American Apartment Owners Association

Tips For Landlords To Beat Back The Winter Blues

Thu, 02/22/2018 - 5:04am

The real estate business slows down in winter months, with fewer tenants looking for new apartments. In much of the country, there’s less maintenance and upkeep to do outside — unless it’s a snowy winter. Try these activities to beat back the winter blues, reduce vacancies in open apartments, and stay productive during winter months.

Leasing Tips for Winter

If you’ve got vacant units, it can be difficult to attract renters in winter months. People prefer to move in summer, when the school year is over, the weather is nice, and days are longer. However, you can still find success with winter leasing if you change your approach. 

You will get much more interest in rentals if your photos show off your apartment in the best light possible. Consider hiring a pro to do a one-time photo or video shoot. You’ll be able to use the media to promote your apartment for years to come and the expense is tax-deductible.

Then, create complete listings that really sell your unit. What makes it special? Do you offer a programmable thermostat or ENERGY STAR appliances, so renters save on utility costs? Does your apartment come with a porch or backyard? Is there basement storage or an attached driveway? You never know what will stand out to a prospective renter, so include more information rather than less.

Renting out three-bedroom units can be tricky. It’s easier to find a couple looking for a one-bedroom or two friends who want to share a two-bedroom. Try listing a three-bedroom as a two-bedroom plus office (or yoga studio, guest bedroom, etc.) to broaden your reach.

Some landlords can be flexible on rent, so they lower the rent to get someone in there quickly. Others get flexible with lease terms. For instance, offering a month-to-month lease rather than a 12-month lease. Get creative with incentives, perhaps by offering free parking, free cable or a gift certificate to a local supermarket.

Increase the odds of filling vacant units by responding quickly to any leads. By calling someone back within the hour or scheduling a same-day showing, you can impress prospects with your responsiveness and beat out the competition.

Other Ways to be Productive in Winter

While these renting tips for winter may help you fill vacancies, there are other techniques you can try while you’re waiting for a great tenant.

Websites advertise your rentals year-round, helping you avoid seasonal slowdowns. Make it a winter project to develop a website for your rental, then enjoy 24/7 interest all year.

Contractors that may be difficult to reach in summertime likely have ample free time in winter. This could be a good time to renovate an older apartment with an updated bathroom, new kitchen cabinets, fresh coat of paint, or refurbished hardwood floors. Year-end and post-holiday sales help landlords extend their purchasing power. If you’ve been planning for a remodel, winter could be the right time. You will be able to charge more for an updated apartment. Plus, the work will be done just in time for the pickup in the rental market come spring.

For more leasing tips for landlords, become an American Apartment Owners Association member today.

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Landlord forced to pay tenant $300K for bedbugs infestation

Mon, 02/19/2018 - 1:39pm

The whole city will be itching for payouts like this.

A Bushwick tenant scored a fat $300,000 judgment against his landlord over a bed bug infestation — because the owner ignored repeated requests to help him get rid of the creepy crawlers, his lawyer said Friday.

Luis Cotto, 35, filed the suit on Jan. 23 against his landlord, Gouramety Jackson — claiming that there had been a bed bug problem in his apartment on Willoughby Avenue near Evergreen Avenue since August of 2015.

He alleged that Jackson had failed to fix the problem, despite a series of complaints.

Cotto claimed that he had suffered “severe and permanent damage to his skin” as a result of the bug bites.

The settlement is one of the state’s highest ever in a bed bugs case, said his lawyer, Bruce Baron.

The lawyer said in a statement that landlords city- and state-wide have something to learn from this case.

“This sends a clear message to landlords throughout the state,” Baron said. “Don’t neglect your legal and moral obligation to protect occupants on your property from physical harm, or be held responsible.”

Jackson, who represented herself, could not immediately be reached for comment.

 

Source: nypost.com

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Wall Street Snaps Up Cheap Single-Family Rentals

Mon, 02/19/2018 - 9:15am

For Invitation Homes Inc., the U.S. landlord built by Blackstone Group LP, the 220 houses it owned in working-class areas around Atlanta were outliers, filled primarily with low-income tenants paying rents well below those at its other properties.

For another company with big private equity ties, the homes were an opportunity.

Promise Homes Co., a firm started last year with $130 million from investors including Ares Management co-founders Tony Ressler and Michael Arougheti, purchased the houses from Invitation Homes for $22 million in August. The startup set about a strategy built around helping tenants improve their finances, aimed at keeping them in their rentals and minimizing costly turnovers.

As Wall Street’s rental-home industry matures from its early days of frenzied homebuying after the foreclosure crisis, upstarts such as Promise are turning to cheaper houses that have largely been cast aside by big, established landlords. With easy real estate bargains gone, investors are focusing on homes that carry higher yields and potentially more risks — as well as an opportunity to promote a mission of helping poorer renters.

“Larger companies are getting rid of underperforming assets,” said Jade Rahmani, a managing director at Keefe, Bruyette & Woods Inc. “That’s leaving an opening for companies to move more downstream, companies targeted to the affordable market, to lower-income residents — because there still could be an opportunity to earn a return.”

When Wall Street companies started buying homes en masse in 2012, they mostly avoided focusing on properties aimed at poorer tenants, who tend to be less financially stable and more transient. Cheaper houses often require more expensive repairs, and even when they don’t, landlords can get hung up on basic math: A new roof or refrigerator costs the same amount whether you rent the house for $1,000 or $2,000, but it takes longer to recoup the cost of repairs if you’re collecting lower monthly payments.

Single-Family Sprawl

Houses accounted for 35% of all U.S. rentals in 2016, up from 31% in 2005

Source: National Association of Homebuilders tabulation of Census data

Those calculations are changing, however, as increased competition drives up home prices and compresses yields.

“There’s been interest in the lower-priced properties from individuals since we launched our platform,” said Gary Beasley, chief executive officer of Roofstock, an online platform for buying and selling single-family rentals. “More recently, we’ve had institutions looking at some of the lower-priced homes and getting excited about it.”

Cerberus Landlord

It’s not just new companies such as Promise entering the mix. Cerberus Capital Management LP, whose initial foray into single-family rentals consisted of making loans to landlords, is betting on working-class homes that generate lower rents than those owned by other large institutions.

The company’s FirstKey Homes unit acquired 8,000 single-family rental properties in the last six months of 2017, more than doubling its portfolio. The Marietta, Georgia-based landlord owns 14,000 homes spread across 24 markets and plans to triple its holdings, according to CEO Martin Esteverena.

FirstKey’s homes have average rents of about $1,300. By contrast, Invitation Homes, the largest U.S. single-family landlord, charged an average of about $1,700 in the third quarter.

Other investors are focusing in geographical areas that were largely avoided by early large-scale buyers. Tawan Davis, a Goldman Sachs Group Inc. alum, is focusing on East Coast U.S. cities sometimes seen as more complex — and costly — to operate in. His company, Steinbridge Group LLC, has acquired about 60 Philadelphia row houses that typically rent for $700 to $1,200, and it plans to eventually invest $425 million across areas such as Baltimore and Northern New Jersey.

The idea is to offer quality, affordable housing that lets families stay in gentrifying neighborhoods, Davis said.

“Our goal is to be a long-term presence in these neighborhoods, not to be a part of the problem,” he said.

Source: bloomberg.com

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Nearly two-thirds of U.S. housing markets see home prices hit all-time high

Mon, 02/19/2018 - 9:06am

As housing inventory sank to its all-time low during the fourth quarter, home prices increased, creating all-new highs in many U.S. markets, according to the latest quarterly report from the National Association of Realtors.

The national median existing single-family home price in the fourth quarter came in at $247,800, up 5.3% from $235,400 in the fourth quarter of 2016. During the third quarter, home prices increased 5.6% from the third quarter of 2016.

Single-family home prices increased in 92% of measured markets, or 162 out of 177 metropolitan statistical areas. In fact, 15% of metro areas saw double digit increases, and now 64% of markets reached a new all-time high in home prices. This is up by 18 metros from last quarter.

“A majority of the country saw an upswing in buyer interest at the end of last year, which ultimately ended up putting even more strain on inventory levels and prices,” NAR Chief Economist Lawrence Yun said. “Remarkably, home prices have risen a cumulative 48% since 2011, yet during this same timeframe, incomes are up only 15%. In the West region, where very healthy labor markets are driving demand, the gap is even wider.”

“These consistent, multi-year price gains have certainly been great news for homeowners, and especially for those who were at one time in a negative equity situation; however, the shortage of new homes being built over the past decade is really burdening local markets and making home buying less affordable,” Yun said.

Total existing home sales, including single family and condos, increased 4.3% during the fourth quarter to a seasonally adjusted annual rate of 5.62 million, up from 5.39 million in the third quarter. This is also up 1.3% from the 5.55 million pace in the fourth quarter of 2016.

But due to these higher levels of home sales, existing homes for sale shrank 10.3% from the 1.65 million homes at the end of the fourth quarter of 2016 to an average supply of just 3.5 months. This represents a new low in housing inventory and is down from 4.2 months of supply in the fourth quarter of the previous year.

And despite the national family median income rising to $74,492 in the fourth quarter, affordability still dropped due to increasing home prices and rising mortgage rates.

“While tight supply is expected to keep home prices on an upward trajectory in most metro areas in 2018, both the uptick in mortgage rates and the impact of the new tax law on some high-cost markets could cause price growth to moderate nationally,” Yun said. “In areas where homebuilding has severely lagged job creation in recent years, it’s going to be a slow slog before there’s enough new construction to cool price appreciation to a pace that aligns more closely with incomes.”

 

Source: housingwire.com

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Home Seller Tips To Having A Successful Open House

Mon, 02/19/2018 - 9:05am

Holding an open house for your soon-to-be-listed or newly on the market home is a lot like being on a game show where edging out the other contestants in a short period of time is key. In TV game shows, such as “Jeopardy,” the contestants don’t automatically know answers to so many trivia questions; they study and they plan and they make it appear to viewers like they walk around with that body of knowledge every day. Open houses need to be thought of similarly. Once your home is on the market, an open house is your opportunity to plan and strategize how you are going to win over buyers in very short time.

Even in a strong real estate market where houses sell quickly, it’s still important to ask your agent to hold as many open houses as possible until the home sells. One reason is that even buyers with agents still like to look at homes on their own without feeling the pressure of a home tour. Sometimes their agent is out of town when your house goes on the market. Many buyers are not represented by an agent and the only way for them to tour a home is through an open house. Your agent will plan the open house to include everything from signage to freshly baked cookies. As a seller, you should take the following steps:

Depersonalize

Back to the game show analogy, think of depersonalizing as studying the answers and questions before trying out for “Jeopardy.” Your house is lovely for how you live in it, but buyers don’t want to see you in your house. In fact, the more your house makes it difficult to guess who lives there (age, religion, gender etc), the better. Take down personal photos, religious emblems, the cute collection of mini ceramic frogs, etc. Analyze your stuff for whether it’s morally, politically, or otherwise socially objectionable and remove all of it. You don’t want to eliminate buyers because they are turned off by your personal tastes.

Declutter

While you are depersonalizing it’s also a good time to declutter as the two go hand in hand. The more simple and understated your home is, the more likely buyers can see the home for what it is and imagine themselves in it. When you have too much stuff cluttering walls and counters and shelves, buyers turn their focus toward those things and sometimes even make the assumption in logic that if you are cluttery, then you are disorganized, which means maybe you don’t take care of the house as well or as on time as you should. A good rule of thumb is to box up or store at least half of the smaller items displayed in your home.

For example, how much is on your kitchen counter right now? Now imagine reducing that number to just three things. What would you choose to keep versus store? Some sellers are benefited by going to other open houses in their area and looking at how other people have decluttered and arranged what is left. Online pictures, such as what is found on Pinterest, can help too. Often you can get some good ideas on what works visually just by seeing how others do it. When you are all done decluttering, clean your home like never before because buyers notice dirt and grime. Hire a maid service if you have to.

Lure Them In

The outside of your home is as important as the inside, especially the front entry area. Before an open house, take care of simple yard maintenance such as mowing, edging and weeding flower beds. A fresh layer of mulch adds color especially in winter months when not much is blooming. At your front door, clean off spider webs, blown leaves, and place a large, colorful pot of annuals or anything you can buy in season.

Complete Your Honey-Do List

While you have the yard power tools out, dust of your workbench and take a walk around your house inside and out. Make a list of all maintenance issues such as wiggly door handles, missing fascia, paint that has chipped, etc. and repair them before the open house. Buyers see even the smallest of maintenance issues as an extension of the condition of larger items such as roofs, plumbing and major appliances and assume you haven’t taken care of the home. You might talk to your realtor about a pre-inspection to deal with all home maintenance and problems upfront, before you get into contract with a buyer.

Be Cautious

Once you have taken the above steps and you are ready for the actual open house, there’s one last thing to plan. Protecting your valuables and identity. It might be rare, but criminals do use open houses as a way to case a house or to find collateral to steal identities. Make sure indoor safes are locked and hidden. Store heirlooms, checkbooks, prescriptions, and valuable jewelry away from prying eyes. Utilize a reliable, trustworthy, identity theft protection service to see you through the entire listing and sales process.

 

Source: realtytimes.com

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Selling an investment property? Read this first

Mon, 02/19/2018 - 9:03am

Recently, a family of my acquaintance were selling a condo that had been an investment property. They had owned it for five years, and it fetched a rent a third higher than the mortgage; however, it was in an old building that had had several expensive assessments, so the condo had not been cash-flow positive during that time. Plus, the property had nearly doubled in value, and the couple thought it was prudent to cash out, since prices in the area seemed to be softening. They started researching their options.

There are three reasons people like investing in real estate. First, it’s a great way to diversify a portfolio and build wealth. Second, average citizens can take out a mortgage to leverage their investment; this is a more exotic, less advisable option when it comes to securities. Finally, a piece of real estate can pay off in two ways: by appreciating in price and by bringing in rental income.

When spouses filing jointly sell their primary residence, $500,000 in gains is shielded from tax. But when you sell an investment property, as my friends were doing, you owe capital gains tax on the proceeds. This can take a big bite — the federal top rate is 20 percent.

However, there is a way to defer paying that tax. It’s called a 1031 exchange. It allows you to put off capital gains tax if you use the proceeds of the sale to buy other rental real estate.

Here’s what my friends found out:

In order to complete a 1031 exchange, you must engage the services of a firm that specializes in such exchanges before you close on the sale of your investment property. They will charge a fee to hold onto the money from the sale until you are ready to spend it.

After closing, you have 45 days to identify up to three “like kind” properties for the exchange. Like kind simply means real estate; in practice it can be anything from empty land to an apartment or a freestanding house. But it must be an investment property, not a timeshare, shares in a REIT, or a second home, and not renovations or improvements, either.

And, you have 180 days in total — or until tax day (with extensions) for the year your property was sold, whichever comes sooner — to close on the sale of one of those three properties. For example, if you closed January 1, 2018, the new property must be purchased by July 1. But if you closed in December 2017, you only have until April 15 of 2018, unless you get an extension on your taxes.

Now let’s do some math.

In order to get the full tax deferral, the value of the new property should be equal to or greater than the sale price of the old property. Keep in mind that you owe capital gains on the mortgage payoff, as well as the cash that comes from the sale of your original property. You can, of course, put some cash into a new property and keep the rest, known as “boot.” But in practice, if you go much below the sale price the tax advantage can be quickly eaten up by closing costs and fees. As a rule of thumb, if the boot, the amount you take home, is greater than the total capital gains, it’s not recommended to do an exchange.

The main issue that wards people off of 1031 exchanges is the time crunch on finding a suitable new property. It can be daunting if real estate is not your primary occupation. It would be best to research your options before putting your existing property on the market. In fact, you can do a “reverse exchange” by buying the new property before selling the old property — provided you are confident of selling it in time.

Have you done a 1031? Have advice for my friends? Or further questions? Fire away.

Source: chicagotribune.com

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Major apartment developer: ‘There is an acute crisis headed our way’

Mon, 02/19/2018 - 9:00am
  • The luxury market is largely overbuilt, while there is a shortage of affordable rental housing.
  • Lower- and middle-income households are spending proportionally more on their rent, says apartment developer Toby Bozzuto.
  • Nearly half of all renter households pay more than 30 percent of their income for housing.

Scan the downtowns of the nation’s largest cities, and you are likely to see a staggering array of cranes.

Most of them are helping to build luxury apartment buildings. In fact, multifamily construction is now at a 40-year high; the trouble is, developers are putting up the wrong kinds of buildings. The luxury market is largely overbuilt, while there is a shortage of affordable rental housing, and developers are hamstrung by the now record-high cost of construction.

Apartment completions in the 150 largest U.S. cities jumped to 395,775 units in 2017, beating 2016 production by a staggering 46 percent and more than doubling the long-term average, according to RealPage, an apartment management software and data company. Luxury, upscale buildings accounted for between 75 and 80 percent of the new supply in the current cycle.

“It’s really tough to deliver product at those lower price points. The cost of land, the cost of building materials, the cost of labor. It’s really about the same regardless of what product you’re doing and it’s just tough to make a deal work financially if you’re going toward that middle-market price,” said Greg Willett, chief economist at RealPage.

Demand for luxury apartments is still strong, but that demand is by choice, not necessity. Tenants in luxury buildings are often renting a second or third home or perhaps downsizing from a larger suburban home. They are not struggling to afford the monthly payments.

“In our portfolio, which represents 70,000 units mostly in the luxury space, we’re seeing that our renters are spending a relatively low amount of their income on rent despite rents being perceptively high,” said Toby Bozzuto, president and CEO of The Bozzuto Group, a multifamily management and development company operating in the Northeast and Mid-Atlantic. “That being said, it is a tale of two cities. In the middle income and the lower income markets, people are spending proportionally more on their rent — so much so I believe there’s an acute crisis headed our way.”

Despite rising incomes, nearly half (47 percent) of all renter households (21 million) pay more than 30 percent of their income for housing, including 11 million households paying more than 50 percent of their income for housing, according to a late 2017 report from Harvard’s Joint Center for Housing Studies.

“While the market has responded to rental housing needs for higher-income households, there are alarming trends that suggest a growing inability to supply housing that is affordable for middle- and working-class renters, let alone those with very low incomes,” said Christopher Herbert, the center’s managing director.

Rents on the high end flattened in the last year, and landlords are starting to offer concessions, like high-end amenity packages or a month’s free rent.

“We’re getting a pretty competitive leasing environment in select locations at those really high-end price points, and we’ve already gotten to flat to slightly declining rents,” said Willett.

That is not happening outside the luxury market, where rent increases are still strong due to low supply. Developers say they simply can’t afford to add anything but luxury.

“The two-by-four doesn’t care whether it’s in a luxury building or in an affordable building. It costs the same,” said Bozzuto. “The differential of course, is the rent and there’s a huge disparity in high-end rent versus low-end rent. So the issue is for us to develop an economically viable, feasible project, it has to be, by its very nature, high end. The rents have to be high to support the cost.”

The cost of that two-by-four, lumber, is now at a record high. Other products like steel and concrete are more expensive, but the real cost spikes are in land and labor. Skilled construction labor is not only expensive, it is extremely difficult to find.

Investors, according to Bozzuto, are now moving away from new construction and instead rehabbing older rental stock. These so-called value-add projects just raise the rents on current tenants even more.

There are some government programs that offer developers financial incentives to build lower-income housing, but they don’t meet the needs.

“Those are finite and many, many of us are competing for those very finite resources,” said Bozzuto, adding that the luxury market is, “on the precipice of oversupply, but I think macroeconomic conditions are actually going to keep us this year from developing much further. Costs in particular, land costs, hard costs mostly driven by labor, will ultimately make it harder to build new buildings.”

Source: cnbc.com

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Gfast: Ultrafast Broadband Without the Sawdust

Fri, 02/16/2018 - 2:20pm

More and more, apartment dwellers expect ultrafast broadband. Yet multi-dwelling unit (MDU) building owners rightfully reject the offer to install fiber to the home (FTTH) because it’s messy, disruptive and can be a costly ultrafast option for tenants. But there’s a way to get to ultrafast broadband without all the sawdust and disruption: Gfast.

There are a handful of broadband options available, but most are not suitable or feasible for apartment buildings. MDUs present wiring and access challenges that can be difficult to overcome. For example, all the owners of an apartment building need to agree on which broadband technology should be installed, cover the associated costs, and permit the digging of trenches.

Enter Gfast

Gfast (pronounced gee-fast) is an ultra-high-speed broadband technology that’s taking off and delivers all the benefits of ultrafast broadband without the hassle of fiber installation. Gfast delivers broadband access at up to 1.5Gbps – nearly 100x higher than what most consumers have access to today – over traditional copper wires or coax that are already in most apartment buildings. It achieves this speed by bringing fiber to the building and connecting to the existing infrastructure with a Gfast unit inside or next to the building. In addition, the solution combines upstream and downstream performance and dynamically allocates the bandwidth in each direction, in real time. This enables high-bandwidth uploading activities, such as uploading Facebook Live videos or backing up hard drives to the cloud and high-speed download applications such as streaming Netflix 4K video content.

Benefits of Gfast

Additional benefits of Gfast:

  • Low-cost deployment – Tenants can self-install new equipment without an expensive and disruptive in-home professional installation like those required of most internet service providers (ISPs). Residents can easily plug the equipment into their existing phone lines.
  • Highly reliable – Compared to existing copper technology like DSL, Gfast not only runs much faster, but is also far more reliable. Its set up eliminates most service disruptions that have occurred with DSL technology, which, in the past often leaves tenants frustrated and causes them to complain about the service to landlords.
  • Energy efficient and green – Gfast keeps the power consumption as low as possible, only consuming power when sending or receiving data. In comparison, DSL systems consume power 24/7/365.
  • Few regulatory issues –  Gfast avoids potential regulatory issues regarding where the demarcation exists between the service provider and the property owner, as occurs with broadband fiber installations.

AT&T is rolling out this service in 22 areas of the country and CenturyLink and Windstream are also rolling out deployments of Gfast in 2018. This is good news for landlords who want to offer ultrafast broadband access to tenants without incurring high costs and creating access issues.

 

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California lawmakers want to boost tenant protections

Fri, 02/16/2018 - 8:37am

Following failure of a bill that would have expanded rent control, a trio of California lawmakers is introducing legislation aimed at adding other protections for renters.

Democratic Assemblymen David Chiu of San Francisco, Richard Bloom of Santa Monica and Rob Bonta of Alameda want to make it harder to evict tenants and extend timelines before evictions could occur.

“We’re in the midst of the worst tenant crisis in our state’s history,” said Chiu, chairman of the Assembly Housing and Community Development Committee. “Tenants are facing unprecedented hardships and constantly under the threat of eviction.”

Here are the three bills:

  1. Assembly Bill 2364 from Bloom makes changes to the Ellis Act, the state law that allows landlords to evict tenants from rent-controlled apartments if they are tearing down a building or getting out of the rental business. Bloom’s bill would make it harder for landlords to evict tenants unit-by-unit and provide one year’s notice before an eviction could occur.
  2. Assembly Bill 2343 from Chiu extends the time tenants have to pay rent before being evicted and gives tenants more time to respond to an eviction lawsuit.
  3. Bonta’s legislation, which he plans to introduce by the end of the week, would force landlords statewide to comply with a list of defined reasons, such as damaging a unit, creating a nuisance or not paying rent, before they could evict someone, a process known as “just-cause” eviction.

One third of California renters pay more than half their incomes on rent, according to a recent state report. Tenant advocates also are collecting signatures for a potential November ballot measure to expand rent control statewide.

Source: latimes.com

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What Every Real Estate Investor Needs To Know About Apartment Property Managers

Thu, 02/15/2018 - 2:11pm

If you are looking for a way to diversify your portfolio while building wealth for the future, buying an apartment building could help you achieve both goals. There are enormous advantages to owning rental property, and investing in a fully-rented apartment building could bring you a steady stream of rental income — money you could use to supplement your retirement income, boost your savings and help you prepare for the future.

If you have never considered investing in real estate before, you might want to rethink that decision. From beneficial tax treatment for your profits to generous deductions for depreciation and other costs, the advantages of owning rental real estate are very clear.

On the flip side, investing in real estate also gives you a new status — that of a landlord. That is a status many investors would rather not have, but you do not have to take on all the responsibility of apartment building ownership. By working with an apartment property manager, you can leave the day-to-day management of the property to someone else while you book the profits.

What Does An Apartment Property Manager Do?

Whether you are new to investing or an experienced old pro, there are real advantages to working with an apartment property manager. In exchange for a small percentage of the rent roll, these professionals will perform a host of vital duties, including:

• Helping property owners research the local rental market: Property managers can help owners research the local rental market, making it easier to set appropriate rents for a newly constructed apartment building.

• Communicating with tenants: This communication can include things like changes in rental rates, additions to the lease agreement, new policies regarding pets and visitors and complaints from neighbors. It is important that property managers have solid communication skills, along with the ability to interact effectively with all kinds of people.

• Collecting the rent: Apartment property managers are responsible for collecting rent and making sure that all tenants pay on time. For this service, property managers generally receive a percentage of the rent roll.

• Finding and screening prospective tenants: Property managers will place ads to attract tenants and conduct background checks to screen prospective renters. As part of the process, the apartment property manager may check credit reports, verify employment and check references from past rental units.

• Dealing with complaints: Property managers deal with the range of complaints from tenants, from issues with noise from other renters to problems like leaking pipes and deficiencies with the heating and cooling system.

• Handling emergencies: When a toilet is stopped up at 2 a.m. or the furnace breaks down on the coldest night of the year, it is the property manager who gets that call.

• Coordinating move-outs: When a tenant moves out, the property manager will coordinate the event and conduct a post-rental inspection. The results of this inspection will help determine whether or not the tenant will get their security deposit back.

• Dealing with evictions: No landlord wants to evict a tenant, but in some cases, an eviction is the only course of action. The property manager will handle all aspects of the eviction process, from serving notice on the tenant to changing the locks to contacting local authorities if there are issues with the move-out.

• Conducting routine maintenance: Every apartment building requires routine maintenance, and the property manager is responsible for coordinating the work and making sure it gets done. From painting the hallways to laying down new carpet to fixing up apartments between tenants, the property manager is responsible for all these things.

• Understanding landlord/tenant law: The laws governing landlords and tenants can be quite complicated, and it is important for an apartment property manager to understand those regulations and abide by them. From how to handle evictions to issues like rent control, the property manager must have a solid understanding of the underlying law.

As you can see, the job of the apartment property manager is a complicated one, but the career can also be quite rewarding. Property owners rely on their apartment managers to screen tenants, collect rents, make repairs and handle all the day-to-day aspects of their real estate empires. If you love the idea of investing in property but hate the thought of being a landlord, hiring a property manager could be the right choice.

 

Source: forbes.com

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Airbnb Hosts Can Now Use Rental Income to Help Refinance a Mortgage

Thu, 02/15/2018 - 2:09pm

Though its effects on neighborhoods and real estate markets aren’t universally agreed upon, there’s no doubt that Airbnb has provided many a homeowner with an extra income stream. And if you’re a host who’s used those earnings to pay off some of your mortgage in the past, a new program is here to further sweeten the deal. Last week, Airbnb announced a partnership with Fannie Mae and three major lending institutions that will allow hosts to formally include the money they generate from rentals when applying to refinance their homes. According to an Airbnb blog post on the matter, the goal is to “unlock potential savings for hosts and help them reach their financial goals” by formalizing this revenue stream in the eyes of lenders, lowering their monthly mortgage payments in the process.

As part of the arrangement, Airbnb will furnish hosts who rent out their primary residence in the United States with a proof of income document, which can then be included in mortgage applications through Quicken Loans, Citizens Bank, or Better Mortgage. Fannie Mae will guarantee the mortgages, part of what Airbnb called the government-sponsored organization’s “work to find new, innovative ways to expand the availability of affordable mortgage credit” at a time when past notions of stable work have yielded to the vagaries of the so-called “gig economy.”

As Fannie Mae vice president of customer solutions Jonathan Lawless sees it, the partnership is simply an effort to keep up with the times. ”Rental income on your own home is something that ten years ago we almost never saw,” he told The Wall Street Journal last week. “The fact is that we’re seeing this much more commonly across the country.”

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It’s worth approaching the prospect of refinancing your home in this way with a degree of trepidation. Refinancing to take advantage of rising property values and “using your house as an ATM” was a major contributing factor to the financial collapse of 2008, as lenders overextended borrowing credit to homeowners based on unscrutinized sources of secondary income. Though Airbnb will be able to provide accurate income data directly to lenders, the capricious nature of the tourism industry—not to mention the threat of Airbnb bans in cities like Detroit and Baltimore—could potentially mean that one source of your home’s value is here today and gone tomorrow.

For now, it seems like the mortgage industry is cautiously optimistic. Fannie Mae is using the current three-lender program as a trial period, and has said that so long as things run smoothly it’s open to backing mortgages from other lenders who decide to go the Airbnb-income route. Though that won’t stop anyone who’s seen or read The Big Short from stuffing cash under their mattress, it’s encouraging to know that lenders are at least attempting to keep pace with the evolving nature of homeownership in these uncertain times.

Source: architecturaldigest.com

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How to Keep Your Rental Property Yard Looking Great All Year

Thu, 02/15/2018 - 2:07pm

You’ve put a lot of time and money into your property and you know that you’ve got to have a regular maintenance routine to keep it in good order and looking the way you and your tenants would like. There are some tasks you have done on a weekly or monthly basis, and some are scheduled annually. That’s great for the building itself, but do you give the same kind of thought to the landscaping? A rich carpet of green grass is the finishing touch for your property and it needs the same kind of care as you give the interior so that it remains an asset you and your tenants can be proud of.

Here are the steps to drawing up a seasonal schedule for yourself or your gardener that will keep the lawn healthy and thriving through the seasons:

Winter In parts of the country where winter means low or freezing temperatures and snow, there’s little required for the lawn. Do be aware, though, that heavy foot traffic on a snow-covered lawn is going to lead to compaction of soil and grass roots that you’ll have to deal with later. If it’s applicable, remind tenants that it’s never acceptable to drive over lawns, and doubly so if they’re frozen.

In warmer temperature zones, cut down the watering schedule since there are fewer hours of daylight and usually some rain. If you don’t have “smart” irrigation controls, be sure to adjust timers.

Wherever you live, if you do the gardening yourself you can spend some time getting your tools ready for spring. Scrub off old dirt, remove rust, lubricate pivot points, and sharpen blades on hand tools and your mower.

Spring This is the season when the lawn needs the most attention. Doing these jobs will determine how lush and green the lawn will be through the summer.

• Rake vigorously to remove surface leaves, dead grass, thatch, and debris.
• Aerate the soil to correct compaction caused by weather and foot traffic. This opens up the lawn to receive nutrients and adequate hydration.
• Test and correct the pH. Grass thrives in neutral pH, so soil needs to be adjusted if it’s too acidic or alkaline.
• Pre-treat for weeds. The best time to stop them is before they start.
• Fertilize to give the grass a strong root system and the energy for a long growing season.
• You may want to overseed (read more about that on the list for Fall) if you’ve got a cool season grass like bluegrass or turf-type tall fescue, but note that this will mean you can’t pre-treat for crabgrass and weeds because the products that stop those seeds from germinating will stop the grass seed, too.

Summer Watering and light maintenance are all that a lawn requires in summer.

• Water in the morning after the dew has dried, because having the lawn continuously wet can encourage certain fungal diseases. Water deeply rather than frequently, making sure the lawn gets an inch of water each week.
• Mow regularly, removing only one-third of the grass blade height each time. The higher the grass, the deeper the roots are, and the more moisture they retain. Leave clippings in place as mulch and to shield the soil from sun that will dry it out.
• Keep weeds in check by hand-pulling annual, shallow-rooted weeds and doing spot treatments on hardier ones.

Fall This is the time to do the jobs that will ensure that the lawn is ready for winter and fresh regrowth as the weather warms.

• Overseeding in spring doesn’t mean you shouldn’t do it again now. Fall is when to overseed your lawn so that it recovers after the stressful heat of summer. The process is simply sowing the seed over the entire lawn, not just the areas that are bare or thinning. The process will improve the density of the lawn, revive its rich color, and improve its overall health, making it more able to fend off weeds.
• If the lawn is on a twice a year fertilizing schedule, and you fertilized in the spring, now is the time for the second round so the grass can benefit from the extra nutrition as it gets ready to go dormant for the winter.
• Pre-emergent weed control may also be called for, depending upon where you live. Weeds may not show until early spring, but perennial varieties will be actively growing roots and storing up energy for their reemergence. Stop them now.
• Mow until the grass goes dormant, and then put away the mower ‘til spring.
• Clean up by raking weeds and debris, and remove lawn furniture so it doesn’t compress the ground and invite pests and disease.

Source: realtybiznews.com

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Which Cities Have More Renters?

Thu, 02/15/2018 - 2:04pm

Between 2006 and 2016, there was a significant increase in the number of renters nationwide. According to an analysis of United States Census Bureau data by the rental listings site RentCafe, by 2016, roughly 23 million additional people were living in rentals — or nearly the same number of people that the country’s overall population rose by in that decade (23.7 million)

In 2006, 20 of the country’s 100 largest cities had more renters than homeowners. By 2016, that number had grown to 42. Of those cities, Newark had the largest share of renters (74 percent), followed by Jersey City, (70 percent), Miami (68 percent), New York (65 percent), and Boston (64 percent).

Which cities recently joined the list? Here are the 22 new renter-majority areas, ranked by the greatest proportional increases. (Cities farther down the list may be larger, have added more renters or have a larger percentage of renters than cities above them if they had less growth in renters relative to their populations.

Renters made up about 36 percent of the population in the United States in 2016, but the rate at which renter share increased year over year peaked in 2009. And while the percentage of renters in the country is the highest it has been since 1986, according to the Pew Research Center, that still leaves the majority of the population in owner-occupied housing.

Source: nytimes.com

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When’s The Best Time Of Year To Rent Out An Apartment?

Thu, 02/15/2018 - 6:59am

Is there a best time of the year to rent out an apartment? While tenants will move every month of the year, there are periods of peak and low demand. Understanding how the rental market works will help landlords plan their marketing schedule, make renovations and fill vacancies quickly. Here’s what landlords need to know about seasonal demand for apartments. 

Conventional wisdom holds that the best season to rent out an apartment runs from May to September.

During these months, students may be moving out of college, transitioning from high school or looking for a short-term summer rental. Families prioritize moving during the summer, so that children won’t have to change schools midway through the year. There’s nice weather in these months, so it’s less painful to move than it would be in, say, February. Lastly, properties also look better when there are grass, flowers and trees. This can increase the appeal of an apartment — especially if the unit comes with outside space, such as a patio or a backyard.

Winter is a slow season for renting out apartments due to the holidays, inclement weather and low temperatures.

Since many landlords know that summer months offer prime demand, their leases are often structured accordingly. Tenants who decide not to renew their lease join the ranks of the apartment seekers. Since many leases start in June or September, some landlords consider either of these the best month to rent out an apartment.

How the Rent Cycle Benefits Landlords

Summer season brings more options for both landlords and tenants. Renters will find a lot of units from which to choose — compared with a handful of units that may be available in March or December. Landlords will find more applicants, too. Landlords who want to quickly fill vacancies may be able to find a tenant much faster than if advertising the apartment outside of peak season.

During slow season, property managers may have to choose between filling a vacancy quickly from the limited pool of applicants and getting the rent they want. In peak season, landlords can get their preferred rate or even raise it, because so many tenants need apartments.

Landlords who are planning renovations can take advantage of peak season. For instance, a landlord who is planning a bathroom remodel can work in July and August to get the renovations complete in time for a Sept. 1 move-in date.

In markets that have an oversupply of units compared to the number of prospective renters, there may be less of a noticeable difference between advertising rentals from May to September and renting at other times of the year. Fewer prospective tenants increase the odds that an apartment will sit vacant for months. Landlords who own housing stock in these areas could consider offering short-term rentals, accepting pets, renovating apartments or discounting the rent to increase interest in their available rentals.

To stay up to date with all landlord tips, consider becoming an American Apartment Owners Association member. Members receive free or low-cost landlord forms, actionable advice and discounts on supplies. Join today.

Disclaimer: All content provided here-in is subject to AAOA’s Terms of Use.

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Do’s and Don’ts for Non-Discriminatory Tenant Screening

Tue, 02/13/2018 - 4:47pm

In October, a Massachusetts landlord who refused to rent apartments to pregnant women or families with minor children was found guilty of violating the U.S. Fair Housing Act. The same month, the New York City Fair Housing Center sued a landlord for allegedly quoting higher rental rates to black individuals posing as prospective tenants than to their white counterparts as well as for rejecting applicants with public rent assistance and making children undergo unnecessary lead tests. Five months earlier, a federal jury in Montana fined a landlord for charging a disabled tenant $1,000 to have a service animal.

Cases like these are stark reminders of the risks of neglecting to follow rules designed to protect renters from discrimination.

Every landlord, property manager and real estate agent should know not to ask verbal or written questions about an applicant’s race, skin color, religion, sex, national origin, disability or family status such as pregnancy and the presence of children under 18 – the seven classes protected under the Fair Housing Act. The same protections bar landlords from other behavior that can be deemed discriminatory such as posting ‘For Rent’ signs only in Spanish (discouraging non-Spanish-speaking applicants) or promoting a property in terms like “great building for single professionals” (discouraging families with children, married couples and partnered couples).
But knowing and complying can be two different things, especially with the continual evolution of case law related to housing discrimination.

The challenge is complicated by additional protections that may be provided under state and local housing laws. In Maryland, for example, state law forbids discrimination on the basis of marital status, gender identification or sexual orientation, and some cities and counties have defined additional categories such as age, sexual preference, occupation and source of income.

Tenant screening provides a first line of defense against discrimination complaints. That’s because differences in factors such as an applicant’s income, employment, references, and credit histories can help justify the selection of one tenant over another and thereby absolve landlords of discrimination charges. Here are eight recommendations for using the screening process to keep discrimination lawsuits at bay.

1 – DO apply your policies and procedures uniformly. Avoid running a full tenant screening report on some applicants and only a credit check on others, for example. If you have a policy of renting to applicants with the best credit, don’t make an exception for a would-be tenant with a better personality but a less positive credit report. Be consistent or be vulnerable.

2 – DON’T get too personal on rental application forms. Ask about jobs, previous addresses, income and references, but stay away from specific questions about things like spouses (just provide spaces for a list of all adults) and other categories protected under the Fair Housing Act.

3 – DO choose a ‘colorblind’ screening service. Some services have a colorblind scoring system that enables landlords to establish their preferred tenant profile based on specific parameters such as income, evictions and credit score, either using the service’s default tolerances or defining their own. The software then evaluates each applicant according to those criteria and returns a “recommend” or “not recommend” verdict completely independent of race, religion or other potentially discriminatory factors. This ensures that applicants are evaluated equally, providing a strong defense assuming the software’s recommendations are followed.

4 – DO stay abreast of new developments affecting screening. One of them is a pending amendment to the Fair Credit Reporting Act, introduced in Congress last August as S.1758. Currently, eviction reports used in the tenant screening process can include records dating back seven years. Under the amendment, called the Tenant Protection Act, only eviction records no older than three years and resulting in a judgment that is not being appealed will be allowed. Use of older records would be viewed as discriminatory.

5 – DON’T automatically reject an applicant with a criminal record. In 2016, the U.S. Department of Housing and Urban Development (HUD) issued a memorandum on how housing providers can, and cannot, utilize arrest and conviction records. According to Jodie McDougal, a partner at the Davis Brown Law Firm in Des Moines, these guidelines mean that landlords cannot have blanket policies excluding all applicants who are felons but must instead perform a case-by-case evaluation. McDougal’s explanation and recommendations can be found at emo%20IMHA%20Article_Final.pdf

6 – DO keep all documentation for up to 10 years. That includes rental applications, signed releases, tenant screening reports and any other data or documents collected during the screening process, even if you don’t rent to the applicant. This information can be crucial if a rejected applicant questions your denial or selection of a different tenant. A paper trail can help you prove that the person was not denied residency based on discrimination but because a more qualified tenant was selected instead.

7 – DO send a declination letter when rejecting a potential tenant. This document – also called an adverse action letter – specifies the reason or reasons for rejecting a rental application, such as income, employment or credit history. Services like TenantAlert provide free declination letters with all the federally required language and a checklist of legitimate reasons for turning down a candidate with every tenant screening order, helping to avoid screening-related discrimination claims.

8 – DO call your attorney when in doubt. There’s no way for you to be an expert on every aspect of fair housing, particularly with new legal challenges and decisions coming out on a regular basis. Be sure you have a local legal resource who can advise you on any questions, periodically review your rental application form, and potentially prevent you from making a mistake that may land you in court.

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The Guide to Common Household DIYs

Mon, 02/12/2018 - 3:53pm

Whether you rent an apartment or own your own home, sometimes it’s just easier to fix things yourself. Of course, not every project should be done yourself. If you have a major problem that can lead to further damage or an issue with things like electricity or plumbing, it’s best to get a professional. But completing a household DIY project gives you a feeling of accomplishment and independence while calling a handyman simply does not.

Building Your DIY Toolkit

If you are going to fix things, you are going to need tools. And if you are reading this, chances are you don’t have a toolkit already assembled. Not a problem! Building your first toolkit doesn’t have to be an expensive or difficult task. You can find discounted supplies at government auctions, pawn shops, thrift stores, and even Craigslist if you know how and where to look. If you prefer to buy new, look for sales especially around holidays like Father’s Day and Labor Day.

What You’ll Need:
  • A tool box or kit to hold everything together.
  • A work light or flashlight. An LED headlamp gives you light while keeping your hands free.
  • A screwdriver set with both flat- and Phillips-head screwdrivers in various sizes.
  • A solid claw hammer weighing in at about 1 lb.
  • A tape measure to measure twice before you cut once.
  • Locking, adjustable pliers that can double as a clamp.
  • An adjustable crescent wrench you can use in multiple projects.
  • A level for hanging and cutting things straight.
  • A utility knife with built-in blade storage.
  • An electric cordless drill– it may be your biggest investment, but it’s worth it.
  • A hacksaw and backup blades for replacement.
  • Safety goggles and gloves
  • Rags and painter’s tape
  • Pencils
  • WD-40
  • Super glue and duct tape
DIY Projects for the Home

Whether you need to fix a broken door or you want to install extra storage, putting in a little elbow grease around the house or apartment is a great way to feel more invested in your place. When you put work into something, an attachment grows. This is what makes a house a home.

Here are some of our favorite DIY projects you can try:

  • Install halogen track lighting in hallways to illuminate the space and highlight photos and paintings on the walls.
  • Breathe new life into a room by painting an accent wall or adding pattern with wallpaper.
  • Update your laundry room with a folding ironing board, extra storage, and non-slip floors.
  • Replace old and shoddy windows with new, better functioning windows that are energy-efficient and reduce your power bills.
  • Install new faucets in the kitchen and bathroom for an upgraded look and better function.
  • Fix sticky and unbalanced doors by planing the wood and replacing hardware.
  • Use chalkboard or whiteboard paint to make a family message board in the kitchen or another common room.
  • Re-caulk your tile in the bathroom and kitchen.
  • Fill empty vertical space with storage, lighting, or decor.
  • Replace an outdated kitchen backsplash with tin tile or peel-stick tiles.
  • Install rollers inside kitchen and bathroom cabinets for easy access and increased storage.
  • Use recycled wooden pallets to make a number of home and garden accessories.
  • Build floating shelves and hang them on the walls for decorations and minute storage.

Whether you rent or own, it feels good to take care of your home. Doing it yourself isn’t always best– if you may damage structures or harm yourself, you need to call a professional. But if you want to DIY, you need the tools first. Save money setting up a toolkit by looking for used materials. Once you have the goods, you can tackle a number of DIY projects around the house from installing lights to building furniture out of recycled wood.

Author

Mr. Murphy first got into doing DIY projects to save money, but over time he has developed a real passion for this hands-on, intensive work.

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What Is Your Property Really Worth?

Mon, 02/12/2018 - 9:49am

Question. Over the years, I have been involved in questions dealing with the value of certain property. This has involved such diverse issues as appealing the County’s assessment for tax purposes, obtaining a refinance mortgage to avoid private mortgage insurance, and recently challenging an IRS valuation of property we just inherited.

Is there a way to determine what our property is really worth. We have often obtained different appraisals on the same property, and would like to determine our true net worth. How do the appraisal prices work?

Answer. The most commonly used method to determine the value of one’s property is to obtain an independent appraisal from an experienced appraiser. However, appraising market value of real estate is an art — and not a science. And at best, it is an inexact art. My own experience with appraisals and appraisers has led me to question the validity of a number of appraisals.

It should be understood that an appraisal is an estimate and an opinion of value. The appraisal will not determine or establish the value of your property, but it can only estimate what that value is. The Supreme Court of the United States has defined fair market value as “the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.”

All too often, however, the appraiser does not understand — or even know — the neighborhood, and brings to bear his or her subconscious prejudices while considering the value of your house. This is even worse now since lenders often have to rely on appraisers who are not even in the locality of the property.

There are three methods used by appraisers. First, the cost approach. Under this method, the cost of reproducing the building is added to the value of the land, and a discount is applied for depreciation and deterioration that the buildings might have suffered.

A second approach is known as the capitalization of income. Since this is generally used in considering income-producing property, and is complicated and controversial, this column will not enter into a discussion of this approach.

The third formula is known as the market comparison. Here, the appraiser must consider the value of comparable properties, and once again, this is a highly subjective task. For example, your next door neighbor’s house recently sold for $410,000. Your house looks identical to your neighbor’s from the outside.

But inside your house there are major differences. You have a finished basement; your neighbor does not. You have wall-to-wall carpets; your neighbor does not. You have recently installed a very modern kitchen; your neighbor’s kitchen is from the l940’s.

Needless to say, unless the appraiser actually visits and inspects both houses, the comparable method may adversely affect you.

Nevertheless, this market comparison method is widely utilized by appraisers in determining property values for mortgage lenders.

This does not mean to imply that you must take the appraisal without question. Here are some tips in dealing with your appraiser:

  1. Insist on obtaining a written report from the appraiser. Obtain the appraiser’s name and address, and inquire as to the methods used to determine the value of your property.
  2. If the appraisal was obtained by a mortgage lender, appeal that appraisal through that lender. Advise the lender you are dissatisfied with the value placed on the property, and that you will insist on a second appraisal being done, by an appraiser of your selection.
  3. Although it may be considerably more expensive for you, it may be worth your effort to hire your own appraiser. While they have to give you an objective, independent market value determination, you certainly have the right to obtain your own evaluation as to the worth of your property.

Several years ago, the United States Tax Court was called upon to determine — for estate tax purposes — the value of certain property located in New York city. The Court concluded that a 19 percent discount from market value should be applied to the property because the decedent owned a small percentage of the property and could not — by himself — exercise full control over the property. Furthermore, the Court discounted another 26 percent because of market conditions in New York in the late l980s. (Barudin v. Commissioner, T.C. Memo. 1996-395). Thus, each property is different, and you — and your appraiser — should be completely familiar with all of the factors to be considered when determining the market value of your property.

Incidentally, there is a legal provision contained in the Equal Credit Opportunity Act of 1991 that should utilized by every mortgage borrower in this country. In Section 701(e) of the Act, Congress made it clear that every creditor “shall promptly furnish an applicant, upon written request by the applicant made within a reasonable period of time of the application, a copy of the appraisal report used in connection with the applicant’s application for a loan that is or would have been secured by a lien on residential property.” The law does permit the creditor to require the applicant to reimburse it for the cost of the appraisal.

It is strongly recommended that everyone request and obtain a copy of the appraisal report from the mortgage lender.

There are, of course, on-line websites that attempt to project — or perhaps predict is a better word — the value of your house. While all these are helpful, I would not rely solely on what you see on the internet.

 

Source: realtytimes.com

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Three Reasons Multifamily Developers Should Focus On Baby Boomer Renters

Mon, 02/12/2018 - 9:47am

For the past few years, the importance of appealing to millennial renters has dominated the conversation. But, based on recent trends, the industry should really start honing their focus on baby boomers. From being the fastest-growing tenant profile to experiencing less rent burden to staying in one place for longer than other demographics, baby boomers are the ideal tenant in today’s luxury multifamily space.

Largest Growing Tenant Profile

On a national level, between 2009 and 2015, the biggest changes in the renting population came from those aged 55 and older (up by 28%), compared to only a 3% increase in renters 34 or younger. And by according to a survey by Freddie Mac, by 2020, more than 5 million baby boomers are expected to rent their next home. A baby boomer renter is close to retirement or is retired; wants to live in the city, closer to their children and grandchildren; is downsizing from a suburban McMansion and wants service-based amenities. How would I know? I largely fit that profile. I recently sold my home to move into a luxury apartment building. As I mentioned in my previous article, liquidity, flexibility and lifestyle are important features for this renter profile. The right amenities for my age bracket are service-based, such as concierge services and package delivery.

Less Rent Burdened

Luxury apartment buildings may be overlooking the net worth of retired baby boomer renters. Rent burdenship — the percentage of income a renter spends on his or her rent — has a strong correlation to a renter’s overall income. High-income owners tend to spend a lower percentage of income on rent than lower-income owners. A renter is said to be “rent burdened” if he or she spends 30% or more of his or her income on rent. This metric can illuminate what socioeconomic groups will fill today’s luxury apartments. It seems almost too obvious that baby boomers have higher net worth than millennials, yet the assumption is that they are not renting.

Low Rates Of Turnover

Baby boomers are much less likely than millennials to move once they’ve found a place to live. Factors such as finding a new job, having a child and other changes in lifestyle are major causes for people to seek a new place to rent. Baby boomers aren’t likely to start new jobs, nor are they likely to dramatically change lifestyles. And they’re not looking for month-to-month leases — they’re more likely to stay once they find a place they love. According to Freddie Mac’s research, “very important” factors influencing a baby boomer’s next move include neighborhood walkability and community amenities that mean they are no longer responsible for caring for the property.

Attracting Boomers

So how do multifamily developers make their case to baby boomers? The first part is amenities. Older renters love an amenity package that makes life easier and caters to service. These in-unit amenities provide convenience for former homeowners who don’t want to deal with the hassle anymore. Baby boomer renters want a unit maintained for them while they travel: they want their pets watched, they want their plants watered, they want their groceries delivered. So, buildings that provide these services will have an easier time attracting the boomer demographic.

Another attractive aspect for baby boomers is the transit-oriented development (TOD) status of a building. Traveling easily is important to these renters. In urban areas, TOD refers to ease of transit. TOD buildings are near public transit, like bus stops and commuter rail lines. In the suburbs, TOD refers more to nearby retail. TOD apartments are near restaurants and shopping centers, enabling baby boomers to stay close to home while getting their essentials. These apartments are also near highways, granting access to the surrounding area and making it easy to travel to family and friends.

Baby boomers may be the oldest generation that’s renting en masse, but they’re a bloc that should not be forgotten by multifamily developers. These renters are looking for a sense of community paired with amenities that meet all their needs. Developers would be remiss to ignore this generation of high-earning, low-rent-burdened renters.

Source: forbes.com

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What NOT to Do When Remodeling Bathrooms

Mon, 02/12/2018 - 9:44am

Avoid these top five bathroom blunders — because nobody likes to learn the hard way.

While a bathroom might not be the first room a potential home buyer asks to see, it can make or break the sale.

Here are five common mistakes both rookie and seasoned flippers and homeowners make when renovating a bathroom.

Mistake 1: Ignoring proper spacing and layout

Bathrooms may seem straightforward, but a lack of spatial awareness in the renovation planning stages can lead to problems down the road.

Remember: Just because you can fit something into the bathroom design doesn’t mean it can function within that space. Always keep function in the forefront of your mind and in your design.

For example, if you choose a shower with a door, your bathroom layout should leave plenty of room for it to fully open. No potential home buyer will want to squeeze out of a partially opened shower door every morning. Other considerations include providing enough space to comfortably get on and off the toilet, open cabinet doors, etc.

Spatial considerations also include making sure elements of the room are close enough together to function. For example, the toilet paper holder should be within a child’s arm’s reach of the toilet, and outlets should be easily accessible from the counter.

Mistake 2: Choosing the wrong materials

Because of the sink, toilet and shower, bathrooms deal with more moisture than any other room in the house. Homeowners also use many of the strongest cleaning products on bathroom surfaces. Both of these factors, if not taken into consideration, can lead to significant damage if you don’t select the right materials for the job.

Go with materials that can stand up to harsh cleaners and are not highly susceptible to mold, warping or distortion. Avoid porous materials that will retain moisture and allow hidden mold to grow.

Mistake 3: Ignoring storage space

No one complains about having too much storage in the bathroom. When planning a bathroom remodel, incorporate plenty of storage space into the design.

Consider how many people will use the bathroom. Don’t make the mistake of providing only enough bathroom storage space for one person in a 4-bedroom house.

Additionally, most people prefer a bit of privacy with bathroom storage, so a set of floating shelves, while helpful, will not be sufficient on its own.

Mistake 4: Forgetting about ventilation

Ventilation isn’t a glamorous part of a bathroom renovation, but it is essential. Forgetting to work in enough ventilation can lead to mold, mildew and other costly problems in the future. It can also make a bathroom uncomfortable if it’s not properly ventilated during or after a shower.

If possible, work in a combination of natural and artificial ventilation sources. A well-placed window can go a long way, but it won’t be very helpful during cold winter months, when a homeowner won’t open it. Make sure to install a quality ventilation fan that can handle the size of the bathroom.

Mistake 5: Putting off lighting plans until the end

Many people think of lighting as a finishing touch to a renovation. While lighting is often installed later in the process, you should plan your lighting fixtures at the beginning of the renovation.

Bathrooms are often where people get ready for the day, which is why lighting is essential. Recessed lighting can create shadows on your face in the mirror, and the last thing you want when trying to sell a bathroom is unflattering lighting.

Waiting until the end to address lighting can also lead to dark patches within the bathroom. Depending on your preferred shower style, you may or may not need lighting above the shower or tub.

Similarly, no one wants to use the toilet in darkness. When drawing up your plans, consider what type of lighting will best accommodate your space and room design. Making adjustments in the planning stages will be much easier than making them at the end of a project.

 

Source: zillow.com

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One more reason to buy rental property: tax cuts for landlords

Mon, 02/12/2018 - 9:41am
New tax laws make it tempting to become a landlord

New tax laws that went into effect this year offer a big benefit: tax cuts for landlords. That’s because those who own rental property as a business may now be able to deduct from their taxes 20 percent of rental income earned.

That can add up to thousands in tax savings. And that makes for a sweet deal if you plan to buy rental property.

Here’s an even sweeter deal: buy a two-to four-unit multi-family rental property. Then, live in one of the units as a landlord. You may be able to collect enough in rent from the other units to cover most of your mortgage payment.

Taking advantage of the new tax laws can be tricky. Learn the facts. Crunch the numbers. And get advice from a tax planner, accountant, and/or lawyer before jumping in these waters.

How landlords benefit

Mario Costanz, CEO of Happy Tax, says landlords scored a big break in the recent federal tax reform bill.

“They stand to potentially save thousands on the taxes they will file next year. The Tax Cuts and Jobs Act gives some landlords a 20 percent deduction on the income generated from their rental property,” he says.

To qualify, your total taxable income from all sources is limited: no more than $157,500 if you are single or $315,000 if you’re married. You also must operate your rental business through a pass-through entity. This means as a sole proprietor, limited liability company (LLC), partnership, or S-corporation.

Case in point: Say you own a duplex through an LLC. Your property earns $20,000 per year in net rental income. For the 2017 tax year, you would report this rental income on IRS Schedule E and pay taxes on it at your individual tax rate. If your income from all sources in 2017 is higher than $37,950 (or $91,900 if you’re married), you’d pay at least 25 percent in taxes on that $20,000. Your 2017 tax bill would then be $5,000. And you’d be left with an after-tax income of $15,000 on your rental.

“But in the 2018 tax year, you’d be able to deduct 20 percent from your $20,000 in rental income right off the top. So you’d pay taxes on only $16,000 rather than the full $20,000,” says Costanz.

More perks for rent collectors

This isn’t the only new tax benefit landlords can claim.

“If you purchase your property via a pass-through entity – such as an LLC, S-corporation, sole proprietorship, or partnership – you can further minimize your tax implications. The new tax laws have effectively brought the tax rate for pass-through entities down to 29.6 percent,” says Allen Shayanfekr, CEO/co-founder of Sharestates.

“There are also new bonus depreciation rules,” says Samuel Tae, director of International Tax for Ryan, LLC. “These allow a taxpayer to immediately deduct from their taxable income 100 percent of certain capital expenditures and property improvements.”

In other words, you can claim depreciation quicker on items you spend for your rental property. This can include things like new carpeting, replacement windows, and new security lights.

There’s another perk, too.

“Some lenders allow property managers to use rental income to qualify for loans. But this varies from bank to bank,” says Costanz.

Prepare for challenges

Experts caution that going the landlord route isn’t easy. First, consider that the new tax law caps state and local tax deductions at $10,000. Also, you’ll only be able to deduct up to $750,000 in mortgage interest.

Buying a rental property can be very costly, too.

“Make sure you have plenty of cash on hand,” suggests Costanz. “Mortgage insurance is not available for investment properties. So be prepared to make a substantial down payment. This can be 25 percent down for a multi-unit property.”

Most lenders will require you to have extra cash reserves, as well.

“They can require up to six months’ worth of mortgage payments for the property you’re financing,” Costanz says.

To qualify for the new tax breaks, there’s another catch, too.

“You can’t purchase residential rental properties in your personal name. You now have to set up a pass-through entity for each purchase, file paperwork with the state, and prepare multiple tax returns. You should weigh the cost of these extra steps against your potential savings,” says Shayanfekr.

Helpful tips: qualifying for tax cuts for landlords

Generating passive income through a rental property can be a great way to make money.

“It’s always a good idea to invest in assets that produce income rather than generate expenses. If you buy a multi-unit property like a duplex or small apartment building and live in one of the units, your home is making money for you. You can generate thousands of dollars per month in passive income,” says Costanz.

The right prep can make you a more successful landlord.

“Work with a certified public accountant or enrolled agent to make sure your tax planning and preparation is done right,” Costanz adds.

Lastly, to help lower your risks and costs, find a partner.

“There’s power in numbers,” Shayanfekr says. “Find someone you can rely on and work together with. You’re better off buying a larger property with a partner and outsourcing the management than trying to self-manage a smaller unit count property. The larger the unit count, the more diversified your risk is.”

 

Source: themortgagereports.com

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