ACCESSLASVEGAS Y O U R A C C E S S T O T H E L A S V E G A S M U LT I - F A M I LY H O U S I N G M A R K E T
July | August | September 2012
Hiring and Keeping the Right Managers
Las Vegas Occupancy Corner
page 5 Protecting & page 8 Property Values
The Property Management Issue Is the Best Management Team in Place to Put You Over the Top? Do They Have All of the Right Pieces? There is more to property management than hiring a landscaping crew to occasionally mow the grass or hang up flyers to announce vacancies. In this issue of ACCESSLASVEGAS we will explore time-tested “simple” ideas and some unique breakthrough ideas, along with incredible uncommon practices, which make an ordinary property ... extraordinary. The articles we are featuring make properties “stand out” because of the property management company that is in place and executing at a very high level. The goal of this issue is to allow owners to evaluate the current management they have in place and ask themselves the following important questions when reading one of the amazing articles we have placed into this newsletter: -
How is my property performing? Can it be performing better? Is my current management team doing this (fill in the blank based on the article)? If I change this (fill in the blank based on the article) will it help my bottom line? What am I going to do next to maximize my property’s value?
Did you know 72% of apartment owners who fire their property manager or property management company say it is because of lack of communication. And if those managers or management companies are not communicating with the owners, do you really think their communication skills were best for the owner’s bread and butter ... the resident’s? Keep in mind that your property management team should not only be servicing you, they should be representing you when dealing with your residents. If they lack creativity, professionalism or attentiveness in this area, it will cost you money in the end. While this issue is not about finding all of the flaws within your property, it is about opening your eyes and opening your doors to running a better, more stable asset. In the end, for owners, it is all about the money and a great management team can make you or literally break you.
July | August | September 2012
Hiring and Keeping the Right Property Managers: A Lesson In Finding Diamonds in the Rough How to spot the signs of a potentially great Property Manager and how to keep them from leaving
Before we can begin this issue we should first visit the most important KEY to any property ... the Property Manager. We want to address the signs of finding a real go-getter, actually how about two go-getters. We want to know ... who’s successful? How did they do it? and most importantly to YOU as our reader -- can their stories help YOU and your property become successful or even more successful? This article examines two success stories of apartment managers who started small and are currently making a BIG splash! This article is an interview and an analysis of Kate Heitzman of Greco Properties (General Manager at BLUE in Uptown Minneapolis, a 242-unit luxury market rate property) and Toni Powell of Bigos Management (Community Manager at Calhoun Greenway also in Uptown Minneapolis, a 350-unit market rate property). Both management companies operate in Minnesota but their stories can play out in ANY city in the world, it just takes consistency and an ongoing passion for Property Management Q: How did you get your start in the apartment industry? Toni: By accident! I moved to the twin cities from St. Cloud. The apartment building I moved into didn’t have my apartment ready -they needed a manager, and there I was. It was a 40 unit 1st tier Minneapolis suburb, class A property. Eventually, they asked me to take over a different 38 unit luxury townhouse project. I did. When my manager left, I asked to take over both properties. I was bored and I needed MORE. They didn’t think I would be able to handle both properties, but they gave it to me, and I made it work. Kate: I had always worked in retail management, and didn’t want it anymore. Once I had a kid, the hours didn’t work for me. I did my research and felt that as a single mom, property management would fit into my lifestyle. I applied for a full-time caretaker position at Laurel Village. As you may know, Laurel Village is one of the largest properties in the twin cities metro area with 720 units across 7 buildings spanning 3 city blocks in downtown Minneapolis. On a site this large -- there’s a lot of miscellaneous stuff that needed to get done. THAT was me. It gave me a good introduction into property management -- I’ve seen a lot and done ALOT. I’ve been surprised by people many times, and they STILL surprise me to this day! That’s property management for you -- never a dull or predictable moment. Q: How Long did you stay in your first property management job before you decided to move on? What made you decide to move on? Toni: (I stayed with my first company) … for 3 years and then started to look for opportunities. I get bored REALLY easily, so I need to have challenges! Kate: I was there (at Laurel Village) for 3.5 years. In the last year, I realized that I would definitely stay in property management, but I REALLY wanted to have my own property to manage. While I was at Laurel Village, I was promoted from Caretaker to Operations Assistant. 2
3 Immediate Observations: It looks like for both Toni & Kate, stayed a decent amount of time with their first employers and learned as much as they could learn. As it does to many people I have talked to in the apartment industry, it HOOKS you, it gets in your blood, and then you’re left looking for MORE. They both wanted MORE, which is the catalyst that prompted them to look for the next step in their career. Interesting! Q: Where did you go next? What did you decide to look for? How did you find your next job? Toni: Another peer I networked with worked for Bigos and LOVED the company. So I found a job posting they had listed and interviewed with a Regional Manager at Bigos. I didn’t hear back from him! But I KNEW I wanted to work there (at Bigos), so I decided to call him once a week for 2 months. I had heard that the “word on the street” was that I was not a good fit for the property I had applied for, but I knew in my heart, I wanted to work for Bigos. My persistence DID pay off. Another Regional Manager at Bigos called me and offered me a job at Mallard Creek -- 120 units in Golden Valley. It was a market rate, older property (20 years old) in a GREAT area. Interviewer: Here’s a woman who doesn’t take “no” for an answer! Toni: I stayed at Mallard Creek for 3 years, and during that time, I handled a total rehabilitation of the property (interior and
exterior) -- it kept me challenged and I was constantly learning new things. Kate: I started to look for opportunities where I could manage my own site, and saw an ad for a Section 8 property in Edina. It was 80 units spread across 4 different buildings -- similar in set-up to Laurel Village, but that was where the similarities ended. It was MUCH different in size and demographics. I stayed there for 1.5 years -- I worked hard, I did everything from ripping out carpet with my Maintenance guy, plunging toilets, to doing Section 8 paperwork. You name it, I did it. I’ve not only become pretty handy with tools, when I work with Maintenance, they respect me, as I’ve done many of the things they’ve done right alongside them. I learned everything I could about managing my own site, and my next opportunity was a larger site in Chanhassan -- 162 units. I stayed there for a year before realizing I didn’t like being so far out. From there, I was contacted by someone I knew in the industry to manage a 290-unit property in St Louis Park. My sites kept getting bigger and bigger, my responsibilities grew, and I learned A LOT during this time! Q: Why/How did you decide to go about finding your next opportunity? Toni: I love working for Bigos. I have great managers/supervisors. I communicate with my supervisors that I want something new, and that I can get bored really easy. They always find ways to challenge me. I love new challenges. After Mallard Creek, when I started getting bored again, I started to apply to other openings in our company,
“I had heard that the “word on the street” was that I was not a good fit for the property I had applied for, but I knew in my heart, I wanted to work for ... my persistence did pay off.” but I didn’t get the positions I applied to. In hindsight, it was a GREAT decision both for myself and for Bigos -- because I got to do all the things I did, learned a lot, then when I WAS ready, Bigos was there to challenge me. My next challenge was a 245-unit market rate property in Plymouth called Willow Creek -- I stayed at Willow Creek for 1.5 years before applying for other challenges within the company. From Willow Creek, I was promoted to Shadow Hills, a 322-unit market rate property -- we won property excellence last year at the MADACS -- this property is one that I consider my biggest challenge and triumph so far! I’ve been with Shadow Hills now for exactly 12 months, and just when I thought I might get bored, along comes another challenge. (At the time of the interview) -- Next month, I will be transferring to a Calhoun Greenway. This is in Uptown -- I’ve always been in the first tier suburbs. This will be a whole new area and demographic for me. This is a new acquisition and total rehab of 350-units. It’ll be totally different than anything I’ve done, its different clientele, different location, with lots of moving parts. I’m going to LOVE it.
Property Management is like a puzzle ... if you are missing a vital piece the puzzle can never be completed. So, make sure you have all the right pieces!
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ACCESSLASVEGAS Kate: Working in the suburbs, I realized I missed the hustle bustle of a densely populated urban area. I knew I wanted to either return to downtown or uptown in Minneapolis. I began networking with people I knew, putting my feelers out for opportunities that met my need. I now had experience, so I didn’t want to go just anywhere. I wanted to find the right match for me & my family. I knew what I wanted, and I was willing to be patient and look for the right opportunity. That’s when I heard about Greco Properties and their new project in Uptown Minneapolis, called Blue. 242 units of luxury market rate apartments in Uptown. This was a new project with a new lease-up -- something I had never done, but couldn’t wait to do. Q: What are the biggest challenges going from a smaller property to bigger properties? Toni: It wasn’t much different. The more units you had, the more people you have to get everything done. For me it wasn’t a change. You just learn to manage and increase your employee base, and work on larger numbers when thinking about resident retention. The challenges in property management are the same from a small property to a large property -- those challenges are resident relations, turnover, staff moral (especially with management company transitions), and the most challenging of all, but also the most rewarding -- is to take a property over from another management company and bring it up to the Bigos standard of excellence. We have a standard of excellence -- both with apartment residents and employees. Sometimes making those changes can be tough -- but in the end, it’s good for everyone. Kate: The biggest challenge is all the things you don’t know. But just know that its trial & error, and if you’re smart, you can figure it out quickly. The biggest challenge for me is to know what I want out of a job/career. It’s taken me a couple of years of experience to find my niche -- find what I liked, what I don’t like, what I am good at, what I am not so good at and find a company who wants me for all the things I do well. There’s a lot of variety out there, and lots of availability. There’s a job, career, company for everyone. You have to fi n d t h e r i g h t p r o p e r t y a n d r i g h t management company for you. Q: What do you think has played the biggest role in your success -- what 4
July | August | September 2012
would you advise others to look for/do to become successful? Toni: The thing with Bigos is that they’re a big, smartly run company. There’s always another opportunity to do something new. They’ve been a HUGE part of my success. They support their people, they provide education, they have opportunities -- it’s a culture of cultivation. Bigos has promoted and moved people within the organization -- which has been a HUGE part of my learning, growth and success. I also advise others to communicate with their supervisors about their long term and short term career goals as well as what you’re good at, and what you want. I’ve always communicated to my supervisors what I want next, let them know I BELIEVE I can get it done. I’ve let them know that I can get bored easily and I need to have new challenges. I have been lucky to have supervisors and managers that listen and utilize me to the best of my abilities. Kate: Ask A LOT of questions, get to know your peers in the industry, go to the MADACS & other MHA functions, attend networking functions that are offered in the industry to get to know everyone and what’s out there. It’s a big industry, but at the same time, it’s SMALL -- you know? You can get to know people, network with them, help them out, treat your vendors well, et cetera I also recommend that everyone get to know themselves and what they want. For me, I have always looked for smaller, more hands-on management companies where they know you personally and where you’re not just another employee. It’s more family oriented. Where you feel like your suggestions and voice is heard -- where they DO listen and implement your suggestions. I found out what I wanted
through my journey and when I looked for opportunities, I paid attention to what made sense to me -- what I wanted out of a management company. When I’ve found the right management company -- I am able and allowed to be successful. Final Observations: Both women were high energy, go-getters. Both started relatively small, and grew their success from there. One went the path of a large management company, and the other went the path of picking smaller management companies with the right opportunities that met her needs. The thing that struck me about BOTH of them is that they both KNEW themselves well -knew what they wanted, knew what they were good at, and knew what they were looking for. I talk to A LOT of people -there are MORE people that are confused about who they are and what they want to do than there are people who KNOW themselves. These women KNEW themselves. This is part of their success. Something not noted in the blog, but I want to mention, is that both Kate & Toni talked extensively about their team and resident strategies. It is clear that both liked working with people, and both women valued working in teams, as well as valued their teams. It is our hope that through our SUCCESS STORIES series, you, the reader, will find new inspirations, new ideas, new ways of becoming successful. Written By: Daisy Nguyen and digested from “Success Stories: Two Apartment Managers Who Started Small & Making A BIG Splash!” (Rent Soda)
Back to the Basics: 5 Tips to Avoid Difficult Situations A Property Management 101 Lesson Catering to the demands of multiple tenants makes property management a tough job. While fielding complaints and handling maintenance, papers get lost and things get overlooked. To help the owners out there get through (and hopefully prevent) some of the more difficult situations, here are our top 5 property management tips (see below). Make sure your management teams are aware of these simple tips.
Security deposits are a huge contention between landlords and tenants, making this one of the most essential property management tips. Understand what you can and cannot collect as a security deposit and whether it needs to be kept in an interest-bearing account. More importantly, at the end of a lease, only make proper, itemized deductions from a security deposit, and return it in a timely manner. Owner Tip No. 4: Regularly Inspect Your Property Remember that you are ultimately liable for what happens on your property even if a dangerous condition is caused by a tenant. Same goes for conditions that make a unit legally uninhabitable. Pop in now and again to make sure common areas are well-maintained and tenants aren't in need of repairs.
Owner Tip No. 1: Write It Down Writing everything down is the number one way to make a owner’s or manager’s job easier. This doesn't only include leases, either. If you need to enter an occupied unit, notify the tenants via writing and keep a copy in a designated folder. Same goes for any other notices or warnings you hand out. It also might be wise to keep notes of any conversations in case of a later misunderstanding.
Owner Tip No. 2: Don't Discriminate Housing discrimination is a big problem in this country, which means it comes with big penalties. A successful housing discrimination suit results in a property owner paying damages, attorneys fees, and court costs.
Written By: Stephanie Rabiner and digested from “Top 5 Landlord Tips: Property Management 101” (FindLaw)
Know the law -- both federal and state. Federal law, governed by the Fair Housing Act, is pretty standard, but state laws vary and may be much broader.
2 Overlooked Crisis Ideas
Property Documentation with Photographs “A picture is worth a 1000 words,” holds true with protecting investments for your owners. Make certain you take first-rate photos prior to move-in, digital photography makes this a simple, effective task. Show the condition of the entire p ro p e r t y i n s i d e a n d o u t . I n c l u d e ; appliances, fixtures, walls, flooring and every room of the property. Create a CD and place it with the tenant or property file, you may also want to have a copy on a back up drive in case of disaster. When a tenant vacates, photograph issues with cleaning and repairs. This provides a decisive manner of determining if money needs to be withheld from the security deposit. Develop a Disaster Plan Weather is unpredictable and brings threats of hurricanes, tornados, severe storms, blizzards, ice storms fires and floods. The key is having a plan in place and be ready just in case. The following are suggestions to consider when developing your property management company’s disaster plan:
Owner Tip No. 5: Understand Local Eviction Law Evictions are the bane of any landlord's existence. One wrong move and the process can be delayed another month. If you want to handle evictions yourself, pay attention to dates, deadlines and notice requirements. Otherwise, call a real estate attorney -- they've got evictions down to a science. Or better yet, hire an eviction service. They will save you in time alone.
Owner Tip No. 3: Properly Handle Security Deposits
the values of an owners property and protect them against money-hungry tenants.
Protecting Property Values Many Property Management Companies often overlook two simple and very important things when managing a property. Both are sure-fire ways to protect
• Do you have a generator for power loss • Do you have a process to communicate with residents and owners • Do you have method to protect your data off site • Do you have current owner and tenant e-mail and cell numbers • Do you have a place on your web site to post updates • Who will answer the phones, monitor electronic mail and be the spokesperson • Who will conduct post disaster inspections CONTINUED ON PAGE 8
July | August | September 2012
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Las Vegas Metro Occupancy Trends June 2011 through May 2012
92% 91% 90% 89% 88%
90.95% 90.70% 90.21% 90.17%
91.02% 90.59% 90.81%
87% 86% July
Source: Spencer Ballif and Jeff Swinger of CB Richard Ellis (Las Vegas) (118,132 Apartments Surveyed in May 2012)
Las Vegas Multifamily Snap Shot
Source: Red Capital Group
MULTIFAMILY HOUSING UPDATE – LAS VEGAS Q1 2012 PAYROLL TRENDS & FORECAST - Certainly due for a good word, Las Vegas got one last year as job growth returned after three consecutive years of loss. Metro establishments created 4,700 jobs for the year, a 0.6% advance. The pace of hiring accelerated through the summer months, peaking in the August to October period when seasonally-adjusted numbers indicate that 16,100 jobs were created. Expressed on a year-over-year basis, payrolls increased at 6,300-job and 11,900-job rates in 3Q and 4Q, respectively. Early 2012 trends were mixed. Year-on-year comparisons were disappointing, rising at just a 3,600-job, 0.5% pace in 1Q12 against weak 1Q11 data. By contrast, seasonally-adjusted numbers were constructive, counting a net gain of 15,500 jobs from January to March, standing as the second strongest quarterly gain recorded since 2005. RCG expects the metro recovery to be sluggish at first. Although there is evidence that casino hotel hiring is accelerating, other measures of leisure tourism activity haven’t turned up yet. We project 4,000 to 8,000 job gains during the rest of 2012 and 2013. ABSORPTION & VACANCY RATE TRENDS - A dab of job growth was all that was needed to bring tenants back into the Las Vegas rental market in force. Property managers leased a net of 1,221 vacant units during 4Q, according to Reis, nearly three times the take in the seasonally stronger third quarter and eight times the 150-unit, 10-year fourth quarter average. Absorption was partially offset by the addition of 454 units to inventory, largely to the Henderson submarket, but occupancy advanced 60 basis points sequentially to 92.7% nonetheless, representing the highest level posted in three years. Northeast was the only submarket to experience a 4Q net tenant loss (-44). Conversely, renters absorbed more than 250 units in the Henderson (350) and North (289) submarkets, producing a 120 bps same-store occupancy gain in the latter. Reis expects the surge in occupancy to continue. The service foresees a 120 bps gain this year, followed by a 70 bps advance in 2013. RCG doesn’t forecast the Las Vegas market, but we do note that Reis’s projection is based on a more optimistic job growth forecast than ours. RENT TRENDS - Leasing agents rediscovered long-lost pricing power in the fourth quarter courtesy of significantly improved tenant demand. Average asking rents increased $5 (0.5%) sequentially to $809, representing only the second quarterly gain in nearly three years and the equal largest since 2Q08. Effective rents also rose $5 (0.6%) to $749, but the advance left rents languishing at 2005 levels. Preliminary first quarter 2012 results indicate that asking rents increased 0.6% December to March. The benefits of higher metro rents varied widely across submarkets. Properties in in-demand North and Henderson recorded 1.5% and 1.7% sequential effective rent advances, respectively. Elsewhere, progress was harder to come by. Four of the remaining seven metro submarkets chalked down further rent declines and the gains were in each instance less than the metro average. Reis expect rent growth to accelerate dramatically once average metro occupancy approaches 95% in 2013 The service foresees growth in the 3.5% to 5.2% range from that year through 2016.
Access Investment Offerings COMMUNITY (UNITS) Pecos Terrace (184)
PER UNIT PRICE
Colliers International / 702.836.3717 Colliers International / 702.836.3717
BROKER / CONTACT INFORMATION
Rainwalk Apartments (105)
ARA Advisors / 702.855.0440
Sunrise View Apartments (45)
NAI Sauter Companies / 702.383.3383
Park Hacienda (28)
Hendricks & Partners / 702.866.6239
Access Recent Transactions CLOSING PRICE
PER UNIT PRICE
Rancho Verde (264)
March 8, 2012
Rancho Verde Apartments LLC
February 7, 2012
Joshua Villas (176)
January 31, 2012
Fremont Villas (138)
January 27, 2012
Judith Villas (144)
January 13, 2012
For additional information and / or broker information on Access Investment Offerings and / or Access Recent Transactions contact Bret Holmes at 702.699.9261.
July | August | September 2012
July | August | September 2012
Protecting Property Values
Pacific Northwest. They both told me that they have to make allowances for credit scores when screening potential residents. In other words, many of these people have lost their homes and sometimes it isn’t their fault.
CONTINUED FROM PAGE 5 •Will each inspector have a digital camera to photograph damage • Do you have an inspection report that can be accessed on line The more prepared you are in advance the less mayhem you will have in a crisis situation. Review disaster plan guidelines with residents at lease signing. Make sure your web site includes emergency instructions for owners to make inquires and residents to register problems. Emergency situations create an influx of calls and emails. Have a plan how you will prioritize catastrophes, make it known the most critical issues take precedence. Be prepared to assist out of area owners with insurance claims. It’s our job as property managers to protect the properties of owners and assist residents in a time of crisis. Create a well developed plan and you will have cooperative owners and residents if there is ever an unfortunate disaster. Written By: Agi Anderson is co-owner of KGB Vision Systems. After nearly 20 years marketing and selling real estate as a Florida real estate broker, Agi teamed up with Karen Gunn-Bardot who manages the largest property management company in Brevard County, Fl with more than 2000 accounts. Agi and Karen compiled all the forms, legal agreements and processes and created KGB Vision Systems. Their consulting firm helps real estate companies launch and grow property management divisions throughout the United States.
Understanding the New Profile of the 21st Century Renter Owners and managers better adapt ... the game has changed for good There are two inter-related trends that will impact the property management business for years to come. The first trend involves the rapidly growing number of Americans who can’t afford to buy a house or have lost their homes in the “Great Mortgage Fiasco”. There are virtually hundreds and 8
hundreds of thousands of families across the nation have been faced with the unseemly choice of giving their house back to the lenders or experiencing the dread of foreclosure. More evidence is mounting that less than half of the foreclosures and REO houses have hit the market yet. That’s correct, more than 50% (and that may be conservative) of the mortgages that have gone into default have been foreclosed on and put up for sale. Then there are the millions of “Generation X and Y” young adults who don’t have the money, credit scores or income to qualify for a home mortgage. Their only option is to rent or live with relatives. The demand for rental housing will be mushrooming in the months ahead. My most reliable sources of information tell me that Housing and Urban Development (HUD) and the Federal Reserve Board are working on some draconian plans to turn thousands of REO houses into rentals as soon as possible. There’s a looming shortage of rental housing. The Good News and the Silver-Lining for Property Owners and Managers Lest I sound negative let me share some anecdotal good news. The new breeds of resident-renters, especially those looking for houses to rent, are people who think like owners, not renters. Recently I interviewed two property managers in the
Many of their homes were desperately “under water” with little hope of ever breaking even. Some were couples and families where one of the wage-earners had lost their job and their income was reduced so drastically that they could no longer afford the cost of owning a home. Yet they think like homeowners, have that pride of ownership mentality, and don’t want to live in rental homes that are in run-down condition. So they actually want to take care of the places that they rent or lease. This doesn’t mean that property managers can let their guard down when it comes to screening applicants to fill their vacancies. Just because applicants look neat and sound responsible doesn’t mean that they are. One of the most important ways to begin the screening process, and before you do a credit investigation, is to carefully observe and evaluate their attitude and manners. As one property manager told me, “I want to try to understand their values, their ethics and their heart from the very first meeting. First impressions are still important” she reminded me. Does this applicant behave courteously? Watch their faces and look into their eyes when they are speaking. Do they act nervous, cagey or evasive when you ask them questions? Does he or she show indications of being difficult to deal with in the future? Did the applicants wipe their feet when stepping into the house? Is their car clean and in good condition? Did the applicant drive up to the rental while smoking? Can you smell smoke or alcohol on their breath while you’re speaking with them? Remember to ask the applicants lots of questions about themselves. Then be a good listener and hear what they have to say. Also ask them what their questions and concerns are. You can learn so much about people and their character by simply letting them ramble on. Oftentimes it helps to pay attention to the details. Don’t minimize an y criticisms or negative comments they make about their last experience as a renter. It’s encouraging to know that the latest wave of potential resident-renters wants to find affordable housing where
9 they can make a life and stay for as long as they need. They’re more motivated than ever to treat rental properties as if it belonged to them. Yet once again, and I can’t stress this enough, it doesn’t suggest we can let down our guard on doing thorough background checks. Hope for the best with applicants, but have both eyes and both ears wide open when it comes to making sure they are responsible and honest. Sometimes we are so anxious to fill vacancies and get a resident paying rent that we cut corners or overlook subtle danger signs. The results can be a nightmare, and it all can be avoided by sticking to time-tested screening and background protocol. It doesn’t mean we should become cynical or suspicious. We should anticipate meeting some very nice people with high enough standards. Yet we must make sure they’re as good as they look and sound.
The reason I stress this point is simple. If you’ve treated your tenants with respect, (who by the way are paying for your retirement and should be the most important people in your life) there is a much lower chance that you will get into a dispute that will undoubtedly cause you stress and loss of funds. Of course, this approach doesn’t always work and sometimes, the tenant-landlord relationship can become tense and things unfortunately can sour. Welcome to real estate! Luckily, because these kinds of things have long been part of the rental business, there’s been plenty of time to develop ways to handle these events. So let me offer some general guidance that could be helpful to your circumstances. Every Situation is Different
Written By: Marc Courtenay and digested from “The New Profile of the 21st Century House Renter” (PropertyManager.com)
There are different state and local laws. Each tenant is different. Each issue presents different circumstances.
What Do You Do If a Tenant Refuses to Vacate?
Only you can decide how to handle your particular situation, including whether you need legal advice. If things do not go well, it may unfortunately cost you a lot of money. They key is to reduce your losses, should a tenant refuse to vacate at the end of the lease.
Breakthrough thoughts for an age old problem
As with all tenant issues, the first way to try to handle this situation is in a fair, reasonable, respectful and professional manner. This will almost always give you the best outcome, even if you do lose some money from the situation.
They are not paying rent because simply do not have the money to pay. They may have contacted you to alert you to this, or they may not be answering your calls. Again, your best chance to mitigate damages is to work with them on a plan to vacate the premises. So … reach out! You will probably never see a dime of the money they owe you, nor what you’ll pay for an unlawful detainer (UD) eviction lawsuit. Make sure you give them that proper legal notice of their lease violation/ failure to pay, as per the local laws. Try to work with them and get them to agree to move out in a reasonable time frame. Suggest that they move in with family or friends. Suggest that this is a way they are helping you reduce your losses. Tell them you will give them a good rental recommendation if they handle this unfortunate situation responsibly. This is where the “treating tenants with respect during their lease” comes in. Hopefully, you have built up good will and they will want to help mitigate or reduce your losses.
Scenario 1: They are paying rent but won’t move ... They are still paying rent but you want them out because you want to renovate, you want to move in, you have an issue with their tenancy that violates the lease, you want to up the rent. Talk to them on the phone first and alert them to the issues. A good approach is to give them extra time on a month-to-month basis so they can find a good place to move to.
It’s just part of the rental business: Many types of situations arise that can cause a tenant to refuse to vacate your property.
Scenario 2: They are broke!
Make sure you comply with all the local tenant notice laws and give them the proper written notice after you’ve discussed it with them. This is critical. Let them know that a written notice is coming. Always try first to negotiate a fair resolution for all parties. This will better ensure that they will move out on a scheduled date, that they’ll leave the property in good shape, and you can move on with your plans for the residence. If they just refuse, we’ll cover unlawful detainers below.
• Potential solution: My attorney, a long-term real estate owner, will meet with the tenants and offer them $750 to move out -- if they do it within a few weeks, leave the place in good shape, and let him show the house during that period. He says it gets the tenant out quickly, gets the house back in close to rental shape, and lets him re-rent the property without delay. And it works! • Bring in a mediator: If you are ticked off at your tenant, it’s still worth trying to negotiate. It’s a lot better then spending twice as much on legal fees, and it drags through court for three months while you are not collecting rent, and they leave the
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place trashed! So if you are too upset to negotiate, get someone who is neutral, like a mediator, to work a deal to get your tenants out. Relations Deteriorating, Eviction Needed If they just won’t leave, filing a UD eviction lawsuit may be the only option -- just make sure you gave the proper legal notices from the start of the process, per above, so you aren’t slowed down in a UD suit. Cost and time frames vary by state, so do some research. Once you file, they will be served notice, but still offer and negotiate to drop the lawsuit and spare their credit report if they move out. The longer they stay, the more you lose regardless. It’s going to test your ability to stay cool and make good decisions, but getting them out quickly so you can re-rent the property should by far and away give you the best outcome. If you are into the rental property game, you’ll find that dealing with tenants in financial trouble is one of the least enjoyable parts of the business. But it is inevitable, so try to make the best of it -for a good solution for all parties. Written By: Leonard Baron, MBA, CPA and digested from “What Do You Do If a Tenant Refuses to Vacate?” (Zillow.com)
4 Really Important Things Property Managers Need to Know (But Might Not!) Another Property Management 101 Lesson You think these are things everyone knows ... well, think again. 1) Security Deposits Security deposit limits are legislated by the state, and can vary widely. For instance, states such as Illinois and Georgia impose no limit to the amount of security deposit a landlord can require a potential tenant to pay. Other states, such as California impose a 2-month’s rent limit for 10
unfurnished apartments, and a 3-month’s rent limit for furnished apartments. On a side note, New Hampshire’s limit is 1-month’s rent, or $100.00, whichever is greater. 2) Do You know the Differences between a Rental Agreement and a Lease Agreement? There is a major difference between a rental agreement and a lease agreement. Rental agreements are usually used for a shorter time frame, typically one month, and are automatically renewed each month. During that time, either party can choose to terminate the rental agreement with proper notice which is typically 30 days. O n e a d v a n t a g e o f u s i n g a re n t a l agreement is that owners/managers can choose to increase rental amounts or change the terms of the rental agreement at any time. Lease agreements are usually used longer term rent agreements (typically one-year). During that time the lease terms cannot be modified, nor rent increased. However, property owners do maintain the ability to terminate the lease if the tenant does not abide by the original terms of the lease. Each lease type has it advantages and disadvantages, depending on your market area, your typical renter (and if you spot any potential red flags), and the local economy.
3) Lead-Based Paint – You Must Disclose It Landlords and property managers must disclose any known lead-based paint that may be found on the property. This law, entitled Title X, applies to all rental properties built prior to 1978. It’s important that this notice be signed and kept with other tenant records, as a hefty fine can be imposed (up to $10,000) on any property owner/landlord that does not properly comply with this requirement. 4) Know the Notice Requirements For Your State Notice requirements to enter an occupied unit or rental home vary from state to state. Many states contain a 24-hour notice on their statute, but a surprising number of states don’t list any entry requirements at all. These states include AK, CO, GA, ID, IL, LA, MD, MI, MS, MO, NJ, NY, NC, SD, TX, WV, and WY. Of course, establishing your own minimum entry notice requirements can prove beneficial to both your operation, and your tenant’s well-being, so establishing notice requirement guidelines, and communicating these to your tenants upon completion of a rental agreement will eliminate many potential issues down the road. Written By: Mary Girsch-Bock and digested from “4 Key Things Property Managers Need to Know (But Might Not!)” (PropertyManager.com)
LOCALEFFECTS Forecast Jobs Uptick Expected to Stoke Apartment Demand Improving apartment operations, favorable pricing draw interest from investors Apartment operations in Las Vegas will improve as job growth strengthens this year, a quarterly market report from Marcus & Millichap Real Estate Investment Services said. Employers are forecast to add 12,000 jobs during the year, a 1.5 percent increase in payrolls, compared with a 1.1 percent gain last year. While nearly all employment sectors are expected to add jobs this year, the bellwether leisure and hospitality industry will lead the way with 7,400 new employees, the second-quarter report said. As unemployed workers who moved in with family or friends over the past few years re-enter the workforce, it enables the "debundling" of combined households, which will push demand for apartments, said John Sebree, director of Marcus & Millichap's national multihousing group. The typically lower-paying hospitality jobs are a strong driver of apartment demand, and greater absorption has supported rent increases. Asking rents appreciated 1.4 percent to $806 a month in the first quarter, while effective rents -- taking out concessions -climbed 1.9 percent to $756 a month, Marcus & Millichap found. They're projected to reach $822 and $771 a month, respectively, by year's end.
compared with a 57 percent drop in the previous year. Real estate investors Robert Fox and Daniel Gaeta were able to buy a 10-unit downtown apartment complex for $165,000 through an online auction. They're going to put $30,000 into remodeling the units, which will rent for $550 to $650 a month. "I'm perfectly happy investing in the downtown Las Vegas area and in fact, I would prefer to do that as opposed to other areas," Fox said. The downtown submarket is becoming more vibrant with the opening of The Smith Center for the Performing Arts, the new Las Vegas City Hall and plans by Zappos.com to move its headquarters to the old City Hall. CB Richard Ellis multifamily broker Spencer Ballif reported that overall Las Vegas apartment vacancy of 9.41 percent in April, up from 8.97 percent in March. He's showing 6.75 percent vacancy for 40,331 Class A units, or high-end apartments; 9.22 percent vacancy for 47,349 Class B units; and 13.23 percent vacancy for 30,542 Class C units. Written By: Hubble Smith and digested from â€œForecast Jobs Uptick Expected to Stoke Apartment Demandâ€? (Las Vegas Business Press)
Will Zappoâ€™s Work for Downtown Housing? Zappos will certainly spur demand for more downtown housing, said Gary Banner, a multifamily broker for Colliers International.
"Downtown will be one of the first submarkets in Las Vegas to experience true population growth and positive absorption of available rental units," Banner said. "The smart-money people are now seeking development opportunities and have quietly begun acquiring multifamily parcels for future development." The most recent application for multifamily development came in September for 330 units near Casino Center Drive and Coolidge Avenue, said Flinn Fagg, director of planning development services for the city of Las Vegas. The city has about 2,900 approved downtown housing units on the books, but none of the projects has broken ground, he said. Barnet Lieberman, a New York investor who acquired five blocks downtown for a live-work project, has 1,100 units approved at Charleston and Fourth Street. Another 700 units are planned at Gass Avenue and First Street; 352 units at Fremont and Eighth; 296 units at Bonanza Road and Main Street; and 130 units at Hoover and First. Other than high-rise condos that reverted to rentals, not much residential development has taken place downtown in the past decade, said Spence Ballif, multifamily specialist for CB Richard Ellis. It's unlikely that there will be much new construction beyond the units already permitted, he said. "The hard part is to buy land down there. It's still expensive," Ballif said. "If you're doing a mid-rise with 50 units an acre, it's really expensive. You can't do garden-style because the land's not there and it's not the highest and best use."
Improving apartment operations and favorable pricing have attracted both institutional and mom and pop investors to Las Vegas. The number of transactions more than doubled last year, and the median price rose 4 percent to $28,100 a unit in 2011,
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July | August | September 2012
The Secret is in the Marketing, Yet No One Tells Your Community’s Story Advanced Management Group, a Las Vegas owned an operated management company, has had massive growth over the past 4 years within its multifamily division. Despite the growth there is very little complacency within its leadership group. While everyone has “cut back” its staff and eliminated its marketing divisions Advanced Management Group did the unthinkable, they hired a Marketing Director. Recently CAM certified, Roy D. Becker joins this rapidly growing company to increase it properties awareness in the marketplace. Yes, we did not say property management company awareness ... we said properties. Ask yourself, is your current property management company up to completing this simple task for you ... marketing your community properly? If not, they may not be the right property management company for you. They probably are not telling your story. They more than likely are just going through the motions, day-in and day-out. We attract new residents, we retain existing residents, we don’t make excuses other property management companies make. We just make “it” happen. We know we are right for any asset. We are not only Advanced in our thinking, we are Advancing our clients thinking to levels never before seen in Las Vegas. Just ask them. We care about our assets and so do our owners. Why? Because we think like owners and give you the attention most property management companies can’t ... don’t you want your asset to be Advanced? Get the most Advanced leadership in the industry today, contact Advanced Management Group directly at 702.699.9261. In a market that changes daily, sometimes hourly, your asset can’t afford anything less than being Advanced.
For information, article consideration and featured columns ACCESSLASVEGAS can be contacted at 702.699.9261. The publisher of this newsletter is:
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Access Las Vegas - Quarter 3 2012