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6 Ways To Deal With The Danger From Mold And Mildew

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By The Editors
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Here are 6 ways to both prevent mold and mildew and how to clean it if you find mold and mildew in your rental.

Here are 6 ways to both prevent mold and mildew and how to clean it if you find mold and mildew in your rental.

By Eli Secor

When it comes to property cleanliness, mildew and mold can cause hazardous health and living conditions. It can also lead to costly repairs and may even make the unit uninhabitable and leave you with the bill to provide alternate housing.

Here are a few ways to avoid mildew and mold, as well as what to do if it already exists in your unit and ways to clean mold and mildew.

No. 1 – Take care of ventilation in the building

  • Install bathroom and kitchen fans and remind tenants to use them regularly
    • Open the windows if not using the fans
  • Install moisture-detecting switches
    • Moisture-detecting switches will turn fans on when moisture levels become elevated
  • Use dehumidifiers and air conditioners to reduce moisture in the air.

No. 2 – Be proactive in preventing leaks

  • Replace water heaters according to the manufacturer’s instructions
  • Use a draining pan that drains outside
  • Install leak detectors under sinks to alert you of any leaks

No. 3 – Include clauses regarding mildew and mold in the lease

  • Have tenants sign a form stating that it is their responsibility to address mildew and mold problems and notify the landlord
  • Ensure that tenants are reporting water leaks so they can be fixed in a timely manner
  • Essentially, the responsibility is on the tenant to not allow moisture issues to happen in their unit. Having the right forms that are up to date is really important no matter where you get them.

No. 4 -Cleaning mold and mildew

  • If you decide to hire a contractor to clean up, be sure that they have the proper experience and knowledge.
  • Check their references and ensure that they are following the United States Environmental Protection Agency’s “Mold Remediation in Schools and Commercial Buildings Guide.”

No. 5 – Cleaning

No. 6 – Know when to contact a professional

  • If you believe that there is a bigger issue dealing with water and/or plumbing, be sure to contact a professional.

Mildew and Mold: Takeaways

Mildew and mold can do serious damage, especially when not taken care of right away. Therefore, be proactive.

Make sure that you prevent mildew and mold from occurring in the first place. Avoid leaks by replacing equipment when needed and install moisture detectors where you can; ensure that the unit has proper ventilation.

Lastly, if you are unsure of what to do or believe that there is a serious problem, contact a professional.

About the author:

Eli Secor started LandlordGurus.com with long-time friend and fellow landlord Chris Lee. After many a discussion about how to manage various tricky rental property issues, they decided to share their experiences and expertise with other independent landlords.  Along the way they are finding new answers and new tools, which they also share.

Should The Power Be On In a Vacant Rental?

By
Hank Rossi
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Should you leave the power or the hot water on in a vacant rental is the question this week for Ask Landlord Hank. 

Should you leave the power on in a vacant rental is the question this week for Ask Landlord Hank. Remember Hank is not an attorney and is not offering legal advice. If you have a question for him please fill out his form below.

Dear Landlord Hank,

My rental does not have power or hot water at the moment. Should I set those utilities up for showings, and then cancel or close the accounts before tenants move in?

–Tina

Hi, Landlady Tina,

I would definitely have the power on so that your place shows as well as possible and looks homey, bright and cheerful, and that the indoor temperature is comfortable.

When I show a property to a prospective tenant, I make sure all the lights are on, etc. The water needs to be on too, in case someone needs to use the restroom, but hot water should be turned off at breaker panel – there’s no need to pay to heat the water when no one is using it.

Make sure your lease indicates that the tenant is responsible for the power and that you receive verification that that power has been transferred into the tenant’s name on the first day of the new lease.

You can get in trouble if you turn off the power after someone has moved in.

Sincerely,

Hank Rossi

Each week I answer questions from landlords and property managers across the country in my “Dear Landlord Hank” blog in the digital magazine Rental Housing Journal.    https://rentalhousingjournal.com/asklandlordhank/

Rent Sarasota
Owner/Broker
1000 East Avenue N.
Sarasota, Fl 34237
DIRECT  941-374-0675
Office  941-328-8999
Fax     941-538-7212
Should you leave the power or the hot water on in a vacant rental is the question this week for Ask Landlord Hank. 
Landlord Hank says, “The water needs to be on too, in case someone needs to use the restroom, but hot water should be turned off at breaker panel.”

Ask Landlord Hank Your Question

Ask veteran landlord and property manager Hank Rossi your questions from tenant screening to leases to pets and more! He provides answers each week to landlords.

  • This field is for validation purposes and should be left unchanged.

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A Tenant Poured Grease Down Drain Who Is Responsible?

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One Of Your Tenants Smells Gas Leak? Here’s What To Do

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By The Editors
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One Of Your Tenants Smells Gas Leak? Here’s What To Do

A gas leak at your property is an emergency that requires immediate attention and action. This article will focus on what you or your tenants should do if they suspect a gas leak.

By Phil Schaller

Luckily it’s pretty easy to know if there’s a gas leak at the property. Gas companies inject a non-toxic odorant called mercaptan into the gas. This provides the rotten egg or sulfur smell to alert the resident that there’s a leak.

If you or your tenants smell gas, leave the property immediately. When you can no longer smell gas you should be safe – if you smell gas outdoors, leave that area as well. Keep your distance from the property until the issue has been resolved.

As you exit the property, leave the doors open if possible. This won’t stop the leak but it’ll allow some gas to escape and reduce the risk and potential damage to the property.

After you or the tenants are a safe distance away from the property and don’t smell any gas, call the fire department (911) and the gas company. They’ll be able to assist with shutting off the gas to the property.

Do not under any circumstances create a spark if you smell gas. Here are a few household items that can create a spark:

  • A telephone, or any mobile device that has a battery
  • Matches, a lighter, or another source of ignition
  • Electrical switches, including lights
  • Appliances
  • Car ignitions/spark plugs
  • Flashlights
  • Garage door

Once the gas has been shut off, it’s time to call in a pro to assess and repair the piping or appliance that caused the leak. Leaks are most likely caused by faulty appliances or because someone hits and/or ruptures a gas line. Your RentalRiff property specialist can help with this as can many HVAC companies.

Gas leak checklist for tenants

Here is a checklist you can provide tenants on what to do if they smell gas (often we’ll print cards with these instructions for our customers/tenants to put on the refrigerator):

  • If you smell rotten eggs or sulfur leave the property immediately.
  • Leave doors open as you exit the property.
  • Once you’re a safe distance away, call the fire department (911) and the gas company – they’ll be able to shut off the gas.
  • Call in a pro (either your RentalRiff property specialist or an HVAC company) to assess your gas pipes and make the necessary repairs.

Hope this quick guide is helpful and provides a baseline for what to do if there’s a gas leak. Any questions on this topic please feel free to reach out any time – your local gas company will also be a great resource.

Happy landlording!

About the author:

Phil Schaller is an experienced landlord and the founder/CEO of RentalRiff – an alternative service to traditional property management that provides ongoing oversight and upkeep of rental properties, while serving as the main point of contact for tenants. You can reach him at 541-600-3200. Maintenance and repair costs are included and property specialists are licensed/insured. Phil is a Pacific Northwest native, father of two, and fly-fishing addict.

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Digital Leasing Requires a Precise Human Touch

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By The Editors
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Digital leasing still requires a human touch and it is essential to find ways to infuse the human element into virtual leasing.

Digital leasing still requires a human touch and it is essential to find ways to infuse the human element into virtual leasing.

By Kendall Pretzer

Digital leasing has revolutionized the way the real estate industry operates. Fading are the days of traditional leasing when prospects had to physically visit properties to see the apartment and make a decision. The entire process can be completed digitally, and prospects are taking advantage of these tools. Prospects will explore online and acquire extensive knowledge about a property before reaching out.

Leasing teams can shine in the digital leasing process by leveraging technology to enhance the customer experience.

From the initial inquiry to move-in day, there are countless opportunities to create a seamless and engaging journey for prospective renters. Prospects can tour apartments virtually, examine floor plans and sign a lease online without setting foot in a community until move-in day. While digital leasing offers many benefits, including convenience and flexibility, it doesn’t nullify the human touch and how it functions as an essential component of leasing in today’s digital environment.

The Human Touch and Blending Teams With Tech

Leasing teams play a crucial role in building trust and rapport with potential residents. It allows leasing professionals to understand a prospect’s needs, address concerns and provide recommendations. Without the human touch, the leasing process can feel impersonal and robotic, potentially deterring prospects from committing to a lease. It’s essential to find ways to infuse the human element into virtual leasing.

Today’s leasing teams play a vital role in bridging the gap between virtual and human interaction. According to the new 2024 NMHC & Grace Hill Renter Preferences Survey, half of residents prefer a digital renewal, and yet still 50% would prefer personal assistance. The goal is to provide everyone the ability to ask questions when answers are unavailable online, meeting the needs of residents and prospects regardless of their personal preferences.

Whatever solutions your teams employ for leasing, communication strategies need to be adapted to ensure that they are providing a smooth experience. This includes being responsive to inquiries, providing information about the property and addressing any concerns. By doing so, leasing teams can create a sense of trust and reliability, even in a virtual or hybrid setting.

Policies and Training for Digital Leasing

 While automation makes things easier, faster and more convenient in theory, the ability of teams to respond and troubleshoot can make all the difference when things don’t go as planned.

To ensure a seamless experience, owners and operators must establish clear policies for digital leasing. These policies should distinctly outline the procedures and guidelines for virtual tours, lease signings and communication. Policies should also address any potential challenges that may arise in the digital leasing process and provide solutions to overcome them. By having well-defined policies in place, companies can set expectations for both their leasing teams and prospects, creating a more efficient and transparent experience.

Procedures won’t be effective unless teams are equipped with the necessary skills and knowledge to handle digital leasing.

This requires comprehensive training programs that focus on understanding the platforms, effective communication techniques and problem-solving in a digital environment. Numerous online options are available for digital leasing training, allowing employees to learn at their own pace, offering quizzes to test their knowledge and, most importantly, keeping your teams up-to-date on the latest technology and trends. Companies can also utilize video conferencing tools for training and brainstorming, making sure all teams are on the same page on policies and procedures.

Regular assessments should be conducted to evaluate the leasing team’s performance and identify areas for improvement. By investing in training and assessment, owners and operators can ensure that their leasing teams are well-prepared to provide excellent service at the most valuable touchpoints in the digital leasing process.

Mystery shopping is also a valuable assessment tool for the quality of prospects’ digital leasing experiences. Acting as prospects searching online, mystery shoppers can offer insights into the leasing team’s performance and identify areas where teams can enhance the digital experience. Companies can also use surveys with prospects to gain an even greater understanding of their point of view. The feedback obtained from mystery shops and surveys can then be used to further enhance the digital leasing process in conjunction with leasing agents. These mystery shops and surveys also offer an opportunity to ensure that onsite teams are properly executing company policies.

The Digital Leasing Toolbox

The digital and in-person experiences must complement one another, providing potential residents with a smooth process that provides the contact and information needed at the right moments.

Video Tools — Zoom, Microsoft Teams and FaceTime are examples of must-have video-conferencing technology. During virtual tours with a leasing agent, prospects still have the opportunity to ask questions. They can also speak with leasing teams face-to-face, blending the human touch with tech to create trust. For those who prefer to tour on their own, 3D cameras can create an immersive walkthrough of apartment homes, amenities and all areas of the property at a time that is most convenient for potential residents. This still provides a general feel for what it would be like to live in the community.

Artificial Intelligence — AI and chatbots help collect the initial information about prospects, answering basic questions and scheduling virtual or in-person tours. Because not all queries can be handled by AI, the ability to connect prospects to leasing agents is a must. If people are looking after hours, then an option for leaving a voice or text message is needed.

Cloud-Based Document Management — Systems like Dropbox and Google Drive enable teams to securely store and share all leasing-related documents in a central location. This eliminates the need for paperwork and reduces the risk of lost documents. Document management can also be used to allow residents to sign leases and share other pertinent leasing items.

By appreciating the influence of digital leasing and the significance of human interaction, owners and operators can craft a quality experience for potential residents regardless of what avenue they choose. Residents and prospects are unique individuals with distinct desires in their living situations. Technology plays a practical and efficient role in disseminating information, but it is crucial to remember that personalization relies on the human touch.

About the Author:

Kendall Pretzer brings more than 30 years of experience in property management and supplier solutions to her role as the Chief Executive Officer at Grace Hill. Kendall joined the team in 2018 after Grace Hill purchased her company.

About Grace Hill

Grace Hill provides industry-leading SaaS technology solutions designed to make a positive impact in real estate and improve the lives of people where they work and live. Harnessing years of real estate experience and the understanding that people are better together, Grace Hill helps owners and operators increase property performance, reduce operating risk and grow top talent.

Do You Know The Changing Priorities Of Renters?

Holiday Package Volume Means Hectic Season for Property Teams

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By The Editors
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Holiday packages can create headaches for property managers so some are turning to other solutions to handle the package volume.

Holiday packages can create headaches for property managers and property teams so some are turning to other solutions to handle the package volume.

By Doug Pike

The holiday season is known for its hustle and bustle, but for multifamily property teams trying to keep pace with the deluge of package deliveries, hustle doesn’t begin to describe it.

As e-commerce growth continues, the seasonal package surge easily overwhelms onsite associates tasked with package management. Entire workdays are consistently consumed with receiving, logging, storing and distributing resident deliveries.

For property teams, the annual timing of the package spike couldn’t be worse. Package volume soars just as team members start taking time off to be with their families and the onsite presence is limited. The situation leaves management companies with limited options. Due to current labor challenges and multi-industry competition for seasonal help, increasing manpower isn’t a quick and easy solution.

Physical solutions like package lockers and package rooms take time to install, as well, and prove no match for holiday package volume. But multifamily communities are finding success with third-party, offsite package management solutions that coordinate with residents to schedule delivery direct-to-door. And, unlike hiring and physical package system installs, third-party management systems can be implemented almost instantly.

The team at Bridge at Waters Park, a 442-home multifamily community in Austin, Texas, experienced instant relief when it deployed a third-party package management solution.

“It definitely opened up more time for us to be able to do our jobs and also to plan events and do the things that we need to do. We experienced the relief right away, not having to check in 100 packages a day,” said Liz Derouen, Community manager at Bridge at Waters Park. “It was mainly leasing that took care of package management, but we would bring in everyone to help when it got really busy. We had to dedicate team members to just checking in and organizing packages, and then getting them for the resident when they would come in to retrieve them. That really took up a lot of our time.”

Derouen said Bridge at Waters Park briefly considered installing package lockers but quickly identified the scalability shortcomings of onsite package infrastructure.

“We opted not to go the package locker route because we had heard so many nightmares about that, too. They get full, then packages get left in the open for someone to take,” Derouen said. “Our teams would have to go out and collect, log and sort those overflow packages anyway. It wasn’t a solution that would take the burden away from our teams.”

Multifamily operators are opting for third-party package management not only for its immediate implementation, but also due to its scalability. Organizations are looking to avoid the impact of seasonal online consumerism spikes, which include consumer-centric events like Prime Day and post-holiday gift card spending. But they’re also seeking to future-proof themselves against current and projected e-commerce increases. The offsite storage aspect of third-party package management effectively erases the storage capacity issues and clutter created by untenable package volume levels.

According to a report from Insider Intelligence, overall e-commerce growth is projected at 9.3% for 2023. In 2022, clients for third-party package management company Fetch saw a nearly 20% increase in package volume during November and December, compared to the same period in 2021.

“Seasonal shopping surges have always presented a challenge for the industry at the property level, but e-commerce trends aren’t slowing and increasing package volume is now an everyday reality,” said Michael Patton, Fetch CEO. “Package management responsibilities are taxing on onsite associates who weren’t hired to deal with residents’ deliveries. That’s not what they signed up for. But the growing package volume commands an inordinate amount of their time. We’re already at a breaking point for the industry, where operators choosing to handle packages onsite must decide whether to throw more people and square footage at the problem, or sacrifice resident services.”

Empowering residents to coordinate their delivery creates invaluable autonomy within a largely dependent living experience while freeing up significant time for team members and enabling them to focus on their primary responsibilities. The move has shown to increase satisfaction and retention rates for residents and associates alike, but also has ancillary benefits. The transition from onsite package management to third-party solutions also creates the opportunity to repurpose and leverage former storage spaces. Derouen said her property reclaimed leasing office space previously dedicated to package storage, making her team more efficient.

“There was kind of a domino effect when we made the switch. It wasn’t just a matter of convenience for our team, it also provided us with a better working space,” Derouen said. “It’s the little things that make an overall difference at the community level.”

During the holiday season, it’s the little things that alleviate stress and lift spirits that can make all the difference.

About the author:

Doug Pike is the content manager at LinnellTaylor Marketing.

Packages Piling Up Can Be A Headache For Apartment Property Managers

Fair Housing–Landlord Liability for Tenant-on-Tenant Discrimination

By
Brad Kraus
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Increased indoor time in coming winter months can lead to more tenant-on-tenant discrimination and is landlord liability an issue?

Increased indoor time in coming winter months can lead to more tenant-on-tenant discrimination and is landlord liability an issue?

By Bradley S. Kraus
Attorney at Law
Warren Allen, LLP

Winter is almost upon us, which means many people will be indoors more often than not. Unfortunately, that increased indoor time can mean more tenant-on-tenant disputes. While seasoned landlords are no strangers to handling such situations, one particular situation, tenant-on-tenant discrimination, requires additional discussion—and immediate action.

Buried within the Oregon Administrative Rules is OAR 839-005-0206, which details specific theories of discrimination involving housing in Oregon. One particular section involves landlords:

(5) Tenant-on-tenant harassment: A housing provider is liable for a resident’s harassment of another resident when the housing provider knew or should have known of the conduct, unless the housing provider took immediate and appropriate corrective action.

What this administrative rule reads as is a theory of liability for tenants against their landlord if they are harassed by other tenants based on a protected status if the landlord did not take “immediate and appropriate corrective action.” Such exposure may seem strange, but some courts have already previously determined that the Fair Housing Act contains the same protections for tenants. If the landlord knew, or should have known, of tenant-on-tenant discrimination, and failed to take action, the victim tenant may sue the landlord based on this discrimination.

What does this mean for landlords? First, a landlord should do as they always do with tenant disputes. If complaints or disputes between tenants arise, take proper investigative measures to determine what actually happened. This would involve interviewing the parties, witnesses, and reviewing any other written statements or documents provided. Second, creating a log book and/or incident report can assist down the road in recreating what, if anything, happened. Landlords should use/create such items anyway as a best practice, as they are infinitely helpful in the event of litigation.

If it appears or is discovered that discriminatory language and/or conduct occurred, a landlord should take immediate action. This would include the proper termination notices under Oregon law. In the event of a he-said/she-said situation, it may behoove the landlord to defer on the side of aggressive action, as opposed to inaction. Fair housing lawsuits are no laughing matter, often involving substantial attorney fees, costs, and stressful discovery processes, all of which could potentially be avoided through affirmative action.

As a landlord’s attorney, I have learned that not all tenant disputes are created equal. Some are petty, and/or involve people that cannot be placated or made happy unless they live entirely away from each other. Some involve racism, discrimination, and/or bigotry, which should have no place in our world. While these are two extremes that do not encompass the entirety of tenant-on-tenant disputes, if a landlord finds themselves facing the latter of these two scenarios, working with your attorney on an aggressive response can be the difference between resolution and litigation.

Increased indoor time in coming winter months can lead to more tenant-on-tenant discrimination and is landlord liability an issue?
Brad Kraus

About the author:

Bradley S. Kraus is an attorney and partner at Warren Allen LLP. His primary practice area is landlord/tenant law, but he also assists clients with various litigation matters, probate matters, real estate disputes, and family law matters. You can reach him at kraus@warrenallen.com or at 503-255-8795.

  

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SB 891’s Conclusion and What it Means for Landlords

Portland Update: Changes to FAIR Ordinance Bring (Some) Necessary Changes

Dealing with Habitability issues and Substitute Housing

 

10 Steps To Winterize Your Rental Property

By
By The Editors
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Record freezing temperatures recently can be a challenge for property managers so here are 10 steps to winterize rental property

Record freezing temperatures recently can be a challenge for property managers and tenants so here are 10 steps to winterize your rental property in the maintenance checkup this week provided by Keepe.

Dealing with ice, snow and frost will be a common occurrence for many Americans this winter, which is why it is important to make properties safe for tenants, aiming to minimize slipping hazards and annoyances resulting from weather-damaged or malfunctioning amenities. Winter-proofing for the safety of tenants is just as important as Winterizing vacant rental properties.

Why winterize vacant rentals?

Whether tenants are on vacation or a property is simply waiting to be rented out, planning to prepare it for vacancy should be made a priority for safety reasons – and even more so when freezing temperatures and harsh weather also become a concern.

Snowstorms can become a frequent occurrence and bring along the burdens of snow buildup, drops in temperature can cause entire systems to freeze and become compromised, while the cold season itself makes it that much worse for both property managers and tenants to experience the discomforts of failing systems and amenities.

10 Steps To Winterize Your Rental Property

    1. Shutting off the water supply system is ideal because it is most vulnerable to breakage and damages caused by freezing temperatures. To avoid pipe bursting and leaks that could happen while the property is vacant, consult a professional and have a full water supply shut-off procedure, which is designed to “seal” the water supply system to prevent cracking, bursting and other issues caused by water freezing. After this procedure is complete, it is a good idea to leave all faucets open to both drain leftover water and prevent pressure buildup, as well as adding antifreeze fluid to toilets after they are flushed of remaining water.
    2. Servicing and setting up the heating system is important to save energy, prevent malfunctions and also supplement measures taken to protect the water supply system. Some older water supply systems are connected to the heating system, and particular circumstances might make completely shutting off the water supply system unsuitable: in this case, if a property is vacant indoor spaces do not need to remain warm and livable, but leaving the heating system on and setting temperatures to 55°F or slightly higher will make it warm enough to help prevent frozen pipes. Before the property is vacated, have a professional check both heating and water supply systems to ensure there are no pre existing damages or weaknesses that could be worsened by the harsh season.
    3. Having the electrical and HVAC systems checked, especially when planning to keep heating running. An electrician should check wiring, outlets and the main panel to make sure no system failures happen while the property is vacant – especially if the heating system and water systems also depend on it. An HVAC specialist can ensure that it is performing efficiently during the cold months and check for potential issues that could worsen while the property is vacant.
    4. Shutting off gas lines to prevent incidents related to gas leaks while the property is vacant. Having a professional check the state of gas lines is also a good way to ensure the continued safety of the system.
    5. Unplugging all appliances so they do not use unnecessary “phantom energy” while also keeping them from being the cause of a short out that could cause a fire.
    6. Having the gutters cleaned and the roof inspected to avoid ice and snow buildups that could add strain to the roof and flood the space. Record freezing temperatures recently can be a challenge for property managers so here are 10 steps to winterize rental property
    7. Repairing cracks, openings and drafts both prevents pests and wildlife from accessing the property as well as making sure that the indoor temperature does not drop, potentially leading the heating system to function inefficiently.
    8. Inspecting trees and surrounding vegetation allows a professional landscaper to check whether any dead trees or branches could become hazardous in extreme weather conditions.
    9. Installing a security system allows remote monitoring of the property, which helps prevent break-ins. Video, Bluetooth and sensor systems are able to send out real-time alerts that facilitate immediate responses following the detection of unexpected activity but also leaks and electrical faults. Even opting for a simpler system – such as automatic, pre-set outdoor lighting for the night time – can be helpful with making the property look occupied to potential burglars.
    10. Directing mail and packages to a new address makes the property look occupied by avoiding overflowing mailboxes and busy porches to become a clear sign of vacancy to passerby’s, which again can be an invitation for break-ins.

 

About Keepe:

Keepe is an on-demand maintenance solution for property managers and independent landlords.

Navigating The Shifting Rental Housing Market With Data-Driven Solutions

By
By The Editors
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Using AI for the rental housing market is a forward-thinking approach, enhancing efficiency and financial success with data-driven solutions.

Using AI for the shifting rental housing market is a forward-thinking approach, enhancing efficiency and ensuring financial success with data-driven solutions for rental housing.

By Vidur Gupta
CEO, Beekin

In today’s changing landscape, artificial intelligence (AI) has taken center stage as a critical solution for the challenges the rental housing market faces.

Property operators increasingly turn to AI to enhance their leasing strategies, attracting and retaining residents effectively. Generative AI technologies, including ChatGPT and other popular tools, are garnering increased attention for their ability to empower property companies to make informed decisions, adapt swiftly to change, and achieve the perfect balance in their leasing strategies with data-driven solutions for rental housing.

Exacerbating these challenges, are the tectonic shifts in mobility and preferences in the rental housing market. Factors such as the exodus from expensive urban areas and persistent inflation have reshaped the industry. In 2020, the COVID-19 pandemic prompted a substantial migration from cities like San Francisco, with over 55,000 individuals — more than 6% of the city’s population — leaving. This trend has persisted, resulting in elevated vacancy rates and rents that have yet to recover. Even today, 7.6% of Bay Area residents are contemplating moves to different cities, creating unique challenges for the leasing sector in Northern California and echoing nationwide trends. These statistics underscore the urgency and relevance of AI solutions in the rental housing market.

The Changing Landscape

Traditional leasing strategies, which used to rely on supply and demand in stable markets, are no longer as effective.

Various socio-economic factors, including shifts in employment, the rise of remote work, and economic fluctuations, are driving this transformation.

Property owners and operators who once firmly held onto these traditional approaches, now see their limitations in a rental housing market that is in deep flux.

On one hand, millennials are forming new households, but saddled by debt they are unable to buy homes. This is causing operators to adopt new, innovative strategies as residents alter their housing preferences. In this era, when residents make quick (and sometimes unpredictable) housing choices, having access to the latest information is crucial.

Real-time data becomes the key to success, providing the flexibility to make well-informed decisions promptly. Property owners and managers must fully grasp the importance of real-time data to thrive in a landscape that values adaptability and responsiveness. The statistics underscore this urgency: as of 2023, 12.7% of full-time employees work from home, and 28.2% follow a hybrid work model. These numbers reflect the rapid normalization of remote work, driven by the desire for flexibility and work-life balance.

This trend reshapes the leasing sector and emphasizes the need for property developers to stay in sync with residents’ changing preferences to remain competitive in this dynamic environment.

AI-Driven Solutions

Lease optimization is critical to maximizing profitability and efficiency for property managers. Technological innovations are increasingly becoming indispensable tools for achieving these goals.

Below are just a few examples of what AI can do:

  • Data Analysis: The average 200-unit property generates 60GB of data every month

This volume of information is impossible to analyse manually. By analyzing historical and current lease data, maintenance orders, resident communications, and market trends      operators can stay on top of any changing fact patterns. This deep analysis helps in identifying opportunities for lease optimization and maximizing both resident satisfaction and property performance.

  • Predictive Analytics: AI can forecast lease renewals, vacancies, and rent fluctuations, allowing property managers to make informed decisions in advance, reducing downtime, which can significantly impact revenue.
  • Personalization: AI-driven solutions can tailor lease agreements to individual tenant needs. This personalization can lead to increased resident engagement, retention and longer lease terms. Much like eCommerce, Media and other digital engagement channels which win trust through hyper-personalized consumer offerings.
  • Dynamic Pricing: AI algorithms adjust rent prices based on demand, seasonality, and market conditions. This active pricing strategy optimizes rental income by ensuring that properties have competitive prices.
  • Risk Assessment: AI can evaluate the creditworthiness of potential tenants, minimizing the risk of lease defaults. It helps in creating more secure leasing agreements.
  • Operational Efficiency: AI streamlines maintenance scheduling, energy management, and security tasks. This efficiency can lead to cost savings and improved tenant experiences.
  • Lease Negotiations: AI can assist lease negotiation by providing market insights and suggesting terms that align with market standards, thereby optimizing lease agreements.
  • Compliance and Legal Support: AI ensures that leases comply with local and federal regulations, reducing the risk of legal issues. It can also help in managing compliance-related documentation, and reducing any bias that may prevail with human judgement.  Machine intelligence also comes with confidence intervals and an understanding of how right (or wrong) a certain prediction is.

Embracing AI for Future Success

Accepting AI in rental housing is a strategic move with many benefits.

By harnessing the power of AI, property managers can transition into a data-driven rental housing era, making decisions based on in-depth analyses that predict market trends and opportunities plus optimize rent pricing, resulting in more efficient rental housing operations.

AI also facilitates improved tenant experiences with its ability to provide round-the-clock support through chatbots and virtual assistants. These kinds of personalized and prompt responses make tenants feel valued. Knowing the impact of fixing a leaky faucet in record time can help manage renewal negotiations well and measure satisfaction.

AI also revolutionizes property maintenance by enabling predictive upkeep, preventing costly equipment breakdowns, and ensuring houses are in optimal condition.

Security is another aspect where AI shines, offering real-time surveillance and threat alerts, enhancing the safety of tenants and property. Beyond this, implementing AI translates to cost savings through energy optimization and streamlined operations, reducing the need for manual labor.

Tenant screening becomes more thorough and reliable through AI, assessing creditworthiness and rental history, which, in turn, minimizes the risk of lease defaults.

AI’s predictive capabilities extend to lease renewals, helping property managers identify tenants likely to renew, thereby reducing vacancies.

By continuously monitoring the local rental market, AI ensures that your properties remain competitive in terms of pricing and amenities. Sustainability is also on the agenda, with AI optimizing energy usage, reducing waste, and enhancing eco-friendly features. AI ensures that lease agreements comply with legal regulations and automates related documentation management, minimizing the risk of legal issues.

It’s also essential to consider the context of generational trends.

Over the past five years, the Gen Z demographic has witnessed remarkable growth, with an impressive influx of nearly 4.5 million new renters. This surge has propelled Gen Z to the forefront of the rental sector, commanding a substantial 74% share, while other generational segments have experienced declines in their renter populations.

This generational shift underscores the need for property managers to adapt and embrace AI as it aligns with the tech-savvy preferences of these new renters.

Using AI for rental housing is a forward-thinking approach, enhancing efficiency and ensuring financial success. Maintaining a focus on ethical implementation and tenant privacy is essential, contributing to improved tenant satisfaction. AI is a pivotal tool in catering to the evolving demands of the modern renting population, ensuring a competitive edge in the dynamic rental housing market.

About the author:

Vidur Gupta, Founder and CEO of Beekin, a data platform for apartments and rental homes, is a seasoned professional with prior roles as a Non-Executive Director at Notting Hill Genesis and Head of Capital Markets and Analytics at Future Finance. His career encompasses positions at HIG Capital and Deutsche Bank. Holding an MBA in Finance and Economics from The University of Chicago Booth School of Business, Gupta is a key figure in the real estate and finance industries, driven by a passion for empowerment.

Digital Leasing Requires a Precise Human Touch

Supply Growth Pushes Multifamily Rents Down

By
John Triplett
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U.S. multifamily rent growth has turned negative, as strong supply growth eroded rent gains in many fast-growing Sun Belt metros

U.S. multifamily rent growth has turned negative, as strong supply growth eroded rent gains in many fast-growing Sun Belt metros, Yardi Matrix reports.

However, the report says despite negative rent growth, demand for apartments remains robust, “in line with the surprisingly strong economy and with homeownership increasingly out of reach as mortgage rates soar.”

Job growth may be slowing

The report says that while the economy continues to produce solid results, market attention is focusing on the seeming inevitability of slowing job growth and the capital markets conundrum of higher interest rates.

The longer rates stay in the 4.5% to 5% range (or higher), the more multifamily properties will face capital gaps when loans come up for refinancing.

Will apartment demand slow?

There is concern that apartment demand will slow if the economic growth turns negative in line with consensus forecasts.

A downturn would likely reduce renter activity. At the same time, multifamily demand is boosted by long-term trends that aren’t likely to fade. The cost gap between renting and homeownership has rarely, if ever, been higher, which keeps renters in apartments.

Demand is also created by the hybrid work trend as people seek more space for work.

Negative rent growth but strong absorption

Absorption remains strong in many markets such as Austin, Phoenix, Orlando, Raleigh, Charlotte and Nashville, while rent growth is negative.

Rents are receding in these metros due to the robust delivery pipeline and rapid rent increases in recent years that have reduced affordability.

Some highlights of the report

  • The U.S. economy grew at 4.9% in the third quarter, an unexpectedly high rate, led by consumer spending.
  • Multifamily rents have decelerated in 2023, due in part to the robust supply response to strong demand for housing.
  • Multifamily starts are dropping as deals don’t make economic sense right now, which could lead to more rent growth in coming years.

Summary

New multifamily and single-family starts are dropping, Yardi Matrix says in the report. This could set up another demand/supply imbalance and higher housing inflation after the supply surge ends.

“This is not to say the Federal Reserve was wrong to raise rates, which were too low for too long. But the effort to manage lower inflation without a downturn is difficult and carries with it unintended consequences, which are being felt in the economy and commercial property market,” the report says.
Read the full report here.

About Yardi Matrix

Yardi Matrix researches and reports on multifamily, office and self-storage properties across the United States, serving the needs of a variety of industry professionals. Yardi Matrix Multifamily provides accurate data on 18+ million units, covering more than 90 percent of the U.S. population. Contact the company at (480) 663-1149.

Justice Department: Rent-Setting Algorithms May Be Price-Fixing

By
John Triplett
-
The U.S. Department of Justice says RealPage rent-setting algorithms may be price-fixing that may be a violation of anti-trust laws.

The U.S. Department of Justice has filed a statement of interest in federal court in Nashville saying that software company RealPage’s rent-setting algorithms amount to a new kind of price-fixing that may be a violation of anti-trust laws, according to reports.

Multiple tenants across the country have sued RealPage claiming the tech company’s apartment software helped landlords collude to inflate rents. The lawsuits from around the country were consolidated in federal court in Nashville.

The Justice Department wrote that in the past, collusion has happened with “a formal handshake in a clandestine meeting,” they wrote. “Algorithms are the new frontier, and, given the amount of information an algorithm can access and digest, this new frontier poses an even greater anticompetitive threat than the last.”

A ProPublica investigation last year found that Texas-based software provider RealPage used rent-setting algorithms to recommend rents to landlords across the country to maximize profits — a practice that experts said may violate antitrust laws.

RealPage has denied the allegations.

“Antitrust enforcers have struggled to apply decades-old laws to new technologies such as RealPage’s rent-setting software, which have changed the way competitors interact with one another and with customers,” ProPublica says.

But, prosecutors said, whether firms use a software algorithm or human interactions to create the scheme “should be of no legal significance.”

“Automating an anticompetitive scheme does not make it less anticompetitive,” the DOJ said in the filing.

“As described in federal lawsuits filed by tenants, RealPage invited concerted action among landlords, including the sharing of nonpublic data with the software, with the purpose of raising rents,” prosecutors wrote in their memorandum. “The arrangement is still price-fixing regardless of whether competing landlords ever communicated with one another about prices,” ProPublica reported that prosecutors said.

“Put simply, RealPage allegedly replaces independent competitive decision-making on prices, which often leads to lower prices for tenants, with a price-fixing combination that violates” federal antitrust law, prosecutors wrote.

“Not every use of an algorithm to set price violates federal law,” they noted, but it is “unlawful when, as alleged here, competitors knowingly combine their sensitive, nonpublic pricing and supply information in an algorithm that they rely upon in making pricing decisions, with the knowledge and expectation that other competitors will do the same.”

Last year, 17 Democratic members of the U.S. House of Representatives sent a letter to the Department of Justice and the Federal Trade Commission asking the agencies to investigate RealPage’s rent-setting software, according to ProPublica.

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Investigation Called For Over RealPage Rent-Setting Software

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