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Portable Cooling Devices and the ORLTA: How SB 1536 Affects You

By
Brad Kraus
-
Portable Cooling Devices and the ORLTA: How SB 1536 Affects You and Oregon

Portable cooling devices, Oregon SB 1536, and how this law impacts both landlords and tenants and the requirements it places on them.

By Bradley S. Kraus
Partner, Warren Allen LLP

The 2022 legislative session has concluded. When compared to the sessions of the past two years—and the flurry of new laws landlords have had thrown at them arising from the same—this session seemed less noteworthy. However, the legislature did pass SB 1536, a bipartisan piece of legislation amending the Oregon Residential Landlord and Tenant Act. This law tackles restrictions on the use of “portable cooling devices” from May to September of each year and imposes new requirements that housing provide cooling devices in new construction.

As you can imagine, this law was reactive to the unprecedented heat wave the Pacific Northwest experienced in the summer of 2021. Prior to SB 1536, the ORLTA had little discussion about air conditioners within the same, unless it was provided for by the landlord (at which time the landlord would have an obligation to maintain the same). From a definitional perspective, SB 1536 defines “portable cooling devices” as “air conditioners and evaporative coolers, including devices mounted in a window or that are designed to sit on the floor.” Notably, this does not include devices whose installation or use would require alteration to the dwelling unit. Senate Bill 1536 prohibits landlords from restricting tenants from installing or using portable cooling devices in most circumstances.

There are several standards to be found within Oregon SB 1536 to which tenants will need to adhere. First, the installation and use of the portable cooling device cannot violate building codes, damage the premises, or make it uninhabitable, or require electrical power that cannot be accommodated by service to the building or dwelling unit. Landlords can also require that the portable cooling device be installed or removed by the landlord or their agent, be inspected and serviced by the landlord or their agent, and finally, require that it be removed from October 1 through April 30.

There are additional restrictions allowed for portable cooling devices installed in the window. The window-installed device cannot impede necessary egress from the dwelling, interfere with the ability to lock a window, or damage the housing unit. Finally, the window-installed unit must be installed so that it is not at risk of falling. In the event the resident installs the portable cooling device (as opposed to the landlord), the landlord is immune from liability for claims for damages, injury, or death caused by a device installed by the renter. In essence, the landlord will be able to maintain some oversight over the device—and install it themselves as detailed above, should they desire—but doing so removes this liability exception.

Finally, with respect to new construction, cooling devices are now required. In buildings where permits are issued on or after April 1, 2024, the dwelling units must have cooling facilities that provide cooling in at least one room, not including a bathroom, which conform to applicable law at the time of installation and are maintained in good working order. This can include central AC or a portable air conditioning device provided by the landlord.

The impacts of global warming are upon us. The temperatures during the summer months continue to rise. The extreme temperatures felt in 2021 may be an outlier, but similar heat waves will continue. Senate Bill 1536 became effective March 24, 2022, with input from both sides of the aisle, and Multifamily NW. As the summer months approach, landlords should handle any requests related to AC units with the above in mind and reach out to counsel if they have any questions about their rights and obligations.

About the author:

Bradley S. Kraus is an attorney 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 [email protected] or at 503-255-8795.
Portable Cooling Devices and the ORLTA: How SB 1536 Affects You and Oregon
Bradley Kraus, Portland attorney

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The End of the Grace Period, Part Deux

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Renter Preferences Survey Report Shows The Future Is Remote Work

By
John Triplett
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renter preferences survey

The 2022 renter preferences survey report shows that renters have been on the move over the past 18 months and clearly seek more space in their living arrangements.

And, more telling is that a quarter of respondents who moved reported that their moves were due to a shift to remote work during the pandemic, according to the 2022 Renter Preferences Survey Report from National Multifamily Housing Council and Grace Hill.

“In general, renters are teleworking with higher frequency than ever before. And there’s little expectation of that changing. In fact, nearly two-thirds (64 percent) of survey respondents said they expect to be teleworking about the same amount over the next year as they are now. This shift is driving demand for home offices and meeting space,” the report says.

The 2022 renter preferences survey report shows that renters have been on the move over the past 18 months and clearly seek more space in their living arrangements.

Renters were moving

Renter Preferences Survey Report Hot Trends and Key Findings

1. Demand for more space

“Lockdowns seemingly led to a strong desire for additional space; twenty-eight percent of renters who said they intend to move to a different rental community when their lease expires cited “additional living space” as a reason, up from just 19 percent two years ago.

2. Washers and dryers, air conditioning, soundproof walls and high-speed internet

“Now, more than ever, home is proving to be a sanctuary, and renters have a great desire — and are willing to pay a premium in additional monthly rent — for certain amenities. Reported must-haves include: washer/dryer in-unit (92 percent of renters interested, $54.73 monthly premium), air conditioning (91 percent, $54.73) , soundproof walls (90 percent, $46.21), high-speed internet access (89 percent, $47.93) , and walk-in closet (88 percent, $43.46).

3. Package delivery increase

“The share of renters who received two or fewer packages per month dropped from 45 percent in 2019 to just 24 percent this round, while the share who received three or more packages per month increased from 55 percent to 76 percent over the two-year period,” the report says.

Renters want choices

“Our survey asked residents what types of rental homes they considered during their last home search. While traditional apartment homes garnered a majority of responses (57 percent), townhomes and single-family rentals were also in the mix at 23 percent and 19 percent of responses, respectively.

“There were also strong correlations between what type of rental home they ultimately ended up in and their preferences for features and amenities like storage solutions, fitness centers and package management,” the report says.

Interest in smart home technology

The 2022 renter preferences survey report shows that renters have been on the move over the past 18 months and clearly seek more space in their living arrangements.

Renters’ interest in smart home technology is tied to its ability to add convenience or drive savings. Survey results show that the most popular smart home feature for renters is a smart thermostat, with 70 percent of respondents saying they were interested in or wouldn’t rent without this feature.

Smart sensor technology is also feeding renter interest in leak detection systems (67 percent) and water-saving features (67 percent).

Also connectivity is an issue with reliable cell service and internet service a requirement.

The 2022 renter preferences survey report shows that renters have been on the move over the past 18 months and clearly seek more space in their living arrangements.

“Reliable cell phone service ranked as the No. 1 community amenity, with 86 percent of survey respondents indicating interest. Renters are even more serious about their internet connectivity, with nine out of 10 respondents saying they were interested in or wouldn’t rent their home without it.”

Renter preferences survey: pet-Friendly amenities

Roughly one-third of renter respondents indicated they lived with a pet or service animal.

Dogs are proving to be a renter’s best friend, with 70 percent of pet owners indicating their fur babies were dogs.

The preference is driving interest in—and premiums for—four-legged friendly amenities like community dog parks, pet washing stations and on-site pet services like doggy daycare and grooming.

Moreover, survey results show that pet breed restrictions may be falling out of favor with renters, with 77 percent of respondents indicating that pet breed restrictions would either have no effect on their leasing decisions or would make them less likely to rent a property with restrictions in place.

Noise-related issues continue to be a problem

Noise remains a leading environmental pollutant at rental communities, detracting from renters’ wellbeing and living experience.

“As a result, renter interest in sound mitigating tech in windows and walls remains sky high. In fact, soundproof walls are the third most popular home feature after air conditioning and an in-unit washer/dryer, with 90 percent of respondents indicating they were interested or wouldn’t rent without them.”

Features that are most important

A renter preference for outdoor space also

“Renters have long put a premium on private outdoor space like patios and balconies, as well as other community outdoor amenities.

“Nationally, nearly three-quarters (73 percent) of the renter preference survey respondents indicated strong interest in a community pool, with the strongest interest levels coming mostly from fairer climates in the Southeast and Texas. Geography also factored into interest levels around amenities like rooftop space and common area barbecue grills as renters in higher density areas in and around some of the nation’s leading cities showed stronger interest levels,” the report says.

About the renter preferences survey:

“Our team conducted the survey in September and October 2021. Web-based surveys were distributed to more than 1 million residents. Along with the national report, metro-level reports are available. To qualify, each market needed at least 150 responses from five properties and at least two participating firms.”  A total of 221,559 renter responses were received.

Get the full report here The 2022 NMHC/Grace Hill Renter Preferences Survey Report is Now Available

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Picking the Right Delaware Statutory Trust Companies

By
By The Editors
-
Picking the Right Delaware Statutory Trust Companies

Investors often must juggle multiple investment options, like where to invest and with whom. When it comes to evaluating a Delaware Statutory Trust or DST investment, real estate investors should look for a firm that specializes in DST investments to help ensure their 1031 Exchange is executed, with no detail being dropped.

One of the most important reasons investors need to carefully research any Delaware Statutory Trust company is because 1031 Exchange investment decisions need to be made within a tight timeframe, and within strict IRS requirements. These are not easy decisions to make within the timeframe, as they require careful assessment and specialized know-how of both the 1031 Exchange and DST industries.

1031 Exchange Timeline Considerations

The IRS timeline on a 1031 exchange can be extremely challenging, including completing the following steps within the specified timeframe as outlined under Section 1031 of the United States Internal Revenue Code:

  1. Investors must purchase another “like-kind” investment property
  2. The replacement property must be of equal or greater value
  3. Investors must invest all the proceeds from the sale (i.e. the sale cannot receive any “boot”.) NOTE: A boot is a portion of the sales proceeds you receive from a 1031 exchange that isn’t re-invested in a replacement property. For example, if you sell a property for $200,000 but only re-invest $180,000, the $20K difference is known as boot.
  4. The investor must be the same title holder and taxpayer
  5. Investors must identify new property within 45 days
  6. Investors must purchase new property within 180 days

How Knowledgeable is your Delaware Statutory Trust Company?

One of the greatest benefits of working with a specialized and skilled Delaware Statutory Trust company is that they can provide investors not only expert advice and insight into the various property options, but also provide advice on building a conservative, customized, and diversified portfolio for their investor’s. Some firms advise investors to select risky businesses like hospitality, senior care, and oil & gas industries for 1031 exchange property options. Firms like Kay Properties & Investments is focused on building conservative, customized, diversified portfolios for their clients, doing everything possible to minimize risk.

Another important investment criterion investors should consider when a DST 1031 exchange, is does the firm provide 1031 Exchange investors a diversified menu of real estate assets from which they may choose, rather than forcing them to pick from limited options.

Kay Properties has access to the marketplace of DSTs from working closely with more than 25 DST sponsor companies. This allows investors to close their 1031 Exchange in little as 2-3 days, and invest in quality assets within the multifamily, net-lease, self-storage, industrial and manufactured housing sectors. In addition, Kay Properties offers the industry the largest inventory of custom debt-free DSTs while other firms only have 1 or 2 available. In addition, Kay Properties provides its clients a cash-out refinance option for those investors seeking potential liquidity.

Are They Offering a Breadth of Investment Options?

One of the concerns with having limited investment options is that investors may choose to invest their money in a particular investment not because it is necessarily the most suitable available in the market, but simply because it is the best option amongst those presented to them. For example, Apple and Microsoft are often considered by some to be well managed and profitable companies, but if those were the only options presented to a stock investor by their financial advisor, that investor would not necessarily know about other companies sometimes considered by others to also be well managed and profitable in which they could diversify their holdings, such as Amazon, Google, Netflix, etc… The same is true in the world of Delaware Statutory Trust brokers.

Many 1031-exchange investors are sometimes introduced to DST 1031-exchanges by someone that only has access to one or two DST properties and/or who has very little experience/knowledge in completing and evaluating 1031 DST exchanges.

What About the Education Process for DST 1031 Investors?

Because the Delaware Statutory Trust 1031 IRS laws can be confusing, the best Delaware Statutory Trust broker should offer investors educational tools to help them find the right DST investment vehicle. In addition, a good DST 1031 firm should also possess extensive knowledge about the different types of DST options, and be able to share this knowledge so that their client can pick the right property that meets their goals and objectives, be it in terms of tax deferrals or benefits and of course potential returns. And – depending on your unique goals and objectives – an excellent DST broker may help you select DST investments as you consider all three: potential income, potential capital preservation, and capital appreciation potential.

Kay Properties has one of the most (if not the most) robust 1031 Delaware Statutory Trust educational platforms in the nation. Some of these educational tools include:

  • DST 1031 Conference Calls
  • 1031 Exchange Delaware Statutory Trust Seminars and Workshops
  • Vast Library of DST blog articles where investors can learn about DST trends, transactions, and insights
  • A Regularly Updated Library of Podcast Episodes dedicated to DST 1031 exchanges

What Does their Track Record Say?

Another good idea for investors who are looking for the right Delaware Statutory Trust company should do is to examine the track record of any firm you are thinking of working with to determine whether they have extensive experience with DST 1031 investments. A long track record suggests they have acquired the necessary financial skill set and industry expertise which can help them evaluate several options to help you pick the right one. Plus, with years of experience in the DST sector, the best DST companies boast of a broad network of DST sponsors, offering you many options to choose from.

Kay Properties & Investments is considered one of the most experienced and knowledgeable investment firms in the country specializing in Delaware Statutory Trust (DST) and private equity real estate investments. The firm was established in 2010 with the emphasis on providing real estate investment options to high-net-worth clients looking for passive real estate ownership. In addition, Kay Properties believes it has created one of the largest 1031 exchange and real estate investment online marketplaces in the country that generates some of the largest DST 1031 investment volume in the United States. In 2021, for example, Kay Properties clients participated in thousands of transactions, and the $610 million of equity invested through the Kay Properties platform was invested in more than $8 billion of real estate offerings totaling approximately 50 million square feet of multifamily, manufactured housing, single tenant net lease, industrial, self-storage and medical properties nationwide.

Besides a deep network, what accredited investors deserve is an experienced and knowledgeable 1031 Delaware Statutory Trust broker that can provide them with valuable insight, guidance, and access to a large amount of diverse DST properties from many different DST sponsor companies. Kay Properties, a national Delaware Statutory Trust (DST) investment firm, is such a DST broker.

What to Look for When Searching for a Delaware Statutory Trust Company?

What to Look for? What does this mean? What Questions to Ask?
Make sure the firm is hyper-specialized in DST 1031 Investments A true DST specialist firm will have participated in billions of dollars of DST investments and be able to provide clients custom options to satisfy their specific, unique needs.

 

 Kay Takeaway: Ask how many DST 1031 deals the firm has successfully completed.
Make sure you use a firm that has an entire team of DST 1031 professionals It’s important to understand how the concepts of debt replacement, lease structuring, diversifying real estate portfolios, etc. are relevant to any 1031 exchange. A true DST 1031 expert will be able to explain these and other terms in great detail. Key Takeaway: Ask very specific questions and demand very specific answers.
Make sure you use a firm that is very particular with their DST properties Many firms that don’t specialize in DST properties encourage investors to look at assets that have higher risk, overly priced, and little performance data. Key Takeaways: Ask where the advisory firm sources their properties for 1031 exchanges, and what type of due diligence they have performed on the properties.
Make sure to use a firm that has some of its own skin in the game. Smart investors work with DST 1031 advisory firms who invest their own money in the investments they are selling. Key Takeaways: Ask if your advisory firm personally invests in the specific properties they are advising other people to invest in.

 

What Kay Properties Can Do for You?

One of the tremendous resources offered to investors by Kay Properties is the kpi1031.com online marketplace. The www.kpi1031.com platform provides access to the marketplace of DSTs from over 25 different DST sponsor companies, custom DSTs only available to Kay clients, independent advice on DST sponsor companies, full due diligence and vetting on each DST (typically 20-40 DSTs) and a DST secondary market.  Kay Properties team members collectively have over 150 years of real estate experience, are licensed in all 50 states, and are 1031 exchange DST brokers who have participated in over $30 Billion of DST 1031 investments.

Sophisticated real estate investors know that choosing the right DST broker is critical when looking to place their 1031-exchange or cash-investment dollars into a DST.

Ask Bill Exeter

Ask Bill Exeter and his team your questions about 1031 exchanges and he and his team will get back to you.

Name

About Kay Properties and www.kpi1031.com

Kay Properties is a national Delaware Statutory Trust (DST) investment firm. The www.kpi1031.com platform provides access to the marketplace of DSTs from over 25 different sponsor companies, custom DSTs only available to Kay clients, independent advice on DST sponsor companies, full due diligence and vetting on each DST (typically 20-40 DSTs) and a DST secondary market.  Kay Properties team members collectively have over 150 years of real estate experience, are licensed in all 50 states, and have participated in over $30 Billion of DST 1031 investments.

This material does not constitute an offer to sell nor a solicitation of an offer to buy any security. Such offers can be made only by the confidential Private Placement Memorandum (the “Memorandum”). Please read the entire Memorandum paying special attention to the risk section prior investing.  IRC Section 1031, IRC Section 1033 and IRC Section 721 are complex tax codes therefore you should consult your tax or legal professional for details regarding your situation.  There are material risks associated with investing in real estate securities including illiquidity, vacancies, general market conditions and competition, lack of operating history, interest rate risks, general risks of owning/operating commercial and multifamily properties, financing risks, potential adverse tax consequences, general economic risks, development risks and long hold periods. There is a risk of loss of the entire investment principal. Past performance is not a guarantee of future results. Potential cash flow, potential returns and potential appreciation are not guaranteed.

Nothing contained on this website constitutes tax, legal, insurance or investment advice, nor does it constitute a solicitation or an offer to buy or sell any security or other financial instrument. Securities offered through FNEX Capital, member FINRA, SIPC.

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The Top 50 Best Cities For Renting An Apartment

By
John Triplett
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top 50 best cities to rent an apartment

RentCafe has ranked the best U.S. cities for renting an apartment in 2022, using a unique combination of 17 metrics and proprietary data, according to a release.

“In addition to what it costs to live in America’s cities, we also looked at the selection and quality of apartments, the quality of their neighborhoods, occupancy rates, local economy growth, air quality, job opportunities and much more,” the company said in the release

The report ranks the suburb north of Austin, Round Rock, as the best city for renters in 2022, followed by North Carolina’s fastest-growing city, Raleigh.

Here is the ranking across the three main categories of cost of living and housing, local economy and quality of life:

  • Round Rock leads other Southern cities, small and large, that confirm not only Texas’ appeal for renters, but the South’s as an entire region. Round Rock stands out especially due to its highly rated schools, having one of the best job growths in the country: 9.1 percent, and a large stock of high-end apartments: 75 percent.
  • Raleigh takes the second spot due to its great quality of life metrics, as well as its high-end apartments in quality neighborhoods, low unemployment rate – 4.3 percent, and access to high-quality education.
  • Conroe, TX ranks third thanks to its great cost of living and housing, followed by Greenville, SC, and Orlando, FL, which rounds up the top 5.
  • Jacksonville, FL takes the title of best large city for renters, at no. 6 overall. What made it stand out were its large apartments, high number of new business applications – one of the highest in the country, good job growth – 5.4%, and low unemployment rate– 5.5 percent.
  • Small cities dominate the cost of living & housing section, with Savannah, GA in the lead. Its large floorplans and lower overall costs of living helped the city rank high up in the general chart as well, at no. 12. Plano, TX ranks best for local economy, with a low unemployment rate of 4 percent, one of the highest average incomes: $78,700, and a healthy job growth of 7.4 percent.

The Top 50 Best Cities For Renting An Apartment

Read the full report here.

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Be Careful: Investors, Landlords Are Easy Targets for Fraud

By
By The Editors
-
Investors, Landlords Are Easy Targets for Fraud

Investors and landlords are easy targets for fraud because they have to put their information out there in many databases.

By David Pickron

Just last week I received an email that promised me the easy life.  King Jeremiah from Zimbabwe had 45 million dollars that he needed my help with to get out of his country.  Imagine that… little ole me being contacted to help royalty in another country.  And for my troubles, I’d get half of the money.  I was blown away, even overwhelmed, by this amazing turn of fate that had come my way.   Most of us can clearly see through offers like this a mile a way but they keep coming.  Someone must be falling for these types of scams, or they would not continue month after month, year after year.  Though fraud schemes like these are easy to see, scammers are getting better and better at using your information against you.  One slip and you could lose your identity or thousands of dollars.

Recent statistics provided by a Federal Trade Commission (FTC) report that there are over 6,000 reports of fraud on average every single day.  And that’s just those that are reported. I would guess that the actual number of acts of fraud committed daily are 3-4 times as many, but they go unreported. These acts include check, credit card, bank account, email, and/or mail fraud; they are all around us.

As an investor/landlord you have to ask yourself are you at risk, and if so, how?

Investors have their information literally everywhere online as it is stored in several databases.  The simple act of buying a home opens you up to people seeing and eventually stealing your data.  Think of the places you provide personal information during this process: application forms, down payments for escrow, public websites like the county recorder and assessor, landlord registration, corporation commission, Zillow, and other data harvesters.  In fact you’ve probably experienced our very own investing industry grabbing this data and soliciting you directly to buy, sell or manage your properties.  How many unsolicited texts, phone calls or emails have you received from people who want to buy your home?  Ever wonder how they are getting your number?  Your personal information is more accessible than ever.

As a Private Investigator with the click of just a few buttons, I could tell you everywhere you lived, what you owned, who your neighbors were, names of your family members, cell phones, social security, date of birth, extended relatives, cars, employment etc.  When you set up your last online profile, wherever it may be, did you answer a new security question?  Boom, that is one more piece of data collected on you.  It used to be as simple as asking for your mother’s maiden name, but that has now extended to things like your high school best friend, sisters date of birth, name of first pet or any other crazy question.  Unknowingly we are all sharing information that may be used against us.

We rely on great relationships with our bankers who  have seen a large increase in bank fraud over the last several months.  While they may seem safe, wire and money transfers have become targets for fraudsters, and they do not have the protection credit cards have.   Wire transfers are immediate and clear banks quickly and before you know it, your money is gone.  Our personal and business accounts are at risk too.  It is crazy to me that we will diligently protect our social security number but then give anyone a check with our routing number and bank account number printed right on it, leaving us massively exposed to online check fraud.  It’s time to protect our bank account numbers like just like we do our social security number.

I suggest that you do these THREE things immediately as an investor:

  1. Put a freeze on your credit. Experian has made it easy to freeze and unfreeze.  Freezing your data stops anyone other than you from accessing your information and receiving new credit.  If you are at a car dealership and looking to finance, you simply go to the Experian portal and remove the freeze for the day.   It automatically freezes again the next day.  Create your freeze today at: https://www.experian.com/freeze/center.html
  2. Use an online rent payment system to manage your rental payments. This system allows rent to be paid from bank account to bank account, without giving out your personal bank account numbers to your tenants.  This will protect you from one more person having your personal information.
  3. Watch what you post online. When you search your name, what do you see?  I personally write many articles, do podcasts, record videos, and have my information everywhere…I am toast!  In helping others, I expose myself and, in an attempt, to be personal, tell many stories that give data about my family, properties, hobbies etc.  Social media is also the perfect medium for people to grab pictures or personal information.  If you find yourself in a similar situation with a growing online presence or increased exposure, go back to number 1 above and make sure you freeze your credit.  You don’t want to be one of those 6,000 reports a day going to the FTC.

In reality we aren’t ever going to be able to entirely get away from those that want to use our good information for bad purposes.  But we can take steps to protect ourselves that will at least limit the damages.  The good news for me is that King Jeremiah is going to make me mega rich, so I’ll just find a quiet home in a sleepy town, own a Dairy Queen, and be set for life.

About the author

David Pickron is president of Rent Perfect, a private investigator, and a fellow landlord who manages several short- and long-term rentals.  Subscribe to his weekly Rent Perfect Podcast (available on YouTube, Spotify, and Apple Podcasts) to stay up to date on the latest industry news and for expert tips on how to manage your properties.

Investors, Landlords Are Easy Targets for Fraud
David Pickron

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Rent Growth Accelerates Again Up 1.2 Percent In May

By
John Triplett
-
Rent Growth Accelerates Again Up 1.2 Percent In May

National rent growth accelerated slightly again in May, with the national index up by 1.2 percent over the course of May, the largest monthly increase of the year so far, according to Apartment List.

“So far this year, rents are growing more slowly than they did in 2021, but faster than the growth we observed in the years immediately preceding the pandemic. Over the first five months of 2022, rents have increased by a total of 3.9 percent, compared to an increase of 6.1 percent over the same months of 2021,” the Apartment List research team writes in the report.

Rent growth likely to exceed pre-pandemic trends

Year-over-year rent growth currently stands at a staggering 15.3 percent, but is down slightly from a peak of 17.8 percent at the start of the year the report says.

“Based on what we’ve seen so far this year, rent growth in 2022 seems likely to continue exceeding the pre-pandemic trend, even as it moderates substantially from 2021 levels,” the report says.

Rents increased in May in 96 of the nation’s 100 largest cities, though 70 of these cities have seen slower rent growth in 2022 so far than they did last year, and some of the hottest Sun Belt markets are finally showing signs of plateauing growth.

Vacancy rate continues upward trend

The national vacancy index ticked up slightly again in May, continuing a streak of gradual easing dating back to last fall.

vacancy rate continues upward as rent growth accelerates

“Our vacancy index now stands at 5 percent, up from a low of 4.1 percent, but remains well below the pre-pandemic norm,” the report says.

Although this gradual easing in occupancy is a positive signal, the market remains historically tight.

“And although we’re now at the start of the busy season for the rental market, when the bulk of moving activity normally takes place, rapidly rising rents may incentivize many renters to stay put and renew existing leases rather than looking for new ones. At the same time, the recent spike and mortgage rates has created yet another barrier to a historically difficult for-sale market, potentially sidelining would-be homebuyers and keeping them in the rental market.

“Given these factors, it’s possible that the easing of our vacancy index could level off in the coming months,” the report says.

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Changing the Perception of Apartment Living

By
By The Editors
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Family in new apartment home::The popularity of apartment living is growing with a wide variety of renters at all income levels, ages and stages of life.

The popularity of apartment living is growing with a wide variety of renters at all income levels, ages and stages of life.

By Debbie Willis

Negative perceptions about renters and landlords have been around for ages.  According to a survey conducted by Apartment List, some of these perceptions include renters are poorer and can’t afford to purchase a home, they are transient and not invested in their community, and renting is a short-term solution which points to a lack of commitment and responsibility.

Throughout our own development process and experience, we consistently run into locals who feel adding an apartment development within their community will have a negative impact on the neighborhood.

The popularity of apartment living and for rent single family homes continues to grow across the United States, and for many it’s by choice.  According to Pew Research Center, the percentage of renters in the United States rose from 34.6% to 43.3% from 2006 to 2016 and it appears to have remained at these levels since.  So why the negative perceptions?  And why are so many choosing to rent as opposed to purchasing a home?

Who’s Renting and Length of Residency

We’re seeing a wide variety of renters in all stages of life, economic standing, and age applying to live in an apartment and for rent communities.

Some are snowbirds looking for a second home in a warmer climate to spend their winters, some are traveling professionals, some are building a home or waiting to purchase a home, many want to live in a specific location, some are retiring and looking to simplify and downsize, and some simply do not want the stress that comes with owning and maintaining a home.  For these reasons and many more, renting has been a lifestyle choice for years and is increasing in popularity.

The popularity of apartment living is growing with a wide variety of renters at all income levels, ages and stages of life.
A wide variety of renters in all stages of life, economic standing, and age are applying to live in an apartment and for rent communities.

One of the stigmas related to apartment living is the fear an apartment community will draw transients and higher crime rates.  As of May 2022, the average residency of a P.B. Bell apartment resident is 29.3 months or 2.4 years.  On the high end, two communities within our portfolio have an average residency of 3.7 years.  The properties within our portfolio range in class type, age, and location and offer a varied sampling.  Maintaining a beautiful, clean, and safe community is a top priority at all our properties and residents enjoy the benefit and convenience of having a professional group manage and care for their community and home.

Income

Many community members worry, and may publicly voice concern when a new multifamily community is proposed or planned for development in their neighborhood because of the idea or assumption that apartment renters generate lower than average income and are not willing to invest in their immediate and surrounding community.

According to CoStar, as of May 17, 2022, the average asking rent for an apartment home in the Phoenix Metropolitan Area is $1,597.  Typically, the minimum income requirement to qualify for a rental home is at least three times the asking rent, which would total nearly $60,000 in annual income.  Newer apartment communities are asking much more.  The average market rent per unit in an apartment community built in 2020 to 2022 in Phoenix is $2,060 (source: CoStar).  This brings the minimum annual income requirement to $74,160.

While some are applying for an apartment home with roommates to combine income and meet these qualifications, we’re also seeing many applicants surpass the minimum income requirement by quite a bit, falling into the upper middle and upper class.

Regardless of single or multiple applicant status, occupancy standards are enforced at all professionally managed communities which is typically two persons per bedroom.  When we review our residents’ qualifications, it’s clear many can afford to purchase a home but are choosing to rent because they like the location, the flexibility, availability, and convenience an apartment home may offer.  Multifamily residents also support nearby shops and restaurants boosting local businesses.

Community Amenities

Master-planned community members may fear that apartment renters moving into the community will cause congestion with the use of their amenities, such as parks, community centers, pools, etc.

However, it’s quite the opposite.  One of the appealing factors to many apartment renters are the incredible amenities available exclusively to them within their apartment community.  In Arizona, some of these basic amenities include resort style pools, fitness centers, 24-hour on call maintenance, controlled community access, and playgrounds.  Newer developments are offering so much more, from dog parks and dog spas to indoor and outdoor lounges, complimentary common area WiFi, coffee bars, business centers, electric vehicle charging stations, smart apartment home thermostats and so much more.  Apartment residents have the ability to access all these amenities within walking distance from their apartment home, offering a unique lifestyle of luxury, exclusivity, and convenience.

We’d like to challenge skeptics to seek out a new apartment or rental community in your area and take a tour.  See for yourself why people are making this lifestyle choice and making the decision to rent.

About the author:

The popularity of apartment living is growing with a wide variety of renters at all income levels, ages and stages of life.
Debbie Willis, CPM®, President & Designated Broker Of Property Services

Debbie D. Willis, President and Designated Broker for P.B. Bell, is responsible for the company’s residential property management operations.  Debbie has been in the multifamily property management field since 1979 and with P.B. Bell since 1983.  Debbie administers all functions of the P.B. Bell Property Management Division and oversees all new business and development activities.  Debbie has served as the Arizona Multihousing Association State Convention and Trade Show chairperson, Education Committee chairperson, and Ethics Committee chairperson.  She currently serves on the Arizona Multihousing Association Board of Directors.  Debbie has an Arizona broker’s license, received her Certified Apartment Manager (CAM) designation from the Arizona Multihousing Association in 1987 and her Certified Property Manager (CPM®) designation in 1992 from the Institute of Real Estate Management.

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Workplace Culture No Longer Enough to Attract and Retain Associates

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By The Editors
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Workplace Culture No Longer Enough to Attract and Retain Associates

As apartment and multifamily companies compete for a limited pool of candidates, here are seven best practices to create a competitive advantage as workplace culture is no longer enough to attract and retain associates.

By Maritza Riquelmy-Romero 
Vice President of Human Resources
Richman Property Services, Inc.

Culture is incredibly important to an organization. But as the multifamily industry is rapidly discovering as it emerges from the pandemic, culture can no longer compensate for foundational needs when it comes to hiring and associate retention in the workplace.

While a relaxed dress code and a ping-pong table in the break room may have once indicated a fun and edgy corporate culture worth signing up for despite a slightly lower salary and lesser benefits, prospective employees now want it all. And they’re getting it.

With the hiring and retention challenges currently faced by nearly all industries, apartment companies included, job seekers are firmly in the driver’s seat. They don’t have to settle or sacrifice their work/life balance. They want an enjoyable workplace culture, as well as all the tangibles that serve as the cornerstones of a positive and fruitful employment situation. Now, it’s up to multifamily owner/operators to deliver.

As multifamily companies compete for a limited pool of candidates, here are seven best practices to create a competitive advantage:

1. Competitive Compensation

As competitive as multifamily has become in terms of recruitment, operators can’t afford to offer anything less than top of market wages and compensation. Whether hourly or salaried, associates know their value and have a baseline expectation for pay. While job seekers still seek out top companies and fun workplace environments, they aren’t willing to join an organization that doesn’t also meet their income requirements.

2. Bolstered Benefits

When pay is equal across the industry, operators can create a competitive advantage through their benefits packages. Especially for entry-level associates, comprehensive health benefits can be a huge enticement. Scaled company contributions, where associates earning less also pay less for health benefits, can help to recruit new associates because less of their earnings will go toward insurance coverage.

Increased vacation time, an extensive list of paid holidays and creatively structured time-off opportunities can also tilt the scales when a prospective hire is weighing job offers. Organizations are also going a step further, offering education reimbursement, rent discounts, pet insurance and sabbatical leave for tenured associates.

3. Comprehensive Training

New hires who enter their roles prepared to hit the ground running typically express increased job satisfaction in the early stages of their employment. Training programs that position new associates to contribute immediately and feel competent in their work can prove invaluable, both in terms of associate satisfaction and property performance.

But training shouldn’t cease after the onboarding process. Ongoing training platforms that keep associates up-to-speed with new technology implementations, renter preferences and company objectives also serve to increase associate retention. Employees who feel like they are evolving in their roles and provided with career development opportunities are more engaged with their work. And engaged employees are loyal employees.

4. Emphasize Retention

Recruitment and hiring often receive an inordinate amount of attention when it comes to maintaining a multifamily workforce. The real challenge in maintaining teams is not attracting new associates but keeping current employees in place.

Operators need to be cognizant of rising starting salaries compared to current employee compensation. By taking care of existing team members first, and not offering new hire benefits that aren’t first extended to active associates, companies can demonstrate a commitment to employee retention.

People don’t leave companies. People leave people. When operators can curb associate turnover, they create more cohesive and productive teams and forge deeper interpersonal connections. Associates working in an environment of continuous turnover don’t form the same connections with their coworkers, making it easier to leave. In contrast, when coworkers have been side-by-side for years, the workplace develops more of a family feel.

5. Solicit Associate Feedback

Culture and interpersonal connections are significant factors in associate retention. Operators can take employee engagement a step further by regularly soliciting associate feedback. When employees have a valued and respected voice in the company, it builds loyalty and grows associate tenure. Companies that poll associate sentiment and satisfaction through periodic surveys or other platforms for direct feedback develop more involved and invested teams.

It is equally important for associates to know that their feedback is received and incorporated into company decision-making processes. Two-way communication between associates and upper tiers of the company is vital to establishing an environment of trust and respect.

6. Maintain Flexibility

Associates at all levels of multifamily operations have grown accustomed to remote work environments in recent years and maintaining a flexible business model will go a long way toward attracting and retaining associates in the current job market. Operators who view the fading pandemic as a chance to revert to traditional methods of property management will only encourage employee turnover and hamper hiring efforts.

Operators who embrace opportunities for remote work or even introduce options for increased flexibility will find themselves in the favor of both current and prospective associates. Some companies have started rolling out hybrid staffing models and four-day work weeks to boost employee satisfaction.

7. Celebrate Associates

Company successes are built on the backs of associates. Taking the time to recognize the people who helped the organization reach a milestone or surpass previous performance levels validates their hard work.

Tangible rewards – bonuses, gift cards, an extra day of PTO – for significant achievements demonstrate appreciation and incentivize continued productivity. Direct recognition from the executive team confirms the visibility of individual or team efforts and promotes unity across the company. The gesture doesn’t need to be extravagant, but opportunities to recognize associates and celebrate their achievements must be seized.

While corporate culture remains a differentiator for multifamily organizations, it’s not the panacea it once was for hiring and retention. People seeking employment in the multifamily sector now demand a complete workplace package that includes peak compensation and benefits, as well as career development and engagement opportunities. Without that foundation to attract and retain associates, corporate culture begins to crumble.

About the author:

Maritza Riquelmy-Romero is a Senior level Human Resources professional with over 20 years’ experience. Maritza is focused on operational success through strong partnerships, leadership assessment and strategic vision development. Maritza holds a MBA from University of Phoenix, a Bachelor’s in International Human Resources Management from Eckerd College and is a certificated PHR from the Society for Human Resource Management.

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Multifamily Rents Defy Expectations And Keep Climbing

By
John Triplett
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Multifamily rents have defied expectations and kept climbing as asking prices rose $15 in April, an all-time high Yardi Matrix reports

Multifamily rents have defied expectations and kept climbing as asking prices rose $15 in April, an all-time high, as weakening U.S. economic growth has not stopped multifamily rents, according to the latest Yardi Matrix report.

Overall the rate of rent growth remains elevated due to strong demand and a long-term shortage of housing that analysts estimate is between two million and five million units, the report says.

Also single-family monthly rental asking prices topped $2,000 per month for the first time as build-to-rent grows.

Yardi Matrix writes that, “Coming off a record year of growth, in a weakening economy, there was not much doubt that multifamily growth would slow down in 2022, but by how much?

“So far into the spring leasing season, the market is holding up well.”

Highlights from the report:

  • Despite the U.S. economy’s recent hiccups, multifamily performance continues to be stellar with asking prices up in April to all-time high of $1,659. Year-over-year growth moderated by 50 basis points but remains high at 14.3 percent.
  • Although there is a small handful of weak numbers, multifamily demand and rent growth remain incredibly strong throughout the country.
  • “Of our top 30 metros, rent growth was up at least 8.8 percent over the last year in all but one. Rent growth was positive in each of the top 30 metros over the last one-month, three-month and 12-month periods.
  • The average single-family asking rent in the U.S. topped $2,000 for the first time and stood at an all-time high of $2,018 in April. Year-over-year growth dropped 110 basis points to 13.2 percent.

Some cautions in the future

Yardi Matrix writes, “Certainly, deceleration will happen, and there are warning signs on the horizon” with the economy.

However, “The demand-supply equation for multifamily should remain favorable even in the event of a modest economic slowdown.

The job market is strong, and household finances remain healthy, as evidenced by a robust increase in consumer spending during the first quarter. Higher mortgage rates have put a crimp in the for-sale housing market, which is likely to keep some renters in apartments, while household formation growth is expected to remain strong,” Yardi Matrix says.

Build-To-Rent Single-Family Rentals Grow

“Rapidly rising house prices and increasing interest rates are keeping homeownership out of reach for some potential buyers, while others are losing bids to the growing competition from institutional investors.

“The increasing preference for suburban housing has added to demand for single-family rentals. New development is on the rise as more and more investors enter the sector, though that will be tested as development and borrowing costs increase,” the report says.

Read the full Yardi Matrix 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.

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Ask Landlord Hank: What to Do About Hoarder-Tenant Friend

By
Hank Rossi
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What to do about a hoarder tenant who is also a good long-time family friend is the question this week for Ask Landlord Hank.

What to do about a hoarder tenant who is also a good long-time family friend is the question this week for Ask Landlord Hank. Remember Hank is not an attorney and he is not offering legal advice. If you have a question for him please fill out the form below.

Dear Landlord Hank:

We rent out a house next to us to a lifelong friend of my husband’s. She used to babysit him when he was little. She is now in her 60s, with very poor physical and mental health. She is a hoarder and as her physical health has deteriorated, this problem has become out of control and unhealthy for her.

My husband has gone in with her permission several times and cleaned up the place. Within two weeks it is always a mess again. There is literally just a path through from the front door to a chair she lives and sleeps in. She can no longer reach a bedroom or the bathroom. She wears adult diapers and cleans herself up afterward, but is now getting too weak to even do that very well. It takes her an hour.

She also has a dog and a cat, which just use a back room of the house to go to the bathroom because she can no longer take care of their needs either. There is no family willing to help. We have repeatedly tried to talk her into assisted living, which she shoots down immediately.

At this point, she really needs nursing home care. She refuses to go to the hospital and insists she wants to stay here and that she is fine.

At what point do we override her free will and take legal action to get her help? We are concerned for her, of course, but are also worried we could be held responsible for her unsanitary living conditions. We have tried to help. She just won’t let us.

But her health is so poor, we could be calling an ambulance for her someday soon. At that point, the state of her living conditions would no doubt be reported to somebody. Could that come back on us in the form of criminal charges or something similar? If we take action to get her out into assisted living or whatever she needs, she will see it as the ultimate betrayal. She thinks that families that allow a loved one to go into a nursing home are just terrible people.

Some thoughts or insight into our level of responsibility? We live in Ohio. Thanks so much for your time. –Crystal

Dear Landlady Crystal,

This is a very tough situation to be in, as your tenant is far more than a tenant.

It seems like you consider her “family” and she has the same feelings. I’m not able to diagnose this person but from your description of the situation it appears that this tenant may be battling a hoarder disorder, which has been officially designated as a subtype of obsessive/compulsive disorder.

This disorder is also considered a disability by the American Psychiatric Association, meaning that she would also be protected by the Fair Housing Act. She would be protected on many levels, and I know eviction is not any part of the plan – nor should it be.  Since she is failing both physically and mentally and has basically created a toxic environment, this is no longer a safe place for her to be.

You may have to be the mother figure here and tell her that since she can no longer take care of herself properly you are very concerned about her continued well-being and she is going to need more care than she is getting and a clean, safe environment in which to live. This is not up for discussion, and she can either be a part of the decision or she can fight you, in which case she’ll have less say so in where she moves from your place.

I would talk to your local social services and health department and ask for help. You could also visit some assisted living communities for advice and availability.  I would first contact a local Ohio attorney dealing in landlord-tenant law and ask for advice. This is not going to be an easy battle since she is in denial about her health and the need for more care. I know you care for her very much and hopefully she will come to see that you only have her best interests at heart.

Sincerely,

Hank Rossi
www.rentsrq.com

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/

 

Can a landlord prohibit tenants using small portable washers and dryers in a rental unit is the question this week for Ask Landlord Hank.
Landlord Hank says, “I would talk to your local social services and health department and ask for help.”

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.

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