The Multifamily Housing Opportunity

With rentals on the rise, investors are turning their attention towards apartment buildings.

 

After a 30 percent drop in home prices in the last four years and forecasts of a slow real estate recovery, industry analysts are seeing a greater demand for rental housing. Though the residential market has suffered overall, the rental business has been thriving. Rental prices are on the rise and occupancy at apartment complexes is higher than it’s been in the last three years.

Not surprisingly, companies that build multifamily rental housing are enjoying a renaissance. While lenders might still shy away from financing for-sale condominiums, most are tripping over each other to fund the development of rental housing, especially in denser metropolitan and suburban downtowns. Manhattan rental occupancy in the second quarter eclipsed 98 percent and average asking rents had spiked to more than $3,720 a month for a two-bedroom.

Investors take note: The numbers show a national trend that has pushed the return on apartment investment to almost 15 percent, according to the National Multi Housing Council. 

Noted economic prognosticator Gary Shilling said the end of housing’s salad days have trumpeted a return to sensibility in the residential real estate market. Because it will take many years for prices to rebound, he said people can no longer count on a house as being a great investment and more will begin to separate their financial speculation from where they live.

Shilling said young families are probably going to stay in apartments longer and more empty nesters will want to stop sinking money into a house not going to jump in value anytime soon. All signs show it’s already happening. 

DAVE WINZELBERG

Throw a Successful Apartment Event

By Jennifer Chan

Image by rickpilot_2000 via Flickr

Summer is a great chance to get outside and get to know your residents. Throwing community events for your complex helps build a sense of community and shows that you’re cooler (hopefully) than the other apartments out there. But planning events take time, and the last thing you want is for your gathering to be a huge flop. Your parties don’t have to be lame this summer – just take a few tips from our list.

Go outside. Take advantage of the nice weather and hold your event in a common outdoor area. Have it at the pool, string some lights up on your roof, show a movie on the lawn, or set up a volleyball court. In the colder months, hold a pumpkin carving or sledding event. once your residents are outside enjoying the nice weather, they won’t want to go back in.

Make the space festive and comfortable. If you make your event space look inviting, your residents will be more likely to stay longer. Set up plenty of seating in the area, string up some lights, or just go for colorful blankets on the grass and see your residents come for a look and end up staying an afternoon.

Put out snack foods. Remember in college when everyone went to events for the free food? Discourage the grab-and-go mentality by offering lots of finger food along with the burgers and hot dogs. Snacks that keep everyone coming back means there’ll be more mingling and chatting among your residents.

Plan activities. If there are kids in your units, have a station to keep them occupied so their parents can have some fun, too. Bring out the water balloons, karaoke, bingo, and three-legged races to get some interaction going. Fun activities will get the conversation started and help your tenants get to know each other.

Play music. Starting off a party can be awkward, but don’t make tenants leave because of the weird hush. Beat the awkward silence by playing some popular tunes.

How to Rent to Rent to Roomies

How to Rent to Roommates

Image by Tulane Public Relations via Flickr

Renting to roommates can be tricky. Instead of a married couple, family, or single person, who are singularly responsible for your property, you need to deal with two or more separate individuals. Renters may choose to rent with a friend to cut down on rent costs or try out a domestic situation with their significant other, but this can present problems for the landlord. Here are some tips for renting to co-tenant renters.

Roommates are not a protected class. This means you don’t have to rent to them, and have the power to pick a family or married couple over a group of roommates. As long as you’re not being discriminatory about refusing them, being concerned about dealing with multiple, separate tenants is grounds for turning them away.

Make them jointly liable. No matter how they split the rent or household responsibilities, be clear that each renter is individually liable for all of the rent and the responsible for following all the lease guidelines.

You can hold all tenants responsible for damages. With roommates, you’re more likely to hear the “I didn’t do it, don’t take it out of my security deposit” excuse. Legally, though, you can. If one of your tenants violates the lease or causes serious damages, you can hold all of them accountable and terminate everyone’s lease. Make sure you go through the legal process and give everyone the required advanced warnings and notifications.

Can you assign a master tenant? In cities with rent control, landlords are able to assign a “master tenant” to take on some of your duties, such as selecting a roommate. This also means that in a roommate dispute or a situation where it’s not working out with the tenants, the master tenant can choose to ask the other roommate to leave. In most cases, you cannot evict just one roommate, unless he/she is a subletter of a tenant. If your city has rent control in place, see if the regulations allow for a master tenant.

by Jennifer Chan

PayRentChex will allow roommates to make payments online and pay separately. Added fees (pets, utilities) can also be added into the rent due each month for the roommates to split! We provide these features and many more!!

Smoke-Free Apartments: Resident Amenity or Pandora’s Box for Property Managers?

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Smoking restrictions in multifamily housing communities aren’t new. For several years, property owners in New York and other cities have designated buildings smoke free without much fanfare. But there has been a recent flurry of government mandates aimed at apartments and other movements to promote smoke-free environments.

The topic has become more than just water cooler fodder, as industry officials are spending hours in their workdays fielding questions and concerns while legislators work to create and pass smoke-free and secondhand smoke nuisance ordinances at apartment complexes. Industry officials fear that property owners will have the burden of enforcement.

In New York, smoke-free living took center stage in April when Mayor Michael Bloomberg, who compares smoking to jumping off a bridge, proposed creating written policies for apartments to determine where smoking would or wouldn’t be permitted in an effort to mitigate secondhand smoke.

The same month, Rockland, New York, became one of the state’s first municipalities to pass a law requiring property owners with three or more units to designate smoking and nonsmoking areas. Residents must be provided a copy of the policy and prospective residents must be informed of the policy during lease or rental negotiations. The policy also has to be posted in public areas of the property.

The list goes on, even in the government and public health sectors.

The number of nonsmoking public housing communities, at the encouragement of the U.S Department of Housing and Urban Development (HUD), is growing. As of January 2011, more than 230 public housing authorities throughout the country had adopted no-smoking policies for some or all of their units, most of them coming since 2005. One of the most recent is the Bristol (Conn.) Housing Authority, which is placing a ban on smoking inside apartments beginning July 1.

In Central Texas, the Austin/Travis County Health and Human Services Department is creating awareness and promoting smoke-free housing through Live Tobacco-free Austin campaign. The group’s website lists eight Austin-area apartment communities that are either tobacco-free or smoke free.

It was just a matter of time, says Dallas apartment industry consultant Anne Sadovsky, before smoke-free living would become a hot topic. An authority on FHA regulations who hosts numerous seminars and informational sessions each year, Sadovsky said the subject routinely creeps into discussions all the time.

Last month, she fielded questions from concerned property owners and managers at a workshop on FHA regulations hosted by the Apartment Association of Greater Dallas. The meeting was sidetracked for about 20 minutes, she said.

There are no easy answers.

“I have been predicting for 15 years the emerging nonsmoking market and how we will accommodate it,” she said. “Some properties have set aside nonsmoking buildings, which is difficult to do if already occupied with mix of non smokers and smokers.”

She along with others believes that compliance will evolve, even if it takes a few tattlers.

“Don’t worry,” she said, “the nonsmoking residents will quickly report smelling cigarette smoke. They will rat each other out.”

A non-smoker, Sadovsky said don’t look for any discrimination issues from smokers until the Department of Housing and Urban Development deems smokers a protected class, and that’s not likely to happen soon.

“HUD is the one that is going to establish the federal protective classes, and if it doesn’t come through HUD to make it forbidden or protect the non-smokers, it’s not going to happen,” she said. “That’s where it’s going to have to come from. But there are many, many other things ahead of that.”

Yet an apartment’s liability could come into question, says Molly Kirkland, San Diego County Apartment Association Director of Public Affairs. If a property ignores a complaint and, for example, a medical claim comes from a resident claiming to be affected from secondhand smoke, the property could find itself on the defensive.

“It really kind of opens up, and I don’t want to say it, but Pandora’s Box,” she said.

by Tim Blackwell

How To Be a More Persuasive Real Estate Professional

Sometimes, no matter the wealth of rental real estate knowledge you have, it comes down your ability to be persuasive and personable towards your clients. You know how your services can add value to their apartment search – but do renters realize that? Here are subtle ways you can help renters distinguish your service from others’, build customer loyalty, and close more deals.

Mirror your clients. During conversation or background checks, find any similarities you may find with your clients and run with it. We usually make friends and interact smoothly with those who are similar to us, so finding common ground, mirroring body language or tone of voice will help make a good impression on a client.

Be transparent. Use a strict no secrets policy, whether this applies to information about the community, loud neighbors, or showing listings you really want to get off the market (but don’t apply to search parameters). Don’t hide the truth, but go forward with your clients’ requests and fulfill them to the best of your abilities. When your service really saves clients time and effort, you’ll be valuable to them, leading to customer retention and lessen dissatisfied customers or negative reviews.

Offer a personalized experience. Going the extra mile can make all the difference – after all, you need to to give to receive, right? Crafting personalized e-mails, responding promptly to calls, or searching for listings that fit the clients’ preferences makes your service valuable. By giving renters your 100%, they’re more likely to come back to you in the future as well.

Admit to the drawbacks. No property is absolutely perfect – help your renters find the community or apartment that suits them, but lay out both the positives and negatives, and leave it up to them to decide. Renters will be able to make an informed decision with your help, building trustworthiness and respect for your business.

(ELECTRONIC) RENT: Smash Hit Now Playing at a Property near You!

Great write up, Charles! Thank you!

The concept of electronic rent payments is not new to property management. The first rents paid ‘on line’ (vs. via paper check), were processed in the late 1990’s, the Dark Ages for electronic transactions. What’s amazing is the amount of traction yet to be gained by providers of such services, in the area of acceptance by property managers and tenants.

If a property manager wants to make operations more efficient and cost-effective by offering electronic rent payment to tenants, now is the time.  Services offered by vendors include rent payment only (whether using one or multiple methods) as well as modules for maintenance request logging and tracking (no more lost tickets!), two-way communication between managers and tenants (no more flyer’s on doorsteps or posted by elevators), direct interface with accounting systems, and ability by managers to access data remotely. The ability to have a custom-designed, white-labeled front end covering all the modules exists.

Confused by the choices? No reason to be, as eventually the chosen vendor’s platform should be what works for the tenants, management company, staff, and the local situation.  Here are some expected considerations:

1. Money will be saved due to quicker receipt of rent. Several vendors allow for next day credit of funds.
2. Money will be saved due to the readily available audit trail—the best systems allow a manager to see what’s come in or pending, what’s overdue and can automatically transmit (or manually arrange reminders for) follow-up emails, snail mail, or phone calls. Individual transaction numbers will generate for each payment and should allow sorting by selected criteria (e.g. by property, date, payment size, tenant, etc.)
3. Money will be saved due to the cost of paper, envelopes, postage and re-deployment of staff who formerly manually mailed statements and tracked receipts. Going green is also smart in this environment!
4. Some vendors offer options that almost make it difficult to avoid paying rent electronically. Facebook messages, emails with links to the payment site, payments via text message, automatic deduction from a bank account.
5. Look for secure payment options, where payments are tracked the moment the tenant hits ‘Send’–no more “I sent it-We didn’t get it”.
6. Those in my own social networks who have commented on the topic have said that rent is the last recurring payment they don’t make electronically, a fact which tends to be annoying.

Once a provider is selected, expect to pay the vendor fees for monthly maintenance and per transaction. No consensus exists as to whether fees should be paid by the manager or tenant and this article won’t suggest which is preferable. Accountants (and the tenants’ association, if there is one) should be able to help decide. Transaction fees are nominal, at any rate. As for monthly fees (Software developers don’t work pro bono.),  confirm what‘s provided (such as regularity and notification of updates) for the money. Fee levels shouldn’t necessarily be the deciding factor, especially if a productive, co-operative relationship with the vendor has developed, having the desired salutary effect on your operations.

Inquire about what vendors provide in terms of a service level agreement. What’s guaranteed in terms of performance, what their previous experience has been, what their DR contingencies are, and know what  the property’s plans should the system be unavailable all need to be clearly outlined. By which properties is the software currently used? Request references and don’t rely solely on online reviews.

Ok, time for implementation of the new online payment system (and other modules, mentioned above, if chosen) has come. What’s next? Training, education, webinars, PR, for starters. Every property will have tenants who’ll seamlessly switch to e-payment. They are ready for it. The next group will be amenable to the idea but will need hand-holding. There’ll be a third group who are sticks-in-the-mud and, in addition to training, will need some incentive to switch to electronic rent payment.

Incentives could include an amount or percentage off the first month’s rent, free or reduced parking, drawing for a gift card. Creativity and persistence will be the best way to get the effort noticed. If a system is deployed and resident response is lagging, create a feedback loop so efforts to increase acceptance aren’t done in a vacuum.

Finally, once up and running, share experiences with the industry and be available to answer questions from peers. Realize that a property can be distinguished as forward thinking by providing a service which makes tenants’ lives easier and allows them to feel more connected with goings-on in the building, on the grounds, and in the neighborhood.

-Charles H. Fiori

Waiting to collect rent? or finding time to drop off your check? No more inconvenience with PayRentChex!

How many of you are constantly looking at the calender when the month is coming to a close, figuring out when you are going to drop off your rent check? Having to make it to your rental office between the hours they are open.  

Or how many of you are waiting to collect rent, having checks still rolling in mid month, when they should be there no later than the 5th of the month? Having to pay bills or a mortgage by a certain date.  

What if you could pay your rent online or using your smartphone?

What if you could collect rent more in a more simple and efficient way and receive your funds the NEXT DAY in your bank account?

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