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Professional Publishing, Inc www.TheLandlordTimes.com

METRO

PORTLAND & VANCOUVER

Vol. 17 Issue 1

Published 17 Years

January 2013

MONTHLY CIRCULATION TO MORE THAN 20,000 IN PORTLAND/VANCOUVER APARTMENT OWNERS, PROPERTY MANAGERS, ON-SITE & MAINTENANCE PERSONNEL Published in association with: METRO Multifamily Housing Association; Rental Housing Association of Oregon; IREM & Clark County Rental Association

Portland, Oregon Multifamily Housing Update 3Q12 Payroll Trends and Forecast In spite of a weak September print, Portland payrolls increased at a 17,000-job, 1.7% annual rate during the third quarter, up from 2Q’s 15,100job, 1.5% performance. Slower hiring in the nonprofessional components of the business services sector and the education, health care and hospitality services sectors was primarily responsible for the soft September report. Employment in the foregoing sectors declined -700 jobs year-on year, down from a 6,000-job advance in June.

Seasonally-adjusted data were largely consistent. After creating 13,400 net jobs from April to August, Portland payrolls plummeted -6,100 jobs in September, the worst single month since 2009. The RCR payroll model forecasts job growth rates ranging from 1.2% to 2.0% over the next five years. By the numbers, the metro area should add about 14,000 payroll positions in 2012, followed by an 11,400-job advance next year. Conditions are favorable for faster expansion after 2015 with annual net job creation returning to levels last observed between 2005 and 2007.

3Q12 Absorption and Vacancy Rate Trends Preliminary Reis data show Portland apartment occupancy holding at a lofty 97.8% average in 3Q12 (ranking #2 among the RED 50 after New York), unchanged quarter-toquarter and up 100 basis points yearover-year. Axiometrics (AXM) surveys of larger, professionally managed properties uncovered a moderately lower metro occupancy rate. Same store occupancy averaged 95.3%, down 10 bps sequentially and unchanged y-o-y. The subset delivContinued on page 7

Investors Anticipate Opportunities in Commercial Real Estate across All Major Property Sectors in 2013, According to Latest PwC Real Estate Investor Survey™ Greater Investor Optimism in Retail, Especially for National Regional Malls; Technology Office Markets and Warehouse Sector Showed Steepest Cap Rate Declines in Q4 As 2012 drew to a close and the industry's recovery progresses, commercial real estate offered varied investment opportunities across each major sector and a diverse number of cities, even though macroeconomic uncertainties still exist, such as the fiscal cliff, according to the fourth quarter 2012 findings of the PwC Real Estate Investor Survey. Continued on page 5 Page 3

Apartment Insurance Costs Increase for the Second Consecutive Year According to National Multi Housing Council Report The cost to insure apartments increased by 9.5 percent between 2011 and 2012, marking the second consecutive year of rising insurance expenditures according to the National Multi Housing Council’s (NMHC) Apartment Cost of Risk Survey (ACORS). The survey covers data from more than one million apartment units, the largest number of units covered by the survey to date, operated by 55 apartment firms, Professional Publishing, Inc PO Box 30327 Portland, OR 972943327

tracking three principal components of insurance premiums: property, general liability and workers’ compensation. The 9.5 percent increase in 2012 came entirely from property risk costs, with general liability and workers’ compensation costs staying virtually unchanged from 2011. “Respondents noted that their greatest challenges in 2012 came from obtaining adequate and affordable coverage in traditional catastrophe

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risk zones. In fact, catastrophe exposed properties were the major drivers of the increase in premium costs and higher deductibles,” said Rick Haughey, NMHC’s Vice President of Property Operations and Technology. “With U.S. catastrophe losses in 2012 expected to be moderately higher than average due to Hurricane Sandy, the outlook for insurance costs in 2013 remains uncertain. This uncertainty mitigates what would be downward pressure on 2013 catastrophe rates due to strong underwriting capacity for primary insurers and reinsurers.” Additional key findings: The mean (nonweighted) average for the total cost of risk increased 9.5 Continued on page 3

PRESIDENT'S MESSAGE Page 6

PRESIDENT'S MESSAGE Page 10 Chapter 29 Institute of Real Estate Management

HOW TO GET STARTED IN REAL ESTATE INVESTING Page 14

Clark County Rental Association

PRESIDENT'S MESSAGE


METRO MULTIFAMILY HOUSING ASSOCIATION President • Jeff Denson Past President • Chris Hermanski

JEFF DENSON MMHA

Vice President • Paul Hoevet

Secretary • Pam McKenna

President's Message

President

Happy New Year! It is with both honor and excitement that I will represent MMHA as President in 2013. I would like to thank our Immediate Past President, Jeff Denson, for his time and effort that he gave the association this past year. I would also like to acknowledge all of our Founders, Past Presidents, and Members of the Board, Committee Chairs, and Committee members. If it was not for all of your commitment, MMHA would not be the number one rental housing resource that it is today.

Thank you to our departing Board Members: Cindy Meek of Holland Residential, Cliff Hockley of Bluestone and Hockley Real Estate Services, and Korah Young of GSL Properties, Inc. It has been a pleasure working with all of you this past year. Your service to the Association is appreciated. Please join me in welcoming our new Board Members: Maureen McNabb of Capital Property Management Services, Inc, Dave Bachman of Cascade Management, Inc, and Jay Olson of Prometheus Real Estate Group. I look forward to sharing many accomplishments with you in 2013.

MMHA 2013 Events: MARK YOUR CALENDAR!

January 23, 2013 9:00 AM - 2:00 PM ELEVATE: Renewals & Expirations - Portland, OR January 30, 2013 8:00 AM - 12:00 PM ELEVATE: Maintenance and Customer Service - Portland, OR

2013 promises to be a very productive year for the Association. Our industry is doing extremely well and our rental housing market continues to remain one of the strongest in the Nation. As the rental housing market continues to grow, so will MMHA. Some of the growth initiatives the Association will be working on this year include continuing to increase all of our advocacy efforts to ensure our voice is heard in the 2013 Oregon Legislative Session, a focus on membership growth through continued expansion of our statewide Council Structure and to develop and implement a plan to encourage up and coming Industry Leaders to partici-

Treasurer • Gary Fisher 921 S.W. Washington Suite 772 Portland, OR 97205 (503) 226-4533 (503) 228-8303 fax

pate in the Association. As we enter 2013, MMHA must continue to capitalize on the strength and momentum of the Industry it serves. The Association has a well laid foundation and is poised for yet another successful year. I look forward to meeting many of you throughout the year. Your involvement with your Association will help MMHA to continue its growth and remain the number one rental housing resource.

January 31, 2013 8:00 AM - 12:00 PM ELEVATE: Basic Appliance Repair & Diagnosis - Portland, OR

visit www.metromultifamily.com for more dates

Make This a Green 2013 A healthy and sustainable multifamily community can save money, while attracting residents. The City of Portland can help: ƒ Reduce waste. ƒ Increase recycling. ƒ Conserve water and energy. ƒ Provide free resources and answer questions.

Contact us 503-823-7224 | multifamily@portlandoregon.gov www.portlandoregon.gov/bps/multifamily 2

The Landlord Times - Metro • January 2013


...continued from front page

percent in 2012, driven by an increase in property cost of risk, which accounts for 70 percent of the average apartment firm’s total cost of risk. The mean average property cost of risk increased by 10.4 percent and average per occurrence deductibles increased to $118,000 from the unusually low average deductible of $66,000 in 2011. The mean average general liability cost of risk remained virtually unchanged in 2012 after a 9 percent increase last year. The mean average workers’ compensation cost of risk in 2012 also remained similar to 2011 at $1,038 per full-time employee. Property terrorism insurance takeup rates increased to 91 percent in 2012, compared to 85 percent in 2011. A slight decrease in property terrorism insurance rates was also reported. About the Survey The ACORS contains information about property, general liability, umbrella, workers compensation, D & O, professional liability, employment practices,

environmental, and newly added insurance lines including terrorism and cyber liability. Fifty-five firms representing over one million apartment units supplied data on rates, deductibles, retentions, key coverage terms, claims history and more for the key lines of coverage. Firms that completed the survey can receive exclusive access to the full data set, along with the report analysis by Conning Research and Consulting on behalf of NMHC. Non-participating NMHC members can download an executive summary and a PowerPoint summarizing the results at www.nmhc.org/ goto/61017. Based in Washington, DC, NMHC is a national association representing the interests of the larger and most prominent apartment firms in the U.S. NMHC’s members are the principal officers of firms engaged in all aspects of the apartment industry, including owners, developers, managers and financiers. One third of Americans rent their housing, and more than 14 percent live in a rental apartment. For more information, contact NMHC at 202-974-2300, e-mail the Council at info@nmhc.org, or visit NMHC’s web site at www.nmhc.org.

About the Form: The Move-In Accounting Form provides a template for detailed financial documentation of the tenancy than what was previously part of the Rental Agreement. The form provides ample space to record all deposits, rents, specials and charges to customize and fit the unique needs of each property. The Rental Agreement still has basic tenancy accounting of rents and deposits, however the Move-In Accounting form is designed to easily display and record multiple deposit types, rent payments, concession strategies and payment plans. OREGON

MOVE-IN ACCOUNTING DATE __________________________________________ PROPERTY NAME / NUMBER ___________________________________________________________________________________________________________________________________________________________________ RESIDENT NAME(S) ___________________________________________________________________________

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UNIT NUMBER ___________________________________ STREET ADDRESS ___________________________________________________________________________________________________________________________________________________________________________ CITY ___________________________________________________________________________________________________________________________________________________ STATE ___________________________________ ZIP _____________________________________________________________

RENT/CHARGES

DEPOSITS

PRO-RATE METHOD: c A c B c C (See #1 on page 2 of Rental Agreement)

c IF CHECKED, DEPOSITS WILL BE HELD BY OWNER

FIRST RENT PAYMENT

SECURITY DEPOSIT

SECOND RENT PAYMENT

$________________________

DUE ___________________________

FROM ___________________________ THRU ___________________________

____________________________________________________________________________________

$________________________

____________________________________________________________________________________

$________________________

TOTAL ADDITIONAL DEPOSITS

$___________

$___________

TOTAL RENT DUE AT MOVE-IN OTHER MONTHLY CHARGES

$___________

(REFUNDABLE)

ADDITIONAL DEPOSITS

SPECIALS/ADJUSTMENTS

(PRO-RATED IF PARTIAL MONTH)

____________________________________________________________________________________

$________________________

____________________________________________________________________________________

$________________________

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$________________________

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$________________________

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$________________________

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$________________________

____________________________________________________________________________________

$________________________

TOTAL SPECIALS/ADJUSTMENTS

$___________

____________________________________________________________________________________

$________________________

TOTAL DEPOSITS CHARGED

$___________

TOTAL OTHER MONTHLY CHARGES

$___________

____________________________________________________

– $________________________

PRIOR PAYMENT(S)

SPECIALS/ADJUSTMENTS

DEPOSITS PAID AT MOVE-IN – $________________________

____________________________________________________________________________________

$________________________

____________________________________________________________________________________

$________________________

____________________________________________________________________________________

$________________________

____________________________________________________________________________________

$________________________

TOTAL SPECIALS/ADJUSTMENTS

$___________

TOTAL RENT/CHARGES AMOUNT DUE

$___________

PRIOR PAYMENT(S)

____________________________________________________

BALANCE OF DEPOSITS DUE

TOTAL RENT/CHARGES + DEPOSITS CHARGED

$___________

TOTAL PAID

$___________

REMAINING BALANCE DUE

$___________

– $________________________

$___________

RENT/CHARGES BALANCE DUE

X

_____________________________________________________________________________________

X

RESIDENT

X

RESIDENT

_____________________________________________________________________________________

RESIDENT

$___________

TOTALS

TOTAL CHARGES PAID AT MOVE-IN – $________________________

_____________________________________________________________________________________

www.TheLandlordTimes.com

$________________________

DUE ___________________________

FROM ___________________________ THRU ___________________________

X

_____________________________

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_____________________________________________________________________________________

DATE

DATE

DATE

X X X

RESIDENT

RESIDENT

RESIDENT

_____________________________________________________________________________________

ON SITE

RESIDENT

OWNER/AGENT

Form M004 OR Copyright © 2011 Metro Multifamily Housing Association.® NOT TO BE REPRODUCED WITHOUT WRITTEN PERMISSION. Revised 9/13/11.

Apartment

M004 OR Move-In Accounting Form

_____________________________

DATE

_____________________________

DATE

_____________________________

DATE

_____________________________

DATE

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Dear Maintenance Men: By Jerry L'Ecuyer & Frank Alvarez Dear Maintenance Men: I have a conundrum! My roof is in good shape, however I have a mystery leak or to be more precise I have a moving mystery leak. In other words, when it rains, the roof does not always leak in the same place. This is driving me crazy. Sam Dear Sam: A good roofing troubleshooter is worth their weight in gold. Here at Dear Maintenance Men, we love a good mystery! First things first; have your building inspected by a reputable roofing company or roofing inspector. The inspection will eliminate non-issues and help point you in the right direction and may even solve the leak mystery. The amount and intensity of rain will contribute too many roof leak mysteries. Often a light rain will cause a leak in an area that would not leak in a heavy or prolonged rainstorm. The reason is material swell. A light rain is not “wet” enough to swell surrounding wood or roofing material and cut off the leak. Mind you, this is still a leak that needs fixing. The deep penetration of water in a heavy or wind driven rainstorm will cause a leak by sheer volume that would not have leaked in a light rainstorm. Roof flashings are a common source of leaks that drip far from the

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source of the water intrusion. A roof flashing can be found were the roof material meets a transition area such as a chimney, a wall, a pipe or other structure. Shifted or lifted composite shingles or roof tiles will cause water to come into contact with the felt paper under the roofing material and a break in the felt or roofing paper will cause a leak. Debris on the roof, valley, top caps, gutters etc can form water dams and cause leaks. Watch overhanging trees as well as they can damage the roof and cause leaks. Dear Maintenance Men: I have a Carbon Monoxide Detector question. The building I manage is an “all-electric” building with attached garages. Do I need to install a CO detector in each unit? Dan Dear Dan: I don’t think your situation is all that uncommon. We have run into this install problem before. We consulted with the Orange County Fire Authority and Randy Lindenberg from National Gas Consulting in Orange County. Because every building is unique in its construction and design, a proper assessment will need to be made based on the location of any gas-operated appliance in an all-electric building. The

general rule is; if an all-electric building has a gas-operated appliance and shares a common wall with the residential units, Carbon Monoxide or CO detectors will be required. For example: You will need to install CO detectors in your all-electric building if you have attached enclosed garages. CO detectors will also be required if the building has an attached laundry room with a gas water heater or gas dryer. We also recommend installing a CO detector in the laundry rooms that contain a gas appliance. Keep in mind; automobiles, wood fireplaces, barbecues and any other combustible material can cause carbon monoxide. Owning an “all-electric” building does not necessarily eliminate the need for CO detectors. Dear Maintenance Men: I hear a soft pisssst sound in the walls. My husband says it might be a gas leak, I think it is a water leak. Now to complicate things, we don’t smell gas and we don’t see any water. Could this sound be anything else? Julia Dear Julia: You have our condolences, but it could be worse, at least it is not a slab leak! The chances of the sound being a gas leak are slim as the gas is under low

pressure. The chance of smelling rotten eggs on the other hand would be high. Our guess would be your issue is a water leak. The possible reason you are not seeing any water evidence is that the leak is very small and the water is atomizing as it is leaving the pipe. The atomizing action is aided by the fact that the pipe is most likely a hot water pipe and the water is turning to steam. Because the pipe is making noise, this should help in locating the leak. Once you locate the source of the leak, open the wall large enough to complete the repairs and leave the wall open for a few days or until all the moisture is gone. QUESTIONS? QUESTIONS? QUESTIONS? We need more Maintenance Questions!!! To see your maintenance question in the “Dear Maintenance Men:” column, please send submission to: Questions@ BuffaloMaintenance.com Please call: Buffalo Maintenance, Inc for maintenance work or consultation. JLE Property Management, Inc for management service or consultation Frankie Alvarez at 714 956-8371 Jerry L’Ecuyer at 714 778-0480 CA contractor lic: #797645, EPA Real Estate lic. #: 01216720 Certified Renovation Company Websites: www.BuffaloMaintenance. com & www.ContactJLE.com

The Landlord Times - Metro • January 2013


Investors

...continued from front page

According to the report, investors in the office sector are showing a greater acceptance for slower growth and less apprehension about moving further out on the risk spectrum. Although core trophy assets remain the preferred target of both domestic and international investors, aggressive pricing and improved fundamentals have resulted in certain investors looking to buy either core in strong secondary markets or lessthan-core in primary markets. "The commercial real estate industry continues to show its investment durability as assets command attractive spreads over fixed-income investments and offer more stability than stocks, while most property sectors continue to post occupancy gains and rental rate growth," said Mitch Roschelle , partner, U.S. real estate advisory practice leader, PwC. "Foreign investors are particularly bullish on U.S. commercial real estate as they look for stable investments during uncertain times abroad. In 2013, Survey respondents expect to see an uptick in sales activity as property owners cull portfolios to take advantage of the low cap rate environment. And as investment capital continues its trend of matriculating beyond just apartments, cap rates are expected to compress across the entire asset class."

decline in overall capitalization (cap) rates has extended to the retail sector. According to the fourth quarter Survey findings, investors remain optimistic about investing in the national regional mall market despite a slow-moving economic recovery and a challenging retail landscape. Buying opportunities remain few and far between, especially for Class-A+ and Class-A malls, with huge barriers to entry making highquality malls thrive, which also keeps owners from selling them. According to surveyed participants, yields have compressed too much for well-leased strip shopping centers that some are considering buying value-add in great locations due to a lack of new supply. For power centers, challenges mainly stem from rising Internet retail sales, merchant consolidations, and an inability to easily shrink into urban streetscapes. In the fourth quarter of 2012, the average overall cap rate, the initial

return anticipated on an acquisition and a reflection of an investment's anticipated ownership risk, decreased in 24 of the surveyed markets, held steady in seven, and increased in just one of them. The overall cap rate shifts remain irregular with tech office markets (i.e. San Francisco) and the warehouse sector both showing some of the steepest declines. The national warehouse market's cap rate compression, where the average overall cap rate declined 40 basis points, reflects the optimistic outlook held by most surveyed investors. The average overall cap rate declined again in the Survey's national Central Business District (CBD) office market, marking nearly ten instances of quarterly declines since the first quarter of 2010. Moreover, the current average of 6.70% is the lowest reported for this market since the second quarter of 2008. Due to this cap rate compression, some Survey participants are taking time to identify CBD assets to sell – while

others remain in search of select buying opportunities. In the apartment sector, surveyed participants believe market conditions continue to favor sellers, but some investors sense that rents may have peaked for now and that certain markets have become overpriced. In addition, investors remain attentive to the near-term impact of new construction. Consequently, this market's average initial-year market rent change rate dipped for the second consecutive quarter, suggesting less upside in this market. Investor Outlook Through 2015 The PwC Real Estate Barometer included in the Survey tracks the anticipated performances of the four main property sectors (office, retail, industrial, and multifamily) from 2012 to 2015. For the office sector, even though the sector's recovery as a whole lags behind other commerContinued on page 15

Investors Becoming More Comfortable with Buying in the Retail Sector The above chart illustrates that the

OREGON RENTAL OWNERS JOIN US TODAY!

BENEFITS YOU RECEIVE AS A MEMBER OF RHAGP Your voice heard: State and local legislative representation. Education: We offer a wide variety of monthly training programs, members get a significant discount on classes. Receive a monthly subscription to the Update: The Update,our newsletter, contains up-to-date information on landlord/tenant issues and legislative information. Substantial discount on rental forms: 60% off all rental forms and books for members. Fully staffed office: Our friendly office staff are here 9am-5pm, Mon-Fri happy to help you with your property management needs. Savings on Tenant Screening: Report charges are automatically posted to your interest free account.

RHA

RENTAL HOUSING ASSOCIATION Of Greater Portland www.rhagp.org

10520 NE Weidler, Portland, OR 97220 P: 503-254-4723 F: 503-254-4821 The Landlord Times - Metro • January 2013

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RENTAL HOUSING ASSOCIATION OF GREATER PORTLAND

President • Elizabeth Carpenter Past President • Phil Owen Vice President • Robin Lashbaugh Secretary • Lynne Whitney Treasurer • Jon Moon Office Manager • Alita Dougherty Member Services • Cari Pierce Bookkeeper • Pam Van Loon

10520 NE Weidler Portland, OR 97220 (503) 254-4723 • fax (503) 254-4821 info@rhagp.org http://www.rhagp.org

It is my pleasure, as the newly installed President of RHAGP, to extend my thanks to Phil Owen for his three years of service in the office of President. Phil goes above and beyond in his support of landlords and their concerns. I would like to thank him for his mentoring during my term of President Elect this past year. I look forward to providing information concerning the Rental Housing Community, to Landlords throughout the State of Oregon, as well as those within the Portland Metro area. RHAGP has continually grown and is progressively assisting landlords in our state. As your chair of the Membership Committee for the last 2 years, it has been my pleasure to see

President' s Message

our association grow to over 1700 members. We have the largest membership of any rental housing association in Oregon! We are continually improving, with newly added benefits for our members. From our up-todate attorney written forms, to our presence in the State legislation (thanks to our lobbyist Cindy Roberts), the RHAGP represents and protects landlords well. During this Legislation year, Cindy will be keeping us informed thru out the session. Look for future updates within the RHAGP Newsletter and on our website, www. rhagp.org. Some of the new changes for our members this year include reducing our membership dues for landlords with 1-4 units to $99.00. We are rolling

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out our Premium Membership that includes an online resource library with white papers, videos and special discounts from our vendor members, as well as access to basic accounting software and unlimited use of online forms. The Premium Membership is ever evolving, and will be, in time, a robust resource for landlords to find relevant answers to their questions. Our classes have expanded to include New Membership Orientation and Mentoring Meetings on the last Thursday of each month. Please join us by calling the office and reserving your spot! Additionally, our education committee is launching lunch time sessions for our working property managers and owners this year; keep your eye out for dates and times. We will release two (2) publications this year: The forms book and our new law book. Premium Members will receive free, ongoing updates to the law book. We at RHAGP are always looking for new and improved ideas to bring information to the Landlords of Oregon. As a nonprofit organization we welcome members to join our board meeting and committees. You can make a difference in keeping our organization strong.

PHIL OWEN RHAGP President

Committees currently seeking additional members: Dinner Program Education Electronic Media Government Affairs Marketing Membership Update Newsletter This past year was a one of planning and strategy for RHAGP. This year we look forward to implementing those ideas and new programs for your association. The Rental Housing Community is built upon relationship with landlords, tenants, associations and service providers. We are continually looking to expand the list of quality vendors/affiliate members. Please contact the office with any suggestions you may have for improvements to the Vendor/Affiliate Marketing Program, as well as referrals for future members. I’d like to make the RHAGP your first stop for information concerning your Rental, your tenants and all your landlord needs. Here’s to a happy and successful 2013! ~Elizabeth Carpenter, President

The Landlord Times - Metro • January 2013


Portland ...continued from front page ered since 2009 was 94.9% occupied in September, up 320 bps year-onyear. Occupancy averaged 95.3% or higher in every AXM submarket. Northeast recorded the highest occu-

pancy rate (97.6%), up 70 bps y-o-y and 80 bps sequentially, followed closely by Northwest (96.0%). Vancouver submarket chalked down the largest y-o-y advance, rising 150 bps to 95.3%, RCR models anticipate that metro occupancy will be nearly unchanged through 2013 and remain above 97% through 2015. The Rose City should maintain its #2 RED 50 ranking for average occupancy for the duration of the forecast period. 3Q12 Rent Trends Reis report that average effective rent increased $10 (1.2%) sequentially and $42 (5.4%) year-overyear to $841,

compared to 1.3% and 4.9% gains recorded during the second quarter. AXM same store data show concession costs plunged $3.05 (–34%), propelling effective rents 1.7% higher sequentially and 4.3% year-over-year. Infill submarkets posted the strongest sequential gains. Northwest and Northeast Portland enjoyed the fastest growth in the AXM series as effective rents surged 4.1% and 3.0%, respectively, quarterto- quarter. East Gresham submarket, where rents are lowest in the Portland area, also reported constructive growth trends. Gresham rents increased $16 ( 2.2%) quarter-to-quarter to $779.

RCR models project a slightly slower 5.0% y-o-y advance for 4Q12, as the year before comparisons become more challenging. Although further slowing is likely through the forecast period rent growth is expected to exceed the rate of inflation throughout. The model foresees annual gains of 3.3% to 3.5% in each year through 2016. 3Q12 Property Markets and Total Returns Sales of professionally managed apartment properties gained momentum over the summer after a quiet Continued on page 9

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Q: I know I should probably follow up more on my guest cards and also call people who make appointments and don’t show up, but calling people back makes me feel like I’m “bugging them.” If they’re really interested, won’t they just come back or call me? It does seem “logical” that a person interested in your community will just naturally get back in touch with you. However, there are a multitude of options out there right now. Besides,

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in their place and think about all the decisions they have to make as a result of their move. If you have an apartment at your community that will work for them and you are sincerely interested in meeting their needs, why wouldn’t you follow up with them? Of course if all you care about is just renting an apartment and not the person who will be living in it, then you’re right: You would “just be bugging them.” People can recognize a phony a mile away. On the other hand, people are also pretty good at detecting when someone sincerely cares about them and has their best interests at heart. The follow up work you do will come off as a true expression of your desire to meet the needs of your prospective renters, if you genuinely care about them. If you have a question or concern that you would like to see addressed next month, please ASK THE SECRET SHOPPER by making contact via e-mail. Your questions, comments and suggestions are ALWAYS welcome! ASK THE SECRET SHOPPER Provided by: SHOPTALK SERVICE EVALUATIONS Phone: 425-424-8870 E-mail: joyce@shoptalkservice.com Web site: www.shoptalkservice.com Copyright © Shoptalk Service Evaluations

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Metro Apartment 2008 The Landlord TimesManager - Metro •• October January 2013


Portland ...continued from page 7 spring. A total of six properties valued at $5 million or more exchanged hands during the third quarter for total proceeds of $121mm. This compares to three sales for aggregate cost of $83.2mm during 2Q12. Traded units were valued at an average price of $156,298 during 3Q12, up from a $108,409 mean during the prior quarter. August sales of two trophy properties helped boost the price per door metric. A Downtown loft conversion transacted for $200,495 per unit, representing a 75% increase from the previous sale in 2008. Likewise, a stick-built Lloyd District 5-story

building exchanged hands at a $240,718 per unit price, representing 30% capital appreciation since the last trade was consummated in January 2010. Trophy cap rates were in the low4% – to low-5% range, representing a rough 50 bps discount to Seattle,. Using a 5.3% generic cap rate, RCR estimate investors should expect to achieve a 7.3% annual total return, ranking 23rd among the R46. The information contained in this report was prepared for general information purposes only and is not intended as legal, tax, accounting or financial advice,

or recommendations to buy or sell currencies or securities or to engage in any specific transactions. Information has been gathered from third party sources and has not been independently verified or accepted by RED CAPITAL GROUP. RED makes no representations or warranties as to the accuracy or completeness of the information, assumptions, analyses or conclusions presented in the report. RED cannot be held responsible for any errors or misrepresentations contained in the report or in the information gathered from third party sources. Under no circumstances should any information contained herein be used or considered as an offer or a solicitation of an offer to partici-

pate in any particular transaction or strategy. Any reliance upon this information is solely and exclusively at your own risk. Please consult your own counsel, accountant or other advisor regarding your specific situation. Any views expressed herein are subject to change without notice due to market conditions and other factors.

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1) Rental property. This is one of those rare real estate investments where you can make money even if you pay top dollar for the property. The reason is you are going to hold onto this property for the long term. You're only requirement is the property generate a positive cash flow. This means after you sum up all of your expenses on the property like financing cost, taxes, insurance and a vacancy rate, the amount you are collecting in rent surpasses this figure. This is one of the classic "get rich slow" methods of real estate investing. You are making a small amount of money each month from the property in rental income, and you are also slowly building up equity in the property over time as you pay down the mortgage.

the price will come up once construction is complete. I have known investors who have purchased several condo units in a facility being built and put $5,000 down on each unit as a down payment. Then before the property was even constructed "flipped" their contract to an end buyer who was willing to pay them 4 to 5 times their down payment just to get in on the deal. The problem with this type of investing is it normally only works when a market is going up regularly. In a down market like we are experiencing these types of deals are much harder to find but they are still out there. There are still part of the country that are very desirable to live in and are experiencing market growth.

2) Pre-construction investment. This is also known as buying property on "spec" or on the speculation that when the property is finished it will sell for a much higher price than you have invested in it. This is seen mostly in new condominium projects where investors fight to buy the units before they are built assuming

3) Flipping houses. This is a type of property investment that has made leaps and bounds in the last few years thanks to the popularity of many popular home improvement and house flipping shows on cable networks in the last few years. This has become a very dangerous thing as people who have Continued on page 11

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How

...continued from page 10

no idea what it actually takes or costs to renovate and flip a property are buying homes because they think "I saw it on television and I can do that" Television doesn't show you the whole picture. You have to be aware of all of the hidden costs like marketing the property, closing costs, carrying costs if it doesn't sell right away, etc. You need to make sure you are buying the property at a significant discount to cover yourself completely. 4) Buy and hold. As mentioned above, real estate tends to gain value over time. Bad properties in bad neighborhoods will accrue equity if given enough time. History has shown us that even when a large market correction occurs like has happened now, properties eventually do recover and increase in value. The secret is to make sure the property is at least covering it's own costs while you wait for the equity to build up in it.

5) Lease options. Not everyone has perfect credit. For those who have credit issues finding a lender to purchase a home can be an impossible task. They need time to get their credit repaired. These people are perfect candidates for lease options. They will pay above market value for the house and put a non-refundable down payment down. They are willing to pay for the privilege of rebuilding their credit while working towards a path of home ownership. For these people, a lease option presents a solution to their lending problem and buys them the time they need to get their credit and/or income ready to go to a traditional lender. Media Contact: James Paffrath RealtyPin.com, 1-(866) 960-8649, james@realtypin.com News distributed by PR Newswire iReach: https://ireach.prnewswire.com PR Newswire (http://s.tt/1ygg7)

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Advertising Sales Will Johnson • will@propubinc.com Terry Hokenson • terry@propubinc.com Shelley Loring • shelley@propubinc.com

Serving the Portland/Vancouver Multifamily Housing Industry More than 21,000 Distributed Monthly www. TheLandlordTimes.com The statements and representations made in advertising and news articles contained in this publication are those of the advertiser and authors and as such do not necessarily reflect the views or opinions of Professional Publishing, Inc. The inclusion of advertising in this publications does not, in any way, comport an endorsement of or support for the products or services offered. Metro Apartment Manager is produced monthly and is published by Professional Publishing Inc. An Oregon Corporation. PO Box 30327 Portland, OR 97294-3327. (503) 221-1260 • (800) 398-6751 Copyright 2012. All rights reserved.

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ASK THE ENERGY EXPERT CHRISTINA (TINA) JIMENEZ, Business Services

Q:

Weatherization Can Deliver an Excellent ROI

Does weatherization pencil out for me if my residents pay the energy bills? Are there rebates to help defray my cost? A. Property owners and managers invest in energy efficiency for a variety economic reasons. Adding insulation and replacement windows improves resident comfort, reduces noise and lowers tenant energy bills. This contributes to lower tenant turnover, which directly benefits your bottom line. The upgrade can make it easier for your units to compete with newer properties in the marketplace, allowing you to more successfully attract tenants. Weatherization also improves your property value. Cash incentives available from Energy Trust of Oregon help defray your cost. By raising the re-rent rate $10 to $20 per month, many property owners and managers find weatherization offers an excellent return on investment while still saving their residents money with reduced monthly energy bills.

Start with a free Energy Consultation from PGE Portland General Electric offers a free energy consultation of your property to help you decide which improvements make sense for your property. Request a free energy consultation at PortlandGeneral.com/EnergyExpert. Insulation makes units more comfortable PGE recommends that you insulate before you replace windows because insulation is more cost-effective and can reduce energy use by up to 20 percent. Insulation is rated according to R-value -- the higher the better. • Insulate attics to R-38. Attic and roof insulation usually is the least costly and offers the greatest energy savings. If attic insulation is R-18 or less, bring it up to R-38. Use an experienced contractor and install sufficient attic ventilation. • Insulate underfloor to R-25 unless your property has a basement. If crawlspace insulation is R-11 or less, bring it up to R-25. Water pipes in the crawlspace should be insulated for freeze protection. Crawlspace ventilation also is important. Install

a black plastic ground cover to control moisture. • Wall insulation should be R-11 to R-15. If your property’s walls have no insulation, consider insulating to R-11 by drilling a 2-½ inch hole at every stud cavity and blowing insulation into the wall cavities. This typically is done on the building’s exterior, making wall insulation less practical for brick and stucco buildings. Wall insulation is an excellent noise reducer. Replacement windows and doors offer multiple benefits New double-pane windows can improve comfort, curb appeal and marketability while reducing condensation, drafts and noise. Replace baseboard and electric wall heaters Although not considered to be “weatherization,” this investment can be highly cost-effective because these heaters are inefficient and expensive to operate. Consider replacing them with new ductless heating and cooling systems that can save up to 60 percent on heating costs. Some tenants report monthly savings of $50 to $60

per month compared to electric baseboards. These systems also provide summer cooling – a feature increasingly sought by residents. For information on ductless systems, go to PortlandGeneral.com/Ductless. Get cash incentives from Energy Trust An excellent way to help make your project pencil out is to take advantage of cash incentives from Energy Trust of Oregon. Cash incentives are available for many of the upgrades listed above. Learn more by calling the PGE Energy Experts at 503-228-6322 (Portland) or 503-399-7717 in Salem. Take advantage of low-interest financing If you need upfront financing, your project may qualify for low-interest, no-fee financing through Umpqua Bank (an Equal Housing Lender). Go to GreenStreetLoan. com or call 866-790-2121. If you have questions you’d like to have answered in future “Ask the Energy Expert” columns, please e-mail Sarah. Pagliasotti@pgn.com.

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CLARK COUNTY RENTAL ASSOCIATION President • Lyn Ayers Vice President • Blain Cowley Secretary • Patty Silver Contact • Lyn Ayers • Phone (360) 693-0025 • info@ccrawa.org

Treasurer • Janine Ayers

Membership Committee • Roger Silver

5620 Gher Rd., Suite H Vancouver, WA 98662-6166 (360) 693-CCRA www.clarkcountyrentalassociation.org

President's Message 2013 has arrived with rain, sleet, some snow, below average temperatures, and high winds. Not a very normal start. But like my Grandpa used to say: “I’ve lived in this country for 38 years and I’ve seen 38 years of unusual weather.” Well, let’s just hope that we do have a normal year as landlords. Every organization probably has growth high on its list of challenges. Growth is at the top of my list, but

what does “growth” look like to me? Growth in what way? More members? Maybe more revenue and a larger reserve at the end of the year? More knowledgeable landlords? Some other criteria? We need our members to know more about being a responsible landlord. I want growth in each member’s wisdom in running their business properly. I would like to see more aware-

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ness of our industry in city/county agencies. It would be beneficial if we better understood the rental forms. It would be worthwhile to increase community awareness of who we are and how we contribute to the betterment of local society. So growth as I describe it above is my key goal for 2013, the logical next question of course is how do we achieve it? Obviously we need to continue with worthwhile educational dinner meetings and make sure the mentor program remains vibrant and healthy and that our members take full advantage of it. We must continue to publish the monthly newsletter filled with relevant and informative articles. We need to get more involved with our local city/county officials. In my career, I learned that when goal-setting, a goal must meet certain criteria. The goal must be achievable, it must be time limited, and it must be measurable. Improving our members’ abilities and increasing influence and awareness are achievable. They are time-limited –calendar 2013- however this goal isn’t measurable. How can we measure success of this goal? Fewer complaints might mean better landlord management. Higher attendance at meetings means

more interest in learning. If existing members renew at a higher rate, this indicates more of our members believe the value is there. Additional advertising, flyers distributed throughout the community, involvement by members in community organizations, and an attractive website will drive increased awareness of the organization’s identity and purpose. This can be measured by more contacts via email, phone, and in person from community members and leaders outside our industry. By including these measurements in our goal, this time next year we will be able to measure our success in achieving “growth” in 2013. As you can see, there is a lot to write about and even more to work on. 2013 will undoubtedly be a year filled with challenges and a mixture of success and failure. Let’s keep in the forefront of our minds ways to make this a positive year for each of us. If we are successful, this time next year we can look back and realize that we made significant progress towards our goals. Lyn Ayers President CCRA

The Landlord Times - Metro • January 2013


Investors

...continued from page 5

cial property sectors due to lower job creation among office-space using companies, as well as an evolving work environment, many metros are benefiting from a lack of new supply. As a result, the barometer places 35.2 percent of the U.S. office stock in expansion by year-end 2012. This percentage is expected to grow through 2015. Pockets of strength exist in the retail sector and are starting to outnumber the weaknesses in certain trade areas. The barometer places 45.6 percent of the U.S. retail stock in recovery by year-end 2012. As the industrial sector continues to recover, occupancy gains are being reported in most industrial markets across the country. As a result, the portion of U.S. industrial stock in recovery is expected to grow annually through year-end 2014. By year-end 2015, the expansion and recovery phases of the real estate cycle will dominate this sector. Underlying fundamentals for the U.S. multifamily sector remain extremely positive through 2015 due to pent-up demand and a growing preference for renting instead of buying. The expansion phase of the cycle will dominate this sector for the next four years. "While the recent slowdown in the country's economic recovery and job gains has reduced leasing activity across much of the nation's office sector, it has not had the same impact on the warehouse sector, with many surveyed investors calling the sector extremely healthy," stated Susan Smith , editor-in-chief of PwC's quarterly real estate investor survey. "While the U.S. multifamily sector remains a top investment choice, concerns about new supply and overpricing do exist, which has some investors looking to other sectors, like retail, which had been a bit taboo for many investors for quite a while, but is starting to regain attention even with the rising popularity of e-commerce."

Information about subscribing to the PwC Real Estate Investor Survey can be found at www.pwc.com/us/ realestatesurvey. About the PwC Real Estate Investor Survey™ The PwC Real Estate Investor Survey, now in its 25th year of publication, is one of the industry's longest continuously produced quarterly surveys. The report provides overviews of 33 separate markets, including ten national markets -- regional mall, power center, strip shopping center, CBD office, suburban office, flex/R&D, warehouse, apartment, net lease, and medical office buildings. The report also includes a review of 18 major U.S. office markets including Atlanta, Boston, Charlotte, Chicago, Dallas, Denver, Houston, Los Angeles, Manhattan, Northern Virginia, Pacific Northwest, Philadelphia, Phoenix, San Diego, San Francisco, Southeast Florida, Suburban Maryland, and Washington, DC. In addition, the report covers three regional apartment markets - Mid-Atlantic, Pacific, and Southeast, and two regional warehouse markets - - East North Central and Pacific. In addition, the National Development Land Market is included in the second and fourth quarter issues while a comprehensive lodging report is included in the first and third quarters. The fourth quarter 2012 report also features up-to-date information relating to forecast periods, structural vacancy replacement reserves, forecast values, tenant improvement allowances, and vacancy assumptions. In addition, each issue of the survey contains over ten tables of market data focusing on value expectations, tenant improvement allowances, forecast periods, structural vacancy, and growth rates.

countries with more than 180,000 people who are committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at www.pwc.com. Learn more about PwC by following us online: @PwC_LLP, YouTube, LinkedIn, Facebook and Google +. © 2012 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved. PwC refers to the

US member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors. www.prnewswire.com

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A Property Management Regroup How To Do It And Why It Works! © By Ernest F. Oriente, The Coach Regroup…is this a new management trend? Not a chance! Regroup is simply an opportunity to end one month’s business cycle, recap the performance at each property you manage and outline a plan of success for the new upcoming month. Why does it work? Because it allows each person on your team to assess their performance from the previous month, and to make any necessary adjustments for the new month. Here’s how it works. Scheduling and preparing regroup: Regroup should be scheduled during the slowest time of each month and should start before your leasing office opens in the morning, if possible. A solid and productive regroup takes about two hours and will require about one hour of preparation by your resident manager. Be certain to have a blank chalkboard or a standing easel for taking notes and keep distractions to a minimum. Regroup is also a time to build on the creative juices from each person on your team, so make regroup a special part of each month and allow for everyone to have equal time to share

their feedback. Simply stated, there are no wrong questions or topics discussed at regroup and your team will respect and respond positively to this freedom. Tip From The Coach: As the supervisor for your properties, it is critical for you to attend regroup and actively participate in them. Your preparation for each regroup should begin by reviewing the agenda from the previous month with your resident manager, to assess if the to-do list from last regroup was accomplished. Then, review together the new regroup agenda making certain your resident manager’s gameplan is consistent with your company goals and expectations. Running the meeting: Each month’s agenda for regroup should begin by reviewing the financial information important to your company and its investors. This might include “actual” revenue and income versus budget, resident retention percentages, collection issues or expense performance versus the budget. Then, have your resident manager address any problems ex-

perienced during the past 30 days or any upcoming issues that will affect the property. Next, map a calendar of activities that will enhance the performance for this property. This might include a monthly event to thrill your residents, a new marketing plan, or a special focus on your resident referral program. This part of regroup is where the creativity of your team really starts to roll and if you listen closely, you will hear many “golden” ideas. Lastly, have your resident manager recap the team goals for the new month and be certain the meeting always closes on a positive note! Tip From The Coach: As the supervisor for this property, take detailed notes during regroup, then send a brief memo to your resident manager recapping the day. Include in this memo a to-do list for the upcoming month, so your resident manager will clearly know what is expected. Clear communication is the cornerstone of management success.

Meeting individually with your team: At the close of each regroup, plan to spend another thirty minutes more with your resident manager to recap the day, cheer their success, and discuss the specific performance of each individual at the property. During this meeting ask your resident manager if he/she needs any additional support or training to develop their skills or the skills of their team. This is the most important part of regroup as time spent developing your team for future opportunity, will make for pro-active management which means you always have a sharp person ready to be promoted to the next position. Tip from the Coach: In the same spirit of the individual meeting you have with your resident manager, ask him/her to have a similar meeting with each member of their leasing team. This will help to grow their skills as a leader and you will want to attend the first few meetings to be certain the agenda for the individual meetings are exactly as you expect. In fact, as a manager, always “inContinued on page 17

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A Property

...continued from page 16

spect what you expect”. A good rule of thumb! Wow! Such an important topic and so much to share! Incorporate regroup into your next 30 day business cycle and see for yourself how successful the time is spent! Need help planning your agenda? E-mail a quick note to ernest@powerhour. com and the Coach will send you a sample agenda in ten minutes. It’s easy! The Coach says so! Want to hear more about this important topic or ask some additional questions? Send an E-mail to ernest@powerhour.com and The Coach will E-mail back to you a free invitation to be a participant on a PowerHour conference call. Author’s note: Ernest F. Oriente, a business coach since 1995 [29,760 hours], a property management industry professional since 1988--the author of SmartMatch Alliances--and the founder of PowerHour...[ www.powerhour.com and www.powerhourseo.com and www. pirmg.com ], has a passion for coaching his clients on executive leadership, hiring and motivating property management SuperStars, traditional and Internet SEO/SEM marketing, competitive sales strategies, and high leverage alliances for property management teams and their leaders. He provides private and group coaching for property management companies around North America, executive recruiting, investment banking, national utility bill auditing [ www.

powerhour.com/propertymanagement/ utilitybillaudit.html ] national real estate and apartment building insurance [ www.powerhour.com/propertymanagement/insurance.html ], SEO/SEM web strategies, national WiFi solutions [ www.powerhour.com/propertymanagement/nationalwifi.html ], powerful tools for hiring property management SuperStars and building dynamic teams, employee policy manuals [ http://www. powerhour.com/propertymanagement/ employeepolicymanuals.html ] and social media strategic solutions [ http:// www.powerhour.com/propertymanagement/socialmedialeadership.html ]. Ernest worked for Motorola, Primedia and is certified in the Xerox sales methodologies. Recent interviews and articles have appeared more than 7000 times in business and trade publications and in a wide variety of leading magazines and newspapers, including Smart Money, Inc., Business 2.0, The New York Times, Fast Company, The LA Times, Fortune, Business Week, Self Employed America and The Financial Times. Since 1995, Ernest has written 200+ articles for the property management industry and created 350+ property management forms, business and marketing checklists, sales letters and presentation tools. To subscribe to his free property management newsletter go to: www.powerhour.com. PowerHour® is based in Olympictown…Park City, Utah, at 435-6158486, by E-mail ernest@powerhour.com or visit their website: www.powerhour. com

www.TheLandlordTimes.com

OREGON RENTAL PROPERTY OWNERS JOIN US TODAY!

³ Your voice heard: State and local legislative representation. ³ Education: We offer a wide variety of monthly training programs, members get a significant discount on classes. ³ Receive a monthly subscription to the Update: The Update, our newsletter, contains up-to-date information on landlord/tenant issues and legislative information.

³ Substantial discount on rental forms: 60% off all rental forms and books for members. ³ Fully staffed office: Our friendly office staff are here 9am-5pm, Mon-Fri happy to help you with your property management needs. ³ Savings on Tenant Screening: Report charges are automatically posted to your interest free account.

RHA

Rental Housing Association of Greater Portland www.rhagp.org 10520 NE Weidler Portland, OR 97220

Effective January 1,2013 Regular Membership for up to 4 Units: Annual Dues $99, Set up fee $25 Regular Membership for 5 or more Units: Annual Dues $110, Set up fee $50, $1.50 per Unit (Annual Dues + # of Units not to exceed $250) Affiliate Membership (Advertise to our landlord members): Annual Dues $220, Set up fee $50 Dual Membership (Regular Membership+Affiliate Membership): Annual Dues $255, Set up fee $50, $1.50 per Unit (Annual Dues + # of Units not to exceed $285) RENTAL HOUSING ASSOCIATION OF GREATER PORTLAND Phone: 503-254-4723 Fax: 503-254-4821 The Landlord Times - Metro • January 2013

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Increasing Community Reviews Online Should On The Top of Your Marketing "To Do List" for 2013

H

By Tami Siewruk

ere are few tips on how to increase the number of reviews you receive on Yelp and Google Places. These are very easy to use tips that can greatly improve the number of reviews. Why is this goal of increasing your online reviews so important? According to research by the Opinion Research Corporation (ORC), 84% of Americans say that their buying decisions are highly influenced

by online reviews. Give this a minute of thought and you'll realize that you also read reviews make decisions based on what you have read. Also, the number of reviews the community has on Google Places, the rating, and frequency of those reviews is correlated with the visibility of your listing according to research and local search ranking factors. http:// www.davidmihm.com/local-searchranking-factors.shtml Increase review today by adding calls to action: The testimonials page

TrueSource Screening QUALITY TENANT SCREENING YOU CAN COUNT ON!

on your website is not only a great place to add great reviews about your apartment community and company, but is also a great page to add a call to action for residents to leave reviews. We made it easy by adding links to read and write reviews for Google, ApartmentRatings.com and Yelp. Make certain you and your teams are actively asking for reviews: Have call outs in your email signatures, on the leasing desks, and on all social media channels asking residents to leave reviews on the channels that are important to you. Link back to the resident reviews page on the website via social media posts so future residents can read great reviews and click to read or write reviews on the channel of their choice right from your website.

We've seen great results for clients of whom we've added a reviews page linking to their resident's reviews profiles on Google Places, and Yelp. It's critical to make certain that the entire community team is encouraging residents to leave reviews on these channels by providing them with the direct URL to the reviews landing page on the community's website. Leave a card in each apartment where a service request has been taken care of... watch how call backs suddenly decrease!

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Ple a se Visit us at www. The La n dlordTimes .com

The Landlord Times - Metro • January 2013


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The Landlord Times - Metro - January 2013