Five Things Every Property Management Purchasing Team Should Know

Written by Apartment Management Magazine on . Posted in Blog

177378487-formationDeveloping a formal product procurement policy is essential for property management teams. Clearly defined strategies and processes help you control day-to-day costs across all departments, and benefit owner revenue streams when applied consistently.

If you’re looking for a way to benefit all of your multifamily property stakeholders, take a look at your inventory and supply policies. Every product and service directly impacts profitability. It’s important to reduce costs without compromising service and quality.

Remember, everything from replacement appliances to those tiny rubber kitchen faucet gaskets that seem to wear out at the least opportune time must be acquired and installed in the most cost-effective, efficient way to achieve maximum results.

Here are five tips to help you develop a smart property management strategy to reduce expenses and increase your profit margin.

NUMBER ONE: Negotiate volume discounts. On-demand-supplies typically cost more than items purchased under a volume stock and replenish plan. Running to the hardware store every time you need a gasket or value adds extra expense in the form of fuel, man-hours and wear and tear on vehicles. Plus, if parts must be ordered, delays completing repairs often frustrate tenants and owners.

NUMBER TWO: Designate a purchasing control center – even if you assign those duties to a single employee. Greater control improves consistency and accountability. A streamlined system reduces time spent chasing quotes from non-qualified vendors and ensures your property always gets high-quality services or products from pre-vetted vendors and contractors.

NUMBER THREE: Annual process reviews ensure continuity of service for your tenants and higher profit margins for your owners. Once a year – either at the turn of the calendar year or the beginning of your fiscal year – have your purchasing team review the prior year. Standardizing brands, replacement parts, office supplies and other consumables saves time and money stocking and replenishing supplies.

This is also a great time to review volume discounts and contractor agreements for outside services such as landscaping, HVAC repair, tenant liability insurance coverage and other services not provided by your in-house staff.

NUMBER FOUR: Maintaining a warranty-tracking system eliminates unnecessary equipment purchases. Your purchasing department should have a complete list of all equipment – vehicles, in-unit appliances, security system components, office equipment, computing devices, etc. – with serial numbers, purchase date, warranty information and any other pertinent data that identifies relevant details about maintenance and upkeep. Before you order a new frig, check the warranty, and if applicable, identify approved repair centers.

Supplementing your warranty-tracking program with a spreadsheet used for tracking equipment and supplies strengthens internal controls. We’ve all heard stories about laptops sprouting legs and walking off the property or unexplained shortages of office supplies. Your purchasing team should know where every purchase finds a home on your property – and be able to verify it’s movements by serial numbers or other identifying tags.

NUMBER FIVE: The accounting office is no place for ambiguity. Initiate a purchase order system for any item or service over a set threshold. Depending on the size of your property management company that may be $50 or $100, or if you really want to take control of your operating expenses, you may mandate that all purchases require management approval or have a purchase order.

Reconciling and allocating charges is essential. Prior to payment, every invoice must be reviewed for:

  • Price inconsistencies/variances
  • Unapproved charges
  • A clearly defined due date and late fee policy
  • Itemized listing of charges
  • Correct quantity ordered/received
  • Authorization (signature or employee name identifying who placed the order)

Think about this for a minute. If you have a modest profit margin of just ten percent on sales and you shave your expenses by five percent, that generates a fifty percent increase in profit. Naturally, property management accounting structures don’t work exactly like retail outlets, but the point is: eliminating unnecessary costs associated with daily operations has a dramatic impact on profit.

Getting started may seem overwhelming, but your Appfolio.com team is here to help.


appfolio Appfolio | Company Website | LinkedIn Connect |

AppFolio, Inc. develops Property Management Software that helps businesses improve their workflow so they save time and make more money. Appfolio submits articles & blogs including topics of Resident Retention, Improved Owner Communication, Time Management, and more.

Just Grounds…Just the First Impression

Written by Apartment Management Magazine on . Posted in Blog

87557876Coveted by property managers far and wide is an individual with the knowledge and skill to plan, execute and care for grounds. Hiring or discovering someone on your management team is blessed with a green thumb, is truly a treasure. Most communities suffer from the fatal floral fantasy. Believing tearing out that big space at the entry, and armed with a $100 budget, the results will look just like that display at Disney.

Sad is the day, that a Regional visits a property to discover a foot wide trench cut through the precious sod with a proud manager and supporting team member, who announce..”Sam’s great with plants we’re going to fill this with flowers.” Either there’s no budget for the soil, plants and irrigation or no time to daily care for the plants that wither away from neglect. Most of the season will be needed to replace the grass that was removed. With plants in the ground, adding new area, less is more.

Equally disappointing is the point of sale purchase by the team member. Leaving the grocery or big box store with office supplies, we think this planter will be beautiful next to the office entry. Its quickly painlessly added to our purchase. Kerplunk! its placed in the planter (with or without its plastic liner) and a week later we notice the plants have died. A skilled staff member can save us from ourselves.

Selecting plants for containers or planting beds requires planning and understanding. Distractions of beautiful blossoms can be fatal. The decision should be based on sunlight exposure and availability of water.

some plants need 6 hours of direct sunlight. some need shade. some will bloom continuously with some daily attention. another amazing discovery is many plants only bloom once a season. they all need water…but how often, how much.?

This simple task, get some flowers in the ground. Is actually a complicated decision, if you want the purchases to be investment decisions for the season.

Again, if you have a talented team member, count yourself among the fortunate. If not, consult the professionals!  Incorporate grounds and curb appeal into your community outreach.

Seasonal flower displays in planting beds or attractive arrangements in planters are a major contributor to property curb appeal. But failure to make the correct selection will create a grounds nightmare of high maintenance or quickly dying plants.

Partnering with a local business can provide the expertise to select plants that will thrive in the specified location. Discussion of the time the maintenance the staff can dedicate to the care and feeding of the floral display should also be considered.

Giving the nursery staff pictures of the planter (guessing its probably too large to take to the nursery.)will help them design a colorful container combination. A label in the plant can provide the credit with “Floral design by…” Additional recognition can be offered through the newsletter. The display of flowers at the East and West entries were designed by ….

Another service could be planning a resident activity. Offering a “How To” event with tips on container gardening with flowering plants or vegetables, gives the vendor an opportunity to build relationship with residents by providing information and possibly selling their products.


Lori_Hammond Lori Hammond | Company Website | LinkedIn Connect |

Lori has 30+ years’ experience in the Property Management Industry, working with both market rate and affordable housing.  Lori has been privileged to work with some tremendous industry leaders during employment tenures with Oxford Management, NHP Management, AIMCO, Alliance Residential, Boston Capital, The Sterling Group, P.K. Housing and currently Management Resources Development.

 

Green-Certified Multifamily Sees Fannie Mae Drop Rates

Written by Apartment Management Magazine on . Posted in Blog

shutterstock_177078899-600x400Fannie Mae proclaimed their commitment to a more eco-friendly and green multifamily industry by announcing in February that they will be offering special, discounted or lower interest rates on any of the loans they make to any certified energy-efficient multifamily properties.

The idea of offering deep discounts to property owners who are willing to improve their properties’ energy performance doesn’t just make for a more sound investment in our future; this move is also designed to see the overall quality and affordability of these multifamily properties improve in the long run.

Fannie has agreed to lower the interest rates on any loans they make that either refinances, acquires, or is made as a supplemental multifamily mortgage loan on any qualifying green property by 10 basis points.

Fannie’s new program is designed to push multifamily builders and investors to seek more energy efficient alternatives for their new and existing projects. This push is seen as a much needed incentive for decision makers who might be on the fence about building or converting over to green energy and efficiencies.

This comes at a time when gaining green certification means becoming eligible for a number of green funding opportunities and a variety of rebate programs designed to help balance the additional costs of executing any new energy conversions. Because of this cost offset – which can sometimes equal the total cost of the conversion – more commercial investors and owners are choosing to gain Energy Star, LEED, and/or one of the other certifications available for energy efficient properties.

As far as the long-term financial benefits of these conversions, owners report lower overall maintenance and operating costs, improved tenant attraction and retention as renters report lower monthly energy costs and satisfaction from renting a better-quality unit, and then of course the basic environmental benefits that everyone recognizes and enjoys.

To qualify for Fannie Mae’s discount program the properties must have an EPA Energy Star, LEED, or Enterprise’s Green Communities certification and these loans will be classified as Green Bonds to attract eco-friendly investors looking to grow their current portfolios.


JustinAlanis Justin Alanis | Company Website | LinkedIn Connect |

Justin Alanis is the Co-Founder and CEO of Rentlytics Inc.  Rentlytics is based in San Francisco, CA providing deep analytics for apartment property owners and managers. View and analyze property operational and financial metrics more effectively and identify issues.

 

Is Your Multifamily Community Pet-Friendly or Pet-A-Phobic?

Written by Apartment Management Magazine on . Posted in Blog

Shared post provided by Trulia.com

Pets_Apartments_in-Lynchburg-VAWhen you consider there are approximately 83 million owned dogs and more than 95.5 million owned cats in the United States – not that most cats would ever admit to being “owned” – it’s likely you have either considered modifying your property pet policy, or wondered if adopting a more welcoming pet policy would help you build long-term relationships with your tenants.

Some multifamily housing communities welcome pets with open arms. These complexes have convenient pet parks located throughout the property furnished with refreshment stations – even if it’s only access to a water hose – and pet waste bags attached to disposal bins installed in smaller green spaces. Along with convenient amenities, the most welcoming communities also offer reasonable fees and low pet rent.

Others refuse occupancy to all varieties of non-human tenants. Or, they simply set their lease and fee schedules so far out of reach that most applicants get the message pets are NOT preferred.

Trulia.com recently published a review of 25 major US rental markets, comparing pet rent rates, deposits and fees to determine which cities are the most, or least, pet-friendly. Their tabulations were based on other considerations, including the number of available pet groomers, local veterinarians, pet stores and other animal services in the area.

How Does Your Property Rate?

Low to moderate pet rent and affordable fees are huge draws for prospects with furry, feathered and scaled family members. Low deposits won’t immediately garner your property a pet-friendly seal of approval. In order to catapult your property to the top of the list with apartment seekers, you have to roll out the red carpet with low fees and affordable pet rent, too.

Are You a Boston-esque Property? That would mean that you are really trying to move toward a more pet-friendly environment, but you haven’t quite gotten there yet. At #14, Boston didn’t even make it into the top half of the Trulia list. True, the average pet rent in Boston is only $9 a month, but a scant one percent of landlords and property managers allow large dogs. Only 20% allow cats.

Did you know that 14% of property managers (or landlords) require a pet interview prior to approving the lease?

Are You Comfortable in the Middle of the Pack? Some apartment managers are okay with allowing tenants to have pets – as long as they are willing to submit their pets to a pre-lease interview and they aren’t looking for rock bottom  fees.

There isn’t any empirical research that definitely confirms a correlation to deposit tiers and pet interviews, but a quick search on Apartment.com revealed properties in Tampa, Florida who require cat and dog pre-leasing interviews tend to charge middle-of-the road deposits and pet fees, around $15 monthly pet rent and $250 non-refundable fees.

Compared to Washington, DC, Tampa’s rates seem modest. Washington imposes the highest pet expenses on tenants:

  • Pet fee – $427
  • Deposit – $366
  • Per rent – Almost $45/month

 More than half of apartment seekers claim they haven’t secured a lease because of pet policies – that is a large audience to ignore.

Here are five steps you can take if you’re ready to make the shift toward a preferred, pet-friendly apartment community.

  1. Use your rent comparison tools to scope out the competition. If necessary, make calls to nearby apartment communities and ask about pet rent fees and deposits so you know what tenants are facing in your area.
  2. Consider arranging discounts for tenants with local vets, pet stores and other area service providers.
  3. Interview animal occupants prior to signing a lease, but keep in mind, like humans, pets may be nervous during an interview with a stranger.
  4. Ask for a vet statement if you’re concerned about pet health or behavior issues.
  5. Compare the costs associated with improvements to make your property more pet friendly and potential revenue increases before proceeding with policy changes.

Do you have experience with pets and pet owners in multifamily housing settings? Please share with our other readers in the comment section below.


Shared post provided by Trulia.com

Are You Losing Control of Your Property?

Written by Apartment Management Magazine on . Posted in Blog

Busy-Man-460x306Let’s face the cold hard facts – even a dedicated, professional management team can get in a bind once in a while. Proactive managers realize preparing for the unexpected is essential, whether it’s a cash shortfall or a sudden downturn in the market.

But, from an owner’s perspective, warning signs you have lost control of your property create uncertainty and stress. Here are some signs you might be heading for major problems – or worse, financial disaster.

Frequent Cash Calls Signal Poor Planning

Do you ever call your owners and ask for a temporary infusion of cash? If you find yourself trying to get caught up month after month, there’s a problem. Multifamily rental income should cover operating expenses and provide profits for the management company and property owners.

The solution: Prepare a realistic operating budget – and stick to it. Review your budget with your team and owners frequently to identify areas where you can tighten the belt or renegotiate third-party contracts. Your managers should have access to accounts payable aging reports with supporting detail.

Late Payments, High Eviction Rates and Low Retention Rates Signal Poor Leasing Strategies

If a resident gets behind on their rent, it’s hard to catch up. The longer the situation continues, the more lost revenue your company experiences. While you may immediately start eviction within your lease terms, a better solution would be to prevent problems from becoming a property-wide issue.

The solution: Initiate strong resident screening and vetting protocol. Include a master rent roll that details rents collected and outstanding balances for every unit. A monthly review of aged accounts receivable reports will help you spot potential patterns early, allowing you to modify your leasing strategies before things get totally out of control.

An Uptick in Resident Complaints Signals Poor Communication and Customer Service

Residents deserve to have a consistent and efficient way to report maintenance issues. If you find your office personnel are fielding a high volume of complaints, it might be time to take a look at your reporting and responding processes. Can your residents report major problems – like a plumbing leak or electrical problem – 24/7? Does your maintenance team respond quickly, acknowledging the report and providing a realistic time frame for resolution?

The solution: Implement a maintenance policy that includes routine inspections to eliminate unnecessary inconvenience for residents. Provide digital and/or printed documentation that identifies issues that qualify as emergencies and the proper channels for requesting service. Encourage renters to use online resident portals whenever possible. Keep owners in the loop. Disgruntled residents may track down the owners if their problems aren’t resolved quickly. It’s never a confidence-building experience for an owner to get a call about a plumbing leak at three o’clock in the morning.

Low Occupancy Rates and Limited Renewals Signal Weak Marketing Strategies

When you’re reviewing your rent roll and monthly tenant reports, remember to review renewal numbers. Low renewal rates may signal failures in your marketing campaign strategies as well as customer service issues.

The solution: Review your marketing plan, including online reputation management and referral strategies. If you don’t have a quick make-ready program so you can turn your units efficiently, make that a priority. Offering early renewal options for current tenants and pre-leasing programs for future tenants can boost retention rates and lower vacancy numbers, too. Initiating a sixty-days out plan to start the discussion about renewals works well for many multifamily property managers.

If you recognize any of these red flags, it’s time to review company policies and processes. Better for you to take control before your owners lose confidence in your ability to manage their investment properties.


appfolio Appfolio | Company Website | LinkedIn Connect |

AppFolio, Inc. develops Property Management Software that helps businesses improve their workflow so they save time and make more money. Appfolio submits articles & blogs including topics of Resident Retention, Improved Owner Communication, Time Management, and more.

Residential – Americas: The next ‘multi-family’

Written by Apartment Management Magazine on . Posted in Blog

99571449ee792aa7ded3ea2365367420Everyone likes to come home to a clean, comfortable place at the end of a busy day. For pension funds, one of the more attractive value-added multi-family strategies in today’s market is providing just that for the working class in the US and the rising middle classes in Latin America.

Workforce rental housing offers sustainable cash flow from fast-leasing properties that keep rents closely linked to the going rate in any given area – while new household formation and government financial support are fuelling demand for pre-sold modern apartments in emerging markets.

Workforce housing, as it is called, is proving to have a solid foundation. Multi-family housing was the first property type to recover from the crisis, as financial stress forced many people into rental housing and millennials’ preference to delay homeownership kept occupancy high and rental rates on the rise – secular shifts towards renting that are still under way.

While the 10.3% gain in the NCREIF Apartment index was the lowest of the five sector benchmarks during the fourth quarter of 2014, the other property sectors were, in effect, catching up with the multi-family market.

Despite this, economic and demographic tailwinds continue to support demand for rental housing in the US. The declining affordability of housing in the post-crisis world is spurring demand for rental units within the financial reach of working Americans whose earnings are near or below the average for their local areas. The popularity of urban living has crimped that supply; the UCLA Economic Letter on Real Estate and the Macroeconomy says that, in Los Angeles, 143,000 rental units that had been affordable to those earning less than $44,000 a year became unaffordable since 2000.

Those trends mark a paradigm shift in how people in the US think about housing. In short, many more Americans are becoming renters, either by choice or necessity.

Today, approximately 36% of Americans live in apartments, up from about 30% five years ago, and Standard & Poor’s expects the trend to continue. For starters, household formation is still below the historical average. In a recent report on the multi-family REIT sector, S&P projects an increase in new households, but says “today’s new households generally have a higher propensity to rent”.

Michael Moran, vice-president and head of real estate investments at Allstate Insurance Company, says: “We are transitioning into more of a multi-family-oriented society. We believe the trends supporting rental housing, particularly more affordable alternatives, will persist.”

Allstate is an investor in TruAmerica Multi-family, an 80/20 joint venture between The Guardian Life Insurance Company of America and Robert Hart, who served as CEO and president of NYSE-listed Kennedy Wilson Multi-family Management Group before launching TruAmerica in 2013.

TruAmerica’s integrated team “remanufactures” classic workforce housing, says Hart, acquiring existing class-B, garden-style properties strategically located near major employment centres – typically at a 25-40% discount to replacement cost – before transforming them into professionally managed, amenity-rich communities that warrant higher rental rates.

In contrast to sectors like retail and office, workforce housing has high occupancy and very little interruption in cash flow due to tenant turnover. Annual turnover rates are typically near 30% of a community’s tenants – and can reach 50% – and lease terms are usually one year or less, compared with long-dated multi-year terms on office and retail space. That cycle keeps overall rent levels closely aligned with the prevailing rate, enabling investors to benefit from rising rental income as the economy strengthens.

The strategy typically creates a cash flow yield ranging from 7% to 10%, from the inception of any given project in the portfolio. About 50% of the return to investors is from cash flow; the significant income contribution illustrates that the strategy is a true value-add approach. While cap-rate compression will be a yield enhancer, Hart says, the team is not relying – or betting – on a favorable cap rate at exit to generate competitive returns, and the durable income stream provides downside protection against rising interest rates.

In contrast, home ownership is on the upswing in emerging markets, resembling the US 40 years ago, says Frederick Gortner, co-founder and chief operating officer at Paladin Realty Partners. Los Angeles-based Paladin has invested nearly $750m of equity across four funds in joint ventures and transactions in Latin America with a projected total cost of nearly $4bn since being launched in 1995. Nearly half of the capital is deployed in Brazil, where the firm concentrates on building for-sale, low and middle-income housing with local operating partners.

Another significant market is Mexico. Combine this with the Andean countries of Colombia, Peru and Chile, and investors are faced with Latin American market of 500 million people facing a regional housing deficit of four to seven million units – and a dearth of both equity and debt capital.

“The incremental demand is many times higher than the supply,” says Gortner. About four million people enter the middle class every year in Brazil, he says, driving creation of 1.5m new households annually, as against construction of 300,000 to 500,000 new housing units each year. He expects the trend to persist, with Brazil averaging 2-3% annual GDP growth over the next two decades.

The creation of long-term mortgages has supported the transition from large homes financed by multiple generations living together to modern apartments for smaller households, Gortner says. Historically, Brazilians could only obtain loans for 10-15 years, at interest rates of around 20%. Spurred in part by government programmes, banks now offer 30-year mortgages at rates between 8% and 12%, bringing home ownership within reach of many.

For institutional investors, the other key features of the strategy are relatively high profit margins and a significant margin of safety due to the low leverage used in Brazilian housing development. Gross margins are about 20% on Brazilian projects; the proceeds from pre-sold units finance about one-third of each development, helping to keep leverage to between 10% and 20%. Compared with office buildings, “housing is not prone to over-building and demand fluctuations”, says Gortner.

Macro trends favour the strategy as well, he adds. Publicly-listed homebuilders have stuck to the sidelines as Brazil’s economy spluttered in recent years, allowing Paladin’s joint-venture companies to acquire sites at favourable prices, while Latin America’s cultural, religious and linguistic cohesiveness provide a relatively stable investing environment. “The region doesn’t have the societal-cultural tensions the rest of the world is struggling with,” he says.


logo_aaoa American Apartment Owners Association | Company Website |

At the American Apartment Owners Association (AAOA), our mission is to serve the interests of landlords, real estate brokers, property managers, real estate owners and apartment building owners nationally.  Visit www.AAOA.com for more information about membership details!

What’s Your Multifamily Investing Style: Passive or Proactive?

Written by Apartment Management Magazine on . Posted in Blog

A row of colorful new townhouses or condominiums.Whether you’re getting ready to buy your first property, or your tenth, these tips for proactively managing your appreciation will help you plan for higher returns on investment.

Multifamily apartment buildings often come with hidden value. Distracted owners and poorly focused, or inexperienced, property managers may defer maintenance, which leads to run down buildings and high turnover rates. Sometimes lackluster performance can be turned around with strategic renovations and an engaged management team.

As you tour potential properties, keep in mind the goal is to force appreciation – increase net operating income. Identifying simple fixes that significantly boost value for tenants while controlling operating expenses is a proactive step every investor can make.

Look for opportunities like the ones below to develop a strategic plan for investing in multifamily properties for maximum profit.

Tip One: Updating the laundry facilities.

  • Investing in adequate lighting, easy-care flooring and a fresh coat of paint may be all that is needed to renovate a shared laundry room.
  • In-unit appliances or hook-ups may better serve your target demographic. Check apartment floorplans for large closets than can be easily converted to wash-and-dry centers. Don’t forget to negotiate rent-to-own pricing or discounts on outright purchases for tenants with local vendors.
  • Cancel or renegotiate third-party laundry leases before you finalize property purchases. Some leases require as much as a 50-50 split between property owners and a professional laundry service. Eliminating the split can significantly reduce operating costs – and boost profit.

Tip Two: Add another layer of security.

  • Install entrance security systems – such as key and intercom systems – that increase security in common areas and for individual homes.
  • Update parking lot and breezeway lighting – eliminate dark spots for your renters. No one wants to fumble for the keyhole or walk from their car to their home in the shadows.
  • Adding interior hallways adds value for many would-be tenants – this strategy will cost more initially, but you should be able to recover your investment with higher rent tiers.

Tip Three: Give your property a cosmetic make-over.

Installing new signs, interior blinds, and low-maintenance landscaping creates a stellar first impression. Remember, a dedicated management team keeps high-traffic areas spotless. Flooring material, furnishings and decorations must be easy to clean and maintain.

Tip Four: Realize major renovations present opportunities, too.

You don’t have to shy away from properties that need major renovations. A proactive strategy can help you capture higher returns on investment. Ask for closing credits to replace or repair parking lots, sidewalks, and other paved areas. You can also:

  • Convert unused land into additional parking spaces or a community garden.
  • Replace the aging roof with state-of-the-art solutions that increase energy efficiency and reduce operating costs.
  • Install fencing or sound barrier landscaping to reduce road noise.

One of the most important elements of a proactive management strategy is getting to know your demographic. Study your prospective tenants – submarket renters come with diverse wish lists and must-haves. If you know what’s most important – wood floors, property-wide Wi-Fi, in-unit laundry facilities – you can look for ways to meet their needs.

Passive managers wait for the market to drive their property values. Proactive investors keep their eyes peeled for opportunities to increase net operating income, even before they sign the purchase papers.

Need some help assessing your property appreciation investment strategy? Appfolio.com property management specialists are here to help.


appfolio Appfolio | Company Website | LinkedIn Connect |

AppFolio, Inc. develops Property Management Software that helps businesses improve their workflow so they save time and make more money. Appfolio submits articles & blogs including topics of Resident Retention, Improved Owner Communication, Time Management, and more.

Why Aren’t You Requiring Tenant Insurance?

Written by Apartment Management Magazine on . Posted in Blog

9e135587-2f8e-401e-9e2f-a8b4f7716762-mediumIt’s 6:30pm on a Tuesday and you get home from a long day at the office when you get a call from your onsite manager. There’s been a kitchen fire at one of your properties. The manager affirms that nobody is injured, thankfully, but the kitchen is destroyed.

Accidents happen more often than you think

While kitchen fires may seem rare, they are actually a common occurrence. In a 2014 nationwide study, The U.S. Fire Administration reported nearly 1.39 M residential fires in 2011 alone, of which the leading cause was cooking. Keep in mind that figure doesn’t include unreported fires, which can still cause significant damage.

Tenant accidents are costly for owners

Tenants seldom have the means to pay for the severe damages they cause, which leaves an owner with two options: pay for the repairs out-of-pocket or, if tenant caused damage is covered, file a claim with the owner’s property insurance. Considering fire claims have an average loss of $37,153, the later option could negatively impact future premiums or even result in cancellation of the policy altogether. A more appropriate option would be to file a claim under a tenant’s renters or tenant liability insurance policy.

The growing trend of tenant insurance

If you’re not currently requiring insurance, you’re among the minority. According to a National Multi Housing Council’s 2012 Apartment Cost Risk Survey (as reported by multifamilyexecutive.com), 84% of apartment companies say they require residents to buy tenant insurance. At an average monthly cost to the tenant of $12 – $15, the question of whether or not to require insurance is not a difficult one to answer – it’s a no-brainer.

Tenant insurance requirements are easier than ever

For some, managing an insurance requirement may seem like just another menacing task, but property managers and tenants have more options than ever before that are making this practice more attractive. Many insurance companies now offer varying liability and contents coverage, as well as discounts if tenants bundle coverage with their auto insurance. For property managers, companies such as AppFolio offer programs in which tenants can be enrolled in a tenant liability insurance policy should the tenant fail to provide proof of or have lapses in coverage. Force placing tenant liability coverage, which by the way is cheaper than renters insurance, will often times motivate a tenant to obtain renters insurance, which is the ultimate objective.

Tenant insurance requirements are a win-win

Unfortunately, tenant caused accidents are bound to happen, but they no longer have to be the financial setback to tenants and owners they once were. There are smart and affordable options for mitigating this risk while providing peace of mind. So, I have to ask: Why aren’t you requiring tenant insurance?


appfolio Appfolio | Company Website | LinkedIn Connect |

AppFolio, Inc. develops Property Management Software that helps businesses improve their workflow so they save time and make more money. Appfolio submits articles & blogs including topics of Resident Retention, Improved Owner Communication, Time Management, and more.

How Much Will the Average National Rent Get You? (Infographic)

Written by Apartment Management Magazine on . Posted in Blog

The average national rent in the United States for an entry-level one-bedroom or studio apartment is $769. So how much square footage does that afford you? The average space you’ll find varies greatly depending on the city–from living like royalty in Detroit or Phoenix to scrounging in closet-sized spaces in Los Angeles. See how many square feet the average rent will get you n these target markets.

Floor(ed) Plans


appfolio Appfolio | Company Website | LinkedIn Connect |

AppFolio, Inc. develops Property Management Software that helps businesses improve their workflow so they save time and make more money. Appfolio submits articles & blogs including topics of Resident Retention, Improved Owner Communication, Time Management, and more.

How Accurate are Real Estate Market Forecast?

Written by Apartment Management Magazine on . Posted in Blog

bat_dong_san_tang_gia_1Looking backwards is sometimes the best way to plan for the future. For example, if we look at 2013, we’ll see some of the surprising and unexpected turns the real estate market took. Many analysts predicted 2013 would be somewhat sluggish. Instead, some markets saw bidding wars, primarily fueled by low inventory and historically low mortgage interest rates.

Predictions are based on both positive and negative trends like inventory shortages or overages, activity by the Feds and consumer demand.

Let’s look at a few 2014 projections and see how accurate they were.

Inventory Stability

The close of 2013 saw an uptick in sales, with the median age on the market dropping by more than 10% over 2012 levels. Market analysts predicted the trend would continue in 2014. Some areas, like Las Vegas, Nevada, moved closer to “normal” price points and inventories as cash investor activity slowed. According to Reuters, the close of 2014 showed promise for long-term stability on the horizon, but more time is needed for  median home prices to fully stabilize.

Positive Equity Growth

About 20 percent of homeowners with a mortgage found themselves in a state of negative equity during the second quarter of 2013. Realtor.com reported median list prices rose in October 2013 by 7.57 percent as compared to the same period in 2012, leading market experts to predict that as prices continued to rise, 2014 would lift many homeowners toward a return to positive equity levels.

As 2014 came to a close, Zillow reported a mix of positive and negative equity stats.

  • Home values did increase, but that didn’t necessarily improve the financial condition for all underwater mortgage holders. Negative equity continued to rise in 21 of the top 50 housing markets.
  • Florida and the Midwest reported 25 percent of mortgaged homes remained underwate, with the national United States average for negative equity still high at 16.9 percent.
  • Low-end homes were more likely to be upside down than high-end and luxury homes.
  • Although negative equity is flattening out, the economic impact on the real estate market will continue to be an issue for the next few years.

Low Mortgage Rates Fade

Real estate investors watched mortgage rates climb substantially in 2013, and with the Fed considering tapering bond-buying, industry experts predicted the rates would continue to climb in 2014, although only slight increases seemed to be probable.

Slight changes in the interest rate did indeed occur. But, prices haven’t continued to rise. According to YCharts the national average for a 30-year mortgage declined over the last quarter of 2014 from 4.20 percent in October to 4.13 percent the last week of December. And, the current rate on April 16, 2015 was even lower – 3.92 percent.

Rates vary among diverse markets, and the fluctuations in recent months have been fairly small, but the current trend indicates we shouldn’t expect significant increases in the coming weeks and months.

Foreclosure Rates Decline

Foreclosure sales played an active part in the housing market in 2012, but September of 2013 marked the 36th consecutive month to experience a year-over-year decline in foreclosure activities. The third quarter of 2013 reported the lowest foreclosure numbers in almost seven years. Forecasters predicted this drastic decline meant foreclosure sales would have negligible impact on the 2014 housing market.

RealtyTrac.com reported a national foreclosure rate of 1:1295 housing units in February 2015 – an eight and a half year low. Much of the success in the move toward normal conditions may be attributed to stringent lending practices and better financial management.

However, not every market is breathing a sigh of relief. In February 2015, New York reported six consecutive months of increased foreclosure activity and Massachusetts reported an increase of 53 percent compared to prior year numbers.

As you can see, predictions based on national averages don’t necessarily reflect conditions in all markets. Following market trends and staying abreast of surveys and research provide valuable insight into the industry. But, it is imperative to consider the unique market fluctuations within your region. What happens in New York or Florida may not be the same thing as what is happening in your own backyard.


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AppFolio, Inc. develops Property Management Software that helps businesses improve their workflow so they save time and make more money.  Appfolio submits articles & blogs including topics of Resident Retention, Improved Owner Communication, Time Management, and more.