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Camera Technology Helps Apartments Document Waste Diversion

Camera Technology Helps Apartments Document Waste Diversion

The Environmental Protection Agency increasing focus on recycling of bulk materials, so camera technology helps apartment communities document waste diversion rates to impress investors, meet corporate goals, satisfy mandates.

By Paul Bergeron

Commercial and residential real estate companies continue to direct more focus on waste diversion, paying attention to recyclable materials that might not fit their local collection criteria for recycling or donation such as small electronics, clothing, toys, housewares and even furniture.

With the Environmental Protection Agency (EPA) and local mandates in many major markets calling for reduced waste diversion, smart cities are rethinking what is sent to landfills and are looking for solutions on how to reuse and recycle as much as possible. Bulk-item pickup can prove costly and involve inconsistent pick-ups by waste collectors.

Reusing and repurposing these materials can prevent the waste of potentially useful materials and reduce the consumption of fresh raw materials, thereby reducing energy usage, air pollution and water pollution from landfills.

Multifamily and retail property owners are seeking efficient ways in which to manage this process, including properly documenting their diversion to satisfy the growing list of environmentally friendly policies that their company, residents and tenants desire – and to make their operations more attractive to investors.

Utilizing innovative waste management strategies can be a surprisingly effective way to address these complex issues all at once. For example, cities with “zero waste” programs in place are working diligently toward their goals, too, however, major problems are encountered with curbside dumping and illegal dumpster deposits at apartments.

A Look Inside the Dumpster

Technology is taking a leading role with helping to solve this. CheckSammy is a national service with localized, regular pick-ups that more cities are turning to. Using monthly subscription-based pricing, CheckSammy can identify, sort, document, pick-up and repurpose part of the estimated $975 per North American household per year that holds on to reusable items or resorts to curbside and bin dumping due to no convenient means of donating. This includes items such as clothing, small electronics, linens, books, toys, sports equipment, kitchenware or any reusable household item.

This consumer bad habit is detrimental for apartment operators who face unit clean-outs from residents who move, or worse, are evicted, and leave bulk materials such as furniture behind. Retail stores and offices face similar dilemmas, having few options on how to dispose of materials in an environmentally friendly manner.

CheckSammy helps by contributing the missing piece in the process,” company CEO and Co-Founder Sam Scoten says.

Working with cities in all 50 states, his company is one to identify the gaps in apartment companies’ progress to Zero Waste and design a program that meets their specific needs and goals.

Camera Technology Helps Apartments Document Waste Diversion

CheckSammy uses its proprietary app that guides its fleet of drivers as they service the sustainability bins filled daily with their clients’ residents and retailers’ textiles, hard goods, E-waste and non-reusables. The app provides time-stamped data to capture sustainability and audit-ready data.

The app can also be used to capture data for third party waste and recycle haulers. Property management waste-hauling costs are rising, so property managers need to be more efficient. The best way to achieve that is through technology that automates tasks and frees time and money for property managers to focus on day-to-day operations and increasing revenue.

“For residential and commercial property operators, knowing what is in the dumpster on a daily basis really helps because it helps to create the waste meter,” says Mary Nitschke at RealPage, which in partnership with Compology launched an artificial intelligence, camera-based waste management solution in September. “With energy, for example you know from the meter how many kwh are being used, which makes reporting simpler. That kwh can be converted to BTUs so buildings that use gas for heating can be accurately benchmarked against apartment buildings that use electric heating.

“But with waste, operators can’t be certain what’s in the receptacle unless they know that the bin is half-full, three-quarters full, or 8 percent full at pick up? Does it contain all glass bottles, dirty diapers or a preponderance of non-collapsed cardboard, which gives the eye the sense that it’s full?”

Nitschke concurs that to determine that, imagery becomes the key. Using the proper camera is like having someone willingly watching and tracking each and every Dumpster on a daily basis so you identify and solve for that itemization and get to a true diversion. A time- and date-stamped photo becomes the proof of what is in the Dumpster,” she says.

Camera Technology Helps Apartments Document Waste Diversion

Waste Monitoring in High Demand

Boston-based apartment operator GID has a waste management strategy in place to reduce waste to landfill. Its long-term reduction target includes increasing the portfolio diversion rate to 50 percent by 2027. Currently it is at 28 percent total diversion rate, or 56 percent of the way toward the target, according to its Head of ESG & Corporate Programs, Philip Carmody. Its current national portfolio includes 37,000 residential units and 5.5 million square feet of commercial space, spanning 18 states.

UDR, a leading multifamily REIT, uses its Environmental Management System (EMS) to govern its approach to evaluating the potential economic benefits of sustainable investments and monitors ongoing asset performance. Investment decisions are based on two primary factors, financial return and the expected impact to the environment.

These are appropriately weighted to align with its objectives of improving operating margin, lowering controllable expense growth, reducing our carbon footprint, and remaining cognizant of the expectations of our stakeholders and the markets we operate in, the company says.

Its EMS is designed to collect and categorize energy, water, and waste data in a timely manner. During the past 12 months, it has invested in and implemented numerous technological advances that have helped it to better analyze these data, including predictive analytics, mobile applications, utility smart meters, and interrelated computing sensors to more efficiently monitor equipment operations.

UDR consistently interacts with its waste partners to optimize weekly pick-ups, increase recycling and reduce carbon emissions to help the environment. In 2019, this work reduced trash waste by an estimated 337 metric tons and increased recycling by 4 metric tons in its same-store portfolio.

In addition, UDR utilizes trash monitoring services that reduce carbon emissions through automated, on-demand pick-ups, thus eliminating unnecessary services.

The company’s most recent data (2019) show that it increased the number of trash monitors at our properties by 24 percent.

“CheckSammy helps by contributing the missing piece in the process,” company CEO and Co-Founder Sam Scoten says.

Key Benchmarks For Waste Diversion

Today’s waste diversion programs require audits – and proper documentation is needed to help it all add up. The same can be said for property owners who are seeking certifications such as points-based LEED designations or other standards.

Likewise, the mission of GRESB, formerly the Global Real Estate Sustainability Benchmark, is to assess and benchmark the Environmental, Social and Governance (ESG) and other related performance of real assets, providing standardized and validated data to the capital markets. GRESB doesn’t like estimation and has challenged the multifamily industry to do better. Many investors are requiring GRESB participation for commercial and multifamily properties in the United States.

The USGB has now created a True Certification for Waste. It creates diversion by using formulas to identify material types, how full the bin is, and the frequency of pick-up to develop the diversion tonnages. The challenge of this standard is that the type of material must be known. Sonar sensors can register how full the dumpster, but cannot account for material type. Neither can scales account for what is making up that weight. The photo is the proof of content. The camera is the meter.

Throughout the year, CheckSammy Commercial compiles data on these buildings and presents a sustainability report showcasing the metrics and volumes re-directed from landfills. This avoids the errors that can come by relying solely on often inconsistent billing statements.

Camera Technology Helps Apartments Document Waste Diversion
“CheckSammy helps by contributing the missing piece in the process,” company CEO and Co-Founder Sam Scoten says.

“Whether it’s a downtown high rise or a retail store in a mall, we offer businesses a way to track and report sustainability efforts for all its used consumer goods,” Scoten says.

EPA Sees the Need

Local ordinances about waste diversion are growing and are changing rapidly as greater emphasis on sustainability is viewed favorably by society, Scoten says. “It is very important to be able to report for recycling diversion because it is required and varies based on locality in markets such as Dallas and Austin, among others,” he adds.

The EPA has a tool for reporting waste diversion and some believe that this type of tool ultimately becomes more prevalent.

Craig Haglund, Program Manager, EPA’s Energy Star, speaks of the importance of tracking energy consumption and how his customers are driving a new, stronger focus on waste materials.

“Portfolio Manager® has long been used by commercial real estate firms as a tool to track, manage, and reduce energy consumption across their portfolios,” Haglund says. “Waste tracking has been added to the platform in recent years in response to the industry’s desire to cover broader sustainability management programs.

“We often say you can’t manage what you don’t measure, and this is especially true for waste since it can be challenging to get a handle on the quantity of waste and its various streams. Enabling better tracking of waste allows real estate owners and managers to reduce their impact on the environment, enhance their local communities, and improve their bottom line through more efficient management.”

Haglund adds, that investors “see organizational sustainability efforts not only as the right thing to do; but as an overall sign of good management.”

On the altruistic side, CheckSammy helps its commercial clients tackle the growing problem of used consumer goods generated by commercial properties by collecting and re-directing used and new office supplies – that might have been sent to a landfill — to new homes through their portfolio of non-profit and for-profit entities.

“We also encourage our clients to ask their tenants to bring in used clothing, shoes and accessories to help achieve and surpass their companies’ sustainability efforts,” Scoten says.

About the author:

Camera Technology Helps Apartments Document Waste Diversion

Paul Bergeron has been reporting on the apartment industry since 2002 and served 20 years as Editor in Chief for National Apartment Association’s UNITS magazine. He currently is Editor of his LinkedIn media platform Thought Leadership Today and can be reached at pbergeron333@gmail.com.

Successful Landlords Know All Tenant Screening Companies Are Not The Same

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Solving Junk Removal Problems From Your Rental Property

Understanding Debt Structures Prior to Investing

Understanding Debt Structures Prior to Investing

By Kay Properties

Individuals who are investing in real estate through a 1031 exchange – or investing after-tax dollars – will need to consider investing either in property that has a mortgage or property that has no long-term financing (debt-free).

For clients in a 1031 exchange (per the current IRS code), a property with debt may need to replace the debt obligation in order to fulfill the 1031 equal or greater purchase price requirement.

We have found through the years that investors may not actually understand the various debt structures that they are investing in and that each loan may have different terms and agreements. There are pros and cons of debt.

Cash Flow

Often times, cash flow can potentially be higher when you use a debt within your investment strategy. High cash flow can be very attractive to investors, but high cash flow is only attractive until it is not… and this is where investors need to understand how a higher cash flow is being achieved and the risks associated with it.

We typically have seen sponsors use interest-only financing in order to get a higher potential cash flow, risking the large balloon mortgage payment that will be due. There would be no principle paydown in the loan and investors could potentially be stuck with a large loan balance that they will need to replace in their future 1031 exchange.

Cross-Collateralized Loan Obligations

Within the DST marketplace you will find that there are DSTs that have a single asset and there are DSTs that can contain upwards of 20+ properties.

It is important to understand the loan structure when considering investing in a DST with multiple properties that has a debt component. There are two types of debt structures that can be on a portfolio:

  1. Each property within the portfolio has its own loan, or
  2. All the properties are connected under one loan, otherwise known as a “cross-collateralized loan.”

A cross-collateralized loan is considered more risky, as it can potentially put a lot of restrictions on cash flow for investors and substantially limit the sponsor’s ability to sell the portfolio on behalf of investors. The DSTs might have multiple properties, providing diversification for investors, but if all the properties are under one loan this does not necessarily provide the diversification that most investors think they are getting.

For instance, there could be clauses within the loan that can significantly affect an investment,  such as when a certain amount of properties stop paying rent or go bankrupt, the lender can call the loan or do a cash-flow sweep (meaning that because of one portion of the portfolio is having problems, the entire investment is at risk).

Credit-rating clauses allow a lender to sweep cash flow for a period of time should a certain tenant or a percentage of tenants’ credit ratings drop. For example, you could have a portfolio of net-lease corporate back properties that do not go out of business and do not stop paying rent, but maybe there is a recession or something else affecting the corporate level of your tenant that temporarily drops their credit rating. This gives the ability for the lender to lock all the current cash flow in the lender’s lock box, taking away an investor’s current cash flow.

We also have seen sponsors place a few properties within the portfolio that are not officially investment grade-tenants per Moody’s Standards and Poor’s ratings, and this is misleading to investors, as a non-investment-grade tenant can have a significant default risk.

Lastly, when you have a portfolio of properties under one loan it can potentially limit the ability to sell the portfolio, as in most cases you will need to sell all the properties at the same time. What if a buyer only wants to buy a portion of the properties because they do not like three of the 20 properties included? The sponsor may be forced to reduce the price to make it more attractive to that buyer.

Some sponsors have a strategy of a 721-exchange, which has its own sets of pros and cons.

If a portfolio is debt-free or not cross-collateralized, it can provide more potential exit strategies for the sponsor.

In short, investors that have the ability to stay debt-free can mitigate risks that a loan can bring on a property and its exit strategies. If investors need to take on debt or are comfortable with the risks of debt it is important to understand the pros and cons of the different debt structures available.

(*please request or refer our 721 Exchange Whitepaper for more information)

About Kay Properties and Investments

Kay Properties is a national Delaware Statutory Trust (DST) investment firm. The 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 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 15 Billion of DST 1031 investments.

Understanding Debt Structures Prior to Investing

Understanding the potential advantages of the 200% Rule in a 1031 exchange

Purchase Your Next Property at Auction with a Retirement Account

Purchase Your Next Property at Auction with a Retirement Account

By Stephanie Fryar

Whether an auction is in-person or online, the goal is still the same: To acquire the piece of real estate at a fraction of the price. A common misconception is that it will take too long for your self-directed IRA (SDIRA) custodian to provide you with the proof of funds necessary to lock-in the winning bid. That is entirely untrue! There are three ways you can accomplish this part of the investment, but it is up to you to decide which method works best for you.

In the first method, communication is key. Typically, auctions are scheduled far enough in advance that you can make your SDIRA custodian aware of your intentions to participate on that specific date. The speed at which you will obtain your proof of funds will depend on the process of your SDIRA custodian. For example, at Preferred Trust Company we are able to process an investor’s direction to invest and provide a cashier’s check on behalf of the IRA within 24 hours (cashier’s check can either be picked up at our office or sent via overnight mail). If you do not win the bid, the cashier’s check must be returned to your custodian within 10 days of the auction.

Your second option is to establish an IRA-owned LLC with checkbook control, also known as a checkbook IRA. This means that you will have direct access to your qualified funds through the LLC’s bank account, essentially removing your custodian as the intermediary of processing your investments. It is important to note that even though you are not working directly with your self-directed IRA custodian, you are still responsible for reporting your investment activity to your custodian. For example, Preferred Trust requires that investors with checkbook IRAs submit monthly bank statements from the checking account, along with any documentation related to investment purchases transactions.

Although not encouraged, if you are in a time crunch, your third option would be to take a personal distribution from the IRA. Depending on your age (under 59½ or over 59½) and the type of account you are investing with (tax-deferred or tax-free), a distribution could be considered a taxable event. To avoid the taxable event, you need to provide proof of purchase to the custodian within 60 days of the initial distribution. The transaction will then be reclassified as an earnest money deposit at the close of the investment purchase. If you do not win the bid, the funds need to be returned to your custodian within 60 days of the initial distribution, or you may risk facing the IRS penalty and tax consequences, depending on your age and the IRA account type.

About the author:

Stephanie Fryar is the Content Creator for Preferred Trust Company. All content she produces is to help educate savvy investors and current clients about self-directed IRAs. Stephanie specializes in original content and market research related to alternative investments, but more specifically, real estate investments.

About Preferred Trust Company

Preferred Trust Company sets the standard for quick processing times, fewer transaction fees, personalized customer service, and the highest standard of compliance. Preferred Trust is currently waiving the establishment fee and first year administration fee for all new Self-Directed IRA accounts through December 31st, 2021. Click Here to learn more about this offer or call 888.990.7892 today!

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Lasting Damage: Reporting Tenants to Credit Bureaus is a Powerful, Effective Option

Lasting Damage: Reporting Tenants to Credit Bureaus is a Powerful, Effective Option

An unfortunate reality of property management is the inevitability of dealing with slow-pay and no-pay tenants. Even though a tenant may pass your initial creditworthiness processes at application time, it’s impossible to predict if circumstances or intentions will change and the tenant will become a problem payor. When that happens, you have a couple of options.

Sure, letters, increasingly serious notices, personal visits, and stern phone calls are always the first steps to collecting, but what happens when those don’t work? Many property managers turn to collection agencies, but more and more are opting to report delinquent-payment histories to the big credit agencies using credit-reporting services like Datalinx.

Some property-management organizations assume that reporting tenants to credit bureaus isn’t an option for them; either they think their reports will be too small to be accepted, don’t think they qualify as creditors, or simply don’t know where to start. Companies like Datalinx acknowledged these issues, and since 2001 has been refining the process to make reporting to the big credit bureaus easy and affordable, which in turn makes this a very powerful and effective solution.

Do They Care About Credit?

For some consumers, credit scores are simply not an issue. Either they have no need to apply for credit, or they have simply decimated their credit score to what they think is a point of no return. Fortunately, those types of tenants probably wouldn’t have made it through your application process to begin with.

However, most people do care about their credit, and understand the impact a negative item will have on their future. Today, credit-card companies, banks, and free credit-monitoring apps provide credit scores to customers on a regular basis, indicating that more and more consumers are concerned about protecting their record.

Sometimes, simply notifying the customer that you now report missed or late payments to the four major credit bureaus will motivate them to pay on time. It certainly never hurts to remind them of your ability to report this information. Often tenants are under the false impression that rent payments are not reportable for credit-bureau purposes. However, services like Datalinx now offer property owners and managers the ability to report all payment histories, whether positive or negative. Informing your tenants that reporting tenants to credit bureaus is your practice and intention can make a big difference in the timeliness of payments, dues, and more.

Reporting tenants to credit bureaus and long-term effects

Reporting Tenants to Credit Bureaus is a Powerful, Effective Option

One of the questions consumers are most curious about when it comes to credit reporting is how long information—especially negative information—will remain on their reports. No one wants one missed payment or short-term collection account to negatively impact personal credit decisions for decades. Unfortunately, some tenants don’t give you any other option than to turn to alternative measures for recovering debt.

Generally speaking, negative information remains on a consumer’s credit report for about seven years according to Equifax, one of the major credit bureaus. Negative items can include late or missed payments, accounts that have been sent to collections agencies, situations when payments have not been paid as agreed, liens, or even bankruptcies. Seven years can be a very long time, especially when an individual applies for auto loans, new rental agreements, mortgages, or even certain jobs.

Each of these negative items not only will be listed as a red flag on a full credit report but will also drastically decrease an individual’s credit score. While some employers or organizations will listen to a consumer’s explanations or consider subsequent repayments of these debts, most simply cannot bend the rules to accept a score or report outside their established credit parameters.

As a property manager, adding this knowledge to your arsenal helps you not only educate past-due customers as to the long-term effects of their payment behaviors, but also helps you prepare new tenants with the consequences of late payments to your organization. In this case, knowledge is definitely power.

Why not consider a collection agency?

A professional collections firm is certainly an option to consider, but when considering cost and long-term impact, there are significant differences between collections and credit reporting. With a collections agency, the property owner or manager pays the agency a set fee or percentage of the amount collected from the tenant. The account is subsequently charged-off the books of the property owner or manager as a loss.

What does this mean for the consumer? First, the collection agency will report the account to the credit bureaus, and the debt will appear as a collection on the tenant’s credit report, instantly affecting their credit score. And, of course, this will be a negative item on the credit report for seven years from the date of the first missed payment. If the tenant makes payments to the collection agency and pays the balance in full (usually including a fee from the collection agency), the agency will report this information as well. Paying a collections account may have a lesser impact on a credit score, but the item will still be reflected on the report.

There is another important, but often overlooked, aspect of this process. When an account is reported to the bureaus as a collection, it can never be anything but that—a collection. Datalinx recommends another alternative: consider foregoing the collection agency and reporting the past-due account to the bureaus as delinquent, especially in cases where you believe the relationship with the tenant is repairable.

Why? A delinquent, or late, payment has a less negative impact on a tenant’s credit report than a collection, especially when the delinquent account is subsequently paid in full. Offering this option to a tenant also gives you as the property owner or manager leverage to urge the tenant to pay to avoid a much more detrimental impact on their credit. You lose that leverage when you turn over an account to a collections agency.

Credit is King…or Perhaps the Ace

With a credit reporting service like Datalinx in your rental or leasing toolbox, you hold the proverbial ace in the hole when it comes to persuading your tenants to pay on time. For those who care about their credit score, reports of consistent, on-time payments is an unexpected bonus to help them increase credit scores and build a solid, long-term history. This may be the impetus needed to nudge those on-the-fence individuals to pay closer to their due date instead of waiting until the last possible minute. And for the others, your Datalinx account allows you to report negative items while maintaining leverage to collect past-due funds—without paying fees to a collection agency.

With Datalinx, you hold all the cards.

Please visit our website at www.datalinxllc.com, or contact us at support@datalinxllc.com or (425) 780-4530 if you have any questions or need our assistance.

What Eviction Reporting Codes to STOP Using Now, and a New CDC Eviction Moratorium

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7 Checklist Items For Spring Rental Property Maintenance Outside

Getting ready for warmer weather and rental property maintenance is the maintenance checkup this week, provided by Keepe.

Spring is the best time to plan and get to work on a rental property maintenance on the exterior.

As weather gets milder, it becomes easier to begin projects that would have been difficult or even impossible to complete during the wet and cold of winter plus summer heat is right around the corner.

7 spring rental property maintenance outside to-do’s

 

    1. Water Drainage. Those April showers might come in handy after all. They are the best way to test out the efficiency of a property’s drainage system. After rainfall, it is necessary to check whether any water remains undrained around the property. Noticing whether puddles fail to disappear after 24 hours is one way of gauging this. If water fails to properly drain, moisture can easily increase around the property’s foundations and walls, often causing heightened moisture levels within the property and water damage to walls and floors, which all facilitate mold growth. Our experts encourage turning to a professional who can evaluate the efficiency of a property’s drainage system and suggest any maintenance work to ensure that water is directed away from the property.

 

 

    1. Roof. While it’s best to hire a professional to climb on the roof and check for cracks that might cause interior leaks, the Do-It-Yourself and Climbing-Free option entails spraying water with a garden hose (if possible) onto the roof and checking whether it drains without leaks. Promptly turn to a roof cleaning and repair specialist if interior leaks are noticed. Additionally, natural debris – such as leaves and branches – can easily collect on the roof during the winter, which makes the spring a good time to schedule a roof cleaning service.

 

    1. Gutters and Downspouts. With strong winter winds, gutters will have likely accumulated sediments and debris. Check in with your trusted gutter cleaning specialist and schedule a cleaning service.

 

    1. Foundations.  If your property has an exposed brick or concrete foundation, check for cracks and signs of deterioration. Turn to a foundation professional for necessary repairs to guarantee that the property is properly and safely sealed.

 

    1. Windows, Entryways and Thresholds. Window sills and entryways can easily develop cracks. Those cracks make it possible for critters to enter the property while also contributing to straining the heating, ventilation and air-conditioning (HVAC) system as a poorly-insulated property fails to retain a desired temperature. A professional handyman can easily reseal cracked thresholds.

 

    1. Caulking. Similarly to entryways and windows, exterior caulking can wear off as a result of harsh weather exposure. To guarantee that a property is properly insulated, a professional should check the conditions of exterior caulking and re-caulk deteriorated areas.

 

    1. Siding. A cleaning and pressure washing specialist can assess the conditions of a property’s exterior siding and recommend whether it should be thoroughly cleaned. Cleaning dirt and debris from siding keeps mold and fungi from growing.

7 rental property maintenance to-do’s for summer

 

    1. Air Conditioning System. Ensure your tenants will be able to enjoy a functional air conditioning system in the summer, so check now instead of waiting for them to call later. An HVAC specialist can check whether the air conditioning system is in optimal shape and clean condensers and evaporators from debris that naturally accumulate after the air conditioning is not being utilized regularly.

 

    1. Painting. Good rental property maintenance includes tending to worn and discolored walls, doors, windows, fences and porches is a perfect activity for the spring. A professional can get your exteriors back to like-new condition with a fresh coat of paint.

 

    1. Window and Door Screens. All screens should be thoroughly checked for tears, as they represent an easy point of entry for those bugs and critters that start showing up as the weather gets hotter. Older, loose and worn screens or frames should be promptly replaced to avoid the annoyances of bugs’ activities within the home.

 

    1. Porches and Fences. Wooden fences and porches should be treated with protective sealant every four to six years. A professional can assess the condition of porches and fences to recommend necessary treatments, which protect wood from the cracks, warping, rotting and discoloration that can happen as a result of wet weather and/or direct sunshine exposure.
    1. Decks. Especially in older properties, exterior decks can begin to wear down, rot and become unstable and unsafe. A specialist can check the conditions of a deck’s structure and recommend necessary repairs to ensure that tenants can safely enjoy spending time outside as the weather gets warmer.
    1. Landscaping. If your property is surrounded by greenery, a professional should be hired to trim overgrown vegetation, remove debris and leaves, and inspect plants that are actively growing on the property’s structure or fencing. This allows for vegetation to grow neatly around the property, which is both aesthetically pleasant and safe, since overgrown surroundings make for perfect living spaces for pests and other wildlife.
    1. Garden Sprinklers: If you rely on a sprinkler system to maintain your property’s lawn check it after it was unused for several months and before it starts beings used often. A professional can check for leaky valves, inefficient lines, water pressure levels and faulty sprinkler heads.

Other recent rental property maintenance Keepe posts you may have missed:

7 Tech Gadgets For A Safer And More Efficient Rental Property

5 Maintenance Tips For Long-Lasting Rental Carpet Flooring

Is The Water Heater At Your Rental Property Ready For The Big One?

7 Types Of Kitchen Countertops For Your Apartments

About Keepe:

Keepe is an on-demand maintenance solution for property managers and independent landlords. Keepe makes hundreds of independent contractors and handymen available for maintenance projects at rental properties. Keepe is available in the Greater Seattle area,

 

7 Steps To Build Wealth Through Apartment Investing

7 steps to build wealth through apartment investing is the subject of this blog by veteran real estate investor and syndicator Vinney Chopra.

By Vinney Chopra

Apartment investing is an excellent way to build wealth because of the strong cash flow that is provided by owning multiple apartment rental units.

This type of investing builds wealth much faster than owning a single-family home because you have multiple tenants paying each month and a greater cash flow to use to grow your business.

And that is the key. How to grow your apartment investing business so that you build real wealth into your life.

I learned early in my investing career when my wife and I bought our first apartment building about 30 years ago and kept on purchasing lots of them over the years.

It was in 2004 that I became a real estate broker in California and wanted to scale up. At that time the single- family investing route seemed daunting and very hard. You had to acquire single-family homes across many states, and then manage them effectively and efficiently. That’s when I discovered the advantages of apartments and have never looked back. It’s been a very exciting and profitable journey even since.

7 steps to build wealth through apartment investing

The following are seven steps to building wealth through apartment investing.

No. 1 – Debt leverage

It’s only real estate where the banks, financial institutions, insurance companies, Fannie Mae and Freddie mac are willing to partner with you and give a loans up to 65%-80% of the value of the real estate you are purchasing. You have to only put down a 35% to as low as 20% to control the investment.

Let’s look at stocks, bonds, precious metals and even crypto currency, none of the above mentioned groups will be willing to give loans to purchase these. Real estate is an excellent vehicle of wealth building due to “debt leverage”.

No. 2 – Cash flow

Cash flow is king especially when it comes to apartment investing. By purchasing the asset in good job growth and better economic markets we realize cash flow on day one of purchase after acquiring with attention to details, due diligence and the actual performance numbers. It’s much better to have the investment that pays you daily rather than speculate on the increase in value over time. We should definitely look at the cash flow generating assets as we purchase them.

No. 3 – Depreciation

Depreciation is one great benefit of owning real estate. It’s a paper loss. Even though the asset is making cash flows due to collection of rents minus expenses and mortgage, we are able to depreciate the structures (usually 70- 80% of the value of the apartment buildings) over 27.5 years straight line. There are other avenues where we can deduct larger depreciation amounts through “cost segregation” in the first 5 to 15 years thus giving us more tax benefits.

No. 4 – Taxes

As mentioned above, owning apartments is a tremendous tax benefit. Like running a business, we are able to deduct all the expenses incurred in running the management of the apartment, and the benefit of deducting the depreciation, many times brings losses at the bottom line. This happens even when there is a lot of net income generated during the years of performance. This is a huge benefit that is not realized in other means of investing.

How To Build Wealth Through Apartment Investing

No. 5 – Appreciation of property

You can force appreciation in apartments. One way to force appreciation is to buy a poorly managed apartment complex with rents below market and then price accordingly. By improving management and raising rents to market rates, you increase the value of the property and your return greatly increases from the investment.

If you buy in strong rental locations, you will benefit from low vacancies also. As the neighborhoods improve due to more businesses moving to the area and pent up demand for the rentals, the market rents increase and the cap rates go down which also gives a boost to the value of the apartments.

How To Build Wealth Through Apartment Investing

No. 6 – Debt pay down

This is a great benefit. As the rental income and other incomes are collected monthly in apartments, the mortgage (interest on loan and the principal) is paid out monthly. Consequently, the loan balance amount is decreased monthly which is called principal (loan or debt) pay down. If we keep the asset over 30 years and pay down the debt for that long, we will own the apartment complex free and clear. Mind you it all got paid for by the rents collected with no money out of pocket.

No. 7 – Appreciating rental rates in the future

This is another great benefit. As the market improves where the apartment is located, a two- percent- to four- percent rent growth is usually expected. In certain hot markets the rent appreciations can even go as high as seven percent- to nine- percent for few years. But it is prudent to take a conservative approach and keep this appreciation to lower percentage.

I sincerely hope that you saw the major advantages in apartment investing, often called multifamily investing. With millennials liking portability and the down-sizing of the Baby Boomers population the demand for apartment rentals is predicted to be strong and sustained for a long time.

About the author:

Vinney Chopra is the Founder and CEO of Moneil Investment Group and President of Ideal Investments Group. His latest accomplishments include acquiring 12 multifamily assets in the last 28 months, worth $132 million. His last two syndications were sold out in just a few hours, and one in 36 hours raising $4.7 million and another one $6 million in eight hours. Between the two syndication companies he founded, Vinney’s team is controlling over $200 million worth of assets. He is a mechanical engineer. After entering USA with $7, he graduated from The George Washington University with Master’s in Business Administration in Marketing, he shifted his focus to marketing and motivation. He was a professional fundraising consultant and motivational speaker for more than 35 years with a wonderful private company. Vinney and his wife started their real estate investments in 1983. Many times, people call him “Mr. Enthusiasm” or “Mr. Smiles.” He likes to bring great value to everyone he comes in touch with. He likes to add value to everyone around him. You can also reach him at vinney@vinneychopra.com.

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6 Steps Every Investor Should Take Before Buying An Apartment Building

4 Ways to Balance the Needs of Pets and Residents in Multifamily Communities

4 Ways to Balance the Needs of Pets and Residents in Multifamily Communities

How one large multifamily operator can balance the needs of pets and residents with more than 4,000 pets living in their multifamily communities.

By Kris Servidio and Jacie Good
Mark-Taylor Properties

Pets have become more and more of a priority as so many people continue to spend significant time in their homes. Pets offer many wonderful benefits – companionship to residents who feel isolated, help in reducing stress during challenging times, and the enticement of physical activity through play and exercise.

A recent national study conducted by the American Apartment Owners Association revealed that nearly 90 percent of renters are pet owners and want pet-friendly apartments with access to pet amenities.

These trends are important for multifamily leadership teams to understand as they seek to create communities that are welcoming to pet owners. Additionally, a percentage of their residents will likely be non-pet owners, with preferences that are also important.

Mark-Taylor currently has more than 4,000 pets living in our 60+ portfolio of communities. While sometimes challenging, the four approaches below have allowed us to provide the best  customer service to all of our residents and balance the needs of pets and residents.

1. Communicate Pet Policies Clearly

In an Apartments.com article from 2018, 33 percent said they were influenced by pet policy when deciding whether or not to tour a community.

Communities should clearly communicate pet polices through websites, social media, review responses and tours.

Leasing teams should make sure pet policies, cleaning and deposit fees are thoroughly discussed prior to move-in.

For non-pet owners, limitations on the number of pets per unit and enforcing weight and breed restrictions gives peace of mind, and lets them know management knows their living experience is valued.

Communicating available onsite pet amenities and services also lets pet owners know how much you value their furry friends.

2. Create Pet-friendly Spaces

Pet amenities have moved from a perk to a necessity, as pet ownership has increased dramatically the past five years.

To accommodate this increase, think about creating special spaces at each community geared exclusively towards pets.

This helps to pamper pets while providing separation from non-pet owners who may want to distance themselves from high-traffic pet areas.

Amenities, such as doggy doors and back yards in single-family home rentals, or onsite pet spas complete with dog-washing stations and spacious dog parks, have become nearly standard in our communities, keeping both groups happy.

3. Keep Your Community Clean and Quiet

Swift and safe pet-waste disposal is something community management teams should prioritize.

Sanctioned spaces for pets – such as dog parks – help keep waste confined, while resources such as pet waste stations help pet owners maintain responsibility.

Maintenance and community management teams should be encouraged to walk the properties daily to remove anything owners may have missed. Additionally, in order to keep all residents happy, management should work with pet owners if their dogs are barking loudly or disturbing others.

 4. Remain Responsive to all Residents

Listening to the growing and changing needs of pet and non-pet owners must remain a priority if community management teams want to thrive and balance the needs of pets and residents.

Dogs barking during the day might not have been an issue in 2019, but as more people work from home, or participate in online school, this can be a challenge.

Take time to create ongoing conversations with residents to understand their needs and how management can help. As situations evolve, management may help residents find solutions through add-on “concierge” services such as Valet Living’s pet-sitting and pet-walking services, Ally Waste’s dog-walking options and other pet care solutions.

Pets will continue to be an important part of many resident’s lives, and communities that cater to pets will be top of mind to meet this trend.

Similarly, children and adults will still need their homes to be quiet places where they can work and participate in online school. Creating inviting spaces for pet-owners and non-pet residents to harmoniously coexist will require management teams to stay on top of industry trends and resident preferences as they thoughtfully balance all resident’s needs.

About the authors:

4 Ways to Balance the Needs of Pets and Residents in Multifamily Communities
Jacie Good
4 Ways to Balance the Needs of Pets and Residents in Multifamily Communities
Kris Servidio

Jacie Good is the associate director of facilities and service and Kris Servidio is the associate director of facilities and support for Mark-Taylor Residential. Established in 1985, Mark-Taylor Companies is a privately held, Scottsdale, Ariz.-based developer, owner and investment manager of multifamily communities. The company ranks as the largest apartment developer in Arizona’s history and the second largest owner of rental communities in the state, and is the investment manager to more than $3 billion in multifamily real estate on behalf of numerous third-party owners. For more information, visit www.mark-taylor.com.

The Benefits of Being Pet-Friendly For Rental Property Owners

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How Do I Prove My Tenants are Legal with Medical Marijuana?

How Do I Prove My Tenants are Legal with Medical Marijuana?

This week the question for Ask Landlord Hank is about medical marijuana and tenants. Remember Landlord Hank is not an attorney and is not giving legal advice so check your local ordinances.

Dear Landlord Hank:

I have new tenants using medical marijuana. Only medical pot allowed in Florida. How do I legally verify it is medical marijuana?

This is a very good area and I do not want druggies here. The upstairs tenants are long-term lease holders and are about ready to call the police or move out.

Thank you for your kind consideration of this situation!

Hi Landlady Linda,

I’m sure your lease has prohibitions against criminal activity.

I’m afraid I like the straight approach with people. I would ask them for their medical marijuana card, otherwise they are engaging in illegal activity, which is in violation of the lease.

By the way, a new bill was introduced into the Florida legislature on Jan 22, 2021 to legalize marijuana for recreational use in Florida provided you are at least 21 years of age.

This may never pass and become law so you need to deal with this now.

If your new tenants can’t produce a medical marijuana card, I would tell them they are in violation of the lease and the law, and give them the chance to move out, quickly.

Sincerely,

Hank Rossi

How Do I Prove My Tenants are Legal with Medical Marijuana?
Landlord Hank says, “I’m afraid I like the straight approach with people. I would ask them for their medical marijuana card, otherwise they are engaging in illegal activity, which is in violation of the lease.”

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Do I Have to Paint and Replace Flooring for a Long-Term Tenant?

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How Do I Get Tenants Out Who Have Damaged My Rental Property?

A Decade of Multifamily: 7.7 Million Apartment Units Trade for $912 Billion

A Decade of Multifamily: 7.7 Million Apartment Units Trade for $912 Billion

The price-per-unit for multifamily properties surged 156 percent over the past decade, reaching nearly $160,000 per apartment, surpassing both median home-sale prices and rental rates, according to the latest study from Commercial Search.

“Never have we spent so much time in our homes. Median prices are at their highest level in generations,” the company writes in a release.

“A supply shortage and interest rates that are on the floor — and likely to stay there for some time — mean prices continue to rise. The national median home-sale price is up roughly 58 percent since 2009 to $313,200. In the last decade, as prices rose, home ownership rates slowly declined. In 2016, the homeownership rate in the U.S. was 62.9 percent, the lowest level since 1965. Four years later, the homeownership rate neared its peak reached before the housing crisis, 67.9 percent, with much of the uptick being driven by cheap borrowing costs. However, the pandemic has caused rates to fall back to 65.8 percent as of Q4 2020.”

A Decade of Multifamily: 7.7 Million Apartment Units Trade for $912 Billion

Some key points from the study

  • Since 2009, there have been more than $912 billion in multifamily sales.
  • Dallas-Fort Worth was the hottest market for multifamily deals over the past decade, with 2,227 deals completed during this period. It was followed by Atlanta and New York City with 2,134 and 1,791 deals, respectively.
  • In 2020, DFW closed 146 deals and Atlanta closed 132. New York City fell out of the top, with only 26 deals closed last year. Phoenix came in third with 125 deals.
  • Both NYC and Atlanta saw more than $50 billion in multifamily sales since 2009.
  • Multifamily prices in New York City grew 425 percent in the past 10 years, resting at $437,511 per unit in 2020.
  • In San Francisco, the most expensive market, the price-per-unit dipped to $493,041 last year. In 2019, this price was 338 percent higher than in 2009.

A Decade of Multifamily: 7.7 Million Apartment Units Trade for $912 Billion

Read the full report here.

Top Suburbs with the Most New Apartments In Last 5 Years

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Gen Z Renters Drawn to Vibrant Smaller Towns over Urban Centers

Gen Z Renters Drawn to Vibrant Smaller Towns over Urban Centers

Unlike their millennial peers, Gen Z renters seem to favor vibrant small towns concentrated in America’s heartland, far from the ubiquitous coastal cities, according to a new study from RentCafe.

“Younger people are willing to trade off living in a crowded, bustling city for having more space at home. Many of these heartland places are also much closer to their hometowns, too, enabling a tighter intergenerational connection, which is more valued among younger adults today than with Gen X,” said Jill Ann Harrison, Director of Graduate Studies, Department of Sociology, University of Oregon, in the release.

According to the most recent national apartment-application data, the share of Gen Z renters jumped by 36 percent in 2020 compared to the prior year. At the same time, the number of apartment applicants from every other generation decreased. And, “some cities saw spectacular increases in rental applications from the youngest generation to enter apartment life.”

“With the ongoing shift towards remote work, Gen Z may become the poster child for economic revival in the heartland if they’ll be able to work from home after the pandemic,” RentCafe says in the study.

  • Nationally, Gen Z renters’ share jumped by 36 percent in 2020 compared to a year prior. In 18 of the top 20 fastest-growing cities for Gen Z renters, their share of applications increased by 50 percent or more in just one year.
  • Where are Gen Z renters heading? Well, in an atypical year like 2020, not too far from home; small and mid-sized cities, with a relatively low cost of living, rents below the national average ($1,400), concentrated in the heartland.
  • Thanks to an 84 percent spike in apartment applications, Greenville, N.C., is the top trending city for Gen Z renters. Little Rock, Ark. is next, with a 70 percent increase, followed by Norfolk, Va. Nine cities in our top 20 list are in the Midwest, and eight in the South.
  • Which are THE Gen Z hubs right now? Mostly college towns: Boulder, Colo., Davis, Calif., Conway, Ark., Bloomington, Ind., and Ankeny, Iowa are the top Gen Z cities, where this cohort makes up the majority of rental applications.

Remote Work Leads Gen Z Renters To Smaller Towns

The study notes that In the current socio-economic context that proliferated remote work, college communities in the middle of the country might just offer the promise of a different and better way to live and work, according to a recent study published by the Brookings Institute.

This perspective is also shared by Nicholas P. Dempsey, associate professor of sociology at Eckerd College. He points out that college towns like Boulder, Colo., or Tallahassee, Fla. Need to diversify their job offerings to retain the youth, even if they currently have the largest number of Gen Z’s in the country. However, the long-term effects of the COVID pandemic on how we work and live are yet to be completely understood.

Gen Z Renters In College Towns

“Young people launching careers head to where jobs are in the different industries that interest them, and those still tend to locate in the biggest cities.

“If firms allow many of their employees to work from home after the pandemic, college grads might just choose to skip the move to the big city, and stay in the college town that they’ve grown to love. But that’s a big if,” Dempsey said in the release.

Gen Z Renters Drawn to Vibrant Smaller Towns over Urban Centers

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Exodus from Gateway Markets Drives Rent Declines