Q: Landlords are getting saddled with higher costs. With everything going up, can you talk about passing costs onto tenants?

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Q: Landlords are getting saddled with higher costs. With everything going up, can you talk about passing costs onto tenants? Also, RUBS, where units with more tenants pay a higher share of utilities. Seems sensible to me. 

Bornstein, Esq.

We have a great deal of empathy for housing providers facing rising costs while being constrained in how much they can raise rents. While inflation has become a much-covered topic, the numbers are deceiving. The Consumer Price Index (CPI) takes into account certain consumer staples and does not adequately reflect the climbing costs landlords incur, such as appliances, what contractors are demanding for repairs, building materials, property taxes, and indeed, utilities.

Despite these hardships, we have to be careful in raising rents because Big Brother is watching, tenants have plenty of recourse to air out their grievances, and there is no shortage of tenants’ attorneys looking to find mistakes and even the score.

Why Investors Should Consider Purchasing Rent-Controlled Properties

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By Ari Chazanas, Lotus West Properties, AAGLA Board Member

A marked increase in housing rental costs in major American cities has renewed a decades-long debate on the efficacy of rent control legislation as a solution for reducing homelessness. This legislative stop-gap, which is aimed at putting “caps” on maximum rent prices, has grown particularly more attractive in light of the significant rise of homeless rates in cities where the average cost of renting an apartment has exponentially increased in recent years. So when investors hear the words “rent control,” they may immediately shy away from investing in properties that fall under these regulations.

But there are numerous advantages to buying rent-controlled buildings, and once you know the specificities of the state and local rent control laws in the area where you plan to invest, you can gain a better understanding of the limits set on rent prices and the exemptions that might exist under certain circumstances.

5 Tips to Prepare for End-of-Year Reporting and 1099s

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By Brittany Benz

The end of the year is approaching, which means now is the time to begin checking off all of your year-end reporting tasks and getting your 1099s in line. However, if you’re relying on paper files or using accounting software that’s separate from your property management solution, this process can be incredibly time-consuming, cumbersome, and even error-prone for your property management business. Read on to find out five ways you can streamline your end-of-year duties so you can create space for what matters — big-picture thinking for the year ahead.

While this article contains helpful information, we are not providing legal advice. You should consult a qualified tax attorney for any specific questions about filing 1099s or year-end reports for your business.

1.) Move to a paperless accounting system

Paper-based accounting processes take up more time and can lead to errors due to double data entry. Meanwhile, generic accounting solutions like QuickBooks are not integrated into your business, so it takes longer to gather information and it’s harder to have a complete financial picture. Rather than relying on a separate system to handle your accounting needs, look for a property management solution with built-in accounting to save your team time on re-entering data and increase accuracy. Since everything is in one place, a fully integrated system like AppFolio can eliminate the pain of accessing and understanding the essential data that drives your business.

Homelessness in California: Are High Rents the Problem?

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By Frank Gallo, Member, Apartment Association of Greater Los Angeles

A recently published study by the University of San Francisco on the California homelessness crisis concludes that the inability to pay rent was a major contributor to homelessness. In my opinion, the study is a good start but seems to be incomplete since it does not indicate for what reasons did those individuals stop paying their rent.

The survey and interviews used for the study attempt to identify the causes of homelessness while trying to understand why people remain homeless. Unfortunately, the study fails to address some major issues that are the intrinsic causes of the problem. What life crisis resulted in the individuals becoming unhoused? More importantly, how can we prevent those life crises that resulted in people becoming homeless? Creating housing for the now homeless would not prevent them from going back to the streets or prevent others from becoming homeless, it would just make the problem popular with politicians and well-paid non-profit organizations that continue to perpetuate it.

Evaluate Your Real Estate Portfolio by Creating Cash Flow Statements

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By Christopher Miller, MBA

For over 20 years, I’ve helped investors lessen their landlord responsibilities through the use of 1031 Exchanges and Partial Interest Properties.  Many investors have asked me “Which of my properties should I sell first?”   I’ll answer that with a question: “Which are the lowest performing?”  Some investors may have owned several properties over many decades but can’t answer that question.   This month, we’ll review how to create a cash flow statement on your property, calculate your Return on Equity, and estimate your Property Value.

The Fun Part – Add Up Your Income

First, we’ll need to add up your gross receipts from the property.  This will include monthly rent payments and other income from laundry or parking.  It is important to note that Tenant Deposits do not count as income since you will need to pay that back at some point or use it for repairs.  Write down your annual monetary collections as A.  I’ll use $100,000 as an example.

What is the “Pain Factor” of Your Investments?

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By Christopher Miller, MBA

At a trade show recently, I spoke with a new real estate investor who was experiencing pain with his investments.   For his first experience as a landlord, he chose a rent-controlled 4-unit property.  This property, it turned out, causes more pain than he is ready for: as he inherited 2 (so far) problem tenants.

This month’s article isn’t a judgement on which properties are better than others – the answer to that will depend on an individual investor’s wants, needs and unique circumstances.    A property that is too painful for one may be just right for another.  This month, we’ll discuss the “pain factor” of real estate investments to help decide which may be right for you.  I will illustrate with some examples.

12 Genius Email Tips To Help You Master Property Management

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By Max Glassberg, YardiBreeze

In the competitive landscape of property management, effective communication is your edge. It’s not just about sending emails. It’s about standing out and building trust. With tools like Yardi Breeze, you can differentiate yourself from competitors, engage prospects and foster lasting relationships with current renters. These email tips unveil key strategies to optimize your outreach, ensuring you’re not just heard, but remembered. Use these practical email tips to help you master the art of property management.

Legal Corner

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By Michael A. Brennan, Esq., Brennan Law Firm

Question.     I just purchased a small building and I’m trying to determine the names of the tenants living in the units. I did receive rental agreements during escrow, but the tenant information doesn’t seem to line up with the tenants living in the apartments. I can’t even seem to find the telephone numbers for several of the residents. I’ve purchased properties before, and I know the importance of reviewing the files and doing thorough due diligence before closing escrow. Usually, I am much more thorough before closing but, in spite of the sloppy record keeping, this was a good deal and the seller needed a fast close.  Now that I’m the owner, is there anything I can do to clean up the records?

The Failure of Housing First: How Bad is It and What Can We Do Better?

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By Tim Campbell

This is Part One of a two-part review of Housing First.  Part One details how badly Housing First has failed. Part Two will look at successful alternatives.

Before critiquing Housing First’s performance, we need to look at its history, then define what it is and what it’s supposed to do. Housing First was developed in the early 1990’s by Dr. Sam Tsemberis, a faculty member of the Department of Psychiatry at New York University’s School of Medicine, based on his research on the positive outcomes when people were housed before receiving supportive services.  At the federal level, Housing First was adopted as a service model during the George W. Bush administration and became HUD’s mandatory funding model for homelessness programs in 2013. In 2016, California made it a cornerstone of its funding to local governments. It has been supported by the federal and state administrations of both parties.

Protecting Your Multifamily Business from Fraud

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By the Team at Entrata

Fraud in the multifamily industry today is rampant. It’s not a matter of “if” you’ll experience fraud, but “when.” If you aren’t taking the necessary measures to prevent fraud from happening and mitigating the risk of potential fraud, you’re opening a pandora’s box that could lead to lost revenue that you may never recover.

While technology introduces the potential for more fraud to occur in the multifamily rental business, there are strategies and tools that when implemented, can significantly reduce your risk of potential fraud. Throughout the rest of this article, we will outline best practices you can follow for mitigating risk of potential fraud by rental applicants.