Metro (Portland) Rental Housing Journal - July 2014

By Cliff Hockley and Special Con-tributors Jacob Zahniser and Chris Walters

A building owner asked to lease to a marijuana dispen-sary is faced with a host of

complex legal considerations unique to marijuana dispensary tenants. This arises from the inconsistent state of play between federal, state, and local regulators: • Marijuana remains a controlled

substance under federal law. • Oregon law permits dispensaries,

subject to licensing and other requirements.

• Oregon cities have the right to prohibit dispensaries within their jurisdiction.This article summarizes the key

considerations a building owner must keep in mind when thinking about leasing to a dispensary.

The Legal MorassFederal Law The sale of medicinal marijuana is

illegal under federal law and mari-juana remains a federally controlled substance. As long as marijuana remains a federally controlled sub-stance, there will always be a risk that federal law enforcement will shut down a dispensary and poten-tially seize the premises.

The U.S. Department of Justice, however, has stated that federal prosecution will occur only when the sale of medicinal marijuana touches on one of the following:1. The distribution of marijuana to

minors2. Revenue from the sale of mari-

juana goes to support criminal

organizations, gangs, and cartels3. The diversion of marijuana from

states where it is legal in some form under state law to other states where it is illegal

4. State-authorized marijuana activ-ities being used as a cover for traf-ficking other illegal drugs or engaging in other illegal activities

5. The use of firearms or violence in the cultivation and distribution of marijuana

6. The exacerbation of other adverse public health consequences asso-ciated with marijuana use such as driving under the influence

7. Growing marijuana on public lands and the attendant public safety and environmental dan-gers posed by marijuana produc-tion on public lands

8. Marijuana possession or use on federal propertyCivil ForfeitureIf federal law enforcement steps

in to shut down the dispensary, it may also seek to take the premise through civil forfeiture laws. Under federal and state civil forfeiture law, the government has the authority to seize property used to commit a crime, even if the owner of the prop-

erty is not charged with, or convicted of, a crime. As long as the property itself is linked to the criminal activi-ty, it may be seized. Typically, the government first seizes the property and then builds its case as to wheth-er the property should be forfeit. This can take months or years before the forfeiture is final, during which time the building owner is deprived of any revenue from the property.

Consequently, while the threat of federal law enforcement is mitigated when a dispensary is operated in compliance with state law, the risk associated with federal law enforce-ment remains very real (and very high), especially considering that federal enforcement policy may change with a new administration.

State Law A building owner would be wise

to include terms in the lease that mandate the tenant to provide the owner with documentation of com-pliance with all state requirements. For example, the premises cannot be within 1000 feet of a school or anoth-er dispensary, it must be equipped with an alarm system and video monitoring, and the dispensary ten-

1Q14 Payroll Trends and Forecast Notwithstanding the sharp drop

in 1Q14 GDP, Rose City job creation trends were buoyant, as employers added workers to payrolls at a 28,000- job, 2.8% year-on-year rate; the fastest growth observed since 3Q06. Every sector save transporta-tion made a positive contribution, led by construction, retail trade and business and leisure services, which collectively expanded at a 19,900- job, 5.0% year-on-year pace.

Seasonally-adjusted data also painted a bright picture. This series reveals that Portland establishments created a net of 12,100 new positions during the three-month period ended in April, the largest such job gain recorded in ten years.

RCR analysis finds that Portland job growth is closely correlated to U.S. payroll and metro personal income growth rates and lagged S&P 500 investment returns. A 96.0%

WWW.RENTALHOUSINGJOURNAL.COM • PROFESSIONAL PUBLISHING, INC PORTLAND/VANCOUVERPublished in association with: METRO Multifamily Housing Association; Rental Housing Association of Oregon; IREM & Clark County Rental Association

July 2014Rental Housing Journal Metro

Professional Publishing Inc.PO Box 6244Beaverton, OR 97007

PRSRT STD US Postage PAID Portland, OR Permit #5460

Current Resident or

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4. President’s Message: A Landlord's Summer

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continued on page 10continued on page 7

Understanding Oregon Medical Marijuana Dispensary Tenants

Payroll Job Summary

Total Payrolls 1.043.8m

Annual Change 28.0m (2.8%)

2014 Forecast 22.8m

2015 Forecast 18.1m

2016 Forecast 17.9m

2017 Forecast 12.4m

Unemployment 6.1% (May)

Market OverviewPortland Oregon

Multifamily Housing Update 1Q14

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“I Just Do Maintenance”By Pam McKenna

“I just do mainte-nance.” How many times have heard this statement out at a property? The phrase

seems to imply that this role is insig-nificant or less important than oth-ers. Through our resident surveys, I’ve seen consistent feedback on personnel demonstrating the impor-tance the maintenance team plays. Through reviewing financial reports I’ve seen operations literally turn around as a result of an organized, diligent, hardworking maintenance team member. Clearly this is a piv-otal role in property management. So what have you done to invest in this critical piece of your operations? Through strategic training, develop-ment and oversight, you will experi-ence a higher level of performance and improved operations.

The best place to start is with your onsite manager. If your manager and your maintenance team do not speak the same language it can often cause

frustration and create unnecessary work for the team. Get your manager signed up for a maintenance class in order to understand the basics of the maintenance function. One of the best experiences I have had in my career was spending the day working alongside the maintenance team. It allowed me to understand the demands of the day for the main-tenance crew and highlighted ways that the office team could improve on communication. Let’s just say I had a lot more respect for what they do af-ter walking a day in their shoes. The more knowledge the management team has of this critical function the more effective their management will be over the maintenance role.

Budget knowledge is the num-ber one weakness. We don’t want to give our maintenance managers the budget, but when they are over budget they are the first to get rep-rimanded for spending too much. If you prepare your team with budget knowledge they will understand the goals for the year ahead and can find

ways to not only meet budget but often come up with creative ways to reduce expenses resulting in savings.

Time management for the main-tenance team includes efficiency in ordering. On-line ordering will cut down on hours spent thumbing through a catalog. Create a saved fa-vorites list that only requires you to enter the quantity of items and with a few clicks the order is submitted. Planning ahead will make it easier to cut down on driving to the local hardware store for those last minute items needed to wrap up a turn. It is more effective to order supplies once a week through organized schedul-ing rather than putting in an order every other day.

Communication between the maintenance team and the manage-ment team is critical. It begins with holding regular team meetings to ensure the team is on the same page. Was a move-in bumped up to an earlier date? Did someone cancel their notice and they are not moving out? Did a resident complain about

a work order not getting handled correctly? Team meetings can be an excellent way to coordinate and efficiently work through changes and challenges. How often do the manager and maintenance walk the property together? This should be done weekly so that both sets of eyes are on the community and expecta-tions are reviewed and discussed during that walk. The team should set goals for each week, month and year and track them in order to ap-preciate their progress. Establish standards regarding the use of radi-os to ensure all communications are professional and appropriate. Train the management team on how to bet-ter communicate when preparing a maintenance request. There are ques-tions that when asked can clarify the specifics of the request. An example might be clarifying a specific room and wall an outlet is not working instead of just saying “outlet in bed-room not working.”

Resident satisfaction is often tied

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July 10, 2014 1:00 AM - 1:00 AM PDX Charity Golf Tournament (Portland, OR)

July 11, 2014 12:00 PM - 1:00 PM It's the Law Lunch Time Series: Dealing With Non-Tenants - Unauthorized Occupants, Trespassers & Ejectments (Portland, OR)

July 15, 2014 7:00 AM - 4:00 PM SOLD OUT EPA Lead-Based Paint Renovation Certification (Portland, OR)

July 16, 2014 9:00 AM - 11:00 AM NALP: Rental Policies and Procedures (Portland, OR)

July 22, 2014 9:00 AM - 1:00 PM New Hire Training (Portland, OR)

July 24, 2014 8:00 AM - 5:00 PM CAMT: Appliance Repair Part I (Portland, OR)

July 31, 2014 8:00 AM - 5:00 PM CAMT: Appliance Repair Part II (Portland, OR)

August 5, 2014 1:00 PM - 5:00 PM OR Landlord/Tenant Law Part 1 (Portland, OR)

August 6, 2014 9:00 AM - 12:00 PM NALP: Leasing and the Internet (Portland, OR)

August 7, 2014 1:00 PM - 4:00 PM Washington State Forms & Notices (Vancouver, WA)

August 8, 2014 8:00 AM - 12:00 PM Mold Awareness & Remediation (Portland, OR)

August 8, 2014 12:00 PM - 1:00 PM It's the Law Lunch Time Series: Crazy But True: Stories From a Full Moon (Portland, OR)

August 12, 2014 1:00 PM - 4:00 PM Washington State Landlord/Tenant Law (Vancouver, WA)

August 15, 2014 9:00 AM - 1:00 PM New Hire Training (Portland, OR)

August 19, 2014 1:00 PM - 5:00 PM OR Landlord/Tenant Law Part 2 (Portland, OR)

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Rental Housing Journal Metro • July 2014 3


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adjusted-R2 model specified with these variables forecasts moderating job creation trends, gradually revert-ing toward the metro’s 1.6% annual long-term mean. Portland is likely to achieve faster than average growth through 2016, but gains are likely to recede in 2017, in keeping with broader U.S. trends.

1Q14 Absorption and Occupancy Rate Trends

Strong tenant demand remained the order of the day as Portland households occupied a net of 689 vacant units during 1Q14, according to Reis. Absorption was moderately weaker than in the prior (870) and year-earlier (709) quarters, but the shortfall was largely attributable to lower supply. Developers delivered only 395 units during 1Q14, down from 1,088 (4Q13) and 502 (1Q13). Consequently, occupancy increased 20 basis points sequentially and 40

bps year-over-year to 97.0%. Axiometrics surveys of stabilized

property found an average occu-pancy rate of 95.7%, unchanged sequentially but up 50 bps y-o-y. Class-C assets enjoyed the highest average occupancy (96.3%), followed by class-B (96.3%) and class-A (95.0%). Units in not-stabilized prop-erties were absorbed at a useful rate of about 21 units per month.

RCR find that absorption is close-ly correlated with job growth. In line with our jobs forecast, Portland is likely to enjoy above normal demand through 2016, followed by a gradual drift to the long-term mean, yielding slightly lower occupancy by 2017.

1Q14 Effective Rent TrendsThe Portland market posted a

tenth consecutive quarter of 4% or faster effective rent growth in 1Q14, rising at 4.3% annual rate, up from 4.0% in 4Q13. On a sequential quar-

ter basis, average rents advanced $10 (1.1%), up from the prior quarter’s 0.8% gain. Axiometrics surveys of larger, same-store properties found considerably stronger rent growth. Effective rents among this group increased 7.6% y-o-y, representing the fourth consecutive annual metric in the series exceeding 6%.

Class-B properties achieved the strongest rent gains, rising 8.8% over-the-year. Class-C assets trailed (4.8%), while class-A properties notched a 5.8% average advance. Rent increases were steepest in the metro’s two largest submarket inven-tories: Beaverton (8.3%) and Tigard (9.4%). By contrast, slower growth was recorded in Northwest Portland (5.7%) due to competitive pressure.

RCR find that changes to metro personal income, job and supply growth and S&P 500 returns account for 91.4% of changes in rent growth. Using this model, we estimate that Portland rents will rise at an above average (3% - 4%) rate through 3Q16 before slowing to the 1.9% - 2.3% range.

1Q14 Property Markets and Total Returns

Investors drank long and deep of Portland properties during 4Q13, closing on 18 properties valued at $5 million or more for a total of $414mm. Sales velocity was understandably slower over the winter quarter, fall-ing to seven transactions for aggre-gate proceeds of $183mm. The aver-age unit price was sharply higher, however, rising to $141,964 from 4Q13’s $113,343 metric. Acquisition of a class-A Boise mid-rise by a Wall Street fund for $281,915/unit (fifth highest price ever in this market) was largely responsible for this result. Cap rates for institutional tro-phies fell in the mid- 4% range, but standard class-B suburban assets were mostly in the high-5% to mid-6% range.

Occupancy Rate Summary

Occupancy Rate (Reis) 97.0%

RED 50 Rank 10th

Annual Chg. (Reis) +0.4%

RCR YE14 Forecast 96.8%



RCR YE17 Forecast 96.9%Effective Rent Summary

Mean Rent (Reis) $894

Annual Change 4.3%

RED 50 Rank 11th





Trade & Return Summary

$5mm+ Sales 7

Approx. Proceeds $197mm

Avg. Cap Rate (FNM) 6.7%

Avg. Price/Unit $141,964

Expected Total Return 6.5%

RED 46 ETR Rank 34th

Risk-adjusted Index 2.53

RED 46 RAI Rank 41s

Continued on page 7



President Elizabeth Carpenter • President Elect John Sage • Past President Phil Owen • Vice President Robin Lashbaugh • Secretary Lynne Whitney • Treasurer Elaine Elsea • Office Manager Cari Pierce

10520 NE Weidler Portland, OR 97220 (503) 254-4723 • fax (503) 254-4821 [email protected] • www.rhaoregon.org.

Liz Carpenter RHAOregon PresidentPresident’s Message:

A Landlord's Summer I read somewhere the perfect sum-

mer day is when the sun is shin-ing, the breeze is blowing, the

birds are singing, and the lawn mower is broken! Well that may be true for a lot of people, but not for us landlords. Summer is the short time window we have to make repairs, replacements, upgrades, and the rest of those things wet winter days don’t allow.

It’s important to remember a few things about all this work. Foremost, keep good books. All those receipts and bills are really important around tax season. Understand how to use depreciation as a business tool. Some landlords use a strategy known as cost segregation, components of a property and its improvements are depreciated separately, often with different, shorter timelines. Furniture and appliances, for instance, are depreciated over five years. Did you know property improvements are also included in the cost basis? They are depreciated over time, though the cost of most repairs is deductible in the year when it is incurred. Add the use of your home office, unex-

pected losses and tax losses, and all of a sudden you’d wish that lawn mower were broken--this stuff can be overwhelming.

The RHA is here to help you navi-gate the pitfalls of our industry and help you make smart business deci-sions for your properties. We have an experienced team, experienced board of directors, and wonderful partner companies who are here to help.

This month we have something very special going on at the RHA. Please save the date and come to our first annual “Under a Starry Night” social. Taking place of our monthly dinner meeting, we are starting a July tradition of hosting all our mem-bers at the RHA offices. Fine food, wonderful friends, and a way for you to help our favorite non-profit JOIN, who help people transition from the street to a home.

We will also be dedicating our new community room after longtime RHA board member Jon Moon. It will be a fine and special evening and we really hope the entire RHA community will attend.

Of course our classes, tenant

screening, and answers to all the questions around the section 8 law taking effect continue at the RHA. Just call our office or check our new website. We are here to serve.

Can’t wait to see everyone in a few weeks Under a Starry Night.

July 16, 2014 at 6pm, complimen-tary beer and wine. $19.00 per guest to cover the cost of food.

Sincerely,

Liz CarpenterRental Housing Alliance Oregon

President

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I Just Do...continued from page 2

Advertise in Rental Housing Journal

METROCirculated to over

20,000 Apartment owners,

On-site, and maintenance

personnel monthly.

Call 503-221-1260 for more info.

to the relationship with mainte-nance. This team is interacting with the residents on a more consistent basis making customer service and fair housing training a critical piece for improved resident satisfaction. The maintenance team should know how to sell the value of the commu-nity when interacting with the resi-dents and do their part to market the service they provide. Make sure they are completing follow up calls to ver-ify the residents are satisfied after ev-ery work order. What about leaving behind a thank you note and a treat? This can add that additional market-ing and customer service “wow” fac-tor to your maintenance team.

Setting up a team with the proper personal protection equipment, cur-rent MSDS sheets, and regular train-ing on safety practices can reduce liability at the property. Routine site inspections are encouraged to stay out in front of any areas that may be-come liabilities and are being over-looked.

Set standards for the team on ap-pearance and hygiene. Personally, I am more comfortable allowing a maintenance person into my home that is in a clean uniform with a proper name badge. Smoking should only be allowed in designated areas and steps should be taken to remove the smoke smell that lingers on an employee.

How else can you improve effi-ciency with the maintenance team? Be clear on when it is a good time to include two workers to complete a task. Train the team to plan ahead to bring all the right tools and supplies to a job to avoid those needless trips back and forth to the maintenance shop. Managers should be aware of what a reasonable amount of time is required to complete typical tasks so they can help monitor efficiency. The maintenance team needs to know when it is appropriate to call in a vendor because an issue is larger than what they can handle.

Keeping the shop organized will

help improve efficiency as well. A shop should have minimal inventory with a system that is organized mak-ing it easy to quickly locate the parts needed. Dispose of old random parts that will never be utilized. Create smart work spaces that allow for eas-ier repairs, such as a large table to cut screens. Get rid of old couches and TVs and create appropriate lunch stations for the team to take breaks.

Compile a standard specs list for your community making it easier to order supplies and creates a more consistent apartment turn for resi-dents. It is easier to find the parts you need when the specs are the same throughout the property.

Create a record documenting the property systems, dates replace-ments occurred, annual inspection dates and routine maintenance cal-endars. Plan the year ahead by cre-ating a capital planning board in the shop. Map out the plan for the year ahead and what items are budgeted or planned for in each month.

Set the tone that a great attitude goes a long way. Coming to the property with a “can do, get it done” outlook will make a huge difference in performance. Ask for their com-mitment to excellence and to bring 100%. Invest in your maintenance team through training. Maintain consistent oversight – “inspect what you expect”. Follow up with recog-nition, rewards and appreciation. Validate how valuable they are to the operations of your communities and definitely don’t accept the statement “I just do maintenance.”

p

PGE_SpectrumAd_BW_5.pdf 1 8/30/2013 9:46:48 AM



Have you noticed that when you take time off from work, life goes on? I have recently

done just that and now that I am back in the saddle, I realize the chal-lenges we were facing before are still present. In fact, new challenges have developed in the interim.

Here are a few examples. A few landlords continue to create prob-lems for the industry. Others live on the opposite extreme of being involved in community activities in addition to taking care of their rent-als and their tenants. Most of us operate in between. When you encounter landlords and managers in the second category, acknowledge their contributions and thank them for going beyond and doing more. Alternatively, when you encounter the problem landlords offer to assist them. Many just don’t know any bet-ter through their ignorance; others just don’t care; and the minority tries to milk the situation for the highest return at the lowest cost.

Many things happen in our lives that are outside our control but they

impact us and our tenants and often require a response from us. Gang violence is a growing problem. Apartment fires continue to damage our properties and devastate those tenants that are impacted. Young children fall out of windows. Tenants lose jobs. Governments pass laws restricting our industry. These are just a few of those crises that may occur.

Do we have contingency plans? Are we willing to remain flexible to these external influences? If we do not stop to consider these possibili-ties, we may end up being forced to react rather than being proactive.

Contingency planning is only one facet of being a good landlord. Another is appreciating your tenants and that they have lives too. When tenants are taking care of their “homes”, let them know you appre-ciate them. You don’t have to be friends—just respectful.

Be firm: when the rent is late the first time, send them a 3-day notice immediately. Let them know that paying on time is important and

expected. Do not try to be nice and give them a few days to pay (unless there is a good reason.) Realize that just being nice may actually be mean. If a tenant is several weeks late, he/she still has to pay the rent PLUS late fees besides the following month’s rent is due even sooner. If you give them until the next month to pay, realize they NOW have two months’ rent due—if they can’t pay one month’s rent, how do you expect him/her to come up with 2 months of rent?

There is another facet of landlord-ing that is becoming more important as a result of the Great Recession, and that is there are more families on the edge of homelessness. As humans we have an ethical obligation to be aware of their plight and when it makes sense do something about it. Often as we become more successful, we look at those less fortunate and classify them as lazy or not living smart or living off the public dole. As with most generalizations, this belief is just plain wrong: there are many exceptions. Many who are living on

the edge are in that position due to circumstances beyond their control. Don’t automatically disqualify them if they don’t meet your criteria. Stop and look beyond their current situa-tion. Whenever you do this remem-ber two important rules: don’t make exceptions to your criteria without documented reason and keep in mind your rentals are a business, not a social service agency. If this style of landlording does not work for you, find some other way to help families in these straits.

There are many freedoms in being a good landlord. This is one of the reasons I like being a landlord. My wife and I can run our business how we wish, remembering always the rules and regulations for landlords. It is easy to feel like we are making a difference for good. Look for ways you as a landlord can make a differ-ence for good as well.

p

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Thoughts on Beinga Successful Landlord

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Reflecting higher cap rates for mid-range properties, RCR elected to increase the generic cap rate 25 bps to 5.75%. Using this level, a 6.5% exit cap rate and model derived occupancy and rent forecasts, we arrived at a 6.5% expected, 5-year unlevered total return, ranking 34th

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Market Overview...continued from page 3

The information contained in this report was prepared for general informa-tion purposes only and is not intended as legal, tax, accounting or financial advice, or recommendations to buy or sell currencies or securities or to engage in any specific transactions. Information has been gathered from third party sources and has not been independently verified or accepted by RED CAPITAL GROUP. RED makes no representa-tions or warranties as to the accuracy or completeness of the information, assump-tions, analyses or conclusions presented in the report. RED cannot be held responsible for any errors or misrepre-

sentations contained in the report or in the information gathered from third party sources. Under no circumstances should any information contained herein be used or considered as an offer or a solicitation of an offer to participate in any particular transaction or strategy. Any reliance upon this information is solely and exclusively at your own risk. Please consult your own counsel, accountant or other advisor regarding your specific situation. Any views expressed herein are subject to change without notice due to market conditions and other factors.



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ant must pass a criminal background check. In order to know if the dis-pensary tenant is in compliance, the building owner should be familiar with the state’s regulations govern-ing dispensaries. Regular property inspections will show tenants that they cannot deviate from their obli-gations to the law and the lease agreement.

Local Law Under Oregon law, any Oregon

city may pass a moratorium on dis-pensaries until May 2015. At least 70 cities across Oregon have passed moratoria or other regulations effec-tively prohibiting dispensaries alto-gether. These cities include Hillsboro, Beaverton, Tigard, Tualatin, Milwaukie, Gladstone, Oregon City, and Wood Village. Thus, the build-ing owner should know whether the local code even allows a dispensary at the premises.

The Practical ConsiderationsOnce through the legal morass,

the building owner must address the host of other considerations unique to dispensaries such as (a) tenant mix, (b) image issues, (c) insurance considerations, (d) compliance with other leases, and (e) compliance with financing restrictions.

For example, in a multi-tenant building the other tenants may not appreciate having a marijuana dis-pensary as a co-tenant. Besides the perceived image problem, marijuana

gives off distinctive odors that other tenants sharing a common HVAC system may not appreciate inhaling.

Relatedly, having a dispensary as a tenant could lead to a decrease in lease renewals from other tenants in the building. Other tenants may per-ceive any loss of business as caused by the dispensary (whether true or not). To mitigate this, and other co-tenant risks, stand-alone facilities may be the best option for dispensa-ry tenants.

Finally, dispensaries are relatively new and their operators may be inexperienced in operating a dispen-sary. This inexperience increases the likelihood that the dispensary will fail and the tenant will default on the lease.

ConclusionA building owner asked to lease

to a marijuana dispensary is faced with a host of complex legal and practical hurdles unique to marijua-na dispensary tenants. While not insurmountable, the building owner should take great care, and consult with experienced legal counsel, when considering whether or not to enter into a lease with a marijuana dispensary.

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Dispensary ...continued from front page



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It’s a common occurrence among the most talented people in the corporate world – highly skilled

and qualified workers make the leap from valued employee to uncertain business owner.

Unfortunately, rather than becom-ing a master of their own business, many of these entrepreneurs work twice as much as they did in their safe corporate job, unwittingly com-mitting themselves to becoming the lowest rung on the ladder, says Ze-novia Andrews, founder and CEO of The MaxOut Group, a company de-voted to empowering and teaching entrepreneurs development strate-gies to increase profits.

“People believe that starting a new business is supposed to mean they’ll have to work much longer hours, and that’s why most new businesses fail early,” says Andrews, author of the new book “All Systems Go – A Solid Blueprint to Build Business and Maximize Cash Flow,” (www.zeno-viaandrews.com).

“Entrepreneurs need to be the brains and oversight of the opera-

tion. It’s not wise to work for your own business. Sixteen-hour days get entrepreneurs lost in the minutiae. The lose perspective and burn out.”

Business owners need distance for perspective, and the best way to create that is by knowing how to del-egate duties to employees, she says.

“Owners need to be the strategic visionary who hires, trains and de-velops the best talent available, and then delegates work,” says Andrews, who discusses the five keys of del-egation.

• Understand that your team is made up of human beings. No one can work nonstop, so get your timing right. Know what each employee can handle, and never overwork them. Most people perform at their best when they are consistently busy but not rushed or pressured.

• Focus on the strengths of your team. Delegation is not a dump-and-run tactic. Know your employ-ees and how they fit into your busi-ness puzzle. Allow them to do what

they do well, and give them respon-sibilities and authority. They’ll be happier and so will you.

• Focus on your own strengths, then plug the holes. Few of us are great at everything! If bookkeeping’s not your thing, hire an accountant.

If you don’t have marketing expe-rience, find someone with proven skills. Trying to perform jobs that you don’t do well will require twice as much effort with less-than-satis-factory results.

How Entrepreneurs Can Increase Profit with a Hands-Off Approach

Mechanical Rule of Distance’ Lets You See Big Picture & Test Ideas, Says Business Development Strategist

continued on page 11



Responding to Maintenance Emergencies

By Mary Girsch-Bock

Years ago, while living in Las Vegas, a summer thunder-storm wreaked havoc on my

apartment. Lightning eventually struck the roof of my loft, creating a fairly significant hole in the roof. Since it was late, I placed a bucket under the hole to catch the still-fall-ing rain and called the management office to report the damage.

I left four messages that evening; none were returned. The roof was eventually fixed; five days later.

Each day I prayed that the summer monsoon rains would stay away un-til the roof was fixed.

I was lucky about the weather. Not so much about my choice of apartment communities. What re-ally angered me was the lack of con-cern about a serious problem that a tenant had. I didn’t expect them to come out that evening in the middle of a storm to fix the roof. I did ex-pect them to call me back and let me know that it would be taken care of. That lack of concern was what I put on my 30 day notice, when I chose not to renew my lease.

Are you available for your resi-dents 24-7? That doesn’t mean fol-lowing up on minor issues that can be easily addressed in the light of day. It does mean that when your tenant has a legitimate concern, are you easily reachable, even if just for some reassurance?

If you’re a little confused on what constitutes a legitimate emergency, here are some issues that proper-ty managers should respond to as quickly as possible. And remember, if you’re not sure, err on the side of the emergency being important and pick up the phone and call.

Major leaks, including both storm related damages, or issues such as a toilet or sink overflowing from an upstairs units.

Lack of heat. This is an issue that needs to be addressed immediately, particularly in colder climates.

Any structural issues. This can in-clude anything from collapsing bal-conies, stairways, carports, or ceil-ings.

Any gas smells. While hopefully tenants have been instructed to call the local gas company in the event of a gas smell, this is an issue that man-agers need to address promptly.

Lack of running water. Again, this is an issue that constitutes an emergency, and property managers should respond accordingly.

While property managers should never be expected to respond to ev-ery issue that arises after hours, it’s important for tenants to know that should an emergency arise outside normal business hours, their proper-ty manager is only a phone call away.

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• Be the resource king or queen. Your employees are only as good as the resources they have. Make sure that they are equipped to always do the best work for you on a daily ba-sis. Running out of stock, not having new software and not shelling out for that desperately need printer is NOT good delegation.

• Become the fire, ice and mo-tivation behind your team. When they need guidance, give it to them; when they need appreciation, offer it to them. Inspire, motivate and lead by supporting your delegated deci-sions and following up on them of-ten.

“Business owners need to be the big thinkers: to identify patterns both good and bad; to become an idea machine and testing fanatic; to fill out details from outlined strat-

egy; to be aware of market trends; to always have one eye on the competi-tion; and to develop an instinct for the people with whom you like to work,” Andrews says.

About Zenovia AndrewsZenovia Andrews, www.zenoviaan-

drews.com, is a business development strategist with extensive experience in corporate training, performance

management, leadership development and sales consulting with international

clients, including Pfizer, Inc. and No-vartis Pharmaceuticals. A sought-after speaker and radio/TV personality, she is the author of “All Systems Go” and

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Hands-Off ...continued from page 9



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Mildew is driving me crazy. We have a

property with interior bathrooms and they are constantly devel-oping mildew on the walls and ceiling. We have cleaned, painted and cleaned out the duct work for the vent fan and the problem does not go away. How can I solve this problem?

William

Dear William:A number of things may be at work

here. Unit overcrowding is gener-ally the main reason for moisture & mildew build-up in an apartment unit. Because of the overcrowding, the residents, take more showers and baths, throughout the day and eve-ning. Often to hide the excess people

in the unit, the resident will keep all the window covers closed and the widows shut, effectively keeping the moisture from escaping. Add a win-dowless bathroom into the mix and the problem is compounded.

Mechanically, we suggest you in-spect the vent fans in the bathrooms. Make sure they are not clogged with lint or dust. If the fan is operating properly, check the CFM or Cubic Feet per minute of air movement. The minimum number should be 50 CFM. If the bathroom is getting more than the average amount of use, you may want to replace the ex-isting fan with one that has a higher CFM rating. We recommend using at least a 120-CFM fan. Equally impor-tant, many bathrooms have two wall switches; one for the light and the other for the fan. If this is the case, we recommend combining the two switches into one. That way when the resident switches on the light the fan will come on automatically. We find most residents will not turn on the fan if it has its own switch. Last-ly of course, is to get the resident to open a few windows and let some fresh air in.

Dear Maintenance Men:Over the years, the sidewalks around

our building have accumulated a fair amount of chewing gum residue. We are looking for a good method to remove the gum and the gum deposit. Once clean, is there any surface treatment to prevent gum from sticking?

Ryan

Dear Ryan:There are a number of ways to re-

move gum from a brick or concrete sidewalks. Spray the gum with an aerosol freezing agent or place dry ice on the gum for a few minutes. The gum will become very brittle and should be easier to pry off the surface with a putty knife or scraper. It may take a few tries to remove all the gum. If there is any gum remain-ing, spray WD-40 or vinegar and let it soak to dissolve the remaining gum. Use a scraper or stiff brush to remove the rest of the gum. Af-ter all the gum is removed, use a power sprayer to deep clean and re-move any gum residue. If you still have discoloration on the concrete, use muriatic acid & water mixture to bleach the concrete. To keep the

By Jerry L'Ecuyer & Frank AlvarezDear Maintenance Men:

... continued on page 19



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There is an old saying when it comes to selling/renting real estate that the three most im-

portant factors are: location, location, location. Yet, what if you are work-ing at an apartment community that does not have these three things go-ing for it? Maybe your community is “off the beaten path” and no one can find you, or your building is located in a neighborhood that is not con-sidered desirable because it needs a facelift. Perhaps you are near certain types of businesses that may discour-age people who are driving by from driving in. The issue of “location,” is obviously a concern based on the fol-

lowing question:

Q: I work at an older building that is tucked away in a secluded spot. It once had a great reputation, but over several years, the local neighborhood has taken on a “run down” appear-ance and many of the area businesses are not caring for their properties the way they once did. It’s getting harder and harder to attract new renters, not to mention trying to hang onto exist-ing residents who are now concerned with security and safety issues. If I could pick up and move this build-ing I would do it! Do you have any suggestions?

A: I want to commend you for your loyalty to your building and residents. It’s obvious that you care a great deal about the people and the place where you work, as well as your local community. Challenges with “location” are especially diffi-cult as they sometimes fall into the realm of things that we consider to be “beyond our control.” We feel powerless and frustrated. On the other hand, difficult challenges pres-ent unique and exciting opportuni-ties to become creative and also get other people involved in the prob-lem-solving process. Thomas Edi-son said, “Opportunity is missed by most people because it is dressed in overalls and looks like work!”

Well. . . solving challenges relat-ed to “location” is work; it’s HARD work! It requires spending time ana-lyzing ALL of the problems, not just the ones that are blamed on location. Let’s face

it: Over a period of time, it be-comes easier and easier to make “excuses” and “blame” what is per-ceived as a “bad location” on EVERY problem that arises. (i.e. “No one can

find us because we are in a bad loca-tion!” - How colorful and well placed are your signs? How skilled are you at giving specific, detailed direc-tions; even if it means using a local pub as a landmark? “No one will use our laundry facility because it is per-ceived as being ‘unsafe’ because we are in a bad neighborhood.” - Is your laundry room bright, cheerful and welcoming? Is the interior, as well as the exterior building and surround-ing area, well lit? Can residents be introduced to each other and encour-aged to use the “buddy system?”)

With regards to your neighbor-hood situation, perhaps your com-munity could become a member of your local Chamber of Commerce and network with other area busi-nesses who care about the condition of your section of the city. Maybe your staff and residents could get involved civically and attend local town meetings to make your voices heard about what’s happening in your neighborhood. What about forming a block watch at your com-munity? 503-281-6390

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By Marc Courtenay

One of the challenges in the management of rental prop-erties involves collecting

from residents behind on rent pay-ment. Knowing the laws which gov-ern the methods used for collection is a vital first step.

We can debate how far we’d push the envelope to make sure the rent is collected, but the key to avoiding legal trouble is awareness and com-pliance with federal, state and local regulations.

A good place to begin is the fed-eral government’s “Fair Debt Collec-tion Practices Act” which is enforced by The Federal Trade Commission (FTC). You can go directly to their web page on this topic for details.

Two relevant declarations that motivated Congress to enact this leg-islation speaks volumes:

There is abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors. Abusive debt collec-tion practices contribute to the num-ber of personal bankruptcies, to mar-ital instability, to the loss of jobs, and to invasions of individual privacy.

It is the purpose of this title to

eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively dis-advantaged, and to promote consis-tent State action to protect consum-ers against debt collection abuses.

The complete text of the Fair Debt Collection Practices Act (FDCPA) is found here. It’s challenging to read but it does cover in detail the inten-tions and protocols of the FDCPA.

Then there are state and local reg-ulations to know about. The good news is that each state and many municipalities have updated online explanations of these laws. Most are common sense but the details are where managers and their staffs can get entangled.

This topic was recently discussed at the PropertyManagers.com dis-cussion page on LinkedIn. The ques-tion of what constitutes being “too aggressive” was raised in regards to Community Management Asso-ciations (CMA). The feedback turned in the direction of how it applies to property managers.

One property manager responded by writing, “Aggressive to me would entail going door to door instead of

the normal practical methods of get-ting tenants to pay on time. Are there other ways to promote timely pay-ments?”

That’s the main question, and responding to it another manager wrote, “Depending on the property, door knocking, notices, phone calls and e-mail generally work.

“Using the threat of an eviction af-ter say the 10th or 15th (after proper 3

or 5 day notices have been delivered) has proven most effective for myself as they do not want that on their re-cord, the associated court costs due to dismiss the eviction or the ruined rental history. Being consistent on this and requiring signed arrange-ments are usually an effective strat-egy”, he concluded.

This topic reminds us of how im-

Knowing the Limits on Collection Practices for Property Managers

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If first impressions are formed by a new resident within 10-12 sec-onds of meeting those on your

leasing teams, what impressions do the walls in your office make? Can your walls sell? Can your walls motivate and inspire you and your leasing teams? You bet they can! This article will show you three easy steps to make sure your walls are selling—365 days a year.

Inspiring your residents: First, recognize that every time a resident comes into the leasing office of the properties you manage, your leas-ing teams have a golden opportu-nity to sell and re-sell the wonderful lifestyle your apartment communi-ties provide. Next, have your leas-ing teams determine how much wall space is available in their leasing of-fices and ask them to draft a plan for the types of information they want each resident to see. Here are some strategic items your leasing teams can place on their walls: pictures of their residents having fun at a recent property activity, letters of apprecia-tion from current residents, a mission statement from your company, your service guarantee or promise, a cur-

rent resident newsletter, a reminder about resident referrals, dates for an upcoming resident party or event, sample floorplans, special awards or training certifications, your Face-book page, and a photo of your leas-ing and maintenance team. Lastly, have your leasing teams profession-ally frame each of the items they will be displaying on the walls of their leasing offices, as the quality of the framing will make a subconscious quality impression on your residents and future residents.

Tip From The Coach: Now that your leasing offices are ready to sell to your current residents, can your leasing teams use this sales tool for future residents as well? You bet! At the start of each property tour, have your leasing teams begin by showing each future resident the fun items displayed on their walls…especially the pictures of current residents hav-ing great fun. When the walls in your leasing offices sell, your leasing experts will have higher closing ra-tios and more team success!

Motivating your team: Once your leasing teams have finished setting up the selling walls in their leas-

ing offices, it’s time to prepare the walls that will motivate them. Ask your leasing teams to locate a wall or two in their leasing offices that is not usually seen by either current residents or future residents. Next, discuss with your leasing teams the key numbers, corporate information or trends they would like to see on a regular basis. Here are some ideas that might be helpful to display: weekly/monthly leasing goals, bud-get performance on a monthly and year-to-date basis, maintenance re-quests, a follow-up system for track-ing hot prospective residents, bonus programs, a calendar to plan future resident events or activities, a place to share or post new ideas, company awards and collection reports. Last-ly, ask your leasing teams to find a creative way to display this wonder-ful information so they will have a pride of ownership attached to this special area.

Tip From The Coach: Many of our property management clients ask their resident managers to hold a weekly meeting in the area where this information on their walls can be easily referenced. Consistently refer-

encing this information on a weekly basis will show your leasing teams that the information displayed is crit-ical to the success and profitability of their apartment community.

Encouraging yourself: As the ex-ecutive or owner of your property management company, your walls must also sell. Certainly, many of the ideas mentioned above, would be valuable to have on your walls. Some specialized measurements to place on your walls might include: occupancy trends, employee turn-over, ROI performance, quarterly graphs recapping this quarter…com-pared to the same quarter last year, team rankings and industry statistics that will impact your properties.

Tip From The Coach: Remem-ber, whatever you place on the walls in your executive office will send a strong message to your company about the key areas of your business. So choose each item carefully, as ev-ery person who comes into your of-fice will survey your walls and ask you questions about what they see or read. In addition, you might con-sider giving new employees a tour

Can Your Rental Center Walls…Sell? by Ernest F. Oriente, The Coach

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portant it is to screen applicants thor-oughly. Once you’ve found qualified residents consider having a question-and-answer discussion concerning timely payments.

Many property managers have a one-page “collections agreement” that clearly spells out what will hap-pen if the resident is late on paying rent. The manager has them sign it and gives them a copy.

Make sure you know your rights

as a property manager, and make sure if you use a “collections agree-ment” the wording is legally sound and in harmony with the laws.

There are also collection agencies and “debt collection specialists”.

One that I corresponded with wrote, “Collection agencies must have licenses in most states. In my company, everybody (including my-self) must take courses and get des-ignations from the ACA and other

trade organizations. Nobody in my organization talks to a debtor with-out taking the course, passing the ex-ams, and getting the designations.”

If you have suggestions and expe-rience on the subject of effective and legal collection practices please leave them in the comments section. It’s a need-to-know topic for all property managers.

PropertyManager.com

a Service of AppFolio

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Collections Practices...continued from page 15



The Coach ...continued from page 16Shoptalk ...continued from page 14

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of your office walls on their first day with your property management company. This will allow them an opportunity to see and read first-hand, exactly what is most important to you and those on your executive teams

Want to hear more about this im-portant topic or ask some additional questions about how to create walls that sell? Send an E-mail to [email protected] and The Coach will

E-mail you a free PowerHour invita-tion.

Author’s note: Ernest F. Oriente, a business coach/trainer since 1995

[32,170 hours], serving property man-agement industry professional since

1988--the author of SmartMatch Alli-ances™, the founder of PowerHour® [ www.powerhour.com ], the founder of

PowerHour SEO [ www.powerhourseo.com ], the live weekly PowerHour

Leadership Academy [ www.powerhour-leadershipacademy.com/pm ] and Power

Insurance & Risk Management Group [ www.pirmg.com ], has a passion for

coaching his clients on executive leader-ship, hiring and motivating property management SuperStars, traditional and Internet SEO/SEM marketing,

competitive sales strategies, and high leverage alliances for property man-

agement teams and their leaders. He provides private and group coaching for property management companies around North America, executive re-

cruiting, investment banking, national

utility bill auditing, national real estate and apartment building insurance, SEO/SEM web strategies, national

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], powerful tools for hiring property management SuperStars and build-ing dynamic teams, employee policy

manuals [ www.powerhour.com/prop-ertymanagement/employeepolicymanu-

als.html ] and social media strategic solutions [ http://www.powerhour.com/

propertymanagement/socialmedialeader-ship.html ]. Ernest worked for Motorola,

Primedia and is certified in the Xerox sales methodologies. Recent interviews

and articles have appeared more than 8000+ times in business and trade pub-

lications and in a wide variety of leading magazines and newspapers, including Smart Money, Inc., Business 2.0, The New York Times, Fast Company, The

LA Times, Fortune, Business Week, Self Employed America and The Financial

Times. Since 1995, Ernest has written 225+ articles for the property manage-ment industry and created 400+ prop-erty management forms, business and marketing checklists, sales letters and

presentation tools. To subscribe to his free property management newsletter go to: www.powerhour.com. PowerHour®

is based in Olympic-town…Park City, Utah, at 435-615-8486, by E-mail

[email protected] or visit their website: www.powerhour.com

p

The problems you face won’t go away overnight. They took years to develop and will take time to correct. MUCH patience will be required to bring about any lasting change. Of course many people prefer to stay with problems they understand rather than look for solutions they’re uncomfortable with. (It’s easier to complain than change!) However, if you always do what you’ve always done, you’ll always get what you’ve always got. You may not be able to change the location of your building, but you CAN change the direction of your thinking. - After all,

it’s a lot easier to “pick up and

move” people, rather than buildings! If you have a question or concern

that you would like to see addressed next month, please ASK THE SE-CRET SHOPPER by making contact via e-mail. Your questions, com-ments and suggestions are ALWAYS welcome!

ASK THE SECRET SHOPPER

Provided by: SHOPTALK SERVICE EVALUATIONS

Phone: 425-424-8870E-mail: [email protected]

Web: www.shoptalkservice.com

Please Vis i t us at www.

RentalHousingJournal .com



Dear Maintenance ...continued from page 12

Phone 503-542-5120Fax 503-281-5644

Mon - Fri 8:00AM to 5:00PM

Servicing the Property Management Industry for over 30 Years

LOWEST PRICES GUARANTEED!

LARGEST SELECTION...

APPLIANCES • mATTRESSES • HDTVs

Pat Jennings33 years experience

Tony Kavanagh40 years experience

• Knowledgeable, experienced staff• Personal account managers• 7 day delivery & set-up• Free haul away of old appliances • Coin-Op laundry/Commercial Grade • Special pricing on mattresses and HDTVs

gum from sticking to the concrete or brick sidewalks in the first place; use a waterproofing sealer on the side-walk to reduce the likelihood of the gum sticking to the surface.

Dear Maintenance Men:I keep hearing about PEX tubing as

an alternative to copper tubing when it comes to re-piping my rental units. What is the difference between PEX and copper tubing and why use one over the other? What are the pros and cons?

Aldridge

Dear Aldridge:First let’s define what PEX tub-

ing is. PEX is a cross-linked poly-ethylene pipe. (It looks and feels like plastic pipe.) The PEX pipe is resis-tant to extreme temperatures, stress, pressure and chemicals attacks such as acids & alkalies. This makes PEX pipe suitable for both hot and cold water systems and can be used in below freezing condition and is suit-able up to 200 degrees Fahrenheit. The pipe is extremely flexible and easy to install.

Pros and cons of using PEX: Pros:1: Versatile and user friendly, can be

bent around corners & snaked through walls.

2: Minimum of connections need-ed to complete a pipe run. (Less

chance of a leak)3: Cold weather burst resistant. 4: PEX pipe is less expensive than

copper pipeCons:1: Cannot be used outside or in sun-

light. 2: Not recycle friendly3: Installation tools can be expensive.4: Not handyman friendly

Pros and cons of using copper pipe:Pro:1: Long lasting, easy to use and in-

stall2: Resists corrosion3: Environmentally friendly, i.e.: re-

cyclable.4: Safe for exterior use. Cons:1: Expensive to buy.2: Can burst in extreme cold weather

if not properly winterized. 3: More connections and elbows

needed to complete a pipe run.

Before making any decisions about using PEX piping, check with your local building department to ensure it is allowed in your area. However, if it were our building, we would use copper pipe. Copper is straight forward to install, no special tools are needed and any competent handyperson can fix a leak with sim-ple tools and a torch.

Please send us your Maintenance Questions!!!

To see your maintenance question in the “Dear Maintenance Men:” column, please send submission to: Questions@

BuffaloMaintenance.com Please “Like” us on Facebook.com/Buffalo-

Maintenance Bio:

Please call: Buffalo Maintenance, Inc for maintenance work or consultation.

JLE Property Management, Inc for management service or consultation

Frankie Alvarez at 714 956-8371 Jerry L’Ecuyer at 714 778-0480

CA contractor lic: #797645, EPA

Real Estate lic. #: 01460075Certified Renovation Company

Websites: www.BuffaloMainte-nance.com & www.ContactJLE.com www.Facebook.com/Buf-

faloMaintenance

p

FULL SERVICE MANAGEMENT

COMPETITIVE PRICING

PROFESSIONAL EVICTIONS

KNOWLEDGEABLE STAFF...

OVER 25 YRS. EXPERIENCE

CONTINUING EDUCATION PROVIDERS

SMART MANAGERS + SMART RESIDENTS = SMART PROPERTY MANAGEMENT

503-465-4404 [email protected] www.smartpm.co

Metro (Portland) Rental Housing Journal - July 2014

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Transcript of Metro (Portland) Rental Housing Journal - July 2014