American Apartment Owners Association

The Pros and Cons of Live-In Home Flipping

Thu, 07/06/2017 - 11:13am

Mindy Jensen and her husband Carl have made up to $100,000 every two years by buying a house, fixing it up while living in it full time and then selling it for a profit. Call it live-in flipping.

“I didn’t even know I was doing it” for the first couple of homes, said Jensen, 44, who began using the strategy to build wealth in 1998. “I bought an ugly house because it’s all I could afford.”

The Jensens invest in the stock market with the proceeds from flipping their homes, money that has grown into a sizable nest egg while also providing capital for the next project.

Like any investment, there are pros and cons to live-in flipping, as a few veterans explain.

Pro: There are no income taxes, if you do it right. Live-in flipping exempts owners from paying capital gains taxes on the sale (up to $250,000 for an individual and $500,000 for a couple), provided they have lived at the property for at least two of the previous five years.

Con: You move around a lot. To continue making significant tax-free profits, you’ll have to move every few years.

Pro: You have one mortgage instead of two. Live-in flippers avoid carrying double mortgages and can take their time selling the home, says Jensen, who is the community manager for the real estate investment blog and podcast,

“You don’t have to buy at the very bottom of the market and sell it very fast,” she says.

Marketing officer of DNA Behavior Tripp Rockwell eliminated about $7,600 in carrying costs by living in a property outside of Decatur, Georgia, that he flipped after four years, netting about $40,000 in profit.

Con: Your home is a construction zone. What you save in carrying costs will be paid for in aggravation as portions of the home are remodeled. Rockwell washed his dishes in the bathtub while his kitchen was gutted.

“If you are a very clean person and can’t have dust around your house, this may not be for you,” Jensen says. “If you do a lot of entertaining, you’re going to have to stop.”

You may also have to live in close quarters with workers all the time.

“They may use your restroom, use inappropriate language you don’t want your children exposed to, or play music not to your taste or volume preference,” says Dan Bawden, chair of the National Association of Home Builders Remodelers.

Some projects such as pest extermination or a major plumbing problem may require that you stay somewhere else temporarily, and the cost of accommodations will cut into your profits, adds Joanne Cleaver, communications manager for national digital real estate agency

Pro: You’ll save money, especially if you do the work yourself. Buying a beat-up house is cheaper than a turnkey one, especially if you’re handy.

Jensen and her husband prefer to do the work themselves – even electrical and plumbing – which is permitted in all of the places she’s lived, though many locales require that you hire a licensed professional.

 Investors must decide if the returns are worth the risk and effort involved in owning rental property.

Rockwell also used sweat equity to fix up his house, spending only about $30,000 to buy the raw materials.

It’s even possible to save on materials, if you’re diligent. New York Consultant Leo Giannini saves about two-thirds of the cost of materials on his live-in flips by purchasing materials at building supply auctions. He found drywall for $1 per sheet, insulation for 10 percent of its usual cost and discounted kitchen equipment.

To protect your in-progress investment, your homeowner’s insurance policy should include things like coverage for theft of materials, equipment and other builders’ risks, Cleaver says.

Con: Say goodbye to your free time. If installing flooring, fixtures and painting are a cinch and you opt to do the work yourself, expect to spend every weekend working on the house, Jensen says.

Timing projects may also be tricky, especially if you still work a full-time job.

“Spacing out projects meant some issues got worse and created more problems,” Rockwell says. “The roof was a goner from the beginning, but we just patched as best we could until, during one especially bad storm, the rainwater began streaming down an interior wall.” Rather than continue saving to repair the roof, Rockwell needed to blow the budget to make the expensive fix immediately.

Pro: You can use owner-occupied mortgage financing. Investors usually must put at least 20 percent down on an investment home mortgage and may have higher interest rates, but an owner occupant can put as little as 3.5 percent down, Jensen says.

Some foreclosed properties, such as Fannie Mae HomePath, are only open to offers from owner occupants for a certain period, making for better deals. Jensen purchased her current home via the HomePath program for $176,000. After she put $100,000 into the home, it recently appraised for $450,000.

Con: You still need to analyze your numbers. It may be your home but you need to think like an investor first. The best live-in flippers can spot problems in a house when they buy it so that they know how much money they’ll need to put into it.

Teris Pantazes, co-founder of, which helps homeowners find local, independent home improvement pros and handymen, has seen homeowners blindsided by issues like termites or cracks in the foundation. Although serious, these are issues that can be overcome if you understand construction, he says. “We’ve seen far too many people get involved without any knowledge of how to handle construction or contractors.”

You’ll also need to have an eye for a property that will sell and then time that sale well. Jensen admits not all of her homes have been easy to sell, including one that she tried to sell during the most recent housing market crash.

But having a budget, cash reserves and patience is key, especially if it takes longer than you expected to sell. You also have to be OK with keeping money tied up until then.

“We enjoyed the property, the location was great,” Rockwell says of his prolonged stay in the live-in flip. “We just knew that we wouldn’t get our money back out of it until we actually sold it.”


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Seven Essentials for Buying a Safe Home

Thu, 07/06/2017 - 11:10am

In dazzling summer sunshine, everything in a home looks great. But… and it’s a big but!

Buyers can be distracted by strategic staging, clever decor, and time pressures. They benefit from stepping back to determine whether the home they’re considering will require expensive additions or overhauls to keep everyone safe—not just this summer, but every day of the year.

The more buyers ask from sellers, the greater the need for careful examination!

Seven Safety Essentials for Home Buyers

As well as any safety concerns specific to your family, there are seven main issues that should be top of mind for buyers of houses, townhomes, or condominiums:

1. Contained Pool Fun: Pools come in all shapes, sizes, and types. One safety issue remains important: controlling who enters the pool and when. This involves safety measures for small children and across generations, as well as for visitors who are non-swimmers or uncomfortable around water.

Pool fencing that complies with local bylaws is essential. Looks matter, but locks are vital. Ask for installation details and check those against local safety requirements.

Life Saver Pool Fence relates its product designs directly to the importance and expense of transforming pools into safe playgrounds. Their pool fences can be “removed and reinstalled by the homeowner as one of the best investments a seller can make, especially with family homes.” This US company reports they use “triple-reinforced solid poles, self-latching gates, rounded edges and the strongest UV resistant mesh available in stylish colors.” This reality means buyers should not assume the pool fence is included.

2. Backyard Fire Zones: Landscaping and patio designs are usually customized to suit the specific needs of those paying for these expensive features—the homeowners. Buyers are, therefore, buying someone else’s decisions about what works, what doesn’t, what’s safe for family and what’s not. The cost of “making over” a backyard, fire-pit area, outdoor kitchen, BBQ corner, or other common cooking, smoking, or outdoor-fire feature can be significant. Changes that are decor- or taste-driven are not the issue. If buyers’ will be introducing small children and pets into areas designed for adults-only use, modifications may be essential. Fire and play zones do not mix!

3. Aging Danger Zones: Established gardens, patios, pool areas, decks, fences, and playgrounds look wonderful. Realistically, at some point “established” changes to “worn out.” Buyers shouldn’t just peek out windows at the yard or view the garden from the patio doors or deck. Get out there and stomp around — gently. Not enough to destroy the yard, just enough to ensure constructed elements are sound. Deck railings and fences rot out from the bottom. This means looking great does not guarantee they are strong, stable, and secure.

4. Landscaping Liabilities: Trees are amazing and valuable. As part of their life cycle, mature trees may need periodic pruning to safely remove dying and dead branches before they become falling hazzards. When considering properties with large trees, buyers benefit from talking to arborists to learn about the approximate costs of maintenance programs they are buying into. The legal issues involving trees are almost as complex and varied as those for fences.

5. Inside and Out: Make sure equipment or structures included in the purchase price have genuine value. Home Inspections may include evaluations of major equipment like owned furnaces, water heaters, and even major appliances. Sometimes, outdoor equipment and structures, even for pools, are overlooked. If buyers don’t feel confident about verifying the condition of outdoor equipment or structures themselves, specialists may be required.

When buyers, in their offer, specifically request items such as gas-fueled appliances, caution should be exercised. Buyers should confirm that equipment they ask for is in good condition and, where appropriate, professionally installed to maintain its functionality and safety.

6. Multi-storey Perspectives: London England’s shocking high-rise fire shone a bright, terrible spotlight on fire-safety design, maintenance, and unit security around the world. Buyers interested in a high-rise or multi-unit facility should ask their real estate professional to provide documentation concerning these issues for the building or buildings being considered. Local fire authorities can contribute significant fire safety knowledge.

“If you live in a high-rise or work in a high-rise building, be familiar with the occupancy,” Houston Texas Fire Samuel Peña stressed. “Be familiar with the life-safety systems [and] know where the means of egress [exit] are. Know what your responsibility is in case of an emergency.”

Chief Peña emphasizes “four simple safety tips [which] could mean the difference between life and death in case you’re involved in a high-rise fire.” Long before fire strikes, Chief Peña strongly advises those living in multi-storey buildings to learn the local Fire Code, how and when to evacuate, where safe places are, and where all the building exits and stairwells are located.

7. Curbing Danger: Even busy or high-accident streets are periodically quiet streets. Buyers do not spend hours or days viewing a home before they buy. During their brief visit, buyers may not experience any traffic or noise concerns. That’s why real estate professionals are so valuable—but only if buyers express their personal uneasiness and ask direct questions about safety, noise, and anything and everything that is of concern to them.

For a perspective on local road safety that can also help buyers evaluate danger in an area they are not familiar with, revisit my column Do No Harm’ Driving Long Over Due”

These Seven Safety Essentials should be top of mind for buyers determined to find a safe home. How long is your safety list when home shopping?

A Safe, Fun Summer to you all!


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4 Things Home Inspectors Don’t Often Check

Thu, 07/06/2017 - 11:08am

Most home inspectors carefully scrutinize a house from top to bottom, many with checklists that contain more than 1,600 features to evaluate. But some items require a specialist for a more thorough evaluation.

The fireplace and chimney

Inspectors often open and shut dampers to make sure they’re working properly. They may shine a flashlight up the chimney to look for any obstructions. But for anything further, buyers likely will need to hire a fireplace inspector to look for things like soot and creosote buildup, which are possible fire-starters. Those extra inspections could cost anywhere from $80 to $200.

Foundation issues

A geotechnical or structural engineer may need to be brought in if a buyer has concerns about the ground underneath the home, such as whether any shifting, tilting, or sinkholes have caused damage. Professionals will test the soil for several potential problems. Basic testing likely will cost between $300 and $1,000, while more invasive testing can cost upwards of $5,000. Buyers on a budget might consult a free site called PlotScan, which reveals any history of sinkholes and other natural catastrophes in the vicinity of the home, to better understand whether they need further inspection help.

Well and septic systems

Some home inspectors trained to evaluate septic systems may be willing to do an extra inspection for an added fee to test a home’s well water and septic system. Otherwise, buyers will have to hire a well inspector. These professionals will collect water samples to test in a lab for coliform, arsenic, and other harmful bacteria and chemicals. They’ll also make sure that seals, vents, and screens have been properly maintained and that the well and pump are producing enough water. That typically will cost about $250 for an inspection.


“We’ll go up on roofs if it’s safe,” says Frank Lesh, executive director of the American Society of Home Inspectors. “But if it’s raining or it’s too high, we’re not able to get to it.” A specialized roof inspection, which costs about $500 to $750, offers a closer look. Some roof inspectors will even do an initial consultation for free. Those who don’t go on the roof can sometimes conduct an infrared inspection to look for any temperature differences along the roof to see where heat or air conditioning might be escaping.



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Maximizing Fees for Your Property Management Company

Thu, 07/06/2017 - 9:08am

Our topic today is maximizing fees, otherwise known as value-added services. The main revenue source for most property management companies is their management fee, but there are many value-added services that can be incorporated to increase revenue. Our guest, Darren Hunter, specializes in this and is a household name in the Australian property management community. He has spent most of his professional life helping property management companies figure out their business and today he’ll go over fee maximization for property managers. Two sponsors make this show possible: NARPM, the National Association of Residential Property Managers, and PM Grow Summit, the annual educational summit for growth-minded property management entrepreneurs.

Who is Darren Hunter?

Darren Hunter began as a property manager in 1989. A consultant and trainer now for the last 11 years, Darren works with property managers and their companies in Australia, New Zealand, and the United States. He has specialized in helping real estate business owners earn more money not only with new business but with their current business as well. It’s called fee maximization, which is the ability to increase and add fees with current owners.

An Overview of Value-Added Fees

In Australia, there is a mentality on the east coast that the management fee should cover everything. Property managers are afraid to charge for things other than management and leasing. So, those companies typically earn 15 percent of their revenue outside of management and leasing fees. On the west coast of Australia, however, you find 50 to 60 percent of income coming from fees outside of management and leasing. Those are the best-earning companies in Australia.

In the United States, most of a management company’s revenue is coming from management fees and tenant fees, but not anywhere else. It’s an interesting breakdown and sets you up to easily double your profit margin. NARPM did a survey that said 20 percent of the average property management company’s revenue is profit. If you are earning a total fee income per property of around $2,000 per year for one property, and your profit margin is 20 percent, it means you’re only earning $400 on that property.

With traditional thinking, to double your profit margin, you need to double your roofs and front doors. But, all you really need to do to double your profit margin is find another $400 a year in these extra value-added fees. That’s a more efficient way to double profit. You won’t need more doors and more staff and more overhead costs.

On, you can find a knowledge library that includes 11 Profit Laws Regarding Fees. The first one is easy. Two people meet each other at a barbecue and discover they own investment properties and they each use different management companies. Those two people will talk about what they’re charged in management fees but not any other fees. That’s not as high on their radar, and it’s not as important as management fees.

Focus on getting the management fee to be the market rate. Then, maximize the leasing fees. A lot of areas in the U.S. don’t have leasing fees at all. But, if you maximize that fee to the accepted market rate, you can then do the work in the add-on fees. That’s where you get your results. Property owners really focus on the management fee. You can work with add-on fees because your owners are not thinking those are as important.

Three-Part Pricing Strategies

Some management companies will set up a tier system where they have a low fee option that comes with optional add-ons, a middle fee option that includes most of the management services but still leaves room for add-ons, and the highest tier, which is one fee that includes everything. People often go to the middle and they tend to negotiate which package they want instead of negotiating fees. There are also two-tier systems with a lower package and a higher package. Two package systems still offer a choice, so there’s not just one fee structure. You can usually get a property investor into the top package, where one management fee covers everything. Just make sure that the fee is high enough to cover all your services.

Price anchoring plays to psychology. In a three-tier property management pricing structure, you’re really expecting to sell the middle package. The top tier package might not sell as often and the bottom tier package is the anchor against that popular middle package. There are different market cultures at play, and you have to go with what works.

Do your best to limit pricing choices to three. The more packages you have, the more confused people can get. That’s going to prevent them from making a quick buying decision. If you structure three packages right, you can succeed as long as it’s easy to understand. If it’s too confusing, you can lose business because people won’t be in the mindset that’s required to make a purchase. Experiment and see what works. Testing and measuring is the key to reading what people will accept in your market.

High Ticket Property Management Items: Lease Renewals

After management fees and leasing fees, you can charge a lease renewal fee. If the average rent is $1,500, and you charge $750 for a leasing fee, your renewal fee might be $375, roughly half the cost of the leasing fee. That fee alone, when done properly, has the potential to increase your profit margin by 50 percent. This fee comes up once a year. If you’re managing 250 properties and you expect half those tenants to renew, you’ll earn $46,175 on that fee alone, which looks like a healthy boost to your bottom line. It’s a pure profit strategy. You aren’t taking on extra work that will cost you more resources.

How would you go about explaining this to your clients? Well, another of Darren’s 11 Profit Laws is the Law of Alternative Cost. This is what it would cost if the service was not provided. So, if you didn’t provide a lease renewal and the tenant just went month to month, what would be the cost to the owner? The tenant might move out during the winter months and the owner may have a vacant property for longer. There will also be new leasing fees. So, the owner loses the cost of one month’s rent plus leasing fees. The alternative cost could be thousands of dollars. When the alternative cost is thousands of dollars you can justify a quality leasing fee. Don’t fail to express that alternative cost, or your fee will look too expensive.


High Ticket Property Management Items: Inspection Fees

Inspections or assessments should be another service you offer. This is when you go to the property during the lease and make sure the tenants are following the terms of that lease. Many managers aren’t charging for this service as all. Property managers ought to visit the property once or twice a year, and you shouldn’t avoid charging for that service. If you sent a plumber to a property to fix a leaky faucet, what will that plumber charge? The plumber might charge $150. You wouldn’t call the plumber and complain about the cost. You pay it because that’s what a plumber is worth. In the property management world, what is your time worth for conducting that inspection or assessment? You are spending time:

  • getting to the property
  • inspecting the property
  • and documenting the process.

This is a difficult job with a lot of risk management and compliance. Your time is worth something. Don’t charge cut-rate fees.

Some property managers might feel like property inspections are the essence of property management, and should be included. But, what does the rule book say? There is no rule book. The management fee does not have to cover the inspections. If you believe you’re worth it and you know how to justify it, you can charge for anything. You can even charge a rent collection fee on top of the management fee if you know how to justify it. So, if you think that the management fee must cover the inspections, then that’s your mindset and you believe it. But, if you think it’s separate, you can charge it.

You’re competing against other property managers who do include inspections as part of their management fee. However, the mindset is still more important than the market. If all your competitors are not charging for a routine inspection fee and you are charging a quality fee, your owner might question it, especially if competitors are not charging it. You’ll need to convey that your inspections are high quality and prioritized. Maybe the competitors aren’t actually doing those inspections because they aren’t charging for them.

The amount of revenue you can earn depends on how many inspections you conduct. Inspections are typically done at least once a year, and if you can justify it, try to get two inspections a year. If you charge $100 for each inspection, and you have 250 properties that are inspected twice a year, you’re going to bring in $50,000. There are some labor and time involved, so your cost might be 50 percent, and you’ll have gas and mileage. So, you’ll have a 30 percent profit margin, which is $15,000.

High Ticket Property Management Items: Administrative Fees

Some management companies will charge a monthly administrative fee. This will cover postage and technology like your software costs. It might be $10 a month per property. Justify this by explaining your office operations and the costs that are associated. You can sell that you’re charging a flat rate on this fee rather than tracking and charging more or different fees every month. So, that might be an extra $120 per year per door. If you have an owner with multiple properties, determine whether you’ll charge this fee per property or per owner. But it’s fair to say you can charge this $120 annual fee on 75 percent of your properties. That’s another $21,000 per year, which is pure bottom line.

Again, this is a mindset. When an owner gets a letter or a notice about business expenses and overhead increasing due to compliance and the fact that the fee structure hasn’t been revised for the last five years, it will be accepted. Owners value their peace of mind overpaying a little bit extra. A large majority of clients will accept the fees as long as you can justify them.

High Ticket Property Management Items: Additional Fees

Here are some other fees you can charge in addition to your management and leasing fees:

  • Move in and Move out Inspections
  • Photography and Video
  • File Transfer fee on account set-ups when you inherit a property or a tenant in place
  • Internet Marketing fee
  • Eviction Protection Program
  • Repairs and Maintenance fees
  • Outside of Normal Duties fee
  • Insurance Claim fee

The biggest impact from this list will be the marketing and maintenance fees. With maintenance, property managers will charge a percentage of the maintenance invoice. If you send a plumber out, you’ll charge a percentage of the plumber’s fee for your organization. It’s not popular, and you have to know how to present it.

Change the mindset that the management fee should include this. If you have an owner who pushes back against 10 percent repairs, maintenance fees and etc. and other agencies don’t charge anything, talk about your value. Properties that are old and neglected are usually managed by companies that don’t pay attention to maintenance. If you can demonstrate you’re proactive with repairs and maintenance, owners will see they have benefits. The property will be in better condition and its value will increase. You can frame it as reactive repairs versus proactive repairs. The best vendors are worth your maintenance fee. If you can point out that vendors are charging you less than they would be charging outside of your property management relationship, then that management fee will make sense.

The revenue here depends on a property’s condition and age. Maybe you could expect to earn $100 on a property’s maintenance annually. With 250 properties, that’s another $25,000 to the bottom line. This is much better than growing with rent roll growth. Rent roll growth requires extra overhead and additional costs.

Implementing the Value-Add Services

With all of the fees that have been discussed here, you could have more than $107,000 coming into your property management business. It’s up to you if you want to do this for you.

You can increase your fees. You can earn more money with the business you currently have. All of the mindset issues you have are dragons in the mist. They don’t actually exist.

There are three actual circumstances where you can’t do this:

  1. If you’re offering bad service and you’re asking customers to pay more, it will not work.
  2. If you don’t believe what you’ve read here, you won’t be able to do it.
  3. If you wait and think about doing this in six months, you won’t be able to do it. Do it now.

For more information from Darren, please visit If you have any questions about growing your property management business, contact



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America’s 20 Hottest Real Estate Markets for June 2017

Mon, 07/03/2017 - 7:57am

Are you ready for the housing market’s Endless Summer? At least it might feel endless, because there seems to be no end in sight for the national housing shortage now that we’re waist-deep in the busiest season for buying and selling, according to a preliminary analysis of June data by®.

With limited growth in for-sale homes, prices remained high. Just a few months ago, the nationwide median home price pushed above $250,000 for the first time. We’re predicting it will hit $275,000 when we close out June—an increase of 9% since one year ago.

“The housing market has now gone 24 months in a row seeing inventory drop on a yearly basis, the longest streak in over two decades,” said Javier Vivas, manager of economic research at, in a statement. The shortage is hitting even more markets, he added—8 out of every 10 have fewer homes for sale now than this time last year.

And that shortage is reflected in how fast homes are snapped up. Properties in June spend a median 60 days on the market—the same level as May, but five days faster than in June 2016.

The hot list Rank (June) 20 Hottest Markets Rank (May) Rank Change 1 Vallejo, CA 1 0 2 San Francisco, CA 2 0 3 Kennewick, WA 5 2 4 Sacramento, CA 4 0 5 Columbus, OH 7 2 6 Detroit, MI 18 12 7 Boston, MA 3 -4 8 Colorado Springs, CO 6 -2 9 San Jose, CA 7 -2 10 San Diego, CA 16 6 11 Dallas, TX 12 1 12 Waco, TX 30 18 13 Grand Rapids, MI 13 0 14 Stockton, CA 10 -4 15 Midland, TX 8 -7 16 Fort Wayne, IN 11 -5 17 Santa Rosa, CA 19 2 18 Denver, CO 17 -1 19 Yuba City, CA 21 2 20 Modesto, CA 23 3 Source:



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The housing market has become ‘lopsided’ — and it’s bad news for first-time buyers

Mon, 07/03/2017 - 7:51am

Investors and wealthier shoppers are pricing first-time homebuyers out of the market.

After the 2008 reset of the housing market, prices have recovered — but at a much faster pace than wages. The S&P Dow Jones index that tracks home prices in 20 major cities like San Francisco and Chicago set a record for a fifth straight month in April, the latest month of data available.

That’s because there aren’t enough houses for all the prospective buyers, especially at affordable prices.

“The lack of listings in the affordable price range are creating lopsided conditions in many areas where investors and repeat buyers with larger down payments are making up a bulk of the sales activity,” said Lawrence Yun, the chief economist at the National Association of Realtors.

With fewer affordable homes available to younger first-time buyers, sales are slowing. The NAR said on Wednesday that pending home sales, which track contracts that have been signed but not closed, fell in May for a third straight month.

“Many prospective first-time buyers can’t catch a break,” Yun said. Prices are going up and there’s intense competition for the homes they’re financially able to purchase.”

Cyndi Lesinski, a realtor based in Los Angeles, said it was typical for homes priced under $550,000 to get multiple offers and move off the market anywhere from within 24 hours and two weeks.

The number of starter homes on the market fell 16% from Q2 2012 through Q2 2017, Trulia said. 

“We had somebody right away,” Lesinski said about her most recent listing, which was expected to close Wednesday.

“I listed it as a ‘coming soon,’ and we accepted an offer the day that we actually put it in as an active listing.”

But it’s not always the highest offer that closes the deal, Lesinski said. Sometimes it comes down to how well a buyer’s agent is able to negotiate other terms and conditions.

It would be great to see an increase in new condo developments in the $450,000-to-$550,000 price range, Lesinksi said, though builders have focused on more expensive housing to get more bang for their buck. The National Association of Homebuilders, however, has repeatedly said land and labor shortages limit how much new housing can be added to the market.

So, maybe “we could all move to Ohio to all the towns that are depressed and dying,” Lesinski said. “There’s a lot of empty houses there.”


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4 Options to Help You Finance Your First Rental Property

Mon, 07/03/2017 - 7:48am

For years, you’ve been diligently paying off your personal debt. You’ve finally got a healthy savings account. You’re funding your 401(k).

Everything is going well, but one thing is still missing: You’d really like to give real estate investing a try. The biggest obstacle that’s tripping you up is the financing process.

4 Options for Buying a Rental Property

Financing a rental property is rarely as straightforward as we’d like it to be. There are always a few wrinkles to be ironed out. But if you’re considering the purchase of property, sort through your various options and be sure to include the following.

1. Try an online lender.

Plenty of investors continue to use local banks and credit unions to finance real estate investments, but those are no longer the only options. Some experts even argue they’re no longer the easiest ones.

Instead, the honor of most convenient lending solution has gone to online loan marketplaces like LendingTree, LoanDepot, Quicken Loans, and Rocket Mortgage.

With an online loan marketplace, you don’t have to waste time driving from one bank to another and sitting in on lots of boring meetings, only to hear the same old spiel again. You simply fill out some information, compare loan options, and get set up with the best partner for your plans.

2. Put down a large down payment.

Are you having trouble qualifying for a mortgage? Or perhaps the interest rate you’re offered just isn’t feasible given your numbers?

One option is to hold off for a few more months and stash away more cash. If you can put 25 percent down or more, you can save considerably on the interest. If you can furnish more than 50 percent, you might even be able to attract a hard money lender on far more favorable terms.

3. Ask about seller financing.

Seller financing is a clever option that often works when an investor can’t get a loan from a bank or other traditional lending source. In this case, the seller of the property—which is almost always owned free and clear—essentially becomes the bank.

You take ownership of the property, but then cut monthly “mortgage” payments to the previous owner. Should you default, the seller has recourse to take the property back.

If you try to pursue seller financing, you have to get together a smart game plan. Approaching a seller without any details isn’t going to inspire his or her confidence. You need to have specific terms written out and ready to be executed.

4. Gather a group of investors.

There’s something to be said for owning a piece of real estate free and clear. This avoids the potential of a foreclosure and gives you more room for your numbers to work out.

You probably aren’t in a position where you’re able to buy a property with cash on your own obviously. But thankfully, you don’t have to. You have the option to gather a group of investors and go in together.

Let’s say you’re interested in buying a $200,000 rental property, for example. If you find three other people who are willing to put in $50,000, you can collectively own the property and start a cash flow on it much sooner.

This is a great way to get your feet wet while spreading out the risk.

Patience is Paramount

You never want to rush into buying a property. It doesn’t matter whether it’s going to be your personal residence or a rental. Nothing good ever happens in real estate investing when the trigger is pulled prematurely.

There will always be another property, and few deals are ever the “certain thing” you may be tempted to to believe in the heat of the moment. Be patient and wait until your financing falls firmly into place.



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Property Management Leadership Requires Timely Information

Mon, 07/03/2017 - 7:43am

Technology continues to connect us faster and from greater distances, until time zones and the miles between us no longer matter.  These changes are happening at a blistering pace and timely information is allowing property management leaders to operate their companies and their properties with a new set of rules.  Thomas Friedman, author of “The Lexus And The Olive Tree” says, “the future will require a complete integration of capital, technology, and timely information for leaders to lead”.  As a property management professional, are you ready to be a leader of the future?

Reviewing some powerful statistics:  Given the rapid pace of technology and innovation, it’s important to realize just how fast information and ideas are reaching us, with the tap of a keystroke.  Here are some powerful statistics about today and the future:

  1. It took commercial radio 38 years to reach an audience of 50 million, it took 13 years for television, but the Internet only took five years to grow this large.
  2. According to the Cisco Visual Networking Index global IP traffic will reach 1.1 zettabytes per year, global IP traffic has increased fivefold over the past five years, and will increase threefold over the next five years, two-thirds of all IP traffic will originate with non-PC devices by 2019, and broadband speeds will more than double by 2019.
  3. 92 percent of North American Internet users currently research travel arrangements online.
  4. An MBA at Duke, Purdue or Syracuse University can be earned by taking online classes.
  5. E-commerce will continue to double, over the next 24 months.

Tip From The Coach:  As a property management professional, do the above trends surprise you? Are you and your property management teams leveraging these trends for your competitive advantage?  Remember, with the pace of technology, only the leaders who embrace this rapid pace will survive and thrive into the future!

Leading-edge uses of technology and information:  Many of our property management clients are using the statistics above to create some very innovative ways of applying capital, technology and timely information.  Here are some examples:

  1. Property management companies are using comprehensive internal websites [intranets] and the cloud, to maximize the flow of information and ideas within their company.  In addition, our property management clients are linking their marketing information to the intranets of their corporate clients.
  2. Leading property management companies are offering their residents WiFi Internet access and smartly-crafted resident portals.
  3. Our clients have specifically designed their websites to capture the E-mail addresses of prospective future residents, for free future permission-marketing.
  4. Apartment communities are leveraging their online forms/access for handling maintenance requests and other resident services plus tracking levels of response time plus completion satisfaction.
  5. Progressive companies are adding Chief Knowledge Officers to mine great ideas, share best practices, develop leading-edge technology and communicate strategic plans.
  6. Our property management clients are conducting training and sharing real-time communication with their teams using a variety of training platforms.

Accessing real-time information:  In addition to the examples above, leading vendors in the property management industry are providing real-time website information.  Here are two examples: A leading industry website provides password-protected real-time access for its property management advertisers at a secured portion of their website.  This means advertising clients can make changes to their rental rates, update property information, review web page activity and analyze monthly/year-to-date marketing reports.  In a second example, a leading call tracking service is providing real-time access at their website for their property management clients.  This access allows their clients to review important marketing information, compare the results of their marketing with other properties within their company, download and listen to actual inbound telephone calls from future residents, download marketing information for their own internal spreadsheets and reports, E-mail reports to others within their company and define their own parameters for custom reports of their marketing statistics.



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The 10 Worst Multifamily Markets for Investors

Mon, 07/03/2017 - 7:37am

We previously examined the multifamily segment and selected 10 hot markets for investors. The sector is still benefitting from long-term expansion, with positive job growth expected in most of the nation’s major metros over the next couple of years, according to Fannie Mae’s Multifamily Market Commentary for June 2017. New supply is a concern for multifamily properties, but even that is expected to moderate as only 12 metro areas have more than 20,000 units that have been completed or underway since 2016.

The great outlook is not uniform across all multifamily markets, however. Employment rates in some areas have yet to fully recover to their pre-recession levels. Even in an environment with robust demand, certain smaller segments are bound to disappoint.

The letdown is affecting even highly desirable markets, including Los Angeles and New York City. Why? Rents have skyrocketed to the point where they are becoming unaffordable. Also, rent control laws like the ones in Los Angeles are beginning to make investors hesitate about making new forays into an otherwise strong sector.

This roundup takes a look at markets that have a ways to go before they become investor favorites, and ones that are already so desirable that they leave limited upside potential.


The city received two strong economic infusions in 2016—the Republican National Convention and a team in the World Series. Those dual benefits were not enough, however, to tip Cleveland’s delicate balance. Information from Moody’s Analytics, via Fannie Mae, suggests that Cleveland will add an estimated 15,000 jobs in 2017, thanks to the healthcare research and development sectors. Yet investors should use caution, because new multifamily supply here is looking like it will outpace demand.


Not too long ago oil prices seemed destined to stay high forever, and Houston would perpetually benefit from domestic and global demand for the energy source. Much of the city’ exceptional growth was tied to the oil market, which has seen took a nosedive. Unless oil prices recover, Houston will need to diversify the sources of its affluence. Expect to see a period of rising vacancy rates and declining rent growth, according to Fannie Mae.

Kansas City, Mo.

Kansas City’s recovery has been underwhelming, thanks to a job market. Going ahead, Fannie Mae expects an average population size, meager job growth and affordability of single-family homes to keep the rental market embers too weak to generate much heat.

Los Angeles

Sometimes a city’s success can bring its own backlash. In California, state legislators are aiming to repeal the Costa-Hawkins Act of 1995, a law that favors landlords in banning caps on single-family houses and putting restrictions on which apartments are eligible for rent control. Now, the idea is to allow municipalities to make those decisions. In Los Angeles, a city with already tight rent restrictions, some investors believe firmer rent controls could mean less incentive for development, writes Mark Ventre, a director at capital provider Berkadia in Insiders’ Insight, a newsletter from the firm.

New York City

Where in the world does earning between 40 percent and 130 percent of an area’s median income makes housing “affordable?” In New York City, the nation’s largest apartment market. Overall, the vacancy rate is likely to remain low, but the high-end apartment segment is likely to experience more rent concessions. Also, job growth in the city is expected to slow further. While there is always more demand than supply in New York, and economic drivers are multi-faceted, this is not a market for the timid.

Oakland, Calif.

The Oakland market is benefitting from overflow from the San Francisco and San Jose markets.  The inflow of businesses from other parts of California also coincided with a multifamily construction boom already underway. The caveat: Rents grew by more than 7.0 percent on average annually, from 2013 to 2015, which Fannie Mae believes is unsustainable.

Orange County, Calif.

The economic recovery has been good to the Orange County rental market, as demand for the metro’s apartment units is only slightly outweighed by new supply. One aspect of Orange County’s market that is out of balance is its dependence on national and local housing conditions, according to Fannie Mae. Construction jobs account for about 5.9 percent of all jobs in the metro area, compared with 4.5 percent nationally. That leaves Orange County vulnerable in the case of a construction slowdown.

Orlando, Fla.

Fueled by a strong tourism industry, Orlando added more than 50,000 jobs in 2016, expanding employment by 4.5 percent. New apartment development is picking up rapidly, with about 8,000 units underway, according to Fannie Mae’s Spring 2017 outlook. It sounds good, but the condominium market could be a potential Achilles’ heel. Thousands of condominium units were either built or newly converted in recent years, which represents a shadow inventory of multifamily housing. Investors don’t want to get caught in a cycle of unconstrained development activity.


Fannie Mae believes the market is likely to be one of the best performing multifamily markets in the U.S. in 2017, despite a slowdown in economic growth in the fourth quarter of 2016. Yet Phoenix has two potential trouble spots: more than 40 percent of units underway will be delivered two sub-markets—North Tempe and Central Phoenix,—which might spark concerns of overbuilding. Also, while Phoenix’s economy is diversifying and transitioning to higher-paying sectors such as professional services, education, health and finance, tourism is still the city’ fifth largest employer. The construction sector represents about 5.5 percent of employment. It is volatile historically and can experience softness due to sudden layoffs.

Tampa, Fla.

It’s another delicate balancing act in the Tampa-St. Petersburg market. Tampa’s employment segment has not yet recovered all of the jobs that it lost in the downturn. Steady deliveries of inventory pushed vacancies up to about 4.8 percent, a modest increase, according to Fannie Mae. Rent growth is expected to slow down, but should continue to remain in the range of 2.5 percent. Tampa is making progress, but be mindful of the fact that the relatively low cost of single-family homes is keeping demand for rental units in check.


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3 Keys to Remaining a Profitable Landlord in the Age of Airbnb

Mon, 07/03/2017 - 7:31am

It’s no secret that rental properties can be a great investment. However, just like all entrepreneurs, landlords need to adapt to changes in the market in order to minimize risk and remain profitable.

In this age of rental sites like Airbnb, landlords are increasingly faced with the issue of tenants trying to make extra money by listing properties as short-term rentals. These short-term rentals can expose landlords to significant risks. Even though this practice by tenants may be a lease violation, it is unrealistic for even the most diligent landlords to identify and put a stop to these violations before they occur.

In order to avoid potential liability, landlords need to anticipate the possibility of short-term rentals happening on their property and take necessary precautions.

Liability for Violations of Local Laws

Some cities have laws that place restrictions on short-term rentals. These laws are often part of a city’s zoning or administrative codes. The city may completely prohibit any type of short-term rental. Others require you to register, get a permit or obtain a license before listing a room or home on a site like Airbnb.

Some jurisdictions also require an occupancy tax to be paid on short-term rentals. Violating local laws, or failing to collect and pay taxes, can result in fines and other penalties against the owner of the property or the property itself, like a lien being placed on the property.

Landlords can gain some protection against this potential liability by including a lease provision that requires the tenant to take legal responsibility should an illegal short-term rental be discovered.

However, such a lease provision will only be binding between the landlord and the tenant – it will not be binding between the landlord and the local government. If the city decides to take adverse action against the landlord or the property, the lease agreement won’t stop them. Still, having this provision in the lease agreement will give the landlord an avenue to go after the tenant for any damages suffered.

Additional Insurance Coverage

Perhaps the most obvious risk for landlords when it comes to unapproved short-term rentals, is that additional people will be living in the property for whom the landlord had no opportunity to conduct a background check, credit check or other method of approval. Any experienced landlord knows that failing to properly screen tenants often results in increased damages to the property.

To help protect against this risk, landlords should require tenants to secure additional coverage on their renter’s policy specifically covering any damage caused by short-term renters. The additional coverage needs to list the landlord as an additional insured third party on the policy. Landlords should write this requirement into their lease along with a method for obtaining proof that adequate insurance coverage is in place.

Sharing the Profits

Landlords are in the business of getting paid for letting other people reside on their property. It’s only fair that landlords should get to share in the profits if they find their tenants making money off the property as a short-term rental.

When drafting this requirement into the lease, landlords need to carefully consider the percentage of profits they claim. If the goal is to prevent short-term rentals altogether, setting a very high percentage may be enough to deter the tenant from engaging in short-term rentals at all.

However, if the landlord is enticed by the potential of making some extra money, setting a lower percentage may encourage short-term rentals and even provide a steady stream of additional profit. In either case, this provision should be carefully thought through and drafted to have the intended effect.

The considerations above are only a few of the many potential issues landlords need to consider when it comes to their properties being used as short-term rentals.

Be sure to contact a licensed attorney in your state to help you think through these issues and make any necessary changes to your lease. If done properly, landlords can take significant steps in limiting their liability and maybe even creating a win-win scenario with their tenants that can be profitable for everyone.



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When Buildings Go Green, Property Owners Find Increased Value

Thu, 06/29/2017 - 4:32pm

Eco-friendly features are cropping up on buildings around the country. In addition to green roofs and solar panels, private-public partnerships are increasingly building more efficient and cost-effective stormwater systems. And owners are reaping major monetary rewards for their efforts.

Green infrastructure is an umbrella term for anything that helps manage stormwater naturally and often includes rain gardens, green roofs, cisterns and rainwater recycling. Stormwater runoff, which often contains oil, grease and fertilizer, is among the most consistent pollutants of local waterways, according to the U.S. National Research Council. With more development in urban areas consisting of concrete and other impervious surfaces, stormwater often has no place to go other than down the local sewage channel. Without mitigation, the stormwater can overflow channels, flooding streets.

With this in mind, local governments are starting to require some kind of green infrastructure within commercial development and are creating coordinated green infrastructure networks that include public and private sites.

The Urban Land Institute, which reviewed several water management and green infrastructure systems in a recent report, found in addition to benefiting the city, green infrastructure is adding value for property owners.

“We found that green infrastructure was capable of creating value,” ULI Senior Director of Urban Resilience Katharine Burgess said. “It created an enhanced user experience, improved placemaking opportunity and improved development yield of land to be used more efficiently.”

These additional amenities, such as green roofs, parks and water features, will often lead to rental increases. A 200-unit apartment complex at 1330 Boylston in Boston garnered an additional $300 to $500/month in rent for units that overlooked the green roof. The green roof cost $113K to build and the extra rent nets $120K/year, according to the ULI report.

Partnering with private developers creates a more affordable way for cities to address green infrastructure, which studies show is more cost-effective than implementing graywater infrastructure (where sewage mains and tunnels collect and treat stormwater and sewage before discharging). New York City estimates gray strategy would cost $6.8B compared to a green strategy that would cost $5.3B to implement. Burgess said she expects stormwater management and green infrastructure to become increasingly more prominent until one day it is part of business as usual.

“Real estate developers are taking really effective approaches on requirements or desires to achieve sustainability practices,” Burgess said.

Several developers have already noticed savings in building costs since implementing various green infrastructure.

In 2016, Gerling Edlen was able to harvest rainwater at its 180K SF Meier & Frank building in Portland, Oregon, that met 93% of the building’s non-potable water needs. The company saved more money than it paid the city. Annual savings equaled 107% on the building’s total annual water cost, according to Gerling Edlen Director of Sustainability Renee Loveland. The building owner also uses the stormwater system as a marketing tool with tenants. The renovation benefited from a local green investment fund grant.

This historic building, which is LEED Platinum certified, has an underground rainwater collection tank, a 12K SF green roof, a 112-kilowatt solar array and bioswales at grade.

The retail center Market at Colennade in Raleigh, North Carolina, uses three cisterns and a water reuse system, bioretention swales, an efficient irrigation system and a detention basin as part of its water management system. It is so efficient that of the 30.6 inches of rainfall captured in one year, only 0.6 inches flowed out of the system, according to Regency Centers Vice President of Investments Chris Widmayer.

Among the biggest benefits of this project was its ability to partner with anchor tenant Whole Foods, which uses the cistern to help market the grocery store’s green culture, Widmayer said.

For Burbank Water and Power, the green infrastructure helped attract younger employees to the company’s campus, Burgess said. The campus, which was renovated in 2000, operates on 100% recycled water, using green roofs that absorb 70% of rainwater and save the facility about $14K/year, according to ULI’s report.


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How Independent Apartment Owners Can Increase Income

Thu, 06/29/2017 - 11:05am

While much of the focus at large multifamily conferences often revolves around new, high-rise, Class A properties, a series of panels at the recent National Apartment Association’s annual education conference concentrated on independent owners and how they can maximize income and value using similar tools to their institutional counterparts’.

From small improvement tips to large-scale unit remodels to best practices for protecting your assets from insurance claims, the Independent Rental Owners sessions provided key insights for apartment entrepreneurs from experienced industry professionals.


Many independently owned units fall into the all-bills-paid category, which differs from large institutional owners who tend to pass off utility responsibility to their renters. Since the landlord is responsible for paying the utilities in an all-bills-paid unit, a quick and easy money saving technique is to manage utility output. Utility benchmarking is a helpful practice, as you can develop a standard for utility usage and then monitor your building’s performance over time. Using a benchmarking system can allow you to target specific utilities and optimize consumption practices. Installing LED light bulbs and updating appliances to meet energy efficient standards are also common practices among independent owners, as well as updating sprinkler systems with smart sensors and timers that track weather patterns and adjust watering accordingly to help cut back on excess water use.


Depending on geography, some household amenities are expected as part of the lease, while others are not. If refrigerators or washers and dryers are not expected in your units, consider adding them and increasing the rent. According to Karla Ross of Bob Ross Realty, simply adding a refrigerator to a unit can increase monthly rent by upwards of $50 in certain locations. A high-quality, refurbished refrigerator that costs $550-600 with a three- to five-year lifespan can be paid back in roughly one year. The excess cash flow goes straight into your pocket.

Taking the amenity package a step further, Ross recommends analyzing the effects of fully furnishing your units and renting them out as corporate or short-term rentals. Furnished apartments can sometimes go for double the asking rent of an unfurnished apartment. While volatility in occupancy may increase with short-term or corporate rentals, the additional cash flow can often offset or exceed the cost to maintain the unit.


Many independent owners maintain portfolios of older stock, and while it’s common to update the interior of buildings and units, often the exterior is overlooked. Does your property have a courtyard or basketball court that are rarely used? Would adding a walkway or changing the color of a fence improve the use of outdoor space? Victoria Cowart of Darby Development Co. recognizes significant value in reconfiguring unused space into more attractive shared areas like dog parks or outdoor entertainment areas with grills and fire pits. As resident desires change, modifying and improving your communal space can improve your curb appeal significantly.


Online portals and mobile apps are no longer unique to large owners with significant technology budgets. As Tim Hurley of Highland Commercial Properties explained, it is now simple to create mobile apps using public platforms such as Google Forms. Apps can allow owners to communicate with residents to handle customer service requests and inspections, or contact vendors and service providers to maintain contracts. As technology becomes paramount in the industry, independent owners can stay current with simple and basic mobile app communication.


Having the right insurance in today’s market goes beyond carrying the right policy on your property. It is important to ensure that anyone coming onto your property, whether it is a resident, vendor or service provider, maintains their own insurance to limit your liability. Lonnie Derden of Enterprise Risk Control explained that service workers who are injured while working at your property can file a worker’s compensation claim against you if their companies don’t maintain adequate coverage. This can lead to rising premiums for property insurance and can be easily avoided if you verify proof of insurance when signing contracts with your vendors.

Renter’s insurance is also a key way to avoid paying insurance claims if something were to happen on your property. Some owners are even providing renter’s insurance to all residents, and including the cost in the rent. Property claims can get very expensive and affect your ability to maintain insurance going forward. If the claim is minimally more expensive than your deductible, it may be wise to pay for the repairs out of pocket, rather than filing a claim, which will impact your insurance rates for the long-run. A quick check of proof of insurance for renters and vendors is an easy way to insure you don’t end up paying avoidable insurance claims.

While independent owners often do not have the capital available to institutional owners, they remain competitive by taking advantage of small improvement projects, providing amenities residents use and desire, and ensuring all people entering their properties are adequately covered for liability purposes.



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Fewer homes for sale as rentals become all the rage, Zillow says

Thu, 06/29/2017 - 10:59am

South Florida homebuyers are starved for listings, and Zillow partly blames the shortage on a big increase in single-family rentals over the past 17 years.

The tri-county region has 77 percent more homes being rented now than in 2000, the real estate website reports.

South Florida has 242,000 single-family rentals today compared to 137,000 in 2000.

Las Vegas led the U.S. with an astronomical 259 percent increase in single-family rentals. Phoenix was second with a 187 percent increase.

“Thousands of single-family homes that were once bought and sold every few years prior to the recession have now been converted into rental properties by investors, trading hands much less frequently … contributing to inventory shortages,” Zillow Chief Economist Svenja Gudell said in a statement.

Still, the situation is slowly starting to improve for South Florida buyers.

Palm Beach, Broward and Miami-Dade counties had 1.3 percent more homes hit the market in May compared to a year ago, Zillow said. Nationally, buyers had 9 percent fewer homes to choose from last month, the fastest decline in nearly four years.

Zillow cited other factors for the shortfall in listings, including more millennials buying homes, low levels of construction and still-sizable numbers of homeowners who can’t sell because they remain “underwater” on their mortgages.

“There is no silver bullet that will clear the market of all of these issues, and buyers frustrated by the status quo will likely have to remain patient and be ready to pounce once that perfect home does become available,” Gudell said.

Condo-hotel owner prevails in class-action case

A jury this month sided with the owner of Hilton Fort Lauderdale Beach Resort in a $10 million class-action lawsuit brought by unit owners over shared costs.

The unit owners in the condominium-hotel at 505 N. Fort Lauderdale Beach Blvd. sued Q Club Hotel LLC, alleging that the property owner was charging fees not authorized by the governing documents.

Larry Litow, the attorney for the defendant, said Q Club had been paying a “wrongfully disproportionate share” of parking, management fees and other costs.

When Q Club fixed its mistake and started charging the correct amounts in 2012, the unit owners objected, Litow said.

Matt Weissing, attorney for the plaintiffs, said in an email he’s pleased that U.S. District Judge James Cohn in Fort Lauderdale found back-charges totaling more than $11.3 million are improper, saving his clients that amount.

“We are obviously disappointed that the jury did not find that those same charges were improper for the period of 2013-February 2015,” Weissing wrote.

Accountant Barry Mukamal, an expert witness for the defendant, said the jury verdict carries significant implications because it validates Q Club’s efforts to increase cash flow at the property.

“That directly affects the value of the hotel going forward,” Mukamal said, though Litow clarified that Hilton Fort Lauderdale Beach is not for sale.

In a condo-hotel, the property is professionally managed, and individual owners rent their units when they’re not staying there.



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After Two Year Freeze, Board Approves Hike On Rent Stabilized New Yorkers

Thu, 06/29/2017 - 10:55am

For the first time in two years, the Rent Guidelines Board [RGB] voted Tuesday to raise the monthly payments of 1.6 million rent-stabilized tenants. In a 7 to 2 vote at Baruch College in Manhattan, the board decided to hike rents on one year leases by 1.25 percent and two year leases by 2 percent. The news of the hike follows months of negotiations, and was largely expected after the nine-member board recommended increases in April.

Still, the vote came as a disappointment to many stabilized tenants and advocates, who’d recently called for extending the unprecedented two-year rent freeze for another year. As DNAinfo reports, hundreds of tenants showed up to Tuesday night’s meeting, many of them chanting “How low can you go?” while urging board members to vote for another rent rollback.

“We understand that landlords need to maintain the buildings and make a profit,” Gloria Moreno, a Queens resident and member of the Rent Justice Coalition, told the outlet. “But their profits continue to increase, meanwhile tenants can’t keep up with increasing rents and other expenses.”

According to many in attendance, landlords are still reaping the benefits of an 8.5 percent hike approved by the board in 2009, during the peak of the recession.

“They are not in hardship,” Althea Mathews, a formerly homeless Bronx resident, told the New York Times. “We can’t afford to live in this city. We need help and I’m really disappointed in the board. They didn’t hear us after all these meetings.”

While some tenant activists expressed frustration with the decision, others said their efforts were successful in keeping the hike relatively modest—especially compared to the 4 percent increase on one year leases and 8 percent increase on two year leases called for by the Rent Stabilization Association, which represents landlords.

“While the votes weren’t there to support a rollback, tenants—through their testimony and protests—did succeed in keeping the increase to a minimum,” Harvey Epstein, director of the Community Development Project at the Urban Justice Center and a Rent Guidelines Board member, told DNAinfo.

Meanwhile, Jack Freund, vice president of the Rent Stabilization Association, called the increases “totally inadequate” to make up for operating costs paid by landlords, the Daily News reports.

According to a report put out by the board in April, landlords’ operating costs are factored into the decision to raise rents through a price index—which increased 6.2 percent in 2016 and is forecast to go up 4.4 percent next year. A Manhattan Judge also ruled last month that the board must consider the economic circumstances of tenants when determining rents.

“Taken together, the past four years have seen the lowest guidelines in history—including the first two freezes ever,” mayoral spokeswoman Melissa Grace said in a statement. “We will never go back to the days when the landlord lobby got big rent hikes regardless of what the data said.”

The changes will impact lease renewals after October 1st of this year.



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Seattle City Council could make it easier for those with criminal records to find housing

Thu, 06/29/2017 - 10:52am

The Seattle City Council will consider the “Fair Chance Housing” ordinance, which would expand rental housing options for those with criminal records—a barrier that disproportionately impacts people of color.

The proposed legislation, which Mayor Ed Murray sent to the City Council for consideration last week, would limit the role of criminal records in the tenant screening process. Landlords wouldn’t be able to screen applicants based on criminal convictions older than two years.

Also off the table: arrests that didn’t lead to a conviction; records that have been expunged, vacated, or sealed; and juvenile records. If a juvenile tenant is on the sex offender registry, that can’t be used for screening, either, but only juveniles—the ordinance cites a 2004 study that juvenile sex crimes have a low recidivism rate.

If a landlord does exclude someone based on a criminal record, they’d have to provide a “business justification” for doing so. Landlords also wouldn’t be allowed to mention criminal-record-based criteria in advertisements.

The bill exempts small landlords—those that manage four units or fewer—and landlords that live on the premises.

Last year, the Department of Housing and Urban Development noted that in some cases, denying housing over a criminal record could violate the Fair Housing Act because of its impact on black and latinx populations.

Locally, more than a quarter of people incarcerated by King County are black, compared to 6 percent of the general population. King County’s black population is also arrested at a much higher rate than its white population.

One in five people become homeless shortly after leaving prison, a report by AllHome, which coordinates homelessness services for King County, found.

Fair Accessible Renting for Everyone (FARE), a coalition that includes Columbia Legal Services, the Tenants Union of Washington, the Public Defender Association, the ACLU of Washington, No New Jim Crow Seattle, and others, have been fighting to lift rental barriers for people with criminal convictions for quite some time.

In a statement, FARE said that the ordinance is a “good start,” but doesn’t go far enough: “Even two years gives legitimacy to a baseless and racially influenced stigma.”

FARE’s recommendation: to eliminate the use of criminal convictions in background checks altogether. They point to a 2015 NYU report showing that criminal records are not a reliable indicator of risky tenancy.

Fair Chance Housing is also a recommendation of Seattle’s Housing Affordability and Livability Agenda, better-known as HALA.

Over at The C is for Crank, Erica C. Barnett points out that the exemptions, both the two-year mark and the small landlord carve-outs, seem to negate the point of the law: Allowing a carve-out for landlords that live on the premises seems to feed the narrative that those with criminal records are dangerous, even as the ordinance’s language seems to argue against it. And if getting people into housing reduces recidivism, doesn’t allowing screening for a period of time, especially the first two years, encourage recidivism?

When asked at the press conference announcing the legislation, Murray and the Office of Civil Rights’s Brenda Anibarro said that this was a concession for landlords, who they’ve had some trouble reaching an agreement with. “There are a lot of disagreements over the numbers of years,” said Murray.

The Rental Housing Association (RHA) of Washington, which represents Washington State landlords, hasn’t immediately returned a request for comment, but they have historically opposed the idea.

RHA is currently in the process of suing the city over two other tenant protection laws, one that puts a cap on move-in fees and another that mandates that rental applications be first-come, first-served.

Fair Chance Housing will first be considered in a special meeting of the Civil Rights, Utilities, Economic Development and Arts committee on July 13 at 5:00 p.m.



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