Valley Rental Housing Journal - June 2015

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Rental Housing Journal Valley

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June 2015

Professional Publishing, IncPO Box 30327Portland, OR 97294-3327

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PAIDPortland, OR Permit #5460

By Tami Cox

In a competitive leasing market, it's important to stay on top of your game if you want to mini-

mize vacancy rates. Regardless of whether you are new to leasing or have been doing it for years, try these proven strategies to gain better re-sults from your leasing efforts on multi-family properties:

1. Know your market - When was the last time you not just pulled rental comps, but actually visited properties in the direct vicinity of the property to be leased? Do you know what the "other" guys units look like? What a prospective tenant is getting for their money? Are your rents in line with the current market for the same bedroom/bathroom configura-tion and square footage? How friend-ly is the leasing staff out there? Are your competitor's buildings well maintained or going downhill fast? How can you lease what you have if you never leave your desk when doing your "market research"? This may seem time intensive and tedious. But even a day or two spent on such activities will be worth it.

2. Be responsive to leads - I don't know about you, but one of the most irritating things as a person looking for a new place to call home is if you reach out to a place you're interested in, and they don't call you back! I consider this to be unprofessional, and surprisingly, there are a lot of these property managers and leasing agents out there. Maybe they don't care about leasing their units? Maybe they have so much money to throw

6 Keys to Maximize

Leasing Results

continued on page 5

2. Behind the Leasing Desk with Heather Blume

3. Good Hiring Takes Time, Patience and Practice!

6. Ask the Secret Shopper

By Clifford A. Hockley, PresidentBluestone & Hockley Real Estate Services

As tall tower cranes have be-come a fixture in the Port-land skyline, many are won-

dering how many units will be added to the Portland metro area in the next few years. According to the spring 2015 Barry Report (published by Patrick and Mark Barry Appraisers) somewhere between 12,000-16,000 units will be built between 2015 and 2016. Typical annual demand is be-tween 3,000 and 4,000 units per year. That translates into a likely surplus of apartment units in 2016.

Given the increased supply, what is forcing rents up?

Increased demand for rentals is driven by demographic changes, population growth, and job growth. The low rate of apartment vacancies, at the 3% mark across the Portland Metro marketplace, is evidence of this.

Demographic changes. The mil-lennials have exited college, moved out of their parents’ home and are populating central urban areas of major cities. They have created sig-nificant apartment demand in the metro Portland area.

Note: Developers and investors need to use caution as they continue

to race ahead. Within five years, 50% of this cohort is looking to live in a suburban environment. (According to Trulia‘s chief economist Jed Kilko in a blog he posted on January 22, 2015.

Population growth. Since 2010, an estimated 116,168

people have moved to the Portland metropolitan area. This reflects a 5.2% growth rate from 2010–2014, which is the 20th-fastest in the coun-try among large cities in the United States, and fourth-fastest outside the Sun Belt.

Job Growth.

Apartment Rents Have Nowhere to Go but Up In 2015

...continued on page 7

Results from Fannie Mae's April 2015 National Hous-ing Survey™ show some im-

provement in housing sentiment, but likely not enough to trigger any breakout improvements in housing market activity this year. Among those surveyed, the share saying they would prefer to buy a home if they were to move increased to 63 per-cent in April, following a drop of six percentage points in February and March. In addition, average home price growth expectations continued their steady climb from late last year, with respondents now saying home prices will increase by 2.8 percent during the next 12 months. However, the share who believe this is a good time to buy a home decreased by

four percentage points as consumer concerns regarding high home pric-es surged for a second consecutive month, matching renewed concerns regarding the state of the economy. These data points as a whole mirror Fannie Mae's Home Purchase Senti-ment Index (expected to be released this summer), which has remained largely flat since last fall, further sug-gesting that housing growth may re-main subdued in 2015.

"The spring and summer home buying season has gotten off to a stronger start, reflected in some of the improvement in consumer hous-ing sentiment," said Doug Duncan, senior vice president and chief econ-omist at Fannie Mae. "The share of consumers who intend to own rather

than rent their next home rebounded after a two-month slide. Meanwhile, home price growth expectations strengthened to the strongest pace since last October. Nevertheless, con-sumers continue to express concerns about the recent weakening econom-ic conditions and high home prices. These combine to depress the share of consumers believing it is a good time to buy a home. When we con-sider both the continued caution of consumers and the positive start to the year, we believe that these results support our expectation that 2015 will be a year of modest growth in housing activity."

More Consumers Positive on Housing, But Not Quite Ready to Leave the

Sidelines

Survey Results Suggest Continued Modest Housing Growth in 2015


2 Rental Housing Journal Valley • June 2015

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Behind the Leasing Desk with Heather Blume

Dear Heather, I have worked for the same property

management company for several years and have worked my way into a good salary, benefits, and a Manager in Training role. With this role comes great responsibility, including taking on the challenge of supervising employees. The downside to this role is that I don't really have the autonomy to really fix some issues that drive me crazy within my office and for the most part, my hands are tied when it comes to disci-plinary action issues because that is my manager's responsibility. You see, I have a coworker that has a variety of health issues and it is known within the office and management, so therefore, we have

to accommodate. I have no problem with this for the most part. My issue is that she calls out a lot. When I say a lot, I mean it is to the point of being predict-able. Even my maintenance staff make jokes about her calling out so much. For instance, I will get a text that tell me how she's not feeling well and how it's ruining her weekend. First off, this is rather annoying because I frankly don't care what she is doing on her days off. Secondly, this irritates me even more because in my eyes this is a set up for the inevitable call out for her return to work from her weekend break. Not only that but she won't hesitate to share with you that she suffers from several ailments at the same time and all of the details of

them ...I am not trying to belittle her health conditions but I honestly have never met anyone with more issues that prevents them from working in my life! I have brought these frustrations to my manager's attention many times. The response I get is very HR (which I understand) and it's typically some-thing like "you have to accommodate by giving breaks during the day or allowing her to go home early or come in late". Seriously?! Can't I just get a Leasing Agent that shows up and isn't a Web MD nightmare? Although her call outs have been less frequent than before, it's still predictable and if she does show up, she is so loopy from her medications it makes it difficult to work with her. My manager has told me to send her home if she comes to work loopy but frankly, I need her in the office and can't afford to be alone in the office any more than I already am.

How do I balance my feelings of frus-tration and disbelief in her legit "sick days" and still be in compliance with the law and not on the wrong side of an lawsuit? Some days I believe she is ill and other days I think she just didn't want to get up out of bed and come to work. She has even mentioned that she knows my manager can't fire her because she could sue based on her medical issues. I know we all have a right to call

out sick but I just feel like it's predictable and abusing that very policy that is meant for those that do have medical issues that truly inhibit them from work-ing normal shifts or performing daily tasks. How do I overcome these feelings of not believing her, not feeling confident in her attendance, not feeling confident that her ailments are severe enough to prevent her from working or performing her duties, and yet knowing that I have to accommodate her call outs and deal with it?

Please Help! Sick and Tired of those who are

ALWAYS Sick and Tired Dear Sick and Tired of those who

are ALWAYS Sick and Tired,Wow! This is a really horrible

situation and I can imagine that you must be thoroughly frustrated, even more than your letter sounds. It's always difficult to work in an envi-ronment where you feel there is someone who is shirking their responsibilities, and working in a property management office with that sort of a person is extra hard because our days move so fast that once you get behind, you never feel like you can catch up.

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President, Multifamily Northwest

Good Hiring Takes Time, Patience and Practice!

I doubt that any busi-ness professional would argue that an essential component to success is

hiring the right people for the job. And, as any company leader or man-ager would likely tell you, this could be one of the most difficult and chal-lenging aspects of operating any business – regardless of type, size or location.

Why is it that so many businesses still have challenges in this arena? After all, we now function in a world filled with technology and software programs designed to make our everyday business tasks more effi-cient, accurate, and faster. We have thousands of mobile apps at our fin-gertips (literally) to do so many things: track our diet/exercise, watch our homes (and even kids) while we are on vacation, guide us to destina-tions within foreign countries, and even find us a mate (temporarily or for life-your choice!). We even have the ability to create a car, or a gun (scary), with a 3-D printer! Why should we not just be able to print the perfect employee…right? If only it were that easy.

Good hiring decisions can increase

productivity, boost morale and cul-ture, and truly enhance the bottom-line. Mistakes can create just the opposite effect and be extremely costly in terms of both money and time. High employee turnover impacts the culture of an organiza-tion with demoralization.

Although the space constraints of this article prohibit exploring the volumes of information one could write about this topic, I will limit this to some hiring practices that I have come across and learned from others that make the process less daunting and, with consistent execution, can produce favorable outcomes.

Create a good job description: Preparation is key. Know and under-stand the role you are seeking to fill. Writing a clear and concise position description is essential to attracting qualified candidates – and avoids wasting your time with someone with skills that simply do not match the job requirements.

Interviewing: Brian Tracy and Mark Thompson (authors -Now, Build a Great Business: 7 Ways to Maximize Your Profits in Any Market) describe a process of inter-viewing called the “law of three”:

Always interview at least three candidates. Even if you feel the first one is the best and right fit, disci-pline yourself to meet a least two more candidates. The more people interviewed the greater the selection choices- bringing a higher likelihood of making the best decision.

Interview your top candidates in three different locations. People often demonstrate different person-ality traits in different settings. The presentation in a formal office set-ting may be very different from how a person behaves in a less formal coffee shop or restaurant. When the guard comes down, more accurate personality traits may come forth. This is especially helpful if the job

requires a person to work in multiple settings or locations with different people. How do they function in dif-ferent settings?

Three interviewers. If possible, have at least three different people in the organization meet with the can-didate. This not only provides mul-tiple input from different perspec-tives, it also promotes a team “buy-in” which leads to vested interest and support in helping the person succeed.

References: Checking references with people who can speak to the abilities and performance of a candi-date is crucial. Although most refer-ences provided are typically weight-

The Maintenance Doorhanger is a handy dual purpose form to use in your rentals. On one side it serves as a notice to anyone who might enter the rental that maintenance work is being performed in the house. On the reverse side it serves as a disclosure to the residents that maintenance personnel was inside whether for sched-uled maintenance or an emer-gency. It has space to further clarify who entered and what action was taken. Additionally, if maintenance did not enter the house, the door hanger also offers common reasons to communicate the attempt to enter was made.

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We are pleased to announce our partner-ship with Grace Hill, enabling us to offer you 24/7 online training with their incredible classes! Grace Hill offers high-quality, interactive property management training that is available anytime and anyplace you have high-speed access to the internet. To ensure you get continuing education credits and ease in registering for classes, visit our website at www.multifamilynw.org, under “Professional Development.” Here you can access a variety of classes available at your convenience through our partner Grace Hill.

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M111 OR-WA © 2014 Multifamily NW®.NOT TO BE REPRODUCED WITHOUT WRITTEN PERMISSION. Rev. 2/4/14.

MAINTENANCE

DEPARTMENT

IS WORKING

IN YOUR

UNIT NOW

UNIT # DATE TIME

REASON: c MAINTENANCE______________________________________

___________________________________________________________________

c EMERGENCY_________________________________________

___________________________________________________________________

WHO ENTERED___________________________________________________________

____________________________________________________________________________________

ACTION TAKEN____________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________

FUTURE ACTION REQUIRED_______________________________________

____________________________________________________________________________________

____________________________________________________________________________________

c SOMEONE HAS BEEN IN YOUR UNIT

c ENTRY REFUSED

c UNRESTRAINED PET(S)

c RESIDENT REQUESTED TO BE PRESENT BUT DID NOT ANSWER THE DOOR

c OTHER__________________________________________________________

c WE COULD NOT ENTER BECAUSE:

c A.M.

c P.M.

M111 OR-WA © 2014 Multifamily NW®.NOT TO BE REPRODUCED WITHOUT WRITTEN PERMISSION. Rev. 2/4/14.



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First, while I very much sympa-thize with your situation, I have to concur with the "very HR" response that you've gotten so far. Employers MUST make accommodations to sick employees under federal law, but more than that, this particular employee has already placed a not-so-veiled threat against them. Whenever you have an employee who KNOWS and has the audacity to say that they know they can sue their employer upon termination, it's a very sticky situation. On one hand, if any other employee pulled this behavior, you'd do the write ups and terminate them. On the other hand,

it's going to cost you much more in the legal and public relations arena to get rid of this person than to let them half ass their job. From a com-pany view point, you're picking up the slack, so they aren't out anything and they don't have to deal with the problem.

Second, you have to make sure that even through your dissatisfac-tion with this employee that you are not making the work environment hostile so she will leave. She can sue the company for that as well, and a lot of those kinds of suits are being won currently, plus with the health issues she has, she'll have the sympa-

thy on her side. Problems all around on that front.

Third, if she comes in "loopy" on her meds, you really should send her home. I know this puts additional stress on you, but remember that some states are verbal contract states and what she says in her inebriated state, you and your company can be held legally liable for. On top of which, any contract that she signs with a resident might not be valid if she, as a company representative, is in an altered state. Plus, in such a state, she could write a contract for either the wrong amount of rent or the wrong lease term, and once the resident has signed it with her, you're bound to that contract. Send her home when she's a threat to your NOI.

So let's talk about some solutions. One of the things that you men-tioned is that you can't afford to be alone in the office anymore than you already are. This may just be the background of a staffer talking, but one of the quickest ways to call atten-tion from the corporate office to the escalated degree of the problem is to call your local staffing agent when she calls out, or when you have to send her home sick. The corporate office might not notice the stress that it puts you under to not have her there, but they WILL notice the stress that staffing costs put on your bud-get. This is a risky solution, howev-

er, so it might be worth it to just contact your office about ASKING for staffing. It will have a similar effect, and won't potentially get you in as much trouble as just calling a staffing agent without approval will.

Now here's the good news - People who are frequently absent or who do not seem to connect with their workplace rarely stay there long term, so she may be on her way out. Also, if she's made the lawsuit statement, that might be what she's really looking for, and when you do not provide her with the grounds to sue, she'll move on and look for another rube to play this game with.

How you, as a manager in train-ing, handle a situation like this can be a defining moment for your career. You can take the path of secretly hat-ing your coworker (and believe me, MANY of us take that path, as it's the easiest), or you can try to ignore as much of the situation as you can and realize that you can only do what you can do in any given day, or your can try to reach the employee on a personal level.

The last is the hardest to do, but also the most long term rewarding of the options presented. To open com-munication you have to re-founda-tion some modicum of trust between the two of you. I would start by giv-ing her massive positive reinforce-ment on days when she doesn't call

Behind the Leasing Desk ...continued from page 2




Maximize Leasing Results ...continued from page 1

Survey Highlights

Homeownership and Renting

• The average 12-month home price change expectation rose to 2.8 percent.

• The share of respondents who say home prices will go up in the next 12 months fell to 46 percent. The share who say home prices will go down fell to 7 percent.

• The share of respondents who say mortgage rates will go up in the next 12 months stayed constant at 52 percent.

• Those who say it is a good time to buy a house fell to 63 percent, while those who say it is a good time to sell remained at 46 percent – tying last month's survey high.

• The average 12-month rental price change expectation rose to 4.1 percent.

• The percentage of respondents who expect home rental prices to go up rose to 54 percent.

• Those who think it would be easy to get a home mortgage increased by 2 percentage points to 52 percent, while those who think it would be difficult remained at 46 percent.

• The share who say they would buy if they were going to move rose 3 percentage points to 63 percent, while the share who would rent fell to 32 percent.

• The Economy and Household Finances

• The share of respondents who say the economy is on the right track decreased by 1 percentage point to 42 percent, while those who say the economy is on the wrong track rose by 1 percentage point to 49 percent.

• The percentage of respondents

who expect their personal financial situation to get worse over the next 12 months fell to 10 percent – matching the survey low.

• The share of respondents who say their household income is significantly higher than it was 12 months ago rose 2 percentage points to 24 percent.

• A new survey low, 29 percent of respondents say their household expenses are significantly higher than they were 12 months ago. A survey high, 60 percent say their expenses are the same..SOURCE Fannie Mae

Positive on Housing ...continued from page 1

around that how long their units sit vacant doesn't matter. Or, maybe they are just too overwhelmed with responsibilities to be effective. This is how you win and your competitor loses out. Be that contact person that cares about every inquiry. You never know who that lead may become to you in your circle of influence - your next tenant or an amazing network-ing contact! Even if nothing fizzles out from it, determine to be a profes-sional who gives every lead equal respect and attention.

3. Arrive ahead of your prospect for showings - this is important. Units get hot and they get cold, depending on your geographic loca-tion and climate. No one wants to see an apartment and shiver or sweat as they do! A definite negative strike against you from the onset. And have you gone around and turned all the lights on in the rooms? So people can actually see the layout and wall colors and so forth in the best possible way? If you stumble to find a light switch when showing a unit, that makes you look like you've never been there and a potential ten-ant doesn't get a warm fuzzy that you know what you're talking about when they ask questions about liv-ing there. They count on you to point out the features that they are just see-ing for the first time. If you don't even know them, well - why would they lease from you? The more money you are asking them to cough up each month for that unit, the bet-ter you need to know it - inside and out!

4. Create the feeling of home - I can tell you, small details matter. Larger properties know this and

that's why they pay stagers to come in and make a model feel like some-one lives there - in a hotelish sort of way. Every prospect knows it's been "staged" when they walk in. But they don't care. It helps them visualize what the unit will look like with real live furniture in it. Now if you have a smaller property and full staging isn't feasible or an option, at least do something to add the feeling and atmosphere of home. It's not expen-sive, and a trip out to your local department and/or building supply store will do the trick. Consider pick-ing up a few low cost but eye catch-ing pieces to be focal points that fit with the style of the room and your unit to be leased. Things such as a flowering potted plant, an attractive candle with a scent most people will like (that you can light just before the showing to freshen the smell of the unit), a seasonally attractive front door mat welcoming visitors, and so forth. I like to leave the flowers as a house warming gift to the new ten-ants, they love it! You can decide how simple or elaborate you want to get. But trust me, leasing success is in the small details your competitor doesn't think matter. You don't have to lease a 300 unit building to do such things. In fact, the smaller your building, the more important getting a new tenant in quickly becomes to your bottom line.

5. Display unit details and your contact information - I'm shocked at how often this is overlooked. If I'm going to buy a house, it's common for realtors to display information on the kitchen counter or somewhere obvious to visitors regarding the home they are looking at. Because they know it's competitive out there,

and they want to sell that house and build a network of contacts. Why wouldn't you put the same effort in if you were leasing? A prospective tenant may look at several properties the same day, and how will they keep them all straight if they have nothing physical to take with them as a reminder of that unit and have a way to follow up with you if they want to lease it? Creating a flyer for each unit you have to lease is a smart move. And having business cards along with it helps as well. Don't forget to make a simple sign in sheet for visitors - include spaces for name, number of adults, desired move in date, any pets, email, and telephone numbers for contact. This gives you a record of who saw the unit and a handy reference to follow up. Even if they don't lease this particular unit, you may have others that you can lease to them as they become avail-able.

6. Be a friendly face - Again, this may not sound like the leasing strat-egy of the century, but you'd be sur-prised at how far being "friendly" can get you! Who wants to deal with cranky management? The tone you set with your attitude and demeanor at the onset of the leasing relation-ship can make the difference in whether or not a prospect leases with you or your competitor. You've heard the old adage, "People do business with people they like", right? That still holds true. A friend-ly, personable leasing professional will get better results than one who's not. Even if you've had a bad day, shake it off before you show up at that appointment. It's you on stage first, then the unit you're leasing. In that order.

These six simple techniques will help you lease your units more quickly. Provided your rent rates are priced right for your market, and you have value to offer a prospect. There are more, and cumulatively, they all add up. But you can maxi-mize your leasing results with a little more effort and attention to detail. You may not become the star leasing agent or property manager of the year, but when preserving and grow-ing an asset - cash flow is king. Without leased units, you have no cash flow. Decide today to step up your game and stand out from the competition. Your operating account will thank you (and hopefully, so will the building owner)!

Bio:Tami Cox is a Business Consultant

and multiple business owner with over 15 years of experience in the commer-

cial real estate market (finance back-ground). She helps business owners, investors, and entrepreneurs nation-wide to become more profitable, put

systems in place to run their businesses more efficiently, and reach their goals.

For more information and to request her services, visit her website at www.

sizzlinghotbusiness.com.



ed to favorable feedback, careful questions can allow you to read between the lines.

A good start is asking how the reference and the candidate are acquainted. How long did/have they worked together? A long-term relationship reveals more about a person than a short-term job stint.

Ask about the person’s daily responsibilities. Watch out for eva-sive or vague answers. Pay close attention to what is NOT being said as well as what is being verbally described. If a reference struggles describing the candidate’s responsi-bilities - beware - they may not have worked together to the degree the candidate states.

Asking what the candidate might need to enhance their career or pro-fessional development is another telling question. This reveals what challenges they may have had in the past and how well they might fit the new job.

Wrap-up questions should include: Why did the candidate

leave? Could they have stayed if they desired to do so? Why are they seeking change? A final question that is very revealing: “If you were hiring at your company, would you hire this candidate, and if so, for what type of position?”

I also recommend careful consid-eration of the “three Cs”. Bill Hybels (author of Courageous Leadership) describes three important character-istics that can help evaluate a per-son’s fit in any team or organization.

Character, Chemistry and Competence. To the degree that these traits can be evaluated is key in determining overall compatibility and provides an indicator for future success.

Character: Look for evidence of honesty, teach-ability, reliability, humility, and a healthy work ethic. This is an important trait because a breakdown in character can breed distrust and alienate co-workers. Character is a foundation of work-place morale. It should be strong in

presence to breed success.

Competence: Seek the highest level of competence possible. This can also be described as “never fear hiring someone smarter than you”. Surrounding yourself with gifted, skilled, bright, capable people will enhance your team will and inevita-bly contribute to the company mis-sion and goals. Seek people with proven track records of success. They are likely highly valued by the people they work with. Go after this proven competence.

Chemistry: How does the per-son “bounce” or interact with oth-ers? Is the demeanor overall happy, positive, upbeat? A personality that attracts and promotes positive ener-gy is more likely to engage and foster teamwork and connection versus someone who is not. Chemistry should not necessarily override char-acter and competence but it must be a contributor. Is the person likable? If two job candidates have equal char-acter and competence, strong consid-eration should be afforded the candi-date whose personality and temper blends best with the team.

These are just a few practices that can help with the hiring process.

When I began my career in manage-ment as a much younger person and was faced with the task of hiring a team for a large multifamily proper-ty, it was far from simple. I never had a college course that taught the sub-ject.

There was no “training manual” for hiring the perfect person. It required careful planning, communi-cation, and evaluation. I was fortu-nate to have good mentors and expe-rienced co-workers. Even with those supporting factors, it was not always successful. And today, the process is still not 100% guaranteed. Remember, hiring practices require just that…..PRACTICE. It is a refined art that takes time and experience to hone, but with preparation and patience, success will follow more times than not. Be smart and careful in selection and do not rush the process.

No doubt that one day soon an app for producing the perfect candi-date will arrive. With the rate of technical evolution, we may need to get ready for those “3-D printed” employees sooner than we think! Better start updating that virtual Employee Handbook. Happy hiring!

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Good Hiring Takes ...continued from page 3

Each apartment community has certain features and benefits, which are the selling points of

that particular community. It could be its location, friendly staff, spa-cious floor plans, beautiful landscap-ing or affordable price; just to name a few. Yet even with the most fabulous features, there will be times when the apartments you have available won’t seem to meet the needs of your pro-spective renters. The following ques-tion from a leasing consultant ad-dresses this issue:

Q: We have several vacant apart-ments right now and I know I’m supposed to try and rent all of them, but how can I rent to someone when it doesn’t seem like the apartment will really meet their needs?

A: Things are not always what they “seem.” Many times you may have the tendency to make an assumption about what you think someone needs based upon your

limited perspective, frame of refer-ence or belief system. For example, you might have 2 bedrooms avail-able right now that are all located on upper floors. If a family with small children comes in, you might auto-matically assume that they are not going to be interested because you think they won’t want to deal with the stairs. On the other hand, you could have all first floor openings and your prospective renter could be a single woman. You might think women living alone only want upper level apartments because you believe they feel safer off the ground. Therefore, when you have a single woman seeking a new home, you may not try to sell her on a first floor location because you don’t think it will meet her needs.

Until you truly get to know your prospective renters and determine what is most important to them, you really don’t know what they need.

You are merely making “assump-tions.” It could be that the husband of the family mentioned above trav-els a lot. The wife may prefer an upper level apartment as she is fre-quently home alone with their small children, and would feel safer living upstairs. The single woman might have a lot of equipment that she has to bring home from work each day, and does not want to deal with con-stantly lugging it up and down the stairs.

It’s important to remember that every person who walks through your door is as unique and special

as each one of your available apartments. The term “one size fits all” may work when you are buying a stretchy article of clothing. However, when it comes to helping people find a new home, no apart-ment will fit the same two people in the same way. For those times when you have prospective renters with

needs you just cannot meet, send them to a sister community and/or offer to pay them a referral fee for anyone they refer who rents. Since things are not always what they seem, you never know when a pro-spective renter who does not end up leasing could be a source of referrals for months, or even years to come.

If you are interested in leasing training or have a question or con-cern that you would like to see addressed, please reach out to me via e-mail. Otherwise, please contact Jancyn for your employee evaluation needs: www.jancyn.com

ASK THE SECRET SHOPPERProvided by: Joyce (Kirby) Bica Former owner of Shoptalk Service Evaluations

Consultant to Jancyn Evaluation Shops E-mail: [email protected] Copyright

© Joyce (Kirby) Bica

sk the Secret Shopper

Vis it us at

www.rentalhousingjournal .com



Portland has gained jobs more rapidly than Seattle, San Francisco and most other major U.S. metro areas in the past year. Portland's employment base expanded 3.1% from June 2013-June 2014, the area's fastest annual growth rate in nine years.

According to state workforce economist Christian Kaylor, the past year marked only the second stretch since the mid-1990s that job growth exceeded 3% in Portland.

Cost of construction. In 2010, the cost of building a two bedroom one bath apartment unit with a washer/dryer hookup was approximately $90,000–$95,000 per unit. Today that cost ranges from $125,000-$165,000 for wood frame apartment buildings up to five floors. The cost of con-struction is significantly greater for buildings over five floors due to the higher cost associated in building with concrete and metal. A recent appraisal completed by Barry and Associates for the construction of a “high end” five story elevator-served building priced out at $230,000 per unit all in (system development charges, soft and hard costs and developer profit.)

A number of factors account for the increased costs of construction:

Increased land prices. Land prices that were down to $10,000 a unit during the recession are now averag-ing closer to $20,000 a unit for multi-family units, with some deals com-ing in at $30,000 – 40,000 a unit (which was once prerecession pric-ing for townhouse unit land.)

Code changes. There have been

many code changes in the last six years. In 2012 the Oregon Structural Specialty Code was revised using the framework of the international building code. This had many impli-cations. First of all, new multifamily properties are now required to install fire suppression sprinklers. Additionally, there are more com-plete requirements for handicapped accessibility, seismic resistance, and stricter codes regarding air flow into buildings. These new requirements have increased building costs signifi-cantly.

Lack of enough labor. The 2014-2015 construction boom has created increased demand for construction labor creating a lack of contractors and laborers available to complete projects. This labor shortage has increased the cost and supply of labor. Commercial increases have averaged 4.4% over the last two years. According to Brian Frank, President of Keyway Construction, a construction company that special-izes in the construction of midrise wood frame apartment communi-ties, the cost for labor across all trades has increased about 5% due to a shortage of experienced trades-people.

Increased material costs. The cost of construction materials have been increasing as well. More important-ly, there are more materials needed to complete the construction of apartments and homes in order to comply with code changes. Brian Frank of Keyway Construction pointed out that the cost of materials has risen about 5% this year. The

combination of labor and materials brings the total increase in apart-ment construction costs in the last 8–12 months to 10%.

Increased permit costs. Every year there are typically

some increases in permit fees to off-set the operation of the permit center staff who manage the permitting and inspection requests. Patrick Barry of Barry and Associates noted recently that system development and permit costs were approaching $20,000 per unit in the Portland Metro area, with a recent smaller project actually cost-ing $25,000 a unit.

Increased systems development charges. System development charg-es increase annually. The Portland Parks and Recreation Department, led by Commissioner Amada Fritz, recently proposed residential increases in parks-related fees for units over 1,700 square feet in the city center and over 700 square feet outside of the city. The proposed increases follow a sliding scale based on unit size which may increase fees up to 52% for outer city units more than 2,200 square feet. Commercial increases in this proposal are bud-geted to increase 113%-281%.

Increases in operating expenses. Water and sewer bills, property taxes (with bond measure increases) and regular maintenance are making properties more expensive to man-age and are also forcing investors to increase property rents. Appraisers have recently noted that outside of new apartments, in which taxes are the biggest expense, utilities are leading the way. Typical utility costs

are $70-$100 per unit per month. New apartments are being taxed at around $1,500-$2,500 per unit.

The bottom line.Rent increases will continue to go

up in the next 24 months as a response to continued robust demand and job growth. Additionally, the cost of construction is forcing developers to increase their asking rates in order to meet all of the economic needs for their proj-ects.

There are two kinds of rent to con-sider:

Rents for newly constructed prop-erties will continue to be strong, ranging from $2.50-$2.75 per foot, even reaching as high as $3.00 per foot for very small units, but signifi-cant concessions will be needed to fill these properties. Also, as more of these new properties lack parking we will see some shift of tenants to properties that have a parking com-ponent. Well located, well main-tained older product rents are in the $1.50 per foot range, while further outside the metro area rents are rang-ing closer to $1.00 per foot. “Value add” properties, which have been substantially upgraded, are nearing the $1.75-2.00 per foot mark.

We expect to see rents for existing properties continue to increase from between 4%-7% each year over the next two years, as existing multifam-ily housing adjusts to the increasing demand in the marketplace.

In summary, rents have nowhere to go but up in 2015.

Nowhere to Go but Up ...continued from page 1

out sick or come in loopy. Extending yourself as a mentor and trying to have a different relationship with this employee might encourage her to come to work more often and to call out less.

As for managing your feelings on the issue, my best advice to you is to step back and take some deep per-

spective on the issue. I want you to ask yourself if it's really worth you caring if you believe her or not? If it's worth carrying anger and spite over something you cannot prove and something that in the long run will not make a difference? My mother once told me that you only have so many pieces in your matched

set of emotional luggage, and you have to choose what's worth packing in them. You can't carry everything, so make sure that she's worth put-ting in there.

Good Luck to you!Heather

Heather is the Imagination In Charge of Behind the Leasing Desk

Training & Consulting Services out of Seattle, WA. An accomplished national

speaker, trainer, consultant, career coach, and author of both books as well

as countless industry related articles, Heather holds her CAS designation, is

NAA Advanced Instructor trained, and has been a member of the NAA Faculty

since 2009, serving as a WMFHA, CAM, and NALP instructor since

2009. You can check out more of her musings, podcasts, and class offerings

at www.behindtheleasingdesk.com

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IT’S JUST SMART BUSINESS

SUCCESS STORIES ABOUT MULTIFAMILY PROPERTIES

Energy Trust has helped hundreds of multifamily property owners and managers get more from their energy by saving them thousands in operating costs and improving their bottom lines.

“We’ll save over $12,000 in energy bills each year because we upgraded to energy-ef cient

exhaust fans. Plus, Energy Trust of Oregon gave us $19,000 in cash incentives just for

upgrading. Our rst-year of energy savings, combined with Energy Trust cash incentives,

paid for our project costs.

Jeff Hart, senior maintenance specialist

College Housing Northwest, Portland, Oregon ”

+Get more from your energy. To learn more visit www.energytrust.org/multifamily or call 1.877.510.2130.

Serving customers of Portland General Electric, Pacifi c Power, NW Natural and Cascade Natural Gas.

Valley Rental Housing Journal - June 2015

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