American Apartment Owners Association

Five Goal-Setting Tips To Real Estate Investing Success In 2018

Mon, 11/20/2017 - 2:28pm

As a real estate investor, it’s easy to succumb to the “shiny penny syndrome”: We focus on the latest and greatest deal, without seeing how this shiny penny fits into our long-term goals. Many successful real estate investors use the “SMART” goal system to plan their pursuits.

In the SMART system, goals must be specific, measurable, attainable, reasonable and timed. Using the SMART technique can help any investor narrow their focus and get the most out of their real estate investments.

Goals Must Be Specific

The term real estate investing covers a wide range of investing styles (fix and flip, wholesale, turnkey investing) and real estate types (single-family, multi-family, commercial). Creating specific goals can help an investor stay on course among myriad potential pathways. Here are some specific ways to go about real estate goal-setting:

Non-specific goal: “I want to make money investing in real estate.” This goal provides no direction about how or where money will be made.

Specific goal: “I want to purchase 10 single-family rental properties in the next 36 months that generate enough cash flow to replace my current annual income.” This goal is specific, and it provides a timeline of when it will be achieved.

Goals Must Be Measurable

It goes without saying: Everyone wants to make money on an investment. Investors don’t invest to lose money. A measurable goal is something that can be quantified, like a specific number of properties that will be purchased or the return on investment that an investor expects.

Unmeasurable goal: “I want to be the top real estate investor in my area.” This goal is unmeasurable because it doesn’t really mean anything. A top investor could be the one who closes the most deals or the one who has the most monthly income.

Measurable goal: “I want to purchase four investment properties with a 6% or higher annual rate of return on investment.” While this may seem so simple, that is the beauty of a measurable goal. The point is to have a benchmark to measure against. When an investor sets their goals, they can easily check to see if they are on track or not.

If goals aren’t measurable, they simply can’t be met. Setting a goal that can’t be measured is just like setting an unreasonable and unattainable goal: It does more harm than good.

Goals Must Be Attainable

Ambition is every real estate investor’s friend. It’s the trait that drives an entrepreneur to be successful. But real estate investors need to remember to keep their goals within reach. Creating unattainable goals only sets an investor up for certain failure that may hinder their desire to try again in the future.

Unattainable goal: “I want to make $100,000 on my first real estate deal.” While it is possible to make $100,000 on a real estate transaction, it’s not always attainable — especially for a first-time investor. Factors like market demand or properties available can impact this goal. Focusing simply on “the big number” should not be a part of real estate goal-setting.

Attainable goal: “I want to secure a property with positive cash flow and potential for appreciation.” This is an attainable goal because an investor can control where they buy and the price they pay.

Goals Must Be Realistic

Goals can hurt an investor when they aren’t realistic. Unrealistic goals are a lot like unattainable goals. However, an unrealistic goal goes beyond “out of reach” and into “impossible” territory.

Unrealistic goal: “I want to manage all my rental properties and fix-and-flips to cut down on costs, all while working a full-time day job.” No matter how motivated a real estate investor is, they can’t add more hours to the day. This goal — attempting to build a real estate investing business with no outside support — simply isn’t realistic.

Realistic goal: “I want to maximize my profits through partnering with the best team of property managers.” It is still possible to achieve positive cash flow while working with a property manager. If the numbers add up, an investor can still realize positive cash flow while outsourcing the day-to-day work to a property manager.

When taking part in real estate goal-setting, a reasonable investor should take inventory of their resources and set goals that correspond to the time and money they have on hand.

Goals Must Be Timed

Many real estate investors work for themselves, so timing goals is critical. By setting timed check-ins, investors can ensure they are meeting their goals.

Untimed goal: “I want to call as many leads as possible.” This goal isn’t timed because there is no end date. Is this a daily goal, a weekly goal, a lifetime goal? In addition to not being timed, this goal is also unmeasurable.

Timed goal: “By the end of the month I want to call 20 leads.” This goal gets points for being both timed and measurable. Setting a monthly quota for leads is an excellent way to parcel out all the work that goes along with investing in real estate.

Timed goals are especially important for investors who work in teams. They add structure to the dynamic world of real estate investing. Many investors jump into real estate investing with the long-term goal of financial stability and independence, and timed goals offer a roadmap to achieve that goal.

Goal-Setting For Real Estate Investing Success

Taking the time for real estate goal-setting can feel tedious, but it is crucial to being successful. The process of goal-setting is only the first step for a real estate investor to begin making headway. Once goals are set, investors need to develop a strategy to accomplish their goals. Build on from here with the next step of creating a business plan to keep your investment goals on track.

 

Source: forbes.com

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Once-Hot Apartment Construction Cooling as U.S. Housing Engine

Mon, 11/20/2017 - 2:22pm

Faster apartment building was instrumental in pulling the U.S. housing market out of its slump a decade ago. Now, that engine is starting to throttle back.

A softening in the multifamily segment is something to keep an eye on even as overall homebuilding — which includes single-family dwellings that make up the largest share of the market — is expected to keep moving forward.

The supply of apartments and condominiums has surged in recent years as builders responded to rising demand, fueled in part by young Americans who preferred to rent rather than purchase a home in the aftermath of the recession. A surge in prices for single-family properties, as the real-estate market recovered from its 2006 plunge, also made apartments more attractive for both builders and people unable to buy.

The following charts show how multifamily construction is maturing and what that implies for the economy

Many of the recent projects are finished and ready to rent. A Commerce Department report on Friday showed completions of multifamily units in October reached the fastest annualized rate in almost three decades.

What’s more, the pipeline of apartments under construction is leveling off from a 42-year high reached at the start of 2017. And the number of multifamily units authorized but not yet started also is cooling as builders attempt to calibrate the supply.

While new multifamily-home construction and permit applications are both still rising, there’s less incentive to keep building with as much intensity. By 2016, multifamily starts had recovered 96 percent of the ground lost during the downturn, while the single-family market was just at 45 percent, according to a report this month from Dodge Data & Analytics, which provides construction-industry data.

Apartment construction spending may retreat 8 percent in 2018, the second consecutive annual decline after years of double-digit growth, Dodge estimates.

Among some other warning signs, rental vacancies have climbed to a two-year high as demand is getting crimped by the 33 percent runup in rents during this economic expansion.

The effects of any slowdown in multifamily housing will have repercussions in the broader economy and extend to other data. First, an adequate supply of apartments — both ready and in the pipeline — could eventually put downward pressure on rental prices, slowing growth in shelter costs that have been propping up inflation so far. Shelter accounts for about one-third of the consumer-price index.

A more tempered pace of apartment development would free up construction workers who builders say are in short supply. That would be welcome news for single-family homebuilding, which requires more labor relative to multifamily construction. The number of one-family houses under construction in October was the highest since July 2008, boding well for industry payrolls.

Source: bloomberg.com

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9 Tips for Cleaning Your Rental Between Tenants

Mon, 11/20/2017 - 2:18pm

One of the biggest stresses that comes with owning a rental property is when the tenant moves out. At this time, it’s your responsibility to check the property, order maintenance, and clean everything for the next tenant. Sometimes, this process is a breeze. Other times, you’re left with a lot of work on your hands.

Even if it’s a pain to achieve, a clean property yields many benefits. A pristine rental comes with higher rent prices, so it’s very important to actually get things clean after a tenant moves out. What’s more, cleaning the property thoroughly between tenants adds longevity to each unit. To reap the rewards, try some of the following tips.

1. Require Tenants to Clean Thoroughly

Give your tenants a detailed checklist covering both the major items and the smaller details you expect them to take care of. Ideally, providing a checklist minimizes the amount of cleaning you’ll have to follow up with. If your tenants follow your checklist to the letter, your final walkthrough will be a breeze.

2. Replace Old Furnishings and Appliances

You can clean things for awhile, but after a certain point, it’s simply better to replace them. Refrigerators, stoves, dishwashers, and other appliances should be replaced once they start to become grimy and difficult to keep clean.

If you have furnishings in your apartment, it’s a good idea to consider replacement items. A mattress, for example, can only be cleaned so many times. If it’s old and dirty, you’ll have a harder time showing properties and collecting a decent amount of rent. It’s better to replace an old mattress with one that fits your budget.

3. Stock Up on Magic Erasers

Magic Erasers work miracles. When your tenant doesn’t clean something to your standards, a Magic Eraser can shine things up in no time.

As a landlord, you can also stock up on a number of industrial cleaning supplies. These commercial supplies work much better than what you can get over the counter, but they’re not readily available to the general public.

4. Hire a Company to Clean the Blinds

It’s good for tenants to dust the blinds before they leave, but you’ll want them to be careful. It’s easy for blinds to break, depleting your reserve savings. You could spend hours working on the blinds yourself, but a blind-cleaning company can do them in no time with special equipment, and they’ll be much cleaner in the end.

5. Check for Maintenance Needs

Before the next tenant arrives, quickly check your property for any maintenance needs: Think repair damage (such as holes in the walls), broken window locks, or leaky sinks. It’s rare that a tenant will leave a property in perfect condition, and you want it as clean and inviting as possible.

6. Consider an Inspection

Depending on certain factors, like your city’s laws and the last tenant that resided in the unit, you may want to have an inspection done. An inspector will look for health and safety concerns and certify that things are in good condition. At the end, the inspector will issue a certificate of occupancy, which can make your property more marketable.

7. Clean Forgotten Places

Even if tenants follow your meticulous checklist, they’re likely to forget a few places. It’s understandable for tenants to miss a few things, but if these spots are not cleaned, grime will build up over time and make the property less attractive to renters.

Check places like outlets and light switch covers, under the lip of the counter top, the tops of the baseboards, and other nooks and crannies. A careful inspection of the property can reveal these missed areas.

8. Don’t Forget the Outside

The property’s exterior is often just as important as the interior, especially if you’re renting a single family home or a small apartment building. Dirty sidewalks, driveways, porches, gutters, siding, windows, and doors can leave a bad impression. Rent or buy a pressure washer to handle the outdoor grime and keep the landscaping fresh and neat.

9. Clean Carpets and Paint

Although you may not need to paint or clean the carpets after each tenant vacates the property, you should do so regularly. Carpet can collect germs that can be hazardous to your next tenants. Paint will also cover marks on the walls, tiny holes, and other wear and tear common with rental properties.

 

Source: biggerpockets.com

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5 Tips for the Best Apartment Walkthrough

Mon, 11/20/2017 - 2:16pm

When giving an apartment walk-through with a prospective resident, it is important that you have all your bases covered. This will make it easier for you as you move toward signing a lease, and it will also encourage your resident to choose your place over others. In order to ensure the best walkthrough success, check out these five tips:

1. Be personable

Nothing makes or breaks a commitment more than attitude. If you want to get a prospective resident to buy in, then sell the place based on its human aspect. Showcase the features of the apartment that you can maximize living in.

Talk about ways the space can be used, how people have used it in the past, etc. Don’t just point out the kitchen and say, “This is the kitchen, here is the oven.” Discuss the oven, its features, and how much food it can cook at a time.

Make the apartment into a home for the resident. It will be less work for the resident to think about, which is always a plus, and it will also help to make the seemingly empty place they look at now into something they can imagine living in.

2. Safety features

Make sure to take the prospective resident through a step-by-step analysis of each safety aspect of the apartment. This is probably the most important aspect of an apartment walk-through, and it will show that you are knowledgeable and caring about your residents’ well-being.

Show them all the possible exits in case of an emergency. Point out where the fire alarms and fire extinguishers are, as well as the carbon monoxide detectors. Tell them the last time they were tested, and how often maintenance does a check-up on them.

Point out the locks on all of the doors and on all of the windows and any peepholes. Let them know what the average crime rate is, and take this time to mention security at the front of the building as well. Be sure to mention any settings on the oven or stove that alarm of heat problems and how the apartment can be baby-proofed — if that seems to be a concern for them.

3. Beat the resident to his own questions

If the prospective resident has done his research, he will come ready with a list of questions. The best way to show the resident your apartment is worthy of his money is to be prepared with the answers, and, even better, to mention what he is going to ask BEFORE he asks it.

Aside from safety concerns, questions may include general utilities questions in regards to cost and use, pet policy, and, if you allow them, how that will work in the specific apartment you are standing in, and how much the furniture you are showing in the apartment now will be included in the actual rent.

4. Inspect the apartment prior to the walkthrough

This probably goes without saying, but it cannot be stressed enough that you should do an individual walkthrough of the apartment before you take a potential resident through. Even if you did a walkthrough right when the last resident left, you do not know what could have crept in since then. Best to not be caught in a surprise.

Turn all of the lights on and off, flush the toilets, run the water, turn on and off all of the appliances, and lift the shades up and down. If you see a problem, then point it out to the resident first. It will show that you are aware of the problem, and if you are the first to recognize the issue, then you can make it seem like less of a problem than the resident may think it is.

5. Analyze WITH the resident

The best thing you can do when conducting an apartment walkthrough is to not rush through it but to take the time to walk side-by-side with the potential renter and look at the nooks and crannies of the apartment together. Doing so will help you to avoid problems later if the potential resident does indeed decide to commit. You both will be aware of any damage already done to the apartment, so if there is new damage done when the resident leaves, there will be no discrepancy on what was there before versus after.

When you do this, make sure to have an inspection checklist on you for the written record. Conducting a side-by-side analysis will also show that you care about the well-being of the apartments you show and that you are not afraid to hide anything. It will show that you care what the resident has to say and of his concerns.

 

Source: rent.uloop.com

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3 Ways to Reduce Your Rental Losses

Mon, 11/20/2017 - 10:25am

Security deposits aren’t always the safety net landlords think they’ll be. Many states will limit the security deposit to 1-2 month’s rent and in many cases damages, broken leases, or unpaid rent may cost you more than the security deposit you collected. If you think it’s worth it, you may take a tenant to court to recover that cost, but may find the tenant does not have any assets to pay back the court judgment they owe you. Then you’re left with the loss of more time and money.

Here are some tips on what you can do to prevent this from happening:

  1. Screen tenants thoroughly before renting to them: You should be equipped with as much information as possible to reduce the likelihood that they will default on rent. Ensure they have stable income, good references, a clean record, decent credit score and a good payment history.
  2. Get RentGuard if your tenant qualifies:
    • RentGuard give you much more protection than a security deposit and it starts at only $299 for $2,500 annual coverage. Coverage options vary and go up to $10,000.
    • What this means is you can use RentGuard in place of a security deposit or in addition to the security deposit. This guarantees that you will be paid out money that is owed to you in a court judgment up to the coverage amount you selected.
    • The RentGuard Analyzer in every tenant screening package (red, white, blue, or gold) will tell you if your tenant qualifies for RentGuard and will give you the option to start coverage or invite your tenant to purchase coverage.
    • To learn more about RentGuard visit  or call (866) 579-2262.
  3. Do monthly or quarterly inspections: Some landlords don’t see the inside of their rental until the move-out inspection and are shocked to find their tenants are hoarders, partiers, pet owners, or worse. The damage that is done in a matter of 12 months can be completely destructive and easily exceed the security deposit. It is better to catch these things as they start to occur by doing regular walk through inspections. Be sure to provide your tenants with written notice (you can use the AAOA inspection notice form here) and also include dates of inspection in your lease terms. By doing this you may be able to fix problems before they get worse or evict a tenant that has broken the lease terms.

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What Renters Are Thankful For

Fri, 11/17/2017 - 12:33pm

In honor of Thanksgiving, this month MHN and Kinsley Associates partnered to find out what residents are most thankful for in their communities.

“The maintenance technician was very nice and worked quickly. He was also kind to my kids, even though they kept asking him questions and wanted to watch him. He handled it graciously, and I appreciated his patience just as much as the work he did!” —Orem, Utah

“I had guests visiting and submitted this maintenance request very late. The maintenance staff was very responsive and had the issue taken care of the next morning. Thank you!” —Alexandria, Va.

“I love the new package room and delivery system. Now my packages are delivered securely and protected against theft.” —Framingham, Mass.

“We appreciate the opportunity to have a dog, the rental rate, location and the floor plan. We also appreciate having a washer and dryer in unit, as well as larger washers and dryers for the whole facility to use.” —Sunnyvale, Calif.

“I appreciate that the management encourages involvement in the community by sponsoring breakfast get-togethers and other community events. I also appreciate the monthly community newsletters they send out.” —Spokane Valley, Wash.

“The leasing agent who showed us around was great at his job. We weren’t going to take the tour, but he convinced us. We were so grateful he did! We loved the apartment and can’t wait to move in.” —Atlanta

“I really enjoyed my move-in experience! There have been no hidden fees or problems that were not previously pointed out to me. I appreciate the transparency. All fees were shown and all problems dealt with!” Alexandria, Va.

“I appreciate that the pet policy does not discriminate against larger dogs. I would not have been able to live here otherwise.” —Farmington Hills, Mich.

“I appreciate that my utilities and rent are all paid together online. It makes paying very easy and convenient!” —Denver

“Management is very patient and helpful. They assisted seamlessly through a tough transition by being honest and presenting all the possible options. I left feeling accomplished and appreciated.” —Charlotte, N.C.

“I’m thankful that the appliance replacement was completed so quickly. It means a lot to me as a resident to have this kind of consideration shown by the maintenance and the office staff.” —Dallas

“Being new to the complex, I was appreciative of management’s attention and clarity in what I should expect from them as a new resident.” —Ellicott City, Md.

“The office staff are friendly, courteous and responsive. They greet me by name, which I appreciate, and go above and beyond to make my living experience pleasurable.” —Wyoming, Mich.

“My apartment on move-in day was spotless! The staff are knowledgeable and go all out to help in any way. They exceeded my expectations! I’m grateful I found such professional support staff and friendly neighbors!” —Portland, Ore.

“My forgetful self-forgot to turn off the coffee pot! I was more than halfway to work when I realized it. Thankfully, the assistant manager took my call and turned the coffee pot off for me. I’m so grateful for the excellent customer service!” —Austin, Texas

“Maintenance came to look at my broken AC unit within a few hours. When they were unable to fix it, they called the AC repair team early the next morning. My AC was up and running by noon. I was very impressed. Thank you!” —Albuquerque, N.M.

“I appreciate the courtesy calls I receive to make sure I will be home when maintenance needs to enter. The staff is super friendly and they make it clear that they want to fix whatever the issue(s) may be.” —Colorado Springs, Colo.

“We really appreciate the amenities that were recently upgraded, especially the hot tub and pool that are now always clean, heated and well maintained.” —Davis, Calif.

“The leasing agent was awesome and very accommodating. He even took me on a tour of an apartment five minutes before closing. I am very appreciative. There need to be more leasing agents like him!” —Virginia Beach, Va.

 

Source: multihousingnews.com

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How to Market Your Apartments in Winter

Fri, 11/17/2017 - 12:28pm

It’s the most wonderful time of the year — unless you’re a property manager. Industries like retail, transportation, and food services thrive during these long winter months, but the property management industry isn’t so lucky.

The dreaded “slow season” for apartment leasing often sends landlords scrambling to fill their vacancies. This is mostly because, well, who wants to move into a new apartment in cold weather? Additionally, it is more convenient for people to move when schools end in spring and summer rather than in winter, according to Apartment Guide.

Property managers, you don’t have to stress too hard this off-season. Here are five ways to market your apartments and attract more renters in winter.

1. Offer discounts on winter bills and rent

Winter is a slower time for apartment rentals, but that doesn’t mean nobody is searching for a new place to live. Life can cause anyone to move unexpectedly — these renters will be looking to take advantage of the winter lag by finding apartments at a lower rate.

Discounts are always a good incentive for drawing in new tenants. Tell renters that you will pay for their heat for the first few months or take half off rent if they sign a lease in January.

“In the lease, just make sure you cap the amount of the utility you pay to $150 or whatever,” according to BiggerPockets.

You can also offer some freebies to renters when they move in, such as gift cards to local stores or furniture in the apartment.

2. Increase your advertising

If you know you won’t be bringing many new residents in during winter, your focus should be on marketing to prepare for when it picks up again.

If you run listings on sites like Craigslist, you can renew them frequently so that they stay near the top of the page. Be sure that the post is memorable and provides all the contact information. Motivate sluggish renters to make the first move.

Post some walkthrough videos of the apartment on Facebook and provide a link to the listing. Engage in some conversations with social media followers about the apartment itself and the surrounding area, and take note of potential leads! Invest in Facebook Advertising Campaigns to reach the maximum number of users and target your specific audience.

You can also use the slow months as an opportunity to follow up on reviews of your apartment. Check Yelp, Google, and ApartmentReviews to update any old photos or data. Ask former tenants to write reviews for you. You can even offer them an incentive to do so. If you see a negative review, respond to the comments directly. Potential residents will see your eagerness to improve.

3. Highlight winter activities in your area

What surrounds your apartment complex that might interest residents in winter? When you advertise, be sure to point out these locations, especially if you’re targeting families. Highlight any ski lodges, ice skating rinks, winter hiking spots, or even local coffee shops.

When your tenants move in, include some coupons if possible and encourage them to visit these locations. You can even sponsor a group trip for you and your residents to enjoy winter fun together.

In addition to advertising on social media, ask business owners if you can post flyers and brochures in their establishment. You may also be able to promote yourself for a day by setting up a table with free hot chocolate and speak to some potential renters in person.

4. Plan some family-friendly winter events

Embrace the holidays and support family time with some promotional winter events. Invite current residents, prospective residents, or really anyone in your community. Use the opportunity to bond with tenants and talk up your vacant apartments.

Host a holiday dinner — be sure its inclusive to all winter holidays — and invite guests to bring their own dishes if they’d like. Plan a New Year’s resolution fitness program if your complex has a gym. Gather some prizes and hold a snowman-building competition by the front of your apartments for current residents.

Post pictures of your events on social media and tag your apartment complex’s location! Your winter spirit will be appreciated, especially by families with younger children.

5. Collaborate with other businesses

Build relationships with local employers and they’ll be willing to cross-promote.

Ask business owners to recommend your apartment complex to new employees looking for a place close to their work. In turn, you can offer discounted rent or utilities to their employees.

Keep an eye on your local business journal. New businesses will no doubt be hiring employees from other locations, and they’ll need a place to live. These new businesses should become part of your target audience.

Support local small shops and restaurants by including gift cards or coupons in welcome packages for new residents.

It’s going to be a cold winter that might seem never-ending, but with the right tactics you’ll make it through without sitting on empty apartments.

 

Source: rent.uloop.com

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Real estate stagers can and should offer design services

Fri, 11/17/2017 - 12:26pm

The most financially successful interior design professionals are often the most diversified. They have multiple streams of income.

One lucrative “stream” available to real estate stagers is offering partial or complete interior design services. Problem is, too many stagers avoid that opportunity because they feel they lack the proper credentials.

True, stagers who don’t have design certification can’t technically call themselves “interior designers.” But most certainly can and should call and promote themselves as “interior design professionals.”

That’s because most stagers have a working knowledge of such design elements as color, furniture placement, fabrics, window treatments, and wall and floor coverings. Whether they’re staging homes for clients who want to sell or stay in them, these stagers are interior problem-solvers.

They help their clients enhance the value — and eventually the resale value — of their residences, and they provide resources that those clients likely don’t have access to. In the process, the stagers help those they serve same time, money and stress.

Many staging pros offer interior redesign consultations, helping homeowners discover new and better uses for the furnishings they already own. The savviest stagers also offer full-scale “interior consultations,” supplying their advice on many design aspects of the new homes their clients end up occupying.

Some veteran stagers charge up to five times more for a full-scale interior session than they do for the more limited staging consultations.

A key advantage of this face-to-face, in-their-space consulting is that it enables design professionals to upsell their services. Posing a question like “How’s the kitchen working for you?” can open the door to thousands of dollars in remodeling work.

Can real estate stagers without any formal design or remodeling training capitalize on these interior consultations? Most certainly, if they have a network of kitchen and bath and other professionals to whom they can refer the work. By doing so, they can collect handsome referral fees.

A compelling reason for stagers to offer complete interior consultation services is that a good many of their clients want them to do so. Those clients often get to know, like and trust the professionals who staged their homes, and they are likely to want to continue the relationship.

Many individuals who move into a new home, and others who have had their existing home staged feel anxiety, stress and even “pain” around the design of their interiors. Some count on their stagers to help them overcome those challenges.

Marketing themselves as interior design professionals can give stagers a competitive edge in their marketplace. Stager can differentiate themselves by promoting the variety of design services that they offer — especially if they’re the only area staging professionals who offer so many of those services.

Adding interior consultations or other design services makes a great deal of sense for real estate stagers. It makes for a lucrative income stream, and it’s easy to do considering that most stagers have the background and expertise to make this move.

Expanding their business in that way prevents individuals from making the mistake that too many stagers commit too often: leaving money on the table.

 

Source: exclusive.multibriefs.com

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Consider Real Estate Investing Partnerships

Fri, 11/17/2017 - 12:24pm

As an investor, there are many ways to partner with others to maximize profits. The key elements of any real estate investment are the seller, the buyer, the property, the source of funds, and when you are flipping, the end buyer. As the buyer (investor), your role is pulling all of these resources together into a specific deal. However, you don’t have to always do that all by yourself. Formal and informal partnerships can leverage your investment business.

Basic Partnership Considerations

Real estate investment partnerships can be very complex or very simple. One of the most simple ones is an interest-only loan. As an investor, you bring in a funding partner by agreeing to an interest rate, the length of the loan, and the security (usually a first mortgage on the property). Outside funding could come from your own network if you have a history of successful investments. However, you have many other sources worth considering. The home mortgage industry has evolved to include an almost endless source of funding. A little searching on your part will reveal everything from crowdfunding to individuals investing their 401k retirement accounts. Some are silent partners and others want a more active role.

A more complicated funding partnership can be a profit-sharing arrangement. Writing a contract for a profit-sharing arrangement can be more complicated and has many variables. You may choose to write up a contract for a single property that details the specifics about how the profits will be shared. Or you could enter into a Limited Liability Company that oversees multiple investment properties and again details how the profits will be shared.

Partnerships certainly don’t have to be 50-50 split. If, as the primary investor, you’re doing most of the legwork, you’re entitled to a higher percentage of the profits. You’re doing all of the research to find deeply discounted properties, negotiating the sales terms, overseeing the remodeling, and finding an end buyer. You may even be putting down earnest money and/or providing part of the purchase money. Under some or all of these scenarios, you’d certainly be entitled to a higher percentage of the profits.

Advantages to Bringing In a Funding Partner

Reasons why you want a funding partner:

  • To bring other’s “skin in the deal” to lower your business risk.
  • Enables you to spread your own resources across more deals to increase overall profits.
  • Enables you to finance and complete more complex and more expensive deals with higher profit margins.
  • Brings in experienced people to share knowledge and ideas.
  • Increase your success and share it with others.

Issues to be concerned about:

  • Clearly detailing agreements about how profits or interest will be paid.
  • Don’t give up too much control of the deals.
  • Be cognizant of extra reporting requirements, especially tax related.
  • New partners trying to take too much control.

Good times to consider partners:

  • Before you start looking for your next investment property.
  • When partnering is more attractive than other financing options.
  • As a method to reduce the cost of leveraging your own money.
  • As a way to boost the confidence of future investors for bigger deals.
  • When you have well-established investors and need a quick source of cash.
  • When you’re already in multiple deals and are short on cash but another great deal comes along.
  • When taking on a new, creative investment deal that your investor has more experience with.

The most common problem that comes with partnering on real estate deals are the legal aspects. It’s highly recommended that you check out the credentials of new investors as much as they check out yours. Also, have a tightly written contract, partnership agreement, or LLC agreement written and attach it to the title of the property to prevent a money partner from taking out another mortgage or selling the property out from under you.

Source: realtybiznews.com

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House Passage of Flood Bill Critical Step Toward Reauthorization, Reform

Fri, 11/17/2017 - 12:21pm

WASHINGTON (November 14, 2017) – With less than a month left before the National Flood Insurance Program expires, the National Association of Realtors® is applauding the House of Representatives for passing what NAR believes is smart, much-needed support for the program.

“Realtors® know first-hand what happens when the NFIP expires, and it isn’t good for consumers, businesses or our communities,” said NAR President Elizabeth Mendenhall, a sixth-generation Realtor® from Columbia, Missouri and CEO of RE/MAX Boone Realty. “We appreciate the leadership that members of Congress have shown passing sound reforms, which will strengthen the program, protect property owners and deliver good results for taxpayers.”

The NFIP is responsible for providing the vast majority of flood insurance policies in over 20,000 communities nationwide. Without it, most consumers would be unable to purchase the flood insurance that’s required on mortgages in a floodplain. In the past, NAR has shown that 40,000 home sales are lost every month when the program is unavailable.

H.R. 2874, the “21st Century Flood Reform Act,” reauthorizes the NFIP for five years, while taking steps to reform the program. These reforms include:

  • Authorizing $1 billion to elevate, buy out or mitigate high-risk properties
  • Capping flood insurance premiums at $10,000 per year for homeowners
  • Removing hurdles to the private flood insurance market, which often offers better coverage at lower cost than the NFIP.
  • Providing for community flood maps and a homeowner’s ability to appeal their flood designation
  • Better aligning NFIP rates to match a property’s true risk, particularly for in-land and lower-value properties
  • Improving the claims process for flood victims
  • Addressing repeatedly flooded properties, which account for 2 percent of NFIP policies but 25 percent of claim payments

These changes, Mendenhall said, would improve the NFIP’s financial health, put consumers on a stronger footing, and deliver certainty to current and prospective homeowners.

“The conversation happening in Washington on this issue is fundamentally about how we deliver the best results for consumers and taxpayers, and that’s a good conversation to have,” Mendenhall said. “Realtors® are simply asking that Congress swiftly deliver on the promise of this program so buyers can move forward without interruption and homeowners know their most important asset is protected. With December 8 around the corner, we’re hopeful the Senate will now step up to the plate and do their part by passing a flood reform and reauthorization package without delay.”

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.3 million members involved in all aspects of the residential and commercial real estate industries.

Source: nar.realtor.com

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How Open-Source Intelligence Can Help Landlords Protect Their Properties

Fri, 11/17/2017 - 12:07pm

Today, even the newest real estate investors with small portfolios are interacting daily with available technology that expedites their property acquisition, marketing, and the management process. From the listing to the move-out, they find and integrate real-time technology solutions. Imagine my surprise when I recently attended Real Estate Investors Association meetings on Crime Free Rental Housing and learned that many investors are still not adding open-source intelligence (OSINT) to their process.

Crime Free Programs are crime prevention solutions enacted with local law enforcement, which aim to prevent illegal activity from taking place in rental properties. In some municipalities, Crime Free Programs have mandatory education seminars and continuing education for landlords. I can certainly make a case that being a landlord requires foundational skills in conducting prospective tenant background screening or, at a minimum, hiring companies that do.

It’s time well spent to explore the tenets of Crime Free Programs. And with OSINT and a variety of tools now available in property management software, it’s easier than ever to integrate crime free steps into your process.

The CIA defines OSINT as information gleaned from “publicly available material,” including the internet, conventional mass media, photos, geospatial information and more. And according to Pew Research Center, as of January 2017, 69% of the public is on a social media platform. So, the odds are in your favor that your next prospective tenant has a social profile that you can use to validate items listed on the application. Facebook, one of the most popular platforms, can be utilized for advanced searches of all kinds.

A thorough landlord will verify all key areas of the application. They will use the phone numbers provided and follow up with current and previous employers and one or more prior landlords and references. Javelin Strategy and Research reported an all-time high level of identity theft in the last year — so it’s vital to document all identification and take a moment to authenticate. Be sure to select someone on your team to be detail-oriented when completing the verification of the application. Some of the top red flags to watch for include:

1. Urgency to move in before the first available date.

2. Errors, omissions and inconsistencies on the application.

3. Applicant is unable to provide an ID.

4. Applicant would like to bring cash.

5. Applicant is not able to provide a current address.

This is your investment property. Real estate investors purchase the property with the dream to achieve high returns on their buy and hold strategies. They target their desired range of return on the principal. It’s not always easy to predict unknown obstacles like a spike in a local real estate tax increase or an unexpected natural disaster, but certainly if you don’t use all the tools available as you are selecting the residents, you escalate your risks.

A more thorough process will make you better at reducing your interactions with fraudulent or criminal behavior. Don’t let criminals target you for your failed screening process. Knowledge is power, so while real estate investors look to integrate the latest in technology solutions, don’t forget to perform the basics of open-source knowledge.

 

Source: forbes.com

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How To Rent To Section 8 Tenants

Fri, 11/17/2017 - 4:37am

Posted on Nov 17, 2017

Section 8, the income voucher housing program, offers a steady stream of renters for your vacant units. If you’ve never rented to Section 8 tenants, you may have questions about how it works, or even why you should consider renting to Section 8 tenants. Get the facts here to make the right choice for your available rentals.

What Is a Section 8 Tenant?

To qualify for Section 8, individuals must:

  • Be low-income (30 percent of the median income level)
  • Be a U.S. citizen (in some cases, legal immigrants may apply)
  • Pass a screening and interview

Qualified candidates who pass will receive housing vouchers that pay anywhere from one-third to three-quarters of the rent.

Many of the people in Section 8 housing are disabled, while some are elderly and others have fallen on hard times.

Why Rent to Section 8 Tenants?

Since there is often a waitlist for Section 8 housing, you’ll almost certainly fill your rental quickly if you offer Section 8 housing. If guaranteed rent for one year seems like a good deal, you may want to rent to Section 8. You’ll get the government’s voucher to cover part of the rent, then collect the remainder from tenants.

Section 8 tenants may be more likely to become long-term tenants, since changing apartments within the program is often a hassle.

While there are advantages to being a Section 8 landlord, it’s not without downsides. You’ll need to apply for any rental units, pass inspections and get annual inspections to remain in the program. The housing authority also sets rent ceilings to keep your rent in line with market rate. While you may net more as a Section 8 landlord, increased rent isn’t guaranteed.

Section 8 may not be a good idea if you’re hoping to get a renter into a vacant unit quickly. It takes time to apply and pass inspection, not counting time to make any repairs. If you’re in a rush, you may prefer to lower the rent or search for subletters who can move in right away. However, if you don’t mind a bit of a wait to get long-term tenants into your apartment, then it may be the ideal opportunity for you.

How to Rent to Section 8 Tenants

To become eligible, you’ll need to apply through your local housing authority. Once you complete the application, a Section 8 inspector will visit. You may need to make repairs or bring your property up to code to pass inspection; don’t let this take you by surprise.

Assuming you pass inspection, you can advertise your rental to the pool of Section 8 renters. You’ll need to prepare your own lease, although the housing authority will review your lease and your rent.

Just because you’re accepting Section 8 tenants doesn’t mean you need to take the first applicant. The choice of who to rent to is still yours. Perform your due diligence by screening tenants when accepting Section 8 vouchers. This provides peace of mind that prospective tenants are who they say they are.

Once you’ve found a tenant and have a signed lease, you can relax. All you need to do is collect the tenant’s share every month; the housing authority pays the difference.

Renting out your apartment is only the first step in enjoying success as a landlord. Get help with day-to-day landlord duties and enjoy discounts and incentives by joining American Apartment Owners Association. Explore all member benefits or join today and start saving.

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

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Q&A: Should I Approve a Good Person with an Eviction Record?

Thu, 11/16/2017 - 3:27pm

Question:

I’ve been looking for a tenant for months and I finally found someone with a reliable income, good references, and no criminal history. However, her credit score is not so great and she has one eviction. She says it’s because she went through a divorce. Should I believe her and accept her as a tenant or is this too risky?

– Phil J.

Answer:

Hi Phil, it is crucial that you fill your unit as quickly as possible because you are losing money on it every day it is vacant. It’s good to know your applicant isn’t a dangerous criminal, but you’re right to be concerned about her financial instability. You don’t want to be eviction #2 for this person and unfortunately, one eviction makes it more likely that they will be evicted again. However, there are a few options you can take to minimize your risk when renting.

Get RentGuard

In situations like these, it’s best to use RentGuard if you want to accept a higher risk tenant. Starting at only $299 for $2,500 of coverage you can protect yourself against damages, legal fees, and potential eviction costs. Either you or tenant can pay for RentGuard to get coverage up to $10,000. All you need to do is order an AAOA tenant screening package. A RentGuard Analyzer will automatically be included and will tell you whether your tenant qualifies (in most cases they will). From the report results, you can click to get that tenant covered by RentGuard.

Just as you may be struggling to fill a vacancy, this potential tenant is probably struggling to get approved for a place. They may be willing to pay an extra fee to get qualified or you could reduce their security deposit and have them purchase RentGuard. Should she leave owing you rent, you can get reimbursed through your RentGuard coverage.

For example, let’s say you accept this tenant and require her to purchase RentGuard as a condition of getting accepted for the unit. Then 6 months later she starts to fall behind on rent but she doesn’t want to leave. You can follow a normal eviction procedure and file a claim through RentGuard to get reimbursed for lost rent and legal fees up to the policy amount. So in summary, rent to her, but use RentGuard to minimize your risk!

Get as many people on the lease as you can

Increasing the number of responsible adults on the lease will make it more likely for you to recover damages or lost rent. If she can’t afford to pay rent, maybe her cosigner, significant other, or family member can. This also helps if you have to file a lawsuit like an eviction because you’ll have more assets to collect from. Also, if you have RentGuard for this property, then all individuals on the lease are automatically covered.

Ask for more security deposit

Considering this tenant has a relatively unstable financial background, they may not have the money saved up to pay for 2 or 3 months security deposit. In addition, there are limits in some states as to how much security deposit you can collect up front. The other problem is that a security deposit may not cover more than a month or two worth of lost rent. What if this tenant ends up owing you much more in rent than the security deposit you collected? Although a security deposit helps, getting RentGuard would boost that coverage even more because with RentGuard you can get reimbursed up to $10,000 for lost rent, legal fees, and damages.

If you have questions about using RentGuard please call the AAOA team at (866) 579-2262 or visit .

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Single-Family Rentals And Section 8: Five Reasons It’s A Great Option

Thu, 11/16/2017 - 8:38am

Section 8, now called the Housing Choice Voucher Program (HCVP), is a federal government program administered by local housing authorities through the U.S. Department of Housing and Urban Development (HUD). It’s meant to give very low-income families, disabled people and the elderly access to suitable and safe housing. For many landlords, leasing single-family homes to program participants is an excellent way to maintain high occupancy with quality tenants and guaranteed rent payment.

Background On The Voucher Program

In the 1950s and 60s, the government’s primary approach to affordable housing was to build large complexes — a strategy that most people agree was unsuccessful. In the 1970s, 80s, and 90s, HUD shifted its strategy towards subsidizing tenant rents, and amendments to the Housing Act of 1937 created Section 8 and ultimately the voucher program. Today, participants in the HCVP are allowed to choose any housing that meets program guidelines and is not limited to subsidized housing communities. This means they can select from single-family homes, apartments, townhouses, etc., owned by private landlords, nonprofit corporations, and government entities.

The program is administered by local public housing agencies (PHAs) that ensure that tenants qualify for the program and that homes meet minimum standards for health and safety. PHAs determine an applicant’s eligibility for the program based on total annual gross income and family size. Over 2 million low-income families participate in the Section 8 program.

Single-family rentals are an important piece of the solution for communities struggling to find sufficient affordable housing for their residents, and the HCVP is an important tool that can help keep these properties affordable for tenants, and economically viable for landlords and investors.

Benefits Of Renting Single-Family Homes To HCVP Participants

Buying single-family homes, making a small investment in their upkeep and renting them to HCVP participants is a true win-win-win for tenants, communities, and landlords. It gives deserving families an opportunity to obtain quality housing in a variety of neighborhoods. And, at a time when housing prices are increasing faster than incomes, this counterbalances the buy-and-flip approach, which creates upward pricing pressure that can exacerbate the affordability crisis.

As for the advantages for landlords, they include:

1. Streamlined process: There is some time and effort involved in learning the program and getting properties initially approved, but once you learn the system, moving new tenants into a rental is a very straightforward process.

2. Low-cost marketing: In addition to general websites like Craigslist and Trulia, there are others that focus specifically on HCVP properties, but the local PHA is often your best source for free vacancy marketing. And because there is often a shortage of properties willing to accept HCVP tenants, even in soft markets, properties do not remain vacant for long, and rent concessions are never required.

3. Convenient, on-time payments: PHAs provide subsidies that generally cover between 65% and 90% of a rent payment, with the tenants paying the balance. Those subsidies are sent on time every month, typically via direct deposit.

4. Protection from tenants’ financial hardships: When renting to lower-income tenants, there is always the risk that their loss of employment or other financial hardship prevents them from paying their rent. Under the HCVP, the subsidized portion of the rent continues to arrive on schedule regardless of the tenant’s financial situation, and tenants are highly motivated to pay their share so as not to lose their HCVP benefit.

5. Consistent occupancy with quality tenants: While markets vary, overall there is a supply shortage of properties willing to participate in HCVP and a huge demand of voucher holders looking for participating units. This means landlords can very quickly fill vacancies in their units and quality tenants are reluctant to move, reducing the costs of vacancy turn-over.

HCVP: Challenges And Opportunities

Of course, no interaction with a large government program like the HCVP comes without its challenges. The requirement that there be an inspection before each new tenant moves in can delay occupancy. However, many landlords agree that having an extra set of eyes on the property on a regular basis is an advantage in the long run.

Another issue is that the program sets guidelines for rents based on averages in the area. It takes the program time to adjust for changes in that average, so if rents are on the rise, you may be getting somewhat less than you could get on the open markets. But if rents are dropping, you are the beneficiary in that scenario.

Ultimately, when weighing the challenges and opportunities, many landlords find that the financial pros of renting single-family homes to HCVP participants clearly outweigh the cons. Plus, the fact that you are helping your communities meet their affordable housing challenges while providing assistance to families in need is a bonus.

 

Source: forbes.com

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Why rentals are up, and what it means for the housing market

Thu, 11/16/2017 - 8:38am

Single-family rentals—either detached homes or townhomes—are developing faster than any other portion of the housing market. These rentals outpace both single-family home purchases and apartment-style living, according to the Urban Institute.

“Almost all the housing demand in recent years has been filled by rental units,” says Sara Strochak, a research assistant with the Urban Institute. She also states that single-family rentals have gone up 30% within the last three years.

This change is unique to newer generations. But when did rentals become so popular? And why are people more inclined to rent than to buy? Below, we’ll further discuss the rise in rentals and how it affects the housing market.

When did the rise in single-family rentals start?

The housing bubble collapse and the recession that followed shattered the decades-old tenet of American wisdom that you can’t go wrong buying a home. Most of the housing market fallout from the 2007-09 recession has finally receded—foreclosures and underwater mortgages are back to traditional levels and housing values have recovered in most places. But one thing hasn’t recovered: Americans’ unquestioned desire to own a home.

Today, single-family rental homes and townhomes make up 35% of the country’s 44 million rental units, compared with 31% in 2006.

Who is leading this trend?

Millennials are leading the way to single-family rentals, and myriad factors contribute to this trend. Many young adults aren’t in a hurry to lay down roots, whether they’re prone to traveling or simply aren’t ready to commit to one area or one home. Student loans and stagnant incomes can also make it harder to save up for a down payment. And it’s inevitable that young people who came of age during the housing bubble would be reluctant to take a leap of faith and commit to a 30-year mortgage.

“While the age distribution of the U.S. population suggests most millennials are reaching the age of household formation and demand for single-family homes, much of this demand is likely to be channeled into the rental market,” says Strochak.

Pet beauty: the new frontier for the $36 billion pet industry Are only millennials affected?

However, it’s not just young people. Americans over 55 have also grown more interested in renting. According to RENTCafé, the number of renters aged over 55 has grown by a whopping 28% between 2009 and 2015. Many of them want to rent homes instead of apartments. From 2010 to 2016, single-family rental households in the U.S. increased by nearly 2 million—1.26 million of those renters were 34 to 65 years old, while just under a half million were 65 or older, according to a RENTCafé census data analysis provided by Adrian Rosenberg. In places like Miami, Houston, and Minneapolis, more than two-thirds of new single-family renters were over 65.

What led to this trend?

When did home renting become so popular? The trend began with large firms buying up cheap homes during the recession and turning them into cash-generating rentals—often rented by families who’d lost their own homes or who could no longer qualify for mortgages. Institutional investors, which are organizations like banks, hedge funds, and mutual funds, gobbled up millions of single-family homes that fell into foreclosure. In Phoenix, for example, the total of single-family homes occupied by homeowners—instead of renters—dropped by 30,000 from 2007 to 2010. Two-thirds of those homes were bought by institutional investors, the Urban Institute says.

But as prices have recovered, that business model no longer works. Instead, small-time landlords now dominate the market, explains Strochak. Investors who have fewer than 10 units own 87% of all single-family rentals, while investors who have only one rental unit own 45%.

How does this change the home-building market?

Big players continue to push the trend, some deploying a new build-to-rent model. Housing firms are actively building single-family homes intending to rent them rather than sell, says Attom Data Solutions, a firm that analyzes housing market data.

“I can buy lots in areas that I can’t sell homes, but I can rent,” real-estate agent Adam Whitmire told Attom in a recent report. “The local economy may not have enough income or enough credit to buy but there is enough income to rent.”

While big-time rental firms are backing off in some larger cities, the single-family rental investment play is picking up in smaller markets around the country in places like Dayton or Chattanooga, according to Attom.

How does renting affect local neighborhoods?

The movement to more single-family rentals is a mixed bag, says Daren Blomquist, senior vice president at Attom. On the one hand, the professionalization of the single-family rental industry is good for both families and neighborhoods, as there could be more standardized levels of maintenance and management services.

But there will likely be “unintended consequences as the nature of some neighborhoods change,” Blomquist warns. Renters might not be as invested in communities as owners.

“For example, people who want to own a home may no longer be as active in the typical suburban white picket fence neighborhood as properties in those neighborhoods become more prominently rentals,” he says. “That may push those home buyers back into more urban, walkable environments, or it might push them further out to more rural areas.”

Should you rent a home instead of buying?

Renting a home instead of buying can be a sensible choice for those looking to break out of apartment life. It can even serve as a good halfway step toward owning, to make sure single-family home life is really for you before you commit to a mortgage.

The main attraction to renting is obvious: buyers don’t need a large down payment to move in. While plenty of mortgage programs give would-be buyers a break on the traditional 20% down mortgage model, skyrocketing prices in urban areas like Seattle or Washington D.C. mean that even 5% can be a prohibitive down payment requirement. So renting might make sense if you are ready to live in a house.

What should you know before renting a single-family home?

While all rental transactions are similar, there are a few things you should consider before moving to a home rental. If you’re moving from an apartment, utilities will probably be considerably more expensive—after all, you’ll be heating and cooling an entire home much of the year. There are also quite a few more maintenance requirements, particularly if there’s a yard. Ensure your lease has clear terms regarding who pays for the upkeep of the property. Gardening might seem appetizing if you are sick of your apartment, but it can be a year-round job, so make certain you’re ready for the extra work. If you want to paint the walls or make other changes, know that you will need permission in writing.

Additionally, because you will inevitably have more possessions than in an apartment, it’s more important than ever to get renter’s insurance — your landlord’s policy likely won’t cover damage to or theft of your property. You should also consider liability insurance, in case you’re found responsible for any kind of accident at the property that causes personal or property damage.

If you’re moving to a single-family rental for more space or for monetary reasons, remember to adjust your budget to accommodate the new utility and rental costs.

 

Source: marketwatch.com

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Facebook launches massive push into real estate listings

Thu, 11/16/2017 - 8:38am

ZillowTruliaRealtor.comRedfin. All household names in the real estate listings world, right?

Well, those companies now have some serious competition from a company that boasts an audience that dwarfs all of those sites put together – Facebook.

That’s right. Facebook is coming to real estate listings.

Now, anyone who’s “friends” with a real estate agent on Facebook is likely used to seeing real estate listings show up in their news feed, but it appears that Facebook has much bigger plans for real estate listings through its own platform.

Facebook announced last week that it is significantly expanding the real estate listings section on its Marketplace, which is Facebook’s attempt to take on CraigslisteBay, and other e-commerce platforms.

And if Facebook’s previous history is any indication of its future successes, Marketplace will eventually blot out the e-commerce sun, just as Facebook already did with social media – as evidenced by Facebook’s monthly active user count of 2.07 billion.

According to information provided by Facebook, since the beginning of this year, search volume in the Marketplace tab has grown 300% globally.

And now, Facebook is bringing that audience to real estate listings.

Facebook currently allows individual homeowners to list their homes for sale on Marketplace. According to Facebook, the feature is “rolling out gradually” and is currently only available via the mobile app in the U.S.

And while the feature is “rolling out gradually” for home sales, Facebook is going full force into rental listings, via partnerships with Apartment List and Zumper.

Through the agreements, Marketplace users can now search through hundreds of thousands of rental units provided by Apartment List and Zumper, all while they’re on Facebook.

Facebook isn’t just dramatically increasing the number of rental listings on Marketplace, the social media monolith is also improving the capabilities of its platform.

According to Facebook, Marketplace now features a revamped experience in the housing rentals category. And Facebook plans to continue upgrading the platform.

The initial phase of the rollout includes custom filters for location, price, bedrooms, bathrooms, rental type, square footage, dog/cat friendly; along with the ability to upload 360-degree photos for individual rental listings.

Then, once a prospective renter finds a property they’re interested in, they simply fill out a short contact form (accessed within Marketplace) and the property manager or agent will then contact them directly.

“Marketplace is a popular place for people to look for a home to rent. Now that we’re adding listings from Apartment List and Zumper, people can search even more options in the U.S. to find a place to call home,” Bowen Pan, product manager at Facebook, said in a statement. “First with vehicles and now with housing rentals, we’re partnering with businesses to bring more ease and convenience for consumers.”

In a post to its website, Facebook said the changes to the housing rentals section are “driven by how people are searching and using the service.”

According to Facebook, the site does not participate in any transaction. It simply connects the listing owner and renter.

Facebook also said that it does not charge to list inventory on Marketplace, but cautions that there may be fees for using a third-party listing partner.

But, according to Facebook, any landlord or property owner wishing to list an apartment or rental house on Marketplace must use Apartment List or Zumper.

Here, from Facebook, is the process for a property manager to get their listing on Marketplace:

1. Create a Facebook Page for their business if they don’t already have one.

2. Sign up with one of our listing partners and contact them to arrange for the listings to be on Marketplace.

To sign up with Apartment List, email sales@apartmentlist.com.

To sign up with Zumper, landlords representing fewer than 5 homes or duplex/apartment units should post directly at www.zumper.com/pro or email pro@zumper.com. Landlords with multiple buildings should visit www.signup.zumper.com/multifamily or email sales@zumper.com.

For property owners and landlords, the draw of listing their properties on Facebook will likely be substantial, and for Apartment List and Zumper, the appeal of serving as the providers of rental listings for Facebook is obvious.

“We’re thrilled to partner with Facebook to deliver our robust network of properties to their expansive and diverse Marketplace community,” Chris Erickson, chief operating officer and co-founder of Apartment List, said. “Together, we will provide renters everywhere a best-in-class experience and powerful resource to help them find their next home.”

Anthemos Georgiades, Zumper’s CEO, agrees.

“Working with the Facebook Marketplace team was like working with a like-minded, rapid growth startup,” Georgiades said. “We got our feed integrated quickly and were able to showcase our accurate, real-time rental listings on Marketplace overnight. By adding Facebook to our network, we are especially excited to expand the audience Zumper’s landlord clients can reach, whether by posting to Zumper Pro or sending us a feed.”

Facebook also said that this expansion of Marketplace will likely not be its last such move.

“Marketplace will continue to explore a variety of new opportunities to partner with businesses, in addition to optimizing the consumer-to-consumer product experience,” the company posted on its site last week.

 

Source: housingwire.com

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Condominium Owners Must Pay Their Condo Fees

Thu, 11/16/2017 - 8:38am

Question: I am the President of a large condominium association, and most of our owners pay their condominium fees each and every month on time. However, one owner is refusing to pay the condominium fee, claiming the association is not performing certain functions properly, and the owner is attempting to offset the fee as leverage to get the condominium to do that work. Does the owner have the right to withhold the fee under these circumstances?

Answer: A condominium unit owner, in my opinion, never has the right to withhold the condominium fee — whether or not the association legitimately owes money or some other duty to the owner.

If one unit owner decides unilaterally to withhold the monthly fee, this can put a serious strain on the condominium association’s budget. More importantly, if one owner is permitted to withhold the fee, every other owner in the complex will be able to claim the same right, and clearly, this will raise havoc within the association. The condominium association has certain monthly obligations. It has to pay taxes, it has to pay insurance, it has to pay a water bill, and it has to pay a management fee. And of course, it has to pay its attorney. Every year, the board of directors of the association — often in conjunction with the property manager — develop a projected budget, estimating what the annual income will be for the next year, and attempting to estimate the operating costs for the coming year. These estimates are often based on the past two or three years history of the association, and of course, the association also has to budget an adequate amount of money each year for reserves.

Reserves are an important part of any condominium budget. Every association must have adequate reserves available in the event an emergency occurs, or an unforeseen problem occurs that will necessitate a considerable expenditure of money. Most owners will acknowledge that they would rather pay $5 or $10 a month each and every month into a reserve account than be hit with a special assessment of $2,000-$3,000 (or more) because there are not sufficient reserves.

Thus, if the projected income on a month to month basis is not reached because one or more owners refuse to pay their fee, this begins to put a serious strain on the overall budget of the association.

There is a case in California that is instructive to all condominium association owners, property managers, and boards of directors.

An owner refused to pay the condominium association’s assessments because he alleged that the condominium association had violated the condominium documents and had committed wrongful acts when it performed certain repair work on his unit.

The court in California recognized there is generally a right of setoff, which can be defined as follows: “A” owes $100 to “B,” but “B” owes $75.00 to “A.” In our example, “A” really owes $25.00 to “B,” and “A” can withhold (setoff) the balance of the $100.00 owed because “B” owes “A” that money.

However, the court also determined that if the claim of setoff defeats public policy, such a setoff would not be permitted.

The language of the court in discussing the public policy of a condominium assessment is very instructive:

Because homeowner associations would cease to exist without regular payment of assessment fees, the legislature has created procedures for associations to quickly and efficiently seek relief against a non-paying owner. Permitting an owner to broadly assert the homeowner association’s conduct as a defense or “setoff” to such enforcement action would seriously undermine these rules.

Thus, as a member of your board of directors, you must take prompt action to collect the delinquent fees owed by all unit owners. The collection procedures vary among the various states, but you and your property managers cannot permit the delinquencies to continue to stay on the books.

There is another important legal concept in condominium and homeowner association law, namely uniformity. A board of directors cannot treat one unit owner in a different manner than they treat other owners. The board cannot be arbitrary and capricious in its application of the laws but must enforce the laws uniformly across the board. If the board permits one owner to stay delinquent, all of the other unit owners may soon claim the same right, and thus your association will begin to have serious financial consequences.

This does not mean to suggest that unit owners have no rights. On the contrary, they certainly can file suit against the association, and in those jurisdictions where mediation or arbitration is provided, can request a dispute resolution mechanism in an effort to settle any outstanding matters. But unit owners cannot be permitted to let their condominium fees lapse.

 

Source: realtytimes.com

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10 Years After the Crash, the Boom Times Are Back in Real Estate—but Way Different

Thu, 11/16/2017 - 8:38am

As anniversaries go, it’s a nerve-racking but inescapable one: It’s been 10 long years since the widespread real estate crash that precipitated the Great Recession, and all the misery that followed in its wake. So it seems like the perfect time to take a giant step back, peruse and analyze all of the data, and assess what has really happened to the American housing market in the decade since.

So where are we, really?

Ever-steeper home prices: check. Buyers clamoring to get into those precious homes: check. Real estate newbies scooping up homes to renovate quickly and sell for a profit (i.e., flip): check. On first or second glance, things are looking awfully similar to the real estate boom that preceded the epic bust. But wait: There’s no need to start stuffing your life savings under your mattress for safekeeping just yet. If you look beneath the surface, there are key differences between then and now, a realtor.com® analysis of housing and economic data shows.

“As we compare today’s market dynamics to those of a decade ago, it’s important to remember rising prices didn’t cause the housing crash,” said Danielle Hale, chief economist for realtor.com®. “It was rising prices stoked by subprime and low-documentation mortgages, as well as people looking for short-term gains—versus today’s truer market vitality—that created the environment for the crash.”

By contrast, today’s housing market is characterized by a significant mismatch between significant job and household growth (the factors that spur people to buy homes) and much tighter lending standards and historically low for-sale inventory (the factors that make it difficult for people to buy new homes). The result: extremely high home prices and a lot of frustrated buyers. (Did you hear about the Northern California home that sold for $782,000 over asking?)

How high, you ask?

Well, the U.S. median home sales price in 2016 was $236,000, 2% higher than in 2006. In fact, 31 of the 50 largest U.S. metros are back to pre-recession price levels. Austin, TX, has seen the largest price growth in the past decade: 63%. It’s followed by Denver, at 54%, and Dallas, at 52%. Nationwide, realtor.com data show that listing prices have been up by double digits for the majority of 2017.

Median home sales prices since 2006realtor.com

Financial regulations reshaped the mortgage scene

The biggest change in the housing scene over the past decade is that lending standards are the tightest they’ve been in almost 20 years. The Dodd-Frank Act, which was passed to tamp down the risky lending that led to the bubble and its collapse, requires loan originators to show proof that a borrower can repay the loan. As a result, the median 2017 home loan FICO score was 734, significantly up from 700 in 2006. The low end of the range has pulled up as well. The bottom 10% of borrowers have an average FICO of 649 in 2017, up from 602 in 2006.

“Lending standards are critical to the health of the market,” added Hale. “Unlike today, the boom’s under-regulated lending environment allowed borrowing beyond repayable amounts and atypical mortgage products, which pushed up home prices without the backing of income and equity.”

Flipping is hot again, but now it’s under control

For just about as long as we’ve had a housing market in this country, folks believed that prices would never go down and that a home was always a good investment. This inspired a lot of flippers and developers to get into the game (well, HGTV may have also played a part).

Unfortunately, the housing crash exposed this fallacy big-time.

In 2006, the share of flipped homes reached 8.6% of all sales, exceeding 20% in some metros such as Washington, DC, and Chicago. Some of those flippers took out multiple loans to afford their properties. With today’s tight lending environment limiting borrowing power, however, flipping accounted for a more reasonable 5% of sales in 2016.

Similarly, builders chasing profits as prices rose ended up building more than what the market was demanding. In 2006, there were 1.4 single-family housing starts for every household formed, well above the healthy level of one per household.

But while stricter lending standards have kept flipping and overbuilding in check, they are contributing to severely constrained construction levels, which contribute to the housing inventory shortage—and that’s keeping prices elevated. Today’s market is well below normal construction levels with only 0.7 single-family household starts per household formation.

What’s driving today’s housing market

In October, unemployment hit a 17-year low, at a rate of 4.1%. In 30 of the 50 largest U.S. metros, unemployment is less than half of 2010 levels. Employment is particularly robust among millennials, who are just starting their careers: In September, employment reached 79% in the 25–34 age group, back up to 2006 levels and 5% higher than 2010.

But at the same time, there are 600,000 fewer total housing starts and nearly 700,000 fewer single-family housing starts.

Single-family home sales since 2006realtor.com

“The healthy economy is creating more jobs and households, but not giving these people enough places to live,” Hale said. “Rapid price increases will not last forever. We expect a gradual tapering as buyers are priced out of the market—not a market correction, but an easing of demand and price growth as renting or adding roommates becomes a more affordable alternative.”

Millennials made up 52% of home shoppers last spring, and with the largest cohort of millennials expected to turn 30 in 2020, their demand for homes is only expected to increase.

Metros where home prices have rebounded the most

In Austin, local real estate agent Jason Bernknopf has been in the business for about 15 years, currently with AustinRealEstate.com. In his view, Austin wasn’t hurt much by the housing market collapse because home prices were already low. Plus, Austin has a diverse economy with plenty of stable jobs in government (it is the state capital, after all) and tech companies such as locally based Dell and Samsung, IBM, and Apple.

Price appreciation since 2006realtor.com

The city has developed a lot in the past 10 to 15 years, Bernknopf says, as it drew people from far more expensive areas such as California.

“We didn’t have a downtown living area in the early 2000s,” he says. “Now there’s huge apartment high-rises as well as condo high-rises, and more areas for people to shop and eat in the heart of town.”

There’s also a building boom in the suburbs, where young families are moving in search of more space and better schools.

Denver, another recent tech hub that was relatively sleepy before the crash, has seen a similar transformation since the recession, says Jeff Plous, an associate real estate broker at One Realty in Denver.

In 2008, prices slowed, but there were no crazy drops, he says.

“The suburbs were hit really hard,” Plous says. “But the city itself wasn’t that bad. It took longer to sell, but people were still buying.”

And then things really turned around.

“Bidding wars went from a sometimes to an always in 2013-14,” Plous says. “You got out of bed, and anything you put on the market was gone in 24 to 48 hours.”

In August, he sold a $400,000 home for $40,000 over asking. The four-bed home in a good neighborhood had netted 12 offers.

“I don’t necessarily believe we’re in a bubble. We just have so many people who want to move here. Our inventory is so far below where it needs to be.”

A slower recovery for some

Time for a reality check: Not every market is booming 10 years after the big crash.

Three major housing markets—Las Vegas; Tucson, AZ; and Riverside, CA—remained more than 20% below 2006 price levels at the end of 2016, at 25%, 22%, and 22%, respectively.

“The recession here in Las Vegas was deeper and longer than nationally,” says Stephen Miller, director of the Center for Business and Economic Research at the University of Nevada, Las Vegas.

Miller points out that after the crash, about 70% of Nevada’s home mortgages were underwater. “If you’re hit harder, it takes you longer to get back up in the ring.”

The center’s research shows that before the recession, the Las Vegas population was growing about 4% annually. Now it’s growing at about 2% annually, a growth track that still portends well for the future.

In Tucson, real estate broker John Mijac at Long Realty Co. saw a lot of excitement, speculation, and inflated prices in the market before the crash.

The area was hit particularly hard. Many Tucson-area investors lost homes to foreclosures and short sales.

“For quite a while, that was the primary movement in our market,” he says. “Now that’s gone away.” He’s starting to see more building come back, along with more home flippers. Again.

Demand and prices are also back for lower-priced homes, but homes above $200,000 haven’t recovered yet. Sellers don’t want to lose money on the sale of these properties, so they’re holding on. “We’re getting close but we’re not quite there.”

 

Source: realtor.com

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The Mass Appeal Amenities That Gen-Z, Millennials, & Baby Boomers Crave

Thu, 11/16/2017 - 8:38am

The multifamily housing industry has seen many changes over the past decade, but one of the biggest developments has been the unprecedented growth of renters entering the market. Statistics show that homeownership rates reached a national 50-year low last year with the number of Americans renting apartment homes rising across every age demographic.

While this trend can offer new opportunities, it’s important to recognize the challenges that a spectrum-wide increase in renters can pose for your business. The market is growing more and more multi-generational, and your ability to meet the needs of a variety of renters can make a huge difference in gaining (and retaining) residents. It’s all about finding the point of convergence between three generations of renters – Baby Boomers, Millennials, and Gen-Z – and while there are dozens of ways that they all differ, there are some key amenities and services that you can offer that appeal to each demographic.

Get Smart with Security

For many Baby Boomers, their main focus is finding security and comfort at home. This generation values a supportive living space, considering the fact that they may be caring for parents, children, or grandchildren. In fact, statistics show that Baby Boomers currently play the role of caregiver more than any other demographic.

Standard safety amenities such as gated entrances and on-site security hold major appeal for the Baby Boomer demographic, but there are also productive ways to provide security features that appeal to younger renters. Incorporating smart home automation into your property with devices such as smoke detectors, alarm systems, and thermostats give safety a hip, 21st-century glow, allowing older and younger residents alike to stay connected to the most vital of emergency services—all while keeping their apartment safe and secure from any looming threat.  Smart home automation also provides residents with the option to personally monitor and configure their apartment home, providing a cutting-edge functionality that Gen-Z and Millennials will both appreciate.

Stay Connected and Green

As the first generation to grow up in the Digital Age, Millennials often equate convenience with speediness, valuing amenities that keep them constantly connected. Gen-Z is similar, and maybe even more inclined to do this, considering they grew up completely immersed in the convenience of technology. And while you might think having an Internet connection is a unique concern for younger renters, studies and surveys have consistently shown that the rise of smartphones has brought older generations into the mix as well. Today, over three-quarters of Americans own a smartphone, and while a large portion of those users come from the 29-and-under age bracket, 74 percent of Americans ages 50-64 are smartphone owners and nearly half of those 65-and-older use smartphones.

Aside from bare-bones basics such as charging stations and high-speed Wi-Fi, you might also consider providing residents with USB port access, electric vehicle charging stations, and the latest technological amenities, which again, includes smart home automation. Smart-home automation allows the renter to be in control of their apartment’s environment even when they are not at home, which for Millennials and Gen-Z is quite often. Renters can seamlessly control temperature, lighting, security, and more from a single device.

In the age of global warming, conservation is now at the forefront of everyone’s mind. Many have become supportive of stricter environmental laws and favor environmentally-friendly policies such as green energy development. As we all well know, beliefs translate into a lifestyle, and it’s clear that renters value environmentally-friendly amenities in their living space. Features can be as complex as adding solar panels to your rooftop or as simple as introducing a recycling and/or composting program into your community’s practices. Even energy-efficient appliances, low-flow toilets, and LED lighting can be a major selling point.

Offer Digital Resources

Aside from establishing an amiable and modern environment for your residents, what is the most vital tool for gaining leads and increasing retention rates in your apartment community? Surveys show that the newer generation of renters isn’t just looking at your location, price, or in-person tours. For today’s consumer, your website is one of the most critical aspects of your marketing campaign.

Obviously, websites allow prospective residents to find important information they may need about your property. However, as technology continues to advance, you need to go beyond a one-dimensional marketing website to attract leads and keep pace with the demands of today’s renters. Using in-depth and engaging online services such as a resident portal, you can offer residents the ability to communicate with your property instantaneously.

Resident portals allow renters to create service requests, make payments, and renew leases, providing them with everything they need in a simple and comprehensive web platform. Digital tools such as these have become essential as more and more people access the Internet from their mobile devices.

While it’s vital to set up a marketing website with a functional resident portal, it’s also important to offer several methods of communication to your prospects and residents. In the age of social media, residents across multiple demographics expect to connect with your instantaneously. When it comes to social media, your Facebook profile has the power to bridge the gap between all three generations. While it isn’t a surprise to find the younger demographics engaging online, Baby Boomers are just as reachable through social media. According to a 2017 survey, over 80 percent of Baby Boomers belong to at least one social media site with the overwhelming majority using Facebook.

Social media gives you space where you can connect with your residents in an amiable and sociable way. While it’s important to maintain as a customer service tool, you can also utilize your profile to highlight your best features and bring your community closer together. Sharing posts with helpful information, showcasing community activities, and inviting residents to organized neighborhood events will create a welcoming and supportive atmosphere throughout your property— one that Baby Boomers will appreciate as much as their Gen-Z neighbors and the Millennials next door.

As the rental market grows, your business can meet the diverse demands of renters by providing amenities that serve their common needs. With features and services that cater to a range of renters, your community will attract more prospects, which will increase rental capacity and ROI.

 

Source: multifamilybiz.com

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Why Landlords Should Protect Their Rental Income with RentGuard

Mon, 11/13/2017 - 2:42pm

Any experienced landlord will tell you that being a landlord does not always result in a guaranteed profit. For reasons outside of your control, tenants may end up owing you rent, breaking their lease early, or leaving expensive damages. In many cases, one or two month’s rent as a security deposit is not enough to cover those costs, resulting in losses. Most landlords accept this as part of the risk of being a landlord, but getting RentGuard can eliminate that risk.

What is RentGuard and how does it work?

RentGuard provides annual coverage ranging from $2,500 to $10,000 for lost rent, damages, or legal fees.

Here’s how it works:

  1. Order an AAOA Red, White, Blue, or Gold tenant screening report on a potential tenant.
  2. If the tenant qualifies for RentGuard, you can click on the tenant’s report to purchase or invite your tenant to purchase RentGuard. Be sure to get RentGuard within 10 days of placing your tenant screening order.
  3. In the event of property damage or eviction, filing a claim is simple. Provide the court judgment and a copy of the lease agreement and rental application. There are no deductibles. The judgment will be reimbursed up to your coverage amount.

If you have questions about using RentGuard please call the AAOA team at (866) 579-2262 or visit 

How much does RentGuard cost?

The RentGuard Analyzer, included in every AAOA tenant screening package, will tell you how much RentGuard will cost. The rates vary depending on how much coverage you want and your tenant’s credit and eviction history. Below is the starting cost for RentGuard:

  • $299/yr for $2,500 coverage
  • $598/yr for $5,000 coverage
  • $897/yr for $7,500 coverage
  • $1,196/yr for $10,000 coverage

5 reasons why landlords should protect their rental income with RentGuard:

  1. 80% of court judgments are never collected by the landlord: Even if you take a tenant to court and you get a monetary judgment in your favor, the tenant will most likely not have the assets to pay for it. You may seek the help of a collection agency, but that means additional cost for you and still no guarantee that the collection agency can recover the money that is owed to you. With RentGuard, you don’t need to hunt down the tenant for the judgment, RentGuard will pay out the full judgment amount up to the coverage you selected within 30 days, guaranteed. That means no losses and no stress!
  2. Damages may exceed a traditional security deposit: How many times have your tenants tried to use their security deposit as last month’s rent? You may specifically have a clause in the lease stating that they cannot do this, yet it is a common tactic tenants use to avoid paying for damages they leave behind. Also, a security deposit might not be enough to cover damages, which means you end up paying out of pocket for repairs. RentGuard would cover those costs, so you don’t have to rely on just a security deposit.
  3. Unexpected changes in tenant employment can result in lost rent: Even good people that meet your rental qualifications could have changes in their employment during your lease term, resulting in a broken lease or owed rent. RentGuard may help cover your losses and costs of filling a vacancy if this were to happen.
  4. Evictions cost on average $3,000 to $4,000: Evictions can be a nightmare experience for landlords, especially when the evicted tenant overstays their welcome and draws out the process for months. Not only does the tenant usually owe rent money, you cannot rent out the unit until they leave. You may never fully recover the money that is owed to you unless you have RentGuard. RentGuard would cover the legal, court, and judgment awarded to you, so you can cover your costs quickly, with little to no stress.
  5. Trying to fill a vacancy can be harder than you expect: Depending on the rental market you are in, you may have a vacant unit for months between tenants. Traditionally, landlords have to wait to find a tenant that meets their qualifications, even if that means losing money on the vacancy. With RentGuard you can fill vacancies faster without increasing your risk. If someone with subpar credit history or evictions applies to rent, you can require RentGuard as a condition for move-in. You’ll have almost no risk, you’ll fill the vacancy, and they’ll be thrilled to be approved for your rental.

If you have questions about using RentGuard please call the AAOA team at (866) 579-2262 or visit 

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