How To Get Started In Owner Occupied Multifamily Investing

December 9, 2017

Owner occupied multifamily investing can be a great starting point for new investors. Veteran multifamily investor Vinney Chopra has some ideas for you to think about in owner occupied multifamily investing.

By Vinney Chopra

I enjoy teaching investor students and helping them learn about multifamily investing and syndication and all of the benefits it brings, but some ask how to get started?

Not everyone is ready to start out buying large apartment complexes for many reasons.

It takes time to learn the right emerging markets. It takes time to learn how to finance big projects. Plus, it takes time to raise money and build relationships with investors and real estate brokers. And don’t forget it takes time to learn how to analyze the deals. That’s a lot!

So when students ask how to get started now, I talk about the advantages of owner occupied multifamily investing in real estate.

What is owner occupied multifamily investing?

Simply put, owner occupied multifamily investing real estate is when an investor resides in one part of the property while renting out the other units.

Many new investors in this owner occupied multifamily investing area start out with duplexes, triplexes or fourplexes.

However this is not for everyone as it puts the investor in the position of being a hands-on property manager with the tenants and dealing with all the property management issues such as tenant screening, repairs and even evictions.

Here is a set of pros and cons from fortunebuilders.com that sets out some of the basics of learning the owner occupied multifamily investing business:

It can pay for itself

Easier to finance

Learning property management first hand

Tenant screening becomes very important as they are your neighbors now

First step toward larger properties and your multifamily investing career

However there are downsides:

Tenants complain

Renters may not want to live in same building with landlord

Avoid becoming friends with your tenants

Tenants are your neighbors and you may not like them

Conflicts can occur

The distinct advantage of owner occupied multifamily investing

Vinney Chopra meeting with a student

There a very distinct advantages that we must keep in mind in owner occupied multifamily investing. Not only can you use rental income to offset the amount you pay against the mortgage, there are several tax deductions and depreciation advantages to living in the same property you also rent.

Living in your own rental property, of course, isn’t for everyone. Whether you will gain greater income from an investment property or an owner-occupied rental property ultimately depends on your individual circumstances. You should consult a financial consultant or tax advisor to discuss your bottom line. But here are several of the advantages to owner-occupied income properties to consider:

Higher quality tenants. Many renters are particular about who they have to live next to, and having an owner-occupied building is reassuring. Owners are also selective about who they allow to live next door, thus attracting higher-quality tenants. It’s a beneficial dynamic that brings tenants who are willing to pay higher rent.

Writing off expenses. Simply put, owners who occupy their rental properties are allowed to write-off their rental expenses against their rental income. Any expenses that apply to tenant-occupied units can be used as an advantage.

Lower management and maintenance costs. Occupying your own rental property minimizes property management and maintenance costs that are typically handled by third parties, thus saving a certain percentage of gross income.

The value of depreciation. Depreciation allows an owner to deduct a portion of the building’s cost, plus the cost of capital improvements, annually from the income of the building. While it is allowed only for the portion of the building used for rental purposes, it can sometimes shield rental income from taxation.

The tax advantages. Along with depreciation tax, owners who live in their rental buildings can deduct the prorated part of the mortgage interest from their income. Property taxes can also be deducted.

Selling the property. Owner-occupied housing is also shielded from property gains taxes (at certain limits) when sold, and those that have been lived in for certain time periods – usually more than a year – are subject to lower capital gains taxes than other investments. Through a tax-deferred exchange, owners who rent where they reside can combine both tax advantages and also defer gains on the sale of the property when they purchase another property within a limited time frame.

Finally, owner occupied properties are exempt from certificate of occupancy and most rent control programs, therefore, the owner is not required to make certain repairs and improvements that these programs require of property that is used strictly for income producing purposes.

Michael Blank writes that he thinks duplexes are a great way to start.

“Many real estate entrepreneurs who want to get into multifamily investing are frustrated by how long it can take to do their first deal. It takes a while to educate yourself, learn how to analyze deals, and to raise money. You have to be consistent with contacting brokers and generating deal flow. And you have to make as many offers as possible,” Blank writes.

Vinney’s duplex purchase

I want to share with you a story of a duplex that came across my desk in our early years of investing.

It was in an emerging market and it only was selling for $119,000. With just 20% down we bought it with mortgage of $648 a month. Since it was in an emerging market with good rental demand, each unit rented for $1, 100 a month. It was a huge cash flow machine. I wish I would have found a fourplex!

My mantra is go for more number of units. Live in one and rent the other three and you live rent free.

Even though we purchased a lot of single-family homes early on, in many cases the cash flows were just not that good, especially when the tenant left and it would be 100% vacant. Plus there was the expense of getting it ready for the next tenant etc.

Your vision for owner occupied multifamily investing

Once an investor has a clear vision of what they’re looking for in owner occupied multifamily investing, the next part is to go out and find it.

Unlike the investment days of old, technology today has granted investors an invaluable resource that provides up-to-date and highly detailed information with the click of a button online.

The majority of today’s research for real estate investment is accomplished using the Internet, with investors taking full advantage of these online super tools. It should be noted that an investor’s due diligence when investing in multifamily properties shouldn’t conclude with online research only, but rather serve as the prelude in the research process.

Your best bet is to find a property that the owner has great interest in selling, whether because of moving, divorce or frustration with tenants.

Actually, if you are currently renting and thinking about using this technique perhaps your landlord would be happy to help you out! There are a few variations that can be used depending on you and your seller. Do they want the market price or are they just eager to get out from the monthly payments – perhaps facing foreclosure? Ask for owner financing rather than going through the loan qualification process. You can also approach the seller with a master lease option.

The simplest method is to take over their mortgage payments – called ‘assuming’ the mortgage. Although these loans are rare these days, some lenders still offer assumable loans. You will need to be approved by the original lender to assume the mortgage. If you cannot get approved for an assumable mortgage you may also try a ‘subject to’ assumption where you merely make payments while the property remains in the seller’s name.

You take over the original mortgage and create a second mortgage on the remaining cost of the house with the seller. Offer a high, interest-only payment for a short period of time – two or three years.

Why I preach to all?

Please leap forward to multifamily as soon as you can!

Move from fourplexes to eightplexes to 20 units and 50 units and then 100 units.

It’s just one transaction with some extra zeros. The rewards are many:

Economies of scale

Ease of management

One transaction

Easy maintenance

Depreciation benefits

More consistent cash flows

Value add to increase revenue and NOI

Equity gains

While purchasing a multifamily unit may seem more costly up front, it is surprisingly easier to finance. Why? Because multifamily properties generate significant cash flow on a consistent basis.

When banks see this, they are more willing to provide a loan. This is great news for investors because there is less risk involved with the investment. If one tenant leaves your multifamily property, finding a replacement becomes far less urgent. If your tenants decide to vacate your single-family unit, you won’t earn passive income until a new tenant is found.

Another reason to invest in multifamily properties is because it becomes financially sensible to utilize a property management company. This means, as an investor, you don’t have to deal with day to day operations of your rental. You can sit back, relax, and watch your passive income checks roll into your bank account.

Resources:

The Pros & Cons Of Owner Occupied Multifamily Real Estate

Why Duplexes Are the Perfect Way To Get Started With Multifamily Investing

An FHA-Financed Duplex is an Ideal First Investment Property

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. He currently owns single-family homes and multifamily units in Texas, California, Atlanta, Arizona and India. Many times, people call him “Mr. Enthusiasm” or “Mr. Smiles.” He likes to bring great value to everyone he comes in touch with.

Free Online Sexual Harassment Training For Property Managers

John Triplett

December 5, 2017

With a new initiative from the U.S. Department of Justice to combat sexual harassment in housing, it is more important than ever that landlords and property managers know the Fair Housing Act and state laws on the issue.

By John Triplett

The online training leader in the multifamily industry, Grace Hill, is offering free sexual harassment training for the property management industry to help with the new U.S. Justice Department initiative to combat sexual harassment in housing.

The Justice Department initiative “specifically seeks to increase the Department’s efforts to protect women from harassment by landlords, property managers, maintenance workers, security guards, and other employees and representatives of rental property owners,” according to a release.

The Justice Department settled over $1 million in housing sexual harassment so far in 2017

Since January of this year, the Civil Rights Division has filed or settled five cases and recovered over $1 million for victims of sexual harassment in housing.

“No woman should be made to feel unsafe in her own home,” Acting Assistant Attorney General John M. Gore of the Justice Department’s Civil Rights Division said in the release. “The Justice Department is committed to vigorously enforcing the Fair Housing Act’s ban on sexual harassment and is looking forward to working closely with state and local partners to combat this problem.”

Dru Armstrong, CEO of Grace Hill, said in an interview with Rental Housing Journal that it is important to provide tools that managers and employees need to navigate the sexual harassment laws and changes going on today.

“We’re very focused on ultimately helping employers and employees create an ethical culture, and a welcoming workplace. I think one of the key ways that you do that, is by empowering your employees with knowledge, and understanding of what those laws are, and how to act appropriately in a situation, which is exactly what our courses do.”

The free course can be accessed here online. Anyone in some type of role in an apartment community, whether landlord, a property manager, maintenance person or anyone can go in and look at the course, even though their manager may not have told them to, or hasn’t instructed them to.

Armstrong said, “I felt very strongly that given our leadership position, it made complete sense to make this course as widely available as possible.

“If folks felt like they needed to better arm themselves in order to stay in adherence with the laws, and behave appropriately on site, then we should absolutely do that. I think it’s really powerful when training is effective, everyone wins, because you’re helping both the employer, and the employee create a welcoming workplace, and I think that’s what, at the end of the day, compliance training, and sexual harassment training is all about,” Armstrong said.

“It covers all of the basic federal laws that anyone needs to know, and the great thing about our courseware is, not only does it teach you the law, but it allows you to practice applying that, and then actually tests you to see whether or not you’d successfully been able to apply those principles. You want people to feel prepared when they actually go on-site, and are in those situations real time,” Armstrong said.

“We’ve actually written scenario-based assessment questions based on real case law. Often times you’re answering a question that a real court decided, and so it can be hard.

“That’s the whole point of training people, and using online training, so people can keep going back to the materials, keep accessing, and I think nothing is more powerful than when a learner raises their hand, and says, “I want to go take this course, because I want to feel more prepared, so I can be successful at my job,” Armstrong told Rental Housing Journal.

“That is exactly why we made it free on Visto, so that anyone in our industry that feels like, “Wow, there’s a lot happening in sexual harassment today, I want to make sure that I’m really on the right side of the law,” can go do that right now, and start practicing, and feel equipped to be successful on site,” Armstrong said.

Do people understand Fair Housing covers sexual harassment?

“I think that when they hear that it’s a law in general, they tune out,” Armstrong said. “When in reality, fair housing, and sexual harassment, and on-site discrimination, really at the end of the day, it’s a very simple idea.

“The idea is that every prospect, every employee, every resident, should feel welcome on-site, and should feel comfortable. Once you understand some of the core principles of the law, which is what our courses teach, then it makes a lot more sense that fair housing would cover sexual harassment,” she said.

Leasing agents can be on the front line with potential tenants

“Often you’re trying to do your job. You’re trying to be successful at your job, and yet you’re in an uncomfortable situation, and the question is, how do you handle that?

“The reason why it’s so important that we made sexual harassment training available to our industry, is you want everyone to go on-site ready to do their job, armed and prepared, and not have to worry about:

- What are the sexual harassment laws?

- What are the fair housing laws?

- How do I handle these situations?

One of the things that we work really closely with our clients on, is putting their own courseware in the system that goes even further.

“Policies and procedures are really important when it comes to something like that, and so I think any time a client asks me, “How can I really manage my risk?” I say, “Well number one, you gotta train people on an annual basis, on all the core compliance topics, so that they’re ready, willing, and prepared to perform, but number two, you guys need really great policies, and procedures in training on those, to make sure that your team members know at your company, how to navigate that.” That’s something else that we talk a lot about with our clients.”

Launching a California-specific sexual harassment course

“This month we are relaunching our California specific sexual harassment course, so all of our corporate clients have access to that. I think one of the interesting things, is California really does have almost a higher standard. And that’s important, because we know how large California is, and how many apartment communities are in California.

“One thing that’s critical is, that everyone in this industry – if they are on properties in California or have properties in California – that they are also adhering to those laws because there are additional requirements specific to California sexual harassment laws. For example, one of the core areas is, you need to have a designated person at your company that people can ask California sexual harassment questions of.

“We’ve found that our clients really like combining our online courseware with some of our features, so that they can designate specific people in the system to respond to that specific requirement. It takes some of that burden off of them. It is important that everyone realize that they’re not just federal laws, but also state laws, that they need to be in adherence with.

“We are hosting a webinar in mid-December on the big California sexual harassment update that’s coming out, and some of the ways that the law has changed,” she said.

What type of sexual harassment happens most often in multifamily?

“We have so many leasing consultants that come into our industry. They find themselves on a career path, which is one of the things that I love most about this industry.

“This is often the first time someone is working in our industry on a property. Trying to navigate how to manage residents, how to manage prospects, and trying to understand how to navigate all those situations, can be very challenging.

“What we hear most often from our clients is, ‘How do we successfully onboard people into these roles, so that on day one they get it, and really understand how it works in housing and that they can actually apply it. That they can handle a potentially gray area when it comes to sexual harassment or to disability.”

“One of the things that we work really hard on is translating complicated laws into short compliance courses that are interactive. Grace Hill’s interactive courses allow people to apply the laws that they’ve learned, and then feel empowered to go out on site and be successful and navigate any of these situations that are not necessarily intuitive. It’s very much, ‘How do we quickly get people up to speed on all of the different regulations?’ I think in particular fair housing, and obviously sexual harassment is part of that.

“California, in my tenure at Grace Hill, has had a number of major changes. And so for us, not only do we stay on top of the federal law, but we spend a lot of time thinking about California, because we have many clients with communities there, and we have many learners on-site there. We want to make sure that they are able to follow those laws, and that our broader learning platform helps them from an operational side, manage some of those requirements.

“For example, they’re able to take our California sexual harassment course, and build their own version of it, where they designate who their corporate representative is that should receive all the sexual harassment questions, and actually receive that through the platform, right? We try to give them not just a technology solution from really great online training materials, but a way to manage staying in compliance with those laws as well.”

Take the free course here.

Here is the Spanish version.

Resources:

Justice Department Announces Initiative to Combat Sexual Harassment in Housing

Since January of this year, the DOJ has recovered over $1 million for victims of sexual harassment in housing

Grace Hill Makes Sexual Harassment Training Free for the Property Management Industry

About Grace Hill:

Grace Hill is the market leader in compliance, and specifically sexual harassment training for the property management industry, is responsible for helping learners have the tools that they need in order to navigate the sexual harassment laws. We’re very focused on ultimately helping employers, and employees create an ethical culture, and a welcoming workplace, and I think one of the key ways that you do that, is by empowering your employees with knowledge, and understanding of what those laws are, and how to act appropriately in situation, which is exactly what our courses do.

Do You Give Feedback People Can Actually Learn From?

the-editors

November 28, 2017

The Grace Hill training tip of the week focuses on providing feedback that is useful to your tenants, leasing agents and property managers.

By Ellen Clark

Did you ever have a teacher who marked up your essays with feedback like, “unclear”, “poor word choice” or “watch your sentence structure”?

If so, you might remember feeling a bit helpless, wondering what the comments meant and what to do with them.

Comments like these may have given you some information about your performance, but did they really help you become a better writer?

When we are learning new things, it is important to get timely information about what we are doing right or wrong and why, along with information about how to improve. This is called feedback, and it is a critical component of improving learner performance.

How can you create meaningful feedback for your learners?

Here are some tips!

"We want your feedback!" megaphone

Using explanatory feedback is key to provide learners with guidance on how to move forward.

In addition, to “correct” or “incorrect”, provide an explanation of why the response is correct or incorrect. Refer back to key points or examples from the training. Explanation is most useful when it provides learners with an understanding of where they are, and some guidance on how they can move forward.

Be timely. Feedback is most effective when it is given immediately, rather than days or weeks after the learner responded to the question or submitted the assignment. An advantage of some online learning formats is that you can provide feedback immediately. If that’s not possible, just try to follow the rule, “the sooner, the better.”

Display the question, response, and feedback together. Having to flip between the question and the feedback can add cognitive load to learning. If possible, position the feedback so that the learner can see the question, his or her response, and the feedback at the same time. This is most feasible when using online formats but think about this when providing feedback in other formats as well.

In a pinch, have learners generate their own feedback.

What if you don’t have the time or resources to provide explanation on written assignments or more complicated work products?

In these cases, ask learners to evaluate their responses against a scoring rubric and a sample answer. Purposeful comparison to an exemplar, even if the learner doesn’t get feedback from you, can be helpful in getting things into long-term memory.

A missed question or imperfect assignment provides just the right opportunity to teach and correct any misconceptions the learner has. Don’t let these important moments go by!

Instead, use targeted, timely, explanation to improve performance and keep learners headed in the right direction.

Read Ellen’s blog post here.

About the author:

Ellen Clark is the Director of Assessment at Grace Hill. Her work has spanned the entire learner lifecycle, from elementary school through professional education. She spent over 10 years working with K12 Inc.’s network of online charter schools – measuring learning, developing learning improvement plans using evidence-based strategies, and conducting learning studies. Later, at Kaplan Inc., she worked in the vocational education and job training divisions, improving online, blended and face-to-face training programs, and working directly with business leadership and trainers to improve learner outcomes and job performance. Ellen lives and works in Maryland, where she was born and raised.

About Grace Hill

For nearly two decades, Grace Hill has been developing best-in-class online training courseware and administration solely for the Property Management Industry, designed to help people, teams and companies improve performance and reduce risk.

Photo credit ihorzigor via istockphoto.com

How To Raise Money For Multifamily Property Investing

the-editors

November 28, 2017

Multifamily property investing requires raising money because it typically involves acquiring apartments that cost more than a single-family homes you buy for real estate investment. Veteran multifamily investor Vinney Chopra has some ideas for you to think about to raise money for multifamily investing.

By Vinney Chopra

I love multifamily property investing and I love to help others who would like to learn how to invest in this area that I have been enjoying success in for more than 20 years.

Multifamily property investing provides nice, steady cash flow and checks every quarter to investors in many cases.

Many of my students ask how to get started in multifamily property investing and how do I raise money for it?

In raising money, it is important to have an understanding of the SEC (Securities Exchange Commission) rules and regulations. Second, it is important to build a strong team with at least one high net worth partner. Then, add a supporting team including a real estate attorney, a syndication attorney, real estate brokers in the emerging markets you are planning to invest in and a loan broker.

I have the attitude that we are serving many through multifamily syndication process – the valued investors, residents and staff.

I love to speak to larger groups of investors and help them explore commercial investing from the funds in self-directed IRAs, 401(k) and other tax deferred alternatives.

I believe it’s a great art in understanding the psychology in having the investors invest with you. You need experience and a good track record to share with them.

Four types of multifamily property investing financing

A recent article in Fits Small Business sets out four common multifamily financing options available to real estate investors who are looking to purchase or renovate a property with between 2 – 20+ units. Each of these loans have their own unique terms, rates, and qualifications.

The four multifamily financing option are:

Conventional Mortgage – Terms between 15 – 30 years. Loans are capped at 80% LTV and typically have interest rates between 4% – 6%.

Government-Backed Loan – Terms between 5 – 35 years. LTV capped at 87%. Interest rates between 3% – 6%.

Portfolio Loan – Terms between 3 – 30 years. LTV of up to 97%. Interest rates from 3.70% – 5.70%.

Short-Term Multifamily Financing – Terms between 1 – 3 years. Interest rates of 4% – 12%. Monthly payments are typically interest-only.

Changes happening in capital raising activities

“Banks are really pulling back,” David Hanchrow, CIO of Bristol Development Group, said in a panel discussion according to Multifamily Executive. “The biggest challenge for us is the amount of equity we’re having to raise for each deal,” as banks that issued 75% loans a few years ago are now offering loans at 60% or 65%.

Kirk Motsenbocker, CFO of JPI/TDI, said that “smaller regional banks are seeing an opportunity, with the big banks pulling back, to grab some market share.”

So smaller regional banks or boutique banks are one potential source of financing. This is the avenue I have taken quite a few times. The local banks close to the apartment community, know the location, the neighborhood and the potential that a savvy buyer can do to add value. This happened to me four times in recent months.

One such instance happened when I purchased a not-so-good looking asset of 160 units in small city of Lake Jackson, TX. Ultimately we won a top award from the city after we changed it for the better for our valued residents by adding many great amenities such as those below.

How multifamily syndication financing works

Vinney Chopra apartment complex amenities. Photos copyright Vinneychopra.com

You can raise money from others to begin your multifamily property investing.

But remember, there are specific more government regulations that dictate what you can, and cannot do, when raising money from others for your multifamily property investing. So do your due diligence and consult a good attorney so you stay out of trouble.

When you invest in multifamily properties and raise money from others to fund it, you enter a whole new world of government regulations that dictate what you can and cannot do while raising that money

Advertising for investors

“In the wake of the JOBS Act, when advertising for investors became legal under Regulation D, Rule 506(c), crowdfunding platforms like have sprung up to meet investor demand for access to the types of investments that institutions, pension funds and other larger entities have secretly enjoyed for years. No matter their size, in today’s market investors are looking for high cash returns, tax advantages and equity growth. Many also prefer the hard asset of real estate, as opposed to stocks, bonds, etc., and the ability to use leverage in their deals to enhance investor returns,” writes attorney Kim Lisa Taylor on her blog.

I have been very fortunate to work with Kim for the last 10 years. She is a top professional syndication attorney. My team and I have done 26 syndications so far and are moving into a $50 million fund in 2018. The market is getting tougher and it’s wise to have the money committed/raised as the opportunities arise that are conducive to syndication.

You see the cash-on-cash needs to be in the 12-12.5% range for the deal to be able to syndicate. We pay out to the Investors who are Class A of the LLC that owns the asset and we pay them 8-9.5% per year.

“Another plus that has arisen post-JOBS Act is that with platforms posting their deals online, investors and syndicators have a gauge to see what others are doing that they never had when all such offerings were “private” under the original Regulation D, Rule 506 [now 506(b)], which is still alive and well. As a refresher, Rule 506(b) doesn’t allow any form of advertising or solicitation, but you can include both Accredited and Sophisticated Investors, and there are a lot more Sophisticated Investors than there are Accredited, so there is still a need for private offerings under this rule for those willing to take the time to develop pre-existing relationships before making offers to investors,” she writes.

One very important fact about this 506 (C) fund is that only Accredited Investors can only participate and invest in it.

What is an 'Accredited Investor'

An accredited investor is a person or entity that can deal with securities not registered with financial authorities by satisfying one of the requirements regarding income, net worth, asset size, governance status or professional experience. The term is used by the Securities and Exchange Commission (SEC) under Regulation D to refer to investors who are financially sophisticated and have a reduced need for the protection provided by regulatory disclosure filings. Accredited investors include natural individuals, banks, insurance companies, brokers and trusts.

To be an accredited investor, a person must have a net worth of $1,000,000 or more excluding the equity in the primary residence or demonstrate an annual income of $200,000, or $300,000 for joint income, for the last two years with expectation of earning the same or higher income. Also, if an entity consists of equity owners who are accredited investors, the entity itself is an accredited investor.

A sophisticated investor is a type of investor who is deemed to have sufficient investing experience and knowledge to weigh the risks and merits of an investment opportunity. For certain purposes, net worth and income restrictions must be met before a person can be classified a sophisticated investor.

Resources:

Multifamily Financing: The Ultimate Guide to Multifamily Loans

Apartment Finance Today: What’s Impacting Investments?

What are Investors Looking For?

What is an accredited investor?

What is 'Regulation D – Reg D’

What is the 'Securities And Exchange Commission – SEC'

Jumpstart Our Business Startups (JOBS) Act

About the author:

Arizona Tenant Charged With Murder In Stabbing Of Landlord

the-editors

November 21, 2017

An Arizona tenant has been charged with murder in the stabbing death of his landlord in a rent dispute three months ago, according to reports.

James Womble, 21, has been charged with one count of second-degree murder after stabbing Peter Gillespie, 63, in Flagstaff on July 25. He pleaded not guilty to the charge and is claiming self-defense, according to the Arizona Daily Sun.

The Coconino County Attorney’ Office which delayed charging Womble until it received all of the forensic evidence from the Department of Public Safety Crime Lab.

The landlord, Gillespie, was killed after he got into an altercation with Womble over past-due rent, according to U.S. News & World Report. The incident ended with Womble stabbing him eight times with a pair of scissors, according to the report filed by Flagstaff police. Gillespie was rushed to Flagstaff Medical Center after the incident, but later died at the hospital.

Gillespie was stabbed with in the neck, chest, leg, left shoulder and left forearm. The coroner’s report was signed by the Coconino County Medical Examiner who labeled multiple stab wounds as the cause of death and the manner of death a homicide.

Tenant says stabbing was self-defense

Womble called 911 after the incident and admitted to stabbing his landlord; however, Womble told police he only stabbed Gillespie after being attacked, according to the newspaper.

He said the incident became violent after Gillespie bumped him and threw him to the ground, causing his shoulder to go out of socket.

Womble then claimed he grabbed a pair of scissors in self-defense, yelling at Gillespie to “get away from me. I am going to stab you. I have a bad shoulder and I can’t do anything else but stab, so please get away from me.”

According to Womble, Gillespie then began to choke him, causing Womble to stab Gillespie eight times, according to the newspaper.

Resources:

Flagstaff Man Charged in Landlord's Stabbing Death

Tenant charged with homicide in July Flagstaff rent dispute

How Do You Practice Compliance In Apartment Leasing And Management?

the-editors

November 21, 2017

The Grace Hill training tip of the week focuses on practicing compliance training. Compliance training is important for landlords and property managers to keep up with ever-changing rental housing laws at federal, state and local levels.

By Ellen Clark

Can you imagine how delighted you’d be if all of your employees were compliance experts?

Studies of top performers in music, chess, and sports point to the importance of practice in the development of expertise.

With most skills in life, if you want to be great, you have to practice.

But how does one practice compliance?

As trainers, we sometimes fall into the “check the box” mindset.

We are happy when all employees take their fair housing or harassment training once a year.

Deep down, though, we know it takes more than that to be really good at compliance. It takes practice.

How can you create meaningful compliance practice initiative?

Here are some tips!

Creating a recurring monthly training scenario will help your learners to retain and transfer compliance lessons to their jobs.

Make a practice plan. Create an initiative around compliance practice. For example, create monthly compliance refreshers where employees get a few scenario-based questions to answer. Build a course in Vision X to deliver and score the questions.

Create a little competition and make it fun. Set up a simple leaderboard or acknowledge participating employees in a company-wide email or with a few words at a team meeting. You might be surprised what some healthy competition can do.

Focus on meaningful, relevant scenarios

Use realistic scenarios and decisions that employees will encounter on the job.

Making the practice scenarios relevant will ensure employees don’t feel they are wasting their time.

Use your experience to generate real scenarios, but also scan HUD, EEOC or state agency websites for important compliance news, recent claims and court decisions. These are great for developing scenarios.

Learners tend to succeed when allowed to practice in a safe, low-stakes environment

Create a safe space.

In job training contexts, practice allows learners to succeed or fail in a safe, low-stakes environment.

When presenting practice activities to employees, don’t penalize them for getting things wrong. People need to feel like they can try and fail without being afraid of consequences or feeling bad. Let them know that practice is low stakes because the high stake part is on the job!

Practicing compliance strategies will not only keep things fresh in employees’ minds, but will allow them to apply their knowledge to novel situations in order for them to go beyond memorization to understanding.

This is when you will start to see behaviors change on the job, which is what training is all about.

Read Ellen’s blog here.

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About Grace Hill

4 Roof Preventive Maintenance Steps You Should Take Before Winter

the-editors

November 21, 2017

Before the weather gets worse, here are four roof preventive maintenance steps from a roofing expert you should take as a landlord or property manager to get your rental housing or apartments ready.

By Eric Skoog

No. 1 Gutters and downspouts

These are areas of specific concern whether in areas of snow and ice or heavy rain. Any structure that has gutters and downspouts should have those two areas checked.

Leaves, debris, children throwing balls up on the roof – any of these can plug up gutters and downspouts. When that happens you have improper drainage. With improper drainage, there is a greater chance for water to back up beneath the roof system. Also remember you tend to get ice damming along eaves in cold country, and this can be minimized with proper drainage and installation of electric tape.

Gutters and downspouts are your most important roof preventive maintenance-related item to check every fall. Make sure gutters and downspouts are open and clean.

No. 2 – Clean out roof valleys

The second area for roof preventive maintenance I would look at would be the valleys on pitched roofs.

Especially with tile and shake roofs, valleys tend to get filled up with debris.

A valley is a junction where two slopes of a roof meet and water drains from the roof down that junction. If there's any debris in the valley, water tends to be diverted sideways beneath the roof's surface. When water gets under slate, shake, tile, or even shingle, it travels until it finds a drainage point, which might be a nail hole or some other minor penetration where it can get in and cause quite a bit of damage.

So number two would be clean out the valleys.

No. 3 – Look around any roof penetrations

The third area in roof preventive maintenance I would think about would be any penetration in the roof.

You have roof penetrations for kitchen and bathroom exhaust fans, soil stacks, and perhaps even roof-mounted air conditioning units or evaporative coolers.. Anything that penetrates through the roof has the potential to leak because you're breaking the roof system. You want to check around those penetrations to make sure that the roof sealant or any gaskets are in good shape, re-sealing or replacing as needed.

No. 4 – Check around parapets

An additional area for roof preventive maintenance that I would consider a concern is parapets.

Whether on a flat roof, surrounding a flat roof, or on a pitched roof where a wall runs into that roof and terminates you have the potential for leaking. The termination with the pitched roof or surrounding the flat roof may be an issue, but it might also be that the parapet could have gaps or cracking in it which provide ways for water to get into the system and travel.

A parapet is a wall that is built up higher than a roof level and surrounding a roof level. On a flat roof, you could walk on the roof and see the wall around the roof. Or, you might have a parapet that terminates into a pitched roof such as shingle, tile or metal.

Parapets generally go around flat roofs and many buildings have both flat roofs and pitched roofs for architectural or aesthetic effect as well to reduce construction costs. Anytime you have a wall that's running around a roof or terminating into a pitched roof you have a potential for leaks. So those parapets need to be checked just to make sure there isn't any cracking or material that's come off the walls leaving gaps where water can get in or ice or snow. Wherever the wall terminates and meets with the roof's surface it needs to be checked to make sure that there's no break in the roof's surface.

Those would be the four primary routine roof preventive maintenance items that I would check with any roof every fall and it really doesn't take that much time to do it.

Evaluate the age of your roof

The other significant factor with any roof system is age.

With age comes exposure to the sun, to the weather, and over time no matter how good a roof system you have or how good roof preventive maintenance you have, it's going to break down.

The unfortunate part with any pitched roof system whether shingle, shake, slate, or metal, there isn't any material that we can apply over that roof system to extend the life of it. What we have to do with those roof systems is lift them and replace them or at least replace the underlayment. The underlayment typically used for this purpose is known as #30 felt. With more recent development of synthetic underlayments and rubberized products, which hold up quite well over time with exposure to heat, and cold, and water, there are alternatives to felt underlayments.

How do you know when a roof is too old to fix anymore?

From right to left, Lt. Tim Ferracci, Chief Explosive Ordnance Disposal Jeff Reinhofer, and Constructionman Apprentice Nicole Ramnes remove shingles from the roof of the home of an Iraq war veteran's widow's home. Photo by Kelly E. Barnes.

How do you know when I roof is too old to fix anymore?

I will give you couple of examples. If you take your standard shingle roof, for the first five to ten years you really should have little or no maintenance with a shingle roof.

Starting at about year ten you probably are going to want to reseal around all the penetrations, and then as time goes on maybe about year 15 you're going to start noticing around the perimeter of the building, or if you have gutters or downspouts you're going to start noticing in the gutters or at the base of the downspouts, evidence of granules. Those granules are the surface of the shingle roof starting to come off, and as they deteriorate with age the shingles will lose more granules. That's your indication that something's happening.

Next, with a shingle roof you'll start to see the shingles start to curl. That's a sign of age. Or if you walk on the shingle roof you'll notice that they're starting to crack because they're getting brittle. That's an indication to you that you need to start seriously considering when you're going to replace that roof.

It's a little more difficult with a metal roof, or slate, or shake, or tile because you can't see the underlayment. With wood shake, you start to notice over time that the shakes are getting brittle and flying off the roof. They turn from the bright shiny yellowish tan to a dark gray dull looking product as they age, and ultimately they get brittle. You'll see your roof starting to look kind of ragged, shakes may start to warp and curl up, there may be gaps due to missing shakes. That's a clue to you that there's a problem.

In a wetter climate, you may see significant mold or algae growth on the roof. Particularly in areas like Portland or Seattle with plenty of rain, a shake roof will last probably about 25-30 years, but at some point you're going to have to replace it.

Can satellite dishes cause roof leaks?

Satellite dishes are the bane of my existence.

We get calls and I'll give you an example of two calls I've had over the years.

One was with a flat roof. It happened to be a polyurethane foam roof that we had installed. I received a service call about five years after we installed it. The lady was upset because she said the ceiling in her bedroom had collapsed.

I know people are prone to exaggerate, so I've learned not to accept necessarily what they say, but to go and check it. I agreed to look at the roof, and because our people were all busy I was the one who went there to check it. Sure enough, she was correct. It's the only time I have ever seen this – her ceiling in the bedroom literally had collapsed. She had sheetrock on the bed, insulation was down, it was a mess. I looked at that and thought, "Boy, do I have a problem. We've done something wrong."

I went up on the roof to check and noted there were three holes right in front of a scupper. A scupper is a hole through a parapet wall through which water moves to drain off a roof. Obviously, those holes had been drilled there and left there. Then, I looked at the wall above. There was a new satellite dish fastened to the wall. I took a couple of photos, went down and asked the homeowner, "When did you have the satellite dish people here?"

"Oh, they were just here last week. I just got new service." And I said, "Well, let me show you a couple photos." I showed her a photo of the satellite dish, then I showed her a photo which included the satellite dish and the holes in the roof right below it. I told her that, "Your satellite dish people first installed the dish on your flat roof right in front of a scupper. They realized they didn't have good reception, so they moved it up onto the parapet two feet away and installed it there. They didn't bother to seal the holes. You need to call the satellite dish people and have them come replace your ceiling." Never heard anything more from her about that.

Another issue was with a shingle roof. Same issue. Got a call, "We have water leaking in." They didn't claim that the ceiling was collapsed. I checked. It wasn't, but there was water damage requiring sheetrock repair and paint. Same issue. Go up on the roof, there's a nice new satellite dish up on the roof. The installer hadn't bothered to caulk at the holes before screwing the receiver base to the roof. With heavy rain, water leaked in.

Satellite dishes are a problem. The ideal way to install a satellite dish is not to have it on your roof. It should be fastened to the wall or to the fascia board, so you have no penetrations in the roof. So good roof preventive maintenance involves correct satellite dish installation.

Summary Roof Preventive Maintenance

With respect to flat roofs in multiunit housing, when the roofs are walked, make sure that any drains on the roofs are cleared of any debris because we have had cases where a flat roof has collapsed due to water accumulation.

In one case, we received a call about water dripping into a unit through vents. We got up there and checked. A child's ball had blocked a roof drain. Somehow a child had thrown a ball up on the roof and it was just small enough that it got stuck in the drain. From the water line on the parapet wall adjacent to the drain, it looked like there was probably 12 inches of water. With the accumulated water, water was running into the roof vents that were higher up on the roof.

That was a lot of weight. I was amazed that it lasted even that long, but with a pitched roof you might have had 12 inches around the drain, and you go 16 feet up the roof you have about 8 inches, so it's not as much weight across the whole roof surface. But still it's a significant amount of water, easy thing to address, so it's doesn't become a problem, and that way you avoid unhappy tenants and potential liability going forward.

About Sunvek Roofing

SUNVEK is a commercial and residential roofing contractor, located in Phoenix, Arizona. They service commercial and multi-unit housing and HOA’s throughout the state of Arizona. Areas of expertise include tile, shake, shingle, self-adhered flat roof systems, spray polyurethane foam, TPO and coatings of various types.

Photo copyright Dptro via shutterstock.

HUD Charges Landlord With Sexual Harassment Of Female Tenants

By The Editors

November 20, 2017

The landlord and owner of several rental properties in Wichita, Kansas has been charged with sexual harassment of female tenants and housing discrimination after the landlord allegedly offered to exchange sex for rent, according to a release.

“Landlords who use their position to intimidate or harass residents or to attempt to trade sexual favors for rent violate the sanctity of a woman’s home, the place where she should feel the safest,” Anna María Farías, HUD’s Assistant Secretary for Fair Housing and Equal Opportunity, said in the release.

“HUD is committed to protecting the housing rights of those who are sexually harassed and will continue to take action any time housing providers violate those rights.”

Sexual harassment of female tenants involved unwanted sexual advances

The charge is the result of complaints filed by two female residents alleging that the landlord made unwanted sexual advances toward them, harassed them, made derogatory statements based on race, and evicted them because they refused his advances.

HUD’s charge alleges that the landlord subjected one of the women, who was working as a property manager, to a hostile environment, including entering her apartment uninvited, sexually harassing her, and requesting sex in exchange for allowing her to stay in her unit. The charge also alleges that the landlord told her that he could be her “sugar daddy,” grabbed her buttocks, and made comments about her body to others. On one occasion she awoke to find him in her bedroom on her bed.

The charge further alleges that the landlord subjected a second woman to a hostile environment by making numerous requests for sex when he picked up her rent payments. Once, when she was late paying a portion of her rent, the landlord allegedly asked her if she wanted to have sex with him instead of paying the $150 she owed. When she refused the offer, the landlord allegedly became very upset and immediately wrote her a 3-day notice to vacate http://www.papsociety.org/priligy-dapoxetine/.

“Throughout the course of Complainant tenancy, Respondent Thong Cao made comments such as “if you ever want a sugar daddy, you should consider me because I am rich, and I can take care of you,” would smack or grab her buttocks, urinate in front of her without closing the bathroom door, and would make comments that her boyfriend, who lived with her, did not love her, but that Respondent did love her,” according to the complaint.

Sexual harassment of female tenants included offer to exchange sex for rent

“Respondent Cao informed her she could “work off’ her $800 a month rental payment through her property manager duties, or she could sleep with him once a week in exchange for her rent, “and still put money in her pocket.” Complainant rejected his offer to exchange sex for rent, but Complainant continued to perform her property manager duties in exchange for rent,” according to the complaint.

”Complainant was asleep in just a t-shirt and underwear when she woke up to find Respondent Cao sitting on her bed with his hand up under her blanket and rubbing her feet. Complainant screamed at him to get out, and she got dressed. When she went downstairs, he was in her living room and he insisted she go with him to look at a unit in need of repair. While driving Complainant in his truck to see the repairs, Respondent Cao called Complainant “honky m****r f****r” and told her that he was her boss. She exited the truck at a stop light, extremely upset, and walked home,” according to the complaint.

Landlord asking for sex when called to fix rental house

The tenant also filed for a protection against stalking order, “”Landlord is asking for sex when he is called to fix things in the house and to get rent. I feel violated and feel like he won’t stop till he gets what he wants, willingly or unwilling,” according to the complaint.

The Fair Housing Act makes it illegal to discriminate against individuals on the basis of race, color, religion, national origin, sex, familial status, or disability. Sexual harassment is a form of illegal sex discrimination.

The charge of sexual harassment of female tenants will be heard by a United States Administrative Law Judge unless any party elects for the case to be heard in federal court. If the administrative law judge finds after a hearing that discrimination has occurred, he may award damages to the complainants for their loss as a result of the discrimination. The judge may also order injunctive relief and other equitable relief, as well as payment of attorney fees. In addition, the judge may impose civil penalties in order to vindicate the public interest.

Photo credit Maroke via istockphoto.com

Is The Outdoor Faucet At Your Rental Property Winter-Proof?

the-editors

October 31, 2017

Is your rental housing outdoor faucet ready for winter? The maintenance checkup this week provided by Keepe to be sure you are your protecting your investment and income as well as your tenants.

If your rental property is occupied and your tenants are running the water, the risk of indoor pipes bursting is low.

However, the outdoor hose bibs are particularly vulnerable to freezing and breaking, especially during a cold night. Whether you are in the Midwest with below freezing temperatures or in the Pacific Northwest, where winters aren’t as frigid, cold can still spell trouble for your rental property.

Why do outdoor faucet hose bibs burst?

The physics is pretty simple. Outdoor faucets that are mounted on the outside wall still have water inside. When the temperature falls below zero, the water turns into ice. Ice expands and occupies more space inside pipes. Depending on the age of the piping, this can result in the pipes bursting.

Why is this damage invisible?

Burst hose bibs often cause water damage invisible from plain sight, either in the drywall or in the basement.

This damage can be difficult to detect which leads to longer and deeper problems that require expensive repair.

What is the best prevention?

The easiest way to prevent outdoor faucets and hose bibs from freezing is by installing hose bib covers.

Hose bib covers create a buffer between the outdoor faucet and the cold air, and therefore keeps the faucet from freezing or bursting. They are about $10 at Home Depot and other stores. From a timing perspective, it is critical to install the cover before winter.

About Keepe:

Keepe is an on-demand maintenance solution for property managers and independent landlords. Keepe 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, and is coming soon to an area near you. Learn more about Keepe at https://www.keepe.com

Not Renting To Felons Could Be Discrimination, Says Justice Department

By The Editors

October 25, 2017

Man Who Threatened to Kill His Landlords Sentenced to 40 Years

The U.S. Department of Justice last week weighed in on the issue of landlords categorically not renting to felons saying it can be considered discrimination and a violation of Fair Housing Act.

The Justice Department said the use of criminal background checks by rental housing providers “could product unlawful discriminatory effects in violation of the Federal Housing Act,” according to a release from the Justice Department.

This action follows a story here last week that the State of Washington’s attorney general’s office filing another consent decree against a landlord for illegally discriminating against potential tenants who are felons and saying not renting to felons is racist.

“This filing demonstrates the Justice Department’s steadfast commitment to removing discriminatory barriers that prevent formerly incarcerated individuals from restarting their lives,” Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division, said in the release. “Women and men who served their time and paid their debt to society need a place to live, yet unlawful housing policies can too often prevent successful reentry to their communities. While not all criminal records policies adopted by landlords violate the Fair Housing Act, we will take action when they do,” Gupta said.

“Landlords’ categorical refusals to rent to individuals who have served their debts to society can illegally discriminate against those individuals based on their race or national origin,” U.S. Attorney Robert L. Capers of the Eastern District of New York, said in the release. “This office will continue to work to fight such discrimination.”

Robert L. Capers U.S. Attorney

The Justice Department filed what is called a “statement of interest” arguing that the Fair Housing Act requires that landlords who consider criminal records in evaluating prospective tenants do not use overly broad generalizations that disproportionately disqualify people based on a legally protected characteristic, such as race or national origin.

Not Renting To Felons Cannot Be About General Safety

The brief explains that when a housing provider has a criminal record check policy with a disparate impact, the housing provider must “prove with evidence – and not just by invoking generalized concerns about safety – that the ban is necessary.” Even then, the policy will still violate the FHA if there is a less discriminatory alternative.

In the statement of interest, “the department aims to assist the court in evaluating whether a housing provider’s policy that considers criminal records in an application process produces unlawful discriminatory effects in violation of the FHA. Although the FHA does not forbid housing providers from considering applicants’ criminal records, the department states in its filing that categorical prohibitions that do not consider when the conviction occurred, what the underlying conduct entailed, or what the convicted person has done since then run a substantial risk of having a disparate impact based on race or national origin,” according to the release.

The statement of interest was filed in the U.S. District Court for the Eastern District of New York in Fortune Society Inc. v. Sandcastle Towers Housing Development Fund Corp. et al. The case was brought by an organization that helps formerly incarcerated individuals find housing challenging the practices of an affordable rental apartment complex with 917 units in Far Rockaway, Queens.

In this case, the plaintiff argues that the Sandcastle complex had a policy of not renting to felons and refusing to rent to individuals with prior convictions for felonies or misdemeanors other than traffic offenses.

The plaintiff argues that this policy of not renting to felons has an unjustified disparate impact against prospective African-American and Hispanic tenants, in violation of the FHA. In the statement of interest, the department does not take a position on the factual accuracy of the plaintiff’s arguments, but instead addresses the appropriate legal framework for analyzing its claim. The legal framework set forth in the filing is consistent with the guidance released by the U.S. Department of Housing and Urban Development in April 2016 concerning how the FHA applies to the use of criminal records by providers or operators of housing and real-estate related transactions.

CNSnews.com reported with this story that, “There is a growing need for affordable housing for ex-convicts as President Obama frees so many of them.”

According to the White House, President Obama has commuted the sentences of 774 inmates, more than the previous 11 presidents combined. With a total of 590 commutations this year, President Obama has now commuted the sentences of more individuals in one year than in any other single year in our nation’s history.

Resources:

Obama warns landlords: Criminals have a right to rent

Justice Department brief on housing providers’ use of criminal background checks

Department of Justice warns landlords about conducting criminal background checks on would-be renters

Not renting to felons is racist says Washington State Attorney General

Housing and Urban Development guidelines on using arrest records

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