastal cities and their suburbs dominated the list, with America’s most expensive prime public school areas dotting California—from the mansion-speckled towns around Silicon Valley to the affluent school district of Rancho Santa Fe, outside of San Diego.

A school in Los Altos Hills, a town in Silicon Valley, California, topped the price list. The median price of a home within a mile of the Gardner Bullis Elementary School was $3.56 million, according to Realtor, which based median price on a years-worth of sales data.

“There’s a bit of an aura around that school,” said Javier Vivas, director of economic research at Realtor.com, which happens to be based in nearby Santa Clara. Mr. Vivas doesn’t live far from the school and said he wasn’t surprised that it commands some of the highest real estate prices.

The neighborhood, he said, is known for its safety. After all, “even the ultra rich walk their kids to school.”

Meanwhile, a science-focused middle school at the crossroads between Brentwood, Pacific Palisades and Riviera—an area filled with entertainment executives in Los Angeles—topped another list for pricey secondary school areas. Homes around Paul Revere Middle School have recently sold for a median price of $4.9 million.

Not surprisingly, Realtor’s research also showed that expensive areas tend to host schools highly rated on GreatSchools.org, a national nonprofit info center on U.S. public schools.

The results underscore the circular relationship between affluence and the quality of the local public school system, as elite school districts attract wealthy buyers who then contribute time and resources in their children’s schools.

That’s the case in Bellevue, Washington, an affluent city on the outskirts of Seattle.

“I would say the public schools are a pillar of the real estate values,” said Anna Riley, a top luxury broker with Windermere, whose children attend public schools in Bellevue. “It’s a very large draw for buyers both locally and internationally.”

The mile radius around Medina Elementary School in West Bellevue ranked No. 6 on Realtor’s list of pricey elementary school neighborhoods, with median sales price at $2.8 million.

The schools in West Bellevue attract buyers from China and other countries on the Pacific Rim, and even boast a Chinese-immersion program, among many other unique offerings, Ms. Riley said. The community in West Bellevue offers a prime example of the way well-rated schools and property values are often directly correlated.

“It’s a nourishing loop. You have high real estate values that attract a well-educated buyer population that really prioritizes schools. They then are happy to invest in the schools, both in terms of time and financial resources,” Ms. Riley explained.

Two top public schools in New York City were among the top 10 most expensive primary and secondary school areas in the country: Stuyvesant High School, the city’s leading specialized high school located in Tribeca, and P.S. 130, also known as The De Soto School, between SoHo and the Lower East Side.

Around Stuyvesant, a high school where students across the five boroughs can apply to test into, the median home price was $1.865 million. It was about $1.93 million around The De Soto School.

Frances Katzen, a top broker with Douglas Elliman Real Estate in New York City, said many high-end real estate buyers take school zone into consideration when home hunting in the city. In her experience, they are often drawn uptown, specifically to P.S. 6 in the heart of the Upper East Side.

“There’s a huge number of people who either go uptown to the Upper East or the Upper West,” said Ms. Katzen, who has a client working for J.P. Morgan Chase who is trying to determine if his home is zoned into P.S. 234, Independence School; or Spruce Street School, P.S. 397—two top public elementary schools in Tribeca.

However, school zone is less of a concern for ultra-high-net worth buyers who tend to send their children to private schools, Ms. Katzen noted.

Whether or not they plan to send their schools to the neighborhood public school, buying near a highly ranked one is probably a smart investment. For example, north of the New York City, in Westchester County, is one of the most expensive zones in the country—the mile area around Scarsdale High School, where homes sold for a median price of $1.61 million, according to Realtor.

An extremely affluent suburb of New York City, the idyllic town rarely sees a home sell under $700,000, said Nancy Shaw Chochrek, manager of Scarsdale brokerage for Houlihan Lawrence.

It’s not only the public schools that benefit from the affluence of Scardale’s residents, so does the local business environment, public works and infrastructure.

“Not only do our schools have great facilities, we have great public recreation areas. For example, we have a four-pool complex where we have the fireworks every Fourth of July,” Ms. Shaw Chochrek said. “Almost anywhere you live in Scarsdale you’re in a walking distance from a park.”

Source: mansionglobal.com

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Tenants got a rare chance to come back after being evicted — but most didn’t

Mon, 09/17/2018 - 9:58am

Two years ago, when she was booted from her airy apartment on Franklin Avenue, Sylvie Shain was packing up until nearly midnight.

Now she and her friends were lugging it all back up to her door at the Villa Carlotta: a vintage stove in a sherbet shade of mint, a velvety couch said to have once graced the Chateau Marmont, boxes heavy with knickknacks she never had the heart to cull when she was evicted.

Back then, “I was the little guy and there was no way I was going to win,” Shain recalled one afternoon. “Me going back is like the little guy winning.”

Shain and other renters lost their apartments after a new owner announced plans to turn the Villa Carlotta into a boutique hotel. When those plans fell apart, tenants got a rare chance to come back.

That right to return is a safeguard for renters displaced under the Ellis Act, a state law that allows landlords to evict tenants from rent-controlled units if they are tearing down a building or getting out of the rental business. Under L.A. city rules, if the landlord promptly backs out of those plans and leases the apartments again, former tenants are allowed to return at roughly the same rents.

But tenant activists say it rarely works out that way.

‘Slim to none’

Shain maybe the little guy, but she is an unusually savvy one — a founding member of the Los Angeles Tenants Union who fought the evictions and now advocates for other renters at City Hall. And she is the only tenant to come back to the storied building below the Hollywood Hills.

Some of her neighbors had accepted buyouts from the owner to leave the Villa Carlotta and said they were told they had relinquished their right to return. Others found it impractical or unappealing to come back.

“It’s a tremendous burden for a tenant to move out and find a place and lay down roots somewhere else,” said Larry Gross, executive director of the Coalition for Economic Survival, a tenant advocacy group. “Once they’re out, the likelihood that they’ll go back is almost slim to none.”

CGI Strategies, which owns the Villa Carlotta, withdrew plans to turn the building into a hotel two years ago, in the face of opposition from City Councilman David Ryu. At the time, the company said it still planned to restore the historic building for another use.

The Villa Carlotta is now marketed as a sophisticated hideaway for extended stays of roughly a month or more. Furnished apartments with Nespresso machines and Apple TV have been advertised online for around $4,500 a month, with bigger units going for roughly $8,000.

That far exceeded what tenants were paying when it was a bohemian hangout with peeling paint and leaky plumbing, where neighbors shared a giveaway pile in the lobby and gathered for Thanksgiving dinners. But because the apartments were being rented out again, Shain and other tenants had the right to come back at close to their old rents.

When Rick Guidotti got that news, however, he also got a phone call from a Villa Carlotta attorney who nixed the idea.

The reason? At the time of the evictions, Guidotti and his partner made a deal with the building owner to clear out, he said. CGI was offering them much more money to relocate than they would otherwise be entitled to under city rules, according to Guidotti.

Such buyouts can involve giving up some rights, tenant advocates say, although the exact details hinge on the wording. Guidotti said the deal mentioned waiving “future rights.”

He and his partner now live in an apartment across the street, he said, paying more than twice as much for a much smaller unit in the same neighborhood that Guidotti had lived in for decades.

“I’m just burning through that money,” said Guidotti, a guitarist who used to play with the Turtles. “I could go out and look for a job, but I’m almost 70 years old.”

Many of the displaced tenants accepted some kind of buyout before leaving. A few could not be reached, according to the housing department, which attempted to contact former residents from all the units that had been vacated. Shain said she heard from others who found it impractical to move, including one who had just signed a new lease.

CGI Strategies declined to comment, except to say that it was complying with the Ellis Act. Under city rules, it is also obligated to initially rent out the units that were vacated at the same rates as before, plus any annual increases allowed under rent control, according to the housing department.

Shain, who was paying roughly $1,700 for a one-bedroom unit in Westlake, will save hundreds of dollars a month at her old apartment with its Juliet balcony and 1920s charm.

Despite the changes — the renovated lobby with its breezy music, the disappearance of the old cast of characters in the courtyard — it felt reassuring to be back at her second-floor apartment.

And she relished returning to her familiar neighborhood, where residents at other buildings had helped her when she had knee surgery, bringing her meals and walking her tiny dog, Brad Pitt.

Thousands of units taken off market

It is unclear how many Los Angeles tenants have gotten the same chance, but it appears to be rare.

Housing officials had records of only eight L.A. addresses, including the Villa Carlotta, where landlords withdrew apartments under the Ellis Act in the past five years and later informed the housing department they were going back on the rental market. The department does not track whether people came back.

Both Steven Luftman and Jen Getz, the friends who helped Shain lug her couch back to her apartment, said they too had been displaced by Ellis Act evictions. Across Los Angeles, more than 24,000 units have been withdrawn under the law since 2001, according to the Coalition for Economic Survival.

”I’ve never seen a client return,” said Inner City Law Center supervising attorney Ingrid Arriaga, who isn’t representing Villa Carlotta tenants. In some cases, “they probably don’t feel comfortable moving back.”

An unusual exception was the battle over Lincoln Place, a Venice garden apartment complex that was up for demolition a decade and a half ago. The lengthy saga ended with a settlement that allowed dozens of former tenants to come back.

Beyond the Ellis Act, promises of a “right to return” have been floated in L.A. amid concerns about tenants being displaced by new construction.

City Councilman Mitch O’Farrell recently announced that tenants displaced by the Crossroads Hollywood project would be guaranteed a place in the new buildings at their existing rents, plus any allowable increases under rent control, under an agreement with Harridge Development Group.

Another developer, Bob Champion, made a similar pledge for another Hollywood development last year.

Last month, nonprofit developer Abode Communities vowed that tenants would have the right to come back once a new affordable housing project arose at the Westlake site now occupied by their bungalows, although community activists complained some might not be eligible.

And during the debate over Senate Bill 827, which would have allowed cities to ramp up housing development near rail stops, state Sen. Scott Wiener (D-San Francisco) said that any tenants displaced by construction would have a right to come back to a new building. But tenant activists said that wouldn’t reverse the damage.

Earlier this year, Assemblyman Richard Bloom (D-Santa Monica) unsuccessfully pushed a bill to make it easier to return after Ellis Act evictions and extend possible penalties for “abuses.”

Earle Vaughan, president of the Apartment Assn. of Greater Los Angeles, argued the law is strict enough and that tenants have other protections, including as much as $20,000 in relocation aid under city rules.

“If somebody is going to pay that kind of money, there must be a real reason,” Vaughan said, describing the Ellis Act as a “safety valve” for building owners unable to cover their costs in the rental business.

Shain argued that change was needed to help tenants exercise their rights.

“It’s difficult to navigate,” said attorney Aimee Williams, who assisted Shain through the process. “Even with an attorney. Even as an English speaker. It’s something that a lot of tenants are not equipped to deal with.”

Source: latimes.com

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Renters ‘Paying More For Less’ As Older Apartments Take Over The Market

Mon, 09/17/2018 - 9:46am

It stands to reason that older apartment units—with their outdated features and lower desirability—should come with lower rents. But while that may have been true in years past, according to recent data, a startling new trend is afoot.

Aging rentals aren’t just getting more expensive; they’re actually outpacing rent growth on newer units—and even rising construction rates aren’t doing enough to stop it.

In fact, since 2000, median rents have grown the most on the nation’s oldest properties. According to a new study from Apartment List, rents on units built from 1990 to 1999 increased by 6.5% between 2000 and 2016. Units built before 1960 saw rents jump more than three times that—a total increase of 21.4%—over the same period.

And what’s worse? For renters, there aren’t many other choices. Older units now make up a startling share of apartment inventory. Only a mere 9% of rentals are 10 years or younger (the lowest point since 1960), while 66% are 31 years old or more.

“The quickened pace of rent growth for older building cohorts has resulted in more narrow price gaps across buildings of different ages,” said Chris Salvati, housing economist for Apartment List. “In short, as renter cost burdens continue to pose a major concern, the least expensive cohorts of rental housing are seeing the fastest rent growth.”

A Drop In Affordability

The trend is putting a crunch on local rental affordability across all of the nation’s largest metro areas. But according to the study, the problem is worse in the Sun Belt. San Diego, Miami, Tampa, Houston, and Sacramento have seen the biggest uptick in aging rental units since 2000.

The Sunbelt has experienced the biggest jump in aging apartment units since 2000.COURTESY OF APARTMENT LIST

According to Mark Fleming, chief economist at First American Financial Corporation, in these high-demand markets, it means “renters are increasingly paying more for less.”

“It’s an unfortunate trend for many renters,” Fleming said. “Settling for an older unit may mean sacrificing on some of the modern amenities that might be desired.”

But it’s worse than just renting an undesirable property. Some renters might even be forced into undesirable locations, too.

“Many low- and middle-income renters are already struggling with affordability, and fast-growing rents in older units will exacerbate this issue,” Salvati said. “As affordable options become increasingly scarce, many households may be forced to move to the outer reaches of the metros they live in, or in the most extreme cases, households may move to an entirely different part of the country with a lower cost of living.”

The Construction Problem

The heart of the issue lies in lagging construction, according to Fleming.

“In the U.S., we have not built a sufficient amount of new housing units—rental or owned—to keep up with household formation and the demand for shelter,” Fleming said. “Furthermore, a lot of what has been built is at the higher priced end of the housing market. Insufficient supply, combined with most available houses being on a higher price point, has lead to less filtering down and an aging of what it is in the rental market.”

Multi-family construction is actually up in recent years, too. In 2017, a whopping $61 billion went toward construction in the sector—four times the amount spent just seven years earlier. Still, it’s not enough.

“The recent upticks in construction in many markets are certainly a step in the right direction,” Salvati said. “That said, these heightened levels of construction would need to be sustained for a longer period in order to have a significant long-term impact on affordability.”

Unfortunately, a dip in mortgage rates or home prices—which would likely push some renters out of the market and into ownership—isn’t likely to help either.

“There is already a significant shortage of homes for sale,” Fleming said. “While slower price appreciation and rising rates may improve ownership affordability, it doesn’t address the overall supply-of-shelter shortage. We just need to build more—easier said than done.”

Getting Creative

In the end, it seems America’s major metros might need to get more creative in order to solve today’s affordability and inventory problems.

“What happens in the short-run is not enough to overcome the multi-million unit shortfall in the supply of housing that has accumulated since the end of the recession,” Fleming said. “Long-run changes in how we think about housing Americans and providing shelter is required.”

The growing Yes In My Backyard movement in San Francisco—which aims to increase local development and affordable housing—is a step toward just that. So is the burgeoning popularity of Accessory Dwelling Units (ADUs) or “granny flats.”

Last year, California alone saw 2,000 ADU permit applications, with thousands of residents building new living structures to rent out—either for friends and family members or for full-time tenants—in their backyards or other plots of land.

And across the entire country? ADU expert Kol Peterson estimates there are several million more unpermitted ones. But will the YIMBY and ADU movements be enough? Only time will tell.

 

Source: forbes.com

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Investors finally embrace big single-family rental companies a decade after the financial crisis

Mon, 09/17/2018 - 9:37am
  • “The single-family rental market is very healthy right now,” according to one analyst.
  • “One of the barriers to entry is just having the people, processes and systems in place that allow you to create an efficient business model,” said Dallas Tanner, Chief Investment Officer at Blackstone’s Invitation Homes
  • As the vintage of the homes increases, the capital burden will increase as well.

A decade ago, when the U.S. housing market collapsed and millions of homes went into foreclosure, a new class of real estate investors was born. Large-scale, institutional firms began buying up tens of thousands of properties. They rehabbed them and put them up for rent.

Some said it was a short-term play; they’d sell the homes once property values recovered. And some did, but a decade later the firms that made the biggest bets are not only still in play, but expanding, and continuing to reap the rewards of a new rental boom.

At the start, there were several players. Names like American Residential Properties, Colony American Homes, Starwood, Waypoint and Silver Bay. Now, after mass consolidation in the last few years, only the last two remain: American Homes 4 Rent and Invitation Homes. They are single-family rental REITs, and, along with Canada’s Tricon Capital, which bought Silver Bay, they own and operate about 200,000 single-family rental homes across the nation.

“The single-family rental market is very healthy right now. The demand versus supply balance and the operating outlook for revenue growth over these coming years is more favorable versus most property types,” said John Pawlowski, an analyst at Green Street Advisors. “The operating backdrop for them is quite sound, and they’re better at what they do today versus the early days of this sector, they’re better operators, they have more refined systems.”

A rough start

At the start, bringing this new asset class to a functioning operational scale was not easy. Unlike multi-unit apartment buildings, these companies owned homes in multiple neighborhoods across multiple housing markets. The vast majority were and continue to be in the South and West, where the foreclosure crisis hit hardest, but inventing a management scale was entirely new territory.

“It is very scattered. One of the barriers to entry is just having the people, processes, and systems in place that allow you to create an efficient business model,” said Dallas Tanner, chief investment officer of Blackstone’s Invitation Homes, the largest single-family rental REIT. “That took some time to develop and get right, but with time, we’ve certainly seasoned those processes, and provided an opportunity not only for long-term employment, but we’ve been able to capture an asset class that people want and they’re looking for this quality of choice.”

Single-family rentals have been around forever, but most historically were and still are owned by small investors or so-called mom and pop landlords. These are people who might own a rental home in their neighborhood. They do all the maintenance, but they’re only responsible for one or a few properties.

Invitation Homes, a Blackstone company, began buying homes in 2012 and initially spent about $10 billion on a portfolio of 48,000 homes. It went public at the start of 2017, and now, after the acquisition of Starwood Waypoint last year, which had been the third largest single-family rental REIT, owns approximately 80,000 homes in 17 major markets, largely in Florida and the West. It has a 96 percent occupancy rate and continues to grow revenue, according to the company’s latest earnings release for the second quarter.

American Homes 4 Rent, now 5 years old, owns and operates just more than 52,000 homes with a 96.6 percent occupancy rate, according to its second-quarter financial report. Total revenue increased 11 percent to $522.5 million for the six-month period ended June 30, 2018, from $470.8 million for the six-month period ended June 30, 2017.

While some in the housing market claim that these institutional investors are taking away much-needed housing stock from the for-sale market, they actually comprise less than 2 percent of the single-family rental homes available today. There are currently about 7 million single-family homes for rent, owned by smaller-scale, private investors.

Investors initially unimpressed

In the early days, the going was rough for some, as investors were not impressed with initial returns nor the longevity of these rental REITs. Early innovators, like Laurie Hawkes, who co-founded Arizona-based American Residential Properties and grew its portfolio to nearly 9,000 homes, saw tremendous potential in the long-term play.

“This market went through in three years what it took multifamily 25 years to do. The ability to raise growth capital was the hardest thing to do,” said Hawkes in an interview after her company’s merger with American Homes 4 Rent in 2015.

Blackstone’s President and Chief Operating Officer, Jonathan Gray, who was global head of real estate at the time, never seemed to see the single-family rental market as a short-term play.

“Our focus is let’s perfect the model. Let’s get a world-class management team. Let’s have really clean simple metrics that the market can understand,” Gray said in an interview with CNBC in July 2015.

While this new public asset class is far from mature, it is continuing to expand and to profit, even as the fundamentals of the housing market change again. These companies were an outgrowth of a crisis, when home prices and the homeownership rate both saw record drops in a short period of time.

Homeownership is now growing, and home prices, just six years after hitting bottom, are now higher than they were at their peak in 2006. Still, rental demand continues to be strong for both single- and multifamily units.

“The way people are making choices today, there’s somewhere between 60 and 65 million people between the ages of 20 and 35 that are delaying the decisions like homeownership, and choosing the opportunity to lease a home, or an apartment in a local neighborhood, delaying those decisions are impactful to our business model,” said Tanner.

But unlike in the multifamily space, single-family rental companies have the advantage of being able to move with the housing cycles, profiting both from their income and their assets.

“Sometimes you have an asset that might be worth more in an end-user market than it would be in the rental space, and that’s just a very easy thing for us. U.S. housing is one of the most liquid asset classes in the world, and it’s a very easy thing for us to on the margin be selling and buying with our portfolio today,” he said.

Year to date, Invitation homes acquired 453 homes for $132.2 million, including estimated renovation costs, and sold 599 homes for gross proceeds of $132.0 million,” according to company filings.

Affordable home shortage continues

The nation also continues to suffer from a shortage of affordable homes for sale, and while builders are increasing production, they are not focused on the low end of the market. High costs for land, labor and materials make the move-up and luxury markets far more profitable. That shortage will continue to fuel rental demand for the foreseeable future.

But the rental market is not without risks ahead either. Investors purchased most of their properties out of foreclosure and did immediate renovations and repairs, but as the housing stock ages, those repairs will need to be made again. Invitation Homes reported costs for repairs and maintenance up nearly 20 percent compared to a year ago.

“In a business that’s only been around five years, nobody knows how these homes are going to age,” said Pawlowski. “People understand how much wear and tear they put on their own homes, and how much money they put into it on a recurring basis, but we don’t have the track record of the institutional single-family rental sector to opine with confidence on a long-term capital expenditure burden of this asset category versus others.”

Confidence in the sector grows

As the vintage of the homes increases, the capital burden will increase as well. But one thing improving with age is the confidence in the sector. The stocks underperformed initially but hit their stride in 2016. It was a shock to a lot of those following the sector, who thought that as home prices increased these REITs would sell off their homes and close up shop.

“Operating performance, both occupancy, rental rate, and operating margins, all began clicking and proved to investors that these companies could operate this asset class more like an apartment company, and now it does look like a viable business, so yes we were surprised as well, and it seems to still have legs these next couple years,” said Pawlowski.

As for the future, the companies continue to buy, sell and test the asset class. American Homes 4 Rent had its first real test in Houston last year, when massive flooding from Hurricane Harvey damaged a large swath of its homes. The company moved in both personnel and mechanical resources from neighboring states, set up emergency call centers, and found temporary housing for tenants.

“One of the benefits of the institutional single-family rental program is that we have an in-house maintenance team and a construction team, we’re in many cities across the country and have the ability to mobilize all those forces,” said David Singelyn, CEO of California-based American Homes 4 Rent, in an interview just after the disaster. “We planned prior to the hurricane hitting the city here in Houston. We were able to be in the city the second day with our crews and equipment that we sourced from other cities.”

Technology is the focus for both American Homes 4 Rent and Invitation Homes. Tanner said his company has spent more than $23 billion to date, outside of the original purchase price, improving homes. Going forward, upgrades will include smart home features and technology systems that younger buyers want.

“Sixteen million customers in the U.S. today rent a single-family home, so it’s our opportunity to enhance that experience, providing a suite of services that can be predictable, and that they can opt into over time,” said Tanner. “One of the beautiful things about our business model is that our customers are choosing a leasing lifestyle.”

Source: cnbc.com

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Hurricane Florence spurs calls for long-term NFIP reauthorization

Thu, 09/13/2018 - 1:58pm

The impending devastation of Hurricane Florence is causing a national stir, forcing many to worry about the potential threat of loss of life and property damage.

As the storm inches closer to the Mid Atlantic, The National Association of Realtors are calling on the government to pass a long-term resolution for the National Flood Insurance Program.

“Although the National Flood Insurance Program is currently authorized through November, the National Association of Realtors remains focused on ensuring Congress and the White House enact long-term reauthorization and reforms to strengthen the program’s sustainability,” National Association of Realtors President and CEO of RE/MAX Boone Realty Elizabeth Mendenhall said.

“Flooding is the most common disaster in the United States, one that affects Americans in communities both coastal and inland every year,” Mendenhall said. “As another potential historic flooding event looms, we urge Congress to take up the fight for responsible long-term NFIP reform as swiftly as possible.”

A recent analysis from CoreLogic shows that 758,657 homes in North Carolina, South Carolina and Virginia could be affected by the Category 4 storm, estimating that reconstruction costs could total up to $170.2 billion.

“In these times, we are reminded of the importance of peace of mind for property owners with access to quality and affordable flood insurance,” Mendenhall concluded.

This isn’t the first time that a call for resolution has been requested.

Earlier this year, Ranking Member of the House Committee on Financial Services Maxine Waters, D-Calif. and 61 members of Congress demanded a long-term reauthorization of the controversial NFIP.

 

Source: housingwire.com

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The Top 10 Things Guests Want in an Airbnb

Thu, 09/13/2018 - 12:13pm

Airbnb could be your key to financial freedom — but if you want to be successful renting out a room or a second home to travelers, you’d better offer all the right comforts.

According to a survey commissioned by Airbnb, U.S. travelers say when they choose a rental, amenities are a big deal — more important than location; shopping and dining in the area; or the nearness to family and friends. (Sorry, Uncle Lou!)

Using photos from actual Airbnb homes, we count down the 10 amenities that guests search the listings for most often, according to Airbnb. Here’s what any host needs if you want to earn big by putting your extra space to work.

10. Heat

Hotels are infamously drafty, and long nights in a cold room can knock an otherwise perfect vacation down a few points. Make your Airbnb more appealing to potential renters by highlighting the type of heating system in the home.

A cozy fireplace is a hotly desired amenity, especially in cities with frigid winters.

If you are renting out just a portion of your home, it’s important to give guests the ability to control the temperature in their living area.

9. TV

Travel is just as much about relaxation as it is about activities, and chilling out in front of a television is one of Americans’ most beloved pastimes.

Even if you are renting out only one room in your home, make sure the room has a TV. Even better is if the TV has access to premium cable channels, Netflix, Amazon Prime Video and so on.

A DVD and/or Blu-ray player can make guests feel even more at home, especially if you have a collection of popular movies for them to choose from.

8. A whirlpool spa

A whirlpool spa will make any traveler say, “Ahhhhhhhhhhh, what a wonderful vacation!” It’s the perfect way for your guests to unwind.

True, a Jacuzzi can be a big expense for the owner of an Airbnb, but the spa can help pay for itself as it attracts more renters to your home.

Because the hot water can present unique health health issues, you’ll want to post a safety warning in a conspicuous spot near the spa tub.

7. A washing machine

Traveling can be tough pretty tough on clothes. When vacationers take trips to beaches, forests or amusements parks, they may acquire a few stains to go along with their great memories.

Plus, who wants to lug around clothing for every day of a long vacation? It’s more convenient to do laundry along the way. For these reasons, many Airbnb users say they search the listings for rentals with access to a washing machine.

To make your washroom even more appealing, provide laundry detergent and fabric softeners for guests to use.

6. Wi-Fi

The world runs on Wi-Fi, and your Airbnb will get poor reviews if your guests can’t stay connected to their loved ones, the latest news or (sigh) their jobs while staying in your place.

To make your customers feel more secure, set up a Wi-Fi network exclusively for guests, and give it a name that sounds professional and legitimate.

Change your Wi-Fi password for each guest, and assure your visitors that no one else has the password.

5. Air conditioning

No one wants to struggle with sleeping in sweltering heat during a vacation. To have a successful Airbnb, it’s super important that you have adequate air conditioning.

Even if it’s not customary in your region, a central A/C unit controlled by a thermostat is the best option for keeping all guests happy.

Make sure each room you rent out has access to a thermostat, so guests can control the temperature in their space.

4. Pet-friendliness

Pets are part of the family, so it’s only natural that guests want to bring them along on a family vacation.

If you want to make as much money as possible as an Airbnb host, you should welcome guests traveling with pets to stay in your home.

You may think a pet-free policy will save you money on repairs and cleanups, but you’ll risk turning away lots of potential customers. And how much harm can an animal do in a few days, anyway?

3. Free parking

Guests prefer to park at or in front of the house they’re staying in. They like being able to look out and see that their vehicle is safe.

If you live in a neighborhood that has parking meters, try to avoid making your guests use paid parking spots.

Guests are already paying for the cost of traveling. The extra expense and hassle of inconvenient parking could cause them to choose another Airbnb.

2. A kitchen that’s got everything

Especially on a long trip, eating out for breakfast, lunch and dinner can become exhausting, expensive and time-consuming.

Guests want the option of being able to cook for themselves. It’s one of the biggest benefits of staying in a home rather than at a hotel.

So, offer your guests access to your kitchen — and to pots, pans, utensils, plates and anything else they’ll need.

1. A pool

Children (and adults, too) flip out when they learn they are staying at a hotel that has a swimming pool, and the same goes for an Airbnb with a pool. A pool is the most searched-for rental amenity, Airbnb says.

Guests are particularly happy when a pool comes with towels in a convenient location. Keep safety and liability in mind: Be sure your pool is clean and safe, and keep life preservers nearby. It’s wise to get the pool inspected at least once a year.

Source: moneywise.com

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LA County to Impose Rent Cap in Unincorporated Areas

Thu, 09/13/2018 - 12:00pm

Over protests from landlords and real estate brokers, the Los Angeles County Board of Supervisors voted 4-1 Tuesday in favor of an ordinance to temporarily limit rent increases to 3 percent in unincorporated areas of the county.

Dozens of renters turned out carrying signs reading “The rent is too damn high,” while many landlords and agencies that represent property owners countered that the ordinance would hurt rather than boost housing supply.

Supervisor Kathryn Barger cast the dissenting vote against the interim ordinance, which is expected to come back to the board for another vote in 60 days and, if adopted, to take effect 30 days later. It would set base rents as of Sept. 11 and impose a cap for six months.

Supervisor Sheila Kuehl championed the plan to limit rents while the county considers longer-term solutions, saying it will help solve the homelessness crisis.

She said she was mystified by some policymakers’ inability to see the link between rental rates and homelessness.

“They look at 58,000 homeless people in Los Angeles County and they say why?” Kuehl said.

Helping those living on the street with mental illness has been a critical focus, but Kuehl pointed to statistics showing that only one-third of the homeless population has an identifiable mental health problem. Most of the remaining two-thirds are newly homeless and without a home because of economic issues, she said.

Seniors are particularly hard-hit, Kuehl said. The last annual point-in-time count by the Los Angeles Homeless Services Authority found a 22 percent jump in homeless people 62 years and older.

Advocates on both sides said research was on their side.

Kuehl and Supervisor Hilda Solis, who co-authored the motion, cited research by USC and UCLA professors finding that rent regulations can help make housing more affordable.

“Limiting rent increases cannot fully solve the housing crisis confronting much of urban California, but rent regulations are one tool to deal with sharp upticks in rent and have less deleterious effects than is often imagined,” said Manuel Pastor, a USC sociology professor.

However, the argument seems unsettled. Recent research by Stanford University professors concludes that rent control incentivizes condominium conversions and sales to owner-occupants, reducing the supply of rental housing and increasing gentrification.

In evaluating the effects of a proposed repeal of the 1995 Costa-Hawkins Rental Housing Act — which limits rent control to older housing stock — the state Legislative Analyst’s Office concluded that rent control would likely lower rents but also reduce new construction and lower property values.

Beverly Kenworthy of the California Apartment Association told the board that “rent control is not the same as affordable housing” and once the ordinance is passed, “(renters) will still not be able to afford their rent.”

However, Tyler Anderson of the Los Angeles Center for Community Law and Action told the board that tenants are seeking help with rent increases of 40 to 80 percent.

Beverly Roberts, a 30-year resident of South Los Angeles who advocates rent control and also owns income property, said she is seeing her “community being ripped apart” by high rents. “Landlords don’t need to gouge tenants to get a fair return on our investment.”

Some in favor of rent control said private equity firms are buying up property, while landlords and landlord associations said the county ordinance would hurt small property owners and decrease the value of properties they worked hard to own.

“They are flesh-and-blood people who scrimped and saved” to afford their properties, Janet Gagnon of the Apartment Association of Greater Los Angeles said of “mom-and-pop” owners. “They are being clubbed like baby seals with this rent freeze.”

Landlord advocates suggested other solutions, including offering rental vouchers for seniors and low-income renters.

Others suggested the county was meddling where it shouldn’t.

“Are you now going to start telling the gas stations what they can sell their gas for? Are you going to tell Albertsons what they can sell their milk for?,” a real estate broker asked.

Kuehl replied, “I don’t know, I’ll talk to Chevron about that.”

Barger offered an amendment that would allow owners to “bank” increases from year to year and give landlords greater leeway to evict tenants during the first two years of their lease.

“I do not believe rent control is the right way to go,” Barger said, but indicated she would vote for the ordinance if her amendment was accepted.

“I appreciate your stretching to get there,” Kuehl said, but urged her colleagues to vote against the proposed amendment, which failed to get a second.

Supervisor Mark Ridley-Thomas, who abstained from a vote last week that put a similar cap on rents at mobile home parks in unincorporated areas, highlighted the temporary nature of the measure.

“While rent control is often described as a blunt or inelegant tool during times of crisis, it is warranted to prevent displacement and to protect tenants,” he said. “Unlike Prop 10, the rent increase moratorium considered by the board today was designed to be temporary. It is our job to create a safety net when needed, and now is one of those times.”

The ordinance, if ultimately adopted, is estimated to affect 200,000 people living in rental properties.

Solis urged other cities to “do the right thing” and join the county in imposing rent regulations.

Proposition 10, the ballot measure to repeal Costa-Hawkins, will go before voters on Nov. 6.

Source: nbclosangeles.com

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No Vacancy! 6 Hot Tips for Renting Out Your Vacation Home Long After the Vacation’s Over

Thu, 09/13/2018 - 11:51am

To the uninitiated, buying a vacation home in a popular destination seems like a brilliant business move. You’ve got your own special place to escape to anytime you want—and you can rent it out and make money when you’re not there. Talk about a win-win!

And during high season, it probably is: Whether you have a lakefront bungalow or a cozy ski condo five minutes from the area’s top runs, you likely have no problem getting potential renters fighting over your listing each week.

Unfortunately, as soon as the leaves begin to turn things might start to get a bit icy (or the last of the snow melts, and skiers hang up their gear). You’ve tried a price reduction, but you simply aren’t getting any bookings, even on the weekends.

 

All is not lost! You can still attract year-round visitors to your seasonal rental. You just have to get creative, says Hugh Barton, president of Luxury Vacation Homes Global in New York City.

“People look for deals during the offseason; a person who cannot necessarily afford a luxury home in the summer can possibly afford it during the winter,” says Barton, who rents out vacation homes year-round in 50 locations worldwide. “The key is to highlight the benefits that these locations bring during the offseason.”

Here are six ideas for how to rent out your vacation home long after the crowds have disappeared.

1. Heat things up with a hot tub (or at the very least, a game room)

During the offseason, luxury amenities are key for getting renters to bite, Barton says. If you’re struggling to make your home stand out, consider installing an indoor sauna or an outdoor hot tub. Without fail, these vacation amenities draw in the crowds, he says.

Of course, they also don’t come cheap—on average, it’ll cost you $4,500 to install a sauna and $3,500 for a hot tub—not including the costs of utilities and maintenance.

So if going luxe isn’t in your budget, don’t despair—there are some cheap(er) tricks to try: “Make a designated game room with pool tables, a huge shelf of board games, and a pingpong table,” Barton suggests. “Or create a cinema room set up with tons of movies.”

And don’t forget what’s outside, either. Stock your home with sleds, snowboards, kayaks, and other gear for renters to use.

“Make sure your amenities are of the highest caliber,” he says. “This will make any guest feel like they are on vacation, no matter the season.”

2. Market to different audiences

If you’re struggling to fill the vacancies in your vacation home, it might be time to think outside the box: “A home can be used for more than just a vacation,” Barton points out.

In the offseason, he suggests, you can offer up your luxury home as a spot for a corporate retreat. Or consider hosting a writers workshop, or rolling out the yoga mats for groups looking for a wellness weekend away.

Just make sure you bone up on the rules and regulations on using your home this way. In some markets, you might have to add the owner of the event to your insurance and/or purchase extra liability coverage.

3. Sell the location, no matter what time of year

Jennifer Nelson, an agent with Realty Executives in Phoenix, says her clients often have trouble renting out their Arizona vacation homes during the summer when temps can regularly reach 120 degrees Fahrenheit.

Still, she says, there are always ways to lure renters—if you know how to market the location.

“It’s a smart idea to promote local attractions in conjunction with your rental,” she says. “For example, ‘Get the best tickets of the season for the Diamondbacks game!’ Or your town’s local auto auction, state fair, or whatever.”

While you’re at it, take the opportunity to play up any advantages of visiting the town in the offseason.

“In the winter, [you can] showcase that there are fewer crowds, easier access to high-end restaurants and local services that would ordinarily require a long wait,” she says.

4. Offer exclusive, ‘act now’ discounts

Of course, you can lower your nightly rates to draw in renters, Nelson says. Really want to be booked solid? Put some urgency behind it, and make it clear that this is a deal that’s too good to pass up.

Start by emailing renters who’ve already stayed in your home and gave it rave reviews, Nelson recommends.

“Offer them expiring, ‘act now’ pricing to attract attention so it doesn’t get lost in their email inbox,” she says. “For instance, ‘Book by the end of this week only for a special offseason rate! Extra discounts for stays of longer than seven days!’”

5. Sprinkle in a little holiday magic

Everyone dreams of a getaway somewhere far, far away from Aunt Edna around the holidays. If you can offer your beach or lake house for a bargain price that time of year, capitalize on that, Nelson says.

“If winter is your offseason, consider offering a holiday promotion and highlight your local Christmas fairs and horse-drawn carriage rides,” she says. “Tenants love to envision the whole getaway, not just the home, so the more you can expose them to, the better.”

6. Paint a pretty picture

Perhaps most important, remember that a picture is worth a thousand words—or in this case, thousands of dollars of rental income in your pocket, Nelson says.

“Update your photos to show off the season,” she urges. “For winter tenants, consider putting some cocoa and mugs on the counter, show the local Christmas lights on the rooflines, and show off how magical your town looks in winter. Show off the brilliant fall foliage in autumn and the dreamy spring sunsets over the water, too.”

Then sit back and watch as your booking calendar fills up.

 

Source: realtor.com

The post No Vacancy! 6 Hot Tips for Renting Out Your Vacation Home Long After the Vacation’s Over appeared first on AAOA.

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How to Get Your Investment Property Ready to be Rented Out

Thu, 09/13/2018 - 11:48am

If you’ve got an investment property that you’d like to start renting out, there are a number of things you need to do to make sure it’s ready. Some of these tips could actually make a difference in the demand for your property and can increase how much you can charge for rent, or how easily you get tenants in the first place.

While renting out a property isn’t always straightforward, it’s still a viable investment that beats many others in the current economic climate. In the right location, a good investment property can make you between 5-8% yield each year. Not only that, but the value of the property could also go up over time.

That’s why location is important when choosing a rental property. You want somewhere that you can afford, but that also has the potential to go up in price. As well as that, you’ll want a healthy rental market so you can get your property filled with tenants reasonably quickly and get a good rental price in place. So what do you need to do to get your property on the market?

Use multiple realtors

Make sure you use multiple realtors to try and promote your property unless they can offer you an excellent deal to go exclusive.

Find the right price

Every property sells or gets let out at the right price eventually. So if you’re struggling to get enough interest, you might want to consider lowering it.

The right investment property strategy normally matches a growing property market with a healthy rental yield. Make sure you’ve got your property sorted so you can start earning on your investment.

Get professional photos

Almost everyone checks for properties online these days, or at the very least, in property magazines or realtor windows. That means the most important factor in getting high demand for your property is good quality photos. So many great properties go un-visited (and therefore un-rented) because the landlord put up poor quality photos that don’t do the place justice.

If you want to get a lot of interest in your property – get professional photos.

Make sure your gas and electric are sorted

You don’t want to start encountering problems AFTER you’ve rented out your property. Make sure you fix your gas and electric so that you don’t have to be called out at additional cost.

Fix any minor issues with the property

Fix every minor issue with your property. Again, if something breaks and you have to be called out, it’s going to cost you more. Not only that, but a property that’s in good shape will demand more on the market.

Re-decorate

Even if it’s just a new lick of paint, make sure your property is in reasonably good health. This’ll make it worth more and increase demand from renters.

Install a quality boiler and appliances

You don’t want things that break so you have to keep buying new ones. Make sure your boiler is of good quality and is built to last, along with any other appliances you’re providing.

Get good-quality furniture

Not only will high-quality furniture make the property more popular with potential renters, it’ll also last longer and suffer less from wear and tear.

 

Source: realtybiznews.com

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Facebook Engaging In Housing Discrimination HUD Charges

Mon, 09/10/2018 - 11:04am

The Grace Hill training tip of the week focuses on a Facebook housing discrimination charge by HUD and how Fair Housing Laws apply to social media posts and property management.

Facebook is violating the Fair Housing Act (FHA) by allowing landlords and home sellers to use its advertising platform to engage in housing discrimination, the U.S. Department of Housing and Urban Development (HUD) charges in a housing discrimination complaint.

“Facebook invites advertisers to express unlawful preferences by offering discriminatory options, allowing them to effectively limit housing options for these protected classes under the guise of ‘targeted advertising.’

“The alleged policies and practices of Facebook violate the Fair Housing Act based on race, color, religion, sex, familial status, national origin and disability,” the complaint states.

HUD is charging Facebook with housing discrimination for the following:
  • The company unlawfully discriminates by enabling advertisers to restrict which Facebook users receive housing-related ads based on race, color, religion, sex, familial status, natural origin and disability.
  • It mines extensive user data and classifies its users based on protected characteristics.
  • Facebook’s ad targeting tools then invite advertisers to express unlawful preferences by suggesting discriminatory options.
  • Facebook effectuates the delivery of housing-related ads to certain users and not to others based on those users’ actual or imputed protected traits.
Some of the ways the HUD complaint says Facebook discriminates using its ad targeting tools
  • Enables advertisers to discriminate based on sex by showing ads only to men or only to women.
  • Allows advertisers to discriminate based on disability by not showing ads to users whom Facebook characterizes as interested in assistance dog, mobility scooter, accessibility or deaf culture.
  • Showing ads to users with children only above a certain age.
  • Enables advertisers to discriminate based on race by drawing a red line around majority-minority zip codes and not showing ads to users who live in those zip codes.

You can read HUD’s complaint here: Housing Discrimination Complaint.

The FHA prohibits discrimination in housing transactions, including print and online advertisement on the basis of race, color, national origin, religion, sex, disability, or familial status.

In past posts, we’ve covered some basic guidelines to ensure your advertisements and social media don’t violate fair housing law.

But what about some of the more subtle situations – ones where you may not even realize you could be doing something that might be viewed as discriminatory?

Housing discrimination does not have to be intentional to be illegal

Remember, discrimination doesn’t have to be intentional to be illegal.

If your words or images have the effect of discouraging prospective residents from applying to live in your community, that may be enough to violate the fair housing law.

Let’s look at an apartment community example

Imagine your community is 80% white.

You like to use real photographs from community events on social media.

Because your community is mostly white, the pictures you post generally only show people who are white. You might think there is no risk of a discrimination claim. After all, your intention is not to discriminate. You are only trying to show real images of your community.

Showing diversity on social media posts can prevent discrimination accusations

However, if the images you post have the effect of discouraging people with darker skin from applying to live in your community, you could be at risk.

This could be discrimination based on color under fair housing law.

Using images in social media posts is a great way to appeal to customers.

However, make sure the images you use across your social media communications show diversity.

Consider all federal, state, and locally protected classes

For example, show males and females, people of different races, people with disabilities, a variety of ages, and families with and without children.

Show diversity when using avatars, animated characters, and illustrations, too.

You must be just as mindful of fair housing laws when sharing information and interacting with customers online as you are when sharing information and interacting in print and in person.

You are responsible for not acting in a discriminatory way, no matter what form of communication you are using.

 

 

Source: rentalhousingjournal.com

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Sacramento had state’s second highest rent increase. But there’s good news for tenants, too

Mon, 09/10/2018 - 10:35am

Sacramento residents faced the second highest rent increases among major California cities in the last year, continuing a five-year upward swing, a new analysis shows.

But the news is not entirely bad.

The capital city’s 2.5 percent yearly increase as of August was tame compared to earlier years when rent increases were among the highest in the nation, including nearly 10 percent last year, according to national online broker Apartment List.

Local real estate watchers say a recent increase in new apartment construction appears to be moderating Sacramento’s rising rents, bringing them closer to normal range after several superheated years.

“We’re definitely seeing an easing,” said Bob Shanahan, a Sacramento-area rental market analyst for Colliers International, a global real estate services and investment management company. “It’s kind of a return to normal. The increases in 2016-2017 were unsustainable.”

Colliers’ own analysis of the four-county metro area – Sacramento, Yolo, Placer and El Dorado – found rents to be 3.8 percent higher during the April-May-June period this year than during the same months in 2017.

“Sacramento still ranks 9th among the top 50 U.S. metros in rent growth after averaging 7.4 percent per year from 2013 to 2018,” the Colliers analysis says.

The latest reports come amid ongoing rent control debates locally and statewide. Proposition 10 on the November ballot would repeal the existing Costa Hawkins Rental Housing Act, allowing cities more latitude to control rents.

Sacramento city officials, meanwhile, face pressure to find affordable housing for the lowest-income residents. Of the 5,500 housing-unit building permits issued by the city between 2015 and 2017, only 98 were for apartments or houses that people earning minimum wage or a little higher could afford, according to a city review this summer.

That leaves the city less than 10 percent of the way toward its 2021 housing target for low- and very-low income households, based on goals set by the Sacramento Area Council of Governments.

Sacramento Mayor Darrell Steinberg on Tuesday proposed a limited set of rent controls: A 5 percent rent increase cap for three years that would only apply to units that are at least 20 years old in buildings with at least five units.

Builders immediately opposed the mayor’s plan, saying rent control will stifle apartment construction.

Several other council members announced a competing plan that they want the council to pass this year.

That proposed ordinance, pitched by Eric Guerra, Steven Hansen and Rick Jennings, would require landlords to offer 18-month leases to new tenants, have a third-party mediator settle rent increase disputes and create a fund to help pay for affordable housing projects.

The new Apartment List data show that Sacramento and valley neighbors to the south, Fresno and Bakersfield, remain the least expensive major cities in California for renters to live, more aligned with rent levels elsewhere in the U.S. than with coastal California.

Apartment List set the average rent in the city of Sacramento in August at $1,210 for a two-bedroom unit. Colliers, which looked at the four-county area, put the average local rent at $1,374 during a three-month period this spring.

San Francisco has the highest average rent in the state this summer, $3,100 per month for a two bedroom apartment, followed by San Jose, where two-bedroom unit rent averaged $2,640, according to Apartment List.

Apartment and other housing construction came to a near complete halt during the mortgage meltdown and recession several years ago. Analysts say that lack of new units, coupled with a surge of new arrivals, some of them young emigrees from the Bay Area, caused Sacramento rents to rise quickly since 2013.

Shanahan of Colliers International said Sacramento has gained cachet among millennials in their 20s and 30s as a “cool city to settle down in.”

In the last year, rental construction has increased in the region. Colliers reports that 886 new rental units were added in the four-county metro region in the first half of this year, and another 1,322 are expected to open by the end of the year.

Those include large projects such as the Ice Blocks and The Hardin in downtown Sacramento as well as big projects recently opened or under construction in Rocklin, Folsom and West Sacramento.

The numbers of new housing units, however, do not yet meet the demand, said economist Jeffrey Michael of the University of the Pacific in Stockton, suggesting rent will likely continue to rise. Colliers forecasts a 2 to 3 percent increase per year.

Colliers International, in its latest rental report, noted that occupancy rates in the region were still very high at the midpoint of this year – over 96 percent – meaning that apartments continue to be at a premium, allowing developers and landlords to tilt toward higher rates.

Rents for many new units often top $2 per square foot. One of the region’s more recent openings, the 260-unit Garnet Creek Apartments in Rocklin is advertising its least expensive one-bedroom, 795-square-foot units at $1,720 a month.

 

Source: sacbee.com

The post Sacramento had state’s second highest rent increase. But there’s good news for tenants, too appeared first on AAOA.

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How to Set Up a Smart Lock for Your Airbnb or Rental Property

Mon, 09/10/2018 - 10:30am

If you own a short-term rental property, you know how inconvenient it can be to meet up with guests to hand off keys.

That’s why many rental companies and online booking services, such as Airbnb and VRBO, are embracing smart locks. (VRBO stands for “Vacation Rentals by Owner,” and is owned by HomeAway.)

Internet-connected smart locks replace or augment your property’s existing deadbolt and give you the ability to create access codes (for use with a keypad that’s connected to the lock) and electronic keys (where a smartphone app acts as the key).

“We’ve tested a few smart locks that don’t even have physical keyholes,” says Dave Trezza, CR’s door lock test engineer. “The only way to open them is with a keypad or an electronic key.”

Having a smart lock on your rental means you don’t have to be around to give guests a key, and you can see when they come and go. You’ll know that they made it inside successfully, whether they’re having trouble with the lock, and when they’ve vacated on checkout day, so you can get in to clean.

Some locks even integrate with online booking services to issue access codes or electronic keys automatically to guests with reservations; at checkout time, access automatically expires. Both Airbnb and HomeAway offer this capability for specific smart locks, which we’ll cover below.

“Typically, we see that people overwhelmingly prefer the security and convenience of our fully automated solution,” says Eric Moore, HomeAway’s vice president of product management.

If you’re interested in using a smart lock to give guests access to your rental, you have a choice to make. You can go with the automated method available on select smart locks that work with Airbnb and HomeAway, or you can do it yourself.

Below we walk you through both methods.

Whichever smart lock you go with, make sure it includes all the hardware you need to connect it directly to the internet. It might seem surprising, but many smart locks don’t come with a built-in ability to connect to the internet. Instead, they connect to your smartphone via Bluetooth when you’re nearby.

Most standalone smart locks, such as the CR-rated August Smart Lock Pro, need an extra device called a WiFi bridge to connect directly to the internet. These bridges can range in price from about $60 to $100, depending on the brand, though some brands bundle bridge and lock in one package (August Smart Lock Pro + Connect).

And if you’re still a little fuzzy on smart locks, check out CR’s smart-lock buying guide as well as our complete smart-lock ratings.

Option 1: The Hands-Off Method

First, you’ll need a smart lock that works with your booking service.

For Airbnb, different locks are compatible in different regions and countries. The best way for you to find a compatible lock is to go to the Airbnb Host Assist portal. An Airbnb spokesperson did call out August smart locks and LockState smart locks as examples.

HomeAway confirmed compatibility with multiple smart-lock brands, specifically August, LockState, and ResortLock.

For smart locks that aren’t directly compatible with Airbnb or HomeAway, there’s a service called VirtualKey that acts as a bridge between these booking services and certain smart locks. VirtualKey works with a few CR-tested smart locks: the Schlage Connect and Yale touch-screen deadbolts.

How to get your smart lock connected to a booking service will differ by service as well as lock brand. We recommend starting with the lock provider’s app to see whether there are prompts for Airbnb or HomeAway integrations in one of the menus. If not, check the Airbnb Host Assist website or your HomeAway Owner Dashboard. If you’re using VirtualKey, you’ll want to sign up and follow the prompts.

Here’s one example:

With an August smart lock, you connect to Airbnb from the app by going to Account, then August Access, then August Works With. For HomeAway, you would start from the HomeAway Owner Dashboard on HomeAway’s website. Once there, navigate to Hospitality, then Add-Ons, then Door Locks. At that menu level, select August. You’ll be redirected to August’s website and asked to log in with your credentials to authenticate the account.

With the direct integrations for Airbnb and HomeAway, guests will automatically receive their access codes or electronic keys ahead of their stay, though the timing varies. According to Airbnb, it varies by smart lock brand. As for HomeAway, a spokesperson says the host can choose a delivery time, so long as it’s at least three days prior to check-in.

If you’re concerned about giving these services this kind of control, CR’s program manager for privacy and security, Robert Richter, says you should be—or at least be thinking carefully about it.

“You should always be wary of giving a company this level of control over your property, as there’s always a chance their system can be compromised,” Richter says. “But that’s not unique to this situation. Typically, large companies with a long history with technology, like Airbnb, put a lot of effort into engineering a secure experience. But always make sure to read the information they give you.”

Option 2: The Do-It-Yourself Method

If you’re nervous about outsourcing access to your property, you can opt for the do-it-yourself method. It requires more work on your part but gives you total control over who receives access and when that access is granted and revoked.

The process is similar across lock brands, though not identical. Open your smart lock’s mobile app and look for a menu button that says Guests, People, Access Codes, Electronic Keys, or some variation of those terms. From there, follow the prompts to choose whether to create an access code or electronic key.

Some smart locks, such as the Schlage Sense, give you both options, while other locks only give you one option. (The Kwikset Kevo, for instance, offers only electronic keys.) For access codes, you’ll be able to create a PIN of your choosing that’s four to eight digits long.

To create the code or key, you’ll be prompted to name a recipient and possibly add his or her email address or phone number. You might also have the option of choosing a length of time for the code or key to remain active, handy for programming the access to automatically expire at checkout.

If your lock doesn’t have that option, you’ll need to go back into the app and delete the guest’s code/key after checkout. Once it’s set up, some smart lock apps will offer to send the code or key to your guest. Of course, you can also do that yourself.

Source: consumerreports.org

The post How to Set Up a Smart Lock for Your Airbnb or Rental Property appeared first on AAOA.

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