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How Much Do You Know About Atypical Evictions?

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By The Editors
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Atypical evictions can happen when landlords and property managers have to deal with the issue of unmarried co-tenants and roommates, sometimes on the lease and sometimes not on the lease.

When things do not work out with these tenants, a property manager or landlord may face what is known as an “atypical” eviction.

Landlords are now seeing more renters who are Millennials. The trend of unmarried tenants is reflected in Gallup data showing more Millennials are currently single/never married than was true for those in older generations. This means they may have roommates sharing expenses. Plus considerably more Millennials are in domestic partnerships. Specifically, more than half of all Millennials, 59%, have never married, and 9% are in domestic partnerships, according to Gallup.

This week attorney Clint S. Dunaway takes on this topic of atypical evictions.

By Clint S. Dunaway

Our law firm is frequently contacted by landlords and property managers in Arizona looking for help with an “atypical eviction.”

There are a few keys ingredients that make up an atypical eviction:

 

    • The first ingredient in an atypical eviction is the actual person we are trying to evict. Often we are evicting an ex-girlfriend, ex-boyfriend, ex-friend, roommates, adult children, relatives, etc. For example, if a woman moves into her boyfriend’s house, they breakup, boyfriend asks her to leave, and she won’t leave–then we must move forward with a formal eviction to get her out of the house.
    • The second ingredient that makes these situations unusual is that the person requesting the eviction is often living with the person they are seeking to evict. This must make for some really awkward conversation around the breakfast table.
    • Tensions can become very high in a home where people are living side by side and one of them is trying to evict the other. In these atypical evictions it’s not uncommon for one of the residents to obtain a restraining order against the other person.

It is important to note that whether it is a “traditional” Arizona eviction or an atypical eviction as described above, we must always follow the same formal process.

There are no shortcuts!

So resist the temptation to just lock this person out of your house and throw their belongings into the street.

Trying to take any shortcuts with the eviction process can:

    • Delay the eviction
    • Cost you money
    • Create more stress in your life.

 Do it right the first time and you will be able to get this person out of your life.

 How Long Do Atypical Evictions Take?

The time it takes to evict someone from your house depends on a few important variables, and your state laws.

One of the most important variables is whether or not there was an agreement for this other person to pay rent. If there was an agreement for this person to pay rent and they were not paying rent then we can send them a typical 5-day notice for non-payment of rent.

The entire eviction process for non-payment of rent can take 3 to 4 weeks. So if you have any illusions about your ex-lover/ex-friend/roommate leaving in a day or two you need to re-adjust your thinking.

If there never was agreement for this person to pay rent and there is not a written lease agreement in place then you must send them a 30-day notice to vacate.

If they do not leave after the expiration of the 30 days then we can begin the eviction process thru the courts.

If you are outside Arizona, please check your specific state laws dealing with atypical evictions and seek legal advice on how to handle them.

Also research your state and federal laws on Fair Housing discrimination issues around tenant couples who are unmarried to be sure you as a landlord and property manager are complying with the law.

For instance, Oregon has enacted fair housing laws to protect marital status. One marital status is not more protected than another. In other words, individuals may not be treated differently, denied, or harassed in a housing setting or transaction based on whether or not the residents are married or not.

Photo copyright istock.com/Manuel-F-O

 About the author:

Clint represents landlords and property managers in landlord–tenant disputes in Arizona. He seeks to provide all of his tenants with useful practical advice, not just legal advice to his clients so they can make the best decisions for themselves and their companies. Errors in renting to the wrong people can be astronomically expensive. Clint holds degrees from the University of Dayton School of Law (J.D., 2010) and Brigham Young University (B.A., Political Science). Clint enjoys spending time outdoors and travelling with his family. He also enjoys cheering on the Arizona Cardinals football team. You can reach him at 480-344-4035 and through his website here.

 

How Well Do You Manage Your Property Manager?

By
larry-arth
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Veteran real estate owner and investor Larry Arth has a great property manager who he has worked with for years. Other owners and  investors struggle at times to find the right management style themselves to work with a property manager. Here are some thoughts on how to make the relationship between owner and investors and property managers work better.

By Larry Arth

I was having a conversation recently with an investor who owned a rental property free and clear and had been happy for years that all things were going well, with tenants paying regularly and checks coming in on time.

For the past five years, this investor was collecting rent checks from the property management company like clockwork. The property management company had been sold to another owner a few years back, but things were still going well. The checks came in right on time every month.

Just what an investor wants from a good property management company, right?

This investor never dreamed a simple change in ownership of a property management company could be a red flag.

However, behind the scenes and unknown to the investor, the property management company handling the property had not been paying – since the ownership change –  the annual property taxes due on her rental.

You all know what happens when you do not pay taxes.

In the case of property taxes, they put a tax lien on your house.

If the taxes are not paid, they can actually sell your house out from under you.

Since the investor owned this rental property free and clear, there was no way to know the taxes were unpaid.

The first time the investor found out there was a problem was when a legal notice was received of years of past due taxes. Now the investor is trying to redeem the rental property after the tax sale.

What is the lesson here for investors and property managers?

For owners and real estate investors: How well do you manage your property manager?

How well do you manage your property manager? Photos copyright DragonImages via Canva

Passive real estate investments are great. But it is really important for real estate investors to properly manage their property managers.

My company helps passive real estate investors, and everyone here at Equity Builders Group believes in watching out for investors and looking forward and seeing all of the possibilities of what could go wrong to keep all the benefits an investment may offer – plus how we can make them better.

This forward vision is like looking through the windshield of your automobile. You will note however that every windshield has a rear view mirror (or now in some vehicles the backup camera in the dash too.)This view is small in comparison to the windshield. But it offers an opportunity for you to look around from time to time so you can get a 360-degree view of where you are going and identify any unforeseen challenges.

Passive real estate investments are of course those with which you have very little to do but sit back and collect checks while your property management companies run your business for you.

That is, until your property management company changes staff and our passive investor, mentioned above, now has to try and redeem the rental property after the tax sale.

This investor of course will look into finding a new, and better property management company going forward.

Based on this investor’s experience, I thought I would offer some thoughts on managing property managers.

7 ways to manage your property manager

  1. Talk with them regularly. Even if checks are coming in, you still want to touch base and make sure the team members you hired are still managing your property and all is good.

  2. Create a checklist of things you want to do throughout the year. Perhaps enter these tasks in your calendar so they get done.

  3. Confirm property taxes are being paid. You should see this expense on an owner’s report. However as this is typically an annual expense, and you are not accustomed to seeing this expense, it is easy to overlook a missing expense like taxes. So log this most important tax expense in your to do list. You can also check the local tax record to ensure it is always paid up.

  4. Review all leases. Know when your units are expected to turn over.

  5. Track your vendors. Like any business, it is turnover of employees or vendors where changes occur. If your property manager switches vendors you want to know why and check on the new ones to avoid unexpected surprises. If your property management company switches ownership you want to vet them as you did when you first hired them. Here is a handy property management questionnaire that I developed over the years that will assist you to hire a great property management company.

  6. Spot check market rents. It is easy to become complacent, but markets are always changing. As an owner you want to know if you are getting fair market rents or whether the market has shifted? If you can raise rents, you want to. On the other hand, if you are charging more than market rents you may risk losing tenants. If you have several units that are overcharging you may find yourself in a sudden escalated vacancy position.

  7. Get pictures of your property at least once a year, and more if possible. Investors love it when you do not have repair expenses. But investors should also be concerned if the property is being properly maintained when they are not seeing some periodic repairs. Keeping a log of pictures as the years go by will allow you to see firsthand the condition of the property.

You can see that there is very little time commitment to help ensure that your property is properly managed and maintained.

As a passive investor you want to let someone take care of the day to day details.

You, however, still want to manage your property managers. Happy investing!

About the Author:

Larry Arth is a landlord and the founder and CEO of Equity Builders Group, a Florida based Real Estate investment Group. As a 36 year veteran to real estate investing, Larry understands that we are now in a global economy and as times have changed, investment strategies must change as well. Larry is an international recognized consultant and speaker and assists hundreds of investors per year, both foreign and domestic to realize their investment potential. He analyzes locations across the country for economic strength and the locations that yield the largest most sustainable return on investment. Within these locations he seeks out and gathers the best teams to deliver sound, high performing and most importantly sustainable turnkey investment. He works with investors to ride the wave of each area-specific market surge. Larry’s primary focus is offering (Non Listed) safe and sustainable turnkey investments to the passive investor.

Employee Evictions And How To Handle The Issue

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By The Editors
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The issue of employee evictions can come up because many communities require their employees to live on-site, and the often include an apartment as part of their compensation.

As in any business, management must sometimes terminate employees.  This article will examine the acceptable grounds for termination and the procedures to require terminated workers to vacate the premises.

Most employees are “at will.”  This means they work at the pleasure of the employer.

The law presumes every employment contract for an indefinite term to be terminable at will.  As an “at will” employee, his or her employment is for an indefinite term at sufferance.  Either party could terminate employment at will for no cause or any cause.  Another term for this is the employment-at-will doctrine.

Management can fire an employee for good cause or no cause, but not for “bad” cause.

For example, an employer and employee agree that the employee will do the required work and employer will provide the necessary working conditions, as well as pay the employee for the work done.

However, there cannot be a guarantee of continued employment or tenure.  The very nature of the “at-will” precludes any claim for a prospective benefit.  Either employer or employee may terminate the contract at any time.

Good cause for handling employee evictions and termination

Good cause for termination includes lying, fighting, destroying company property, inability to perform the duties of the job, and insubordination.  The employer can terminate the employment if he or she makes a subjective determination that the employee’s work is unsatisfactory.

Often times, multi-housing employees receive housing as part of their compensation.  The Arizona Residential Landlord and Tenant Act does not protect these individuals in employee-termination situations.

A.R.S. § 33-1308 states in part:

Exclusions from application of chapter

Unless created to avoid the application of this chapter, the following arrangements are not covered by this chapter…

5. Occupancy by an employee of a landlord as a manager or custodian whose right to occupancy is conditional upon employment in and about the premises.

Management should draft a written agreement stating that employees are not residents; the agreement is not a lease and the time frame for vacating the unit following termination.  If the employee is a current resident, the landlord should cancel their lease agreement and inform the individual that the employee agreement takes precedence over the lease.

Once management terminates an employee, it should personally deliver to him or her a five-day notice to vacate under the conditions of A.R.S. § 12-1173 (the forcible detainer statute).  However, if, at the time of hiring, the employee signed an agreement specifying the amount of time he or she has to vacate, this takes precedence over the statute.

Additionally, it is a good idea to issue this notice at the time of termination.  Although lockouts are permissible as long as they do not cause a breach of peace, most courts do not look favorably on them.  For example, a judgment has in the past awarded $5,000 in punitive damages to a former employee because of a lockout situation.

At the end of the notice period, management may file a forcible detainer eviction requesting possession of the unit, fair rental value from the termination date, attorney fees and costs.  This procedure is identical to a normal eviction for nonpayment of rent.  Following the hearing and judgment, the constable can evict the employee under a writ of restitution after five days.

Consider the following example on handling employee evictions

Clydesdale Apartments hire Miller Tyme and his girlfriend, Amber Lager, to perform maintenance and housekeeping duties.  Apartment manager Bud Wizer requires that the two sign an employee agreement stating they must move out within 48 hours in the event of their termination.

After a few weeks, Bud Wizer smells alcohol on their breath, frequent absences and poor work performances.  The property owners, Mr. Brew and Mr. Stout, elect to terminate Miller Tyme and Amber Lager.  They verbally request that the two vacate within the 48-hour period stated in their contract.

Miller Tyme and Amber Lager refuse to move and the owners file eviction proceedings against them.  At court, Judge Fosters dismisses the eviction because management did not deliver written notice.  On the way out the courthouse, Miller Tyme tells Amber Lager, “It doesn’t get any better than this.”

About the author:

Andrew M. Hull, Esq., Hull, Holliday & Holliday, PLC, www.doctorevictor.com • 602.230.0088

 

 

Two Property Managers Shot During Eviction At Portland Apartments

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By The Editors
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Two property managers for Community Development Partners, working at the Cascadian Terrace Apartments in Portland, were shot and wounded by a tenant during an eviction “due to behavioral issues” in late December.

Both managers, a 45-year-old man and 64-year-old woman, were treated for serious but not life-threatening injuries and are recovering, police said.

The evicted tenant is being held on attempted murder charges.

“Assault detectives booked 65-year-old Reynaldo Diaz Cabrera, the evicted tenant, into the Multnomah County Jail on two counts of attempted murder,” according to a release from Portland police.

“On Monday December 19, 2016, at 12:36 p.m., North Precinct officers responded to the report of a shooting at the Cascadian Terrace Apartments, located at 5700 North Kerby Avenue. As officers were responding to the scene they learned that two people were shot by a known suspect who fled the scene,” according to the police release.

Photo of Reynaldo Diaz Cabrera charged with attempted murder

Property managers shot

“Officers and medical personnel arrived and located the two victims, a 45-year-old male and a 64-year-old female, suffering from serious but not life-threatening injuries. Both victims were transported by ambulance to a Portland hospital for treatment.

“The suspect was located in a vehicle by police at Northeast Martin Luther King Jr. Boulevard and Winchell Street. The suspect was taken into custody without incident. A firearm has been seized as evidence.  Preliminary information indicates that the suspect was formally evicted … and the victims are both employees of the apartment complex management,” according to the police department release.

Community Development Partners, which owns the apartment complex, released the following statement about the two property managers shot during the incident.

“We’re extremely saddened to hear that two exceptional individuals from the property’s management team were threatened and injured by a resident,” the company said in a release according to KOIN.com.

“The resident was in the process of being legally evicted due to behavioral issues. We are pleased that the suspect is in police custody. We’re cooperating by offering law enforcement any information on the resident they request.”

Man Who Shot Portland Property Managers Sentenced to 13 Years

Resources:

Two people injured in North Portland shooting

Man allegedly shot apartment managers after eviction

Evicted tenant held on attempted murder charges

After eviction, suspect shoots apartment complex employees

Cascadian Terrace Apartments

Community Development Partners

 

HUD Charges Utah Landlord With Discrimination Over Pet Policy

By
By The Editors
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An owner and manager of a Salt Lake City apartment complex have been charged with discrimination by the U.S. Department of Housing and Urban Development over failing to rent to a tenant who had an emotional support animal.

The potential tenant had inquired about renting an apartment was told the apartments had a strict “no pets” policy because some tenants are atlergic to dogs and other longtime residents simply do not want animals at the property.

The potential tenant told management “she had paperwork from her doctor prescribing the animal as an emotional support animal, and that the animal was a small dog of about ten pounds.,” according to the complaint.  The tenant had a “disability-related need for an assistance animal and the requested accommodation was necessary to allow her the equal opportunity to use and enjoy a dwelling” at the apartment the complaint states.

The HUD charge of discrimination states, “Amy Sloan and BJJ Enterprises, LLC violated the (Fair Housing) Act based on disability by refusing to provide services to persons with disabilities, refusing to make reasonable accommodations for persons with disabilities, and by making housing unavailable to persons with disabilities.”

The apartments are the Pine Cove Apartments, is a 48-unit multifamily apartment building located at 1243 E. Alameda Avenue, Salt Lake City, Utah.

Discrimination involves no-pet policy

“The rental agreement does not contain exceptions to the “no-pet” policy for assistance animals and does not outline any procedures for requesting a reasonable accommodation to the no-pet policy for individuals with disabilities,” according to the complaint.

“For nearly three decades, people with disabilities have had a right to request the reasonable accommodations they need to fully enjoy their homes, but that right is still being denied,” Gustavo Velasquez, HUD’s assistant secretary for Fair Housing and Equal Opportunity said in a release. “HUD will continue to take actions that ensure that property owners and managers understand their rights and responsibilities under the law and take steps to comply with those obligations.”

“The case came to HUD’s attention when the Disability Law Center filed a fair housing complaint with HUD on behalf of a female resident with disabilities at Pine Cove Apartments, in Salt Lake City, who alleged that the owner, BJJ Enterprises, and the manager of the 48-unit complex had denied her request to keep an assistance animal,” the HUD release states. “The Disability Law Center conducted fair housing tests, which revealed evidence that Pine Cove managers discriminated against people with disabilities.  According to HUD’s Charge, Pine Cove strictly adheres to its “no-pets” policy, even when medical documentation attesting to the need for a reasonable accommodation is presented.”

HUD’s charge will be heard by a United States Administrative Law Judge.  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.

Resources:

HUD charges Utah landlords with discrimination

HUD files charges of discrimination against property owner and manager

Apartment management settles discrimination suit over pets and children

Disability Law Center in Salt Lake City on fair housing issues

7 questions landlords have about pets and pet-friendly apartments

What Should a Landlord Charge for Pets?

Landlord, property managers bullied and harassed over rent increases

By
John Triplett
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Tensions are rising between landlords and property managers, and tenant activists. Landlords and managers have been bullied over rent increases. And they face unpleasant demonstrations from activists as Portland struggles with a shortage of housing and rapidly rising rents.

By John Triplett

Rental Housing Journal

A Portland landlord says he and his property managers have been bullied and intimidated over rent increases after he purchased a small apartment building and had to raise existing rents to afford his new mortgage payments.

He said demonstrators have picketed his personal residence. The have placed notices on the doors of neighbors, camped overnight on his lawn, defecated on his lawn and marched into his property managers’ offices scaring the staff, according to his spokesman, John McIsaac.

The landlord, Landon Marsh, raised rents “only to the lower end of current market rates in Portland,” said McIsaac in a recent interview. Marsh has also written an op-ed style editorial here detailing his opinions on what happened.

McIsaac said the rent increases came after Marsh purchased the small apartment complex, did substantial work to improve the condition of the building and raised rents to cover his costs and mortgage. Unfortunately the rent for one tenant went up by 40 percent and the tenant complained to the Portland Tenants United group.

Telling the landlords’ side of the story

McIsaac said he is speaking out because many in the landlord and property management industry do not feel their side of the story has been told, and that more attention has been focused on what the activists’ demonstrations, and what the tenants say.

“I represent the landlords and property managers who do not want to have exorbitantly high rents, we want more housing stock,” McIsaac said.

“In Portland, 85 percent of the landlords are small operators. They might have their retirement tied up in these properties, but they don’t make a ton of money off of them. So the stereotype is that all of the property owners are huge, out-of-state multimillion-dollar concerns. That is not the case. A lot of these property owners have day jobs,” McIsaac said.

The story of one small landlord

 

Landlord has been picketed by activists in Portland

 

Photo ©Multifamily NW

McIsaac said that with the hysteria over rent increases, “the activist group has targeted a couple of landlords in particular. They are not going after the big guys who own thousands of units. They are going after the little guys who own like 20 units.

“And this one guy, Landon Marsh, who is my client, is in the hospital interior-design business. He is a one-man consulting business.  He does not do property development for a living. He has investment properties. They are small ones. All three buildings he owns combined make up 20 units.”

Where this all started with apartment building purchase

“He bought one building around seven or eight months ago out in a semi-blighted part of East Portland, a working-class area,” McIsaac said. “It was built about seven years ago. And it needed some repairs just from wear and tear. The tenants asked him to make these repairs and he said, ‘Yes I will do that.’ “

“So he set to making the repairs. But he had bought the building at market value. And market value right now is a hell of a lot higher than it was seven years ago – it’s a lot higher.

“He said that he was going to have to raise the rent. But he said he would keep the rents – and he stuck to this – at the very low end of market rates. So he’s not a profiteer by any stretch of the imagination,” McIsaac said. He said in his opinion, “This guy is a liberal, progressive classic Portlander. He is a caring, altruistic, sensitive man.”

Group pushing rent control and end to no-cause evictions for Portland

Landlord and property managers face harassment from tenant activitsts

Photo ©Multifamily NW

Portland Tenants United is a growing tenants union dedicated to organizing tenants to take action to strengthen and enforce tenants’ rights and protections, according to their Facebook page.

At a recent press conference, Portland Tenants United and City Commissioner-elect Chloe Eudaly, promoting something called “Keep Portland Housed,” called for a freeze on rent and an end to  no-cause evictions in Portland until there is a policy in place to improve conditions for renters.

Leader says group wants municipal disobedience and rent control

“We’ve been in an officially declared housing emergency for over a year. Despite that, tenant protections – the most critical component to preventing homelessness – have not meaningfully improved, and conditions continue to worsen,” Eudaly said in a press release. “My election, and the passage of Portland’s housing bond, present a clear and obvious mandate to City Council to act.”

Eudaly admits state laws prohibit local rent control measures. But she wants city commissioners to commit “municipal disobedience,” do it anyway and fight the resulting lawsuits, she told the Portland Tribune.

Portland Tenants United is focused on lowering the eviction rates in Portland by organizing tenants to vocalize their concerns. Gabriel Erbs, organizer for the group, insists the fight is far from over, according to a report on Portland Patch.  “Tenants can be evicted, for whatever reason or no reason at all, at the landlord’s whim,” he said.

Landlord and tenant activists have clashed

Landlord and property managers face tenant activist protesters in Portland

Tenant activists demonstrate outside Portland Art Museum photo ©Multifamily NW

Tensions escalated late in 2016 at the Portland Art Museum during an awards ceremony. Multifamily NW, an association promoting quality rental housing, was holding its annual ACE awards ceremony for its members when protestors from Portland Tenants United showed up.

Dozens of protesters gathered across the street from the museum. It didn’t take long for tempers to flare, according to koin.com.

The television station reported that, “Tensions were high. Some choice words were exchanged as well as some apparent shoving as protesters came face to face with ceremony attendees. Shouts calling the multifamily association attendees ‘parasite’ and ‘bloodsucker’ rang out from protesters.”

Landlord and property managers have been bullied by tenant activist protesters in Portland

Protesters push past security guards photo ©Multifamily NW

A small group of protesters stormed past security into the museum to disrupt the event. They were soon removed by security, according to katu.com.

Deborah Imse, executive director of Multifamily NW, said in response to the protest, “Over the past few years, rents in Oregon have risen while incomes have lagged behind, creating an urgent housing crisis. In order to thrive, the region needs to work together to create more quality housing options for families of all incomes.

“With demand for housing continuing to increase, we must take action to reduce rental costs by increasing the variety of housing types available to people of all incomes and creating more subsidized affordable and market-rate units,” Imse said in the statement.

Property management groups say more apartment units needed

Any solutions to the Portland housing issue, property management organizations say, should be market-based. A spring 2016 apartment report released by Multifamily NW  says that “Portland’s current development pipeline includes an impressive 21,600 proposed units.”

“More housing is the solution, and our priorities are to help increase supply and educate politicians on the fact that simply adding fees and making business harder has the reverse effect on the problem they want to solve,” Multifamily NW’s  Imse wrote in an email to the Portland Mercury.

Landlord and property managers bullied by tenant activists in Portland

Imse’s image on protester’s poster photo ©Multifamily NW

“As the organization representing property owners and managers, Multifamily NW has adopted a solutions-oriented approach to address the housing shortage. The market data we collect, along with reviews of affordable housing policies across the country and the experience of our members, have shown us the best way to create affordability in the housing market: adopting proven strategies that add to the housing supply,” Imse wrote in an article on Oregonlive.com  in early 2016.

Barrier to constructing new apartments need to be removed

“To increase the overall housing supply, we need to remove barriers to building. This includes updating zoning codes to allow for a wider variety of housing types at a range of price levels.

“At the same time, we should streamline the process for development review and permitting new construction while retaining standards for high-quality buildings. Under the current process, approvals can take a year or more, adding to project costs and delaying the construction of much-needed market-rate and affordable units,” Imse wrote.

Landlords trying to do the right thing caught in the middle

Landlords and property managers bullied by tenant activists over rent increases

Photo ©Multifamily NW

McIsaac said Marsh tried to work with the existing tenants on payment plans and provide plenty of lead time and help moving if they decided not to pay the rent increases. Most tenants decided to stay, he said.

No lawsuits have been filed.

“But they have come up with some non-factual statements about how he has treated tenants and what he has said to them. And he has bent over backwards, and so has the rental company, to make it easier for tenants,” McIsaac said.

“So it is interesting here in Portland the media has not jumped on him, they have been extremely neutral on him. The head of the tenants union has taken it upon herself to negotiate with landlords on behalf of the tenants and she is not a lawyer, not a property owner, she’s just an activist,” McIsaac said.

Property managers bullied as activists marched into property management office

Activists were protesting at one event and then went over to the office of the property management company Marsh had been using to handle his rentals.

“They marched into the A&G Rental Management LLC office and intimidated the people working there. Drove some of them from the main area back into their offices. They had to lock themselves in their offices. And the principals were not in the office at the time, so they basically attacked the support staff – not physically – but screaming, bullhorns, stomping, just marching through this office. It’s not very big,  maybe a grand total of 1,000 square feet. So 30 of them came in there so it was pretty unpleasant,” McIsaac said.

Challenge of buying apartments at market rates

“The bottom line is, if somebody buys a new rental property at market rate from somebody else who owned it for 10 years, the owner is going to sell it at market value. The new owner is going to have to raise the rents to make the monthly mortgage. If you do away with no-cause evictions, then you also do away with the ability to evict bad actors who are drug dealers or domestic abusers, because that is what the law exists for,” McIsaac said.

“His (Marsh’s) other properties have long-term tenants – his other two properties – and so it’s just a crazy, uncomfortable situation. I think the property managers and the landlords are really willing to work with tenants because of the type of city we have here – but the tenants union has refused conversations and any negotiations that are not absolutely in their favor,” he said.

“And they have a couple of politicians on their side,” McIsaac said. “Some politicians support no-cause evictions and rent control. But they don’t know the facts. If they did, they would not do it. The Portland Tenants Union is funded by the national Service Employees International Union (SEIU). No-cause evictions are No. 1 and rental control is No. 2 but I think there are other things lurking underneath if they can get these laws passed.

“If you have rent control you cannot improve your buildings. You have to be an altruistic millionaire to improve a building with rent control because rent is where you derive your income.”

Resources:

Want to lower housing costs? Increase the supply

Portland Tenants United Picket Housing PAC

Multifamily NW The high cost of rent control

East Portland tenants plaster landlord’s neighborhood with flyers

National Multifamily Housing Council

Ash Street Tenants Association letter to landlord Landon Marsh

Portland tenants publicly shame their landlord

Portland Tenants United protest housing awards

John McIsaac Communications and Public Relations

Oregon’s housing crisis too big to ignore – opinion.

 

What Is The No.1 Challenge Faced By Property Managers?

By
john-triplett
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6 Findings About Property Managers In New Study

Property managers face many challenges from growing their portfolio, to keeping their business profitable and many more.

This new survey from sheds some light on some specific problems and what property managers have to say.

And by the way, 95% of them love their jobs as property managers.

By John Triplett

Rental Housing Journal

A new survey of property managers shows six major findings in the research from 1,500 property managers around the country.

The survey was done from June 6, 2016 to July 7, 2016 by Buildium.com and the National Association of Property Managers, with property managers across the country responding to the survey called the State of the Property Management Industry.

Among some of the interesting statistics were that 55% of survey takers were women. “In the property management industry our population tends to skew a little older and the older the population the more women we see,” said Gail Phillips, executive director of the National Association of Property Managers.

Half of the survey takers were over 50-years-old, and half said they were owners of the company, while 87 percent had been in business for more than three years.

Finding No. 1

80 percent of property managers manage the property of other investors, with 29 percent managing a mix of their own and other’s portfolios. And, 48% of property managers have portfolios which include property they own. Of those, 19 percent manage only their own real estate.

A focus has been on growth.
Portfolios have grown in the last two years – not necessarily revenue growth – but portfolio growth.
And growth is expected in the next two year. Mixed portfolios performed the best closely followed by third-party portfolios and followed by self-owned portfolios.

Finding No. 2

Property managers are in the middle of a high-growth cycle, with 94% reporting a profitable business, and 89 percent expecting to grow in the next two years.

“There is really good news based out of this survey” about profitability, Phillips, executive director of the National Association of Property Managers who participated in the survey with Buildium.com.

Why have we seen so much growth?

“Our leadership has seen different types of growth. Some of them are acquiring other companies,” Phillips said.  In California there has been a change as they have seen influx of both landlords and renters, especially Millennials. The more of them that have been added to the market, the busier it is becoming. There is no clear “yes” or “no.”  “We still have those investors out there,” she said. And some members are picking up work from investors who have bought.

While growth does not always go hand-in-hand with profitability, she said, 94 percent indicated they are seeing profitability, 50 percent are very profitable, only two percent reported losing money and four percent breaking even “which is incredible for any industry.”

Most are looking to grow their portfolio next year and looking at ways they can find other investors.

What is the most effective way to grow you business?

property managers most effective way to grow business
Chart courtesy of Buildium

What is the no. 1 challenge faced by property managers?

Finding No. 3 – Finding reliable vendors is the top challenge faced by property managers, and good communication is their most important skill set.

Most property managers, 82 percent, said they charge fees as a percentage of rent, and 57 percent say they charge between eight and 10 percent, while 24 percent said they charge between five percent and eight percent.

Those charging flat rates, 35 percent of them,  charge between $100 and $149.

This is just property management fees.

property managers survey on how much do you charge?
Chart courtesy of Buildium.

What is the key to success in your business?

    • Communication is the key to success – 60%
    • Organizational skills and staying in control – 35%
    • Hiring and technology – 30 percent

Finding No. 4

43 percent of property managers prefer working with intention investors and 41 percent find inexperience the top challenge in working with owners.

44 percent say they prefer working with owners who intentionally acquire larger portfolios.

What is your biggest owner challenge?

41 percent say inexperience and lack of understanding how the process works.

Finding No. 5

88 percent of property managers use dedicated, cloud-based property management software.

Buildium.com who did the survey is a technology company, and said there is a growing importance of technology in property management.

Tenant screening is the most popular service they use.

property managers love their jobs
Chart courtesy of Buildium

Finding No. 6

95 percent of property managers say they love property management, and nearly a third are motivated by being more efficient at work.

On the question of what motivates property managers:

    • Being more efficient – 31 percent
    • Make more money – 23 percent
    • Helping people – 21 percent
    • Having more free time – 13 percent
    • Pleasing the boss – 6 percent
    • Advancing career – 5 percent

Get the full report here from Buildium.com

Properties, Property Managers Must Adapt to Renter Needs, Changes

property managers survey in report

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Not Renting To Felons Is Racist, Says Washington AG

By
By The Editors
-
Justice Department Sues Owner, Manager of Rental Properties for Sexual Harassment of Female Tenant

The State of Washington’s attorney general’s office has filed another consent decree against a landlord for illegally discriminating against potential tenants who are felons, according to news reports.

A recent court filing indicates that the Washington State Attorney General’s Office believes that denying a prospective tenant with a felony conviction is racially discriminatory, according to KIRO TV in Seattle.

A member of the Attorney General’s Civil Rights Unit served a Consent Decree on Dobler Management Company, a property management firm in Tacoma, after conducting a simulated test on whether the landlord was illegally discriminating against potential tenants, according to the report.

This is at least the third case in the past few months in Washington.

In August, the Washington attorney general’s office filed a consent decree against Pacific Crest Real Estate, LLC, a multifamily residential property business.

“Discrimination may occur when housing providers place criminal history restrictions on housing,” according to the decree. “In Washington, racial disparities exist in the criminal justice system. African-Americans are arrested, convicted and incarcerated at higher rates than non-African Americans. As a result, criminal history restrictions on housing may have a disparate impact on African-American renters.”

No blanket ban on felons

The consent decree says that  the apartment landlord or property management company must show a felony restriction is justified by a legitimate non-discriminatory interest and is tailored – such as considering  when the underlying conduct occurred, what the conduct entailed, or what the convicted person has done since. Otherwise, “a housing provider’s blanket policy prohibiting tenants based on a criminal history may discriminate on the basis of race or color and violate the Fair Housing Act, the Washington Law Against Discrimination, and the Washington Consumer Protection Act.

The attorney general said in the decree that Pacific Crest “failed to revise a policy at Windsor Court which rejected rental applicants without consideration of when the underlying conduct occurred or  what the underlying conduct entailed and what the convicted person has done since.”

A tester using a Craig’s list ad about the rental property called the property and said he had a felony conviction and asked if he could still apply for a rental.

A representative for Windsor Court wrote back in an email that Windsor Court prohibits any renter with a felony, according to the decree. That response violated the attorney general’s language about blanket felony rental policies.

The decree requires the company to use an independent third-party to train all principals, officers, directors, agents, managers and employees who are involved in showing, renting or managing units to undergo fair housing training with specific emphasis on the discriminatory impact of criminal history exclusions.

The decree also required the company to pay $6,000 to the attorney general, of which $2,000 was designated a civil penalty. Future violations could cause fines of up to $25,000 to be imposed.

A second consent decree in August was filed against Premier Residential, LLC in Tacoma, Washington, involving The Park at Auburn Apartments.

It involved a tester using Craig’s list as well and the property representative, similar to the case above, told the potential renter no felony convictions were allowed. The consent decree in this case involved similar training and posting of notices and a payment of $5,000 to the attorney general of which $4,000 was a civil penalty.

Resources:

Washington Attorney General Serves Consent Decree

Washington State Attorney General cases

State of Washington vs. Premier Residential

State of Washington vs. Pacific Crest

Not renting to felons is racist

Felons and fair housing in Washington State

Copyright by Alachua County fair housing via creative commons license.

 

ADA Compliance Tips In Fewer Than A Thousand Words

By
the-editors
-

ADA Compliance Tips In Fewer Than A Thousand Words

By Paul A. Henderson, Esq. | Law Offices of Scott M. Clark, P.C. 

With the plethora of lawsuits being filed over alleged non-compliance with the Americans with Disabilities Act ("ADA") by a drive-by plaintiff, and our own Christopher Walker having his pithy correspondence to the attorney filing those lawsuits being included as an exhibit to the Attorney General's Office's efforts to intervene in those lawsuits, the ADA is a hot-button topic right now.

 Compliance with the ADA is no trivial matter, and thousands of pages can be devoted to describing the minute detail involved in construction, compliance, and litigation over the ADA.  Despite the ADA being a weighty topic, there are some brief points to address that should avoid some of the most common pitfalls facing owners and operators of residential rental properties.

Parking Spaces

The biggest issue right now is parking.  Parking spaces aren't simply a matter of slapping up a sign flagging a specific space for disabled parking only.  First, there are two different types of disabled parking spaces:  "car" accessible spaces and "van accessible" spaces.  Car-accessible spaces, otherwise known as "standard" spaces, must have a width of no less than 8 feet.  In Phoenix, however, spaces in multifamily communities' parking lots must be at least 8.5 feet wide for regular parking and 11 feet wide for disabled parking, so the ADA minimum is trumped here.  Each car-accessible disabled space must abut an access aisle that is no fewer than five feet wide, and this aisle must both extend the same length as the parking space (which for all parking spaces in Phoenix is at least 18 feet deep) and lead to an accessible route to the rest of the area.  Each space must also be flagged by a sign that indicates it is reserved/restricted for disabled parking only, and the base of this sign must be at least 60 inches above ground level.

Van-accessible spaces have additional requirements.  The ADA decrees that the van space abut an aisle that is 8 feet wide at the minimum, have additional signage that indicates the space is van-accessible, and must have vertical clearance of no less than 98 inches.

Disabled parking spaces also have minimum quotas for your parking areas.  There is a sliding scale for spaces.  For each multiple of 25 up to the first 100, you must have one (e.g., 3 disabled in a total of 51 to 75), one for each additional multiple of 50 up to 200, and then one for each multiple of 100 up to 500. For 500 to 1000 total spaces, no fewer than 2.0% must be disabled spaces, and for more than 1000, the minimum number is 20 plus one for each hundred spaces past that first 1000.  Keep in mind that as soon as you cross a threshold, you must have the full number of disabled spaces – so always round up.

Van spaces further complicate this.  For every eight disabled spaces, one must be van-accessible.  If you have 9 disabled spaces, for example, then you must have 2 van-accessible and 7 car-accessible spaces.

Parking spaces aren't the only area of ADA compliance that is important to owners and operators, but they're the topic that has received the most attention recently.  Accessible bathrooms for your public areas must have stall clearance of 60 inches from the side walls and 56-59 inches of rear wall clearance.  Grab bars on side walls must measure at least 42 inches long and be located at most 12 inches from the rear wall, and, if there is one on the rear wall, it must be at least 36 inches long and have at least 12 inches of reach on each side from the center-line of the toilet.

These requirements are important whether you are constructing new parking areas or are replacing and re-striping current ones.  However, when you are involved in any sort of re-striping (even something as simple as adjusting a small area), you cannot reduce the number of accessible spaces even if your plan for re-striping keeps you above the minimum.  If you are forced to remove a disabled-only parking space, you must recreate it elsewhere.  A 24-space lot currently with 2 disabled spaces must always have 2 disabled spaces, even though the ADA requires only a single space.

Other ADA Topics

In your units, are accessible apartments constructed so that there is sufficient clearance inside the unit for wheelchairs, that cabinets and sinks are designed to permit passage around and use by a mobility-impaired individual, and that there are no unnecessary steps or level changes?  Front doors on accessible units must be flush with the ground (i.e., no stairs) and not constructed on impermissible level grades.

These may seem only like design issues, but if your community was not designed with them in mind, or some evolution of the community has caused you to fall out of compliance, you will need to come back into compliance as quickly as feasible.

ADA Issues of the Future

The next big issue will be website compliance with the ADA.  This topic is too technical to discuss in this article, but key points that will be coming up will be text-to-speech functionality, magnification, and other visual-impairment accommodations.  We'll be addressing this topic, and many others on ADA compliance, in the future.

For now, keep one important thing in mind:  if you have any questions, never hesitate to ask your attorneys for advice.  The Law Offices of Scott M. Clark, P.C. stands ready to assist you on all legal matters you, as property managers and owners, may face.

4 Reasons Building New Homes For Rent Could Work

By
john-triplett
-

Building new homes for rent is going on in several selected locations around the county. In fact some communities of new homes for rent are starting to look more like an apartment complex based on a multifamily model but with single-family homes. How well this is going to work for the real estate investor depends on a number of factors, John Burns, CEO of Real Estate Consulting, writes. He cautions that build-to-rent could work in some areas but not everywhere.

By John Triplett

Rental Housing Journal

Building single-family rental home neighborhoods seems like a great idea, until you run the math, John Burns writes in a recent report.

“Almost 12% of all households in the country now rent a single-family home. Certainly, a portion of these renters will pay a rental premium for a new home,” Burns writes.

However, there is a snag.

“While the rental demand remains strong, our home building and rental clients who have run the analysis have concluded that build for-sale homes usually create the most profits. Thus, most new home neighborhoods will continue to be for sale rather than for rent,” according to Burns.

Burns says there are exceptions, however, particularly when generating cash quickly is the priority.  Burns says these include:

  • Weak for-sale demand. For-rent communities make sense in areas where for-sale demand is weak. When a for-sale community might take years to sell out, a for-rent community can return cash sooner.

  • Helping retail feasibility. A master developer may need to attract more residents quickly to help its new retail center thrive. Rental homes generally lease up very quickly and can bring needed customers to an area to help support a retail development.

  • Additional segmentation. The developer might also choose to increase cash flow by selling a for-rent parcel to someone who won’t build homes that compete with the for-sale homes in the community. This strategy generates cash and brings future homebuyers to the community.

  • Significant relocation area. Often, relocating households prefer to rent for a while before buying. They want to learn more about the area, and might even want to wait for more certainty in their job situation.

buld new homes to rent

“In summary, build for rent can make sense in some instances, but build for sale will continue to dominate the single-family home construction landscape.  Do you agree or disagree?  We would love to hear your thoughts. Please take our survey,” Burns writes.

New homes for rent

While Burns is pointing out what his consulting research shows, last year some homebuilders, such as Lennar, announced they are starting to build new home communities for rent.

Lennar said in a release last year that it has started building new homes for lease in Sparks, Nevada at Frontera at Pioneer Meadows.

According to Lennar, Frontera offers 80 new single-family homes for lease offering six unique floorplans to choose from ranging from approximately 1,210 to 2,182 square feet of living space and two to four bedrooms plus private yards. Residents will benefit from brand new upgrades including front and backyard landscaping, gourmet stainless steel appliances with refrigerator and microwave, upgraded flooring, granite countertops, wood-style blinds, washer/dryer and attached two-bay garages.

“From the beginning, our company has always catered to our homebuyers and provided them with superior care and attention to detail that they deserve,”  Dustin Barker, Division President for Lennar, said in the release last year. “We feel honored that we have been able to serve the needs of homebuyers throughout the country for so many years and are thrilled to now enter the rental market and offer even more outlets for our customers than ever before.”

Homebuilders note that new rental house subdivisions have advantages over rental house portfolios amassed by investment funds such as Blackstone Group’s Invitation Homes, which reportedly has 48,000 single-family rentals, according to an article on new home rental communities in the Orange County Register.

“A lot of people want to buy a single-family home, but for whatever reason, they’re credit challenged,” Jeff Roos, Lennar’s Western regional president, told the Orange County Register.  “There’s a great deal of demand. There’s an underserved market.”

While those landlords have hundreds of homes spread throughout a metro area, the builders can cluster their rentals together, making them easier to rent out, maintain and repair.

Rental house starts represented 3 percent to 6 percent of all single-family starts in the nation since 2007, up from 2 percent to 3 percent in the prior 17 years, according to the National Association of Home Builders.

Building new homes for rent more like a multifamily model

Another builder has started new homes for rent in the Central Texas areas near Austin and San Antonio.

Building new, where homes would be in one community, also could eliminate logging miles back and forth to conduct repairs.

 “Where we differ from the single-family rental home platform is we are a contiguous, cohesive community,” Mark Wolf, who launched AVH Communities, told Builderonline.com says. “We build brand-new from the ground up. We’re amenitized like an apartment, operated like an apartment, and managed and maintained like an apartment.”

The renters are expected to pay for base utilities and take care of the inside of the house. “We fix anything that goes wrong like lights and toilets,” Wolf said. AHV plans to target a broad spectrum of renters, from young couples to baby boomers. “We want to provide workforce housing for nurses, policemen, and firemen.”

If you have any questions, please contact John Burns at (949) 870-1210 or you can reach him here on his website.

Resources:

John Burns featured research

Home builders move into the build-to-rent space

Lennar introduces new home community for lease

Homebuilders are becoming landlords

One company trying Texas for build-to-rent

Lennar homes

Frontera at Pioneer Meadows

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