By Ronald F. Hammond, CCIM, RPA, PPM

The owner of a real estate management business may have many reasons to establish the precise value of the company. Selling may seem the most obvious, but valuation done for the asset allocation for tax or other purposes— estate planning, acquiring a loan or other funding—are equally important. Although the sale of the real estate management business may include other non-management operations, such as in house mortgage lending, leasing, brokerage, insurance, maintenance, construction and other functions that contribute to the gross income of the business, this discussion has been limited to the valuation of the property management function alone.

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By Don Logay

Today’s thieves have new “tools” that make burglaries easier than ever and they are getting smarter at determining when is a good time to break into your home or business.

As an example, consider “lock bumping.” Haven’t heard of it? Just Google lock bumping and you’re in for a shock. After viewing a few video clips, you’ll be surprised to see how easy it easy it is to do and how available these low-tech tools are to virtually anyone who wants them.

All a thief has to do is insert a special “bump key” into a lock, give it a couple of taps and they can open any standard dead bolt or lockset just like they had your individually cut key.

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I am often asked, what is a safe planning technique an individual can do regarding transferring assets to their heirs?  Since the family residence is one of their major assets, it is not surprising that transferring it to a special trust can lead to major benefits for all parties.  The reason for this is legislation enacted by Congress that has approved this planning.  This planning still works in 2010 even though estate tax this year but the gift tax is still around.  In 2011 the estate tax returns under current law.

I have gone through estate tax audits with the IRS and a qualified personal residence trust is easily approved, if (i) there has been proper valuation of the residence at the time of transfer and (ii) the parent(s) follows the planning discussed below. Often, I only transfer a 50% interest in the residence which is permitted by IRS regulations.  This helps when the parent(s) still wants to retain their separate interest in the residence.  The parent can also transfer a vacation home under this type of planning.  The IRS limits this planning to only two residences.  Since this planning is done mostly between parent and child, at the end of the fixed term there will be no increase in property taxes!

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Reach A Wider Rental Audience By Making Your Building Wheelchair Accessible

By Brett McKee

While the Americans with Disabilities Act prohibits discrimination against persons with disabilities in places of public accommodations and commercial facilities, many apartment buildings are not wheelchair accessible. It is illegal for apartment managers to discriminate based on handicap but it is not uncommon for apartment managers to skirt around the issue to avoid the costs of getting a building up to ADA code. In fact, the multifamily firms of JPI and Equity Homes were recently sued for allegedly violating the Fair Housing Act and Americans with Disabilities Act.What many apartment managers do not realize is there are affordable and non-permanent ways to make a building or apartment handicapped accessible. Not only will your building be in compliance with the ADA but it will also make your rentals available to the over one million Americans who use wheelchairs and the over 54 million with some sort of disability. Apartment managers may also be faced with circumstances where people need a wheelchair on a short-term basis, such as if a tenant is recovering from an injury or surgery. The same goes for if you are showing a model unit for potential tenants to see. If the building is not wheelchair accessible, you may lose a reliable renter but consider the other options available – like buying a ramp and reusing it as it is needed – to ensure your property appeals to other potential tenants in the same situation.

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New Industry Products

This month we are featuring three new industry products that will help you save money, protect your tenants, and go green.

One2Flush revolutionizes the way you save money on your water bill. A couple of months ago we ran an article promoting One2Flush. Since then Apartment News has gone to fully backing the product. We have installed One2Flush in our own homes, and already started noticing the money being saved. Cutting the water used while flushing, apartment owners can save thousands on their water bills by installing this product in all their units. The more units you have = more $ saved. To get more information call (800) 931-6666.

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Hello from everybody here at Apartment News. We hope that the New Year has been wonderful so far, and that it only keeps getting better for you. Apartment News wishes its readers success and prosperity; and hope that we can help you achieve your professional goals this year.

Apartment News is pleased to announce that we have launched a new website. We are very excited about our new project, and hope that it becomes a major and useful tool in helping you complete your projects and manage your properties more efficiently. Apartment News is striving to create the definitive contractor and income-property specialist database. With as few clicks as possible, residential, apartment and commercial property owners and managers will find countless contractors and property specialists to call upon if needed,  for their services

If you wish to check it out, go to www.aptcontractors.com. There you can find information on hundreds of contractors, and how to get in touch with them. In the future, we hope to add Customer Reviews, so that way you can see what other owners/managers have to say about them and whether  they will be appropriate for your project. We know how hard it is to find the right company for the job, and we want to make the process as easy as possible. Included in the website will be great resources and “How-Tos” to help you manage your properties.

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By Tony Freeman

For most people, apartment ownership means a big investment with special risks. Buying an apartment is a big undertaking and as an owner you need to make sure that you are adequately protecting your investment.

You’ll want to make sure you have coverage for your property, your liability and loss of rents. The main components of an apartment policy include: the building, business property, business liability and loss of rents.

Building
The building provides coverage for accidental loss to the building and other structures attached to it like a garage or wall. If there are detached structures on the property, make sure to clearly define their use. If the structures are used for commercial, manufacturing, farming, or if your tenant decides to use them for any of these purposes or other business purposes, a standard apartment policy may not cover losses arising from these activities.

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Software Advice, a web site that advises software buyers about which property management software to buy, just released the results of their 2009 Property Management Technology survey.

The survey garnered responses from 70 property managers from around the country and came up with some very interesting conclusions.

Among them:

• What technology a growing property management company uses;
• How prevalent social media use is;
• How property management specific software allows companies to manage more units per employee; and
• How companies are struggling to track leads that come from the Internet

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Dear Maintenance Men:

I’m exited about all the electric cars coming into the market starting at end of 2010. I plan on owning one myself!  My question is:  How do I make my apartment building electric car friendly?  I believe this will be the future and I want to have a leg up on the competition.  If I can rent my vacancy faster and for more money, I’m in!   What do I have to think about to convert my existing garages or parking areas to accommodate the electric cars of the future?  George
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By Chris Miller

The importance of creating a business plan for investment real estate doesn’t get much press.  I have seen that some people who deal with real estate for a living do not even use them.  Whether you are a sophisticated real estate investor or only own one rental property, spending a little time on a business plan can save a lot of headaches in the future.
I have had this exact conversation with at least two real estate brokers over the past decade:

Chris: “While reviewing this property, I noticed that the lease runs for 75 years, and has no rent increases.  How do you expect to sell this property for a profit?”

Broker: “Real estate always goes up in value, right?”

Wrong!  I have always reminded my investors that real estate’s value is tied to the income it produces.  Rising income is needed to realize rising property values.  At the same time, flat income does not lead to stable value.  In fact, due to the influence of inflation, it leads to declining value over the years.  Why buy real estate that will slowly decline in value over the next 50 years?  People do every day.  These investors don’t mean to do that but, because they lack a business plan; that is exactly what happens.
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