Rental Housing Journal Colorado May 2016

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Monthly Circulation To More Than 7,000 Apartment Owners, Property Managers, On-Site & Maintenance Personnel

Www.rentalhousingjournal.com • Professional Publishing, Inc

Advertise in Rental Housing Journal Colorado

Circulated to over 7,000 apartment owners, on-site and maintenance

personnel monthly.

Call 503-221-1260 for more information • www.rentalhousingjournal.com

Text 51WAYS to 44222to receive the FREE e-book

51 Ways to Increase Your Rental Property Cash Flow

(And 10 Ways To Ruin It)

3. Dear Maintenance Men – Water Heaters

4. The Increasing Cost of Owning Properties with Onsite Staff

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Rental Housing Journal Colorado May 2016 - Vol. 8 Issue 4

5. Ask the Secret Shopper – Alive After Five

7. Crowdfunding and Peer2Peer Lending for Real Estate Investors

9Out-of-the-Box

Questions and Tactics Multifamily

Investors Should Consider Using

By Richard Montgomery

Investing in multifamily housing and apartments requires extra in-vestigation, sometimes called due

diligence by attorneys, for investors who want to be certain they do not make a mistake. This extra investigation and these questions are beyond what a real estate investor may do normally for a typical commercial real estate invest-ment. As a real estate investor, once you go beyond multifamily rentals such as duplexes or fourplexes, you enter the commercial real estate area. Here are 9 out-of-the-box questions you should be asking, or at least consider asking, be-fore you purchase that multifamily or apartment building.

Charm Residents with Outdoor Living Spaces

By Scott Matthews, Director, Strategic Accounts, The Home Depot

Transforming outdoor spaces into comfortable, functional exten-sions of interior living areas is in

demand for multifamily communities. Residents are interested in spending more time outside, and creating an invit-ing outdoor space for your property will help attract prospective residents and retain current tenants, especially during the warm months and moving season.

Here are some ideas for outdoor up-grades that will give residents a place to engage with other tenants, family and friends and help you stand out against the competition.

Outdoor KitchensGrills are often the gathering point

for many multifamily outdoor areas, so

Nightly RentalsThe Hottest Investment Right Now?

How to earn 2-5 times the gross profit of traditional rental properties

I am sure by now you have heard of the many nightly rental websites that allow property owners to advertise

their homes, apartments, and even extra rooms for rent on a nightly basis. There have of course been some controversies over this new industry as it takes reve-nue away from the hotel industry and thus decreases the amount of taxes that local cities receive from the transient tax. One way or another, you have likely heard of this industry by now. Have you taken the time to analyze this as a viable investment opportunity, though? When you start running the numbers and see-ing what others are doing, then it starts looking very attractive.

Text 51WAYS to 44222to receive the FREE e-book51 Ways to Increase Your

Rental Property Cash Flow(And 10 Ways To Ruin It)

“51 Ways to Increase Your Rental Property Cash Flow is full of great advice on how to get the most out of your rental properties.”

–Sam J, Smart Property Management

2

Rental Housing Journal Colorado

Rental Housing Journal Colorado · May 2016

If you take your typical rental that rents for $1200-1500 per month and convert it to a nightly rental, you should see about double the gross in-come. You will have some addition-al costs of course, and if you have the right property in the right location that can easily increase to 4x the long term rental income. This all sounds nice, but of course you are naturally wondering about the additional costs associated with nightly rentals and the added time it takes to manage these properties.

The largest cost is the initial de-sign and furnishing of the unit. You will need to fully furnish these units to make sure they are attractive. Fur-nishing doesn’t end with just the beds and living room furniture. You should ultimately have a fully stocked home, so a complete set of dishes, tableware, pots, pans, etc. will be needed. You will also want to pay close attention to the details - keep in mind that you are com-peting with hotels that have onsite staff. So, go the extra mile and provide some travel toothpaste, toothbrushes, Q-tips, shampoo, and ultimately anything else that someone could forget to pack. You also want to make sure that all of the walls are decorated. Obviously this starts with a good paint scheme, but ex-tends to the artwork on the walls and knickknacks on the shelves.

Many of the successful nightly rental homes incorporate some sort of theme in their design. It can be a design that highlights the local area and attrac-tions or something much more unique. When picking out furniture it is good to remember that you want your guests to feel very comfortable and at home. So you shouldn’t go with furniture that feels “cheap”; with that said you also don’t have to get expensive name brand furniture either. For many night-ly rental investors, the step of picking out furniture or keeping an eye out for unique furniture items that they can incorporate is the most exciting part of the process.

The other cost is that you will have to have the unit cleaned and turned over after every visitor. If you go with a man-agement company like IRC Real Estate, then you can typically take advantage of the volume discount they get from their vendors. This expense should be in the $50-$150 range depending on size and what turn over services you require. With the dramatic increase in income you are still much more prof-itable compared to a long term rental.

When it comes to maximizing your profits though, nothing matters more than location, location, location. With nightly rentals this isn’t just a business cliché, it truly matters. When choosing a property to use as a nightly rental you should always start by searching with-in close proximity to areas that travel-ers might go. The obvious locations are attractions like ski resorts, downtown Portland, near airports or children’s hospitals, wine country, coastal towns, and city downtowns like Bend & Sa-lem for events and legislative sessions, to name a few. If you have a property in a good location with a good interi-or design, you can end up with a fully booked home almost year round. De-pending on the location, design qual-ity, vacancies, and size you can expect $100-$1000+ per night in revenue.

Keep in mind that this type of invest-ment property is truly a full time job. For a popular property you will have a check in, check out, and turn over to coordinate nearly every week. In addi-tion to this most of these sites are heav-ily reliant on reviews by your guests and your rating on things like response time to inquiries. So you have to always have your smart phone on you 7 days a week to make sure that you are able to respond within hours.

As you can tell this kind of invest-ment isn’t for everybody given the work it requires. This is why the investors that truly view being an investor as their profession hire property manage-ment firms like IRC Real Estate. This allows you to focus on finding and buy-ing the properties in the right locations and possibly handling the remodel and interior design, but then turn it over to the management company. Some com-panies like IRC Real Estate even offer in house interior design services that take care of that work for you.

If you are seriously considering get-ting into the nightly rental industry I am happy to answer any questions you may have and offer some free ad-vice. With my involvement at the board level with organizations like the Port-land Area Rental Owners Association, NW Real Estate Investors Association, and the Salem Rental Housing Asso-ciation I am happy to help educate or guide property investors when they run into problems or are simply new to the industry.

Christian Bryant, President of IRC Enterprise / Real [email protected] • www.IRCEn-terprises.com • View all credentials at LinkedIn

Nightly Rentals ...continued from page 1 Outdoor Living Spaces ...continued from page 1

make them as functional and inviting as possible. Explore different options like charcoal, gas and electric grills, or consider installing a combination to give residents a choice. Consider upgrading the grilling area by adding built-in counters to make prep, cooking and entertaining easier. Always ensure the grill is compliant with local regula-tions, especially regarding fuel type.

One of the newest trends for outdoor spaces is to move beyond simple grills and create full outdoor kitchens. If your community enjoys mingling over meals outside, consider upgrading your area to a kitchen by adding counters, cabi-nets, sinks, faucets and maybe even al-ternative cooking methods like a pizza oven. One of the latest outdoor kitchen trends, pizza ovens are a great alterna-tive to grilling and come in different options such as built-in or cart-mount-ed, as well as gas- or wood-burning.

Residents will be able to prepare, cook and keep their company entertained all in one place without the hassle of travel-ing back and forth to their apartments.

Patio FurnitureOne of the keys to comfort outside is

to invest in durable, water-resistant pa-tio furniture like couches, dining tables and chairs. Make your outdoor space full and functional by offering seating for both dining and relaxing. A dining set will allow for communal seating and a space for residents to eat after mak-ing their meal in the kitchen. Add in a conversation set with comfortable so-fas, loveseats and lounge chairs, where entertaining can continue and tenants can relax and unwind all in one place.

When deciding on furniture, con-sider the construction of the furniture. Wicker, plastic and aluminum are great, lightweight choices. Wood or wrought iron furniture are heavier options, stur-dy enough to handle strong winds.

Exterior LightingBrighten up the outdoor space with

high quality exterior lighting. LED lighting has made big advancements in recent years, giving you a lot of ener-gy-efficient options. Safety is the most important consideration, and LED motion lights can cut down on utility costs while still protecting the space. Installing solar-powered lighting like post caps and pathway lights will also reduce energy costs, add to the safety of the space and improve the evening ambiance. Finish the area with deco-rative accents like string lighting, LED

lanterns and candles, making the space functional and inviting.

Don’t Neglect MaintenanceIt’s important not to forget the im-

portance of regular maintenance on the outdoor space. Regular upkeep to the lawn and shrubbery is easy to overlook. Upgrade to a drip irrigation system, a water system that allows the right amount of water to plants and shrub-bery without losing money in labor and overwatering.

For patios and decks, it’s important to maintain surfaces by regularly using sealants and resurfacing products to withstand foot traffic and weather. In-spect walkways and surrounding pave-ments for any cracked or uneven surfac-es. Repair and seal with concrete sealant and paint for more aesthetical appeal and eliminate any potential risks.

When deciding where to begin, con-sider the most effective updates for the property. Whether it is starting the out-door space by updating the furniture and lighting or upgrading to a full out-door kitchen, these changes will make the space more inviting and communal for residents, while also setting your property aside from competitors.

By Scott Matthews, Director, Strategic Accounts, The Home DepotScott is responsible for managing national ac-counts and e-commerce while overseeing busi-ness-to-business relationships. During his 25 years at The Home Depot, he has served in a variety of roles and capacities, including Re-gional Pro Sales Manager, District Manager and Store Manager.

Call 503-221-1260 for more informationw w w. re n t a l h o u s i n g jo u rn a l . co m

ADVERTISE INRental Housing Journal ColoradoCirculated to over 7,000 apartment owners, on-site

and maintenance personnel monthly.

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Dear Maintenance Men:I have a hundred gallon water-heater

serving seven units. The residents are complaining about a lack of hot water and sand coming out of the faucets and shower heads. The heater seems to be working normally. What would cause sand to come out of the lines?

Johan

Dear Johan:Your water-heater probably needs

the calcium build-up removed from in-side the tank. If your 100-gallon water heater is a commercial unit, you should find a clean out port at the bottom of the tank. Determine the tank manufac-turer and purchase a new gasket for this port. Most plumbing supply outlets will have these in stock.

• Turn off the gas supply.

• Turn off the water supply to the tank.

• Drain the water heater completely.

• Remove the clean out port. Some have a series of bolts, others have only one big nut to remove.

Once you gain entry into the interior of the tank, you may see white or yellow sediment on the bottom of the tank. If the tank has not been cleaned out reg-ularly, the build-up may be significant. A hammer and chisel may be necessary to remove the more stubborn areas. This is also a good time to check the anode rod and dip tube (note: if your dip tube is damaged it can prevent the cold incoming water from reaching the bottom of the tank and being heated.) If either is damaged or eroded, check with your plumbing supply outlet for a replacement. The anode rod can be replaced by unscrewing it from the top of the tank. After completing the tank clean out, be sure to check all the fau-cet spout screens and shower heads to remove any acuminated debris. Af-ter all the work is completed, reinstall the port opening and always use a new rubber gasket. Your tank should work much more efficiently & cost less mon-ey to run while supplying more hot wa-ter. This clean out procedure should be done at least once a year.

Dear Maintenance Men:During the recent rains, my building

started leaking. I was surprised, as the roof is less than a year old. The odd thing about the leak is that it is only affecting the downstairs units. What is going on and how do I solve this?

Michael

Dear Michael:Water is a funny thing and tracking

down leaks sometimes takes a bit of de-tective work. The first thing we would check is the roof. As you stated, the roof is new, but sometimes the odd flashing does not get caulked and the water finds its way down the side of a pipe, valley or junction area. Have your roofer, double check all the flashings. Another issue to look at, is water pooling around the foundation. If you have cracks in the foundation, water will find its way in. Be sure to clear any debris, dirt and leaves from around your building or anything that will cause a water dam effect. Overgrown or old landscaping can contribute to leaks by trapping wa-ter or redirecting water to the building instead of away from it. Inspect the building’s stucco for cracks. We have seen small cracks in the stucco suck in large amounts of water. Pay close atten-tion to the stucco between floors or on the edge of balconies. Balconies shed a lot of water which may cascade over the edge and flow back into the stucco where a hidden crack will allow the wa-ter to enter.

If you have aluminum windows, check the weep holes that allow water to drain out of the window tracks.

Dear Maintenance Men:Should I check smoke alarm batteries

in my units or is that the residents job? Also, how often should I clean out my water heaters, not to mention A/C filters and so on?

Linda

Dear Linda:1. Most rental agreements have a

check box that says the resident is responsible for the operation of the smoke alarm. The newest rental agreements now have a check box

for Carbon Monoxide alarms. We lay awake at night thinking about that little check box. In order to sleep, we check the residents smoke and CO alarms every time we do maintenance on the unit. We keep a log of each time we check and what action was taken. The smoke and Carbon Monoxide alarms should be “Officially” checked and logged, at least once a year. Typi-cally, January is a good month for the annual check.

2. A typical 100-gallon water heater depending on the BTU rating will costs anywhere from $1,800 to over $3000.00 installed. That cost alone should be incentive to clean out your heater regularly. Normal-ly, the clean out should be done at least once a year. If the water at your building has a high mineral content, then it should be cleaned out every nine months. Again keep a log of each clean out; it will help in remembering when to do the next cleaning.

3. If your building has forced air & heating, the filter should be checked, cleaned or replaced each October or November and each May or June. This will help keep

your systems working properly and reduce strain on the compo-nents. It will also ensure proper filtration before the winter and summer workloads.

4. Cleaning out the exhaust vent tubes of the laundry room dryer. Every-one knows about cleaning out the dryer lint basket and throwing it on the laundry room floor. We’re talking about cleaning out the lines leading out the back of the dry-er. Keeping the exhaust vent tubes clean will help cut down on gas and electric usage, longer machine life and shorter drying time and lint in these tubes have been known to be a fire hazard. It should be done at least once a year and again, keep a log of each cleaning for reference.

Bio:Please call: Buffalo Maintenance, Inc for main-tenance work or consultation. JLE Property Management, Inc for management service or consultationFrankie Alvarez at 714 956-8371Jerry L’Ecuyer at 714 778-0480CA contractor lic: #797645, EPAReal Estate lic. #: 01460075Certified Renovation Companywww.BuffaloMaintenance.comwww.ContactJLE.comwww.Facebook.com/BuffaloMaintenance

DEAR MAINTENANCE MEN:Water Heaters

By Jerry L’Ecuyer & Frank Alvarez

Color

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The Increasing Cost Of Owning

Properties With Onsite Staff

By Cliff Hockley, President, Bluestone & Hockley Real Estate Services

Even though the sales of apartments are reaching very low CAP rates with ex-pectations of high returns, a number of laws aiming to protect workers have increased the cost of managing apartments.

In Oregon, these laws include state mandated minimum wage increases and sick leave. On the federal level, required health insurance (for full time employees) and potential changes in federal overtime rules keep increasing the costs to staff with onsite management, maintenance and operations.

Sick leaveAs of January 2016, Oregon joined California, Connecticut and Massachusetts

in requiring employers with more than ten employees to offer 40 hours of paid sick leave. Employers with nine or fewer workers must provide 40 hours of unpaid sick time.

In Portland, the threshold is lower. Employers with six or more workers must provide paid leave while those with five or less must offer unpaid sick time. Law-makers carved out an exception for Portland, which passed it own sick leave ordi-nance two years earlier, and effectively canceled out Salem’s law, which was due to take effect July 1, 2016 and would have applied to all employers, regardless of size.

The vast majority of Oregon’s workforce (excluding federal employees) is covered by the law, meaning full-time, part-time, temporary and seasonal workers will accrue sick time.

Definition of family members expandedThe new law allows the use of sick time to care for and/or or help seek diagnosis

and treatment (including preventative) of a family member with a mental or phys-ical illness, injury or health condition. In addition, sick leave may be used to deal with the death of a family member.

As part of this process, the statute and regulations defining a “family mem-ber” have been broadened. The definition now includes an employee’s spouse, same-gender domestic partner, custodial parent, non-custodial parent, adoptive parent, foster parent, biological parent, step-parent, parent-in-law, a parent of an employee’s same-gender domestic partner, an employee’s grandparent or grand-child, a biological, adopted, foster child or stepchild, or the child of an employee’s same-gender domestic partner, and a person with whom the employee is or was in a relationship of in loco parentis.

Minimum wage increases in OregonThe state’s minimum wage as of January 2016 was $9.25. Beginning in July of

2016, it will rise steadily each year for the next seven years through at least June of 2023. How much the rate will increase will depend on where an employer is located within the state.

Here is the actual implementation table, with some explanation and foot-notes showing the rundown of the plan:

Effective Date of Rate Increase

Base State Rate

Exception: Rate within Portland’s Urban

Growth Boundary2

Exception: Rate within Nonur-ban Counties3

July 1, 2016 $9.75 $9.75 $9.50July 1, 2017 $10.25 $11.25 $10.00July 1, 2018 $10.75 $12.00 $10.50July 1, 2019 $11.25 $12.50 $11.00July 1, 2020 $12.00 $13.25 $11.50July 1, 2021 $12.75 $14.00 $12.00July 1, 2022 $13.50 $14.75 $12.50

After June 30, 2023, the base rate will be adjusted for inflation, with the Portland rate set $1.25 above the base and the nonurban county rate set $1.00 below the base.

The impact of the increase in minimum wage is probably not a problem for apartment properties with high rent. The challenge falls to market rate and low income properties, especially if the rents are computed at a market driven 4 – 5% of rental income. Other onsite staff, leasing agents, painters, cleaners, landscap-ers and maintenance employees will see their pay increased which may increase the overall cost of operating apartment properties.

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sk The Secret ShopperAlive After Five

Every day at five o’clock, people pour out of the work place, get into their cars and head for home.

However, often times they have to run errands or make other stops after they have already put in a full day. Some people even have to schedule appoint-ments to look at apartments when they get off work because their week-ends are packed and they can’t take a long lunch break. Most leasing consultants have put in a full day by five o’clock too, but many rental offices are open until 6:00 or later. Do the prospective renters who come through your door after 5:00 get the same level of enthusiasm and qual-ity of service as those who visit your community before noon? See what hap-pens when the Secret Shopper “drops in” to look for a new home at the end of the day.

The bright flags and attractive land-scaping caught my eye so I stopped in. It was about 5:40 when I entered the leasing. I noticed the office hours sign stating, “Open until 6:00.” The leas-ing consultant was alone and I could see she was straightening up and had turned off the lights in the connecting clubhouse. I said I had just gotten off work, and wanted to take a look at an

apartment. The employee’s smile faded, as she sighed and practically groaned, “I just locked up the model and show apartment . . .” I apologized for stop-ping by so late, but explained I was on my way home from work and there real-ly wasn’t any other time I could look for an apartment because of my schedule. She replied, “That’s okay. It’s not a prob-lem,” but her body language communi-cated something entirely different. She asked the size apartment I needed and for when, but did not inquire about my needs or ask for my name. We walked

directly to the model, with little conver-sation. My efforts at “small talk” were met mostly with silence. The consultant entered the apartment first and turned on the lights. She said, “Go ahead and look around,” and then stood to one side. I walked from room to room, but did not open anything as I felt rushed. I thanked her for showing me the apart-ment and she replied, “No problem.” When we reached the office building, she did not invite me back inside. In-stead, she gave me a business card and an application, and dismissed me with,

“Let me know what you decide.” The next evening I visited another

community. As I pulled into the park-ing space for future residents, I ob-served the leasing consultant locking up. When I got out of my car and ap-proached the office, she tried to avoid making eye contact. It was 5:30 and the closing time was posted as 6:00 p.m. I asked if she works there, and if the of-fice was still open, even though I could see everything was dark. The consul-tant unlocked the door and invited me

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9 Out-of-the-Box Questions ...continued from page 1

Dear Monty: About six months ago, three longtime friends and I decided to make some real estate investments together. Our investment goals are similar; we are each high-income pro-fessionals, share similar risk tolerance and see real estate as a long-term in-vestment opportunity. Now, we have identified a 60-unit apartment building we are interested in pursuing. We have the standard list of due diligence items, but wonder if there are some “out-of-the-box” due diligence tactics to make certain we do not make a mistake as in-vestors. Can you help?

Real estate apartment investing is a series of calculated risks for in-vestors

Answer: Buying, owning and selling investment real estate is always a series of calculated risks. “Make certain” are strong words. No matter your methods, you cannot know everything the seller knows. Over and above the standard due diligence list, buyers have ways to discover more about a property that ei-ther encourages or discourages them. It is always difficult to understand the motivation of the seller because many sellers do not share their core beliefs, or some may even mislead or miscommu-nicate their ideas to create an image of trust. As callous as this statement is, I believe it to be true in many cases. To balance that statement, self-interest is to be expected. Choose carefully which tactics to employ. Business ethics is a subject that is not black and white. It involves various shades of gray depend-ing on the person with whom you are

talking. Choose carefully which tac-tics to employ with which transaction. Some sellers might not take kindly to a given tactic, while others may well have done something similar, or further out-of-the-box, themselves. I have nev-er witnessed any one buyer applying all of these tactics on a single proper-ty. This is a career compilation of tac-tics I have seen.

No. 1 – The rent roll is not enough:Where do the tenants work? Deter-

mine where the tenants are employed. This data will be on the rental appli-cation, but not on the rent roll. If 25 of the tenants are with the same company, and a move to Mexico is announced 30 days after the sale closes, your vacancy rate could skyrocket.

No. 2 – Visit with former tenantsVisit with multiple tenants who have

moved out of the apartments. You can determine this by comparing year-to-year rent rolls. Look for patterns in the reason they moved out. Getting closer to work is one thing. But moving away from drug dealers is a different story.

No. 3 – Investors should look for patterns in the vacancy swing

Get the financials both annually and monthly. Look for patterns in vacancy swings. If you find one, learn what cre-ates it every year. When you hear the answer, trust it – but verify.

No. 4 - Visit the apartments in the morning- and in case you don’t see them also “good day, good evening and good night”

The quote from the Truman show applies when you want to find out what is really going on with the apartment building. Visit the property unescort-ed on multiple occasions. Visit in early morning, mid-day, late afternoon and midnight. You will learn something about your potential tenants and how the building functions. • Do tenants congregate in appropriate places? • Are there vehicles with stale damage? • Is the parking lot well lit? • Do you feel safe? • It can be surprising what you learn going unannounced.

No. 5 – Talk with the local police about the apartments

Check with the local police depart-ment. Tell them you are considering buying the building and ask if you could do anything to help them in the neigh-borhood. You will learn if the building has a reputation. The best thing that can happen on that visit is they will have trouble placing the property.

No. 6 – Research single-family homes near the apartments

Locate the single-family homes clos-est to the property and canvas them. Go to multiple homes, possibly a half–dozen. Some owners may be timid, while other will talk your ear off. The goal is to learn what the neighborhood thinks of the property and how the building operates.

No. 7 – What is the average occu-pancy per unit?

Determine the turnover rate by unit. Is the average occupancy per unit six months or six years? If it is six months and the building operates on a six-month lease, why are they not renew-ing? Serial leasing is expensive.

No. 8 – Talk to whoever is actual-ly doing the maintenance for the apartments

Identify the handyman or mainte-nance person. Take note of the vendors who perform service for the building. Interview some of these folks. Ask them if there are any situations in the building they would change. It could take a number of calls before you hit the jackpot.

No. 9 – Visit the neighborhood bar near the apartments and intro-duce yourself to the bartender

That’s right. That is really what I said. Find the closest neighborhood tavern or bar. Stop in for a drink and introduce yourself to the bartender. You want to talk with a bartender who has been there for years and knows the neighbor-hood. He or she may have something to say that is beneficial to you.

Investors remember these due dil-igence tips

• Make these visits or calls yourself.

• Split them up between the four in-vestors or partners.

• If you do not have the time or in-clination, hire someone who un-derstands the apartment business.

• These tips will undoubtedly add value to your ability to make a good decision.

• Monty’s special tip for investors - Ask the landlord owner why he is selling? Any response should tell you tons.

ConclusionRemember these are the special out-

of-the-box investigation or due dili-gence questions you want to ask. There are many other standard ones recom-mended that you should also consider, but these are my special ones from my years and experience in the business. So remember:

• Where do the tenants work?

• Talk to former tenants

• Review the vacancy swings

• Visit morning, evening and night

• Talk to the police

• Check single-family homes nearby

• Study the turnover rate

• Talk to the maintenance folks

• Visit the local bartender

ResourcesBuying an apartment complex is eas-

ier than you think (http://www.fool.com/investing/general/2014/08/17/buying-an-apartment-complex-is-easi-er-than-you-thi.aspx)

Keys to getting started in multi-fam-ily apartment investing (www.bigger-pockets.com/renewsblog/2012/01/12/keys-to-getting-started-in-multifami-ly-apartment-investing/)

Investing returns on apartments (nmhc.org/Content.aspx?id=4707)

Dear Monty: No-nonsense real estate advice (dearmonty.com/)

Forget buying a single-family home purchase an apartment complex (fi-nance.yahoo.com/news/forget-buy-ing-single-family-home-162100725.html)

Are buyers paying too much for apartments? (www.forbes.com)

How to buy an apartment building (www.wikihow.com/Buy-an-Apart-ment-Building)

National Apartment Association (www.naahq.org/about)

About The Author

Richard Montgomery gives no-nonsense real estate advice to readers’ most pressing ques-tions. He is a real estate industry veteran who has championed industry reform for over a quarter century. You can ask him questions at www.DearMonty.com.

Advertise in


Circulated to over 7,000 apartment owners, on-site and

maintenance personnel monthly.

Call 503-221-1260 for more information

7



Crowdfunding and Peer2Peer Lending For Real Estate Investors

The Disruptors we want!

If real estate investors weren’t choos-ing crowdfunding and Peer-2-Peer lending over the alternatives of Wall

Street and Big Banks this article would end right here. But it doesn’t. Crowd-funding and Peer2Peer lending are the future of the independent real estate in-dustry for one very simple reason that Wall Street and Big Banks cannot fath-om. It’s what people want.

Here’s a quaint idea that I believed as a freshly minted college graduate, and that some companies like Google or Uber deliver on a massive scale. The customer is King. Another way of look-ing at it is if people are flocking to the competition, then that means they don’t like what you have to offer in comparison to your offering. Beyond obvious, yes?

This then begs the question, “What do people want”? When it comes to investing it’s been assumed for decades that people only want higher, safer re-turns and that’s it. For a while there, it was assumed to be irrelevant how these higher, safer returns are delivered, nor was anyone really asking “Is that really what we’re getting”? It’s when we begin to question this system that the bankers

and Wall Street scratch their heads and stare at us as if we’re crazy, laugh, and walk off; they cannot comprehend why we’d be saying something like that.

This was brought home to me in an experience I had taking the rideshar-

ing company, Lyft. I wanted to test it to see what all the ruckus was about and when I did, it changed my life forever. I had never had been offered, nor taken anything more than, a ride home in a taxi cab. I assume this was another taxi cab. It wasn’t. It was a ride home, at 1/3rd off in a clean, well-maintained minivan with a dental hygienist young mother of two named Denise. We chatted. I learned about her and this new way of earning extra money for raising her kids and taking care of the family a few hours at a time. In that one ride my satisfaction level with Yellow Cabs service dropped about 95% and I haven’t taken another cab ride since.

The thing is, it was more than a cab ride. It was not simply the one way delivery of a service to a customer. It was two-way. It was an interaction that made me feel like something more than “fare”. It was a ride home with another human being, who was willing to treat me as if I were a friend; we were both there to help one another, not just give to take. On top of that, the differences like speed of delivery and the person-al knowledge I gained from her profile provided me with a connection that was unprecedented in the “cab ride” scenario. I knew more about her as a person than I will ever know about any of the previous cab drivers I never knew nor will remember.

When people became aware of Uber they compared that to Yel-low Cab. Yellow Cab declared bank-ruptcy in San Francisco two months ago. Why? Not because they are bad at what they do. They went bankrupt because the new way of getting rides made the old way totally unacceptable, unpleasant and costly. I believe this is what we are experiencing in the real es-tate investing and funding industry.

Crowdfunding and Peer-2-Peer lending give people more of what they

want. They want to be treated with re-spect. They want to be connected. They want the freedom to choose. They want to be knowledgeable. Intelligent. In charge. For this reason, people are re-jecting being treated as if: all they care about is money, that they are helpless creatures, that they are devoid of the ca-pacity to learn and that they lack sound judgment. That’s what the current mod-el is telling us.

Technology has opened up avenues of connection and options of commu-nicating never before dreamed of. It is massively disruptive to established, commonly accepted beliefs, systems and structures that never contemplated the possibility of the level and depth of interaction and communication avail-able to each and every one of us at al-most zero cost!

The technology revolution has al-ready dictated that to stay competitive we must change. We must deliver more of what people want. Much like Lyft has done with the rideshare industry, real estate borrowers and lenders are turn-ing to Crowdfunding and Peer-2-Peer lending to deliver more of what people want. Does the current establishment understand and welcome it with open arms? Of course not. Wildly disrup-tive? Yes. A threat? Yes... to the old ex-isting order and an exciting alternative for the end users. We, who can stand a little of the uncertainty that comes with the end of one age and the begin-ning of another are looking at an amaz-ing opportunity.

By Scott Whaley, President REIFADiscover all of the new technologies, strate-gies and ways of investing and getting funding with this new business model that has been sweeping through all industries. Now, it’s our turn. Check out REIFA and #REIFACON at www.reifacon.com or www.reifa.org.

Color

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5. Value - Large property management companies that use Rentegration.com for only forms generation will save time and money over other methods. Mid and small size property managers and independent rental owners can manage their entire business at a fraction of the cost of other software and forms.

CHECK-IN/CHECK-OUT CONDITION REPORTTENANT(S): __________________________________________________________________

ADDRESS: ________________________________________________UNIT: ______________

CITY: ___________________________________ STATE: ________ ZIP: _________________Rating Scale = (E)Excellent (VG) Very Good (G)Good (F)Fair (P)Poor

Rating Scale = (E)Excellent (VG) Very Good (G)Good (F)Fair (P)Poor







Rating Scale = (E)Excellent (VG) Very Good (G)Good (F)Fair (P)Poor IN OutIn Out

In Out

LIVING AREASKITCHEN

BEDROOM 3

Walls

Walls

WallsWindows

Stove/RacksWindows

Blinds/DrapesRefrigerator

Blinds/DrapesRods

Ice TraysRods

Floor

Shelves/DrawerFloor

Carpet/Vinyl/WoodDisposal

Light FixturesLight Fixtures

DishwasherDoors/Woodwork

Doors/WoodworkCounter Tops

LocksLocks

CabinetsCeilings

CeilingsSink

Electric OutletsElectrical Outlets

Floor

Smoke DetectorsGarbage Cans

WindowsTV Antenna/Cable

Blinds/DrapesBATH ROOM

Fireplace

Towel BarsCleanliness

Sink & Vanity

ToiletBEDROOM 1

BEDROOM 2Tub/Shower

Walls

Walls

Fan (Exhaust)Windows

WindowsFloor

Blinds/DrapesBlinds/Drapes

Electric OutletsRods

Rods

Light FixturesFloor

FloorLight Fixtures

Light FixturesEssential ServicesEssential Services

Doors/WoodworkDoors/Woodwork

PlumbingLocks

Locks

HeatingCeilings

CeilingsElectricity

Electrical OutletsElectric Outlets

Hot WaterSmoke Detectors

Smoke DetectorsSmoke Detectors

WA-RTG-20 Washington

©2009 NO PORTION of this form may be reproduced without written permission.

48-HOUR NOTICE OF ENTRYTENANT(S): ____________________________________________________ DATE:________

ADDRESS: ____________________________________________________ UNIT: _________

CITY: _________________________________________ STATE: __________ ZIP: _________48-HOUR NOTICE OF ENTRY

Pursuant to RCW 59.18.150, this is your 48 hour notice that your landlord or their agents will be

entering the dwelling unit and premises located at (Address)______________________________________________________________________________on between the hours of and . (Date) (Time) (Time)The entry will occur for the following purpose:______________________________________________________________________________

______________________________________________________________________________

Landlord Phone

Method of Service: Personal Service: Post and Mail: ** Add one additional day for compliance if served by post and mail.

WA-RTG-40 Washington


CHECK-IN/CHECK-OUT CONDITION REPORTTENANT(S): __________________________________________________________________ADDRESS: ________________________________________________UNIT: ______________CITY: ___________________________________ STATE: ________ ZIP: _________________Rating Scale = (E)Excellent (VG) Very Good (G)Good (F)Fair (P)Poor Rating Scale = (E)Excellent (VG) Very Good (G)Good (F)Fair (P)Poor Rating Scale = (E)Excellent (VG) Very Good (G)Good (F)Fair (P)Poor Rating Scale = (E)Excellent (VG) Very Good (G)Good (F)Fair (P)Poor Rating Scale = (E)Excellent (VG) Very Good (G)Good (F)Fair (P)Poor Rating Scale = (E)Excellent (VG) Very Good (G)Good (F)Fair (P)Poor Rating Scale = (E)Excellent (VG) Very Good (G)Good (F)Fair (P)Poor Rating Scale = (E)Excellent (VG) Very Good (G)Good (F)Fair (P)Poor Rating Scale = (E)Excellent (VG) Very Good (G)Good (F)Fair (P)Poor IN Out In Out In OutLIVING AREAS KITCHEN BEDROOM 3Walls Walls Walls

Windows Stove/Racks WindowsBlinds/Drapes Refrigerator Blinds/DrapesRods Ice Trays RodsFloor Shelves/Drawer FloorCarpet/Vinyl/Wood Disposal Light FixturesLight Fixtures Dishwasher Doors/WoodworkDoors/Woodwork Counter Tops LocksLocks Cabinets CeilingsCeilings Sink Electric OutletsElectrical Outlets FloorGarbage Cans WindowsTV Antenna/Cable Blinds/Drapes BATH ROOMFireplace

Towel BarsCleanlinessSink & Vanity

ToiletBEDROOM 1 BEDROOM 2 Tub/ShowerWalls Walls Fan (Exhaust)Windows Windows FloorBlinds/Drapes Blinds/Drapes Electric OutletsRods Rods Light FixturesFloor FloorLight Fixtures Light Fixtures Essential ServicesEssential ServicesDoors/Woodwork Doors/Woodwork PlumbingLocks Locks HeatingCeilings Ceilings ElectricityElectrical Outlets Electric Outlets Hot Water

Smoke Detectors

OR-RTG-20 Oregon


PET AGREEMENTTENANT INFORMATION

TENANT(S): ____________________________________________________ DATE:________ADDRESS: ____________________________________________________ UNIT: _________CITY: _________________________________________ STATE: __________ ZIP: _________

DESCRIPTION OF PET(S)

1) Type _______________ Breed _______________ Size ______ Age __ Weight ___ Color ____ Name ________ Vaccinations: Yes____ No____ License Number: ______________



Additional Security Deposit Required:$

AGREEMENTTenant(s) certify that the above pet(s) are the only pet(s) on the premises. Tenant(s) understands that the additional pet(s) are not permitted unless the landlord gives tenant(s) written permission. Tenant(s) agree to keep the above-listed pets in the premises subject to the following terms and conditions:

1) The pet(s) shall be on a leash or otherwise under tenant’s control when it is outside the tenant’s dwelling unit. 2) Tenant(s) shall promptly pick up all pet waste from the premises promptly. 3) Tenant(s) are responsible for the conduct of their pet(s) at all times. 4) Tenant(s) are liable for all damages caused by their pet(s). 5) Tenant(s) shall pay the additional security deposit listed above and/or their rental agreement as a condition to keeping the pet(s) listed above. 6) Tenant(s) shall not allow their pets to cause any sort of disturbance or injury to the other tenants, guests, landlord or any other persons lawfully on the premises. 7) Tenant(s) shall immediately report to landlord any type of damage or injury caused by their pet. 8) This agreement is incorporated into and shall become part of the rental agreement exe -cuted between the parties. Failure by tenant to comply with any part of this agreement shall constitute a material breach of the rental agreement.

_____________________________ ______________________________Landlord Tenant ______________________________ Tenant

OR-RTG-24 Oregon


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8



Health insurance required for all employees working over 30 hours a week

The Affordable Care Act was signed into law by President Barack Obama on March 23, 2010 and upheld by the Su-preme Court on June 28, 2012. As part of the ACA, also known as Obamacare, large employers are required to offer health insurance to all full-time em-ployees and their dependents. The term ‘full-time employee’ means, with re-spect to any month, an employee who is employed on average at least 30 hours per week, section 1513 of the law reads. (Scroll down to section 4, paragraph A.)

That section, known as the employer mandate, requires any business with 50 or more full-time employees to pro-vide at least the minimum level of gov-ernment-defined health coverage to those employees.

Businesses must provide insur-ance for employees working an average of just 30 hours per week, which is 10 hours per week fewer than the tradi-tional 40-hour work week.

If an employer has 50 or more ‘full-time employees’ and does not offer health insurance, it must pay a penalty per employee for each month it does not offer coverage.

Employees who work at least 30 hours per week or whose service hours equal at least 130 hours a month for more than 120 days in a year, are con-sidered full-time. This added require-ments for properties with onsite em-ployees that work more than 30 hours a week, and had a major impact on larger apartment properties that may not al-ready have offered health benefits to on-site employees.

Potential increase in supervisor costs on the horizon for 2016

The Federal Department of Labor (DOL), through the Presidential Mem-orandum on Updating and Moderniz-ing Overtime Regulations, is proposing changes to “modernize and streamline” the Fair Labor Standards Act (FLSA) overtime regulations. The following outlines the key impacts of the pending regulations changes.

Significant impact. Most employers covered by the FLSA will need to ana-lyze employee classifications and make other changes by an effective date in late 2016, which will be established in the final rule.

Exemption increase. To be exempt currently, workers must make more than $455/week ($23,660 annually). The proposed rule sets the standard salary level at the 40th percentile of weekly earnings for full-time salaried work-ers, which for 2013 was $921 per week, or $47,892 annually. If the 40th per-centile approach is adopted, the 2016 level is projected to be $970 a week, or $50,440 annually.

DOL Proposal. The Department is proposing to automatically update the salary level to be considered exempt (including for highly compensated

employees) on an annual basis, either based on percentiles of earnings for full-time salaried workers or based on changes in inflation.

This will have the most impact for onsite managers that supervise staff as well as on onsite maintenance manag-ers who supervise staff. If onsite manag-ers supervise more than two employees that can qualify as exempt employees and if they are paid enough, you don’t have to pay overtime. In other words, a non-exempt employee would be paid over time for work over 40 hours a week , an exempt employee is not paid overtime for work over 40 hours a week, though this topic continues to be debat-ed at the Department of Labor. A final rule on this position is expected to be published this spring.

Exempt supervisors must satisfy the following duties tests:

• Primarily manage a distinct unit or subdivision within the organization.

• Spends most of the workweek performing management duties. This generally means more that 50 percent of the worktime, however, other factors might support ex-empt status if less than 50 percent of worktime is spent in manage-ment. Other factors could include: the employee is paid a significantly higher salary than is paid to non-exempt staff; the employee makes frequent management decisions; the employee is free from direct supervision.

• Supervise two or more full-time employees (or the equivalent of two or more).

• Have hiring or firing authority or, if not full authority, their recom-mendations are given particular weight.

• Customarily and regularly exercise authority to make decisions of sig-nificance.

SummaryIn summary, state mandated in-

creases of sick leave and minimum wage increases coupled with federal-ly mandated health insurance for full time employees (30+ hours a week) and potential changes in federal over-time rules keep increasing the costs of staff involved with onsite management, maintenance and operations of apart-ment properties. Owners will need to calculate these costs as they think through the due diligence of the prop-erties they are about to purchase.

Resourceshttp://www.multifamilyinsiders.

com/multifamily-blogs/how-to-pay-your-on-site-manager

http://www.wagehourinsights.com/category/new-exemption-rules/

Properities with Onsite Staff ...continued from page 4 Ask the Secret Shopper ...continued from page 5

inside. She apologized for closing early and said it had been slow so she decided to lock up a little bit early and go home. The consultant tried to stifle a yawn and said, “Slow days make me sleepy.” She asked what I needed, and then said she could show me a model. However, I felt like I would be “putting her out” and offered to come back the next day. She smiled and looked relieved. The consultant handed me a brochure and a business card and said, “Give me a call in the morning. I’ll be here at nine with bells on.” (I wondered what time she took her “bells” off!)

On my third evening out, I stopped by another community that caught my eye. It was just past 5:30 when I entered the rental office. The leasing consultant greeted me with so much enthusiasm, I was caught off guard. She apologized and said, “I’m sorry. Did I startle you?” She extended her hand and introduced herself and asked for my name. She offered me a seat and asked how she could help me. I asked if she has that much energy at the end of every day. She replied, “Not always, but I work at it.” She explained how the leasing con-sultants stagger their start times so the person who opens early, leaves earli-er, and the person who comes on shift later locks up.

The consultant said, “On the days I work alone, I take a couple laps around the property around 4:30 for a ‘pick me up’ and that seems to give me the extra energy I need to finish my day.” She was animated and enthusiastic as she spoke and seemed eager to serve. The consultant filled out a guest card

for me, determined my needs and then gave me a thorough tour of the commu-nity amenities and a vacant apartment. At the end of the tour, we returned to the leasing office where she made sev-eral attempts to close the sale. She pre-sented me with a brochure, community newsletter and an application. She then asked if she could follow up in a couple of days to see if I had reached a decision. When I left, it was 6:15 p.m.

Are you still “alive after five,” with enthusiasm to burn? If not, what can you do about it? Can you adjust your lunch hour or your work schedule so you have more energy at the end of the day? What about your attitude? Can you adjust that? If your office is open for business after five, shouldn’t YOU be open for business too? If you cut corners after five and don’t give EVERY prospective renter a “full meal deal,” they are going to go away “hungry” and end up renting somewhere else!

If you are interested in leasing train-ing or have a question or concern you would like to see addressed, please reach out to me via e-mail. Otherwise, please contact Jancyn for your employ-ee evaluation needs: www.jancyn.com

ASK THE SECRET SHOPPER Provided by: Joyce (Kirby) Bica Former owner of Shoptalk Service Evaluations Consultant to Jancyn Evaluation ShopsE-mail: [email protected] © Joyce (Kirby) Bica

Rental Housing Journal Colorado May 2016

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Transcript of Rental Housing Journal Colorado May 2016