American Apartment Owners Association

Detroit launches citywide rental property compliance effort

Mon, 01/29/2018 - 1:55pm

Perhaps in the not-so-distant future, the days of negligent landlords will be behind us. The City of Detroit announced a plan to bring rental properties up to code, zip code by zip code across the city. Aimed at both helping renters and rewarding good landlords in the city, the program will identify every rental property across the city to make sure they’re safe and up to code.

The initial zip codes to kick off the program are on the far east, northwest, and southwest neighborhoods of Detroit. The program starts with the 48215 neighborhood on February 1.

City of Detroit

The city intends to add a new zip code each month, with plans to complete the full program in 2020.

Properties in each selected zip code will have 90 days to register; building owners will have six months to get their property up to code, get an inspection, and receive a certificate of compliance from the city.

Renters will be able to keep their rent in escrow if their landlord does not receive the certificate of compliance in the six-month time frame. The landlords also need to be up-to-date in their property taxes; if they’re a year behind, the city can refuse to issue the certificate.

The city will also be launching a website where renters can look up a property to verify if it has the certificate of compliance.

The program is intended to reward good landlords in the city. This includes less frequent assessments for landlords who are up-to-date on taxes and have received no blight violations.

“We’ve got to increase the quality of life for the neighbors and the tenants in the city of Detroit,” said Dave Bell, director of the Buildings, Safety Engineering & Environmental Department. “We can’t do that without getting rid of unnecessary requirements and providing an adequate amount of time for the landlord’s to come into compliance. This ordinance creates a win for everyone and moves the neighborhoods forward.”

Landlords who want to speed up the process can register their properties here.

Source: detroit.curbed.com

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The 3 Best Projects for Increasing the Resale Value of Your Home

Thu, 01/25/2018 - 3:31pm

If you plan to sell your home, you want to do all you can to entice potential buyers to choose yours over all the others. But, you also want to make the right home improvement decisions that will give you the biggest bang for your buck. After all, nobody wants to put money into a home without some guarantee that you will see a return when you sell. Consider our 3 best projects for increasing the resale value of your home.

Upgrade Your Kitchen

For most families, the kitchen is the hub of the home. That’s why it’s no surprise that one of the best projects you can tackle for increasing the resale value of your home is upgrading your kitchen. Depending on how outdated your kitchen is and how much money you have to put into it, you can do everything from upgrading your appliances to hiring a contractor to do a complete overhaul. According to HomeAdvisor, the average price to remodel a kitchen is $12,588 – $33,251.

No matter how much money you put into upgrading your kitchen, you are sure to see a return on your investment. Not only will you improve your kitchen’s function, but you will reduce your energy costs by adding more energy-efficient appliances. A kitchen renovation also helps you update the look of your kitchen and increase its comfort with more seating or more prep space. In many cases, homeowners recoup at least 70% of their kitchen renovation costs, and you attract more homebuyers when you put your home on the market.

Focus on Creating Beautiful Bathrooms

Potential homebuyers often look for beautiful bathrooms after finding updated kitchens. Chances are, your bathroom needs a little TLC when you prepare to sell, anyway. Keep in mind that most buyers today look for large showers with multiple shower heads and tile surrounds; many prefer these bathroom updates over whirlpool tubs.

HGTV cautions homeowners when it comes to existing tubs. If you’re on a budget, instantly makeover your tub with a wraparound liner that will fit over your existing one. For a mid-range bathroom renovation, replace an outdated shower with a fiberglass tub-shower combination and new ceramic tile. For a high-end master bathroom update, install a soaking tub and a separate shower with dual shower heads. Many homeowners see an 85% return when installing a shower with body sprays and stone tile; others see approximately a 60% return on investment.

If you don’t want to completely remodel a bathroom, you will get a return by making minor upgrades such as replacing faucets and hardware, replacing a laminate vanity top with granite or marble, and giving your bathroom a thorough cleaning.

Don’t Forget the Value of Curb Appeal

Some of the best projects for increasing the resale value of your home are exterior upgrades that boost curb appeal. For example, updating vinyl siding can yield a nearly 90% return on investment. For improved energy efficiency in addition to improved curb appeal, replace your windows for an 85% return. You’ll also get approximately a 75% return by replacing your roof and a 73% return by adding a new deck to your home.

Some other ways to improve your curb appeal and stay within your budget include painting your front door a vibrant, eye-catching color, pruning trees and shrubs and adding fresh mulch or landscaping stone, updating exterior lights, and adding landscape lights to sidewalks. You also can camouflage your foundation with faux stone panels or utility boxes with paint to help them blend in with your landscaping or the exterior of your home.

Maximizing the resale value of your home is a smart move for homeowners. With a little planning, you can be sure to choose the projects that will give you the best return on investment. Consider upgrading your kitchen, creating beautiful bathrooms, and increasing your curb appeal to make your home more valuable.

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.

Image via Pixabay by StockSnap

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How to expand your real estate investing business into a new market

Thu, 01/25/2018 - 2:35pm

In my last article, I talked about what I see as danger signs for the Washington-area real estate investment market.  I have had those concerns for quite a while, and for the past year or so I’ve been putting together a plan to diversify my real estate investing activities.

It wasn’t all that hard for me.  This is essentially the same plan I executed back in 2003 and 2004 when I felt this market just didn’t make sense anymore.  The difference is that I’ve learned a lot of lessons since then, and I’ve grown much more confident in my abilities and investment criteria.

About a year ago, I actively started to lay the ground work for my plan to start buying properties outside of our local market.  These homes would be long rental properties and the target markets would have better returns and the prices more in line with local economic activity — for example median household income and job growth.

Initially, I had identified four possible markets: Northern Florida, Richmond/Norfolk, Northern Utah and Southern North Carolina.  I keyed in on these markets for different reasons but typically the price to monthly rental income ratio was attractive and housing prices did not appear to be overheated.  I had previously invested in two of the markets and had some on-the-ground help in place.  That was a big plus.

By late summer of 2017, I was finally ready to begin making offers on properties.  Markets move, however.  I no longer felt so good about some of my initial markets.  Two of the markets — Northern Florida and Northern Utah — have been on a tear. They had really taken off and had already seen big price appreciation.  Most of the bargains seemed to have been snatched.  They just didn’t look quite as appealing.

The market I concentrated on was down in Jacksonville, N.C., a military town supported by a couple of large military bases. I had lived down there for a few years in my younger days and I have held a couple of rentals down there for about 15 years. The market is steady with only a little upward movement in price but also very little downward movement in price.

I already had in place property management with whom I’ve comfortably worked for more than a decade.  That is a huge piece of the puzzle and a big incentive to start in that city.  The property manager also had a group of trusted contractors who had done work on my properties over the years.

What I was lacking was a good real estate agent or bird dog on the ground.  Good property management didn’t translate into good real estate agent. I tried using the agents at my property manager’s office, and it didn’t work out. They seemed to move too slowly, and I missed a couple of deals.

To fill the void, I just got online and started building searches on some of the major real estate websites.  Soon I was getting a bunch of emails with properties that met my criteria.  With that, I started calling listing agents.  It’s not easy finding good people; it takes a little effort.

I called maybe a half a dozen listing agents, and I found one that said the right things.  It worked out pretty well.  She became my go-to person on the ground.  She sent me a few deals, and I sent her deals as I saw them on the Internet.

Before long, we were writing offers.  It only took three or four offers before I got a contract accepted.  Things were working out. I usually make many more offers than that before I get an acceptance.  But I ended up letting the first two deals go because the home inspections revealed a lot more work than I’d budgeted.  That’s another challenge of working out of state.  I can’t go easily see the properties. I’m sort of flying blind.

Finally, I got a contract that stuck.  It was a two-bedroom and three-bath townhouse.  I felt that it was worth about $70,000 to $75,000, and it probably needed about $10,000 of work.  It really just needed paint and carpet and it had a possible electrical and furnace issue.

I got it under contract for $45,000.  I paid all cash for the property to get the best deal.  My property manager sent over the contractor right after closing.  It turned out that the electrical problem was just a bad breaker.  It cost me about $200.  The furnace problem resulted from a bad outside AC compressor. That cost me $1,100, about half of what it would cost me up here.  Then I put in new carpet and painted the entire place.  My total renovation cost was under $3,500.  My total cost for the property — including the purchase price, closing costs and fix up — was just under $50,000.

The rents in the area for similar homes ranged from about $675 to $750 per month.  I put mine on the market right at the bottom of the market.  I asked $675 per month even though my home was nicer than most of the competition.  It’s better to get the home rented out quickly for a little less than to try to get top dollar.  You can raise the rent after a year if the tenants renew.  Most tenants in this area stay for at least two years so a modest rent increase is fair for everyone and the price hike is not enough to anger the tenant to the point they move out.

Here are the hard numbers on this deal:

Purchase price: $45,000

Closing costs: $1,000

Repairs: $3,500

Total Investment: $49,500

Market value: $70,000

Instant equity: $20,500 or 41.4 percent of the initial investment

Rent per month: $675

Monthly Costs:

Tax: $100

Insurance: $80

Maintenance: $42

Vacancy: $28

Management: $77

HOA: $43

Total Costs: $370

Net operating income: $305

Now there is a downside to this property.  It’s in a coastal county, so the insurance is higher.  You have to get a separate wind and hail policy even though it’s more than 10 miles from the coast.  The wind and hail more than double the price of the insurance costs. Eighty dollars might not sound like much, but it’s nearly 12 percent of my gross monthly income. That’s a big hit. Many markets have their own little unique surprises, and that’s a major danger of taking your investments out of town.

All of these expenses are key expenses that an investor has to account for.  Many times they’re just best guesses.  I relied heavily on the costs I was accounting for on my existing properties in the area.  But items like maintenance are just a best guess.  I used 6 percent of the income.  That’s based on my other similarly sized properties. I typically spend $500 to $750 per year on leaky faucets with the occasional bigger-ticket item bringing up the average costs.

Note that these costs do not include the monthly mortgage payment.  I paid cash for this home, but even if I didn’t, debt service is not an operating expense.  I tell people that you should expect 35 to 55 percent in operating expenses, not including debt service.  Most people think I’m crazy when I tell them that, but look at the expenses above.  My operating expenses of $370 equal 54.8 percent of my gross monthly rent.

Despite that I still make a net operating income of about $305 per month or about $3,660 per year.  I spent $49,500 on the property.  Divide the net annual income by the total costs for the property and you get an annual return on investment (ROI) of about 8.3 percent.  That’s not bad.

But wait, there’s more.  I have $20,500 in equity on day one.  It will cost you closing costs and commissions to actually get that equity. So realistically I have maybe $15,000 in equity, but that’s still more than 30 percent.  At the end of year one, I expect that I’ll make about 38 percent return on my money.

I still have one more trick up my sleeve.  Remember the home is easily worth $70,000.  Most local banks have a commercial loan called a portfolio loan.  They are happy to lend out 75 percent of the value of the property.  Seventy-five percent of $70,000 is $52,500.  I am only into this home $49,500.  I can go take out a loan for say $51,000 which would return all of my investment plus cover closing costs.  Now I have zero money in the deal and I still have 25 percent equity.

Assuming I have an interest rate of about 6 percent, my payment would be roughly $306 on a 30-year amortized loan.  My operating expenses are $305 so it would move me to essentially break even on the deal, but I would get all of my cash out.

Here’s the power of debt.  My tenant is paying my mortgage and about $51 of that mortgage payment is going to pay down the principal of the loan — it’s increasing my equity by $51 every month, or $624 per year, which is roughly 1.2 percent of my initial investment. Each year that principal payment grows. By year five, it’s up to almost $70 per month.

To further sweeten the deal, I anticipate that the market will continue to go up its historically consistent 1 to 3 percent. If we project a 2 percent average appreciation, that’s yielding me another $1,400 per year in equity because appreciation is based on the value, not my purchase price.

By the end of year two, I could expect to have none of my money in the deal and still making more than $2,000 in debt reduction and property appreciation.  If I raise the rent by just $25, at the beginning of year two that would increase my gains by a full 15 percent.  And since I no longer have any money in the deal, my return on investment is infinite.

Do I recommend you finance all of the cash flow out of your deal? No, I don’t recommend you do anything.  Being a landlord in general is difficult.  I don’t even recommend buying rental property.  I’m just sharing with you some possibilities.

Your risk tolerance may be low and you might just opt to play it safe and pull out 50 percent of your money.  In general, I like to keep my properties with between 50 and 75 percent debt.

I plan to buy a small portfolio of properties in a similar fashion and then refinance them together as a bulk.  Then I’ll get my cash out and buy up another batch.

My buying criteria is pretty simple.  I need all of my acquisition and fix-up costs to total less than 75 percent of the market value of the home, and I need the market rent to be high enough to support the debt.

Usually, my rule of thumb is that the monthly rent should be 1 to 1.5 percent of the total acquisition costs.  So if I’m going to spend $100,000 on a property, I need it to rent for $1,000 to $1,500 per month depending on the market operating costs.  In a lower-cost market, you may be able to hug the bottom end of the range.  The key is to make sure that you can still get a little cash flow with a 70 to 80 percent mortgage on the home.

There is no risk-free real estate investing strategy.  Investing your hard-earned money into property that you can’t drive out and see on a whim is highly risky.  These homes I’ve recently purchased aren’t going to make me rich.  I’m just hoping they’ll be a nice little shelter for me when the market turns again.

Source: washingtonpost.com

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Apartments deal with avalanche of Amazon packages

Thu, 01/25/2018 - 12:24pm

We’ve all heard the mind-numbing statistics about the increases in online shopping – and the related shipping it generates.

Amazon Prime alone boasted earlier this month that it shipped 5 billion packages in 2017. Now add in grocery and meal box deliveries and, well, we’re talking about an avalanche of packages.

Increasingly, that avalanche is burying the management offices of apartment buildings, leaving building owners looking for a way to dig out.

Bloomington-based Doran Cos. thinks it has found an answer.

For about the last three years the prolific apartment developer has been adding an automated locker system to its new projects, including The Moline, a 239-unit building in Hopkins.

And yes, these are high-tech versions of the lockers once found in bus and train stations before security concerns banished them.

“We have a system called Package Concierge,” said Tony Kuechle, senior vice president of development for Doran. “Any of our vendors can use it.”

A delivery person puts a package in a locker and shuts it. The locker locks and generates an access code that is texted to the recipient. When the recipient uses the code, the door pops open. No more paper slips stuck to walls or piles of packages spilling across the floor.

Not surprisingly, other vendors have jumped in the game. They include Parcel Pending, Luxer One, and of course, Amazon, which has started pitching its Amazon Hub locker system. “They don’t take up a ton of space,” Kuechle said. There is a steep initial cost, however, as much as $30,000 for one building.

The issues are more complicated for existing buildings and their owners.

The Cliffs of Minnetonka, which opened in 1985, has 456 apartments in six buildings and an office with a small package storage room that worked just fine for the first three decades. Gradually, however, stacks of packages have lined the hallway outside the storage room.  In the last weeks before Christmas, building entries were papered with delivery notices and management resorted to posters in elevators reminding people to pick up their packages as soon as possible.

Kyle Belgarde, who manages the property, said the problem has grown significantly in the past three years.

“What became a real struggle was the increase in Amazon Prime packages,” he said. “Some packages have been left in building entries. I’ve come to the office and there have been piles of boxes outside the office door.”

On an average Monday or Tuesday – the busiest days of the week — the complex might receive 50 to 75 boxes.

“On the days before Christmas we had 100 to 150 packages a day,” he said. “It took a full-time employee to keep on top of it.”

Belgarde is considering lockers, but doesn’t have room in his office. He’s also thinking about converting some space in the property’s community building to add lockers.

Some apartment owners have come up with their own solutions.

“I am a huge investor in Amazon,” said veteran apartment owner Jim Soderberg, president of Brooklyn Center-based Soderberg Apartment Associates.

“I see this as just the beginning,” he said of this year’s record deliveries. “I think in the next few years, the number will double.”

Soderberg saw his chance to test a new system when he bought the 700-unit Crossroads at Penn apartment complex in Richfield in 2015 and converted it to The Concierge. As the name implies, the property has staked its reputation on the amenities it offers.

When the complex received 125 to 150 packages on the busiest delivery days after Thanksgiving, he was ready, with a 200-square-foot storage room.

“We super-oversized the space right out of the gate,” Soderberg said. He also created cold storage space for flowers and medicines. And, he has a second room available for the inevitable growth he sees in the future. Soderberg said he spent extra time developing a numbering system for buildings and apartments to simplify sorting packages and finding them.

Soderberg has looked at automated systems, but he already has the office staffed from 5 a.m. to 10 p.m.

“It’s a lot cheaper for me to cover my full-time concierge people for the year,” he said.

Changing a single property is one thing. Changing a national company with a diverse portfolio of 29,000 apartments in 214 properties across the country takes creativity.

“It’s astounding the changes I’ve seen over the years,” said Janet Anderson, vice president of operations for Plymouth-based Dominium.

“I had a property in Eden Prairie where that was part of our service, delivering packages,” she said. “We just couldn’t keep up with the packages. It went through the roof.”

The company now is building storage rooms with security cameras in new properties and adding them to existing properties whenever possible. Drivers and tenants pick up a key fob, basically an automated keyless entry device, at the office and return it when they’re done. The process is based on the honor system – with a back-up.

“There are occasional issues with theft, which is why we use cameras,” she said.

The Twin Cities prizes classic brownstone apartments, which pose their own problems.

Laura and Jim Rubin, owners of Minneapolis-based Mint Properties LLC, manage 1,260 apartment units in 74 small, older buildings without on-site management or room for storing packages.

“We have buildings all over,” Laura Rubin said. Residents can have packages delivered to the company’s main office and pick them up there but most have packages delivered to them at work instead, she said. Some neighbors arrange to accept packages for one another.

The reality is that deliveries to apartments are a matter of common sense, just as they are for homeowners, Rubin said.

“I would never have a laptop delivered to my house,” she said.

The Rubins haven’t felt pressure from residents to change the system.

“It’s not expected,” she said. “We don’t have a swimming pool; we don’t have a community room.”

Rubin’s tenants now have a solution.

Amazon Hub is a companion to Amazon Locker, a system that can be installed in grocery stores and other public locations. It has installed the system in 20 locations throughout the Twin Cities, including some Cub Foods stores and Whole Foods Market locations.

Whole Foods is now owned by Amazon.

Of course.

 

Source: finance-commerce.com

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How To Find Your Real Estate Investing Niche

Thu, 01/25/2018 - 12:12pm

Whether you’re a beginning investor or a seasoned pro, it’s essential to occasionally back up and look at the real estate market from the 30,000 foot level. It’s very tempting to try to be a ‘jack of all trades’ in the real estate business but that is seldom a good strategy. It results in people choosing the real estate agent business where there are a hundred others trying to sell the same house in the same neighborhood to the few precious buyers that qualify.

Instead, consider focusing on a niche and becoming an expert in that niche. When you are an expert in a specialized field, people will turn to you when they are ready to buy, sell, rent, or otherwise do business. Start by taking the time to understand what niches are out there, then decide on one, and drill down to become an expert.

Real Estate Niche Examples

Here are a few to fuel your imagination:

  • Raw land. This is speculation that a new highway or entertainment/restaurant hub will dramatically increase the value in a short period of time. Some people like to buy raw land near where a new McDonalds is being built. McDonalds has a long history of thoroughly researching new locations.
  • Duplexes – Triplexes – Quads. Landlording these properties almost always delivers a better return for your investment dollars than single family homes.
  • Small apartment buildings. Finding investment partners is a good way to break into this lucrative real estate niche.
  • Commercial real estate. This is just the tip of the iceberg to a very large market that takes specialization in a particular sector and then sub-specializing within the sector. The major sectors include offices, retail, large apartments, industrial, and hotels.
  • Mobile homes. Used mobile homes are inexpensive to purchase. It can be a great way to get started. Even better is renting out the dirt under other peoples’ mobile homes.
  • Tax liens. This is another inexpensive way to get started. You are guaranteed a high rate of interest or becoming the owner of the property if the taxes remain unpaid. However, tax lien laws vary greatly from state to state. Most that specialize in this niche limit investing to one or two states.
  • Mortgage notes. With the super tight mortgage qualifications, the market for private money is hot right now.
  • Rehabbing, syndicate investing, REIT, etc.
Three Steps to Picking Your Niche

There are three general steps to getting started in your niche. Step one is deciding what niche you want to get into. It’s great if you can make money in a niche that you’re passionate about. However, to feed yourself and your family it’s sometimes more important to pick a niche that will deliver a reliable income for years to come.

Step two is learning about your target market. Move from the 30,000 foot level to the 10,000 foot level. Before committing to a particular niche, dig into the details to learn about your target market. Will you be working with other investors? Will you be working with retail buyers? Will you be working with real estate agents? Will you be working with construction contractors? Learn who they are and then learn everything there is to know about them. One of the most important aspects to know is if they have money to spend in your niche.

Once you’ve learned everything you can about your target market, its’ time to become an expert in the niche. This is an ongoing process. You always want to be on top of your specialized niche. One of your top goals here is learning the best ways to market to your target audience.

Please leave a comment about your preferred niche and how you got started.

 

Source: realtybiznews.com

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Rent-To-Own Homes Pros And Cons

Thu, 01/25/2018 - 8:25am

Posted on Jan 25, 2018

With mortgages currently difficult to obtain, rent-to-own agreements are making a comeback. These agreements, also known as lease-to-own or lease-to-purchase agreements, have benefits for both property owners and renters. Yet if they aren’t approached with understanding, these agreements can sour. Learn what rent-to-own homes are and the pros and cons of rent-to-own agreements to determine if they’re right for you.

How Does Rent-to-Own for Homes Work? 

What are rent-to-own homes and agreements? In rent-to-own agreements, tenants typically rent the home for anywhere from two to five years, paying above market-rate rent to build rent credits. When the lease-to-own agreement expires, tenants can purchase the home for the listing price, minus any rent credits they’ve acquired. If the tenant decides not to purchase the home when the lease expires, the landlord can decide whether to keep the individual on as a month-to-month renter, or ask this person to leave so the landlord can sell the home.

What Are the Advantages of Rent-to-Own Homes?

Renters who want to buy a home yet wouldn’t qualify for a down payment appreciate lease-to-purchase agreements. They can rent the home for an agreed-upon timeframe (typically several years), then have the option to buy when the agreement expires. This provides extra time to save for a down payment.

Individuals with poor credit can work to build credit while renting the home, so they qualify for a better mortgage loan when it’s time to buy.

Property owners enjoy steady rental income for the duration of the lease-to-own agreement, then receive a payout if the renter purchases the home. Some landlords like turning over properties through rent-to-own, using the influx of cash to trade up from older housing stock to more desirable (and prosperous) homes.

Property owners in tight real estate markets appreciate having options. Homeowners who cannot find qualified tenants for yearly leases may prefer to get someone under a rent-to-own agreement than to let a home sit vacant while they cover mortgage payments.

What Are the Disadvantages of Rent-to-Own Homes?

For renters, rent-to-own means putting more money upfront to build rent credits that will go toward the eventual real estate purchase. If renters’ personal situations change (for instance, they need to relocate) or they decide the home isn’t right for them, they’ll lose the extra money they paid.

If the price of the home declines over the course of the lease-to-purchase agreement, renters wind up with less of a bargain. The converse is also true: When home values rise, renters get a great deal on a property that may have been outside their budget.

For property owners, rent-to-own agreements work well in tight markets and when prices are flat. If the local real estate market heats up, sellers with existing rent-to-own agreements earn less money than they would have.

Individuals considering, “should I rent to own a home?” should have a real estate lawyer review the terms of any agreement. Sellers may put in clauses that disadvantage renters — whether it’s an escape clause if the market improves or a clause prohibiting late payments from earning rent credits.

To learn more helpful landlord tips, consider joining the American Apartment Owners Association. Members get access to low-cost landlord forms, educational webinars and much more. See all member benefits, then join AAOA today.

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

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How the New CA Marijuana Law Impacts Property Management and Land Use

Tue, 01/23/2018 - 2:58pm

The legalization of small amounts of recreational pot raises important questions for landlords and property professionals, and local governments. How much marijuana plant growing should be tolerated in an apartment complex, or strip centers, if any? Does the private use of recreational marijuana in an apartment violate a NO SMOKING policy of an apartment complex?    Does the private use of smoking marijuana disturb horizontal and vertical neighbors- causing a lease violation by the tenant?    Should medical marijuana users have special privileges to smoke as an exception to a no smoking ban in an apartment complex?

As we sort out the answers to these questions,  it is important to have an overview of the new state pot law in California, so you don’t go up in smoke! This an overview of California state laws, which may conflict with federal laws, and is not by any means an endorsement of any cannabis-based lifestyle.  

Please be aware that a person or business may be compliance with state law or local ordinances, but may be in potential violation of federal laws governing controlled substances, given the U.S. Department of Justice anti-pot policy.  CNN and the LA Times Reported that Federal Attorney General Jeff Sessions announced last Thursday he was rewriting the federal government’s stance on marijuana prosecution, shifting policy away from the Obama’s administration’s hands-off approach to one that brings more risk to the players in states where the drug is decriminalized

This classical vertical conflict in state and federal laws will have to be sorted out in the Congress and the federal courts. In the United States, national polls indicate that 64 % of Americans favor recreational pot use.

As promised, here, is the California law overview:   

Adult use of cannabis is legal in California under Prop. 64, the Adult Use of Marijuana Act (AUMA), approved by the voters on Nov 8, 2016. In general, AUMA allows adults 21 and over to possess, privately use, and give away up to one ounce of cannabis, and to cultivate no more than six plants for personal use at their residence. It also legalizes the commercial sale, distribution and production of cannabis for adult use at state-licensed facilities beginning January 1, 2018, under terms spelled out in the Medical and Adult Use of Cannabis Regulation and Safety Act (MAUCRSA) approved by the legislature in 2017. Local city and county governments can restrict or ban cannabis businesses in their jurisdiction.

Cannabis remains legal for medical use by patients of all ages who have a physician’s recommendation under California’s 1996 medical marijuana law, Prop. 215. Prop 215 affords somewhat broader rights to possess and cultivate for personal use than AUMA. Prior to AUMA, the sale, production and distribution of medical cannabis by so-called patients’ collectives were authorized in loose terms under a law known as SB 420 (2004). However, SB 420 collectives will be phased out and subsumed in the state regulation and licensing system beginning in 2018.

The Bureau of Cannabis Control in the Dept. of Consumer Affairs is in charge of licensing and regulating retail sales, distribution, and testing; the Dept. of Food and Agriculture is in charge of cultivation, and the Dept. of Public Health is in charge of manufacturing. Prior approval by local city or county governments is required for all state-licensed facilities. Further info on state regulations may be found at the California Cannabis Portal.

Legal Adult-Use Activities

Under AUMA it is LEGAL for any adult 21 or over to:
(1) Possess, process, transport, purchase, obtain, or give away to persons 21 or older, not more than one ounce of cannabis or 8 grams of concentrated cannabis [HSC 11362.1(a)(1) and (2)].

(2) Cultivate, possess, plant, harvest, dry or process not more than six live plants and possess the produce of the plants [HSC 11362.1(a)(3)

PROVIDED:

(a) Any cannabis in excess of one ounce is stored in the person’s private residential property, in a locked space, and not visible from a public place.

(b) No more than six plants are planted at any one residence at one time.

(c) Local governments may impose reasonable restrictions on cultivation, but may not forbid cultivation indoors in a residence or accessory structure that is fullly enclosed and secure. Locals are free to prohibit outdoor cultivation altogether until such time as adult use is made legal under federal law. (HSC 11362.2(b)).

Violation of restrictions on personal use cultivation is a $250 infraction for six plants or less [HSC 11362.4(e)].

Prohibited Activities

Under AUMA, Cannabis users may NOT [HSC 11362.311362.4]:

  • Smoke, vaporize or ingest cannabis or cannabis products in any public place ($100 infraction).
    Exception: local governments may permit on-site consumption at state-licensed premises in their jurisdiction [BPC 26200(g)].
  • Smoke or vaporize cannabis in any non-smoking area, or within 1,000 feet of a school, day care or youth center while children are present, except privately at a residence. ($250 infraction)
  • Consume cannabis or possess an “open container” of cannabis while driving or riding as a passenger in any motor vehicle, boat, or airplane ($250 fine).
    Exception: consumption by passengers may be permitted in commercial vehicles specifically licensed for such purposes without children present. (Open containers are defined to mean any receptacle containing cannabis or cannabis products that has been opened or has a seal broken, or loose cannabis flower not in a container, except when in the trunk of the vehicle. Exception: Qualified Prop 215 patients carrying an ID card or recommendation may possess cannabis in a container that is closed or resealed [VC 23222].) It is also unlawful to use cannabis while in a car under Vehicle Code 23220 & 23221 even if you are a passenger. This is also true for cannabis edibles.
  • Possess or use cannabis on the grounds of a school, daycare or youth center while children are present. ($100 fine).
  • Manufacture concentrated cannabis with a volatile solvent (except for state-licensed manufacturers). Volatile solvents include explosive chemicals like butane but not ethyl alcohol.

Other Restrictions [HSC 11362.45]

AUMA does not repeal, affect or preempt:

  • The rights of employers to maintain a drug and alcohol-free workplace, or to have policies forbidding use of cannabis by employees
  • The ability of landlords and other private parties from prohibiting or restricting use of cannabis on their privately owned property
  • The ability of government agencies to prohibit or restrict use of cannabis within a building they own or occupy

Rights of Prop 215 Medical Users

California’s medical cannabis laws under Proposition 215 remain in effect under AUMA. Prop 215 gives patients and their designated primary caregivers the right to possess and cultivate cannabis for their personal medical needs given the recommendation or approval of a California-licensed physician. Because there is no set limit on the amount patients may possess or cultivate, the argument can be made that patients may legally possess more than the one ounce and six plants allowed under AUMA if their medical needs require. Patients who do so should exercise discretion by keeping their stash at home and not carrying more than one ounce in public.

There is no age limit on medical use. Minors under age 18 need permission from their parents or guardians to use medical cannabis. Young adults age 18-20 are allowed to visit state-licensed medical dispensaries, but not adult-use ones.

Patients who have state medical cannabis ID cards are exempt from the sales tax on medical cannabis and cannabis products [BPC 34011(g)].

The parental rights of qualified Prop 215 patients are protected by AUMA in family and juvenile court proceedings (HSC 11362.84)

Prop. 64 added Section 26033 to the Business and Professions Code, protecting patients and primary caregivers who cultivate an unspecified amount for themselves or no more than five patients, if they receive compensation only under Subdivision (c) of Section 11362.765 of the Health and Safety Code. Under Prop 215, patients are still entitled to grow and possess whatever amount of marijuana is consistent with their medical need, though this is subject to local limits and land-use restrictions, including bans. Locals may not ban 6-plant-per-parcel gardens under Prop. 64, though they may “reasonably regulate” them, including banning outdoor cultivation.

How Can One Obtain Cannabis Legally ?

Adults 21 and over can buy cannabis at retail dispensaries with an “A” adult use license as of Jan 1, 2018.

Medical users 18 and over with a California physician’s recommendation can buy at stores with an “M” medical use license. Some medical cannabis collectives may continue to operate temporarily during the transition to state licensing, but they must obtain a state license within a year.

Dispensaries can apply for both “A” and “M” licenses. Some localities are allowing medical sales only, while others are banning both medical and adult-use. Only a limited number of California cities and counties are allowing “A” dispensaries in 2018.

Consumers can also have cannabis delivered from licensed type “A” and “M” delivery services.

Delivery services can operate in regions that don’t allow dispensaries, except for a handful of localities that have banned deliveries altogether (the legality of delivery bans is uncertain and may be challenged).

It is legal for any adult to buy or receive an ounce of cannabis from another, and to give away up to one ounce without compensation to other adults. Adults can also grow up to six plants at their residence.

Taxes Impact State Revenue and Price

Retail sales of cannabis are subject to the standard state sales and use tax of 7.5% – 9.25%.

Exception: Medical users with a state medical cannabis ID card are exempt from the sales tax for type “M” medical cannabis.

Many local governments assess additional taxes on cannabis businesses, ranging as high as 10-20% of total revenues.

As of Jan 1, 2018:

• All retail sales of cannabis are subject to an additional 15% excise tax.

• Licensed commercial growers must pay a cultivation tax of $9.25 per ounce on cannabis flowers (or $2.75 on leaf)

Criminal Penalties for Cannabis Offenses (HSC 11357-11362.9)

Juvenile offenders: In general, AUMA exempts juveniles under 18 from criminal fines and imprisonment for cannabis offenses.Instead, they are sentenced to community service, drug education or counseling.

Adult offenders: Most offenses for adults 18 and over are punished either as non-arrestable infractions subject to a fine, or as criminal misdemeanors. For misdemeanors, the maximum sentence is normally a $500 fine and/or six months in jail. Felony enhancements may be charged in aggravated circumstances such as repeat or violent prior offenses, environmental offenses, involvement of minors, etc. Also, prosecutors can charge violators with felony conspiracy to commit a misdemeanor if more than one person is involved in the crime.

Illegal Possession (HSC 11357)

  • Underage possession of one ounce or less by persons 18-21 is a $100 infraction. (For juveniles <18, no fine but community service and/or drug counseling)
  • Illegal possession of more than one ounce (or 8 grams of concentrates) is a misdemeanor.
  • Possession on the grounds of a grade school of one ounce or less during school hours is a $250 infraction for first offense; subsequent offenses are misdemeanors punishable by maximum 10 days in jail and $500 fine.

Illegal Cultivation (HSC 11358)

  • Underage cultivation of six plants or less by persons 18-21 is a $100 infraction.
  • Illegal cultivation, harvesting, drying, or processing of more than six plants is a misdemeanor.
    Felony enhancements allowed for:

    • persons with two or more prior convictions for illegal cultivation,
    • offenders with two prior violent felony “strikes”
      and registered sex offenders
    • violation of specified environmental statutes regarding illegal diversion or discharge of water, hazardous waste, endangered species, etc.
  • Possession With Intent to Sell (HSC 11359)
  • Possession of cannabis for illegal sale is a misdemeanor.
    • Felony enhancements allowed for:
      • 3rd-time offenders
      • offenders with two prior violent felony “strikes” and registered sex offenders
      • knowing sale to minors <18; or
      • employing persons <21 to help sell, cultivate, transport, etc.
  • Illegal sale, import, transport, or distribution (HSC 11360)
  • Illegal selling, furnishing, administering, giving away, transporting for sale or importing into the state is a misdemeanor.
    • Felony enhancements allowed for:
      • importing into state or transporting for sale out of state more than one ounce of cannabis or 4 grams of concentrate
      • 3rd-time offenders
      • offenders with two prior violent felony “strikes”
        and registered sex offenders
      • knowingly providing to minors <18
  • Employing or providing to minors (HSC 11361This statute was not de-felonized by Prop 64. Employing a minor in cannabis sales or distribution, and selling or furnishing cannabis to a minor are felonies punishable by prison sentences of three years or more.

Driving under the influence laws are not radically modified

It is unlawful to drive while under the influence of marijuana or alcohol or any other drug by Vehicle Code 23152. “Under the influence” is not explicitly defined in the statute, but is interpreted to imply some degree of impairment. Therefore the mere fact of having taken a toke of marijuana does not necessarily mean one is DUI. For evidence of impairment, officers may administer a field sobriety test. Arrestees may also be required to submit to a blood or urine test under Vehicle Code 23612 or else forfeit their licenses. Since marijuana is detectable for much longer periods in urine than in blood (several days vs. several hours), a positive urine test constitutes much weaker proof of recent use and impairment than a positive blood test. In some jurisdictions, police are testing motorists with oral swab tests. Under current law, police cannot compel you to take a swab test like they can a blood or urine test. Oral swab tests can detect marijuana for a couple of hours to as long as a day or more after use.

Asset Forfeiture

Unlike federal law, California law requires a conviction for forfeiture of property involved in a drug crime. Also unlike federal law, state law does not permit forfeiture of personal real estate for marijuana cultivation. Vehicles may be forfeited only if 10 pounds or more of marijuana is involved. Health and Safety Code 11470. However, state authorities can choose to turn major violators over to federal prosecutors, in which case they may share in federal forfeiture proceeds.

Federal Law in Parks

AUMA does not apply on federal property. Possession in national parklands including Golden Gate Recreation Area is illegal. Marijuana, including both THC and CBD, remains an illegal Schedule One substance under the U.S. Controlled Substances Act. Federal charges are typically brought only in large cases where commercial distribution is suspected (e.g., cultivation of several hundred plants), or where the government stands to gain substantial assets through forfeiture.Text of the Controlled Substances Act.

Industrial Hemp (CA Food & Agriculture Code (Division 24, FC 81000 – 81010)

AUMA authorizes the production of industrial hemp under regulations to be promulgated by the California Department of Food and Agriculture. Hemp is not taxed, regulated or licensed by the Bureau of Cannabis Control like cannabis intended for human consumption. Hemp growers are required to register with their local county agricultural commission, but no procedures for doing so have been established as of Dec 2017.

State Licensing Overview (Effective Jan 1, 2018) Affects Local Land Use

Licensing is required for all phases of the cannabis industry including cultivation, testing, manufacture, distribution, transport and retail sales. All cannabis products must be tested by a state-licensed lab and pass through the hands of state-licensed distributors, who also collect taxes on cultivation and retail sales. The following license types are established under state law (BPC 26050):

  • Type I “Specialty outdoor”- no artificial lighting, cultivated area less than 5,000 sq ft canopy or 50 plants on noncontiguous plots
  • Type 1A “Specialty indoor” –
    indoor cultivation using exclusively artificial lighting between 501 and 5,000 sq ft.
  • Type 1 B “Specialty mixed-light” – combination of natural and artificial lighting between 2,501 and 5,000 sq ft.
  • Type 1 C “Specialty cottage” – 2,500 sq ft or less mixed light or up to 25 mature plants outdoors or 500 sq ft indoor cultivation
  • Type 2 “Small Outdoor” – no artificial lighting, 5,001 -10,000 sq ft
  • Type 2A “Small indoor – exclusively artificial lighting, 5,001-10,000 sq ft
  • Type 2B “Small mixed-light” 5,001-10,000 sq
  • Type 3 “Medium Outdoor” 10,001 sq ft – one acre (=43,560 sq ft)*
  • Type 3A “Medium Indoor” 10,001 – 22,000 sq ft.*
  • Type 3B “Medium Mixed-Light” 10,001 – 22,000 sq ft.*
    *The Dept of Food and Agriculture shall limit the number of type 3 licenses
  • Type 4 “Nursery” for cultivation
  • Type 5 “Large Outoor” cultivation over one acre**
  • Type 5A “Large Indoor” over 22,000 sq ft.**
  • Type 5B “Large Mixed-light” over 22,000 sq ft.**
    ** No type 5, 5A, 5 B licenses may be issued before Jan 1, 2023.
  • Type 6 – “Manufacturer 1” not using volatile solvents
  • Type 7 – “Manufacturer 2” using volatile solvents
  • Type 8 – Testing laboratory. May not hold any other kind of licenses.
  • Type 10 – Retailer
  • Type 11 – Distributor – responsible for collecting taxes, testing, and transporting to retailers. Retailers must purchase cannabis through a distributor.
  • Type 11 – Distributor Transport Only (CA Code of Regulations Section 5014)
  • Type 12 – Microbusiness –
    Combination license to cultivate < 10,000 sq ft, manufacture (Type 6 only), distribute, and retail.
  • Event Organizer License (CA Code of Regulations Section 5600).
  • Persons may hold any combination of licenses, except for testing labs and Type 5 large cultivators, which can hold no other license types.

Copyright 2017 Nate Bernstein, Attorney at Law. LA Real Estate Law Group. All Rights Reserved.

The author of this article, Nate Bernstein, Esq., is the Managing Counsel of LA Real Estate Law Group, and a member of the State Bar of California and his practice concentrates in the areas of complex real estate litigation, commercial litigation, employment law, and bankruptcy matters. The contact number is (818) 383-5759, and email is natebernstein44@gmail.com.  Nate Bernstein is a 22-year veteran Los Angeles real estate and business attorney and trial lawyer. Mr. Bernstein also has expertise on bankruptcy law, the federal bankruptcy court system, creditor’s rights and debtor’s bankruptcy options. He previously served as Vice President and In House trial counsel at Fidelity Title Insurance Company, a Fortune 500 company, and in house counsel at Denley Investment Management Company. Nate Bernstein created www.laquiettitleattorney.com, a leading educational resource on quiet title real estate litigation. Nate Bernstein is a local expert on real estate law and economic trends in the real estate and leasing market, business law, and bankruptcy law. Nate has personally litigated more than 40 major real estate trials, and has settled more than 200 complex real estate and business cases. 

Any statement, information, or image contained on any page of this article not a promise, representation, express warranty, or implied warranty, or guarantee about the outcome of a legal matter, and shall not be construed as being formal legal advice. All statements, information, and images are promotional. All legal matters are factually specific, laws change on a daily basis, and courts interpret laws differently. No express or implied attorney-client relationship shall be inferred from any statement, information, or image contained any pages of this website. No attorney-client relationship is formed until the client or the client’s representative, and the attorney signs a written retainer agreement.

The post How the New CA Marijuana Law Impacts Property Management and Land Use appeared first on AAOA.

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CA Rent Control: Update on Costa Hawkins Repeal

Tue, 01/23/2018 - 10:57am

The movement to repeal the Costa Hawkins Vacancy Decontrol Law has been derailed in the California legislature.    This is the most hotly contested proposed real estate legislation in decades because it directly impacts renters, landlords, and developers of new construction.   Repeal of Costa Hawkins would bolster rent control bureaucracies and would encourage additional cities to adopt rent control structures.

The Costa-Hawkins law is found in the California Civil Code, sections 1954.50 to 1954.535.    The major purposes of the law were: to eliminate vacancy control and thereby reestablish an intermittent role for market forces (supply and demand) in setting the rental price; and, to exempt certain categories of rental units from rent control, e.g., new construction, and single family dwellings and condominiums. The exemption for new units sought to encourage housing supply.

Here is a recent report from the San Jose Mercury News: 

Rent control in California: Proposal to lift restrictions blocked in Sacramento assembly committee

SACRAMENTO — A closely watched attempt to repeal a California law restricting rent control died at a packed committee hearing Thursday, but proponents vow to keep fighting — and, if they get nowhere in the Capitol, to take the issue straight to voters.

“I think there is no choice but for the conversation to continue and for us to try to find common ground,” said a disappointed Assemblyman Richard Bloom, D-Santa Monica, the main author of Assembly Bill 1506.

The raucous hearing attended by landlords and tenants underscored the deepening tension in the state as the housing crisis shuts out many from buying a home and forces residents to pay rising rents that outpace their incomes.

At issue is a state law known as Costa Hawkins that prohibits cities from imposing rent control on condominiums, single-family homes, or apartments built after 1995 — and in some cases, much earlier. If a city first enacted rent control in 1980, for example, any units built afterward are exempt. The law also prohibits cities from requiring landlords to limit rent increases after a renter moves out, a practice known as vacancy control.

Legislation to repeal the law was batted down so quickly by opponents last year that it didn’t get a single hearing. Bloom revived the bill this year as the rental crisis deepened and a tenants’ rights coalition began gathering signatures for a ballot initiative to expand the number of dwellings that could be subject to rent control.

But Thursday’s vote underscored how polarizing the issue is, even among Democratic lawmakers. The Assembly Housing and Community Development Committee voted 3-2 on the proposal, with Democrats Ed Chau, of Monterey Park, and Assemblyman Jim Wood, of Healdsburg, abstaining. The two Democrats and the committee’s two Republican members who voted against it said they feared it would curb the availability of rental homes.

Activists disappointed after an Assembly committee blocked a bill to lift statewide restrictions on types rent control demonstrate in California’s Capitol on Thursday. (Katy Murphy – Bay Area News Group)

Landlords cheered the decision while rent-control advocates organized by the Alliance of Californians for Community Empowerment, co-sponsors of the proposed ballot initiative, took over the hearing room, unfurling banners and chanting, “No housing, no peace!”

“We plan to do everything in our power to fully repeal Costa Hawkins — whether that’s moving it through the legislature or this year at the ballot,” Deepa Varma, of the San Francisco Tenants Union, said in a statement after the decision, adding that proponents of the bill were “extremely outraged” over the decision.

For about four hours, many hundreds — and possibly over 1,000 — supporters and opponents filled the hearing room and packed the long hallway outside. Some of the activists in the hall outside found a way to make their voices heard, chanting, cheering and occasionally pounding on the walls.

Supporters argued that tenants need some measure of security as sharp rent increases continue to sweep across California.  In San Jose, the median monthly rent for a two-bedroom apartment is now $2,550, far above the national average of $1,560. A similar two-bedroom flat goes for $3,080 in Walnut Creek, according to a recent report from ApartmentList.com.

But opponents, including representatives from the California Apartment Association and the California Association of Realtors, argued such a move would make the state’s housing shortage worse. If California repeals Costa Hawkins and cities adopt more sweeping measures, argued the apartment association’s Debra Carlton, “When my kids get out of college they won’t find a place to live.”

Billy Martin, an in-home care aide from Oakland, says broader rent control ordinances are desperately needed for families like his who are “a stone’s throw away” from eviction. He said he returned home from work last year to the two-bedroom apartment in East Oakland that he rents with his wife and children to find a notice on the door from the new owner, an investor: His $800 monthly rent, it said, would jump to $1,500. He tried to fight it, but without rent control, he had little recourse.

The investor who owns his apartment, he said, also rents hundreds of other properties. “Do you know how many lives he has in his hands?” Martin asked.

There may be some bad actors, said San Francisco landlords Irene Lo and her husband, Robert Bailey, but it’s not fair to paint all landlords as evil and greedy. Opening the door to more extensive rent-control measures would be incredibly onerous for small landlords like them, they argued, making it difficult to make needed repairs.

“Why would we want to open up our unit for rent?” Lo asked.

Rent control is also unpopular among economists, who say it distorts the market and dampens supply. A study released late last year by Stanford economists found that San Francisco’s rent control policy fueled gentrification by leading landlords to leave the rental market, resulting in a smaller supply of affordable rental housing. They argue that the state should find another way to provide cost stability to renters without forcing landlords to absorb all of the cost.Few expected a full repeal to pass the state Legislature, but in an interview this week, Bloom said he was hopeful that the prospect of a ballot initiative would lead to a compromise. Bloom and other lawmakers did not immediately say what they would do next.

“I’ve always tried to open the door to conversations about compromise,” he said before the vote. “Up to this point, we haven’t seen a lot of movement in that direction.”

COSTA HAWKINS, EXPLAINED

What is Costa Hawkins? It’s a decades-old California law that makes it illegal for cities to adopt certain kinds of rent control ordinances. There is a big push by renters’ groups and some state lawmakers to repeal it, lifting the restrictions.

What are the restrictions? Single family homes and condominiums are exempt from rent control under this state law. So is any apartment built after 1995, when Costa Hawkins was passed, or in some cases much earlier. If a city adopted rent control in 1980, for example — as Oakland and Berkeley did — then that is the cutoff; nothing built afterward can be subject to rent control. Costa Hawkins also prohibits cities from having a say in how much a landlord can raise the price after a tenant moves out, a policy known as vacancy control.

How many cities in California have some form of rent control? At least 15, according to the Department of Consumer Affairs, including Berkeley, Beverly Hills, Campbell, East Palo Alto, Fremont, Hayward, Los Angeles, Los Gatos, Oakland, Palm Springs, San Francisco, San Jose, Santa Monica, Thousand Oaks, and West Hollywood.

 

Source: mercurynews.com

 

Copyright 2017 Nate Bernstein, Attorney at Law. LA Real Estate Law Group. All Rights Reserved.

The author of this article, Nate Bernstein, Esq., is the Managing Counsel of LA Real Estate Law Group, and a member of the State Bar of California and his practice concentrates in the areas of complex real estate litigation, commercial litigation, employment law, and bankruptcy matters. The contact number is (818) 383-5759, and email is natebernstein44@gmail.com.  Nate Bernstein is a 22-year veteran Los Angeles real estate and business attorney and trial lawyer. Mr. Bernstein also has expertise on bankruptcy law, the federal bankruptcy court system, creditor’s rights and debtor’s bankruptcy options. He previously served as Vice President and In House trial counsel at Fidelity Title Insurance Company, a Fortune 500 company, and in house counsel at Denley Investment Management Company. Nate Bernstein created www.laquiettitleattorney.com, a leading educational resource on quiet title real estate litigation. Nate Bernstein is a local expert on real estate law and economic trends in the real estate and leasing market, business law, and bankruptcy law. Nate has personally litigated more than 40 major real estate trials, and has settled more than 200 complex real estate and business cases. 

Any statement, information, or image contained on any page of this article not a promise, representation, express warranty, or implied warranty, or guarantee about the outcome of a legal matter, and shall not be construed as being formal legal advice. All statements, information, and images are promotional. All legal matters are factually specific, laws change on a daily basis, and courts interpret laws differently. No express or implied attorney-client relationship shall be inferred from any statement, information, or image contained any pages of this website. No attorney-client relationship is formed until the client or the client’s representative, and the attorney signs a written retainer agreement.

The post CA Rent Control: Update on Costa Hawkins Repeal appeared first on AAOA.

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How to Make Your Rental Property Stand Out in an Oversaturated Market

Tue, 01/23/2018 - 10:43am

Image via Pixabay

If you own a rental property and it’s consistently vacant, you are losing money. Without the rental income, you are paying for insurance, taxes, and utilities on a place not even in use. But, there are more renters today than there have been in 50 years and those that can buy property are eager to appeal to those looking for a new place. To keep your venture going, it may be necessary to make updates around the property to stand out from the crowd.

Much of what you can do to make your rental property stand out is very similar to how we stage homes before selling. You want to make it look like a place where others can see themselves living, while also highlighting what makes it unique. Here are a few tips on making your rental property stands out from the competition.

A Fresh Coat of Paint

Painting your property is the most cost-effective way to update its look. It costs about $20 for a can of paint and can make a place look brighter, cleaner, and more liveable. While you may get a lot of advice saying to stick with neutrals, you can’t just slap white on the walls and expect to stand out. Instead of going monochrome, use different shades of neutrals and utilize accent walls to make an impact.

You also don’t have to stick to straight neutrals. While arguably on the muted side, shades of light blue are proven to increase a home’s value. Blue is a soothing, comforting color and may even reduce stress. The only room where this doesn’t work: the living room. Homes with living rooms painted shades of brown like light beige, pale taupe, and oatmeal sell for more than those painted shades of blue.

Invest in Smart Home Amenities

Whether your property is new or old, people want to feel like they are living in a place that is modern. That doesn’t necessarily mean you should pull up original hardwood floors or make updates that remove an older building’s charm. A better way to go is to update by installing new smart home amenities that make living easier around the home.

Accessories like smart thermostats don’t just look cool. They can also help a property use less energy, saving money and reducing the overall environmental impact. Other smart home amenities to consider include things like security systems, door locks, smoke detectors, outlets, home hubs, and even coffee makers. If you are really willing to invest a pretty penny, there are even smart refrigerators that claim to save both money and food.

Focus on the Kitchen

For most people, the kitchen is the heart of the home. Focusing on what makes it unique from other rental properties will mean more to a larger audience. Things tenants are looking for include:

  • Dishwasher
  • Garbage disposal
  • New stainless steel appliances
  • Storage space
  • Natural light
  • Butcher-block countertop
  • Attractive and modern backsplashes

While you may not be able to invest in all these things at the moment, really emphasize what you do have in your listings. Furthermore, you want the kitchen to be as clean and attractive as possible before showings. If you have stainless steel appliances, make sure they are free of fingerprints. Make sure tricky areas like the stove and baseboards are clean and spotless. If there are scratches on the walls, cabinets, or appliances, buy paint for a touch-up and make them look like new again.

***

More Americans are renting than ever, but if your rental property isn’t housing anyone, you are losing money. Make your property stand out with a few simple updates. The right colors of a fresh coat of paint can breathe life into a place. Modern updates using smart home technology help your place stand out. Finally, putting extra focus on the kitchen’s best attributes and making sure it is clean and updated where possible will attract tenants to your property.

Author

Jenny created Special Home Educator as a forum for sharing her adventures in homeschooling and connecting with other homeschooling families.

The post How to Make Your Rental Property Stand Out in an Oversaturated Market appeared first on AAOA.

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Buying a rental property is cheaper in the winter — here are the 26 best places to make money as a landlord right now

Mon, 01/22/2018 - 12:16pm

Buying a rental property during the winter will increase your year-round profits.AP Photo/Keith Srakocic, File

  • Home prices in the US are lowest during the winter months each year.
  • Real estate investors pay 6.6% less per square foot for the same rental property during the winter as they do during the spring and summer.
  • In some of the country’s biggest metros, a winter buy could increase your overall return on investment by as much as 36%.

 

Winter is the best time to buy a home — and that includes scooping up a rental property.

HomeUnion, an online real estate and investment firm, recently released a list of the best places in America to score a bargain on a rental property this season. They compared return on investment figures for homes purchased during winter and homes purchased during summer in the country’s biggest metro areas.

“Median home prices drop substantially during the colder months, while rent losses remain marginal for landlords,” said Steve Hovland, director of research for HomeUnion. “On average, investors can acquire higher-yielding properties in cold-weather markets like Omaha, Nebraska, Buffalo, and Chicago, as well as some Sun Belt markets.”

To determine how much a winter buyer saves in each market, HomeUnion looked at all single-family housing sales over $30,000 that occurred in October and November 2017, and compared them to May and June 2017.

HomeUnion then calculated the capitalization rate (or “cap rate”) — the return on investment after operating costs — for each market, and subsequently, the percentage difference between the cap rate in winter months and summer months.

Below, we’ve highlighted the 26 cities where the cap rate increased by more than 10% when an investor purchased a rental property in the winter rather than the summer.

26. Rochester, New York

Shutterstock

Increase in annual investment return: 10.32%

Median home sale price (winter): $120,000

Median home sale price (summer): $138,802

Savings on home purchase: 14%

25. Fort Lauderdale

Increase in annual investment return: 10.53%

Median home sale price (winter): $210,000

Median home sale price (summer): $230,000

Savings on home purchase: 9%

24. San Jose

Increase in annual investment return: 10.74%

Median home sale price (winter): $823,500

Median home sale price (summer): $950,000

Savings on home purchase: 13%

23. Cleveland

Increase in annual investment return: 12.25%

Median home sale price (winter): $69,950

Median home sale price (summer): $77,500

Savings on home purchase: 10%

22. Dallas

Increase in annual investment return: 12.37%

Median home sale price (winter): $166,950

Median home sale price (summer): $201,875

Savings on home purchase: 17%

21. Detroit

Increase in annual investment return: 12.47%

Median home sale price (winter): $132,000

Median home sale price (summer): $165,000

Savings on home purchase: 20%

20. Providence, Rhode Island

Increase in annual investment return: 12.52%

Median home sale price (winter): $200,347

Median home sale price (summer): $230,000

Savings on home purchase: 13%

19. St. Louis

Increase in annual investment return: 12.82%

Median home sale price (winter): $91,125

Median home sale price (summer): $110,000

Savings on home purchase: 17%

17. (TIE) Knoxville, Tennessee

Increase in annual investment return: 12.86%

Median home sale price (winter): $85,550

Median home sale price (summer): $94,500

Savings on home purchase: 9%

17. (TIE) Kansas City

Increase in annual investment return: 12.86%

Median home sale price (winter): $100,000

Median home sale price (summer): $124,900

Savings on home purchase: 20%

16. Charlotte, North Carolina

Increase in annual investment return: 13.68%

Median home sale price (winter): $127,000

Median home sale price (summer): $155,000

Savings on home purchase: 18%

15. Washington, DC

Increase in annual investment return: 14.22%

Median home sale price (winter): $265,000

Median home sale price (summer): $349,900

Savings on home purchase: 24%

14. Boston

Increase in annual investment return: 14.54%

Median home sale price (winter): $290,000

Median home sale price (summer): $330,000

Savings on home purchase: 12%

13. Atlanta

Increase in annual investment return: 14.62%

Median home sale price (winter): $115,000

Median home sale price (summer): $135,000

Savings on home purchase: 15%

12. New York City

Increase in annual investment return: 14.88%

Median home sale price (winter): $309,000

Median home sale price (summer): $405,733

Savings on home purchase: 24%

11. Minneapolis

Increase in annual investment return: 16.08%

Median home sale price (winter): $163,823

Median home sale price (summer): $205,000

Savings on home purchase: 20%

10. San Francisco

Increase in annual investment return: 16.55%

Median home sale price (winter): $1,037,500

Median home sale price (summer): $1,285,000

Savings on home purchase: 19%

9. Seattle

Increase in annual investment return: 17.81%

Median home sale price (winter): $389,500

Median home sale price (summer): $517,000

Savings on home purchase: 25%

8. Grand Rapids, Michigan

Increase in annual investment return: 18.35%

Median home sale price (winter): $110,000

Median home sale price (summer): $140,000

Savings on home purchase: 21%

7. Columbus

Increase in annual investment return: 18.61%

Median home sale price (winter): $131,000

Median home sale price (summer): $175,000

Savings on home purchase: 25%

6. Hartford, Connecticut

Increase in annual investment return: 18.73%

Median home sale price (winter): $153,000

Median home sale price (summer): $205,450

Savings on home purchase: 26%

5. Philadelphia

Increase in annual investment return: 20.93%

Median home sale price (winter): $123,000

Median home sale price (summer): $150,000

Savings on home purchase: 18%

4. Chicago

Increase in annual investment return: 21.19%

Median home sale price (winter): $185,000

Median home sale price (summer): $250,000

Savings on home purchase: 26%

4. Cincinnati

Increase in annual investment return: 23.76%

Median home sale price (winter): $85,500

Median home sale price (summer): $110,203

Savings on home purchase: 22%

2. Buffalo, New York

Increase in annual investment return: 28.10%

Median home sale price (winter): $119,900

Median home sale price (summer): $150,000

Savings on home purchase: 20%

1. Omaha, Nebraska

Increase in annual investment return: 36.12%

Median home sale price (winter): $78,112

Median home sale price (summer): $115,000

Savings on home purchase: 32%

Source: businessinsider.com

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3 Reasons Why a Real Estate Agent Is a House Flipper’s Best Friend

Mon, 01/22/2018 - 12:01pm

Renovate your concept of flipping a home by teaming up with a real estate agent.

Flipping houses isn’t just about visualizing how to change a home; it’s also about being able to actually sell the house when you’re done renovating. Whether it’s your first flip or your 30th, having an experienced real estate agent on your team can boost your likelihood of success significantly.

Debbie Cederlind and Lora Lindberg — Seattle house-flipping pros and owners of Urban Squirrel — say their real estate agent, Jennifer Reyer, has played a huge role in their business. The three women met back in 2010 when Reyer was helping Cederlind’s daughter buy a house, and they quickly decided to team up.

“[Debbie] rounded up Lora one day, and I said, ‘Let’s just look at a house,’” says Reyer. “So I took them to the worst possible house you could imagine on our first showing.”

Instead of running for the hills like Reyer expected, Cederlind and Lindberg were more excited about renovation than ever. Now seven years into their partnership, the designer duo can’t imagine doing their jobs without her.

If you’re in the business of renovating houses, here are three ways a real estate agent can help you become more successful.

1. She can negotiate

When you’re flipping a house, your initial instinct is to think about what physical transformations the house needs to go through instead of your overall bottom line. A real estate agent can negotiate the price of a home you want to flip, which can give you more wiggle room for your renovation budget (and give you more overall profit).

“A lot of people will ask me, ‘Why don’t you guys get a real estate license?’ but I am more convinced than ever that she is worth every penny,” says Lindberg. “She basically taught us how to flip. She’s also a pretty tough negotiator, and aggressive. Debbie and I are not. We’re wimps, and it’s good to have someone who can do that for us on our behalf.”

2. She determines if the numbers will work

In the beginning, Reyer explained the whole flipping process to the women of Urban Squirrel since they were new to the game. Now, they mainly work together on the buying and selling process, which involves lots of budgeting.

Through numerous flips, Urban Squirrel has never had to lower their listing price. That’s in large part thanks to Reyer’s expert knowledge of the Seattle market, her networking skills, and her ability to crunch numbers quickly.

“Before we even buy a house, she helps us figure out a price point and helps figure out a price point that we need to sell it at,” says Cederlind. “If those two numbers aren’t working in the beginning, we won’t pursue it.”

Working with Reyer also holds the team accountable: They don’t cut corners in the renovation just to get the job done faster or cheaper, Cederlind and Lindberg say.

Additionally, Reyer gives the women advice on determining the most buyer-friendly solutions in their designs. That helps them in the eventual marketing and selling of the home.

3. She helps you reach the finish line

At the end of a project, a real estate agent can feel like a lifeline to a flipper. Renovation shows on TV may make it look easy, but flipping involves a lot of hard work and tiring days. If you’re doing both the renovation and the real estate work, it can feel overwhelming. A real estate agent is just starting her part of the work when you may feel like you’re absolutely spent on a project.

“One of the many reasons we would never want to be our own agent is because at the end of a project, we’re exhausted and burnt out. We’ve worked long hours,” says Lindberg. “But then we turn it over to her, and she’s fresh and excited because she’s just starting.”

Tip: Find an agent who enjoys the process

Of course, it also helps a renovation business to have an agent who enjoys the fast-paced work of flipping houses.

After seven years, it’s clear: Reyer is still as excited as ever to work with Urban Squirrel. She especially enjoys seeing their innovative renovations on houses with “uninhabitable,” “possible teardown” or “no financing available” on the original listing. Whether they’re working on a cabin, a Craftsman or a 1980s tract home, Urban Squirrel’s designs have gained a following in the Seattle area.

“I think they’re kind of magical,” says Reyer.

Source: zillow.com

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Buying Rental Property Vs. Investing In A REIT, Part II

Mon, 01/22/2018 - 11:52am

Many hopeful real estate investors have the same question: Is it a smarter move to buy property directly or to buy shares of a real estate investment trust (REIT)? As the co-founder and CEO of a single family rental investment marketplace — and someone who has formerly run a publicly traded REIT — I’m often asked this question because of my intimate knowledge of both sides of the coin.

This is the second half of a two-part series that explores the benefits of investing in brick and mortar real estate versus a publicly traded real estate investment trust, commonly referred to as a REIT. If you missed Part I and the goals for which a rental property is the more suitable choice, read it here. In this section, we’ll focus on categories where REITs come out on top.

Investing Goal: Liquidity

Immediate liquidity is perhaps the single greatest advantage of owning shares in a REIT. Like any other stock, it can be sold through your brokerage account at a market-clearing price at relatively low cost. Depending on the type of assets, selling real estate that you own directly takes more time and can have much higher transaction costs if you sell through traditional brokerage channels.

Investing Goal: Low Minimum Investment

While you can buy a REIT share for $10 or less, it, of course, takes more capital to own properties directly. For example, in order to qualify for attractive financing to purchase investment homes, you typically need to put down at least 20% of the value of the home. Additionally, if you are concerned about the potential for expenses to be higher than your revenues in a particular month due to non-recurring expenses or maintenance, it is a good practice to maintain a contingency “slush fund” of 1-2% of the total purchase price for general repairs and times when the property may be between tenants. If you are looking to get some exposure to the real estate industry and want to dip your toe in the water, REITs are a great way to get started.

Investing Goal: Diversification

REITs offer geographic and asset-level diversification. Most specialize in a specific type of property, which means you can own shares in office buildings, single-family rental homes, apartments, hotels, self-storage units and more. As a direct investor, achieving that level of diversification is challenging without substantial capital upfront. Some investors mitigate this risk by purchasing multiple properties and/or buying in markets where they do not reside in order to ensure all of their eggs are not in one basket.

Investing Goal: Passive Ownership

REITs require no oversight on your part since management is outsourced to professionals and field experts. While some investors crave more control and direct exposure to hard assets — and the potentially outsized returns that can be generated with this strategy — others will find the passive nature of investing in REITs or other private real estate funds more attractive if they are looking for a complete hands-off solution.

Conclusion

Whether it’s direct investment, buying shares in a REIT, house hacking, house flipping or even working for sweat equity, there are many paths to becoming a real estate investor. All of them have pros and cons and varying degrees of risk and reward. Rather than ask “which is best?” start by asking “which is best for me?” I find having a combination of direct investment and REIT ownership works well as a strategy to get balanced exposure across geographies and property types.

 

Source: forbes.com

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Survey shows consumers are poised to embrace virtual real estate tours

Mon, 01/22/2018 - 11:43am

Technology has made the process of home buying and selling simpler, smarter and faster. As smart home and virtual reality (VR) technology continues to become more mainstream and sought after, consumers are now expecting high-tech experiences before even stepping foot in a prospective listing.

A new survey from Coldwell Banker Real Estate LLC, conducted online by Harris Poll among over 3,000 U.S. adults, suggests VR is poised to become the next big thing in real estate. Americans appear to be ready to embrace VR as a resource to visualize what is normally left to the home buyer’s imagination. In fact, the desire for VR house tours is almost on par with traditional video tours. For those considering a home purchase in the future, 84 percent of respondents would like to see video footage, while 77 percent would like the ability to be able to take VR house tours before actually visiting prospective homes.

Furthermore, the survey found that if they were considering purchasing a new home in the future:

  • Americans also see additional applications of VR, with over two-thirds (68 percent) saying that they would love the ability to utilize VR to see how their current furniture would fit in a prospective home.
  • 62 percent of Americans would be more likely to choose a real estate sales associate who offered VR house tour capabilities as a service for their clients that prospective buyers could view on their computer or smartphone over one that did not.
Smart Home Preferences:

VR is just the beginning when it comes to being smart about technology and real estate. If there’s anything the past few years have proven, it’s that smart home technology is here to stay. The Coldwell Banker survey also asked consumers about their smart home preferences, with the following key takeaways:

  • This year, 32 percent of Americans report having smart home products in their homes, up from 24 percent in 2016, revealing a 33 percent year-over-year increase
  • If selling a home this year, nearly half (42 percent) of Americans agreed that they would look to their sales agent to provide suggestions about how staging their home with smart home products/technology could impact the sale of their home

“Our consumer findings underscore the need for industry-wide smart home education for real estate sales agents,” said Charlie Young, president and CEO of Coldwell Banker Real Estate LLC. “As the smart home leader in real estate, Coldwell Banker is at the forefront of this trend. We were the first to offer a smart home certification and definition of a smart home which positions our network of brokers and agents to deliver a competitive advantage for their customers in an ever-changing market.”

It’s up to real estate professionals to counsel sellers on how to make their listings stand out by having pre-installed smart home technology in their home and provide insight on smart home technology’s value to prospective buyers.

Source: realtybiznews.com

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13 Ways to Be a Great Landlord to College Student Renters

Mon, 01/22/2018 - 11:35am

For a landlord, college student renters present a unique demographic that may have different needs and expectations than your typical renters. When you’re managing property in a college area, the best way to make yourself stand out is by specifically targeting your property to students. By taking the time to think about what college student renters will want in their housing and from their landlord, you can make yourself into the ideal college landlord—and build up a great reputation that will help you continue to bring in residents year after year.

1. Know What Students Are Looking For

When you’re considering the adjustments that need to be done to your property or are looking for good ways to market it for the new academic year, keep in mind what college student renters specifically are looking for, rather than what renters in general tend to expect. Because the needs of college student renters may vary from older professionals, make sure that you take into consideration what areas of the property you should be focusing on and highlighting.

For instance, college student renters will probably be more interested in paying less in rent than in having the most modern, updated appliances, so avoid making updates that could be perceived as unnecessary. Instead, focus on providing your residents with clean, safe units for an affordable price.  According to Sarah Nairn from Landlordology, affordability is one of the top five most important amenities to consider when renting to college students.

2. Make Your Property Conducive to Studying

When the target audience for your property consists of college student renters, it’s a good idea to use what you know about students to your advantage, making the property as conducive as possible to that demographic. For instance, try to create some nice, quiet study spaces that your students can use, so that they don’t need to leave the property when they’re looking for a good place to have a study session.

Conversely, you can also make yourself stand out as a landlord to college student renters by creating fun spaces for your residents to hang out with their friends. Whether it’s an outdoor pool or garden space, or an indoor game or movie room, your residents will love that they have a cool place to spend time in outside of their actual apartment. Plus, by encouraging your residents to bring their friends to the property, you’ll be getting some free advertising that will hopefully lead to new residents in the new school year.

3. Be Patient

Because a lot of college student renters are likely renting for the first time, chances are they’ll be fairly unfamiliar with the details of lease agreements, the leasing process, setting up utilities, and everything else that comes with renting an apartment. One way to stand out as a great landlord to your residents is by taking the extra time to explain to them everything that they need to know and by ensuring that they understand what they’re agreeing to when they sign their lease and what they’ll need to do as a resident before they fully commit.

Understand that they may have a lot of questions, and be patient in answering them. Make sure that you clarify when rent is due, the dates for when your property’s leases start and end, whether or not utilities are included in the rent, and any important policies that you have in place. The more detailed you are in your explanations, the better off your residents will be when they move in.

4. Host Events with Free Food

It’s fairly common knowledge that most college students are short on cash. Fortunately for you, this means that you can gain a lot of points as a landlord simply by hosting events every so often where you offer freebies—and, in particular, (considering most college student renters are less-than-stellar cooks) free food. Try hosting some get-to-know-you events throughout the semester, for instance, in which you incentivize students to come by making it a pizza party or a barbeque.

You can also appeal to your college student renters by hosting some special events during midterms and finals; since these are probably the busiest times of the year for your students, you can save them both some money and some precious study time by providing a meal that they won’t have to make themselves.

5. Offer Freebies to Your Students

Similarly, you can also help your college student renters out by giving out some freebies from time to time. During peak study times, for instance towards the middle and the end of the semester, try to offer free coffee or snacks to students, as well as items that students will need for their exams, such as Scantron sheets or Blue Books.

Even these small and relatively inexpensive items will be appreciated by students, as you’ll save them a trip to the campus bookstore and will make it easier for them to study from the comfort of their own apartments.

6. Keep the Academic Calendar in Mind

While this may seem like a given, considering the majority of your residents are college student renters, it’s nevertheless important to make sure that your property’s leasing calendar coincides with their university’s academic calendar as much as possible.

Typically, it’s a good idea to begin your leases at some point in August, a couple of weeks before school starts, as this will give students plenty of time to get settled in before school starts. This will also give students who have graduated some extra time at the end of the spring semester before they need to move, so they don’t feel overwhelmed having to leave right away.

7. Send Lots of Reminders for Important Dates

Because your property is targeted towards college student renters, you’ll likely have quite a few residents who have never rented an apartment before. Keep this in mind, as it means that you may have to go to some extra lengths to ensure that everything runs smoothly. For instance, some of your residents may be unaccustomed to paying rent every month, and may, therefore, be more liable to forget their rental payments. It’ll help them a lot—and, by extension, save you some trouble in the long-run—if you send out monthly reminders for when rent is due and restate how students can pay it.

You may also want to send the occasional reminder concerning other important dates that your students should be aware of, such as move-in and move-out dates, or any days when you may need to enter their apartment for maintenance or inspections. Given their likely busy schedules and their recent entrance into the renting field, your college student renters may not always remember what they need to do and when, so you’ll be doing everyone a favor by doing what you can make sure they know when important dates are coming up.

8. Apply Feedback

Regardless of where your property is located and what type of demographic you want to draw in, one important factor of being a landlord that always applies is constantly maintaining and improving your property. One great way to prioritize what improvements you should be making is by asking your college student renters for feedback and going from there. Your residents will be glad to see that you’ve listened to what they had to say, and you’ll know that your spending money on improvements that actually will be appreciated.

Try sending out a survey to all of your college student renters towards the end of the leasing year to give them the opportunity to voice their opinions concerning what they would like to see changed. Make sure you ask both about any changes they would be interested in seeing to the property itself and also in terms of the way you run the property. In listening to what your current residents have to say, you can become an even better landlord and make your property even more desirable.

9. Listen to Your Residents’ Concerns

Just as you would want to pay attention to the feedback that you receive from your college student renters when it’s solicited, it’s also essential to listen to their concerns, even when they come in the form of complaints. One of the worst mistakes that you can make as a landlord is to ignore the worries or complaints of your residents; even if they bring up an issue that you’re powerless to solve, make sure that you let your residents know that you understand their concern and that you recognize why they feel the way they do.

Often, even if you can’t remedy their situation, your college student renters will appreciate the fact that you’re truly listening to them and that you really seem to care. And, as Christine Cieri states in an article for Rentalutions, “when your tenants like you as a person they are much more willing to respect you and your property as a landlord!”

10. Respond Quickly

In addition to listening to your college student renters, the time span in which you address problems is also key. If you take too long to respond to your residents when they have questions or to fix problems that arise with individual units or the property’s shared spaces, that will reflect back negatively on you as a landlord. If, on the other hand, you respond quickly and efficiently to questions and concerns, your college student renters will recognize that and will appreciate your effort.

Managing your time effectively in this way will also help you keep on top of everything that you need to do as a landlord, and prevent you from getting behind or becoming overwhelmed. The best way to keep everything running smoothly is to respond as soon as you can to unexpected issues that arise—and if you come across an issue that might take some time to fix, let your residents know that you’re aware of the problem and are doing everything that you can to remedy it. They’ll appreciate that you’re making an effort, as well as the fact that you’re keeping them in the loop.

11. Help Your Residents Sublet

In any college area, you’re likely to have students who only want to rent for a short amount of time, or residents who sign a year-long lease with you, but later find that they need to sublet. With students going home for the summer or studying abroad, chances are you’ll often have residents who want to sublet their apartments for a few months; you may also find that there’s a similar market in place for students who are looking for a place to stay for the summer or just for one semester.

In addition to making the subletting process as smooth and simple as possible, you can really go above and beyond as a landlord by helping your college student renters find subtenants for their spaces. This doesn’t mean that you should feel obligated to facilitate the entire process—you can make a huge difference just by setting up a Facebook page for your property that allows students to post their spaces when they need to sublet, and other students to check the page out if they’re looking for a place to stay. You can also encourage residents to let you know early on if they’re planning to sublet and when, so that if you receive any interest in the property for the short-term, you can put them in touch.

12. Offer Thoughtful Deals

Given that most college students are on a budget, they’ll be extra susceptible deals and promotions that you offer from time to time. While the deals that you offer will, of course, depend on what you can afford, your college student renters will appreciate any way that you can save them some money. If you can, try offering a reduced rental rate for those who sign a lease within a certain amount of time.

You can also save your residents some money by offering free parking or a lower rate for parking if they sign their lease early or decide to renew. Another great deal to offer your residents that will be mutually beneficial is by giving them a rent reduction, whether for one month or for the entire duration of their lease, if they recommend a friend who ends up deciding to sign a lease. You’ll bring in new residents, and your current residents will appreciate that you were cognizant of their finances and gave them the chance to save some money.

13. Giveaways

Another way to win some points with your college student renters is by having a giveaway periodically, to give your residents the chance to win something that they may want or need. If you host a building event, take the opportunity to hold a raffle and give out an item that college students will appreciate—a coffee maker or a printer, for instance, are always crowd-pleasers.

Even if you don’t have any events coming up, you can always hold a giveaway by asking your residents to like your property’s Facebook page or offer the chance for them to win if they respond to a survey that you send out. Most likely, your college student renters will jump at the chance to win some free stuff, and this will reflect back positively on you as a landlord.

While being a landlord in itself involves a lot of work, in order to make yourself stand out it’s important to go above and beyond for your residents, even when—and sometimes, especially when—they’re college student renters. Keep in mind the demographic that your property is targeted towards, and make sure that you’re serving it wisely.

 

Source: rent.uloop.com

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Four Trends That Will Impact Rental Markets In 2018

Mon, 01/22/2018 - 11:21am

As we embark on 2018, there is a multitude of changes and trends in the real estate market that will impact all aspects of the rental industry, and it’s important for real estate professionals to explore them. From investors keying into market growth areas to property managers making adjustments to meet tenant expectations, creating strategies that align with market trends will lead to greater success in 2018 and beyond.

1. Occupancy Rates Fall And Rent Growth Slows

Rent demand, while hot in major metropolitan areas, is actually slowing in most areas of the United States, especially in single-family rentals. Where we’ve been seeing 6–8% growth in rental prices in years past, we’ll see that trajectory stall out, eventually nearing historical rent growth average (around 2%). Much of that may have to do with falling occupancy rates, which often result from increased supply in some cities as construction catches up. There is also a pent-up demand for moving as many people have been in their current rental much longer than historical trends.

With less demand, property managers will need to get more aggressive about attracting and keeping renters.

To attract residents, smart marketing is critical. Investing in automated vacancy posting syndication and moving marketing spend to areas with the highest returns are sure-fire ways to be certain posts gets attention, and quickly.

It’s also important to differentiate when trying to fill vacancies. Through unique perks or amenities, property managers can not only attract more renters but also target specific segments of renters through the amenities they offer. For example, if in a market that caters to younger generations, property managers should consider adding common areas throughout a building to inspire a sense of community, something that millennials and Gen Z value.

However, cool amenities alone won’t keep the renters. Retaining them requires meeting tenants’ needs and expectations. Having systems and the appropriate technology in place to handle maintenance requests immediately can dramatically change tenants’ perceptions of their living situation and make them more likely to renew a lease. Offering excellent and quick service is essential in keeping renters happy.

2. Population Shifts And Affordability Reshape The Landscape

There are two things that drive the rental market — population shifts and affordability. As affordability becomes a more pressing issue for many Americans, we will see the government, especially state governments, stepping in more frequently to offer affordability programs and tax credits. There already exist laws in many states that require a certain ratio of every new residential building to provide affordable housing. Additionally, for people who work in expensive residential areas but cannot afford housing there, we’re starting to see local movements and initiatives working to help those people afford to rent or buy housing. In San Francisco, the city is spending $44 million for a teacher housing initiative, enabling teachers to live and work in one of the most expensive cities in the country.

The biggest trend in affordable housing is the shift away from public housing to housing choice voucher programs. This will privatize much of the affordable housing stock and require a greater number of property managers to understand and be able to manage affordable housing programs. There is also a lot of compliance involved in both affordable and rent-controlled housing, so, if not an expert in this type of housing, investors should look to a specialized property management company to manage this kind of property.

Demographic shifts will also reshape parts of the real estate landscape. An increasing trend for baby boomers and the empty nester population is to actually move out of the suburbs and into urban environments, often choosing to rent instead of buy. This has dramatically changed the profile of the modern renter to one that spans age demographics. It’s important for property managers and investors to take into account both the older demographics and the youngest demographics (Gen Z) when determining the most appealing spaces, amenities and how to align service with tenant expectations.

3. Hottest Market Opportunities

While we have all heard about the popularity of moving to cities like Nashville — the entire Southeast, in fact, and the Northwest are becoming a popular living destinations for many. After all, hot rental markets tend to follow job and population growth. Investors looking to expand their properties should consider these regions.

Other, non-geographic opportunities are senior housing, affordable housing and commercial. Senior housing, in particular, will be a huge market segment. The population of U.S. adults 65 and over will more than double by 2060, reaching 98 million. That will be nearly one-quarter of the population, a number that reinforces a strong need for senior housing. Taking multifamily complexes and converting them into independent 55-plus communities could be a smart choice for developers and investors, depending on their local senior housing needs.

4. Tech Disruption

The use of intelligent systems, machine learning and AI applications in software will, increasingly, be a huge agent of change in the real estate industry. This disruption will alter everything from property valuation all the way to property management — an area where the use of AI and chatbots can offer tenants better service and automate maintenance workflows.

Consider this scenario: A tenant finds a toilet leaking and can alert management via text. They then receive an automated response from a chatbot communicating next steps, and the tech automatically creates a work order for the vendor.

Voice technology will also become huge in property management, potentially even allowing renters to pay rent by voice and make maintenance requests.

Tech disruption even changes the game in real estate marketing, letting agents use virtual reality to offer prospective tenants a tour of the inside of a home or apartment unit without ever meeting in person.

Ultimately, real estate professionals who are able to act on some of these emerging changes will find greater success. They’ll make more strategic business decisions that align not only with the ever-changing variables of the real estate landscape but also with the evolving set of modern-day tenant expectations, giving them an edge with market competition.

 

Source: forbes.com

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How real estate investors can cash in under new tax law

Thu, 01/18/2018 - 8:01am

The new federal tax law took away some benefits of homeownership but gave real estate investors a gift they might not be aware of yet.

Owners of investment property — from mom and pop landlords to big-time real estate moguls — could get a federal tax deduction of up to 20 percent of their net rental income for tax years 2018 through 2025. Most people who own shares in real estate investment trusts can also deduct up to 20 percent of their ordinary REIT dividends.

This tax break has been overshadowed by all the wailing over the law’s treatment of homeowners. It will reduce the mortgage interest and property tax deductions for some homeowners, but these new limits do not apply to interest and property taxes on income property.

More importantly, real estate investors get a potentially large tax break they didn’t have before.

It comes under the section of HR1 titled “Deduction for qualified business income of pass-thru entities.” Congress “used the Facebook spelling” of “through,” quipped Paul Bleeg, a partner with accounting firm EisnerAmper.

Bleeg said the new deduction could increase investor demand for real estate, offsetting any potential drop in demand from homeowners.

The pass-through provision is insanely complex, but it essentially lets owners of pass-through entities deduct up to 20 percent of their business income on their personal tax return, subject to certain limits.

Pass-through entities pay no business tax. Instead, their income passes through to their owners and is taxed at their personal tax rates. They include sole proprietorships, partnerships, limited liability companies and S corporations.

In the past, 100 percent of this income was taxed at the owner’s ordinary income tax rate. In the future, some owners can deduct up to 20 percent of it on their federal return (but not their California return unless the state conforms to this provision). Taxpayers won’t have to itemize to claim the new deduction, which will show up on a new line after adjusted gross income, said Mark Luscombe, principal tax and accounting analyst with Wolters Kluwer.

Congress put several limits on the new deduction, which differ depending on the type of business and the owner’s taxable income.

The first limit applies to everyone claiming the 20 percent pass-through deduction. It says your deduction generally cannot be more than 20 percent of your taxable income, excluding capital gains and the pass-through deduction itself. (Taxable income is your household income from all sources minus your deductions.)

If your taxable income is less than $157,500 (single) or $315,000 (married filing jointly), that is the only limit that applies. If your taxable income is above those amounts, then other limits apply, depending on the type of business.

If you are in a “specified service trade or business,” your deduction will be phased out between $157,500 and $207,500 in income (single) or between $315,000 and $415,000 (married filing jointly) according to a fairly simple formula. If your income exceeds the top of the phaseout range, you get no deduction.

Specified service professions include health, law, accounting, actuarial science, performing arts, consulting, athletics, financial and brokerage services or any business where the principal asset “is the reputation or skill” of one or more employees. (Curiously, architects and engineers were excluded from the list.)

This income limit would apply to real estate agents but would not apply to real estate investors because their principal asset is their property, not their skill, said Kenneth Weissenberg, chair of real estate services at EisnerAmper.

If you are not a service professional and your taxable income exceeds $157,500/$315,000, then your pass-through deduction may be limited by a convoluted computation. It says: Your pass-through deduction can’t exceed the greater of either 50 percent of W-2 wages or 25 percent of W-2 wages plus 2.5 percent of the “unadjusted basis” of depreciable assets, which generally means what the owner paid for the assets, excluding land. Real estate investors would be subject to this nutty math if their income exceeds the limit.

To get the deduction, real estate investors must have net income from a property. Many real estate investors have net losses thanks to depreciation, interest, repairs and other expenses.

Suppose Donna is single, earns $100,000 a year working for a tech company, and owns a duplex that generates $20,000 a year in net income. Her taxable income, we’ll assume, is $108,000.

Under the new law, her pass-through deduction would be 20 percent of $20,000 or $4,000. It is not reduced because $4,000 is less than than 20 percent of her taxable income.

Now suppose she makes $200,000 at her tech job and her taxable income including the rental is $208,000. In this case she would have to do the complex computation.

We’ll assume she bought the duplex for $600,000 but $100,000 of that was land value. Her unadjusted basis is $500,000, and 2.5 percent of that is $12,500. She doesn’t pay anyone a salary, so her W-2 wages are zero. Her deduction still is not reduced because $4,000 is less than $12,500.

“The wages and depreciable property limits won’t impact most real investors,” said Stephen L. Nelson, a CPA in Redmond, Wash., who wrote a monograph on the new deduction.

One gray area is whether people who own real estate in their own names and file their rental income on Schedule E would qualify for the pass-through deduction.

“It’s not 100 percent clear,” said Jeff Levine, director of financial planning with Blueprint Wealth Alliance. To get the percent deduction, “it has to be a qualified trade or business.” The new law does not clearly define trade or business, and the term is defined differently in different parts of the tax code. “Depending on IRS interpretation, a taxpayer’s involvement in the rental property could be a factor” in whether he or she qualifies.

Luscombe said he believes Congress intended real estate investors who use Schedule E to qualify for the deduction, and a congressional committee report supports that idea.

Weissenberg said they clearly would qualify for the deduction.

Nelson also said they should qualify, “but we’ll have to see what the IRS says” when it issues regulations.

Real estate investors do not need to form a limited liability company to take this deduction, Nelson added. They can put property into an LLC (many do for liability reasons) as long as it’s not taxed as a corporation.

The law does state that people who own shares in a real estate investment trust can deduct 20 percent of their ordinary dividends (but not capital gains dividends) starting in 2018. This deduction cannot exceed 20 percent of their taxable income, but other limits do not apply.

“Real estate is a big-time winner” in the tax law, Weissenberg said, thanks to this and other provisions.

Source: sfchronicle.com

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Why taking recourse against a nonpaying tenant can sometimes get a landlord into trouble

Thu, 01/18/2018 - 7:59am

Q: I own rental property in California. My tenant broke a two-year lease within two months of signing. He left the house without paying the rent. I called a real estate agent, advertised the property and got it rented. Can you advise me if I can deduct the amount I paid for the real estate agent from the security deposit and the loss of rent?

A: What you need is an attorney to help you with your question. Most municipalities and states (including California) have rules pertaining to security deposits and leases. Due to your tenant’s bad behavior, you may be able to legally keep the entire security deposit or just a part of it.

You should first review the fine print of your lease. What does the lease document say happens to the security deposit in case of a default by the tenant? Then, you have to look at your state laws and local ordinances to figure out if any law or ordinance applies to your situation. Once you get a handle on what the lease, laws and ordinances say, you can make a decision on what you can do.

From a lease perspective only, most leases say that a landlord is entitled to recover his or her damages when a tenant breaks a lease. Those damages can include the amount of rent that was unpaid and remained unpaid while you searched for a replacement tenant and may include commissions and other costs you expended to get that other tenant. Most lease documents would allow a landlord to deduct those costs from the security deposit.

But this is where it gets tricky. Some state laws only allow certain items to be deducted from security deposits, and some municipal ordinances require you to provide receipts and proof that you spend money — and only for certain items — before you can deduct those sums from the security deposit. Finally, some ordinances will penalize you, the landlord, if you fail to comply with the statutes and ordinances even when the tenant was at fault.

So if you fail to comply with the laws and ordinances, it could cost you a pretty penny. For these reasons and depending on the amount of money involved, we think you should connect with a local attorney who is knowledgeable about all applicable laws.

You might be able to research and get more information on your own, but you’ll be taking a risk that if you do it wrong, the tenant may have a claim against you. In some places, you might have to sue the tenant to get some of the damages you are entitled to, so make sure you understand what your lease says and what laws apply to you and your situation.

Good luck.

Source: washingtonpost.com

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Tips for Purchasing an Investment Property

Thu, 01/18/2018 - 7:57am

As far as investments in the U.S. go, real estate is one of the best. Aside from the general trend of increasing home prices, the fact that the President is a real estate mogul makes it highly likely that economic conditions will be favorable to property investors.

Regardless, investing in property isn’t something you should take lightly. There are a lot of variables you need to take into account, most of which will be beyond your control. With the right knowledge and preparation, however, you can make the most of your investment property.

Below are the tips to keep in mind when purchasing an investment property.

Think about the long-term costs and benefits. Warren Buffett once said: “If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes.” The same can be said of real estate: If you can’t imagine holding on to a piece of property for at least a decade, you’re better off looking at other investments.

Unless you have a considerable amount (read: thousands of dollars) of cash on hand, you’ll want to shop around for low-cost financing options first. Assuming you have a solid credit history, you should have no problem securing low-interest loans. Otherwise, you’ll have to work on either improving your credit score or looking at other ways to finance an investment property.

You should also consider whether you want to live on the property or rent it out to tenants. As a landlord, you can earn a stable monthly income thanks to rent. On the other hand, if you’re not careful when qualifying tenants, you could end up with more trouble on your hands than you’re willing to put up with.

Lastly, don’t forget to account for taxes related to property investing. These taxes include land tax, capital gains tax and stamp duty. If you’re not sure about these, get a tax lawyer or accountant to help you.

Shop around. When choosing property, you may find yourself overwhelmed with choices. Should you purchase a rental in a high-traffic area like a university, even if your potential tenants (i.e. students) don’t have the biggest budgets? Or should you get one in a high-end neighborhood, even if the costs of maintenance aren’t cheap?

To make things easier, start with the type of property you’re already familiar with. For example, if you already have a few years of experience living in a condo unit, chances are you’re well-aware of what condo dwellers want and don’t want.
Of course, you’re free to invest in a type of property you’re unfamiliar with. But if you want to spend as little time as possible filling in the gaps in your knowledge, it’s a good idea to stick with what you know.

Understand the market. The last thing you want is to end up overpaying for property. By arming yourself with knowledge about local real estate conditions, you’ll be better equipped to find property at or below market value.

Contact as many real estate agents and locals as you can. Ask them about average rental rates, demographics, property values, suburb reports and other related data. You can also corroborate their information using reliable third-party sources. Don’t forget to check prevailing mortgage rates as well.

Check the age and condition of the property. If you’re planning to rent out your property, make sure it’s in the best shape possible. It’s easier to justify a higher rental rate when your property looks like a million dollars (even if it isn’t). Have a professional help you in determining whether a property needs repairs, and how much.
On the other hand, a property that’s somewhat rundown can fetch a purchase price well below market value. In that case, consider whether you’re willing to conduct DIY repairs of the place if cost is an issue.

Plan for the care of the property. Property management isn’t easy. As a landlord, for example, you’re responsible for screening tenants, filing taxes, keeping the books, collecting rent, handling maintenance and repairs, writing contracts, working out insurance plans and more.
If that sounds too great a responsibility to handle, it’s best to get help from a property management company. Generally, property management companies charge anywhere between 8 to 12 percent of the monthly rent.

Spruce up the property. Whether you’re planning to rent out your property or not, renovating it will work wonders for its market value. For example, you can:
• Make sure your kitchens and bathrooms are modern and well-equipped.
• Stick to neutral paint colors such as cream, grey and beige.
• Use paint to highlight your property’s architectural features, brighten dim hallways and revive tired walls.
• Improve your property’s overall curb appeal.

Buying the right property takes time and effort. It’s definitely not the sort of venture for someone looking to make a quick buck. But if you’re willing to stick with it for the long haul, your profits will keep coming in for the long haul too.

Source: realtybiznews.com

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5 Intriguing Trends in Today’s Apartment Rental Market

Thu, 01/18/2018 - 7:44am

Investors, developers and builders across almost every metro area in the U.S are scrambling to keep pace with the growing demand for multifamily housing, especially apartment rentals. Market reports show that up to 90% of recent multifamily developments in major cities across the country have been rental apartments. What does this mean for the market?

Below, we look at some of the intriguing trends in today’s apartment rental market.

The Pursuit of the Urban Lifestyle Rental apartments are attracting two different demographics: millennials who are attracted to the urban lifestyle and empty nesters who want to downsize after their kids have gone to school. According to Broadstone Ridge, the pursuit of the urban lifestyle is being driven by the desire for walkable and conveniently located apartment rentals that are professionally maintained and landscaped with all the essential amenities.

Much of the rental apartment trend is being fueled by young professionals who crave living in a place where everything they need and want is close by and doesn’t require them to go onto a highway. Multifamily developments are keeping pace with this trend by investing in the latest technologies and offering various luxury amenities to woo millennials and empty nesters.

More Renters are Aspiring to Luxury Living Many apartment renters are aspiring to live in or close to downtown, but that kind of lifestyle isn’t cheap. Despite more developers and investors targeting deep-pocket customers, there is still an upsurge in demand for affordable luxury living among the middle-class. A larger number of new apartment rental communities are targeting renters who aspire to luxury living.

To attract such renters, apartment rentals must offer a range of luxury amenities like:

● Multi-use common areas with luxury features
● Infinity pools
● Upgraded design features
● State-of-the-art gyms and yoga studios
● Wine rooms

These posh perks are becoming more of a feature in distinguishing luxury apartment rentals from other residential buildings. In markets where rental apartment affordability is particularly acute, developers are simply building smaller apartment units that are more attractive and efficient and becoming more popular among the middle-class.

Cutting-Edge Technology is Selling Technology is quickly reshaping the apartment search and living experience and transforming the rental world. More renters are expecting their apartment complex to provide cutting-edge technology such as high-speed internet, customizable entertainment packages, smart security and other apartment technologies.

Luxury apartment developers are customizing and personalizing services to attract more renters. Offering cutting-edge technology as an introductory offer is becoming more of a trend. The biggest challenge is how building owners can keep up with the next wave of innovations. The bottom line is renters are getting more control over technology.

Signing Green Leases for a More Sustainable Lifestyle More eco-friendly apartment complexes are being developed as renters opt for a more sustainable lifestyle. Expect to see more multifamily units offering energy-efficient buildings, composting and recycling, bicycle parking and other eco-friendly services. More developers who care about the environment are requiring tenants to sign a green lease.

By requiring tenants to live sustainable lifestyles, via green clauses in the apartment rental lease, developers are able to create an intentional community of renters who are committed to sustainability. Going green has benefits for both the renters and building owners.

Micro Apartments are Becoming Popular As evidenced by recent real estate reports, micro apartment units of approximately 350 sq. ft. have been observed in the apartment rental market and are quickly becoming a trend in urban centers. This rise in the demand for micro-apartments is attributed to the changing demographics of the buyer market.

These micro units tend to draw young singles that simply want to live in a prime location and don’t need to entertain at home. Cities like San Francisco, New York, and Seattle have been early adopters of the micro-apartment trend, and it’s paying off by serving the new market.

Conclusion Despite the growing demand for rental apartments across cities in the U.S, there is still growing concern about the rising cost of renting these units. Nevertheless, real estate experts continue to point at changing demographics, economic and cultural factors that they believe will continue to energize the demand for multifamily apartment rentals for several years.

 

Source: realtybiznews.com

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The Truth About Renting Out Your Home During a Big Event

Thu, 01/18/2018 - 7:40am

Super Bowl LII will be played on Sunday, Feb. 4 at the new U.S. Bank Stadium in downtown Minneapolis and organizers expect some 1.3 million people to visit the Twin Cities during the week. Little wonder that popular questions among local homeowners have been: “Are you renting out your home?” and “How much do you think we could make?”

If a big event will be coming to your town — a professional golf tournament, a giant conference, the NCAA finals, whatever — you may be wondering if you can rake in a tidy sum by renting out part or all of your home, too.

The truth is: you may be able to find a taker, but you probably won’t make a fortune.

Super Bowl Is Drawing Many Airbnb Hosts

Even so, Twin City locals are increasingly planning to welcome visitors to their pads in hopes of padding their wallets.

Airbnb, the largest online home-sharing service, now has 3,300 active hosts in Minneapolis and St. Paul for Super Bowl week. That’s up from just 1,000 last February when the company launched its PROJECT 612 initiative (612 is the Minneapolis area code). Other online home-sharing businesses, such as VRBO, are also busy signing up hosts.

All of this is adding to the excitement caused by the don’t-jinx-it! chance that the Minnesota Vikings may play in the Super Bowl, whose stadium is actually shaped liked a Vikings ship.

But Twin Cities homeowners dreaming of pocketing big bucks from their side hustle are likely to be disappointed.

Yes, there are high-end condos on the market for $15,000 a night blocks from U.S. Bank Stadium. And a 20,000-square-foot home on a Lake Minnetonka island is priced at $250,000 for the week. But Airbnb bookings are averaging $173 a night during Super Bowl week. This is about 2½ times the typical rate for the area, though hardly a sum that fantasies are spun from.

The modest rate reflects the experience of Greg Candelaria, an IBM retiree, and his wife, Brooke, last year. That’s when they rented out a spare bedroom and bath in their Houston home, six miles from the NRG Stadium where the Super Bowl was played.

What One Super Bowl Host Brought In

In the weeks leading up to the game, the Candelarias posted a high price of $1,000 a day. No takers. Three days before game day, they lowered their price to $399. The couple was approached by an Atlanta couple with an offer of four nights for a total of $1,000. They grabbed it.

Even though that wasn’t a huge sum, it was better than the $60-a-night they typically raked in through Airbnb.

Keeping Earnings Expectations Realistic

The keep-earnings-expectations realistic was a theme of a Dec. 19 meeting of roughly 50 prospective Super Bowl hosts at a hip space in downtown Minneapolis.

Reece Anderson, manager of hospitality for the Super Bowl Host Committee, said he hoped hosts would meet the needs of the game’s 10,000 volunteers (some coming from as far away as Australia) and discouraged residents from thinking they could charge $30,000 for the week.

“The people who can afford to pay that will fly in their private jets to be at the game and then leave,” he said. “They’re already taken care of. Those are VIPs.”

New Fees for Some Home-Sharing Hosts

Also concerned: city governments in Minneapolis and St. Paul.

Both passed legislation aimed at the sudden growth in the local home sharing market.

For example, Minneapolis hosts who leave their homes when guests stay there must now get a $46 annual license and may face periodic inspections. Hosts who remain in their properties don’t have to pay a license fee.

Taking in a Needy Family

Trudy Ohnsorg, 53, author of Air Be & Me, has been renting out her St. Paul home through Airbnb since 2015 to offset the risk of leaving her stable state government job for a consulting group focused on nonprofits. “It’s brought a steady stream of remarkable people into my life,” Ohnsorg says. “I still love to travel, but now I do it in reverse.”

Although she wasn’t planning to take in someone during Super Bowl week due to fears of partiers trashing her home and disturbing neighbors, she relented when a needy family came knocking. They had to make a work-related move to the Twin Cities during, of all times, the Super Bowl festivities.

So the couple with two kids, two dogs, and a cat will stay at Ohnsorg’s house from mid-January through mid-March at her regular rate. That “gets me the $9,000 I was hoping to receive during this time period,” she says.

Advice for Prospective Home-Sharing Hosts

If you’re considering renting out your home during the next big local event, here’s some advice from Candelaria, Ohnsorg, and Airbnb itself:

Candelaria sent the following checklist (lightly edited for clarity):

  • Go with a secure platform like Airbnb or VRBO
  • Use an attention-getting headline for your listing, like “Stay at Your Own Super Bowl Headquarters in the Heart of the Twin Cities!”
  • Draw attention to your home-sharing ratings, amenities, and location
  • Compare your pricing to other homes in the area
  • Set realistic expectations and know your bottom price
  • Take only fully verified guests that have previous reviews
  • Use caution when considering “first-timers,” since they may create stories to encourage you to rent to them (for instance, they may say there will be four people and then invite more friends for a party)
  • Set a strict cancellation policy (such as 50 percent refund if canceled more than a week before the event but 0 percent refund within a week of the event)

To protect yourself from scams if you plan on opening your home to strangers, do it through one of the major home-sharing platforms. Companies like Airbnb routinely run background checks and risk assessments to lower the odds of a bad experience.

Airbnb is even beefing up its customer support during the Super Bowl to help prevent problems. “We will have a Super Bowl swat team for support services,” says Nick Shapiro, global head of trust & risk management at Airbnb.

Ohnsorg’s advice: Try out sharing your home before a major event.

That experience, she says, will allow you to build up a clientele, understand your pricing, meet all the regulatory requirements and get your insurance in place.

“Get some practice,” she says.

 

Source: nextavenue.org

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