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4 Ways To Keep Up With Changing Compliance Laws In Rental Housing

The Grace Hill training tip this week focuses on the importance of keeping up with ever-changing rental housing compliance laws at federal, state and local levels.

By Ellen Clark

Ever-changing compliance news is a challenge to keep up with.

One of the trickiest things about compliance training is keeping up with changing compliance laws, rules, and regulations.

 You can create a great compliance course, assign it to your learners or set a date for training, and a month later, it needs to be updated. This can feel like an endless, overwhelming cycle.

 To help, here are some practical tips for managing the ever-changing compliance world.

No. 1:  Make a plan to keep up with changing compliance laws

In compliance training, change is a given.

Since you know it is coming, build change into your plans.

Make a plan to update training regularly. Have processes in place and resources set aside so you aren’t repeatedly scrambling for time or budget. Identify a mechanism to get information out quickly (for example, an email or an alert in the LMS) if something critical comes up between scheduled training updates.

Training people to always anticipate change regarding compliance laws is key.

No. 2: Make “change” a big idea in training

 “The world of compliance is ever-evolving” is a fundamental concept that is important for learners to understand.

 Providing learners with big ideas like this equips them with a framework around which they can learn in a coherent way.

Make “change” a theme in your compliance training and revisit it periodically. This may help learners better understand and appreciate the importance of engaging in regular compliance training.

No. 3: Be proactive and keep with with changing compliance laws

To avoid surprises and the scrambling that inevitably results, block time on your calendar every week or two to scan HUD, EEOC or state agency websites for important compliance news.

Set up a Google alert, or something similar.

Subscribe to key email lists and newsletters. Sorting through the information takes time, but planning it into your schedule and leveraging technology will make it a more manageable task.

No. 4: Retain an expert

If you have the resources, retaining an expert such as a law firm for legal compliance or a CPA for compliance with the tax code is very useful.

Work with them to identify priority issues so you aren’t overwhelmed with information you may not need. Have them create short summaries of why the change in law, rule, or regulation or other information is important to your business specifically.

 As a trainer, your work is never done.

This is one of the most challenging aspects of your job, but it can also one of the most invigorating. 

Actively managing the changing world of compliance can help you be ready for whatever the compliance world throws your way.

Read Ellen’s full blog post here.

About the author:

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

4 ways to keep up with compliance laws in rental housing

Photo credit  Nick Youngson via creative commons license.

 

Startup Company Tackling The Rental Property Maintenance Toothache

A new company is tackling the rental property maintenance challenges that face many landlords and property managers every day in managing rental housing.

In an interview with Rental Housing Journal, Keepe Co-founder and CEO Rishi Mathew discussed the primary research that led him to start the company, currently operating in Seattle and Phoenix, and provided a question and answer about the company.

In doing the primary research on rental property maintenance, “We had more than 400 different conversations with property managers, contractors, consumers and tenants,” Mathew said.

“The salient thing we got from property managers was that there are folks who have their own maintenance crew, they have enough density of units – eg. 200 units in the same building – they can afford their own crew. But for property managers who have 50 to 250 units spread out in a particular city, like Seattle and suburbs, then it is impossible to maintain your own crew. You have to have a big crew to manage it and it is not economically feasible.”

When property managers do not employ their own rental property maintenance people

“Many have a rolodex of vendors they work with. The problem is, because they do not employ them, property managers have to depend on the vagaries of those vendors,” Mathew said.

“Let’s say a maintenance request comes in, and they try and schedule a vendor and the vendor is not available at that time.

“And so they have to go to the next one, and then next one,” he said.

Average 14-day turnaround on rental property maintenance

“What property managers were telling us is that the turnaround time from a maintenance request coming in to the problem actually getting solved is like two weeks and up,” so some get done sooner and some take longer Mathew said.

 “That 14-day average turn around was their No. 1 problem because tenants get really upset and then they vent on Yelp or other social media and say, ‘These property managers are really bad because they are not getting my problem fixed.’ 

“We validated that by looking at Yelp reviews of some of these property managers and the No. 1 complaint on Yelp for property managers is that maintenance is shoddy, it takes a long time, and quality levels are not high. That is what we validated- what they were saying.

“For the property managers themselves, it consumes a lot of their time. They are running interference between the contractor and the tenant. They are doing the scheduling, they are fielding all the bids, looking at all the estimates, and then picking the right contractor and managing the scheduling. That takes a lot of their time,” Mathew said.

Two high level points out of the research conversations on rental property maintenance

  1. It takes too long for any maintenance request and tenants are unhappy.
  2. It takes a lot of the property managers own time and they would rather have that time back to focus on getting new clients and managing more units.

So that is how Mathew and his co-founder thought of Keepe as a solution to that problem.

“We want to be the one-stop shop for maintenance for property managers. They send us a maintenance request and we take care of the rest,” he said.

Tenants now have a ready audience

“Social media has changed everything when it comes to the relationship between the property manager and the tenant,” Mathew said, when it comes to rental property maintenance.

“Tenants can give both positive and negative feedback on social media. Tenants now have a ready audience of current tenants and future tenants as well as owners. It has made property managers sit up and take notice. They cannot ignore that feedback any more.

“They are being held to a very high standard just like a lot of other industries. So property managers have to be responsive to the tenants’ feedback and be considerate. A lot of good, successful property managers are that way already but now the standards are going up,” he said.

A platform for all sizes of landlords for rental property maintenance

“We have a lot of independent landlords on our platform,” he said,

“Our long-term goal is to help the rental industry in all sizes of rental housing.  Right now we are focusing on property managers, but the product and service we have is built for everybody.

“We want to make it possible for the independent landlord to be successful and manage their units themselves without having to depend on anyone else for maintenance management,” he said.

A Q&A with the CEO

Q: Why did you found the company?

A: Initially, our goal with Keepe.com was simply to make maintenance and repairs an easy process for homeowners and renters. However, we discovered that in the rental market, property maintenance is like toothache. There is a huge opportunity to make a real difference in the renting experience for renters, property managers and independent landlords, so we jumped at the opportunity of creating a technology-accelerated online marketplace that makes property maintenance a far easier, more transparent and super-convenient solution for these stakeholders.

Q: Why are you qualified to operate in this space?

A: Our team has a unique blend of experience in software technology, real estate and residential contracting that we want to leverage to create a paradigm-changing solution for renters, property managers and landlords.

Q: What demographic info do you have to show how big the need is out there?

We did a significant amount of primary customer research (hundreds of interviews with property managers, renters, landlords and contractors) and found that the number one obstacle for property managers was the lack of an effective rental property maintenance solution. Some property managers have insourced their maintenance operations in order to keep costs low, however the overall high cost of maintenance combined with bad reviews from tenants is a significant burden. Others who don’t have or can’t afford a maintenance crew depend on a small rolodex of external maintenance pros, but their ability to influence responsiveness and quality levels is limited.

Q: What problem are you trying to solve? Especially for the multifamily property manager. Probably not talking about the big guys who can hire their own full-time maintenance folks, but rather the smaller operators.

A: The problem for property managers who don’t have their own crews is that they cannot control responsiveness and quality levels of the maintenance professionals that they work with. Additionally, property managers are spending half their time running interference between their tenants and maintenance guys. With Keepe.com, they get access to hundreds of qualified and licensed maintenance professionals available for immediate (even same-day) service. Keepe.com provides an end-to-end service that includes free estimates, tenant scheduling, contractor dispatching and transparent pricing. Some of our customers have realized a 40% time savings in maintenance overhead and a multifold increase in tenant satisfaction from using Keepe.com for their property maintenance.

Q: Most property managers and landlords tell say rental property maintenance is their No. 1 headache/issue. What do you see so far as the No. 1 maintenance issue you have to deal with?

A: We see a wide array of maintenance issues ranging from repair or replacements of garbage disposals, kitchen sinks, appliances, roofs, heating/cooling. We also see a regular influx of rental turnover projects resulting from lease-ends. In both scenarios, time is of the essence. Either tenants are upset from slow responsiveness, or during turns, the owner is losing money because the unit is not ready for showings and the property is vacant.

Q: Property managers sometimes markup maintenance, sort of their handling fee. How do you charge?

A: We have a transparent business model. We charge an hourly rate that is prorated to the minute. The contractors on our network (also known as Keepers) are accepting jobs and logging time on our proprietary app. There is no markup on materials. The hourly rate is set at market prices and adjusts to the location (zip code). The transparent pricing is beneficial to both property managers and maintenance professionals. Property managers pay market prices and maintenance professionals get the benefit of reduced overhead and zero marketing costs.

Q: How many customers do you have?

A:  We have over a hundred property managers on our network in Seattle and Phoenix. More locations coming soon.

Q: Breakdown between multifamily and single-family?

A: About 40 percent multifamily and 60 percent single-family.

Q: Are you the best fit for the mom and pop landlord?

A: We have many independent landlords who are using our platform. However our value proposition is primarily a great fit for property management companies. In the future, we plan to create a streamlined solution for independent landlords.

About Keepe

We created the company with the ambitious goal of transforming the renter experience by modernizing property management and maintenance. Property maintenance today is too slow, too painful and too opaque for property managers, landlords, tenants and maintenance professionals. We aim to create technology tools that delivers fast turnaround and optimal quality at reasonable cost. In the process, we want to make renting, land lording and managing properties way easier than it is today.

Photo credit Kurhan via istockphoto.com

Seattle Restricts Landlords’ Questions About Tenant Criminal Backgrounds

The Seattle City Council has passed an ordinance 8-0 to bar landlords from using criminal records to screen tenants based on past arrests or criminal convictions, with the exception of sex offenders, according to a release.

“The Fair Chance Housing ordinance would prevent landlords from screening applicants based on criminal convictions; arrests that did not lead to a conviction; convictions that have been expunged, vacated or sealed; juvenile records,”  Councilmember Lisa Herbold said in a release.

Remove barriers to housing for people with criminal histories

“The City will work with stakeholders to develop legislation that ensures fair access to housing for people with criminal records. Stable housing ensures people can engage with their communities and families and obtain stable employment.

“Deep-rooted inequities in the criminal justice system have created lasting effects on communities of color that have created barriers to housing. Furthering fair housing for all our residents is an affirmation of the City’s longstanding commitment to race and social justice,” the roadmap states.

Landlords know blanket policies cannot be used when it comes to criminal backgrounds

Sean Martin, external affairs director for the Rental Housing Association of Washington State, said in an interview with the Seattle Times this is a national issue not just a Seattle issue.

He said that landlords know blanket policies against criminal histories are no longer allowed. It should be individual assessments by landlords based on nature of the crime, the severity of it and when it was committed to see if there is a risk.

“We need to tie in whatever the risk is to determine whether to rent,” he said of landlords. “There is risk there for sure. There is no list that says who is naughty and who is nice.”

Small landlords have a harder time, he said. Larger corporate entities may have a three-person panel where they send the criminal report over to them and have them make the decision and kick it back to the property manager.

He said there are some tools the state, city or county could provide to landlords.

“We do not feel it should be the landlords’ responsibility to solve a societal problem,” he said.

This is a bit cynical, he said but, “Pretty much any legislation that has been thrown out that is putting obligations on landlords is a foregone conclusion to pass,” he said, and probably sometime in July. “Tenant advocates do not want us to look at criminal records at all. That is crazy. The rest of the population should be really concerned about that voice,” he said.

Computer services make it easier to check tenant criminal backgrounds

Nick Straley, Columbia Legal Services attorney, told the Seattle Times that computerized access to criminal records has made it now much easier for landlords to find out the criminal background of prospective tenants.

The issue comes down to whether and to what extent a landlord may use someone’s criminal record in deciding whether they should rent to them, he said.

“This is a new problem. This is a consequence of computerized access to public records and the aggregation of big data,” Straley told the Seattle Times. “Also the proliferation of new businesses that provide computerized information to landlords.”

A modern day scarlett letter?

“So 20 years ago this was not a problem. A landlord would have had to go down to each county courthouse and pull some of these records to determine whether or not someone had a criminal record,” he said.

“And so what this really is, is the modern day scarlett letter – we have attached an indelible mark to people who have already served their debt to society, and simply want to get back to their lives and families and go on with their lives.

“We are glad this is something the city is starting to discuss,” Straley said.

Not Renting To Felons Could Be Discrimination

The U.S. Department of Justice has said categorically not renting to felons  can be considered discrimination and a violation of Fair Housing Act.

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

Is the “no-felony-ever” lease clause dead?

David Pickron, owner of RentPerfect, an investigative screening company in Arizona, says the days of saying “no-felony-ever” are over for landlords unless the felony is a sex offense.

“The problem is that no one wants to take on that liability. Because on the other side, if they do something, we get sued or we all lose rent. So there is a big fight now between the private markets and the federal government,” Pickron said.

The key is WHAT the felon has been doing in society since he or she got out, he said.

“We are not even saying to our clients, ‘Hey it’s seven years since the crime was committed. It’s seven years since they have been back in society.  So that takes a lot of those serious crimes out over seven years,” Pickron said.

Seattle Bars Landlords From Using Criminal Records To Screen Tenants

Listen to the Seattle Times podcast on criminal background checks by landlords here.

Download our eBook  here on 7 Issues And Answers About Renting To Felons

Criminal background checks and issues landlords need to know

 

Apartment Residents Say Living In A Green Home Is Important To Them

A new survey shows 84 percent of apartment residents say living in a green apartment home is important to them and 64 percent say they would pay more to live in a green home.

The survey also shows 85 percent of the apartment residents believe living in a green apartment home benefits their health, according to the AMLI sustainable living index.

The survey of more than 2,800 U.S. apartment residents is the first AMLI Sustainable Living Index survey of apartment residents on their views regarding sustainability and green living.

“This survey highlights that residents care about the environment and their health. They want homes that enable them to live a greener, healthier lifestyle,” Phil Tague, President of AMLI Residential, said in a release.

 “AMLI has made considerable investment to meet this resident desire. Our communities use land, water and energy more efficiently. They include clean-air initiatives and lifestyle amenities that enable residents to live more sustainably every day,” Tague said.

The survey of AMLI residents was conducted in August 2017 at properties in Atlanta, Austin, Chicago, Dallas, Denver, Houston, Seattle, Southern California and Southeast Florida.

 AMLI designed the survey to help it understand its residents’ interest in sustainable living. AMLI will use the survey results to advance its sustainability efforts and enhance its residents’ living experiences. Roughly 12 percent of the 2,812 respondents were younger than age 25, 47 percent were ages 25-34, 16 percent were ages 35-44, and the remaining 25 percent were 45 or older.

Apartment residents say green home features they value most highly include:

  • A smoke-free community (94 percent)
  • Energy- and water-efficient features (93 percent)
  • Access to public transit/ strong walk and bike scores (85 percent)

Most respondents (77 percent) said that AMLI’s green living features have saved them money in utility costs.

A majority (64 percent) of respondents would pay slightly more to live in a green community.

AMLI’s green home communities include a range of features for environmentally and health conscious residents, including:

  • Energy-efficient lighting and appliances
  • Plumbing that reduces water consumption
  • Community recycling programs
  • Use of native plants in landscaping to reduce water demand
  • Electric car charging stations
  • Bike storage and repair shops
  • Healthy, low or no VOC building materials
  • Fresh air ventilation
  • Premium air filters.

 A growing number of AMLI communities are totally smoke-free.

Photo credit CalderOliver via creative commons

About AMLI:

Most apartment residents prefer living in a green home survey says

AMLI is a leader in multifamily sustainability. Twenty-eight AMLI properties (more than one-third of the company’s portfolio) are LEED (Leadership in Energy and Environmental Design) certified and 15 AMLI communities are ENERGY STAR certified. AMLI will grow its portfolio to more than 50 percent LEED certified in the near future. Earlier this month, AMLI received two awards from the U.S. Green Building Council (USGBC): the Outstanding Multi-Family Developer LEED Homes award for its outstanding leadership and innovation in the residential green building marketplace, and the LEED Power Builder award, which recognizes developers that certify at least 90 percent of their units built in the past year. AMLI Residential focuses on the development, construction and management of environmentally responsible, luxury apartment communities throughout the U.S. Founded in 1980, AMLI is owned by PRIME Property Fund, a core commingled institutional fund. AMLI currently owns and manages 59 apartment communities including more than 19,900 apartment homes and has approximately 4,600 additional apartment homes under development at 14 new properties

10 Rules To Successful Multifamily Syndication Investing

This week blogger and veteran investor, Vinney Chopra, talks about multifamily syndication investing and his 10 rules to success.

By Vinney Chopra

If you want to know what you need to start investing in successful multifamily syndications, I can help.

My wealth of knowledge and success in real estate investing for more than 40 years can help with your education in multifamily syndication investing.

10 rules to successful multifamily syndication investing

I have completed more than 25 syndications.  Here is what I practice daily that has helped lead me to success as a multifamily syndicator today:

No. 1 – Educate yourself

Spend the time and money upfront to relieve yourself of as many mistakes as possible. Just one big mistake can wipe you out. To excel in any field – my thinking is that we need to get obsessed in learning it in depth – all the intricacies, foundations, procedures, systems and the structure of the business.

Knowledge is power.

It’s great to find the very best role models in that field, discover what methods they are employing and imitate them. Try to find a great mentor in them, get a coach or a mentor, especially in the beginning. See how you can contribute to their organization their goals.

No. 2 – Dream big

10 Rules To Successful Multifamily Syndication Investing

Set realistic concrete goals with deadlines and expectations for massive action daily, weekly and monthly. A goal is different from a wish; you may wish to be rich, but that doesn’t mean you’ve ever taken steps to make your wish come true.

Setting clear and specific investment goals with specific deadlines becomes your road map and action plan to becoming financially independent. You are statistically far more likely to achieve financial independence by writing down specific and detailed goals than not doing anything at all.

Your goals can include the following:

  • The number of units you need to acquire each year.
  • The annual cash-flow they generate.
  • The type of property.
  • The location of the emerging market

No. 3 – Buy in emerging growth markets and location

10 Rules To Successful Multifamily Syndication Investing

Always invest with a long-term perspective in mind. Never speculate on quick short-term gains in appreciation, even in a heated market experiencing double-digit gains. You never know when a market will peak and it’s usually 6 to 9 months after the fact when you find out.

As a syndicator, you want to do extensive research and decide on an emerging market that will bring lots of jobs. You see, you will need to sell that market to your “Valued Investors”, who would look at all the reasons to invest in your opportunity.

The best approach:

  • First is to choose your city or town based on the health of its housing market and local economy (unemployment, job growth, population growth, etc.).
  • From there you would narrow things down to the best neighborhoods (amenities, schools, crime, renter demand, etc.).
  • Finally, you would look for the best deals within those neighborhoods.

Sell that market to your “valued investors” who would see that you are a professional in your field and care about giving important information articles and links to great pieces of news in the market you are looking to acquire and would be asking them to look at all the reasons to invest in your opportunity.

No. 4 – Look for momentum plays and value-add for consistent cash-flow every quarter

With few rare exceptions, always buy investment property with a positive cash-flow. Do extensive due diligence and stay true to your standards and the assumptions in your elaborate Underwriting.

Don’t fall in love with the property; fall in love with numbers.

Remember, you are building a strong foundation to provide excellent Quarterly Cash flow returns ( I prefer paying quarterly in my companies rather than monthly; investors love walking to the mailbox four times a year to get their nice checks) to investors, so that they can give you more referrals and talk nice about how good you are as a syndicator. It’s so very important to be transparent and keep great communication with valued investors.

No. 5- Build a totally transparent business model

This has been our foundation at my 4 companies. Remember, the investors need to feel secure and confident about you and your business ethics before they give you $50k or $100k or $500k. It’s their very hard earned savings. And as a top syndicator you have the Fiduciary responsibilities to protect their investment more than yours.

Treat their investment as gold and do everything in your power to preserve it and make it grow.

In all our companies, the investors can ask to see ledgers, invoices, bids, bank statements, rent rolls, all financial reports, Capital Expenditures reports, balance sheets… well any and everything. That builds trust and makes them comfortable with your organization.

No. 6 – Create new LLCs for each multifamily community and get extra insurance coverages to mitigate risks

Always put each property in its own LLC. Make sure that all insurance, property, wind stream, flood and umbrella insurances are in place for your assets. Read and educate yourself the “SEC RULES AND REGULATIONS” thoroughly.

Find the best Real Estate Attorney and Syndication Attorney who you can build relationship with. The operations go smoother by getting help from them. You underwrite their fees in calculations, so don’t try to take a cheaper route, it may come back to haunt you.

I have been extremely blessed with Kim Lisa Taylor, www.SyndicationAttorneys.com. She and her team is amazing, efficient, cutting edge with laws and very professional. I would highly recommend working with her. She has done all our 26 Syndications. I am so very proud to talk about Milton Colegrove, Real estate attorneyin Dallas, TX, he is super efficient as has been with us since the very beginning and looks at all my contracts and legal matters through all 4 companies, counsels me daily/weekly. Looks after all my closings; I am never at the closings!!  Isn’t that awesome.

No. 7 – Diversify across markets

Focus on one market at a time, accumulating from 3 to 5 income properties per market. Once you’ve added those 3 to 5 properties to your portfolio, you would diversify into another prudent market that is geographically different than the previous one. Economies of scale prevail and bring better net cash flows by reducing expenses.

Typically that means focusing on another state. One of the underlying reasons for diversification within the same asset class (real estate), is to have your assets spread across different economic centers.

Every real estate market is “local” and each housing market moves independently from one another. Diversifying across multiple states helps reduce your “risk” should one market decline for any reason such as increased unemployment, increased taxes, etc.

No. 8 –Use professional property management or better yet run your own property management company

We decided to manage all our acquisitions from day one. It gives so much control on the day to day operations.

We can take immediate steps:

  • To rectify problems
  • To get better bids
  • To reduce costs
  • To implement strong marketing techniques for high occupancy.

In the beginning I promote to get a local Property Management company to see the systems and learn from them; only after good grasp of the day to day operations and systems; one should think to start their company. Never manage your own properties unless you run your own management company. Property management requires a solid understanding of tenant-landlord laws, Fair housing laws, operational software, good marketing skills, and strong people skills to deal with tenant complaints and excuses.

No 9 – Build an awesome presentation and credibility kit

10 Rules To Successful Multifamily Syndication Investing

Remember we have only first 7 seconds to make a great impression with Investors, RE brokers, Loan Brokers, Attorneys, Bankers, Landlords and others.

It pays big dividends to get professionally designed business plan, an educational simplified PowerPoint presentation and rehearsed on some great scripts. I would highly recommend practicing your scripts for each meeting, rehearsals are necessary.

No. 10 – Leverage your investment capital, time and skills – Syndicate

Real estate is the only investment where you can borrow other people’s money (OPM) to purchase and control income-producing property. This is a very noble cause in my thinking as you are providing above average excellent returns on the funds for so many investors, who are professionals in their field of expertise but don’t have the time or skills to invest their savings to gain high returns in Real Estate-especially in Multifamily Commercial sector. By being honest, trustworthy and following the SEC Rules and Regulations you are able to build your strong business. Also you will be helping so many residents who will be living in your Multifamily Communities that you add value to. Not to forget the job you will provide to the Staff at your assets and the hundreds of vendors you will be giving jobs also.

This allows you to leverage your investment capital into larger multifamily properties than purchasing using “all cash”. Leverage magnifies your overall rate-of-return and accelerates your and investors wealth creation.

It’s much easier to manage and bring about great rates of returns with larger multifamily communities.

Focus on accredited and sophisticated investors.

You are in a very good profession by being a syndicator, you are doing a great job of helping lots of entrepreneurs, doctors, lawyers, managers, high-net-worth individuals, retired businessmen and so many more, who just don’t have the time and skills to effectively syndicate and bring about great returns.

Summary:

So get excited to embark on this great journey to become financially independent to bring the kind of things you want to bring to you loved ones.

About the author:

10 Rules To Successful Multifamily Syndication Investing

Vinney (Smile) Chopra is the Founder and CEO of Moneil Investment Group and President of Ideal Investments Group. His latest accomplishments include acquiring 12 multifamily assets in the last 28 months worth $132 million. His last two syndications were sold out in just a few hours, and one in 36 hours raising $4.7 million and another one $6 million in eight hours. Between the two syndication companies he founded, Vinney’s teams are controlling over $200 million worth of assets. He is a mechanical engineer. After graduating from The George Washington University and finishing his Master’s in Business Administration in Marketing, he shifted his focus to marketing and motivation. He was a professional fundraising consultant and motivational speaker for more than 35 years. Vinney and his wife started their real estate investments in 1983. He currently owns single-family homes and multifamily units in Texas, California, Atlanta, Arizona and India. Many times, people call him “Mr. Enthusiasm” or “Mr. Smiles.” He likes to bring great value to everyone he comes in touch with. You can reach him at www.vinneychopra.com

How Do Multifamily Renters And Single-Family Renters Differ?

Multifamily renters make less money, have fewer kids and are less likely to be married, according to new research from a real estate consulting firm.

The research into the single-family renter shows the key differences between those who rent apartments and those who rent single-family homes, according to Mikaela Sharp, Research Analyst, and Chris Porter, Chief Demographer, for John Burns Real Estate Consulting.

There are 28 million multifamily rental households in the U.S. and 16 million single-family renter households. Here is how they differ:

  • Income: Multifamily renters earn an average of $32,400 a year, while single-family renters earn $42,600.
  • Family: Only 30% of those renting multifamily housing have kids. Typically this is because the renters are more likely to be under 35 years-old or over 65. For the single-family tenant, 52% have kids.
  • Marriage: 21% of tenants in multifamily are married, compared to 38% in single-family rental homes.

Lifestyle drives multifamily renters and single-family renters preferences

“Lifestyle drives much of the preference between renting a single-family home or an apartment. Single-family renters tend to prefer a yard for kids and pets, and good school districts. They also prefer more privacy from their neighbors,” Sharp and Porter write in the research.

“Many single-family renters would like to own some day but have not yet saved the down payment, have poor credit, or want more flexibility to move in the future,” they write.

The report says John Burns worked with five of the largest single-family rental landlords in the country and they “helped us understand this important component of the housing population—now reaching almost 13% of all households.”

For more information contact Chris Porter, Vice President, Chief Demographer, at John Burns Real Estate Consulting at at (949) 870-1218 or Mikaela Sharp, Research Analyst, at (949) 870-1203.

About the authors:

Chris Porter is Chief Demographer. He helps clients understand the role demographics plays in shaping the demand for housing in the short and long term. He co-authored Big Shifts Ahead: Demographic Clarity for Businesses, which is now available for purchase. Chris was instrumental in developing our Housing Demand by Price Point and LifeStage model.  The research he leads informs many of our firm’s forecasts. Before joining John Burns Real Estate Consulting in 2005, Chris worked for Reed Business Information’s HousingZone.com web site, and was also Director of Electronic Media for Reed’s Building and Construction Group. Before that he was an analyst at Rogerscasey, an investment consulting firm. Chris has a B.A. in Economics from Princeton University and a M.S. from Northwestern University’s Medill School of Journalism and works in our Irvine office.

Mikaela Sharp collects and analyzes data for compelling and timely demographic research. She also supports the Marketing team toward building the company’s demographic brand. Before becoming a Research Analyst, Mikaela began her career with John Burns Real Estate Consulting as an intern for both the Demographics and Marketing departments. Mikaela holds a B.A. in Business Economics from the University of California, Irvine.

7 great reasons to invest in smaller multifamily real estate

Are smaller multifamily buildings a better fit for many real estate investors than larger multifamily commerical buildings? This week veteran real estate investor Richard Montgomery, who knows real estate investing, from up-close, get-your-hands-dirty rehab to armchair investing using your self-directed IRA as your funding vehicle, takes on this question from a reader:

Reader Question: Monty, my wife and I are 32 years old and have just finished restoring a big Victorian two-family home in New Jersey. We took on a bit of debt, but I just paid all of the credit cards down and completely paid off a pretty big loan. We currently owe around $280,000 on the mortgage and it is worth around $350,000. Our other two-family is hitting on all cylinders. Debt is looking good and we once again have a good amount of disposable income. I have been looking at multifamily properties on the MLS (Multiple Listing Service) and cannot believe how low they are priced. That combined with interest rates makes me think that this is a fantastic time to buy property. After tax season, we will have $35,000 to invest. Should we continue with small multifamily homes or try to go into larger properties?  Ryan C. 

Monty's Answer: Hello Ryan, and thanks for your question. I would caution you that credit card debt might not be the best way to finance the improvements you are making. There are lenders (commercial banks or private lenders) that will fold the cost for building improvements into the mortgage. There is also a FHA 203k loan that folds the upgrades into the loan. You may want to talk with other remodelers, flippers or real estate investors in your area to see how they finance the improvements and lenders they prefer.

Sorting out the multifamily options

sorting out the multifamily options blog by Richard Montgomery

©Photo by Elena Photo via Canva

There are many unknown facts that do not allow a recommendation suggesting you buy larger multifamilyproperties. Earning capacity, industry sector, net worth, total debt and other factors play a role in decisions of that magnitude.

Based on the information you provided it appears you are ready for another two or three-unit building. There are many benefits in creating your portfolio with smaller buildings. Here are some of them:

  1.  A small loan is easier to obtain. It is less risky for both you and the lender, and most lenders make many more small loans than large loans. The underwriting standards for four-unit and smaller buildings are less stringent. 
  2. Small buildings are the largest market. There are considerably more two and three-family multifamily units in most communities than buildings with eight families and larger.  
  3. Many tenants prefer living in smaller buildings. Fewer people and fewer rules can make for a more “homey” environment with some people. There is a greater variety of floor plans and architecture. 
  4. There are more sources of capital. Commercial banks, credit unions, national banks, savings banks and online lenders make these loans.  
  5. As an investment strategy you are spreading your risk among many buildings instead of a few. 
  6. The return-on-investment gains are higher in smaller buildings.  
  7. There are more opportunities to add-value to communities. Seeking fix-ups in older neighborhoods has been a viable business opportunity for generations.   

The most important principles

why smaller multifamily buildings are great for investors

The key to success in building wealth in real estate transcends whether you invest in small or large buildings, it is gaining a good understanding of these principles:

  1. Make yourself an expert in understanding the vital statistics in the submarkets you chose. Sales rate, time on market, list to sell percentage, average price per square foot by style of property, percentage of listings that expire unsold, rental values, home value trends and more. In-and-out sale prices will be the best comparables if the data on renovation improvements is included.

  1. Operate under the principle that one makes money when buying a property, not when selling it. This real estate reality is not widely understood. Determine the cost to renovate against the projected as-complete value is one of the methods used to calculate the price one can afford to pay. 

  1. Make sure the areas you invest in are transitioning toward being a more desirable neighborhood. When you drive the neighborhood, do you see renovation projects under way, younger people on the sidewalks and a recovering business district? Look for completed renovations as a positive sign.

  1. Possibly the most difficult part of building a portfolio of real estate investments is learning how to manage them. Successful property management techniques and practices are the key to the business. Identifying, qualifying, placing and managing tenants are one of the most challenging aspects of rental property ownership. There are a number of ways to learn “how to” beside the school of hard knocks. Numerous books, university level classes, seminars and more, offer a path to enlightenment. This is an area of real estate where working smart trumps working hard.  

Your letter suggests that you are doing well in real estate. It is nice to hear real estate success stories and I wish you continued success.

About the Author:

Richard Montgomery gives no-nonsense real estate advice to readers’ most pressing questions through his website Dear Monty. He is a real estate industry veteran who has championed industry reform for over a quarter century. He knows real estate investing, from up-close, get-your-hands-dirty rehab to armchair investing using your self-directed IRA as your funding vehicle. In his nearly half-century in the industry, Monty has bought and sold investment properties, founded a real estate brokerage company using a non-traditional consumer driven model, run his own successful brokerage and is former CEO of Corporate Relocation Services. He is a consultant to businesses and entrepreneurs and also shares his knowledge with inquisitive readers through syndicated newspaper columns. You can ask him your real estate questions at www.DearMonty.com.

Richard Montgomery answers small multifamily investing question

Resources:

Buy and live in a duplex, triplex or fourplex

Buying a two- to four-unit home

Why smaller properties are great for the beginning investor

 

smaller multifamily investing

 

The Top 3 Criteria Renters Use To Evaluate A Property

A survey of active renters shows the top three criteria potential tenants use to evaluate a property are the price, the location and the community environment, according to a recent study.

The survey by Village Green, called the National Renters Index, involved 1,000 respondents in seven markets across the country.

In looking for properties, 59 percent of renters said in the survey they research online before visiting a potential rental property and 65 percent used nationally-known renting websites, such as apartments.com.

Community environment is important to renters who say they want a “homey” look and feel in their apartment community with a high-end feel. The cities included in the survey were Phoenix, Atlanta, Chicago, Dallas, Detroit, Philadelphia and Minneapolis.

The top 3 criteria potential tenants use to evaluate a property

  • Rent price – 85%
  • Location – 81%
  • Community environment – 49%

“The National Renters Index serves as a call to us all that we need to be listening to our current and prospective renters around the amenities and experiences sought from their next rental experience,” Diane Batayeh, CEO of Village Green said in the release.

“Renters should carry the believ that they are getting a special experience filled with amenities and the feel of home,” she said.

The top 4 amenities renters are seeking

  • Homey look and feel – 62%
  • Fits my lifestyle –  60%
  • Ability to issue a maintenance request online – 52%
  • High-end property amenities – 52%

How generations differ in what they want

Online, millennials care most about high quality photos, 69%. GenX and Baby Boomers are looking for clear and thorough information about amenities.

In terms of amenities, millennials are willing to pay more for high-end property amenities, 48% of them, compared to only 25% of Baby Boomers who are willing to pay for the high-end property amenities.

The high-end amenities they are willing to pay more for were smart-time technologies, 45%, and door service and/or a coffee bar, 49%.

The Phoenix renter profile

Community environment is especially important to renters in Phoenix, according to the survey. It has the highest percent of renters who are interested in a community with a “homey” or high-end feel. Facilities are also especially important to Phoenix residents.

About the Index

The first Village Green National Renters Index was conducted online, surveying 1,000 paneled respondents in the seven markets across the country. The survey was conducted using SurveyMonkey and ResearchNow online polls in February and March 2017. Respondents were required to be active renters in a residential community.

About Village Green

Village Green is an award-winning, Detroit-based property management company serving more than 30 cities throughout the U.S. Village Green’s hospitality-based business model is focused on delivering exceptional living through passionate service. The company operated 40,000 units valued in excess of $6.5 billion.

7 Habits Of Highly Successful Property Managers

What are 7 habits of highly successful property managers? Buildium.com recently did a webinar to explore 7 ways that property managers can better organize their daily routines while the chaos of property management problems rage around them. Here are the 7 habits.

No. 1 – Make Communication A Core Competency

“Create templates for everything, from emails to new tenants, notifications you send when people are late on rent, or common alerts.  These can all be made into templates and used over and over. If you are sending the same information more than three times in a month, you need a template. Software can help you do this,” Lauren Mason, Field Marketing Manager for Buildium.com, said on the webinar.

  • Deliver information in a consistent way each time.
  • Send rent reminders that look the same each month.
  • Send owner statements that look the same and are consistent.
  •  Are you reminding inspectors at regular intervals to do inspections with the same consistent message?

“Figure out ways to communicate with less effort,” she said. “For instance, instead of you compiling owner statements each month, use software that allows owners to login when they choose to see whatever reports they want. For tenants, allow them to submit a maintenance request online from their phone. And give tenants access to updates from the maintenance worker.”

No. 2 – Always be learning. Always be teaching

“When you are managing a property for someone, you are managing something that person considers as a key investment. Property owners want to feel a sense of security and assurance they are trusting their property to someone who knows property management and the local market inside and out. It’s on you to inspire that confidence,” she said.

“Get up to speed and stay current on all things related to property management – local rent rates, your state’s laws and regulations and general trends in the market place.”

Survey of property owners: What value do you expect from property managers?

  • Gives me peace of mind knowing things are handled – 79%
  • Fills vacancies faster with better tenants – 75%
  • Collects rents, fees and handles accounting – 71%
  • Lifts the burden of planned and unplanned maintenance – 65%
  • A professional partner with industry expertise and knowledge – 58%
  • Helps me increase my revenue and profitability – 57%

No. 3 – Create a playbook for growth

On the webinar, 78 percent said they expect to be managing more properties in the future than today, but how to they plan to connect with new property owners?  Where are you going to get your owner leads from?

So you need to know where property owners go to look for property managers. Top places

  • Searching the web – Two things to help yourself show up, with a great website and content, for long-term growth. Or short-term paid marketing search strategy.
  • All property management – (a Buildium.com company) connects owners and property managers.
  • Other property managers
  • My local real estate group
  • Ask for referrals from a friend

“Responding to a lead within the first five minutes is important, because owners typically look for three potential property manager candidates.

“Know what sets you apartment from your competition. Can your owners login to your portal, for instance?”

No. 4 – Create processes for repetitive tasks

“Document your routines to train new employees you may add to your property management team. Create checklists for each of the things you do repeatedly,” Mason said.  Automate what you can also such as:

  • Rental listings and syndication
  • Applications
  • Payment reminders and late fee notifications
  • Reporting for owners
  • Maintenance updates and recurring task reminders

Tips for success

  • Do an audit once a month
  • Put together a checklist for anything you did more than three times a month
  • Centralize – keep all your documents in one place, preferably in the cloud

“Over time you are essentially building a guide on how to run your business,” she said.

No. 5 – Use technology to stay organized

7 habits of highly successful property managers

“Everyone has differing levels of comfort with technology. Having a single platform everyone can access is an advantage.

“Technology is the edge property managers can use to keep up with maintenance issues, finding good tenants and staying organized,” she said on the webinar.

According to a Buildium.com survey, 81% of owners think property managers should be using the latest technology.

No. 6 – Be proactive

Property managers need to be proactive

Two results of live polls during the webinar.

“Inspect, insure and inquire before trouble hits. When you get ahead of things, it reduces problems,” she said.

How many property managers require renters insurance?

Get proactive by:

  • Having a recurring inspection cadence
  • Require renters insurance
  • Send out reminders to every tenant five days before rent is due.
  • Enable recurring payments
  • Send out surveys

“Catching a leak early saves time and money. Humans need reminders so send out reminders to tenants five days before rent is due. Software can allow you to set up automatic payments. Send out an annual survey to all tenants and owners once a year. Find out why tenants are staying or choosing to leave,” she said.

No. 7 – Keep calm and carry on

“Property management is totally chaotic. Owners pay you to deal with their headaches. Chaos and stress can come from not having the right information at the right time,” Mason said.

Tips:

  • Put information in the cloud
  • Optimize mobile communication
  • Have a life

“Try to centralize information in one place where everyone can access anytime from anywhere. If information is in the cloud, it can be accessed by mobile anywhere anytime. Free up your time so you have the ability to do what you love,” she said.

Buildium.com has 13,000 customers with 1.3 million units.

Get the 7 habits guide here.

About Buildium.com

Buildium is the only property management solution that helps real estate professionals win new business from property owners and community associations seeking services. Backed by expert advice and relentless support, Buildium enables you to outperform across all facets of your business with intuitive software that balances power, simplicity, and ease of use. Buildium services nearly 13,000 customers in 46 countries, totaling over one million residential units under management. In 2015, Buildium acquired All Property Management, a leading online marketing service for property managers, making Buildium the only company to give property managers a way to acquire new customers and increase revenue.

Photo credit: GeorgeRudy via istockphoto.com

Seattle Bars Landlords From Using Criminal Records To Screen Tenants

The Seattle City Council has passed an ordinance 8-0 to bar landlords from using criminal records to screen tenants based on past arrests or criminal convictions, with the exception of sex offenders, according to a release.

“The Fair Chance Housing ordinance would prevent landlords from screening applicants based on criminal convictions; arrests that did not lead to a conviction; convictions that have been expunged, vacated or sealed; juvenile records,”  Councilmember Lisa Herbold said in a release.  

“The bill also prohibits the use of advertising language that categorically excludes people with arrests or conviction records. The legislation does not apply to people registered as sex offenders who committed their crime as an adult.

“Landlords will still be able to screen applicants based on employment, credit scores, income ratios, or other criteria to ensure people will be good tenants,” Herbold said.  They’ll merely be unable to use criminal history when considering applicants, something no study has shown affects a person’s ability to successfully be a good neighbor or tenant.”

Electronic records make it easy for landlords to check criminal history

“Today, largely because of the new access to data that historically has been less accessible, landlords can reject tenants because they’ve been arrested in the past seven years – not convicted – arrested,” she said.

“For a criminal justice system that disproportionately arrests people of color, punishing someone who hasn’t been found guilty is a true injustice.  For those who have been convicted, the way I see it, you’ve paid your debt to society if you’ve served your time.  Blocking formerly incarcerated people from accessing stable housing is an extrajudicial punishment not consistent with the rule of law.”

Rental housing association opposes the ordinance

The Rental Housing Association of Washington (RHAWA) opposes the law, but its External Affairs Director Sean Martin said told Komonews.com that the Association saw no point in attending Monday's meeting after it passed in Council Committee 6 to 0.

"We knew it was going to be approved today," said Martin, who added the RHAWA will review the decision and consider its options, including a legal review. "A lot of our people are concerned about the liability component. There's a lot of concern."

The RHAWA, whose majority of members have smaller units – about 10 or less, said the measure is poor policy and will put landlords and other tenants at risk by turning a blind eye to most criminal records.

"The big concern is landlords feel pain on this, we are closing doors in access to tenants," Martin told komonews.com.

He insisted all landlords want the same thing: good tenants, and said the law will make it harder to assess risks. He thinks some landlords will opt out of the rental business, possibly shrinking the city's rental market inventory.

Landlords renting part of their own homes and sharing a kitchen or bathroom with a tenant will be exempt, as will primary leaseholders given the authority by landlords to choose roommates, according to the Seattle Times.  People renting mother-in-law apartments or backyard cottages on properties where they live also will be exempt, but micro-housing units will be covered by the ordinance.

Not going into effect for months

Herbold said there will be a delay in the ordinance.

“In addition, the legislation will not go into effect for nearly 6 months in order to support a new Fair Housing Home Program in which the City will help landlords learn how they can implement practices that will affirmatively further fair housing by reducing racial and other biases in tenant selection,” she said in the release.

The Seattle Office of Civil Rights will develop rules for and enforce the ordinance. The office regularly conducts testing to check whether landlords are engaging in discrimination.

Rental applicants will be able to file complaints with the office, which will investigate. For a first-time violation, the maximum penalty will be $11,000; for a second violation in five years, $27,500; and for a third violation in seven years, $55,000, according to the newspaper.

Resources:

Council Approves Fair Chance Housing Legislation: Councilmember Herbold’s Remarks as Delivered

Seattle approves ordinance to stop landlords from using criminal records to screen tenants

Seattle rental applicants’ criminal histories virtually off-limits under new law

Seattle bars landlords from using criminal record to screen tenants

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