RENT Magazine discusses the latest investing, legal, screening, and tech trends in the rental industry. Contributors include attorneys, tax experts, investors, and real estate influencers. Stay in the know and read RENT Magazine for FREE.
The author of Tax-Free Wealth returns with a new financial bestseller The Win-Win Wealth Strategy TOM WHEELWRIGHT
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SUMMER 2022
LEARN MORE
HOW TO INVEST DESPITE INCREASING INTEREST RATES
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PAGE 49 3 TAX-SAVING STRATEGIES Most Real Estate Investors Miss West Coast Rents Are Heating Up: 2022 RENT TRENDS
Robert Kiyosaki, best- selling author of Rich Dad Poor Dad, calls Tom “a team player that anyone who wants to be rich needs
to add to his team.”
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8 MUST-READ BOOKS FOR LANDLORDS
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Photo by Scott Foust Studios
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THE OFFICIAL PUBLICATION OF THE AMERICAN APARTMENT OWNERS ASSOCIATION
AAOA.COM
TEAM Editor in Chief Robbie Cronrod Staff Editor Nancy Abrams Marketing Manager Alexandra Alvarado Contributors Ashley Wilson Betty Friant, CCIM Brad Mushovic
CONTENTS
05 12 16 22 26 35 29 32
TENANT SCREENING MUST-HAVES: PRE-SET VS. A LA CARTE
Cassie Wells Connor Gail
Courtney Shier Cynthia Schmidt
3 KEY STEPS BEFORE MAKING YOUR NEXT MULTIFAMILY INVESTMENT
Daniel Sharabi Destiny Roxas Donna Meeuwsen Edward Day Elizabeth Campbell Lysi Harry Barth, Esq. Jason Kogok John Weis Joseph Marino Kathelene Williams, Esq. Nancy Abrams Nate Benstein, Esq. Richard D. Gann, JD Rob Beardsley Rob Scahill Robert Friedman, Esq. Robert Ward Samantha Whitehouse Scott Varney Shara Limoges Steven C. Williams, Esq. The Rentometer Team Tom Wheelwright, CPA
3 MACRO REAL ESTATE TRENDS THAT COULD BENEFIT DST INVESTORS
CLEARING UP THE CONFUSION ABOUT SERVICE ANIMALS
CELEBRITIES ON THE MOVE
GUARANTEED RENT: MUSIC TO A LANDLORD’S EARS
WEST COAST RENTS ARE HEATING UP: 2022 RENT TRENDS
HOW TO INVEST DESPITE INCREASING INTEREST RATES
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WELCOME! The summer issue of RENT focuses on smart investing, beginning with our cover story featuring best-selling author Tom Wheelwright, CPA and his new book The Win-Win Wealth Strategy: 7 Investments the Government Will Pay You to Make. Wheelwright will transform the way you think about building wealth in his book and in his RENT article “3 Key Tax-Saving Strategies Real Estate Investors Miss”. AAOA also interviewed 12 top real estate investors and brokers to address how to invest in a post-COVID world with rising interest rates and inflation. In addition, you’ll learn about tax deferment plans, like DSTs and 1031 Exchanges, how to retire with 6 properties, and 8 must- read books for investors. Looking for new tech to boost profits? RemoteLock’s CMO demonstrates how landlords are diving into short home rentals and using keyless entry to make it happen. Livable’s CEO discusses rising energy and gas prices and how to fairly bill tenants for utilities. And Quantum Fiber provides a plan for apartment owners to get their communities out of the online “slow lane” with high-speed fiber internet. Summer is also peak moving season, so don’t miss our tips on tenant screening, guaranteed rent, and service animal requests. And to avoid fires and injuries caused by summer barbequing, check out StoveTop FireStop’s article on setting tenant rules for safe open-flame cooking. Thank you for reading RENT and have a wonderful, profitable summer.
42 45
5 THINGS YOU SHOULD NEVER DO WHEN EVICTING A TENANT
SUB-PAR CONNECTIVITY CAN HURT YOUR PROPERTY. HERE’S WHAT OWNAERS CAN DO ABOUT IT
49 53 56 67 63
3 TAX-SAVING STRATEGIES MOST REAL ESTATE INVESTORS MISS
ASK AN ATTORNEY
8 MUST-READ BOOKS FOR LANDLORDS
HOW TO RETIRE WITH ONLY 6 PROPERTIES
HOW TO BECOME THE ULTIMATE PASSIVE LANDLORD
71
ENERGY AND GAS COSTS ARE OUT OF CONTROL. WHAT SHOULD A LANDLORD DO?
74
HOME SHARING: HOW MULTIFAMILY CAN TAKE A SHARE OF THE PROFITS
78
SETTING TENANT RULES FOR SAFE SUMMER COOKING. INSIDE AND OUT HOW TO PICK THE BEST CAPITAL GAINS TAX DEFERMENT STRATEGY
81
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How do you choose at which restaurant you want to eat? Do you prefer a place that offers a prix fixe menu with one price? Or do you like to pick and choose from an a la carte menu with a separate charge for each item? TENANT SCREENING MUST-HAVES: PRE-SET VS. A LA CARTE
Ordering a credit report and background screening for your applicant from the American Apartment Owners Association (AAOA) can be compared to ordering dinner at a fine restaurant. You can choose to order a package with a pre-set group of reports for a single price or you can select from the ala carte menu to receive just the individually-priced reports that cover your situation. Conscientious landlords are aware of how important it is to screen their applicants in order to find the one who most closely matches their list of qualifications for an ideal tenant. Below we cover how to determine which options are best for you.
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WHAT DO AAOA’S PRE-SET PACKAGES INCLUDE?
If you have decided you would prefer to order a fixed menu of reports, the range of pre-set packages extends from Basic Background or Basic Credit at $19.95 per person to our most comprehensive choice, the Gold Package, which offers an SSN Verifier and Nationwide Criminal and Eviction at $49.95. One of the advantages of ordering a pre-set package is receiving a LeaseGuarantee Analyzer, which tells you if the applicant qualifies for a LeaseGuarantee. If they qualify, you can get up to $10,000 of protection if the tenant fails to pay rent or excessively damages your property. From the report results you can invite the tenant to pay for the LeaseGuarantee or you can get it yourself. Either way your rental is protected for 12 months.
White Package Everything in Red Package Plus
Blue Package Everything in Red Package Plus
Gold Package Everything in Red Package Plus
Red Package
✓ Eviction (Nationwide) ✓ Criminal (Nationwide) ✓ Sex Offender ✓ Terrorist ✓ Federal Search ✓ SSN Fraud ✓ Tenant Pay Option
✓ Credit Report ✓ Credit Score
✓ Criminal (Nationwide) ✓ Sex Offender ✓ Terrorist ✓ Federal Search ✓ Tenant Pay Option
✓ Criminal (State Specific) ✓ Sex Offender ✓ Terrorist ✓ Federal Search
✓ Previous Address History ✓ TeleCheck® Verification ✓ Eviction (State Specific) ✓ Lease Guarantee Analyzer
WHAT REPORTS SHOULD YOU CONSIDER ADDING TO A PRE-SET PACKAGE?
Although the Gold Package is the most comprehensive package offered, there are 3 additional reports you may want to consider adding to get the most thorough search possible. These options are available by logging into your AAOA account and scrolling to the bottom of the tenant screening page or as add-ons when you purchase a pre-set tenant screening package. NATIONWIDE BANKRUPTCIES, TAX LIENS & CIVIL JUDGMENTS Since 2017, the major credit bureaus eliminated tax liens and civil judgments from credit reports, so it is now necessary to order a separate search for these important items. A tax lien is imposed by law upon a property to secure the payment of taxes while a civil judgment is a ruling against a defendant in a court of law. Civil judgments can arise from small claims, unpaid debts or property damage caused by negligence. A landlord may not evict a tenant but instead take them to small claims court after they move out. In
SINCE 2017 THE MAJOR CREDIT BUREAUS ELIMINATED TAX LIENS AND CIVIL JUDGMENTS FROM CREDIT REPORTS.
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these cases, the tenant would have a civil judgment record, but it would not appear on their eviction or credit report. Bankruptcies may still appear on a credit report, but often with limited information. AAOA’s Bankruptcies, Tax Liens, and Civil Judgments report would provide you with more information you may need to vet a tenant. LANDLORD VERIFICATION While an eviction search tells you if your applicant was legally evicted during the last seven years, it does not tell you what kind of tenant they are. When you order a landlord verification, our staff will call their past landlord(s) and get the full story of their tenancy. Did they pay rent on time? Did they damage the property? Were people not named on the lease living there? This report can be a determinate as to whether you should rent to these people or not. EMPLOYMENT VERIFICATION Similar to the landlord verification, a call will be placed to the applicant’s former and/or current company to confirm their employment. There has been a marked increase in fraudulent tactics used by applicants, such as producing counterfeit pay stubs and 1099 forms, so this report can play an important role in your decision-making process.
OUR STAFF WILL CALL THEIR PAST LANDLORD(S) AND GET THE FULL STORY OF THEIR TENANCY.
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WHAT OTHER REPORTS ARE ON AAOA’S A LA CARTE MENU? The AAOA a la carte list of individual reports allows you to create your own tenant screening package to check an applicant’s credit and personal history. BASIC CREDIT REPORT AND SCORE The ingredients in a thorough credit report will yield you an important picture of how your applicant handles their financial obligations. Have they been in collection? Do they pay their bills on time? How much of their available credit are they using? All of this vital information and more will be found on an AAOA credit report. TELECHECK VERIFICATION The TeleCheck databases provide landlords and property managers with continually updated information, including bad check activity as it occurs, automated inquiries using the consumer’s identification (Driver’s License or State ID) and checking account data. You expect to receive a rent check from your tenant each month. This search will tell you if they are in the habit of writing bad checks. PREVIOUS ADDRESS TENANT HISTORY (PATH) The PATH report searches numerous databases to identify key information on your prospective tenant and is an invaluable asset, especially when used along with eviction and criminal reports. PATH will cross-reference addresses on potential eviction records to find strong matches. In addition, all alias names found through PATH are automatically used for instant criminal searches. This means more The Social Security Number Verifier will uncover whether your applicant is who they say they are. Identity theft is one of the fastest growing crimes in the U.S. and a landlord or property manager who does not verify an applicant’s identity is an easy target for fraud. Social Security Fraud Verification searches more than 19 billion public and proprietary records to instantly verify basic data and potentially fraudulent identities. STATEWIDE OR NATIONWIDE EVICTION SEARCH The eviction search is one report you hope will accuracy at no additional cost to you. SOCIAL SECURITY NUMBER FRAUD
THE INGREDIENTS IN A THOROUGH CREDIT REPORT WILL YIELD YOU AN IMPORTANT PICTURE OF HOW YOUR APPLICANT HANDLES THEIR FINANCIAL OBLIGATIONS.
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THE TAKEAWAY The sex offender search is similar to the criminal search. Results are for convictions only and do not include arrests. A national sex offender database instantly checks all 50 states, saving you time and giving you the assurance that your tenants will be safe. Results may show an offender’s name, date of birth, physical description, address, crime and crime location. So, whether you choose to order an AAOA pre-set package, a la carte reports or a combination of both, you can feel confident that you have the right information to make sure that you are entrusting your investment property to the right tenant. come back marked “no records were found.” Utilizing the applicant’s SSN, the database is searched for eviction filings and judgments for the past seven years. However, only cases that went through the court system will appear on the report. If legal proceedings were not filed and a judgment not rendered, it will not appear in the eviction search results. Ordering a Previous Address Tenant History and a Landlord Verification report in addition to an eviction report will give a much fuller picture of the applicant’s rental background. STATEWIDE OR NATIONWIDE CRIMINAL SEARCH The Fair Credit Reporting Act (FCRA) limits a criminal records search to the past seven years and includes instant records where the individual was convicted. Arrests without conviction are not included. The search covers the Circuit, Municipal, Superior and/or District Courts and includes the most current and past felony and misdemeanor convictions as well as some traffic violations available online. SEX OFFENDER SEARCH
A LANDLORD OR PROPERTY MANAGER WHO DOES NOT VERIFY AN APPLICANT’S IDENTITY IS AN EASY TARGET FOR FRAUD.
NANCY ABRAMS Assistant Editor American Apartment Owners Association (866) 579-2262 nancy@aaoa.com
Nancy Abrams has enjoyed a long career in real estate marketing throughout Southern California and Las Vegas. She formerly represented 19 Merrill Lynch Realty branch offices, property managers The Roberts Companies, new home developers, including master planned communities Peccole Ranch and The Valencia Company and shopping centers for Sandy Sigel of NewMark Merrill.
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30% of units remodeled, additional underway Gated, off-street parking, close to downtown
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PAGE 10
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Interested in one of these
PAGE 11
CONTACT US
investment opportunies?
KEY STEPS BEFORE MAKING YOUR NEXT MULTIFAMILY INVESTMENT Investing in real estate as an active or passive investor requires skill and a few key pieces of knowledge to ensure the deal is a good one for you and your goals. Multifamily real estate is a powerful investment that has proven to provide high returns and safety in difficult times. After closing, an active investor is fully responsible for the operations of the asset, including However, not all multifamily investments are created equal nor are they all equally suited to every type of investor. The first step in investing in multifamily is to decide whether you prefer to invest actively or passively. As an active investor, it is your responsibility to source and negotiate acquisition opportunities and put together the debt and equity for the project. 3 management, taxes, accounting, and renovations. Conversely, the work involved in being a passive investor includes meeting and vetting deal sponsors and picking which deals to invest in. From there, the role of the passive investor is to collect distributions and be truly passive.
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ARE YOU WILLING TO ENDURE YOUR PERCEIVED WORST-CASE SCENARIO?
STEP 1
Decide Between Being an Active vs. Passive Investor
To decide between active and passive, you must evaluate your main source of income and how much capital you have to invest. For example, a successful doctor making $1,000,000 per year probably shouldn’t look to become an active investor because their time is much more valuable when focused on their main career.
In a similar example, if an investor has a $50,000,000 war chest, their time is best spent finding the most efficient and lucrative ways to allocate their capital. Conversely, if an investor only has $50,000 total to invest, spending lots of time trying to squeeze every last percentage point of return out of a small passive investment is not worth the time and effort. of monthly/annual cash flow. Other investors are solely concerned with total returns and therefore, do not make cash on cash metrics a priority. For these types of investors, development investments which are higher risk and don’t produce any cash flow may be a good fit. On the other end of the spectrum, retired investors living off their investment income are usually mostly cash-on-cash focused and therefore invest in existing assets which produce cash flow from day one of the acquisition. These types of investors also stay away from riskier investments since they rely on their investment income to live.
Determine Your Risk Tolerance
STEP 2
The next step is to evaluate your investment goals and tolerance for risk. The main distinctions between the types of investment strategies are between risk versus return and cash flow versus appreciation. The riskier a project is, the higher the potential returns. However, with greater risk comes a larger variation of outcomes. Are you willing to endure your perceived worst-case scenario? An element of risk versus return is the return profile of the investment. Investments with healthy cash flow are generally lower risk than investments which rely more on appreciation. In addition, investors should match their investment goals, such as a certain percentage or dollar amount
APPRECIATION STRATEGY
CASH FLOW STRATEGY
Pro: Higher returns Con: Higher risk
Pro: Lower risk, get cash now Con: Lower returns Good for existing assets and supplemental income
Good for development investments and ambitious investors
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THE THREE MOST IMPORTANT WORDS IN INVESTING ARE MARGIN OF SAFETY.
- Warren Buffett
STEP 3 Underwriting The final step before moving forward with your next multifamily investment is to evaluate the deal itself. Underwriting is the financial analysis process of real estate investing and derives return projections relied upon to make a purchase offer or relied upon by investors when making a passive investment with a sponsor.
The best way to learn to underwrite is by familiarizing yourself with an underwriting model, such as Lone Star Capital’s which is available for free on their website www.lscre.com, and begin underwriting deals as they come across your desk. The next step in learning the basics is to review your underwriting compared to others’ models to see where your assumptions differ. As a passive investor, a quick review of a sponsor’s underwriting can be extremely illuminating in helping to make the decision to move forward with an investment. For those interested in a deep dive into multifamily underwriting, you can buy Rob Beardsley’s The Definitive Guide to Underwriting Multifamily Acquisitions , available on Amazon. With the right knowledge and strategy, investing in multifamily can be a tremendous addition to your investment strategy or even become your main source of income.
Underwriting is one of the most important aspects of multifamily investing. Proper, conservative underwriting can save an investor from jeopardizing their retirement or career. Warren Buffet often explains the key to making a smart investment is to ensure the investment has a sufficient margin for error. This means if some of the assumptions of the investment turn out to be too ambitious, the investment still can perform and most importantly, avoid a permanent loss of capital. Underwriting can be a complicated process which includes market research, rental and sales comparables, putting together pro forma revenue and expenses, as well as structuring and evaluating debt and equity. However, the basics of underwriting should be mastered by all investors regardless of whether they are active or passive.
ROB BEARDSLEY Founder Lone Star Capital
Rob founded Lone Star Capital in early 2018, a multifamily investment firm focused on acquiring and operating workforce housing throughout Texas and the Southeast. Since then, Rob has been involved in over $100M of multifamily acquisitions and published the number one book on multifamily underwriting, The Definitive Guide to Underwriting Multifamily Acquisitions . He has written over 50 articles and hosts The Capital Spotlight podcast.
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THAT COULD BENEFIT DST INVESTORS MACRO REAL ESTATE TRENDS
Within the universe of 1031 exchanges, Delaware Statutory Trusts (DSTs) are among the fastest growing options for investors participating in 1031 like-kind exchanges.
Like-kind exchanges continue to grow in popularity among real estate investors across the U.S. According to a recent report by Ernst & Young, 1031 like-kind exchanges will generate $55.5 billion in added value to the U.S. in 2021. A DST allows investors to own a fractional interest in a property with other investors, not as limited partners but instead, as individual owners. Each investor receives their own percentage share of the potential income, tax benefits, and potential appreciation of the whole property. A DST allows the minimum investment to often be as low as $100,000, allowing investors to not
only be able to invest in properties that can be too expensive for them to purchase individually, but also invest their money into multiple properties, thus diversifying their real estate portfolios. For example, Kay Properties has DST opportunities with a minimum investment amount of $100,000 with offerings that span multifamily, self-storage, net lease (NNN), industrial and medical office properties. In addition to significant tax benefits and access to institutional-quality real estate, investors are also recognizing several macro-economic trends that are contributing to the popularity of DST investments.
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How Could This Benefit DST Investors? Whether you are talking about a multifamily apartment building or a single-family home, low inventory means higher selling prices and a shorter sales cycle - all good news for the seller’s position. However, this low inventory could also cause trouble for a seller who will find it hard to purchase a replacement property to avoid a large capital gains tax bill at the end of their sale. The DST marketplace allows sellers to easily find a 1031 like-kind exchange for nearly every level of transaction, providing sellers with a strategy to not only defer their capital gains taxes, but also gain access to a more diversified portfolio with monthly cash flow potential.
MACRO REAL ESTATE TREND #1: HISTORICALLY LOW INVENTORY According to the National Association of Realtors, the available inventory of homes is down 22% in 2022 compared to 2021. Multifamily buildings are attracting institutional real estate investors, and according to the Wall Street Journal, vacancy rates for logistics properties fell below 4% for the first time in history.
THE AVAILABLE INVENTORY OF HOMES IS DOWN 22% IN 2022 COMPARED TO 2021.
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How Could This Benefit DST Investors? Rising real estate prices might indicate the real estate cycle is nearing its peak, so it could be a good opportunity for investors to sell their multifamily investment buildings. However, selling in an expansion market cycle could trigger a significant capital gains tax bill! DST 1031 exchange investments help sellers defer their capital gains taxes while gaining access to institutional quality real estate assets with the potential for monthly income. DST 1031 exchanges can be structured with leverage for replacing debt or as all-cash/debt-free, eliminating the risk of lender foreclosure. MACRO REAL ESTATE TREND #2: RISING REAL ESTATE ASSET PRICES While real estate prices have slowed slightly in recent months, they have still grown by nearly 20% compared to last year according to a recent report by CNBC. Furthermore, net leased real estate is also experiencing its highest level of demand in history with billions of dollars flooding in from seemingly everywhere.
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How Could This Benefit DST Investors? For investors who are approaching retirement, active management is not an ideal scenario. DSTs provide investors with the opportunity to eliminate the challenges associated with active ownership and management. Governors of the Federal Reserve System, baby boomers hold more real estate wealth than any other generation. Americans over the age of 55 own more than 50% of the country’s total real estate holdings, including a majority of those who own multiple pieces of investment real estate. Now approaching retirement, they will be looking for alternative investment vehicles to move into. MACRO REAL ESTATE TREND #3: BABY BOOMERS RETIRING According to the data gathered by the Board of In DST investments, a sponsor creates the DST and has the responsibility of managing the entire business and assets of the trust. These responsibilities can include the following: ✓ Underwriting the real estate deal ✓ Conducting all the due diligence ✓ Arranging the necessary financing (although some DST 1031 investments are debt-free with no loans on them) ✓ Creating a business plan ✓ Finding a property management team ✓ Coordinating investor relations and potential monthly distribution checks to investors
FRACTIONAL OWNERSHIP OF DSTS ALLOWS AN OWNER TO EASILY DIVIDE SHARES FOR GENERATIONAL WEALTH TRANSFER.
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Additionally, DSTs are attractive to retiring investors because the fractional ownership of DSTs allows an owner to easily divide shares for generational wealth transfer. For example, an investor owns 30 units in an apartment DST and 50 units in a DST portfolio of Dollar General, FedEx and Amazon net lease properties. The individual wants to leave the DST investments to his two grown children. He can choose to give the apartment DST to one child and the Dollar General, Fedex and Amazon DST to the other child, or he can divide up the shares within each DST to give some of each to both children. Want to learn more? Watch AAOA’s interview below with Betty Friant, Senior Vice President at Kay Properties and Investments.
BETTY FRIANT, CCIM Senior Vice President Kay Properties & Investments LLC (855) 899-4587
Friant oversees the Kay Properties and Investments, LLC Washington, D.C. office. With 35 years of experience in commercial real estate and expertise in investment sales, Betty specializes in 1031 Tax Deferred Exchange clients and high net worth investors. Betty is well versed in the many aspects of commercial real estate and has extensive market knowledge. She holds the coveted CCIM designation, which recognizes expertise in commercial and investment real estate. She is driven by her passion for identifying clients’ needs, goals and objectives, thereby helping to identify the best opportunities for them.
Disclaimer: This material does not constitute an offer to sell nor a solicitation of an offer to buy any security. Such offers can be made only by the confidential Private Placement Memorandum (the “Memorandum”). Please read the entire Memorandum paying special attention to the risk section prior investing. IRC Section 1031, IRC Section 1033 and IRC Section 721 are complex tax codes therefore you should consult your tax or legal professional for details regarding your situation. There are material risks associated with investing in real estate securities including illiquidity, vacancies, general market conditions and competition, lack of operating history, interest rate risks, general risks of owning/operating commercial and multifamily properties, financing risks, potential adverse tax consequences, general economic risks, development risks and long hold periods. There is a risk of loss of the entire investment principal. Past performance is not a guarantee of future results. Potential cash flow, potential returns and potential appreciation are not guaranteed. Nothing contained on this website constitutes tax, legal, insurance or investment advice, nor does it constitute a solicitation or an offer to buy or sell any security or other financial instrument. Securities offered through FNEX Capital, member FINRA.
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PAGE 21
CLEARING UP THE CONFUSION ABOUT SERVICE ANIMALS
This article details the most common situations that can arise on a property and offer helpful guidance based on best practices and the Fair Housing Act.
Many violations and court cases stem from claims of discrimination involving service animals. The amount of misinformation on the internet, coupled with the misinterpretation of overlapping laws,
can create complicated situations for property management professionals to navigate, so it’s important to stay informed.
Service Animal, Assistance Animal, or Emotional Support Animal: Which One?
With so many terms being thrown around, it can be challenging to know which one applies. As a rule, the term “service animal” is generally reserved for dogs that meet the criteria for public assistance under the ADA (Americans with Disabilities Act). Assistance animals or ESAs (Emotional Support Animals) are general terms we use for animals that provide a service to a disabled person with regard to housing. For simplicity in this article, we will use the term assistance animal when relating to housing.
THE TERM “SERVICE ANIMAL” IS GENERALLY RESERVED FOR DOGS THAT MEET THE CRITERIA FOR PUBLIC ASSISTANCE UNDER THE ADA.
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ADA or the Fair Housing Act: Which Applies to Housing?
While the ADA does protect service dogs in public places like shopping centers or restaurants, this protection does not apply to housing. It is not uncommon for a prospect to refuse to fill out a reasonable accommodation request form because they are under the false impression that their service dog is covered under the ADA and therefore, is exempt. However, the Fair Housing Act governs situations like this and has clear standards that are to be followed.
So, What Is a Leasing Agent to Do?
First, they would need to politely, yet firmly, explain that this is a common misunderstanding and reiterate that the Fair Housing Act takes precedence here. It allows the property manager to request documentation for both the disability (if it is not apparent) and the verification of the need for the animal. Another prevalent but more complicated situation involving the misapplication of ADA law is when a resident’s guest wants to bring their assistance or service animal onto the property. Again, in this situation, the Fair Housing Act takes precedence. Any guest wishing to bring their assistance or service animal onto the property would need to go through the same process as a resident and provide the following: ✓ Proof of a disability as defined by the Fair Housing Act ✓ Documentation as to how the animal assists with the disability We are fighting an uphill battle against inaccurate beliefs, which may lead many tenants to not disclose the animal in the first place. How should a property manager handle this situation?
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When Should a Prospect Disclose Their Animal?
In a perfect world, a prospective tenant would disclose their assistance animal at the beginning of the screening process. This way, a reasonable accommodation application can be processed in tandem with the rental application. However, many people may choose to withhold that information, which can come off as distrustful. What is a reasonable accommodation application? A reasonable accommodation application is separate from the rental application and has no bearing on the prospect’s approval. Regardless of when the animal is disclosed, the property staff must go through the same process of identifying the disability and subsequent need for an assistance animal. When the application is filed, it should not influence the decision-making process with regard to tenancy.
WHAT IS A REASONABLE ACCOMMODATION APPLICATION? A reasonable accommodation application is separate from the rental application and has no bearing on the prospect’s approval.
Once an application is completed and verified, the resident is free to have their assistance animal live with them regardless of size, breed or the property’s existing pet policy. This can prove challenging, especially if the property is an otherwise pet-free property.
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Should a Pet-Free Property Share Information Regarding Assistance Animals?
Perhaps due to allergies or dislike of animals, many people specifically choose to live at pet-free properties. This can generate problems if a resident moves in with an assistance animal. It might be tempting for a leasing agent to share with a prospect who has issues with animals that the unit they are interested in wouldn’t work for them because a service animal lives next door. However, this would be incredibly careless. Not only could it be perceived as steering, but you would also be disclosing confidential information about one tenant to another. A better policy would be to ensure that every tenant and prospect knows that while being a pet- free property, there could be an assistance animal on the property at any time, as outlined in the Fair Housing Act. Of course, if a resident has a specific disability that would require them not to live near an animal, a reasonable accommodation request should be followed up on. Assistance animals will continue to bring new challenges to housing providers. Proper training is the best and most effective way to avoid possible fair housing complaints. Along with that, having clear policies and forms that conform to the Fair Housing Act will help any property manager to successfully navigate situations around assistance animals.
PROPER TRAINING IS THE BEST AND MOST EFFECTIVE WAY TO AVOID POSSIBLE FAIR HOUSING COMPLAINTS.
KATHELENE WILLIAMS Attorney and President The Fair Housing Institute
Kathi Williams is one of the founders of Fair Housing Institute. FHI is the accomplished vision of Kathi who views its educational courses as the best method housing providers can use to accomplish compliance and avoid litigation. Kathi is also a partner in the Law Firm of Williams Edelstein Tucker, P.C. providing defense and preventative representation for the housing industry in all civil rights matters. During the many decades Kathi has been advising her housing provider clients, she developed a unique understanding of the most effective methods of communicating fair housing best practices through training. Click here to watch Fair Housing Educational Videos.
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CELEBRITIES
ON THE MOVE
Ben Affleck & Jennifer Lopez After months of viewing every mansion for sale in Los Angeles, Ben Affleck and Jennifer Lopez have moved into their new $60+ million home in Bel Air…and it was not even on the market. Formerly owned by Danny DeVito and Rhea Perlman, the 29,000-square-foot estate sits on about 1.3 acres. The four structures include a main house with seven bedrooms, several guest houses, eight-car garage, a home theater, swimming pool and a hair salon. The seller is James Packer, the former fiancé of Mariah Carey.
Mariah Carey
Speaking of Mariah Carey, she recently paid $5.65 million for a stately 13,000-square-foot home in Atlanta’s Sandy Springs suburb. The Southern Colonial country house encompasses nine bedrooms and 13 bathrooms along with a movie theater, swimming pool, pool house, children’s playground, guest apartment and a mirrored gym. The 4.2-acre grounds include dense woodlands, a tennis court and a pond. The property was formerly rented by Dwayne “The Rock” Johnson while shooting a movie nearby.
Shaquille O’Neal
Shaquille O’Neal has purchased a modest 5,269-square- foot home in Carrolton, Texas, about 25 miles north of downtown Dallas. Listed at $1.225 million, the house is about one-sixth the size of the Florida mansion he sold last year. It features five bedrooms with ensuite baths as well as two powder rooms, a paneled library and a small home theater. Built in 2005 on a nearly 10,000-square- foot lot, the gated property also offers a lagoon-style pool with stone fountain, beach entry and spill-over spa.
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CELEBRITIES
ON THE MOVE
Michael Eisner Located on about 5 acres in Malibu’s Encinal Bluffs, Michael Eisner’s waterfront compound is comprised of nine buildings constructed over a period of several years. The Mediterranean structures, including a main house, several guest houses and a two-bedroom caretaker’s cottage, total about 25,000 square feet with 16 bedrooms and 28 baths. Guests can take a cliffside elevator down to the beach below. The former Disney chairman and CEO, who is asking $225 million for the property, is hoping to set a record for the most expensive house ever sold in California.
Reese Witherspoon
Hidden behind security gates and a long tree-lined private drive in Mandeville Canyon, this beautiful English Country- style home was purchased by Reese Witherspoon and her husband about two years ago and then underwent an extensive renovation. Two guest suites occupy the first floor while four family bedrooms can be found upstairs. Dual baths and dressing rooms are part of a deluxe main suite secluded in the owner’s wing. The home, built in 1993 on 3.1 acres and spanning 10,343 square feet, including 10 bathrooms, boasts a state-of-the-art smart home system. The home is listed at $25 million.
Jimmy Fallon
The “Tonight Show” host and his wife have sold their whimsical Gramercy Park East penthouse in an “off- market” deal to model/actress/singer Cara Delevingne. Listed at $15 million, the home combines four apartments on three floors and now offers almost 5,000 square feet with six bedrooms and five bathrooms. The main suite is enhanced by a fireplace, wet bar, sitting area, dual walk-in closets and a bath outfitted with a steam shower and soaking tub. The co-op building was built in 1883 and the original hardwood floors, window frames and casings have all been restored.
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GUARANTEED RENT: MUSIC TO A LANDLORD’S EARS Guaranteed rent. Two words that would make any landlord’s heart sing. The concept of guaranteed rent has become a reality from a host of new companies
springing up throughout the U.S. Almost every landlord has their stories about unreliable tenants who consistently didn’t pay their rent on time, shorted the rent payment or didn’t pay at all. These tales usually end with a vacant unit, loss of income and possibly, the pain and expense of an eviction.
Now, a number of ingenious plans to help property owners maintain their monthly income have been gaining momentum. Each one may have its own business model and variations, but as a group, they may be just what landlords need now that eviction moratoriums are expiring. Welcome to iRenting.
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Rent Guarantee Insurance Rent guarantee insurance differs from landlord loss-of-rent coverage, which protects your income if your tenants have to move out due to insured damage to your property, such as that caused by a flood or fire. Rent guarantee insurance instead covers a landlord for lost revenue for a preset period when a tenant defaults on their rent. Although this type of protection can be costly, the premium might be passed on to the tenant, particularly if they have a record of bad credit. LeaseGuarantee LeaseGuarantee is an annual rent guarantee program that provides payment of all unpaid rent, damages, legal fees and costs owed by a tenant to their landlord in the event of a court judgment in favor of the property owner. The LeaseGuarantee contract covers all individuals on the lease agreement and can be paid for by the landlord, qualified tenant, or both. It starts at $199/year per lease and can provide coverage of up to $10,000, providing you with ample protection in case you take your tenant to court. Technology Meets Rental Property Owners Zillow, OpenDoor, RedFin and other iBuying real estate companies revolutionized the homebuying market with their algorithms and high-technology services. Now the residential rental field is being transformed by the iRenters. For example, Nomad is an iRenting company that brings property owners a pre-screened sub-tenant. Nomad signs the lease, collects the rent from the resident and forwards it to the landlord each month minus a fee, usually a percentage of the monthly payment. The annual lease can range anywhere from two percent to five percent of monthly rent.
LEASEGUARANTEE IS AN ANNUAL RENT GUARANTEE PROGRAM.
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Guaranteeing Rentals with a Twist Tech start-up Doorstead developed its own spin on iRenting. Currently operating in the San Francisco Bay Area, Los Angeles and Orange County, the company presents the property owner with a proposal that includes a minimum guaranteed rent amount and a promise to rent the home within a certain number of days. If they do not find a tenant within the agreed-upon timeframe, they begin paying the rent to the landlord. For 8% of monthly rent, Doorstead prepares the property for the marketplace by managing repairs, cleaning, photography, listing, showings, and tenant screening. Once the home is leased, they will collect and distribute the rent, conduct annual inspections and deal with evictions, if necessary. Wholesale Rentals This method is utilized when a property manager contracts with a property owner to provide them with a guaranteed sum in return for the right to rent a unit. The owner receives the fixed monthly amount over the term of the contract without the financial risks involved with collecting rents from tenants and trying to keep the property occupied. The risk lies with the property manager who is still obligated to pay that promised amount of money even if the home becomes vacant during the contract. Rezi leases apartments wholesale from landlords and rents them to tenants at current market rates. Property owners begin receiving rent as soon as they sign with the company and don’t have to wait for the unit to be rented. The Bottom Line Guaranteed rent programs, especially those backed by a thorough tenant screening report, are a great way to help ensure rent is always paid, no matter what. They can provide peace of mind for landlords and tenants alike. There are both pros and cons to leasing with a rent guarantee program, so it’s important to do your research about options offered in your area before signing any agreements.
THE RESIDENTIAL RENTAL FIELD IS BEING TRANSFORMED BY THE IRENTERS.
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WEST COAST RENTS ARE HEATING UP: 2022 RENT TRENDS The rental market in the U.S. is experiencing historic rental price fluctuations. To quantify some of these changes, Rentometer has selected and analyzed two- bedroom properties in ten neighborhoods of major metro areas.
METHODOLOGY
SUMMARY In this rent report, we analyze how two- bedroom apartment rents have changed between Q1 2021 and Q1 2022 in ten popular rental markets on the West Coast.
• Geography: The scope of this report is Rentometer’s ten most- analyzed cities on the West Coast. • Property type: Two-bedroom (2-BR) apartments with any bathroom count. • Analysis: Average rents were compared in the subject cities from Q1 2021 to Q1 2022. • Data: New rent data collected between January 1st and March 31st of 2021 and 2022, excluding outlier prices below $500 and above $10,000.
TAKEAWAYS
Average two-bedroom apartment rents in these popular rental markets have all experienced price increases between Q1 2021 and Q1 2022. Of the cities analyzed, Oakland, CA saw the least increase at 11%, whereas the Las Vegas market had the greatest increase at 54%. As always, thorough due diligence and assessment of current market conditions is critical to making successful real estate decisions. Whether you are setting your rent or evaluating an investment property opportunity, we recommend identifying sources of reliable market information and contact local professionals familiar with your target rental markets.
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ANALYSIS Rentometer’s data and analysis for the selected cities is presented below:
This article was contributed by the Rentometer Team Visit rentometer.com to analyze rental addresses and neighborhoods today. Rentometer uses proprietary technology and data to provide a thorough rent comparison analysis in seconds.
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The all new STFS LowPro mounts easily with magnets under the microwave. It provides an aesthetically-appealing look in the kitchen, until the crucial moment when it springs into action to suppress the fire.
SAVE LIVES #1 cause of death in the home is cooking fires, and stopping them is our #1 priority . SAVE PROPERTY The damage & repair costs to homes affect everyone: families, management, & owners . SAVE MONEY In addition to savings from costly repairs, many carriers offer insurance discounts .*
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PAGE 34 © 2022 WilliamsRDM, Inc. All Rights reserved. WilliamsRDM, the WilliamsRDM logo, StoveTop FireStop, the StoveTop FireStop logo, Rangehood, Microhood, and LowPro are trademarks or registered trademarks of WilliamsRDM, Inc. These marks may not be used without the expressed written consent of WilliamsRDM, Inc. *Results may vary stfs.com
We surveyed 12 of the nation’s top real estate investors and professionals to find out what strategies they’re using to combat increasing interest rates. The takeaway? You may need to get creative, but there are great opportunities still available for real estate investors. HOW TO INVEST DESPITE INCREASING INTEREST RATES
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DIVERSIFY & ADD VALUE TO ASSETS Rising interest rates could affect loan size for commercial properties, resulting in higher debt service payments and lower cash flow.
PUT MORE MONEY DOWN
I recently had a client get an interest rate down from 6% to 4.8%. How did he do it?
• He has great credit – you have to have great credit. There are a number of ways to raise credit scores. The best way is to pay down credit card balances. • He put more money down. Instead of 20%, he put down 25%. • He paid 1% of the loan amount. Always take the amount that you will pay and divide it by how much you will save each month to see how many months you must own the property to make that money back. • He called around to a number of banks and credit unions. He found that his credit union had more options than a traditional bank.
Here are investment tips while interest rates are increasing:
Relative to other asset classes, multifamily has historically performed well during inflationary periods. Property owners can raise rents yearly, which can level out with inflation over time, increase property values and maximize cash flows. • Identify value-add assets located in strong markets to increase future equity payout at refinance or disposition. • Invest in healthy assets to maximize profit since rental income covers both debt and expenses. • Utilize a diversified investment strategy to spread your investments across markets and asset types. • Use a good tax strategy. Be certain your CPA utilizes accelerated depreciation and cost segregation to maximize deductible amounts.
WITH A COMBINATION OF DIFFERENT STEPS, YOU CAN SAVE MONEY OVER THE LIFETIME OF A LOAN.
Cassie Wells KW Commercial Little Rock, AK Connect with Cassie
Joseph Marino KW Commerical Atlanta, GA Connect with Joseph
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