Property Management as a Business Choice

Written by Apartment Management Magazine on . Posted in Blog

504908827Property management is a relatively straightforward business area that provides reasonable, ongoing returns on the management of residential, commercial and industrial premises. Property managers make money through service fees, normally as a percentage of the rental price of a property. In this article we’ll explore what’s involved in property management and whether it’s a career or business move that could be right for you.

What property managers do

The main areas that property managers and property management firms are responsible for include:

Generating income from property

.   Researching market rates for renting out property and setting appropriate rental prices based on location, desirability, size, facilities, overall condition etc.
.   Adver sing property that is available for rental.
.   Keeping an inventory of property that is available for rental, together with supporting information.

Managing tenants of property

.   Screening tenants to check that they are credit-worthy, have good references, can pay their rent and will look after the property.
.   Getting contracts in place with tenants detailing the various roles, responsibilities and other aspects of renting out a property.
.   Dealing with issues raised by tenants.
.   Carrying out periodic inspections of property.

Maintaining property

.   Liaising with contractors, tradesmen and other services to repair and maintain property.
.   Keeping a schedule of required, ongoing maintenance for property.
.   Protecting and preserving the values of property in the portfolio.

Regulations, compliance and management

.   Dealing with insurance, regulatory and other legal requirements relating to rental of property.
.   Managing property on behalf of either themselves (as a holding company) or private landlords.

Types of property that can be managed

You might choose to specialize in the type of property that you manage. Some of the different areas that you can go into include:

.   Residential – Houses, apartments, condos and shared accommodation.
.   Student – Housing that specializes in student accommodation in cities with colleges and universities.
.   Vacation homes – Property rented out for people when they are on vacation, normally for one to four weeks at a time.
.   Commercial offices – Small and large spaces for other businesses and organizations
.   Factories – Industrial spaces with specialized areas for production lines.
.   Warehouses – Storage locations for businesses.
.   Other industrial premises – Specialized or general industrial space.
.   Retail – Space devoted to stores and other sales of goods and services.

Ideal skills for property management

Going into property management could be right for you if:

.   You like dealing with people – You will often have to interview and screen tenants to make sure that they are right for the property that you are offering. If you do not own the property yourself, you will also need to deal with landlords and other interested parties.
.   You can get good deals on maintenance and repairs – Repairs and maintenance will often be one of the bigger outlays that you need to make. Negotiating good deals on repair rates with suppliers will improve your profit margins.
.   You don’t mind paperwork – There’s lots of paperwork involved in property management including contracts, leases, insurance, regulations and more.
.   You provide good service and value for money – Landlords are looking for a combination of trouble-free renting and value for money. If you can minimize any issues for them and do that at a good price, your business will thrive.

Typical returns for property management

Property managers normally make money by taking a percentage of the rental price on a property. They may also charge set fees based on the first month’s rent and may also ask tenants for fees to process their applications.

.   Fees do vary depending on where you’re located. In rural and suburban areas, rates are typically between 8% – 10% of monthly rental costs, so around $80 – $100 a month per property managed (around $1,000 – $1,200 PA).
.   Some property agencies charge fixed fees of around $75 to $120 a month ($900 – $1,500 PA).
.   Larger cities often charge higher fees for property management; fees in New York can be up to 15% of rent. ($3,600 PA on a $2,00 a month apartment).

In closing

Property management can be a lucrative business, although it does require a good portfolio of managed properties to generate reasonable returns. If you can build up a good portfolio, you can easily make several thousand dollars a month and potentially quite a lot more.


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!

Executing and Recording The Move In Inspection

Written by Apartment Management Magazine on . Posted in Blog

inspection-clipboardThe completion of a move in inspection is a document with serious legal ramifications. Without a complete and executed move in inspection, management has no documentation to show the condition of the apartment at the time of move in. An executed document shows the resident accepted the condition of the apartment with whatever notated findings.

There are several methods to ensure return of the move in inspection.

  • The move in inspection is completed with the resident by management immediately following the lease signing. Both parties sign off and the document is complete.
  • Companies that allow a longer period of time might retain the mailbox key requiring return of the move in inspection before the mailbox key is issued to the resident.

Scheduling a follow up visit to insure completion of any additional repairs can create positive customer service. The resident should be able to anticipate a response from the management company for any items documented on the move in inspection.

Are the items reflective of wear and tear from the previous resident or are there repair items to be completed?

Including maintenance team members in the move in process for the inspection and orientation can provide a number of benefits.

  • The maintenance team receives first hand feedback on the condition of the apartment home-preferably positive, but in the instances that a resident points out a repair or cleaning item that was overlooked, the experience will create an impression that will insure the item is not likely to be overlooked in the future.
  • Maintenance can explain the operation of the thermostat, heating or cooling systems, and electrical features, such as outlets that are controlled by wall switches.
  • Including maintenance staff for the move in inspection can eliminate the need to schedule an appointment for any repairs. Small minor repairs can be resolved instantly.

The underlying symptom is the failure to monitor a review of move ins after the lease has been signed. Missing documents, errors with lease dates and missing signatures are not identified until a legal procedure is in process.

The new move in is cited for unpaid rent, only to find that the items on the move in inspection have not been repaired, attempting to document charges for damages at the time of move out is inconclusive because the move in inspection was not returned.

Best practices install a process to audit the documents following a move in. In the maintenance call back, should be a function to contact new move ins to make sure all items were repaired, and offer the opportunity to add to the inventory if anything additional has been identified.

Recognizing the occasions that maintenance and housekeeping prepare a defect free move in, offers an opportunity to stress the importance of this document and the function of the move in inspection to the portion of the team that may not understand the impact and ramifications of this document.


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.

 

Can a ‘Mobile Doorman’ App Take Multifamily Communities to the Next Level?

Written by Apartment Management Magazine on . Posted in Blog

introducao-infidelidade-das-esposasWith all of the recent advancements in the way we access and manage every aspect of our lives–whether its managing our relationships with the world or managing our multifamily portfolio–it’s about time we start looking at the way we manage our properties and interact with our tenants.

One way we’re making use of all this technology is through mobile apps. One such mobile app simplifying multifamily management and enhancing tenant experience is the Mobile Doorman.

While other apps on the market focus on property managers’ concerns, the idea of allowing tenants to interact with both management and the property itself has begun to spark new innovations.

With these apps, renters are gaining control over granting visitor access to the property, mobile reminders when packages are delivered, and the ability to report/track maintenance requests.

The Mobile Doorman app acts like a traditional doorman would, acting as the property’s liaison. Instead of having to set up access for each new guest or relying on an employee to contact a tenant when a package arrives, the app cuts out the middle man and lets the tenant manage with ease.

According to the app’s founders, the idea is to make it easier for renters to manage their own residential needs by granting them access and control right from their smart phones. The ability for a tenant to submit an after-hours service order for a jammed garbage disposal is only the beginning. That same tenant could go to work the next day and get a text notification once the repair is complete.

Open message boards are another feature that these apps can employ to connect tenants with one another. A community message board can prove to benefit tenants by helping residents connect with a neighbor to help with a project, plan community events, or by providing a platform to advertise items for sale.

Some features that developers are working on for the next generation of apps include integrating sensors in community exercise centers to let interested residents know how many people are using the equipment or using similar sensors in laundry facilities to let tenants know when a washer or dryer becomes available.

At the end of the day, developing useful tools for the benefit of both the tenant and managers is not limited. As a matter of fact, properties can set themselves apart from their competition by offering mobile solutions for tasks such as keeping tenants up-to-date with scheduled happenings throughout the property, enhanced security features, a simple rent payment process, and even access to copies of lease documents.


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.

5 Reasons To Buy Multi-Family Investments

Written by Apartment Management Magazine on . Posted in Blog

Landlord-Insurance-e1379588073855Your first multi-family property is a critical move in your real estate investing career. You’re moving past wrong information and psychological barriers on into new territory to achieve your financial goals. Well, you made the right decision. Multi-family properties open a huge door of profits for the new and experienced investor to achieve their financial goals.

Believe: The first thing you have to do is believe that you can do it. If you don’t believe you can do it, your mind won’t allow you to do it. Take a moment, put all fears aside and envision in your mind what your world will look like when you do your “this.”

See yourself doing it, see yourself doing it successfully, and finally know you can do it.

Your First Building Block of Wealth

Multi-family homes are an easy way to get into investing for first time homebuyers and non-occupant buyers. There are loans for owner-occupant home buyers who want to purchase a multi-family home of up to four units which allows home owners the ability to borrow more because they can use the rental income for loan qualification purposes. They’ll also receive owner-occupant financing with little down and lower interest rates as compared to commercial property loans.

Significant Cash Flow Can Be Created

Your first multi-family property will outperform in profits what your single family investments can do. There’s no doubt that you can become wealthy with single family homes, but you’ll have to do multiple deals quickly just achieve the same amount of money. When you start getting those monthly checks in the mail, you’ll have a reminder of why multi-family investing is the way to go.

Lower Risk Involved

Multi-family properties provide a cushion of income for unexpected events. If you lost a tenant in a single family property, you’ve also lost all your income for that month. With multi-family properties, the mortgage expense can be covered with rents from other tenants and from your cash flow. If there are repairs or maintenance that needs to be done on the property, the cash flow you generate from the property can help to pay those expenses. In order to do that with a single family property, your cash flow needs to be really high to be able to offset the costs.

There’s Less Competition

Multifamily investing is still shrouded in myth and misunderstanding. For that very reason, there’s less competition which means more opportunities for you and I to profit! People in general avoid commercial property because they believe that it is too far out of their reach. They see the price tag.

They see the work involved and then they run back to working their plan of buying one house at a time. What they’re really missing is the opportunity to learn a new way to profit from real estate – a new system of buying right. Your first multi-family property will take you through the process of putting a tested and proven system to structure the deals the right way.

Start as Big or as Small as You Want

Commercial property is the path that will help you achieve your financial dreams and goals. I have been investing in apartments for over 10 years now and want to encourage you to look for deals that involve multi-unit housing. The idea here is to just start. You can start off with small properties and still see a remarkable cash flow as compared to single family properties.


BIO:
David Lindahl has rehabbed over 820 houses in just under 10 years and currently owns over 7,400 apartment units. Starting out as a struggling landscaper with no experience in construction. Within the first 14 months, Dave’s apartment buildings created a positive cash flow of over $10,300 a month for him and his family and with in three and one half years Dave became a multi-millionaire. Dave Lindahl, author of 2 #1 bestselling books, Emerging Real Estate Markets, and Multi-Family Millions. His third book is through Donald Trump’s organization, and is called Commercial Real Estate Investing 101: How Small Investors Can Get Started and Make It Big. Among other publications David has been featured in Reader’s Digest, Creative Real Estate Lifestyles, AOL and Kiplinger Magazine. Dave Lindahl, with no Real Estate experience, created systems that allowed him to create enough monthly positive cash flow to retire within 3.5 years.

Capturing the Current Cash-Flow Window

Written by Apartment Management Magazine on . Posted in Blog

SMCK3MQwNSMAs we enter the final quarter of 2014, we can look back at almost two years of a real estate turnaround having bottomed around early 2013. Investors were poised to capitalize on one of the best real estate investment opportunities ever seen.

There was significant upward pressure building on single-family home prices created by historically low interest rates, falling unemployment rates, and an improving economy. Those factors have resulted in increased demand for housing from both home-buyers and investors alike, which has pushed housing prices higher in most markets nationwide.

In several of those markets, particularly in the non-coastal regions of the U.S., rents are still significantly higher than the debt service on properties, which creates the opportunity for excellent cash-flow in addition to the opportunity to realize equity growth through appreciation.

However, the window of opportunity has started to close for these investment opportunities. As the recovery in the housing market increases demand to drive up prices (and mortgage payments) faster than the rate at which rents increase, eventually cash-flow will be reduced. But at the moment investors still have a unique opportunity to acquire investment real estate that is expected to appreciate in value while still delivering excellent cash-flow returns.

The Real Estate Cycle

It is important to understand that real estate follows predictable cycles. The last three peaks of the housing market in the US were in 1979, 1989, and 2006. The last three troughs or “bottoms” occurred in 1975, 1982, 1995. Over these last three cycles, the range of time from trough to peak ranged from 4 – 11 years, with an average of 7.3 years. According to Brian Beaulieu of ITR Economics, the Chief Economist for Vistage International, our economy will likely experience 3 years of growth from 2015-2017 before the next significant downturn in 2018-2019. He recommends real estate as one of the best investment classes for the next several years.

We have passed the bottom of the most recent down cycle in 2012, about 6 years after the peak, and are now moving through a seller’s market. Investors who “bought low” during the recent bottom period will see sizable appreciation in years to come. However, as homeowners re-enter the market in the coming years, prices will continue to rise and rents will begin to soften, as some would-be renters become buyers instead.Untitled2

The Low Interest Rate Effect

Usually when interest rates are low, buyers jump back into the market. While mortgage rates have been very low (under 5.0% since May 2010), high unemployment, uncertainty about the economy and tighter lending standards slowed the entry of owner occupants purchasing homes. As rates are still low but unemployment has fallen, more buyers will jump in trying to capitalize on the rates and begin to push prices upward. Interest rates will eventually begin to head upward as the economy improves, but I don’t see that happening within the next few years. However, housing prices will rise as we enter an inflationary period.

The Investor Opportunity – Capturing the Current Cash Flow Window

Note the graph that follows. Historically, mortgage payments (the gray line) have closely tracked rents (the orange line) over 19 of the past 26 years. But starting in 2005, mortgage payments rose rapidly as a result of the spike in home prices during the recent housing bubble, and fell sharply from 2007-2012. Starting in about 2009, mortgage payments fell well below rents, which is what has created the exceptional opportunity for high cash-flow and returns for real estate investors.

Untitled

Because housing prices are rising and interest rates are poised to increase, mortgage payments (gray line) are likely to rise at a rate much greater than rents (orange line), and eventually will both approach the trend line once again. As these events occur, the window for exceptional cash flow opportunities will begin to shrink. Thus for investors who buy now, they will get the best of both worlds: lock in good cash-flow now in advance of property appreciation. The sooner investors act, the more lucrative their returns will likely be. This is an especially good time for baby boomers that are at or near retirement to take advantage of the housing market as an investment opportunity with cash, self-directed IRAs, or 1031 Exchanges.

Housing Prices and Appreciation

The median price of U.S. residential properties sold in August — including both distressed and non-distressed sales — was $195,000, up 3% from the previous month, and up 15% from a year ago to the highest level since August 2008, a six-year high.

As the economy continues its recovery, more primary homeowners will re-enter the market. Since job security is the number one factor in consumer confidence related to home ownership, as the unemployment rate drops, more of the workforce will again shift from renters to owners. Also, many previous homeowners who were recovering from foreclosures, bankruptcy or bad credit will have waited long enough to have unfavorable information removed from their credit reports and be able to once again obtain a mortgage.

Who the New Renters Will Be

Although home prices will push appreciation, the rental market will also stay strong on investment real estate. This is because as the economy improves, there is going to be more household formation. During the recent recession, individuals doubled up, grown children moved in with their parents, and younger people deferred marriage and child bearing.

So, as the economy moves away from recession, household numbers will increase and there will be more renters leasing properties. In addition, the U.S. population is expected to grow at 7.3% between 2010-2020 while early in the decade construction has been at a standstill, which has restricted the supply of housing. (Bloomberg.com, 12.30.12)

Post-Recession Job Growth

Historically, after each recession (shown in shaded area), there is a sustained period of growth in employment and a drop in the unemployment rates. The economy still has a great deal of upside. By the time unemployment gets back to historical levels, the other factors will have changed.

What Investors Can Do Now

This market presents a unique buying opportunity for investing in real estate. The nation is still early in its economic recovery cycle, and housing prices are appreciating as unemployment continues to drop and interest rates remain low. Yet housing prices and mortgage payment levels are still well below average rents in many U.S. markets, so there is still an excellent opportunity to capture good cash-flow in addition to property appreciation.

But as home prices and interest rates continue to rise, the optimal investment window will begin to close, so investors are urged to act early to lock in the best returns. 2013 and 2014 presented the best opportunity for investors nearing retirement to set up real estate portfolios with long term cash-flow and appreciation rates that ensure passive income and a secure retirement in the coming decades.

This is the time to take ACTION. The window of opportunity is still open. Contact one of ourInvestment Counselors to discuss the opportunities best suited for you.


OLYMPUS DIGITAL CAMERA Marco Santarelli | Company Website | LinkedIn Connect |

Marco Santarelli is an investor, author and founder of Norada Real Estate Investments — a provider of passive turnkey investment properties in growth markets around the United States. For investment opportunities please visit www.NoradaRealEstate.com

Three Ways to Manage Energy Use to Increase Value and Profit

Written by Apartment Management Magazine on . Posted in Blog

50e2c2_135a309c21f91b52a6a7e39bcda4a633Many property managers accept high utility bills as a necessary – if painful – cost of doing business. True, we need energy to keep our homes cool in the summer and warm in the winter. We’re also fond of our high-tech security systems and all those digital devices that power our 24/7 lives. While energy is a necessity for life in the 21st century, how much of the monthly budget we allow energy use to consume is within our control.

Successful property managers understand that reducing costs associated with energy consumption is not only possible, but financially prudent. Not sure how to tackle high energy bills? Here are three focus areas to consider.

Tech, Training and Targeting

$22 billion dollars. That’s how much multifamily properties in the United States spend every year for energy and water consumption, according to retrofit study findings reported by the National Apartment Association. Researchers studying 236 multifamily properties involved in retrofit projects during a three-year period from 2009-2012 found that energy retrofits lowered consumption costs by almost 20% and more than 25% of energy and water waste can be corrected by focusing on energy-efficient upgrades.

While investing in upgrades and new technology definitely pays off in long-term energy savings, some financial analysts admit that controlling existing systems is often less expensive than upgrading. Training programs that encourage staff members to keep HVAC and boiler systems operating at peak performance and offering incentives to employees who find innovative solutions to curb consumption work for some property managers.

Negotiating Rates

Did you know that procurement contracts can save your property hundreds – potentially thousands – of dollars every year? Working with a property management firm or consultant can bring economies of scale into the picture – high volume often translates to negotiating clout that reduces natural gas and electricity rates.

Managing Demand

Understanding the numbers behind the numbers on your monthly energy bills is one way to curb costs. Negotiating great rates won’t automatically lower your power bills. You have to proactively manage your energy consumption to see real savings. Installing control systems that limit your property demand and shifting major loads to off-peak hours, typically between 9PM and 5AM, can dramatically lower your demand charges.

Keep in mind that installing demand limiters can backfire if your property management team doesn’t monitor usage closely. Some service providers impose hefty fines if you don’t follow your plan to the letter. Before you commit to a demand management program, review the rules carefully. Consider other policies that can improve demand management efforts like auditing bills and creating an energy consumption team to monitor usage and recommend property-wide changes.

You can hire a professional auditor or implement monthly audit policies with an in-house staff member. If you choose to assign auditing tasks to an employee, make sure to include these minimal steps:

  • Read and record meter readings each month; then, compare those readings to your billing statements.
  • Record heavy load incidents for peak and off-peak demand charge comparisons.
  • Verify cost per unit billed matches current contract rates.
  • Look for inappropriate fees and unidentified statement charges.
  • Check all computations and calculations to make sure your property is billed accurately.

Smart technology tools can help property managers and tenants control energy usage and trim expenses. Energy savings can increase your property value significantly and boost profit margins. Applying common-sense solutions and working with industry partners to discover ways to curb energy costs makes sense.


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.

Rents Rise as Renters Become Better Risks

Written by Apartment Management Magazine on . Posted in Blog

symbool_huizenprijzen-huisjes-grafiek_0801A better class of renter is changing the fact of Rentorship in America, creating a climate for higher rents.

Rental applicants, especially those applying for less expensive units, continue to see improvements in their credit risk, according to the latest TransUnion Rental Screening Solutions industry report. The average ResidentScore, a measure used to assess a rental applicant’s risk level, improved by 0.8% between Q2 2013 and Q2 2014.

Improvements in credit risk levels for applicants were observed for all property types, including: Type A (newer, institutional properties), Type B (older, institutional), Type C (older, less desirable area) and Type D (older, less desirable area, renovations/updating needed). Type C (+1.2%) and Type D (+1.4%) rental properties experienced the largest improvements.

“This is great news for both renters and property managers,” said Michael Doherty, senior vice president of TransUnion’s rental screening solutions group. “We continue to see improvement in the credit risk of renters, which gives them more opportunities to receive better rental terms. This is a continuation of a trend we have now observed for the last few years. With the advent of rental reporting to TransUnion, improvements in credit risk will also help renters build their credit by making on-time, monthly rental payments.”

The report also found that average rental prices have increased 3.1% from $984 in Q2 2013 to $1,015 in Q2 2014. Rental prices increased for all property types.

National Rental Price ChangesNational Rental Price ChangesProperty

The national average eviction amount, which has dropped from $1,980 over the last three years (Q2 2011 to Q2 2014) to $1,917 in Q2 2014, is also evidence of a healthy rental market. Property managers in Maryland, Pennsylvania, New York and New Jersey incur the most costs associated with an eviction. Property managers in Mississippi, Oklahoma, Arizona and North Carolina faced the least amount of eviction costs.

The average eviction amount includes costs incurred by the property manager such as lost rent, property repairs and both operational and court costs per unit. “Property managers generally incur fewer costs when their portfolio of renters is of a better quality,” added Doherty.

The combination of a healthy rental market and improved credit risk of renters bodes well for those consumers whose credit suffered as a result of the economic downturn. Many consumers turned to the rental market once home ownership was no longer an option.

However, it also raises the issues of affordability in rental properties.

“Many consumers are still recovering from the economic malaise brought on by the past recession, but those consumers who wish to rent can now see meaningful improvements in their credit score after making their first on-time payment,” said Doherty. “This can help renters who want to purchase homes or cars receive better loan terms, potentially saving them thousands of dollars.”

For the purposes of this analysis, national data on rental applications was collected from property managers utilizing TransUnion’s rental screening solutions in June 2013 and 2014.


OLYMPUS DIGITAL CAMERA Marco Santarelli | Company Website | LinkedIn Connect |

Marco Santarelli is an investor, author and founder of Norada Real Estate Investments — a provider of passive turnkey investment properties in growth markets around the United States. For investment opportunities please visit www.NoradaRealEstate.com

2 Important Leasing Policy Updates Every Landlord Should Consider

Written by Apartment Management Magazine on . Posted in Blog

89505008One constant that landlords and property managers face is change. Landlord tenant laws evolve over time, and your leasing policies need to keep pace with these changes.

Here are two important examples:

1. Pets. Many “standard” lease agreements include provisions concerning pets. Limits on size, breed, number are common examples. These same standard provisions carve out an exception for service animals. To track the law, service animals must be allowed in a “no-pets” property.

So, what’s the problem?

Your lease or leasing policies may mention “trained” service animals, or lay out rules for determining whether the animal is certified as a service animal. And that’s not good enough when it comes to companion, or emotional support animals. It is not required that these animals have any special training. What’s more, a landlord can get into hot water for intimidating a tenant by asking questions about the training their animal has — or hasn’t — received.

Some pet policies and even service animal rules conflict with companion animal laws, so be careful to make the distinction.

2. Nuisance. Tampa is the latest city to pursue anti-nuisance legislation that holds landlords directly liable for actions of tenants. Under the Tampa proposal, landlords would face a $450 each time neighbors or police complain.

These “party house” or “nuisance property” ordinances have moved mainstream. Many provide fines on a daily basis against a landlord when the tenant misbehaves. That means time is of the essence, and landlords need to have the tools to get a problem tenant out of the property quickly, even if the behavior may not breach the lease.

It’s important to review the lease language to make sure there’s no disconnect between what a new, local ordinance requires, and what the “standard” language of the lease holds. Here’s where it’s a good idea to ask for advice from a local attorney — before the meter is running at $450 a day.


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!

Landlords Get Burned by Smoking Policy

Written by Apartment Management Magazine on . Posted in Blog

12_07_2011 Programele de prevenire a fumatului în _coliThis month, the Iowa Department of Public Health is reporting that in one year it’s Smoke-Free Housing Registry has doubled the number of properties that now have 100 percent smoke-free units, with no grandfathered residents.

Property managers across the country say they favor smoke free for one simple reason: they make more money. More tenants want smoke-free, so more applicants compete for those units. Smoke-free units are easier to clean, and easier to manage. But if you are still not convinced of the benefits of this policy, take a look at some of the liabilities you face if you allow smoking:

Landlord Negligence and More

This summer, a jury in northwestern Florida awarded $23 billion to the family of a man who died at age 36 from lung cancer caused by cigarette smoking. While this case was not brought against a landlord, it profiles a disturbing trend for every property owner, including landlords. It proves that public opinion has shifted; jury members today are having no problem recognizing the health risks of cigarettes — or doling out the punitive damages.

In a case a little closer to home,a homeowners association was ordered to pay $15,500 after a jury said it was too slow in resolving a secondhand smoke complaint between two neighbors. It’s not $23 billion, but that’s enough to throw off the balance sheet for your rental property.

In other, less publicized cases, judges have found landlords liable for tenants’ secondhand smoke illnesses,  and have allowed nonsmoking tenants to break the lease.  Liability for fire-related injuries increases significantly in smoker-friendly buildings.

In addition to simple negligence, tenant attorneys are successly arguing that units in buildings where smoking is allowed are uninhabitable. The case above against the homeowners association was based on loss of quiet enjoyment of the property. Both of these claims are based on a fundamental breach of the lease agreement, and tenants can be awarded damages for that breach, including rent abatement.

Some Landlords Are Employers, Too

Two other lawsuits filed recently, one by a flight attendant and another by a teacher, prove that employees are entitled to workplace protections. That includes freedom from the risks of secondhand smoke as a necessary part of their job. And, that includes employees of rental property owners.

Higher Demand for Smoke-Free

A higher demand for these units means landlords who allow smoking are turning away other potential tenants. Lowering the pool of candidates heightens the risk of late rent payments, evictions and damage to the rental property.

Cigarette Smoke is Hard to Clear

Unit turnaround is slower and more costly with units where a tenant smoked cigarettes. That leads to longer vacancy, greater cost, and a higher likelihood of complaints from the next tenant.

Smoking Policies are Harder to Implement

A smoke-free policy can be easier to maintain than mitigating the risks of tenants who smoke. Allowing smoking requires greater vigilance, like keeping balconies clear from debris that can be ignited by a cigarette or ashes carelessly tossed outside. Guests who smoke must be monitored to make sure they are in designated areas. The increased fire risk requires a comprehensive emergency plan, and potential costs of relocation if there is a fire. A policy must be in place to resolve secondhand smoke complaints to avoid liability.

Offering smoke-free housing is the simple fix. Increased profits, decreased risk. A win-win for tenants and landlords.


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!

Are Mortgage Rates Affecting Tenant Decisions?

Written by Apartment Management Magazine on . Posted in Blog

House Keys

Economists predicted that 2014 would be the year that normalcy returned to the housing market. Although rates would begin to inch higher, confidence would strengthen and people would see this as the end of our struggles; private home sales would start to increase.  Things haven’t materialized exactly as experts predicted.

Although many parts of the United States have somewhat followed this pattern, some areas have experienced yet another dip in mortgage rates recently – single family homes just aren’t moving at the rate expected. Here are a few reasons why.

First, although business analysts said the rates had already hit bottom, some credit unions, banks and other lenders recently dropped their rates – attempting to encourage hesitant buyers to apply for mortgages.

Second, some homeowners are waiting it out – sheltering in place – hoping they will get a slightly higher return on investment if they wait for the inventory to fall even further.

Thirdly, although the jobs numbers look better on the surface, many people simply stop looking for jobs and dropped of the tracking radar.

Finally, credit is harder to qualify for today than it was just a few years ago. Potential borrowers also assume that their credit score and history aren’t “good enough” and don’t bother to apply, even if they think they could afford a home.

What this means for the rental market and what should you do?

While homeowners and potential buyers wait on the sidelines, anxiously watching the interest rates and inventory numbers, property managers and owners have a perfect opportunity to fine-tune their marketing and leasing strategies.

The 2012 New Jersey Apartment Industry Economic Impact Analysis and Sector Profile reveals some interesting details apartment projections.

  • Demographics – race, ethnicity, age, socioeconomic status – play a key role in shaping the rental industry landscape. It may be necessary to invest more time and money wooing foreign-born renters.
  • Life cycle expectations are changing. While homeownership has been the quintessential American Dream for most people since the end of WWII, lifestyle is often more important than owning your own home today.
  • More people understand the true costs of home ownership and opt for a more “mobile lifestyle” that affords them the ability to relocate for jobs, school, and to be closer to children or parents.

Forward thinking property managers will continue to watch the housing market research as they review strategies and business plans. As the advantages of rental housing continue to emerge, your property must be ready to respond – with a new appreciation for potential tenants.

It is important for rental property owners and managers not to simply wait on the sidelines for the housing market to shape their future. Be proactive.


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.