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Five Reasons Why Kay Properties Likes Houston – The Fourth Largest City in America and with Room to Grow

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By The Editors
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Five Reasons Why Kay Properties Likes Houston – The Fourth Largest City in America

By Kay Properties

While Houston may have many nicknames that reflect the city’s culture (H-Town), climate (Bayou City), and chronology (Space City), Houston could also be called a “boom city” as it is also home to one of the fastest growing tech centers in the nation and to one of the most appealing markets for real estate investors.  Why? Well, Houston has everything: the people, the diversity, the business climate, and a world-recognized center for energy, medicine, space, and manufacturing.

Located in Southeast Texas, Houston and is the most populous city in Texas, the fourth most populous city in the nation, and covers nearly 700 square miles – big enough to fit Washington D.C., San Francisco, New York, Boston, Seattle, Minneapolis and Miami all within its borders.

Sitting near the Gulf of Mexico, Houston also has a great waterfront history as well. For example, the Port of Houston ranks first in the United States in international waterborne tonnage (weight in tons) handled, and is recognized as a critical hub to the world’s commerce. Not so surprising, Houston is also home to nearly 50 Fortune 1000 companies, which is the second largest concentration of any other city in the country(behind only New York City with 72).

Top Five Reasons Kay Properties Likes the Houston Real Estate Market

In addition to the briefly stated areas above, Kay Properties & Investments likes the Houston market for the following reasons:

1. Rapid Population Growth

Greater Houston is one of the most diverse and rapidly growing major U.S. metropolitan areas in the nation. With a population of 7 million people,  Houston is the largest city in the state of Texas, and the 4th most populous city in America.

With a thriving business culture that runs across just about every industry including fashion, sports, technology, energy, and education, the Houston real estate market is booming. According to Realtor.com, Houston’s real estate prices have risen more than 6% year-over-year for the past five years, and inventory has dropped nearly 25% in the past year.

2. Houston Real Estate Market Is Still Developing

Unlike fully-built cities like New York, San Francisco, Washington D.C. etc, Houston has lots of room to grow and develop.  According to Houston’s central office of economic affairs, Houston’s moderately priced housing market combined with its sound business infrastructure makes the city a great place for investors who are looking for opportunities. From multifamily to industrial to residential, Houston continues to be an attractive market in which to invest.

3. Strong Economy and Job Growth

Anyone who understands real estate fundamentals gets that a strong economic base is critical to creating a good real estate market. The Houston market is one of the most important industrial bases in the world with the second largest manufacturing-based GDP in the nation, the world center for nearly every segment of the oil and gas industry, and home to the largest medical complex (Texas Medical Center) in the world. On top of these economic power houses, Houston also has more than 1,760 life sciences and biotechnology companies, cutting-edge hospitals, health facilities, and research institutions and 6,400 manufacturers who employ more than 240,000 skilled workers and produce $80 billion in goods annually.

Recent headlines abound with recently relocated corporations choosing Houston as their central location including the world’s largest online marketplace and fulfillment center that has absorbed more than 1 million-square-feet, and has eyes on another 3 million square feet in the near future. That’s approximately the size of 74 football fields!

  1. Booming International Trade

Another strong appeal for real estate investors to Houston is the city’s reputation as an international trading hub. People have historically migrated to places of international trade and access to commerce, and Houston is no exception. For example, Houston has the largest US port as measured by total cargo tonnage handled, and one of the busiest ports in the United States when it comes to foreign trade. This level of activity translates into lots of jobs for the Houston market, as well as acting like a giant magnet for tens of thousands of business people and travelers from around the world. That means that these people need a place to stay in either temporary or permanent housing, which is why Houston is also a great market for investment real estate.

5. Education & Quality of Life

Quality of life and educational opportunities are other motivators that encourage people to migrate from one region to another. While much younger than some of its counterparts like Boston, New York and Chicago, Houston is one of the fastest growing big cities in the country. It continuously lures more and more residents from around the globe drawn by the city’s mix of cultural amenities, diverse communities and a low cost of living. Houstonians also take their dining very seriously which is a good thing since the city has more than 11,000 restaurants offering just about any type of cuisine imaginable.  Some describe it as the perfect mix between Southern hospitality and urban sophistication, with tons of waterways and public parks to reinforce its reputation as a quality of life city.

Education is one of the major elements of quality of life. Houston boasts more than 40 colleges, universities, and institutions – offering higher education options to suit all interests. The Greater Houston area has 14 major institutions of higher learning including Baylor College of Medicine, University of Houston, and Rice University. According to U.S. News & World Report, the University of Houston has been ranked among the best colleges in the United States across a number of different categories in 2021 while University of Houston landed on the lists for “Top Public Schools” and “Best Value Schools” in the same report.

Where To Invest in The Houston Real Estate Market?

With a strong economic base, an internationally recognized commerce center, and a growing population, Houston is becoming an attractive city for real estate investors.

Kay Properties often has Delaware Statutory Trust (DST) offerings for both 1031 exchange and direct cash investors available in the Houston, TX market.  To learn more about these and other DST investment opportunities available nationwide please visit www.kpi1031.com or call 1 (855) 875-2781 

Kay Properties is a national Delaware Statutory Trust (DST) investment firm. The www.kpi1031.com platform provides access to the marketplace of DSTs from over 25 different sponsor companies, custom DSTs only available to Kay clients, independent advice on DST sponsor companies, full due diligence and vetting on each DST (typically 20-40 DSTs) and a DST secondary market.  Kay Properties team members collectively have over 115 years of real estate experience, are licensed in all 50 states, and have participated in over $21 Billion of DST 1031 investments.

NOTE: Past performance does not guarantee future results and DST investments may result in a complete loss of investor principal. This is an example of the experience of one of our clients and may not be representative of the experience of other clients. These clients were not compensated for their testimonials. Please speak with your attorney and CPA before considering an investment.

Risks and Disclosures Please Read

This material does not constitute an offer to sell nor a solicitation of an offer to buy any security. Such offers can be made only by the confidential Private Placement Memorandum (the “Memorandum”). Please read the entire Memorandum paying special attention to the risk section prior investing.  IRC Section 1031, IRC Section 1033 and IRC Section 721 are complex tax codes therefore you should consult your tax or legal professional for details regarding your situation.  There are material risks associated with investing in real estate securities including illiquidity, vacancies, general market conditions and competition, lack of operating history, interest rate risks, general risks of owning/operating commercial and multifamily properties, financing risks, potential adverse tax consequences, general economic risks, development risks and long hold periods. There is a risk of loss of the entire investment principal. Past performance is not a guarantee of future results. Potential cash flow, potential returns and potential appreciation are not guaranteed. This material should not be interpreted as tax, legal, insurance or investment advice.. Securities offered through Growth Capital Services, member FINRA, SIPC, Office of Supervisory Jurisdiction located at 2093 Philadelphia Pike Suite 4196 Claymont, DE 19703.

Why the Delaware Statutory Trust Specialist Can be a Real Estate Broker’s Best Friend

Property Maintenance: 6 Items to Troubleshoot in Your Crawl Spaces

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By The Editors
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Rental Property Maintenance: 6 Items to Troubleshoot in Your Crawl Spaces

This rental property maintenance tip offers 6 items to look for to troubleshoot in your crawl spaces under your rentals.

By Phil Schaller

Crawl spaces are great for storage, but because humans don’t frequent this area of the house, they can also provide a great home for rodents, mold, asbestos, and other fun things. Conducting a DIY inspection of your rental property crawl space can be a good way to keep tabs on the area, but bringing in a pro will give you the full picture.

Because lists are always helpful, let’s start with a general list of what to focus on while performing an inspection of your crawl space (in no particular order):

No. 1- Ventilation

A lack of airflow is a problem for several reasons. Mold and other types of moisture damage can become much worse and spread faster without ventilation. This is especially true here in the Pacific Northwest.

No. 2 – Foundation Cracks

Cracks in the foundation can be very bad news (especially horizontal cracks), or not a big deal at all (vertical cracks). Horizontal cracks usually mean ground forces are causing the foundation to bow – not good. Vertical cracks are common and not a cause for concern. Vertical cracks are usually caused by precipitation putting pressure on the foundation, but stability remains.

No. 3 – Electrical

We recommend having an electrician come in to evaluate the situation. What you want to be wary of is any electrical wiring or equipment near moisture build-up. Knob and tube wiring is common in the Puget Sound region and it should be replaced or at least inspected somewhat regularly.

No. 4 – Mold

Per the Environmental Protection Agency, every type of mold can cause some health effects. Three types of mold typically occur in crawl spaces: black, white, and yellow. Mold can cause serious allergic reactions and should be dealt with as quickly as possible. Again, unfortunately in the Northwest, mold is common. Black mold (sometimes looking grey or greenish) is the most dangerous. White mold is still dangerous (often looking fuzzy) but not as bad as the black variety. Yellow mold occurs on organic material (wood) and can cause decay and destruction of the material it inhabits. Vapor barriers can be installed on your crawl space floor and up the walls to prevent mold.

No. 5 – Pests

Insects and little critters love these areas in a house. Termite damage is easy to spot and mice/rats/squirrels leave their droppings everywhere. It’s best to get ahead of these issues and they’re pretty easy to fix (call a pest-control company); doing so just requires some diligence and the occasional inspection.

No. 6 – Asbestos

Another really bad one, along with the black mold. With many, many houses in the Puget Sound region being built before 1980 (when asbestos was used frequently) this is a point of concern for homeowners. Asbestos can be in the walls, ceilings, floors – virtually anywhere in a crawl space. When this material is destroyed the toxic fibers go airborne and can seriously contaminate the air, possibly making a home unlivable. If you haven’t had a professional out to your house to check on this, please do!

In conclusion, crawl spaces can be a source of property maintenance headaches for a landlord. It’s best to have a look in this area at least a couple of times a year. Here at RentalRiff, we can definitely help.

About the author:  

Phil Schaller is an experienced landlord and the founder/CEO of RentalRiff – an alternative service to traditional property management that provides ongoing oversight and upkeep of rental properties, while serving as the main point of contact for tenants. Maintenance and repair costs are included and property specialists are licensed/insured. Phil is a Pacific Northwest native, father of two, and fly-fishing addict.

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A Step-by-Step Maintenance Guide to Unclog a Dryer Vent

The Landlord’s Guide To Rent Collection

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By The Editors
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The Landlord’s Guide To Rent Collection

By Colorado Realty & Property Management

There are over 10 million individual landlords in the United States, each with its own methods for rent collection. How a landlord collects rent, what they charge, and how they deal with late payments has to do both with their personal preferences and the laws in their state.

Renting is a great way to earn side money or even a full livable income, but there are many things to consider before you begin looking for tenants. If you have a property you’re interested in renting, you need to understand how rent collection works and what options there are. You’ll also need to know how you plan to handle late fees and related issues.

We’ve compiled some of the most important information about these topics down below, so keep reading if you’re ready to begin learning what you’ll need to know.

Determining Rent

Typically, your rent should be between 0.8% and 0.10% of your property’s value. You’ll also want to be aware of what others are charging in your area, as you will have a far harder time finding a tenant if your asking rent is noticeably larger than your competition.

An easy way to compare your prospective rent to the local trends is to visit sites like Zillow. There, you can quickly see common asking prices for property’s similar to your own.

Landlords guide to rent collection and laws for landlords Colorado realty and property management

You should also note that depending on which state you live in, there may be guidelines for what you can charge. Be sure to check your local laws before finalizing your rent decision, as there could be limits or minimums you need to know about.

Laws for Landlords is a resource for Landlords and Tenants that provides helpful information regarding legislation and the laws affecting Landlords, Tenants and  Housing Industry Professionals.

Rent Collection Methods

Most landlords accept more than one form of payment. This allows the renter to select which works best for them. Some methods are better than others, but what you decide to use will depend on you.

Cash

While collecting cash takes the wait time out of receiving funds, it has its own downsides. These types of payments are difficult to keep track of, and disputes over what was paid and when can easily occur if you don’t have a good system.

On the other hand, you have access to your collected rent instantly and don’t need to worry about bouncing checks or failed deposits. Still, if you are going to accept cash payments, be aware of the ways they could get complicated quickly.

In most cases, we recommend choosing a different method.

Direct Deposit

If you choose, your renter can set up direct deposit from their bank account to yours, though there is typically a transaction fee. Just be aware that like checks, this method can bounce when sufficient funds aren’t present.

Direct deposit payments are also not typically immediate, and you may even wait up to a week for your money to arrive in your account.

Online Platforms

This method is ideal if you’re looking for an option that is automated and digital. With online platforms like Rent Merchant and Rent Track, your renters can pay via credit or debit.

By setting up an account through one of these sites, your renter can view balances on their account. They can also pay, set up an automatic payment, and view any late fees or charges they have.

These sites are safe and fairly easy to use, but they are more tech-involved than cash or check payments.

Check

Checks are a classic form of rent payment, and plenty of landlords accept them. Now that many banks have mobile apps that allow for instant digital check deposits, you may not even have to leave your home to cash your renter’s payment.

If you choose to accept checks, just remember that it may take time for funds to clear, and it’s always possible the check will bounce.

Payment Services

Websites and apps like PayPal, Venmo, and Zelle allow you to easily transfer money from person to person.

While these apps may be convenient for your renter, you should know that they aren’t meant to be used as long-term rent payment systems. You may have a hard time viewing payment history, and it can often take a day or two for funds to transfer.

Once you’ve determined what your rent is and the payment methods you’ll accept, the next step is determining a due date. Rent is typically due on the day the lease begins, and as most leases begin on the first of the month, this is the most common rent collection date.

Late Fees and Grace Periods

Most landlords charge a late fee for rent paid after the set due date. Check to see if landlords can charge late fees in your state, as some prohibit this practice or regulate their max limits. If your state allows late fees, you can now consider your policy.

A late fee policy should include the rate as well as any grace period you may allow. A grace period for rent is the amount of time after the due date a tenant can pay rent without being subject to a late fee, typically 3-5 days.

A standard late fee for rent is 5% of the monthly rent, though luckily most landlords rarely need to charge this.

What you charge and how lenient you’ll be is up to you. Just be sure to include everything about your grace period and late fee policy in your lease, as charging a late fee without a written agreement can spur legal issues.

It’s important that you be firm and clear about how much rent is and when it’s due. This is the best way to avoid confusion and ensure you get your income on a dependable schedule.

The Best Rent System for You

Making the most of your renting property means setting the right prices, finding a reliable rent collection system, and dealing with issues such as late fees. Whatever options you decide to go with, make sure you’re choosing what works best for you and your renters.

By making careful choices, you can easily start your renting venture out on the right foot and avoid a few stumbling blocks.

Want to learn more?

Check out the rest of our site for more information and have a look at our videos designed specifically for landlords. Or, take a look at the rest of our articles.

About the author:

landlords guide to rent collection Colorado realty and property management

We are an established property management firm that represents the Denver, Broomfield, Colorado Springs and Fort Collins region with reliability, professionalism, and knowledge. We specialize in single-family, residential homes, duplexes, condominiums, townhomes and student rental properties.

Property Management Jobs In High Demand In Third Quarter

By
John Triplett
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Property Management Jobs In High Demand In Third Quarter

Property management jobs were in high demand in the third quarter, according to the latest jobs report from the National Apartment Association (NAA).

Nearly 38 percent of available real estate jobs in the U.S. were in the apartment sector during the third quarter of 2021, exceeding the five-year average of 35.6 percent, the NAA Education Institute said in its third quarter Apartment Jobs Snapshot.

However, apartment job availabilities have muted year-over-year. The annual decline in apartment job postings reflects that other property sectors are recovering from the pandemic.

Robust apartment demand and rent growth generated the revenue property management companies needed to grow their onsite teams. According to RealPage, annual absorption reached 610,715 units in the third quarter. Average effective rent increased 11 percent since the same time last year.

Robust leasing activity during the third quarter of 2021 yielded strong demand for skilled professionals.

Property Management Jobs In High Demand In Third Quarter

Property management professionals were the most sought-after during the quarter however job postings declined slightly year-over-year in the third quarter.

Demand for maintenance positions also fell by 2.5 percentage points year-over year. The decline in hard-to-fill maintenance job postings suggests that companies may be deciding to hire vendors to handle maintenance and repairs as salary expectations have increased.

Dallas, Los Angeles, Seattle, Washington, D.C and Phoenix were the leading markets for the highest concentration of apartment job openings. Demand for student housing talent was strongest in Austin, Columbus, Gainesville, Houston and Tallahassee.

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Divided Oregon Supreme Court Upholds Portland Relocation Payment Ordinance

By
John Triplett
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Divided Oregon Supreme Court Upholds Portland Relocation Payment Ordinance

Oregon landlords “lost a good fight” after a divided Oregon Supreme Court upheld the Portland Relocation Ordinance, according to attorney John DiLorenzo Jr. with Davis Wright Tremaine LLP.

DiLorenzo, who represented the interests of landlords who sued the City of Portland, said the ruling was contained in a 31-page majority opinion and a nine-page dissent.

“We did not get the result we hoped for. The bottom line is that we did not prevail.  According to the dissent, we should have,” he said. “The long and the short of all this is that we lost despite a good fight.”

The majority opinion concludes that ORS 91.225 does not prevent municipalities from enacting measures that might have some influence over a landlord’s decision to raise rent unless it actually controls the amount.  The opinion also concludes that the ordinance did not impermissibly create a private cause of action. Also, “it goes on to say the statute does not define rent control or control.”

On the other hand, the dissent says, “The text of the ordinance and the circumstances surrounding its adoption permit only one conclusion:  The city, as a means of ‘stabilizing’ rising rents, intended to deter landlords from setting rents at fair market levels and selected a coercive tool to accomplish that objective.”

The dissent concludes that the relocation ordinance “controls the rent” and should therefore be preempted.

DiLorenzo added his opinion, saying, “The City of Portland has over the past several years created an extreme regulatory environment for housing providers. “Yet it decries the lack of sufficient rental housing.  It is unrealistic to, on the one hand, adopt policies that discourage ownership of rental housing and, on the other hand, complain that there is too little supply and that rents are too high.”

The landlords, who lost in lower court rulings, argued the Portland relocation ordinance is in conflict with state laws that ban rent control. On March 7, 2018, the Portland City Council made the ordinance permanent and extended its application to landlords who own as few as one rental unit. The ordinance requires landlords to pay tenant moving costs if they want to increase rent by 10 percent or do no-cause evictions to move tenants out to rehab old apartment buildings to upgrade them.

Download the majority opinion here.

Download the dissenting opinion here.

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What to Look for in Property Management Software

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By The Editors
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What to Look for in Property Management Software

Are you still chasing down tenants every month or falling behind on the books?

There’s plenty to do when it comes to managing properties and it can be stressful.  The best way to get organized and stay on top of the day-to-today tasks is to keep everything in one centralized place.  The solution is property management software.  It can keep track of tenant, owner, vendor information, communication, and balances. It can also eliminate manual methods, multiple online tools, and increase productivity.  Most importantly, it can save time and money.  Below are key features to look for.

1. Accounting

Popular features include tracking income and expenses, online payments for tenants/owners/vendors, bank reconciliation and tax reports. Income is automatically recorded when tenants pay online and receipts and invoices can be uploaded with expenses. Tax season can get busy, but it’s easier with 1099s and Schedule Es that are already completed in the software.  Reporting is another important feature.  Some reports include rent roll, tenant late rent report, owner statements, and income and expenses.  With a lot of reporting options, you’ll always know how the properties are doing and property management software helps eliminate human error and keeps you on top of your books.

2. Leasing

Leasing includes rental listings, online applications and leases and tenant screening.  Property management software can post to multiple rental sites in minutes with one click.  Gone are the days of posting to rental sites one by one or using multiple online tools. Online applications and leases can be e-signed and the application fee and security deposit can be collected online too.  No more paper forms or paper checks.  Integrated tenant screening can provide background checks, credit checks, social security validation, and eviction search reports. These reports can be pulled within minutes allowing property managers to choose the right tenant quickly.  With property management software, your business would be more streamlined and have vacancies filled faster.

3. Communication

Portals help build strong relationships with tenants, owners and vendors.  Portals give everyone full transparency for online payments, important notices and work orders.  Tenants can submit maintenance requests and upload photos.  Vendors get notified for every new work order assigned to them and all communication is electronically saved for future reference.  Sending notices is also faster because it can be done in bulk to all tenants, owners, and vendors via email and text message.

One popular property management software that has all of these features plus more is SimplifyEm. They have been helping property managers and real estate investors for over 15 years and have over 150,000+ happy customers.  SimplifyEm is an all-in-one, easy to use software.  With simple and intuitive design, customers have a seamless experience.  The automation and sophisticated reporting saves you countless hours, giving you your time back.  As an online based software, you can access SimplifyEm anywhere at any time. With free onboarding and free live phone and email support, SimplifyEm Property Management Software will help take your business to the next level.  Get 50% off today and be up and running for the new year.”

 

Stringent Rent Control Measure Passes in Minnesota

By
John Triplett
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Stringent Rent Control Measure Passes in Minnesota

A stringent 3 percent rent control measure has passed in St. Paul, Minn., and Minneapolis voters also approved rent control in concept, according to reports.

Voters approved St. Paul’s measure that will cap rent hikes at 3 percent in a 12-month period regardless of a change in occupancy, and Minneapolis voters approved a measure to allow city leaders to begin crafting a rent-control policy, according to the Minneapolis Star-Tribune.

Supporters said the initiatives — which would enact rent control in St. Paul in 2022 and allow Minneapolis to enact a yet-to-be-developed policy in the future — would create stability for tenants in a tight housing market where most residents are renters.

NMHC: Rent control well-meaning but ineffective

The National Multifamily Housing Council (NMHC) released a statement saying, “”Although well-meaning, rent-control measures do nothing to provide real relief for those they intend to help. The passage of rent-control measures in Minneapolis and St. Paul are a true setback for those committed to finding effective solutions to address the cost of housing.

“Rather than improving the availability of affordable housing, rent-control laws exacerbate shortages, cause existing buildings to deteriorate and disproportionately benefit higher-income households. These measures could result in even further instability for Minnesota’s renters and the rental-housing market at large,” the NMHC said in the release.

St. Paul’s stringent rent control

St. Paul’s policy would not make exemptions for new construction or inflation.

Critics said that without those exemptions, the stringent rent control policy could be one of the strictest in the world. On Tuesday, some St. Paul voters said rent control was the biggest issue on this year’s ballot, which also included mayoral and school board races, according to reports.

The vote comes in response to a nation-leading housing shortage in the Twin Cities, which has led to skyrocketing home prices and steep rent hikes.

Voters in Minneapolis were asked a similar question about rent stabilization, although that proposal does not cap rent increases at a certain percentage like the St. Paul policy does, and leaves open options yet to be approved.

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Rent Growth Continues to Slow Down After Record Year

By
John Triplett
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Rent Growth Continues to Slow Down After Record Year

National rent growth continued to slow down in October as the national index increased by 0.8 percent from September to October, the lowest month-over-month growth rate since February, according to the November Apartment List report.

While October still showed a slight rent growth increase, “Twenty-two of the nation’s 100 largest cities saw rents fall this month, ending a six-month stretch in which virtually all of these cities were experiencing uninterrupted rent growth,” Apartment List said in the report.

“Although the pace of rent growth has slowed down significantly from its July peak, growth is still outpacing pre-pandemic trends, with rents continuing to rise during a time of year when seasonality normally causes prices to dip.

“Since January of this year, the national median rent has increased by a staggering 16.4 percent. To put that in context, rent growth from January to October averaged just 3.2 percent in the pre-pandemic years from 2017-2019,” the report says.

Rent Growth Continues to Slow Down After Record Year

Vacancy Rate Continues Upward Trend

Apartment List says much of the year’s rent-price increases have been tied to the tight rental market, with more people competing for fewer rentals. Now the vacancy rate, after hitting bottom at 3.8 percent in August, has trended up the last two months to 4.1 percent.

“Although this is a fairly modest increase, it represents an important inflection point, signaling that tightness in the rental market is finally beginning to ease. If our vacancy rate continues to increase in the coming months, it’s likely that rent growth will also continue to cool,” Apartment List said in the report by Chris Salviati, Igor Popov, Rob Warnock, and Lilla Szini.

Conclusion

“While the market remains extremely tight, we’re now seeing the first signals of that pressure beginning to ease. That said, it’s important to bear in mind that 35 of the nation’s 100 largest cities have seen rents jump by more than 20 percent since the start of the pandemic. Even if rent growth is finally cooling, this year’s rent boom has already added significant housing affordability pressure for America’s renters.”

Read the full national report here.

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Rent Payments Slowing In Early September

Technology Adoption Doesn’t Have To Leave Disengaged Employees

By
By The Editors
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Technology Adoption Doesn't Have To Leave Disengaged Employees

Technology adoption in the multifamily industry does not have to leave disengaged employees in its wake after multifamily operators had to move quickly with technology adoption due to the pandemic.

By Elizabeth Francisco
President, ResMan

The days of referring to the multifamily industry as a lagger in technology adoption have come to an end.

When the pandemic started, management companies of all sizes found themselves behind the eight ball with technology adoption, as they had to quickly figure out how to allow frontline and back-office employees to work remotely.

There’s little time for change management or training when you expedite technology adoption out of immediate need. As a result, you end up with a disconnect between process and people.  Unfortunately, this is where many in the industry are finding themselves now. As employees see technology driving efficiency, it’s easy to feel insecure about their long-term value to the organization.

Rather than embracing the tools the company has invested in, they disengage or resist in ways that slow or derail adoption. Before we get any further down the path of digital transformation, it’s important for management companies to step back and take a more “human-centric” approach to technology adoption.

What is a ‘Human-centric’ Approach to Technology?

Humanizing a technology means explaining the technology and its usefulness to the users. It also means helping the users embrace the technology in their daily routines.

A user who does not get the point of or see the value in innovative technology will not use it. Therefore, technology should stay focused on humans, not the other way around.

Explaining the why behind the technology your organization is adopting is critical to successful adoption and employee retention. Simon Sinek has a great Ted Talk on the importance of starting with “why.”  He explains that the most inspiring leaders communicate from the inside out; they inspire people around them because they start with defining the purpose, why it matters. The “why” inspires people, whether you are a consumer buying a product or service or a part of an inspiring organization. People choose to follow or buy the product because they want to, not because they were told to.

At ResMan, we advocate for our customer partners to identify someone in their organization as the change champion. The change champion needs to work with leadership to set expectations for the rollout and get buy-in from leadership to support their communications. They need to educate the team on the why, clearly communicate how the technology will be rolled out, and help with realistic expectations during the rollout.  They must be realistic with their teams about bumps along the way and the additional time and energy often required; if you have effectively communicated why it is beneficial to your team, they will understand and embrace all that comes with the change.

Lastly, efficiency gains do not have to equate to reductions in staff, and communicating this to employees is important. Employees often fear technology will result in their job being eliminated, so it’s important to address this perception and help them understand how the technology will increase capacity and allow them to refocus their energy on other aspects of the business.

I cannot think of any organization I have worked in or that we have worked with that does not have aspects of the business under-resourced. Our customers often find that they have increased capacity after a rollout of our platform.  The increase in capacity allows for focus on important under-resourced activities like attracting and retaining renters or conducting a higher degree of analysis of the business.

Human-centric Approach with a Remote Work Model

Prior to the pandemic, many leaders in the multifamily industry were still holding back from a more flexible work model, fearing loss of productivity, or believing that they needed to physically see their employees working.

However, the pandemic forced us all to re-evaluate our thinking as the whole country went remote at some point for some amount of time. With the right technology in place, multifamily operators are now positioned to consider a remote work model for at least some aspects of their business.

This type of model offers benefits to both operators and employees:

  • The ability to draw from a nationwide talent pool
  • Quality-of-life improvements that come with eliminating commutes
  • Increased loyalty and commitment to the organization

When the pandemic drove ResMan to a remote work model, we saw a significant increase in productivity levels, and we have made permanent changes to our policies as a result. Working remotely gave our employees more time with their loved ones, significantly improving morale. The flexibility also resulted in employees taking fewer days away from the office, leading us to add more company holidays to make sure everyone can unplug and take a well-deserved break!

But working remotely brought challenges that again required a focus on humanization.

We needed to make sure employees were equipped with the right technology and office setup to be productive and comfortable. We also had to be mindful that employees who work remotely can feel isolated and disconnected from their teams and companies, so we do weekly company standups on top of department standups, including a cameras-on requirement, as do many of our meetings. As leaders, we absorb a lot of information from body language when we meet with employees in person. Making sure we continue to get non-verbal cues is critical to being good managers in a virtual work environment.

Work-Life Balance in the Age of “Always On”

Regardless of whether you offer a remote work model, technology has freed employees from their desks, cubicles, and regional corporate office buildings but, in turn, has shackled them to their smartphones, tablets, and laptops. Even before the pandemic there was a growing concern about the “always-on” impact on an employee’s physical and mental health.

As a result of the notification options included in our smart devices, employees may be experiencing Pavlovian conditioning from notifications of a new email, a new chat, and a new comment. An important part of taking a human-centric approach to technology is putting up digital guardrails to facilitate a healthy work-life balance. Our team members need time to disconnect like they need to sleep. It allows them to recharge, which will positively affect productivity and creativity, and it ensures they can be present when having quality time with friends and loved ones. In the multifamily industry, policies and leadership modeling of good “disconnection” practices is key to ensuring a healthy work-life balance for your employees.

About the author:

Elizabeth Francisco has spent the last two decades building a successful career as an operator and technology provider in the multifamily industry. She started her career as an onsite leasing agent and worked her way up to a vice president of operations while simultaneously helping to launch ResMan, a property-management technology platform.

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How to Combat the Apartment Industry’s Uptick in Fraud

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By The Editors
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How to Combat the Apartment Industry’s Uptick in Fraud

An increasingly digital world invites more fraud and how to combat the apartment industry’s uptick in fraud has become a primary concern.

By Paul Willis

It’s become one of the most striking—and most unwelcome—trends in multifamily rentals.

Over the past couple of years, and especially since the start of the pandemic, apartment operators say fake pay stubs, “synthetic” IDs and other falsified documents have become all too common in the leasing process. While fraud has always existed in the apartment world, industry professionals agree that it has never before elevated to its current levels.

“It’s insane,” said Nikki Chambers, director of systems and training for Hanover Company. “I’ll have five fraudulent applications at one property in just one week. It’s crazy just how much more fraud there is in the market. It used to be isolated to particular submarkets and now, just like how crime has no zip code, it’s the same thing with fraud. It’s not isolated to any area, submarket, region or even a product type.”

A recent Entrata survey found that 55 percent of respondents have been experiencing fraudulent attempts every few months with 15 percent experiencing multiple fraudulent attempts every month. The pandemic has exacerbated the fraud trend, as Entrata data shows that identity-theft reports are up over 2,000 percent since the onset of the pandemic. Perhaps more telling is that 5 percent of applicants among the company’s clients could not be approved due to a lack of verifiable identification, which indicates that one of every 20 potential lessees is aiming to circumvent the system.

“With the average fraud loss at about $3,500 per case, it can be extremely costly, particularly with multiple instances,” said Kelly Canepa, senior vice president of product for Entrata. “That’s why operators are seeking advanced-screening measures that diagnose potential fraud early in the process and ensure that preventative best practices are in place.”

While fraud prevention used to be a background priority in the industry, it has risen to the forefront as a primary concern. Industry experts recently discussed the rising fraud problem, including innovative tactics by deceitful applicants and ways to combat the escalating trend.

Types Of Apartment Industry Fraud

Fake pay stubs, designed to inflate one’s actual earnings, are so prominent that websites are dedicated to them. But that fraud tactic seems a bit old-school compared to some of the new-age types being introduced. Identity theft is becoming more sophisticated, as individuals are using the identities of children, missing persons and deceased individuals—a tactic known as synthetic ID fraud.

This occurs when parts of real identities—such as Social Security numbers, address and driver’s license information—are combined with false information. This means a background check can still pass on some occasions.

“There has been an enormous uptick in all types of applicant fraud,” said Shawaun Alexander, vice president of operations software and systems for Bozzuto. “It’s actually become one of our primary focus areas, particularly since the effects of the pandemic still loom over occupancy and retention rates.”

Fraudsters are becoming more sophisticated. They often use these forms of fake information and false identities to get into an apartment community, then skip out after a few months when it’s apparent that they cannot pay. Oftentimes they escape with no repercussions, because their identity was false to begin with. And the tactics they deploy continue to evolve. They’ll even use outlets that sell identities on the black market.

“False pay stubs used to be all that we’d see,” Chambers said. “Now they are the least of our worries. We’re more worried about the actual identity of someone else being stolen.”

How To Combat The Apartment Industry Fraud Trend

An increasingly digital world invites more fraud, whether through ID theft, innovative phishing scams or other cyber-related activity. Operators tend to agree that fraud has become too complicated and complex to combat on their own. They need help in the form of technology, including intuitive tools to authenticate identity, verify bank account information and substantiate the overall suitability of a potential renter.

“When these solutions are in place, they enable apartment communities to make accurate risk assessments of all their lease applicants,” said Chris Ryan, Experian’s fraud and identity go-to-market lead for North America.

Alexander noted that in addition to utilizing its standard screening provider, Bozzuto utilizes a combination of ID verification and document verification software. But even with all the screening tools in place, she says the manual review process should not be abandoned. For instance, a Bozzuto internal team recently short-circuited approximately 200 potential fraudulent applicants at one community.

“The big goal is to find a full-house solution that doesn’t disrupt the application process or create hurdles for valid renters or your site teams,” Alexander said. “One that hits the key checkpoints of screening, ID and document verification. Many tech platforms hit one of those but aren’t built into the process, so fraudulent applicants can often bypass some of the checkpoints.”

Bozzuto’s primary objective after uncovering a fraudulent applicant, Alexander said, is to ensure the information surrounding fraudulent applicants is transparent across the portfolio.

Hanover Company also uses a variety of tools, including a product to scan driver’s licenses and several third-party verification services. Chambers noted that an ID verification platform utilized by Hanover has been the most successful in flagging potentially fraudulent items at various checkpoints in the process.

“Don’t think that just because you’re in a submarket that historically has not had a problem—or because you have a superior product type or a stellar onsite team with tried-and-true industry professionals—that something cannot sneak past you,” Chambers said. “Technology might not be the only answer, but it’s certainly part of the equation. At this point in the industry life cycle, you have to have some sort of technology checkpoint.”

Industry recommendations

While fraud prevention is key, industry experts agree that any prevention methods should not intrude on the experience of good renters. On the flipside of fraud prevention, Bozzuto uses a credit-reporting agency for positive rent recording. Reputable residents making payments each month receive the benefit of possibly increasing their credit score and strengthening their rental-history profile.

“We have to make sure our teams have the tools—systems, technologies and procedures—that enable them to weed out the fraudulent applicants and create the best possible experience for the qualified applicants,” Alexander said.

Operators agree that augmenting tech with manual practices is a solid tactic, because instances exist when tech won’t catch everything. Chambers said to remain diligent and not fall into the trap of thinking that you have “an amazing manager and she’ll catch everything.”

“Criminals are getting smarter by the day,” Chambers said. “If people used their insight into criminal activity for good instead of evil, the world would truly be a better place.”

In a hypercompetitive industry, it’s not natural to share information. But many believe exceptions can be made when it comes to preventing apartment industry fraud.

“I think it’s important as leaders that we work together to really dig into how prominently our industry is being affected by fraud and how drastically it has increased over the last few years,” Alexander said.

About the author:

Paul Willis is a content manager for LinnellTaylor Marketing.

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