Saving
water with the right landscaping is the rental property maintenance checkup
this week provided by Keepe.
How
to save water with the right landscaping at your property is becoming more and
more important. Drought, water restrictions and increasing water bills may mean
it is time for you to redesign your property landscape plan.
Here are 6 ways you can save water at your property without making drastic changes
Use these tips in your landscape plan to implement water-saving measures that will save you time and money.
No. 1 – Select the right type of grass
At your property, it’s important to incorporate grass that is compatible with your climate. Hybrid-grass such as Bermuda grass, thrives in full or partial shade, as well as sunlight. It is ideal for an extreme-climate region.
In the United States, grasses are typically divided into two groups – warm and cool season turfs. Depending on your climate and drought tolerance, grasses can survive well-throughout the year with minimal support and maintenance. Temperature extremes can add stress to grass. Avoid these issues by using the best grasses for your area.
In warm, southern climates, Bermuda, St. Augustine, Buffalo, Bahia and Zoysia Grass are the most common grasses that are suitable. For Northern regions that experience colder climates, Kentucky Bluegrass, Fine Fescue, Tall Fescue and Perennial Ryegrass are the most common grasses that survive the cold weather.
No. 2 – Use ground covers
Ground covers, such as native plants, slow the evaporation of water from soil. You can replace part of the lawn with ground covers to take advantage of the water-saving system.
Depending on your climate, the type of ground cover that works best for your climate may differ. Ground covers are easy to maintain and often improve the aesthetic look of your landscape area.
No. 3 – Xeriscaping
Xeriscape can be used in an area that will thrive without water and require very little maintenance.
Xeriscaping plants often require less maintenance.
In areas that do not have easily assessable or plentiful supplies of water, Xeriscaping is often used to landscape an area that will thrive without much water or maintenance.
For areas that are susceptible to drought, installing rock garden plantings, native wildflower or ornamental grasses can keep a lush green landscape from turning into yellow wasteland.
No. 4 – Drip-watering system
Drip irrigation is a low-pressure watering system that keeps plants moist while using less water than other irrigation techniques. In addition, installing a rain-sensing timer to your irrigation controller can prevent wasteful watering on rainy days.
Inspect your sprinkler systems and consider drip-water systems where it is appropriate.
No. 5 – Inspect sprinkler systems
Regularly inspect your existing water systems to ensure they are running efficiently. Repair leaks and replace broken sprinkler heads to prevent overwatering. Be sure to check that your sprinklers are only running in the early morning, to maximize absorption.
No. 6 – Landscape maintenance
Incorporate the best practices to ensure your space stays healthy and clean. Mow the grass on a regular routine, leave grass clippings on the lawn to return nutrients to the soil, remove weeds from the lawn, and add compost to the garden to renovate the landscape.
Other recent rental property maintenance Keepe
posts you may have missed:
Keepe is
an on-demand maintenance solution for property managers and independent
landlords. The company makes a network of hundreds of independent contractors
and handymen available for maintenance projects at rental properties. Keepe is
available in the Greater Seattle area, Greater Phoenix area, San Francisco Bay
area, Portland, San Diego and is coming soon to an area near you. Learn more
about Keepe at https://www.keepe.com
Federal Unpaid Workers Owe $438 Million In Rent And Mortgage Payments This Month
The effects of the federal government shutdown on the
housing market are wide-ranging and personal — unpaid workers still have to
pay their rent or mortgage, while aspiring homeowners might see their loans in
limbo, according
to research from Zillow.
About 800,000 unpaid workers (about 380,000 are furloughed and another 420,000 are working without pay), still must find ways to pay for their housing as the shutdown heads into its third week.
HUD letter asks
landlords to use their reserve accounts rather than evictions
The U.S. Department of Housing and Urban Development has sent
a letter to landlords, according to the Washington Post, to blunt the impact
of a lapse in funding for its multifamily programs, which were not renewed
before the government shut down on Dec. 21.
They are asking landlords to use their reserve accounts
rather than evict their tenants.
“As you are aware, the partial government shutdown continues
as the Department of Housing and Urban Development’s spending authority expired
on Friday, December 21, 2018, due to the lack of appropriated funding. Pending
appropriations needed to operate, most FHA multifamily activities must cease
for the duration of the shutdown. Separate guidance will be issued with respect
to Asset Management activities,” HUD
said in the letter.
Unpaid workers and renters owe $189 million
A recent HotPads® analysis found that renters within that
group pay about $189 million for housing each month.
Zillow estimates that
federal employees who are not being paid during the shutdown and own their
homes pay about $249 million in monthly mortgage payments.
Missed payments can
lead to eviction and foreclosure
“Like Americans in the private sector, many federal
employees rely on each and every paycheck to cover critical expenses, including
housing. In many parts of the country, housing affordability is already
stretched and a single missed payment can begin the long process toward
foreclosure or eviction – which has long term impacts on an individual’s
finances and long-term economic prospects,” Zillow senior
economist Aaron Terrazas said in a release.
“It also could
have a significant impact on the overall housing market if it continues to drag
on and furloughed workers who also are would-be buyers get cold feet in the
absence of paychecks. Buying a home is a huge leap of faith for many, as they
bet on continued job security and steady income to finance their home, and
consumer confidence is paramount,” he said in the release.
A Zillow analysis estimates that about 3,900 mortgage
originations are processed each business day for loans backed directly by
federal government agencies such as the FHA and the Rural Housing Service. It
isn’t clear what portion of those are delayed – or for how long – because of
the limited staff during the shutdown, but as many as 39,000 mortgages could
have been affected by today. When those loans are delayed, it most affects
those facing the greatest hurdles to become homeowners. FHA also won’t insure
reverse mortgages or home-improvement loans during the shutdown.
The U.S. Department of Housing and Urban Development says it
does not expect a significant impact as long as the shutdown is brief. But
“with each day the shutdown continues, we can expect an increase in the
impacts on potential homeowners, home sellers and the entire housing
market,” the agency says.
In addition, the shutdown could lead to administrative
delays associated with loans backed by Fannie Mae and Freddie Mac, two
independent agencies that insure the vast majority of mortgages. Those include
lenders unable to get verification of employment for borrowers who are federal
employees, and potential IRS delays verifying borrower incomes, which could
lead to loans being denied.
The January 2019 Portland rents report shows Portland rents have declined 0.5% over the past month, and are down slightly by 0.2% in comparison to the same time last year, according to Apartment List.
Currently, median rents in Portland stand at $1,120 for a
one-bedroom apartment and $1,320 for a two-bedroom. This is the third straight
month that the city has seen rent decreases after an increase in September,
according to Apartment List.
Portland’s year-over-year rent growth leads the state
average of -1.9%, but trails the national average of 0.9%.
Rents rising across
cities in the Portland Metro
While rent decreases have been occurring in the city of Portland over the past year, cities in the rest of the metro are seeing the opposite trend. Rents have risen in 8 of the largest 10 cities in the Portland metro for which we have data. Oregon as a whole logged rent growth of -1.9% over the past year. Here’s a look at how rents compare across some of the largest cities in the metro.
Looking
throughout the metro, Hillsboro is the most expensive of all Portland
metro’s major cities, with a median two-bedroom rent of $2,000; of the 10
largest cities in the metro that we have data for, Gresham, where a two-bedroom
goes for $1,630, is the only other major city besides Portland to see
rents fall year-over-year (-0.5%).
Beaverton,
Springfield, and Vancouver have all experienced year-over-year growth
above the state average (2.4%, 2.2%, and 1.7%, respectively).
Portland rents more
affordable than many similar cities nationwide
As rents have fallen slightly in Portland, many comparable cities nationwide have seen prices increase, in some cases substantially. Portland is also more affordable than most other large cities across the country.
Portland’s
median two-bedroom rent of $1,320 is above the national average of $1,180.
Nationwide, rents have grown by 0.9% over the past year compared to the
0.2% decline in Portland.
While
rents in Portland fell slightly over the past year, many cities nationwide
saw increases, including Las Vegas (+4.4%), Austin (+3.4%), and Phoenix
(+3.3%).
Renters
will find more reasonable prices in Portland than most comparable cities.
For example, San Francisco has a median 2BR rent of $3,090, which is more
than twice the price in Portland.
Methodology:
Apartment List is committed to making our rent
estimates the best and most accurate available. To do this, we start with
reliable median rent statistics from the Census Bureau, then extrapolate them
forward to the current month using a growth rate calculated from our listing
data. In doing so, we use a same-unit analysis similar to Case-Shiller’s
approach, comparing only units that are available across both time periods to
provide an accurate picture of rent growth in cities across the country.
Some rental experts from Zumper, a full-service rental platform company, discussed what they see as the forecast for rent growth and multifamily trends in housing heading into 2019 in a question and answer sessions with Rental Housing Journal.
Natalie Cariola, Senior Vice President of Sales, Zumper:
We forecast core cities will see flat rents as tertiary markets continue to experience rent growth – Natalie Cariola, Senior Vice President of Sales, Zumper.
Q: What is the overall forecast you see for multifamily heading into 2019 at a high level?
A: We foresee new construction continuing to slow as investors and developers become concerned about a looming recession. We forecast core cities will see flat rents as tertiary markets continue to experience rent growth.
Q: Our audience is apartment owners, property managers and landlords, leasing agents and maintenance personnel – take a moment and tell us what you see happening for each of those groups in 2019?
A: 2019 interest rates will have a large impact on all of these groups. If the Fed continues to increase interest rates it will force upward pressure on rents and downward pressure on expenses. This will put pressure on-sites, leasing agents and maintenance teams to accomplish more with less.
Q: Where do you see the rent growth in 2019? Is it going to be in the B and C properties as some have suggested? New Urban Center A properties still a little flat?
A: We see rent growth coming from tertiary markets. In our December 2018 rent report the largest rent gains came from Columbus, Des Moines, St. Louis, Memphis and Shreveport. Our data also shows value add, B product, is closing the rent gap with A product. If 2019 signals larger concessions in the luxury A product it could leave little price difference between luxury product and value add B product. In that case luxury product could steal market share from value add and slow the rent growth that class is experiencing.
Q: Any specifics for our high profile markets – Seattle, Portland, Phoenix Denver metro areas?
Crystal Chen, Marketing Manager, Zumper
Phoenix and Denver markets will continue to see growth – Crystal Chen, Marketing Manager, Zumper.
Phoenix Market In 2019
Growth in 2018, 2 beds are up 8.2% year to date
Healthy job growth, people want to live here for lower rent and cost of living especially on the West Coast (1 bed $950 2 bed $1190) stimulates demand for rentals.
Vacancies will likely remain low so growing rents most likely in the New Year.
Denver Market In 2019
+8.6% year to date growth rate for 1 beds
Similar story in Aurora, +13.6% for 1 beds & Colorado Springs +8-11% for 1 & 2 beds
Hot rental market, surge of millennial migration and economic opportunities (wage growth etc.)
Though growing prices, still not as expensive as other major cities on the West Coast (like Seattle or California cities) so lower prices overall, makes for attractive market.
Most likely continue trend of growing rents 2019
Gauthier van Sasse van Ysselt, Regional Account Executive, Zumper
Housing oversupply in combination with a lack of renter demand during the fall and winter, is resulting in increased concessions – Gauthier van Sasse van Ysselt, Regional Account Executive, Zumper.
Seattle Market In 2019
When looking at the Seattle rental marketing with a short term perspective, you will see that housing oversupply in combination with a lack of renter demand during the fall and winter, is resulting in increased concessions, stagnant median rents and even decreasing rents in some submarkets.
This increase in concessions and change in median rents is most notable in the urban core of Seattle. However, from a long term perspective, we continue to see growth year over year with many submarkets experiencing double digit growth in median rents.
Crystal Chen Summary
Overall, there will be continued growth in the rental market as the U.S. is experiencing the lowest rental vacancy rate right now since the early 90’s (at 6.8%), which shows a high demand for apartments
Increased emphasis on a sharing economy, so renting instead of owning everything from cars to houses is getting more popular.
2019 will most likely continue to see a slow for-sale market, with continued interest rates hikes on the horizon, which makes buying less appealing to many.
Gauthier van Sasse van Ysselt Summary
Overall, the Seattle rental housing market has a clear oversupply in the urban core of the Greater Seattle Area. This oversupply in combination with lower renter demand during the slow season is causing landlords to push concessions and to adjust their median rents.
In the long term, there is consistent year-over-year growth. The questions is whether or not this short term trend will continue. We will have to wait and see.
About Zumper
Based in San Francisco, Zumper has raised $90 million in venture capital funding to date. Zumper is backed by world-famous investors including Kleiner Perkins, Goodwater Capital, Breyer Capital, Foxhaven Asset Management, Axel Springer, The Blackstone Group, Stereo Capital, Dawn Capital, Andreessen Horowitz, Greylock Partners, NEA, CrunchFund, xfund and Marcus & Millichap. Zumper is creating a smooth, efficient, and transparent renting process for both tenants and landlords. We’re the first rental marketplace where tenants can search for and rent an apartment on our end-to-end platform, and we’re just getting started.
Soft credit pulls can help property managers and landlords attract and engage the best renters, according to some new research from Equifax.
Unlike hard credit pulls, soft credit pulls do not impact a consumer’s credit score. This leaves renters in more competitive rental markets more likely to apply to multiple properties without worrying about harming their credit.
As a result, property managers and owners are more likely to attract better applicants and engage the renters who are most likely to pay rent on time – who may be the same renters concerned with having multiple hard credit pulls impacting their credit score.
Soft credit pulls help property managers and tenants
“In the environment today individuals looking to obtain a place to live are going to potentially have to go through the screening process a number of times,” Tyler Sawyer, Vice President of Rental and Real Estate, Equifax, said in an interview with Rental Housing Journal.
“What you’re going to see is often that, that individual might go to one, two, three, four, or five different properties that they might want to take a look at. Each of them maybe managed by a different tenant screening software, or different property managers or different landlords.”
“Often, in the world of credit, when you’re getting multiple inquiries what they’ll see is a negative hit associated to it. Not to a very large degree. But when you’re really dealing with somebody who might be on that bubble that can be very meaningful to them.
So we’ve been able to work with our teams to be able to provide the soft hit. This really gives the same information and the same score associated to an individual,” Sawyer said.
So property managers and landlords can get the information they need to get a good understanding on the prospective tenant’s background and be able to make a decision.
“But they are not going to have that credit hit the way that it works in a lot of the ecosystem here today,” Sawyer said.
Housing shortages within metropolitan areas have created an affordability gap, and as real estate prices continue to rise in markets across the U.S., more consumers are turning to the rental market to meet their housing needs.
Equifax works with tenant screening partners
“Our primary market strategy is really centered on working with the tenant screening organizations,” Sawyer said. “What that means is we’re supplying key pieces of information, like credit scores, like verification of income and employment. Then, we’re supplying that data to the tenant screening companies where they’re really going to be able to take that and make decisions based off of the information that we’re providing to them.
“So, we really see those partnerships as a really key piece for us to be able to work on through, because we don’t have a very strong direct to landlord and property management company model in place. We really believe that being able to partner with those that already have those existing relationships from out there gives us the best visibility on out to the marketplace. Gives us the best ability to be able to push new product on out to the market successfully and impact consumers.
“At the end of the day it’s all these tenant screening organizations that have a lot of those very strong relationships. They are a very well known, strong organizations working with a number of property management companies and landlords to be able to affect change. And if we’re able to work through them successfully with something like the soft credit roll out, then we’re just going to have a much stronger base by which to work with.
Who are the credit invisibles?
As a result, some creditworthy thin file consumers do not get rates and terms commensurate with their creditworthiness.
Property managers see same information on soft credit pulls they do on a hard credit pulls
“We’ve been asked a lot about that, with landlords are reaching out and saying, ‘Hey, am I going to have a different experience? Am I going to have to do a lot of work associated with being able to pull a soft pull versus the hard pull?’ “Sawyer said.
“Their experience remains the same. The information that they typically are going to be looking at, they’re still going to be able to view. And we even able to, kind of operationally in the background, make it a very smooth transition so that they don’t have to run through hurdles to really be able to start taking advantage of this new product.
“Our rollout strategy is centered on making this available to every single one of our customers. We have done a full migration to immediately impact all of those who were pulling credit hits within the rental ecosystem as they relate to Equifax. And so, we’ve been able to impact every single one of them. Just a couple of weeks ago during our official rollout,” Sawyer said.
Tenants can go apartment shopping without credit score impact
“They can go shopping now and not be worried about that hit and that’s really important. They don’t have to be threatened by a credit hit. And let’s face it, in a lot of scenarios consumers aren’t necessarily fully aware that they might have a credit hit associated to it, they just see it as the score going down a little bit if they’re really paying attention.
“This is something that is going to help them in the background. And it’s also helping property managers and landlords to provide solutions that do not negatively impact their potential relationship. The landlord/tenant relationship is a very important one. You’re having someone move into your home and you want to really be able to get up off on the right foot. And that’s how we’re able to positively impact the fully ecosystem, both from the consumer and from the landlord side because they’re going to have the opportunity to engage in a very positive way with the tenant right out of the gate,” Sawyer said.
About Equifax Equifax is a global information solutions company that uses trusted unique data, innovative analytics, technology and industry expertise to power organizations and individuals around the world by transforming knowledge into insights that help make more informed business and personal decisions.Headquartered in Atlanta, Ga., Equifax operates or has investments in 24 countries in North America, Central and South America, Europe and the Asia Pacific region
Multifamily investing in 2019 and the market for multifamily properties is continuously changing so here are 7 expectations and predictions for the year ahead
On account of major political, social, and economic developments, investors will have to look at the bigger picture.
Adaptation is the key to success amid an uncertain landscape. Whether to resist, or flow with the current, will still depend on what investors want to achieve in the foreseeable future.
It’s because of these fundamental reasons that investors will have to keep themselves abreast of significant disruptions in the multifamily investing field.
For that, they will have to be aware of these disruptions and how they are going to impact the profitability and sustainability of their investment portfolios.
You don’t have to look for a fortune teller to get a good glimpse of the future of the multifamily investing market. You only need to view the trends that will shape the investment market.
As we close another year and welcome a new one, let us focus on what to expect from the multifamily market and look at the trends that really matter in the long run.
No. 1 – High rent situation
Zillow notes that rents across the United States will continue to follow an upward trajectory as demands continue to rise. This would lead to a sellers’ market in which multifamily investors who had held on to their assets for quite some time will find it more practical to sell and reinvest elsewhere.
Still, the rates will vary from one location to another. The supply and demand for rental housing is also a significant determiner of rental prices. Along these lines, it helps to know where to invest and emerging markets remain as great locations for buying multifamily assets.
No. 2 – High Interest Rates
U.S. News relates in an article, RISING INTEREST RATES are having a ripple effect across the housing market as the Federal Reserve increases borrowing costs.
The Fed raised rates again in December and possibly will two more times in 2019. The effect of the Fed’s rate hikes is seen in mortgage rates, which are about 100 basis points higher compared with a year ago at nearly 4.9 percent for a 30-year fixed rate mortgage.
October housing starts data also fell short of expectations. Homebuilder sentiment is falling amid rising mortgage rates and stronger home prices, according to the most recent monthly survey by the National Association of Home Builders/Wells Fargo Housing Market Index. The survey data show that builder confidence dropped eight points to 60 this month. It was 72 at the beginning of the year.
Experts say some areas of real estate and certain regions may hold up better than others with rising interest rates.
Doug Imber, president, Essex Realty Group in Chicago, says rising rates are the topic of conversation and concern for real estate investors, but the context for why rates are rising matters just as much as the direction.
“Rates go up for different reasons, and the reason that they’re going up now, thankfully, is because we have a very strong economy and the Fed is trying to be mindful of inflation,” he says.
No. 3 – Multifamily Investing And Commercial Areas Will Remain Strong
Imber says the economy’s strength is reflected in outperforming real estate sectors. Industrial real estate distribution centers and office warehouse have been doing well.
“Generally, office (space) is having a period of lower vacancy and good rent growth,” he says.
Multifamily units, such as apartment buildings, have had a period of solid growth, and it may continue if mortgage rates continue to rise and home prices remain strong. Those two factors raise the barrier to individual homeownership, and the apartment owner is the beneficiary.
“People stay as renters for an extra year or two while they save up more money for down payments (for home buying),” Imber says. “It’s not just the rates are higher, but if I’m making X amount of dollars in salary, I don’t qualify (for cheaper rates), so I have more money to put down.”
The one caveat to multifamily housing is that supply is starting to increase, which could limit how much landlords can raise rents, he says.
Investors who use real estate investment trusts should be able to withstand higher rates, says Mauricio Gruener, founder of GFG Capital in Miami.
He says throughout the previous Fed rate hike cycles, REITs have held up well. Since 1994, REITs have outperformed stocks in every tightening cycle except last year. REITs averaged a return of 16 percent relative to the 10 percent return of stocks during the 23-year time frame between 1994 and 2017, says Gruener, who was citing data that compared the FTSE Nareit Equity REITS index with the Russell 3000 index.
No. 4 – Focus On Emerging Markets
Possibly the best part of any multifamily investing year-end outlook is a list of emerging markets that are attractive to investors. Indeed, considering the need to build a highly profitable portfolio, investors should buy at the right time and in the right place.
Let’s look at a few cities where better cash flow is expected:
One of Vinney Chopra’s multifamily investing properties in Atlanta.
Atlanta, GA
For some quite some time, the Atlanta multifamily market has remained robust. With good population growth and affordability, the city is a haven for first-time investors who are out to build their multifamily portfolios. In fact, as new constructions continue to pick up, we are seeing good indicators of a healthy jobs market in this city.
Orlando & Jacksonville, FL
Going deeper south, there’s Orlando which has always been a primary destination for cash flow-hungry investors. Even though occupancy rates remain high, we can expect new apartment units to offset the discrepancies. We can see the same situation throughout Southern Florida, where investors are leaning away from condominiums and focusing heavily on apartments due to a steady rise in demand for quite some time.
Raleigh, NC
Another southern city in our list of emerging markets for 2019, Raleigh offers more than just historical attractions. For one, the city has had a strong showing in the jobs department. Unemployment was pegged at 3.6 percent and investors remain confident that joblessness will further decline in the coming year with the passage of a new bill that will pull tax rates down and spur the creation of more jobs throughout the country.
Louisville, KY
Despite challenges to rent growth, multifamily markets in the Midwest are not clipping on new property constructions. Taking Louisville as a case in point, demand for rental housing in the city continues to surpass supply. Against this backdrop, along with a decline in the unemployment rate, more rental developments are definitely in the offing.
Fort Worth, TX
The Texas rental market isn’t showing signs of caving in. No doubt, northern Texas is seeing favorable conditions for the multifamily investing sector. As investments come flooding in and job growth is on an uptrend, there remains firm confidence over the fact that Fort Worth is performing well beyond expectations in both newly constructed and value-add investment properties. Emerging from the gains of 2018, competition will definitely boil over as the New Year approaches with optimism over the economy’s performance.
There are other areas where the job markets are strong and predicted to also do well; for example, Los Angeles, Inland areas like Fresno, Provo, Utah, Las Vegas and Phoenix, AZ. Investors are advised to do comprehensive demographic and Job growth researches before entering any market.
One of Vinney Chopra’s multifamily investing properties in Texas.
No. 5 – Catering To A Millennial And Baby-Boomer Market
The future of the multifamily sector will depend not only on economic policies, but also on the needs of the two most important demographic segments: the millennials and baby-boomers.
While it’s true that more millennials are buying single-family homes, they will have to go through a renting phase before they can fully transition into full-fledged homeowners. Nevertheless, younger sub-segments of the millennial market will definitely start out as apartment renters. Sure enough, a large swathe of this market will define emerging markets.
Along with millennials, baby-boomers are also expected to steer the multifamily market into high-opportunity areas. Many of them will be retiring and instead of buying single-family homes, they are moving into rental complexes to pursue scaled-down lifestyles.
No. 6 – The Rise Of Workforce Housing
Aside from these projected developments in the multifamily sector, investors will also have to explore emerging niches. For sure, 2019 will see segments of the market create high-value opportunities along the lines of value-add investments.
One such segment that’s sure to grow is the workforce housing market. According to HousingWire Editor Ben Lane, workforce housing – which caters to low to middle-income earners – is expected to outperform other niches in the multifamily sector. This is on account of sluggish wage growth and low inventory of housing units. These factors will definitely push demand for workforce housing further, amid a rise of people who are renting out of necessity. This, in turn, will result in new constructions and the rehabilitation of existing supply that multifamily investors should leverage in order to secure better cash flow.
Sure enough, several markets are already benefiting from the strength of the workforce housing sector. Rent growth has been fairly stable, but it’s also expected to accelerate for the better part of 2019 in areas where there is strong demand among wage-earners. Investors will only have to accommodate new renters with revitalized apartment complexes through value-adding components and repositioning.
No. 7 – Opportunity Zones
Treasury in October 2018 proposed favorable Opportunity Zone regulations that adopted many NMHC/NAA priorities that should enable multifamily investors and developers to get projects off the ground. As the regulations do not address every issue, NMHC/NAA will work with policymakers to make additional changes, including further reducing the threshold for property improvements that rehabilitation projects must meet for Opportunity Zone benefits.
Enacted as part of tax reform legislation in 2017, Opportunity Zones are designed to provide tax incentives for investments in distressed communities. Under the new program, Governors have designated over 8,700 qualified low-income census tracts nationwide as Opportunity Zones. Up to 25 percent of a state’s qualified census tracts may qualify as Opportunity Zones, with each state having to designate a minimum of 25 Zones
Now that Opportunity Zones have been designated, real estate developers and others may establish Opportunity Funds that will be eligible for two tax incentives:
First, taxpayers may defer capital gains that are reinvested in Opportunity Funds to the earlier of the date an investment in an Opportunity Fund is disposed of or December 31, 2026. Notably, gains deferred for five years are eligible for a 10 percent basis step up, while gains deferred for seven years are eligible for an additional five percent basis step up.
Second, post-acquisition capital gains on investments held in Opportunity Funds for at least 10 years may be permanently excluded from income.
The Bottom Line On Multifamily Investing In 2019
Of course, we won’t know for sure if these expectations will hold up.
But what can be gleaned from these observations is a need to address uncertainty, which has always been a prevailing condition in the multifamily property market. Nonetheless, these offer an apt starting point for investors who want to face 2019 with little to no apprehension.
About the author:
Vinney Chopra on 7 expectations and predictions for multifamily investing in 2019.
“Vinney Smiles Chopra”, a mechanical engineer, RE broker and a motivational speaker came to the US from India with $7 in his pocket. He sold encyclopedias and bibles door-to-door as a student. His hard work paid off when he graduated from George Washington University with an M.B.A. (In Marketing). He realized then that he would make his career in “Relationship Building and Networking” field. As a multifamily syndication expert, he has facilitated over 26 successful syndication deals and has acquired and manages a very successful real estate investment portfolio worth over $200 million.
Vinney has been a professional Fundraising Consultant and Motivational Speaker for over 35 years. He has given over 10,000 exciting speeches and seminars on Fundraising, Positive Thinking, Enthusiasm, Goal Setting, Balanced Living, and has been involved in Business Coaching. He travels and gives live presentations and webinars on Wealth Building. Creating Wealth with Multifamily Investing, Value-Add Win/Win Negotiations, Emerging Markets, Market Cycles, Economic Funding, Commercial Properties Analysis, Due Diligence, investing in Multifamily and the Art of Raising Private Money. You can reach Vinney by Texting the word “Syndication” to 47-47-47 or email at vinney@moneilig.com to learn from his proven techniques and lectures through his educational academies- MultifamilySyndicationAcademy.com and MultifamilyAcademy.com. For more information, visit VinneyChopra.com, MoneilInvest.com and MoneilMultifamilyFund.com.
While environmental concerns and sustainability issues have become a major trend among multifamily investors and homeowners, it seems that they are not the only ones taking advantage of “going green.”
Most landlords, even if you don’t want to spend much on your rental property, can take steps to improve your building’s energy efficiency. Savings made this way can then be used for expanding or improving your rental units.
Here’s a short list of considerations.
Exploit the expansion potential
Although every Realtor will tell you that the location is key to a successful rental purchase, the truth is that great locations are expensive. So instead, you should look for properties in undiscovered, or up-and-coming locations that will be in high demand in five to ten years. However, more importantly than buying a location, you should always look out for rentals with great expansion potential.
Cost of purchase vs. build
Let’s take for example the Golden Gate Heights neighbourhood in San Francisco. Most homes in the neighborhood sell for between $650 and $850 per square foot, which is relatively inexpensive compared to the rest of the city. The building cost per square foot, ranges from $150 for simple rooms with electricity, to $350 for bathrooms and kitchens, but according to the National Association of Homebuilders, the national cost per square foot is only $80. If you challenge a contractor to get a quote that low, you might be surprised by the results.
Building always wins
Once you get hold of a solid contractor who is reasonably priced, don’t let them go. Even if you’ve set your eyes on an underdeveloped lot in an expensive part of the country, the good news is that construction costs don’t follow the cost of housing – they are relatively stable. As a result, rental development returns are much greater in places with higher housing prices such as San Francisco, Washington DC, and New York City.
Overseas experiences
When talking about rental housing in the U.S., we often make comparisons with renting overseas.
Faced with insecure tenancies and unaffordable home ownership, over the past several years, in Australia, there has been a surge of enthusiasm for developing a sector of multifamily housings, which already gained a widespread popularity in the U.S. However, another trend that is present in Australia is building sustainable rentals which can still release equity, should the landlord decide to sell the property later. Apart from eco-additions, passive designs, and indoor-outdoor spaces, construction companies like Meadan Homes make a great case of promoting duplex additions as a great option for flexible rentals that can be easily sold down the line.
Use programmable thermostats
Chances are that heating and cooling are the biggest energy hogs in a rental unit, and one of the best ways to save energy consumption is to install a programmable thermostat. Whichever arrangement you have with the tenants, the thermostat benefits both parties. With quality ones priced between $35 and $50, it’s a small investment for large savings. It can be programmed to turn the unit on and off based on tenants’ daily routines, reducing both the monthly bill and the building’s carbon footprint.
Maintain the HVAC
Make sure the furnace filter is replaced between one and three months, to ensure clean air and improve the furnace efficiency. While each furnace has different specifications, different filters have different lifespans. While being inexpensive and easy to change, a clean filter will ensure clean indoor air and better furnace efficiency, reducing its power consumption. By keeping your HVAC unit running at optimal levels, you’re increasing the energy efficiency of the entire rental.
Invest in humidifiers
A humidifier keeps your rental humidity levels constant, even during the winter when heating is regularly used. Keeping the humidity levels up during the heating season isn’t only beneficial to your health and furniture, but it also makes the ambient air temperature feel warmer than dry air, which means you can lower your thermostat setting. While some HVAC units come with built-in humidifiers, you can always get it separately for a great price.
Buy energy-efficient bulbs
You can always tell an energy-efficient building by its bulbs. Landlords who are concerned about energy efficiency and savings made this way will always use CFLs (compact fluorescent lights) or even LED bulbs. In countries like Germany and Australia, where environmental awareness is high on all levels, incandescent bulbs have been phased out between 2009 and 2012, while legislators in Australia are preparing a regulation that would evict the halogen bulbs as well by the end of 2020. Although the out-front cost of LEDs is higher, they last incomparably longer and they really pay off through reduced consumption.
While expansions and additions are always more cost-effective than purchasing new rentals, a prudent landlord will always make sure those extensions are energy-efficient. The practices listed here won’t only pay for themselves in energy savings, over the duration of the rental, but if you decide to sell, you can always sell the improvements as well, or move them to your next property.
Pet grooming areas and pet wash areas among top amenities. Photo credit Group4 Studio via istockphotoc.om
The 5 top apartment amenities for 2019 were listed in a new study of unique apartment amenities according to Apartments.com.
Yes not only pet grooming areas and game rooms, but wine lounges, virtual golf simulators and beautiful gardens are popping up all over the U.S., but also lots of tech gadgets according to Apartments.com research.
According to a National Multifamily Housing Council (NMHC) study, 20% of respondents cited their reason for moving to a different community was due to seeking better community amenities.
5 unique apartment amenities for 2019
Outdoor Community Living: When it comes to community spaces, many existing properties offer club houses, fitness centers, coffee areas and shared workspaces. But as complexes upgrade, they are incorporating shared outdoor amenities to include fire pits, brick ovens, roof top terraces, access to hike and bike trails, stations to bathe down bikes or pets and spaces for DIY project areas. With balcony space and dog-friendly being one of the top keywords searched nationally on Apartments.com, renters look for those outdoor features adding value to an apartment and lifestyle for their family.
Indoor Relaxation:Numerous indoor amenities are on the horizon too. Coffee shops, movie theaters, spas, salons, music rooms, golf simulators and wine cellars. All offer spaces to unwind and socialize. With 68% of renters searching for only a one- or two-bedroom apartment on Apartments.com, these indoor amenities and community spaces create an ideal space for mixing and mingling with apartment neighbors.
Pet grooming areas and pet wash areas among top amenities. Photo credit Group4 Studio via istockphotoc.om
Tech Lover’s Paradise:If you are relatively tech-savvy, you might consider purchasing smart devices to enable home automation features. Kwiskset Kevo’s smart lock, for example, allows you to lock and unlock your doors remotely with the Kevo App on your smart phone. The lock comes with a backup key for your landlord. The smart thermostat by Nest, allows you to use your phone to change the temperature in your apartment. It also learns your schedule and adjusts to your habits, saving you energy costs along the way.
Environmentally Friendly:NMHC noted in a recent study that 75% of renters are interested in recycling options, while 65% are interested in sustainability and green initiatives. Other amenities of interest include sustainability and green certifications, on-site renewable energy and car sharing. Additionally, new technology is becoming increasingly available for the environmentally conscious such as the WaterHawk showerhead with rainfall designs which come with an LED display that allows you to track usage and select temperature preferences.
Artistic Appeal:And for the art lover, Elect Objects’ E01 digital art frame allows renters to choose artwork from the Internet’s best artists and museums and change them as frequently as desired.
About Apartments.com Apartments.com is a leading online apartment listing website, offering renters access to information on more than 1,000,000 available units for rent. Powered by CoStar, the Apartments.com network of sites includes Apartments.com, ApartmentFinder.com, ApartmentHomeLoving.com, Apartamentos.com, WestsideRentals.com, ForRent.com, ForRentUniversity.com, After55.com and CorporateHousing.com. Apartments.com is supported by the industry’s largest professional research team, which has visited and photographed over 400,000 properties nationwide. The team makes over one million calls each month to apartment owners and property managers, collecting and verifying current availabilities, rental rates, pet policies, fees, leasing incentives, concessions, and more.
A multifamily building in Seattle strikes a balance between affordability and aesthetics, according to a release from Collaborative Companies, the builder on the project.
When Seattle’s Link Light Rail was announced 10 years ago, Sarah Westneat began searching for multifamily-zoned lots in Columbia City near the future station. The vibrant neighborhood, located about ten minutes southeast of downtown Seattle, is one of the city’s most historic and diverse communities, according to the release.
As the second fastest growing city in America, being near public transportation has become a big draw for Seattle residents. Westneat ended up finding a large single-family lot adjacent to the new Light Rail station—an ideal lot for what would later become a 13 unit apartment building designed for the urban commuter.
“I was very inspired by the idea of transit oriented development along the Light Rail,” said in the release. “My daughter and I ended up naming the project Rail House.”
Rail House was designed by Seattle-based architect atelierjones llc who has a knack for urban design. Principal Susan Jones and her team have designed several community-first multi-family developments in the region.
Beyond maximizing space, Westneat requested that the project have a unique architectural quality to complement the diverse community, “I wanted to build something sculptural that would serve as a gateway to Columbia City,” Westneat said in the release. The exterior facade features red hardie panel, black break metal, concrete, and aluminum panels, while the unique window arrangement is intended to maximize light and privacy. All the units run north to south so residents are flooded with natural light throughout the year.
Multifamily building with rooftop decks
Each unit has its own set of special features such as soaring ceilings, heated concrete floors, Juliette balconies and rooftop decks to create a real sense of home for residents.
“We had a ball designing for the people who would live there,” Westneat said in the release.
The project was built by Valor Builds—the construction arm of Queen Anne based Collaborative Companies.
“I very much wanted to find a builder with whom I had good chemistry,” Westneat said. With the project now complete, Westneat stands by her decision to hire Valor because the team was “considerate, flexible and creative.” The Valor team worked in tandem with the architects throughout the project to ensure the 8,561 square foot building fulfilled all of Westneat’s criteria.
Affordability was a priority for Westneat—the units (13 in total) range from studios for $1,375 per month to three story apartments with private roof decks for $2,525 per month. The variety of layouts helped the developer accommodate a wide range of renters.
A diverse community of renters now call Rail House home. Building a community of beautiful light-filled apartments near public transportation at an affordable price was no easy feat in Seattle’s competitive market, but with lots of strategic thinking and attention to detail, the teams were able to make Westneat’s dream a reality.
Appealing rental features for college-age renters is the rental property maintenance checkup this week provided by Keepe.
Many college students outgrow dorms during their college years and start looking for off-campus housing with other students after their initial year of college.
If your property is near a college or university, you can maximize on this demographic by using these tips to gain a larger interest in potential tenants.
Here are the top 6 appealing rental features for college-age renters
Rent: Students are reluctant and often financially limited to over-pay for rent. To maximize on renter interest, be sure to price your rent according to similar properties in the area to maximize on interest while maintaining your revenue.
Occupants: Generally, students rent an apartment unit with other people. Make sure your policy is flexible on the number of occupants one unit can have to maximize on renter interest.
Parking: If your property isn’t centrally located near stores and a university, consider re-evaluating parking costs to ensure your college-age applicants can afford the extra expense. High parking costs might drive students from considering your property as a reasonable place to live.
Reputation: College-age renters review online sites such as Yelp.com and ReviewMyLandlord.com to get a sense of what to expect from the landlord. If you are receiving bad reviews on these sites, be sure to make changes in your business that will reflect you more positively in reviews.
5. Amenities: High end features are not a necessity, but amenities such as laundry, gym, and a pool are all features that can sway college-age renters to picking your property over another. If your apartment complex has useful amenities, be sure to highlight these features on your website and other marketing channels to remain competitive in the market.
6. Smart Technology: Millennials and Generation Z are early adopters of smart apartment technology and prefer renting in properties that have already adopted technologies. Technologies such as smart thermostat and lighting systems are among the top devices that are seen as valuable to renters. Invest in smart technology to draw in millennial renters, especially if you are in a competitive market.
Other recent rental property maintenance Keepe posts you may have missed:
Keepe is an on-demand maintenance solution for property managers and independent landlords. The company makes a network of hundreds of independent contractors and handymen available for maintenance projects at rental properties. Keepe is available in the Greater Seattle area, Greater Phoenix area, San Francisco Bay area, Portland, San Diego and is coming soon to an area near you. Learn more about Keepe at https://www.keepe.com
