RENT Magazine Q2 '22

S P R I N G 2 0 2 2

Ashley Wilson

Betty Friant

Brittany Richards

Elizabeth Faircloth

Cassie Wells

Courtney Shier

Destiny Roxas

Donna Meeuwsen

Elizabeth Campbell

WOMEN TO WATCH IN REAL ESTATE

Jen and Stacy Conkey

Farrah Ali

Marie Antonette Waite

Kaylee McMahon

Kelly Stumphauzer

Lisa Cozzi

Kathelene Williams

Kathie Whitehouse

Pamela Goodwin

Monick Halm

Peggy Bailey

Shara Limoges

Sunny Pate Furtado

Nancy Wallace-Laabs

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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 Brad Mushovic Bradley Barth, Esq. Brittany Richards Cassie Wells

CONTENTS

Courtney Shier Daniel Sharabi Destiny Roxas

05 10 14 19 22 26 29

FROM HOMESTEADING TO HUD: THE HISTORY OF WOMEN IN REAL ESTATE LISA COZZI: A REAL ESTATE AGENT MAKING A DIFFERENCE BETTY FRIANT: CONQUERING THE WORLD OF 1031 EXCHANGE INVESTMENTS UNDERCOVER FAIR HOUSING TESTERS ARE WATCHING YOU: HERE’S HOW TO AVOID A LAWSUIT

Donna Meeuwsen Elizabeth Campbell Elizabeth Faircloth Jen and Stacy Conkey Kathelene Williams, Esq.

Kathie Whitehouse Kaylee McMahon Kelly Stumphauzer Lisa Cozzi Nancy Abrams Pam Goodwin Peggy Bailey Richard D. Gann, JD Scott Varney

5 WAYS TO MAKE YOUR RENTAL PROPERTY MORE PROFITABLE

Shara Limoges Stephen Kowal

CELEBRITIES ON THE MOVE

Sunny Pate Furtado The Baselane Team The Rentometer Team

LANDLORDS BEWARE! DON’T RELY ON CREDIT SCORES ALONE

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WELCOME! This springtime issue reflects back on Women’s History Month and Fair Housing Month, including an exclusive interview about fair housing with Peggy Bailey, Senior Advisor for Rental Assistance at HUD. AAOA puts the spotlight on 10 of the nation’s top women real estate professionals who share what you should look for in an investment property and we’ve gathered seven books, written by successful female real estate investors, that can help you on your investing journey. You’ll enjoy interviews with Betty Friant, who has conquered the world of 1031 exchange investments, and Destiny Roxas, a survivor of Section 8 housing and now a thriving real estate influencer. And you won’t soon forget Lisa Cozzi, who has helped provide water to the people of Soroti, Uganda, while developing an award-winning team of 14 CoStar Power Brokers with over $2 billion in sales. This information-packed issue also provides new takes on such property management issues as tenant screening, rental profitability, access control, energy conservation, 5G readiness, apartment cooking fires, rent fluctuations and Fair Housing testers. We hope this issue of RENT will inspire you to try new things to grow your rental business.

MARCH 2021 VS MARCH 2022 34 37 44

RENT CHANGES IN MAJOR METROS:

#1 THING TO LOOK FOR IN AN INVESTMENT PROPERTY FAIR HOUSING MONTH FEATURE: MEET PEGGY BAILEY, SENIOR ADVISOR ON RENTAL ASSISTANCE AT HUD SUCCESS WAS HER DESTINY: FROM SECTION 8 HOUSING TO REAL ESTATE INFLUENCER HOW TO MAXIMIZE THE TRANSFER OF ASSETS TO YOUR HEIRS WITH AN IDGT ARE YOUR RENTAL PROPERTIES 5G READY? 7 MUST-READ INVESTMENT BOOKS REAL ESTATE MARKET PREDICTIONS FROM AAOA’S LEADING INVESTORS THE PAST, PRESENT AND FUTURE OF 1031 EXCHANGES HOW TO SAVE BIG ON YOUR RENTALS’ ENERGY BILLS YEAR- ROUND ACCESS CONTROL: YOUR FIRST STEP IN THE AMENITY RACE WHY APARTMENT COOKING FIRES ARE SO DANGEROUS HOW TO ANALYZE THE PROFITABILITY OF A DUPLEX DEFER CAPITAL GAINS WITHOUT A 1031 EXCHANGE

46

80 85 89 75 51 54 61 57 65 71

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RETIRE from your REAL ESTATE

Are you ready to leave the burdens of tenants, trash and toilets behind? 1031 Exchange your rental property for potentially 100% passive income! To learn more call (800) 445-5908 Or visit us at www.1031capitalsolutions.com

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The history of women in U.S real estate began in 1839, 45 years after the industry was created. It was then that Mississippi passed the Married Women’s Property Act, which allowed a married woman to individually own property. FROM HOMESTEADING TO HUD: THE HISTORY OF WOMEN IN REAL ESTATE

New York gave women the most extensive property rights, passing the Act Concerning the Rights and Liabilities of Husband and Wife in 1860. Both of these laws expanded the property rights of married women and became models for other states. Women could conduct business on their own, have sole ownership of gifts they received, and file lawsuits. After President Abraham Lincoln signed the Homestead Act of 1862, more than 100,000 women took advantage of the new law, which offered free federal land in the United States. Women who were single, widowed, divorced or deserted were eligible to acquire 160 acres of federal land in their own name. Some stayed on their homestead and accumulated additional land. Others sold their holdings and invested elsewhere.

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THE FUTURE LOOKS BRIGHT FOR WOMEN WHO HAVE AN ENTREPRENEURIAL SPIRIT AND A BIT OF MOXIE.

ACHIEVING EQUAL OPPORTUNITY For over 100 years, women in real estate primarily performed administrative duties. By the late 1800s, however, many had become brokers and agents. Although about 3,000 women were working as brokers in the U.S. at the time the National Association of REALTORS® (NAR) was formed in 1908, its membership was made up of only men. In 1910, Corrine Simpson of Seattle became the first female member of NAR. Today, the organization’s membership is predominately female with over two-thirds majority, but a 2015 Urban Land Institute survey found that only 14% of real estate CEOs were women. More women now occupy brokerage positions than ever before (29%), a 6% increase from 2015. Even though women now account for over two- thirds of NAR’s membership, they had to wait 40 years to serve on real estate association boards.

NAR didn’t explicitly ban women from joining, but they did require local board membership and those boards did explicitly ban women. As a result, the Women’s Council of REALTORS® was established in 1938 and is now an affiliate of NAR with a membership of 10,500 professional women employed in real estate. Most boards dropped gender restrictions by the early 1950s, but it would be 1992 before the first woman, Dorcas Helfant-Browing, was elected to lead NAR. Unfortunately, the Great Depression halted women’s progress in the industry for a decade. About two-thirds of female brokers left the field between 1930 and 1940. Women held these positions post-World War II, taking advantage of the influx of new single family homes being built in the suburbs and the corresponding increase in homeownership following the establishment of VA-loans.

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As women in the workplace gained political clout through the women’s liberation movement, they gained more opportunities in real estate. In 1973, NAR extended its membership from exclusively brokers to sales agents, which made many more women eligible for membership. By 1978, the majority of NAR members were women and by 1980, almost 300,000 women were real estate agents, making up 45% of the industry. BREAKING INTO CRE AND THE FUTURE OF WOMEN IN REAL ESTATE While women have been very successful in residential real estate, commercial real estate has been a much more difficult market. Only about 37% of professionals in this sector are women and most of them work in property management. Additionally, only about 25% of commercial leasing and sales brokers in the U.S. are women, while just 10% of C-suite holders are women. Among real estate developers, 31% of them are women. According to the CCIM Institute (Certified Commercial Investment Member), women have achieved impressive inroads in commercial real estate. For example, only about 100 CCIMs were women in 1984 compared with more than 550 today. Now, after almost 200 years of female success in the industry, a woman, Marcia Fudge, is Secretary of the Department of Housing and Urban Development (HUD), the nation’s top housing official. The future of women in real estate has never been brighter. “Women have been making a career in real estate for decades. But the dynamics of how they do business in the real estate world may be experiencing a shift – for the better, ” according to Inman. “The future looks bright for women who have an entrepreneurial spirit and a bit of moxie.”

THE FUTURE OF WOMEN IN REAL ESTATE HAS NEVER BEEN BRIGHTER.

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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P A G E 9 CONTACT US

investment opportunies?

LISA COZZI: A REAL ESTATE AGENT MAKING A DIFFERENCE When the Great Recession hit in 2008, the financial crisis forced Lisa Cozzi to put her flourishing career as a top producing real estate broker and investor on hold. Little did she realize that within a year, she would find herself in Soroti, a small village desperately in need of water in the Teso Region of Eastern Uganda. Lisa was introduced to Soroti by Father Richard Okiria, a priest she had invited to bless her home in West Hartford, Connecticut. Father Okiria was planning a mission to his birthplace and invited Lisa to join him. She felt that she needed a new purpose and that going on the mission would be the first step to rebuild and give meaning to her life. She accepted his invitation and that singular moment is when Lisa’s lifelong commitment to providing clean water was born. The Teso region is among the poorest communities in Uganda and is still recovering from a 10-year conflict that ravaged the area from 1986 to 2010. It is also located in the most arid part of Uganda and therefore faces adverse climate change effects when extended droughts cause all small water points to dry up. Many women and girls were forced to walk over 10 miles to get clean water.

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The first well was drilled in Soroti Town and as a result, the location and success of the well spurred massive development in the area. What was a barren area with huts dotted throughout the bush, is now a thriving village, of about 61,000 people with farming areas, an employment training center, the Hursey House Resort and paved roads. Soroti is now a destination on the map. While dedicating her time to providing water to the people of Soroti through Bridges to Hope, along with volunteer work with Sunshine Kids for Cancer and Habitat for Humanity, Lisa has also managed to become a leader once again in the real estate industry. Affiliated with Berkshire Hathaway New England Properties, the Lisa Cozzi Team is made up of 14 members and is licensed in Connecticut, Massachusetts and Rhode Island. They are recognized as CoStar Power Brokers with over $2 billion in Sales. The Lisa Cozzi Team recently won the #2 GCI (Gross Commission Income) for the entire Berkshire Hathaway Network for 2021.

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The Team prides themselves on the comprehensive research and analysis they provide their clients on a daily basis. They focus on Class A 100+ unit assets, value-add opportunities, ground up/adaptive re-use and smaller assets for the first-time investor. Lisa specializes in listing multifamily assets utilizing world class marketing techniques, win-win negotiating strategies and strives to attain unprecedented high-per-unit prices. The Team represents buyers with their acquisitions through locating, negotiating and closing multifamily, retail, development, REO, Non- Performing Notes (Nationwide) and 1031 exchanges transactions. Lisa, her husband and their two daughters have donated 10 clean water wells in villages throughout the African bush. Click here to connect with Lisa Cozzi for your real estate needs in CT, MA and RI.

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CONQUERING THE WORLD OF 1031 EXCHANGE INVESTMENTS BETTY FRIANT:

While it is true that the vast majority of executives in real estate investment firms are men, more and more women have been playing a larger role in the executive ranks to become true leaders in the industry. Betty Friant is such a woman. She not only holds the coveted CCIM designation, she also serves as Senior Vice President with Kay Properties & Investments LLC. She advises high-net-worth investors throughout the Washington D.C. metropolitan market and Mid-Atlantic region about 1031 Exchanges and Delaware Statutory Trust investments. By emphasizing transparency, integrity, and superior client service, Betty has become a

recognized industry thought leader in the world of tax-deferred investment strategies and is instrumental in assisting Kay Properties achieve a record $610 million of equity placements for accredited investors in 2021. For her lifelong focus on her profession, Betty was recently recognized by GlobeSt.com as one of the “2021 Women of Influence” in the commercial real estate industry and was made a member of the prestigious Forbes Business Council. Recently, we sat down with Betty and asked her about her career and how she got involved in commercial real estate.

BETTY WAS RECENTLY RECOGNIZED BY GLOBEST AS ONE OF THE “2021 WOMEN OF INFLUENCE” IN THE COMMERCIAL REAL ESTATE INDUSTRY

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Q:

Tell us how and when you began your career in the profession you are in.

DWIGHT KAY HAS BEEN THE BIGGEST INFLUENCE IN MY CAREER

A: Well, I've always had an interest in business. Both of my parents were entrepreneurs and owned restaurants and other small businesses in our little hometown of Winchester, Virginia. I have two sisters, one older and one younger, and we always were motivated to work. Whenever we wanted money, we didn't just get an allowance, we went to work in the restaurant. So, I grew up surrounded by a business environment. Ever since I can remember, the world of business has fascinated me. Then I became attracted to real estate because I just thought how fascinating it would be to own multiple homes or rental properties. Then the idea of being able to help people build equity struck me as a great career direction. So, I started to pursue a career of selling real estate. But then I thought, ‘my gosh, commercial real estate would be so much more interesting than residential real estate because it's all about business.’ So, I moved my career toward commercial real estate sales.

Q:

Who has been the strongest influence on your career?

A: In my most recent career, I would have to give all the kudos to Dwight Kay, the founder of Kay Properties. What he does with our company and how he nurtures and builds and grows people within the company is so impressive. For sure he's done that with me as well. Now, I've been successful in commercial real estate, but Dwight pushed me in ways that I didn’t think I was ready for. Speaking to large crowds of people and always pushing myself and everybody at Kay Properties to reach just a little bit further than we’re comfortable with and making everyone a little better every day. Most definitely, Dwight Kay has been the biggest influence in my current career.

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EVERYBODY APPROACHES THEIR PROFESSION SO DIFFERENTLY, BUT FOR ME, MY FOCUS HAS ALWAYS BEEN EMPHASIZING EDUCATION

Do you feel being a woman is an advantage, disadvantage, or no advantage in today’s business world, and why? Q: A: Yes, I think it's an advantage for me to be a woman. I say that mainly because the commercial real estate industry is an industry where there are not a lot of women - at any level, let alone a senior vice president level. I feel it is an advantage because people aren't so threatened perhaps when a woman approaches them. They understand that my entire goal is to educate them not sell them. I'm not intimidating or threatening. When they realize that I really know what I'm talking about, and they recognize my CCIM designation (which by the way is very important to me because it demonstrates my commitment to my own continuing education), they become more receptive to my presentation. They recognize that I can help them by providing good advice and by teaching them important questions they should ask their own CPAs, attorneys and financial counselors. Then I become a trusted advisor or a trusted resource without being a threat or overpowering or pushy.

What unique qualities and/or personality traits do you think make you so successful in your profession? Q: A: Everybody approaches their profession so differently, but for me, my focus has always been emphasizing education. Sometimes I feel like people will just want me to tell them what to do. And I say, ‘No, I'm not going to do that. When you see a form coming through and it asks you a question, I want you to understand what that's all about. I don't want you to just sign it and move on.’ So, I think the thing that makes me unique is my emphasis on educating my clients and really making my clients learn. And if they learn and then they decide the DST investment route is not for them, that's fine. We're okay with that. But I think the fact that I take such care to make sure my clients really understand what they're doing and know that our team is there for them whenever they need us, I think is very special and very different. I just really care for my clients and want to teach them all I can.

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Q:

What inspiring word of advice would you give to a young woman about to go into the field of commercial real estate or your allied field?

A: I would say to find somebody else who’s in real estate and talk to them; ask them questions. I guarantee almost any real estate professional would love to provide advice to a young person just starting out. Because if you like the real estate business – I mean new home sales, commercial real estate or whatever else it might be – reaching out and talking to someone in the industry can be incredibly rewarding for both parties.

Almost any commercial real estate professional will give you time, take you to coffee, and help you decide what direction might be a good one for you to pursue. This is especially true for anybody who is looking to start a new career. They should take advantage of the people who have been there before. We’re all willing to share what we’ve done and it might resonate with that person and help them get a really good step forward toward starting a new career.

Click here to connect with Betty Friant and the Kay Properties and Investments Team for your next 1031 Exchange.

*Disclosures There are material risks associated with investing in real estate, Delaware Statutory Trust (DST) properties and real estate securities including illiquidity, tenant vacancies, general market conditions and competition, lack of operating history, interest rate risks, the risk of new supply coming to market and softening rental rates, general risks of owning/operating commercial and multifamily properties, short term leases associated with multifamily properties, financing risks, potential adverse tax consequences, general economic risks, development risks and long hold periods. All offerings discussed are Regulation D, Rule 506c offerings. This case study may not be representative of the outcome of past or future offerings. There is a risk of loss of the entire investment principal. Past performance is not a guarantee of future results. Potential distributions, potential returns and potential appreciation are not guaranteed. For an investor to qualify for any type of investment, there are both financial requirements and suitability requirements that must match specific objectives, goals, and risk tolerances. Securities offered through FNEX Capital, member FINRA, SIPC.

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UNDERCOVER FAIR HOUSING TESTERS ARE WATCHING YOU: HERE’S HOW TO AVOID A LAWSUIT

Fair Housing testers are used by advocacy groups, many of which are funded by HUD and are usually individuals from the local community who have been specifically trained to conduct Fair Housing tests. Many are civic-minded volunteers, although most are paid on a per-test basis. Read on to find out how to prepare for undercover testing. WHO ARE COMPARABLE FAIR HOUSING TESTERS?

Fair Housing testing as a means to uncover evidence of race discrimination in rental housing, or "shopping," as it is sometimes called, was first approved by the U.S. Supreme Court in 1982. Since the passage of the Fair Housing Amendments Act in 1988, testing programs have expanded to include tests for both national origin and disability discrimination. WHAT IS FAIR HOUSING TESTING?

Being “comparable” means that the Fair Housing testers are, to the extent possible, matched with the complainant on their background, employment, rental, and even educational characteristics, differing only in their racial or ethnic background. In almost all cases, this means that Fair Housing testers may have to lie on the rental application and in any face-to-face meetings with agents about these characteristics. While this practice can come across as unscrupulous and feel like entrapment, we need to remember that the U.S. Supreme Court justified lying in this context as a powerful means to uncover housing

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discrimination nearly 20 years ago. Fair Housing testers are also allowed to use secret video and audio recordings in certain jurisdictions. TELEPHONE TESTING Telephone testing is the most common method of testing. That’s why it’s so important that the people who answer your phones know what your policies are and how to respond to certain questions. This sort of information needs to be consistently given on every single call. This can become a challenge when it comes to current availability. In a testing scenario, a person might raise the complaint that a unit was offered to one person but later that day not offered to another based on the fact that they are part of a protected class. It is quite possible that the unit was just already rented at this point. This is where documentation comes into play. Having up-to-date documentation that clearly states the exact time that the unit came off the market will quickly resolve any possible discrimination charge. ACCESSIBILITY TESTING Accessibility testing is also widespread, and it’s also very easy. Accessibility testers don’t necessarily need to take a tour of your property to determine whether your property or at least the outside of your property complies with Fair Housing accessibility laws. Sometimes they can just drive around your parking lot and look at your parking spaces and entryway. Sometimes they can go in and take a tour so they can see your amenities and your common areas, and they can tell whether you are in compliance or not. Unfortunately, if a tester does this, it’s almost too late to fix it before they can notice it. If you think that you may have some compliance issues, it’s important to go ahead and get it checked out. It’s always better to get ahead of these problems because if it’s a legitimate noncompliance issue, you’re not only going to have to pay the complainant who files the case but then you’re going to have to pay to have the issue corrected anyway.

FAIR HOUSING TESTERS ARE ALLOWED TO USE SECRET VIDEO AND AUDIO RECORDINGS TO UNCOVER DISCRIMINATION.

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•PROPERTY TYPE •FUNDING SOURCES •HOW OLD YOUR PROPERTY IS It’s important to hire a professional who knows which accessibility laws apply to your property to figure out what you may need to do to bring your property into compliance. ACCESSIBILITY LAWS DIFFER BASED ON FAIR HOUSING TESTING TAKEAWAY While the odds may be slim, the chances you will be tested by one of these organizations is always present. Remember that we only touched on a few testing scenarios here today. A property can be tested in many more ways, for example, policies around emotional support animals or prospects with a criminal background. Be aware, be fair, and make sure you and your team are well trained in all aspects of The Fair Housing Act!

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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A SOUND STRATEGY TO IMPROVE YOUR PROFITABILITY IS TO REDUCE THE COST OF SERVICING YOUR DEBT.

TO MAKE YOUR RENTAL PROPERTY MORE PROFITABLE Rental properties can be an excellent investment, but only if you know what you’re doing and your rental business is set up for success. WAYS 5

Not sure if your rental property is profitable? Consider using a rental property calculator to help you determine the return on investment for your rental property. With this information, you can set goals for your rental property’s profitability (for example, earning $500 per month per property) and make a plan to achieve them. If you’ve found that you aren’t meeting your rental property goals, there are a host of strategies that you can use to improve your rental property profits.

1 2 3 4 5 Choose the Right Loan Type Optimize your Rent Collection Keep Vacancies Down Keep Up with the Maintenance Calculate and Track Rental Property’s ROI ARTICLE SUMMARY

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1. CHOOSE THE RIGHT LOAN TYPE

A sound strategy to improve your profitability is to reduce the cost of servicing your debt. You can do this by lowering your interest rate as much as possible. There are various loan types available for rental properties. What suits your property’s needs will depend on your unique lending profile and the characteristics of your rental. Here are the FIVE BEST loan types to use when buying a rental property:

5

1

2

3

4

Partnering directly with a lender is good for active investors who want to grow quickly. However, you’ll usually have to give up a portion of your equity to access this loan. REAL ESTATE LIMITED PARTNERSHIPS Best for: Active, high growth investors.

CONVENTIONAL MORTGAGE

PORTFOLIO LOANS

HOME EQUITY LOANS

PRIVATE AND HARD MONEY LOANS

Like a standard mortgage for a primary residence, a traditional mortgage uses a fixed or variable low-interest rate while using the property as collateral.

These loans can’t be re-sold and have different underwriting criteria. Portfolio loans allow for a lower credit score and smaller down payment but have higher interest rates.

A loan secured against the equity in your home. This financing option can be a revolving line of credit or a fixed loan with monthly payments. Best for: Landlords with significant equity built up in their homes.

Private lenders focus more on the value of the property and less on your income and credit score when evaluating loans, but you’ll usually need a higher down payment, most likely between 25-30%.

Best for: An owner-

Best for: Landlords who can’t qualify for a conventional mortgage.

Best for: Landlords who can’t qualify for a conventional mortgage.

occupied rental or investors with up to 10 rental units.

Choosing the right loan type takes time and research. While this overview can help you get started, you should really dig into which rental property loan is right for you.

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2. OPTIMIZE YOUR RENT COLLECTION

There are various ways to collect rental payments, ranging from personal checks and cashier’s checks to more advanced mobile and online payment systems. In addition, direct payment systems, known as automated clearing houses (or “ACH” payments”) allow tenants to set up autopay and pay the rent directly from the tenant’s bank account. Collecting rent online with property management software like Baselane is faster, safer, and more reliable than traditional methods like checks. Online rent payments don’t rely on the tenant writing and delivering a check, saving you time and keeping your rental income on track.

Unlike checks, which can take up to five days to post, rent paid online is deposited directly into your bank account in as little as two days. Because Baselane uses multi-factor authentication, and bank-level encryption to keep payments secure, it’s safer than using a check that can easily be forged, copied, or stolen. Paying rent online is easier for your tenant, too. Tenants can choose their preferred payment method (bank transfer, debit, or credit card), set up auto-pay, and get reminders and receipts. You can learn more about the advantages and disadvantages of online rent collection here.

3. KEEP VACANCIES DOWN

One of the biggest killers of rental property profitability is a vacancy. Every month that your rental sits empty cuts into your profitability and reduces your earning potential. To help keep vacancies down, focus on attracting quality tenants and maximizing the number of applications you receive for your empty units.

Attracting quality tenants starts with having an appealing, in-demand property. Choose a property in a good location that targets your ideal demographics. If your property is vacant, maximize the number of applications you’ll receive by investing in staging, high-quality photography, and well-targeted, well-written advertisements showing the property’s amenities.

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4. KEEP UP WITH MAINTENANCE

Maximizing profitability isn’t just about increasing your income but also minimizing your expenses. One significant expense is maintenance, including wear and tear and, unfortunately, property damage. To manage expenses relating to maintenance, ensure you set clear standards for your tenants, so they know what they are responsible for, from sweeping and shoveling walkways to replacing furnace filters.

A good time to cover this information is during a detailed move-in walkthrough. Budget for and perform regular maintenance on your properties to avoid minor issues becoming expensive headaches. Annual inspections of heating and hot water systems, roofing, and foundations will help you catch and repair small problems cost effectively.

5. CALCULATE AND TRACK YOUR RENTAL PROPERTY’S ROI Finally, if you know your property isn’t as profitable as it might be, but you aren’t sure where to start, consider using a rental property calculator to evaluate your rental’s performance return on investment.

charging enough rent, whether your loan costs are too high, or whether you are losing money in other areas, such as maintenance or utilities. You can create a strategic plan to make your rental property profitable using these analytics. Once you’ve taken steps to improve your profitability, revisit the calculator to ensure you increase your income, decrease your expenses, and profit from your rental property.

This rental property calculator can help you do a diagnostic check on a property and determine which actions you should take to improve profitability. For example, a rental property calculator can immediately flag whether you are

This article was contributed by the Baselane Team.

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CELEBRITIES

ON THE MOVE

Shonda Rhimes Shonda Rhimes set a new sales record for the Los Angeles neighborhood of Hancock Park when she accepted an offer of $21 million for the 99-year-old, 12,000-square-foot mansion she purchased from Patricia Heaton in 2014. The three-story, seven-bedroom, 12-bathroom home was designed by Elmer Grey, the architect behind the Beverly Hills Hotel and Huntington Art Gallery. Built on a double one-acre-plus corner lot, the residence is enhanced by two kitchens, a library, screening room, playroom and movie theater in addition to a kitchen garden, pickleball court and swimming pool.

Aaron Rodgers

Green Bay Packers quarterback Aaron Rodgers recently sold his Del Mar (San Diego) home for $5.13 million, about 2.5 times more than he originally paid for it 13 years ago. Built in the late 1980s and significantly upgraded since, the Mediterranean home occupies 5,770 square feet which include four bedrooms and 4.5 baths, a wine cellar, a semi- detached games room and a basement-level movie theater. The octagonal foyer is artfully echoed outside by the eight-sided swimming pool.

Betty White’s Estate

Lovingly built by the late Betty White and her late husband Allen Ludden in 1978, this three-story ocean- view home in Carmel-by-the-Sea, California, is on the market for $7.95 million. Floor-to-ceiling windows and skylights set into soaring cathedral ceilings bring in natural light. Spanning 3600 square feet on about a quarter of an acre, the wood, stone and glass residence consists of four bedrooms, 4.5 baths and features a winding path that leads through manicured landscaping to the beach below.

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CELEBRITIES

ON THE MOVE

Larry David Joining the celebrity exodus to Montecito, Larry David has added a classic French Normandy charmer built in 1929 to his growing real estate portfolio. $5.7 million bought him four bedrooms and 4.5 baths in 2858 square feet designed by high society architect George Washington Smith. The home, set on one-fifth acre, is outfitted with the most modern conveniences while maintaining a vintage ambience that reflects its French influence. Mature shade trees, clipped hedges, lush lawns and citrus trees encompass several patios and seating areas.

Emma Stone

Celebrities aren’t only moving to Montecito, they’re also heading to Texas in greater numbers. Among those recently moving to the Austin area are Sandra Bullock, Elijah Wood, Chris Harrison, James van der Beek and Joe Rogan. And now the latest star to buy in the Lone Star State is Emma Stone. Although Texas does not publish the selling prices of homes there, it is estimated that Stone paid about $7 to $8 million for the 5000-square-foot Colonial. Set on a triple lot on 1.24 acres, the residence, built in 1940, features four bedrooms, 3.5 baths, a swimming pool, formal gardens and vast lawns.

Alec Baldwin

Alec Baldwin and his wife Hilaria have added a third property to their real estate portfolio with the purchase of a nearly 250-year-old farmhouse located in the small mountain community of Arlington, Vermont, once the long-time home of Hilaria’s late grandfather. The $1.75 million selling price includes a late 18th century, 3600-square-foot main house with three bedrooms, three baths, a tavern room and a sauna. Also found on the 55.3-acre property are an 1800-square-foot, four- bedroom, two-bath guest cottage, a horse barn, a red dairy barn and a pond.

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LANDLORDS BEWARE! DON’T RELY ON CREDIT SCORES ALONE As eviction moratoria begin to expire, the importance of doing a thorough tenant background check on prospective renters has never been more important. Property owners are increasingly aware of the need to protect themselves from tenants with collections, liens and evictions in their credit history and who may be unable to pay their monthly rent. Owners who previously relied on their intuition now realize that it can be dangerous to sign a lease with someone based purely

on how they present themselves. Many landlords, even those who have been ordering tenant credit reports for years, will run one on a prospective lessee and then completely ignore it. They are only interested in the accompanying credit score. Unfortunately, these property owners run the risk of renting to someone who is undesirable based on circumstances not revealed by that score alone. HOW IS A CREDIT SCORE COMPUTED? A credit score is based on an individual’s financial history. It is basically a number calculated to reflect the details in their credit report, including installment obligations, past- due payments, collections, bankruptcies, hard inquiries and other public records.

Payment history (35% of the score). Are payments made as agreed? The credit score consists of five factors: 1

2

Credit usage (up to 30%). How much does the individual use their available credit?

3

Age of open accounts (15%). The longer one’s credit history, the higher their credit scores.

Types of accounts (10%). A diverse range of credit accounts is actually desirable.

4

5

Hard credit inquiries (10%). Too many new accounts or inquiries can indicate increased risk.

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As a person’s financial profile changes, so does their score. Their credit score can be adversely affected by missing payments, using too much available credit, defaulting on accounts and applying for too much credit within a short time period. WHAT A CREDIT SCORE DOESN’T TELL YOU: PART 1 There are several sections included in an AAOA credit report, each one full of detailed information to help you make an educated decision about your rental applicants:

Personal information

Credit Summary You’ll get a 7-year credit history with: • Name and date of birth. • AKAs and Social Security Number. • Current and past addresses. • Current and past employers.

• Number of hard inquiries, collections, past-due accounts and public records.

Scorecard The Resident Score 2.0. is specifically designed for landlords and is somewhat different than FICO score. Key negative factors in calculating the score will be itemized. Collections The details of any accounts placed in collection will be listed in this section. • Total high credit, mortgage amount, total account balance, etc. • Percentage of credit available. • Collection agency name and the date account was assigned for collection. • Name of creditor, amount owed and what type of account it is. • Date the account was closed and the status of the debt.

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Public Records If the person has filed for bankruptcy during the last ten years, that information will be included in this section. In the past, judgments and tax liens were also included on credit reports, but in recent years, the number of public records added to credit reports was reduced to just bankruptcies. AAOA member can add a tax liens and judgments report to any tenant screening package. Tradelines Tradelines are companies that the applicant has a monthly obligation to pay. This could include an automobile loan, a mortgage, credit cards, student loan, etc. Each creditor will be listed along with the following information: • Account number and date it was opened. • The credit limit, high credit used and the recent balance. • The monthly payment and any instances of late payment.

• The industry and loan type.

Also included is a month-by-month record of the applicant’s credit use for that account and any late payments. Please note that “UKN” stands for “unknown” and is a neutral notation. In other words, the creditor may not have reported that month or the applicant may not have owed anything at the time. Inquiries The final section of the credit report addresses “hard” inquiries made by banks or other lenders. You will learn which companies have accessed the applicant’s report to view their credit worthiness. The information includes the date and type of business that your prospective tenant has approached for a loan, credit card, etc. It should be noted that “soft” inquiries will not be listed on your copy of the credit report. They are only available to the applicant if they purchase a copy of their report from AAOA.

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WHAT A CREDIT SCORE DOESN’T TELL YOU: PART 2 Now that you know the financial habits of your applicant, it’s time to learn more about their character. You will be trusting them with your most important and valuable asset, so it would be irresponsible not to order the following screening reports to see just what kind of person they are. TeleCheck® Verification Since you are expecting your tenant to pay their rent each month, AAOA believes it is important to know if they are in the habit of writing bad checks. The TeleCheck® Response Message Conditions helps separate good check writers from bad ones. This database comprises more than 51 million bad check records with continually updated information, including bad check activity as it occurs. You will need to enter the applicant’s driver’s license number or state ID when you order this report. Previous Address History The Previous Address History will list any addresses that have been associated with the prospective tenant. In addition to listing any address at which they have resided, it will also include addresses associated with them for some legitimate reason, such a place of work, a business they owned, a place to which they forwarded mail, had packages delivered, etc. If the number of entries on the list seem excessive, simply ask the applicant to explain them. The past address information can be used to help you with other reports that you will be ordering. The data includes the states where the applicant has lived, so you can determine whether you need to order a nationwide eviction or criminal report or just a state search. State Specific or Nationwide Eviction If a judgment has been rendered against your applicant during the last seven years, it will appear in this report with the following information: • Court state and name. • Case number and filing date if provided by the court. • Name of the plaintiff and the defendant’s address. • The date and amount of the judgment.

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Please note that there are many ways to remove a tenant without a court judgment. Only cases that have ended in a judgment against the tenant will appear on this report. For more information about the kind of tenant your applicant has been in the past, you can order a Landlord Verification from the AAOA ala carte menu.

A criminal report will include the following information for each criminal record in the applicant’s profile: • Name, address, Social Security Number, date of birth and gender. • The category of the crime, source ID, case number and the filing date. • Arrest date, name of the offense and disposition. • Sex Offender. OFAC. Terrorist and Federal Searches These searches will uncover more information than a credit score could ever tell you. Based on name and date of birth, the results will certainly help you decide on whether you want to rent your property to that individual. SSN Verifier Plus The Social Security Number Verifier Plus is an indicator as to whether your prospective renter is using a legitimate number issued to them by the United States government. The results will show you the state in which the number was assigned, the year it was issued, date of birth of the person given that number and what their name is. Negative results could indicate fraud and/or identity theft. A landlord who makes their leasing decisions based purely on a credit score is running the risk of renting to a very undesirable tenant and living to regret it. Protect your investment and your business by collecting as much information as possible before making your choice.

LeaseGuarantee Analyzer

In order to protect our members from loss of income up to $10,000 as a consequence of a non-paying tenant, AAOA has an exclusive affiliation with LeaseGuarantee. You will be reimbursed for losses incurred from legal fees, unpaid rent and even damages to your property. The LeaseGuarantee Analyzer qualifies the applicant based on their credit history and determines the cost of that protection. State Specific or Nationwide Criminal As with the eviction report, you can order a state specific or nationwide criminal report for the last seven years. This report will list only criminal records where a judgment has been rendered and not arrests where further action was not taken.

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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RENT CHANGES IN MAJOR METROS: MARCH 2021 VS MARCH 2022 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 the analysis, we look at how rent prices have changed year-over-year as well as the rent-to- buy ratios for these areas considering average property prices. On the next page we present the summary analysis of our findings for these neighborhoods.

• Our Neighborhood Analysis uses a six-month “Look Back” to establish an average baseline rent, considering rental data points six months back from March 1, 2021, and March 1, 2022.

• The average property price was determined by a sample of listing prices according to Redfin.com.

• The annual rent income was determined by annualizing the average monthly rent for two-bedroom rentals in the target metro areas.

• The price-to-rent ratio was determined by dividing the average property price by the average yearly rent income. According to Trulia’s interpretation, a score of 1-15 suggests conditions are better to buy, a score of 16-20 suggests conditions are typically better to rent than buy, and a score of 20 or more that it’s much better to rent.

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ANALYSIS Our data and analysis for the selected neighborhoods is presented in the table below:

As the table shows, two bedroom rents for the Brickell, Miami neighborhood saw the highest increase in rent change among the selected U.S. neighborhoods by 50%. The Venice neighborhood in Los Angeles saw the smallest increase in rent by 4%. The Venice and West Valley neighborhoods with a price-to-rent ratio of 31 suggests those areas may have more rental demand given their relatively high average property prices. Whereas the Montrose neighborhood, with a price-to-rent ratio of 12, appears more favorable for those looking to buy and therefore may have lower rental demand.

CONCLUSION

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 contacting local professionals familiar with your target rental markets.

For questions, please contact feedback@rentometer.com or visit rentometer.com Rentometer uses proprietary technology and data to provide a thorough rent comparison analysis in seconds.

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