In a landmark settlement, a property management company and its landlord have agreed to pay a significant sum following allegations of violating the Servicemembers Civil Relief Act (SCRA).
The U.S. Attorney’s Office, Eastern District of Virginia, recently announced the settlement involving a claim between a servicemember homeowner and their landlord and property management company, McGowan Realty LLC, operating as RedSail Property Management. The complaint alleged that the defendants violated the SCRA by imposing early lease termination charges and additional rent on a servicemember.
The SCRA is a federal law enacted to provide legal protections and relief to active-duty servicemembers of the United States Armed Forces. Originally known as the Soldiers’ and Sailors’ Civil Relief Act (SSCRA) when it was first passed in 1940, it has undergone amendments and updates over the years.
The SCRA aims to ease the financial and legal burdens placed on servicemembers during active duty by postponing or suspending certain civil obligations. For example, the law allows servicemembers to request a postponement of civil court proceedings, such as lawsuits, foreclosures, or bankruptcy proceedings if their military service materially affects their ability to participate. It also protects servicemembers’ property, such as vehicles, against repossession for nonpayment while they are on active duty.
This lawsuit involved a different provision of the SCRA, which allows servicemembers who receive permanent change of station orders or are deployed for at least 90 days to terminate their residential leases without penalty. Landlords are prohibited from imposing early termination fees or requiring payment of rent beyond the termination date specified in the SCRA.
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Here, the defendants refused to honor a servicemember’s lease termination after he received a permanent order to a new duty station 33.5 miles from his residence in Virginia Beach. The defendants argued they were covered by the Virginia Residential Landlord and Tenant Act. Unlike the SCRA, the Virginia law allows servicemembers to qualify for early lease termination only if they must relocate 35 or more miles from their current residence. Therefore, the defendants forced the sailor to pay $3,408.55 in early termination fees plus additional rent.
The Department of Justice argued that the SCRA offers “relief to servicemembers who would otherwise be forced to pay rent for housing they cannot occupy because they have been ordered to move to another location.” The federal law, they argued, trumped state law in this case because the SCRA has no distance limitation. Moreover, while the SCRA allows a landlord and tenant to waive the applicability of the rules, there was no such waiver in this case. A waiver must be executed in writing separate from the lease.
After spending 14 months and $50,000 in attorneys’ fees litigating the case, the defendants opted to settle. The consent decree requires the defendants to pay the servicemember $10,225.65, which includes the unlawful termination fees and additional rent plus two times the unlawful fees and additional rent assessed. The decree also orders the defendants to pay a $3,000 civil penalty to the U.S. Treasury. Moreover, the company must provide SCRA training for its employees and avoid imposing the 35-mile restriction on leases involving qualifying service members and their dependents.
The resolution of this case sets a precedent for the protection of SCRA rights nationwide. All landlords should be aware of how the SCRA affects their relationship with tenants. In litigation failure to provide a servicemembers affidavit can derail proceedings, wasting the time, effort, and resources of the landlord. Even out of court, failure to abide by SCRA rules can be an expensive mistake.
Source: JD Supra by Ryan Kennedy
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Written by Emily Koelsch
Out-of-state investing is an increasingly popular strategy for real estate investors. Property values vary significantly from one state to the next. For investors who live in expensive markets, investing out of state often means a lower entry price and an increased rate of return.
In addition, there are lots of tools available to make it easier to manage rental properties from out of state. This means that investors can still self-manage their properties to further improve returns.
The combination of these factors has made out-of-state investing an increasingly popular choice. That said, it presents some unique risks and challenges for investors. To help you decide if this strategy is right for you, here’s a look at some things you need to consider before investing in out-of-state real estate.
Research is one of the keys to successfully investing in new markets. Before picking a location, you want to do plenty of research to ensure it’s a good option for the short- and long-term. Look at a variety of different data points, including:
Once you’ve found a market that you’re comfortable with, you’ll also want to do a full financial analysis of any properties you’re considering. This should include:
This analysis will give you an estimate of your monthly cash flow and your return on your investment. Doing this analysis is important in all markets, but it’s particularly important when entering a new area or market.
Once you’ve found a market and property you like, the next thing to do is build a local network and team. This should include:
This is the core team you need to purchase and manage a rental property remotely. You can also benefit by having a network of local real estate investors or by connecting with neighbors who can help keep an eye on your property.
Each state has its own Landlord and Tenant laws. These laws can impact how you manage your property. For example, state laws control:
Before entering into a Lease Agreement, Landlords need to be familiar with the laws of the state where their property is located to ensure that they comply with all applicable laws.
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Out-of-state rental properties can make taxes more complicated for investors. Because you’ll be earning income in a new state, it can impact how you run your business and file taxes. Before investing in a new state, talk with your CPA or tax professional about the tax implications of expanding your portfolio in a new state.
Despite the unique challenges that can come from investing out of state, many investors decide it’s the right choice for them. If you decide to move forward with this strategy, here are some tips to help you get started:
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By John Triplett
The FBI searched property management company Cortland Management’s headquarters in Atlanta in an unannounced search on Wednesday, May 22, according to several reports, as part of a multifamily rent price-fixing investigation.
National apartment developer Cortland Management’s Atlanta office was searched by the FBI under a limited search warrant, a representative for Cortland confirmed. The warrant was connected to an investigation by the Department of Justice (DOJ) into potential antitrust violations in the multifamily housing industry, according to a statement from Cortland.
The FBI property management search is part of a criminal antitrust investigation by the DOJ into allegations that Cortland and other property management companies have been involved in a conspiracy to artificially inflate apartment rents.
“We are cooperating fully with that investigation, and we understand that neither Cortland nor any of our employees are ‘targets’ of that investigation,” Cortland said in a statement. “Due to the ongoing litigation, we cannot comment further at this time.”
The FBI property management search took place May 22, according to MLex, which first reported the news.
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Cortland builds and manages apartment projects in most major markets across the United States, with a nearly $21B portfolio as of September, according to its website. Courtland manages 85,000 rental units across 13 states, including Arizona.
Cortland joins several other large real estate property management companies under investigation for creating a rental monopoly. The investigation is tied to RealPage, a co-defendant and consulting firm whose software has been used to determine the maximum amount rent could be raised, then doing so in tandem in a manner Arizona Attorney General Kris Mayes has characterized as monopolistic.
“The conspiracy allegedly engaged in by RealPage and these landlords has harmed Arizonans and directly contributed to Arizona’s affordable-housing crisis,” said Mayes. “This conspiracy stifled fair competition and essentially established a rental monopoly in our state’s two largest metro areas.”
Multiple tenants across the country have sued RealPage, claiming the tech company’s apartment software helped landlords collude to inflate rents. The lawsuits from around the country were consolidated in federal court in Nashville.
The Justice Department wrote that in the past, collusion has happened with “a formal handshake in a clandestine meeting,” they wrote. “Algorithms are the new frontier, and, given the amount of information an algorithm can access and digest, this new frontier poses an even greater anticompetitive threat than the last.”
A ProPublica investigation last year found that Texas-based software provider RealPage used rent-setting algorithms to recommend rents to landlords across the country to maximize profits — a practice that experts said may violate antitrust laws.
RealPage has denied the allegations.
“Antitrust enforcers have struggled to apply decades-old laws to new technologies such as RealPage’s rent-setting software, which have changed the way competitors interact with one another and with customers,” ProPublica says.
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By Ryan Squires
For landlords, property management bookkeeping is one of those ugly little jobs that must be completed day in and day out. As rent payments come in, expenses go out, and stacks of receipts pile up, it’s easy for landlords to lose sight of their financial pictures.
Imagine facing tax season with disorganized records, struggling to understand your true profitability, or missing out on potential tax deductions because of a misplaced receipt. Solid bookkeeping can help you eliminate these concerns.
That’s why we compiled a list of the five most essential property management bookkeeping tips to help you stay organized throughout the year. If you put in the work upfront, recording your finances and preparing for tax time gets much easier in the long term.
Landlords’ most important step is to build a solid financial foundation. The first step? Establish a system that allows you to track income and expenses accurately.
Open separate accounts for your rental business. And we’re not just talking about opening a single business account that keeps your personal finances separate.
Consider opening an account for daily transactions, a security deposit account to hold tenant funds (which may be required by your state to be interest-bearing), and additional accounts to fund major repairs or capital improvements.
A chart of accounts is the backbone of your bookkeeping system. It categorizes all your income and expenses so you can sort them out easily. Create separate income accounts for rent, late fees, application fees, and pet fees (if applicable).
In terms of expenses, these can include property taxes, maintenance and repairs, management fees, insurance, and utilities (if you, the landlord, pay them). Keep in mind that you can customize your chart of accounts to accommodate whatever needs you have.
Choose between cash and accrual accounting methods to properly document your income and expenses on your tax returns. Let’s briefly discuss each system to find what’s best for your property management bookkeeping system.
The cash accounting system is more straightforward and easy to understand of the two systems. With the cash accounting system, you record income when it’s received and expenses when they’re paid.
For example, when you receive a rent payment, you’ll record it. If your tenant misses a payment, you won’t. As a result, the cash accounting system provides real-time cash flow visibility and a clear picture of your immediate financial situation.
On the downside, cash accounting doesn’t provide the most accurate profitability picture. Your records won’t reflect income earned if it’s not yet received, nor will you see expenses incurred but not yet paid, which makes it harder to get a view of your actual financial standing at a glance.
Accrual accounting is a bit more challenging to understand than cash accounting. This method records income as it’s earned and expenses as they’re incurred. For example, even if a renter misses a payment, you’ll still record it.
On the other hand, if you hire a repair worker and agree to pay them next month, you’ll still record the expense as if you exchanged cash that day. The benefit is that you’ll gain insight into where your accounts are headed rather than where they stand now.
In terms of drawbacks, accrual accounting is more complex to implement. Landlords using this system must track outstanding invoices and accrue expenses. But, if you have a large number of properties, the system can help you get a better overall view of your overall financial health at a moment’s glance.
Of course, the preceding were just a few pros and cons of both systems; diving deeper into each is important to see which will work best for you. If you have a very small portfolio, cash accounting makes sense because it’s simple. But, as your number of portfolios scales, you may want to consider the accrual method.
Software like REI Hub helps landlords keep track of all their income and expenses without manual data entry. REI Hub enables you to link your bank account to import expenses and income quickly and securely for increased accuracy.
Plus, with secure document storage, you can snap photos of receipts and keep them in a single, digital location rather than searching for them in drawers or shoeboxes.
Now that you’ve got an idea of how to lay your bookkeeping foundation, the work shifts to ensure a solid and reliable flow of transactions. The best way to start streamlining your processes is to use property management software with the following features.
With online rent collection, landlords can easily collect rent without the hassle of meeting tenants in person and depositing cash, checks, or money orders at the bank. Plus, with the right software, all your income gets automatically recorded for easy bookkeeping.
Additionally, software providers like TurboTenant enable landlords to send late payment reminders and automatically apply late fees.
You could manually record your rental property expenses via a spreadsheet, but as you scale your properties, the number of transactions increases markedly. Instead, use bookkeeping software from TurboTenant to effortlessly record each transaction, store digital receipts, and effortlessly send those transactions to REI Hub for streamlined tracking. It’s property management bookkeeping simplified.
As alluded to in the expense tracking section, you can use software to automate some of your more repetitive tasks.
Software like REI Hub enables landlords to record monthly transactions automatically with their Rules system. Systems like this match transactions based on their amounts and descriptions and apply them to specific properties, revenue, or expense accounts.
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Bank reconciliation is comparing your bank statements to your bookkeeping records. It’s a critical step toward ensuring the accuracy of your financial data because it helps landlords identify discrepancies.
You can choose to reconcile your accounts at any frequency that makes sense to you, but many landlords perform the task every month. You could reconcile accounts by manually comparing bank statements with transactions made in a spreadsheet or in bookkeeping software. Alternatively, software like REI Hub can automate the process to ensure smooth sailing.
Regularly running reports provides landlords with valuable insights into their business performance. Aside from performance considerations, running reports gives landlords financial clarity to help make informed decisions, prepare taxes, and track investments.
Landlords should consider generating the following reports consistently, and many different accounting software brands offer these types of reports.
Profit and loss statements, or P&L statements, summarize your income and expenses over specified periods. They’re essential to calculate net profit and identify areas where you can optimize rental income.
If you’re looking for a snapshot of your financial position at a specific point in time, create a balance sheet. In a single report, balance sheets show assets, liabilities, and the owner’s equity.
If you have more than a couple of properties, utilizing rent roll reports can help you understand how much rent you’ve collected on a per-property basis. They’re essential reports that help landlords get a quick at-a-glance look at who has and hasn’t paid rent.
Schedule E forms are less directly relevant to understanding a property’s financial health on a day-to-day basis, unlike P&L statements, balance sheets, and rent rolls.
Instead, think of it as a yearly report card specifically for tax purposes. Landlords use Schedule E forms to report all their rental income and expenses (including depreciation) for the entire tax year to the IRS. This helps them determine their taxable income from the rental property and claim any eligible deductions to minimize their tax burden. It’s a crucial step in ensuring accurate tax filing for rental properties.
For landlords, maintaining a well-organized bookkeeping system is critical for your long-term success. Tax time will be difficult if you can’t properly account for all the income and expenses of running a property management business.
Plus, staying organized will help you understand precisely where you stand financially. Not only is it good business sense, but it’s critical if you want to create passive income and stay in business.
TurboTenant’s software enables landlords to collect rent online and record expenses from the mobile app. Then, income and expenses can automatically be filtered into REI Hub for streamlined financial tracking — consider it property management bookkeeping on easy mode.
Sign up for a free TurboTenant account today and add bookkeeper to your list of titles.
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Written by Emily Koelsch
On March 15, 2024, the National Association of Realtors (NAR) reached a landmark settlement in a pending lawsuit over real estate commissions. The lawsuit was brought by a group of home sellers who challenged how NAR and real estate brokerages set commission rates.
Here’s an overview of the lawsuit, details about the settlement, and a look at the shifts expected from this industry-changing litigation.
In 2019, a group of home sellers in Missouri filed a lawsuit against NAR and several brokerages claiming that they conspired to keep real estate commissions high and to force sellers to pay the commission of the buyer’s agents.
In October 2023, a federal jury ruled in favor of the home sellers and ordered the defendants to pay nearly $1.8 billion in damages. NAR initially said it would appeal the verdict, a process that would take years. In a surprising shift, however, NAR agreed to settle the case in March.
In its settlement, NAR agreed to pay $418 million in damages and, notably, agreed to changes in the rules governing the home selling and buying process.
Here’s a look at the most notable rule changes from the settlement:
The changes will go into effect in July, pending court approval.
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While these changes should officially go into effect in July, there likely will be some lag time before they cause major shifts in the industry. Even so, this settlement promises to change how people buy and sell houses.
Broadly speaking, the settlement should lead to:
Some additional changes that we’d expect to see over time are:
All in all, we think big changes are ahead for home buyers and sellers. These changes should lead to reduced transaction costs for investors and more options when buying and selling properties.
It will take some time to see the full effects of the settlement, but it’s safe to say this is the biggest change for the real estate industry in decades. To stay up-to-date with any changes or additional real estate news, visit ezLandlordForms.com.
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From professionally managed units to resident-hosting collaborations, owners, operators, and renters are finding the perks of renting out units for the short term.
Although March 2020 placed a screeching halt on travel and the short-term rental (STR) industry, what has blossomed post-pandemic for multifamily owners and operators is the opportunity to gain a healthy extra revenue stream and offload a little cash flow risk.
Remote and hybrid work continues to flourish, making the option of renting for the short term doable for many Americans. Yet, how this ability and its growing group of “subscribers” are harnessed through STR providers and hosts can make all the difference.
“With apartment vacancies on the rise, multifamily operators and owners need to be creative and innovative when looking for opportunities to maximize asset value,” says Jason Fudin, CEO and co-founder of Placemakr, which offers nightly, short-term, and long-term stays in apartment settings either owned or powered by the company.
“The good news is that there is a very clear way to bring cash flow back to—or better yet above—previous levels. The most effective way to do this is to tap into other customers where there is plenty of demand. Our recommendation? Furnishing vacant units to support short-term rental customers,” Fudin adds.
Flex rental operator Kasa continues to see a growing demand for various lengths of stays in apartment settings as travelers prioritize flexibility with a little more space. Roman Pedan, founder and CEO of Kasa, says millennial and Gen Zers are especially choosing experiences over things, which fuels the need for furnished rentals for the “self-directed, digital native, modern traveler.”
Pedan shares, “Properties that lack furnished rentals are invisible to this large and growing segment of housing/living demand. Over time, we believe that catering solely to long-term unfurnished and long-term furnished demand and ignoring flexible any-length-of stay rentals will be as unheard of to a property as not allowing pets [and, indeed, until consumer demand proved too strong, not too long ago, pets were banned from most properties]. Long-term properties need to serve the needs of their consumers, and that means providing a form of housing that is more dynamic than the 12-month unfurnished lease.”
At Kasa, the most common guests are business travelers, families traveling with children or with other families, and people living on the road for extended periods of time. Whether through Kasa-powered properties or partnerships with multifamily owners or operators, like AMLI Residential and Greystar, Kasa has found that the average length of stay is roughly six nights, and over 30% of nights are from people staying 30-plus days. Pedan says the average age of a Kasa guest is older than some might guess at 40, with an average income over $100,000, matching the income of residents in Kasa-powered properties.
This pool of short-term renters is an ideal target for multifamily owners and operators who are looking to fill vacancies as record new supply comes online this year. Whether through units set aside and managed by a STR provider or by the operator itself, a once-vacant apartment can become an additional revenue source with minimal investment.
“With lower-than-average deal volume and stagnant rents in many markets, operators increasingly seek opportunities to grow ancillary revenue while vigorously defending occupancy. Enter short-term rental as an amenity, representing operators’ competitive advantage,” says Jesse Stein, Airbnb’s head of real estate. The company collaborates with operators and renters alike through its Airbnb-friendly apartment program.
The program gives prospective renters the ability to stay at more than 400 Airbnb-friendly apartment buildings with more than 125,000 units on the platform across over 40 markets, including 127 cities and 17 states. Stein says, “When primary residents can host their apartments, rent becomes more affordable. Since its launch in November 2022, the median income generated per resident in the Airbnb-friendly apartment program has been $3,500, with the typical host hosting for 30 nights.”
Sentral president Lisa Yeh shares, “Multifamily owners are slowly coming around to the fact that, when done right, STRs can be a valuable piece of their overall strategy. At the same time, we’re seeing the STR industry begin to embrace partnerships with multifamily properties.” STRs are approximately 15% of Sentral’s 10,000 units under management, but Yeh says of those properties that do offer STRs, they consistently see net operating income rise an average of 20%.
In addition to boosting revenue for multi-family owners and operators, the ability to offset high rental costs can also be appealing to residents, especially if they are already away traveling for business or pleasure. Yeh says, “In today’s uncertain economy, adding another revenue stream is almost all upside—provided, of course, you manage the mix correctly. One surprising benefit is that many residents enjoy engaging and connecting with people who are there for a shorter period of time, so it actually bolsters our sense of community.”
She adds, “Most Sentral communities with short-term units are ranked in [J Turner’s] Elite 1% for customer service scores. For example, our Chicago asset with 25% STR units is ranked as one of the best multifamily buildings for customer satisfaction—while driving 15% higher revenues thanks to the STR mix.”
Offering a mix of various lengths of stay can also give potential renters the opportunity to “try out” a community. “Flex rentals can be used as a zero-cost leasing channel for the property. After booking, about 4% of Kasa guests self-report that they are visiting the property because they are ‘considering a move,’” Pedan notes. “Kasa shares both offline and online leasing materials about the property with these guests to increase the odds that they lease at the property. This becomes a very targeted channel for owners to accelerate leasing and let prospective residents ‘try before they buy.’”
Building on residents’ boosted sense of community that Yeh mentions, Pedan adds that STRs within multifamily communities can also create a landing place for family or friends of residents who may not have the space to accommodate visitors themselves.
“Not only do flex rentals not detract from the rest of the community but—when done right—they can create an amenity for the rest of the property’s residents. This is because flex rentals can be used by visiting family and friends as inexpensive accommodations,” Pedan says. “Residents of a Kasa property can host traveling friends or family in the fully furnished and professionally designed Kasa units at their property, offering a more convenient, cost-effective, and comfortable alternative to a pullout couch or a downtown hotel.”
Greystar, who partners with Kasa but also Airbnb for resident hosting, has seen the advantages of allowing its residents to host their spaces through STR programs. Young Hill, managing director, flexible living strategic services, at Greystar, says, “The benefits of hosting include program parameters, oversight for community teams, a revenue share for owners, and responsible hosting in collaboration with Airbnb to deactivate ‘bad actors.’ Additionally, there is a new demand for long-term unfurnished leases from renters seeking affordability by hosting their homes.”
Greystar also has its own network of branded short-term units, ShortStay by Greystar, which ensures the company’s residents convenient access and exclusive perks as they explore the United States. The units range in availability from one night to 30-plus nights, are fully furnished, and professionally serviced in Greystar-managed communities, Hill notes.
Now a little over one year into its collaboration with the Airbnb-friendly marketplace, Hill anticipates that over 300 Greystar properties will become available this year in terms of resident hosting.
Like Greystar, Sentral also offers a mix of STRs and units listed on Airbnb by its residents. Yeh says, “It’s a natural fit for our company, since one of our main differentiators in the multifamily space is our inclusion of high customer service combined with hospitality-inspired amenities like valet parking, concierge services, rooftop pools, high-end fitness centers with group classes, curated resident events on-site and off-site, Tesla shares, and complementary food and beverage offerings.”
Placemakr’s Fudin adds, “Because this mixed-use approach has proven to help owners weatherproof their assets’ income through various headwinds (think COVID), it is likely that this blended approach of furnished and unfurnished units will become the industry standard. Many of us affectionately refer to this blended asset as flex living.”
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Of course, the horror stories of nonapproved resident hosting still ring in some multifamily owners’ and operators’ ears when considering the idea of allowing residents to rent out their spaces—and guests having access to the community’s often high-end amenities. Before regulations were set, some residents took it upon themselves to rent out their spaces without permission, causing not only trouble for residents, but also their neighbors.
And while the concerns of short-term guests who do not follow community rules are valid, providers like Airbnb and Kasa have set processes to not only maintain the quality of the communities but transparency between the community and its full-time residents.
“Contrary to belief, guests are screened through Airbnb’s platform. Concerns about a constant flow of short-term guests disrupting community dynamics are mitigated by limits on the percentage of residents allowed to host and night limits. A key factor in the Airbnb Resident Host program is that hosts are primary residents hosting their unit ‘part time,’” Hill says.
Airbnb’s Stein adds, “We’ve certainly heard operators’ concerns about safety, overall building sentiment, and STR activity happening in buildings without permission, and we have successfully built a program to alleviate these concerns.”
Safety and security systems echo throughout other STR providers’ protocols as well. Pedan says, “The most sophisticated operators have made significant progress in trust and safety systems, creating value for the rest of the community and in reputation management, and revenue generation systems.”
When selecting a STR provider, Pedan recommends that multifamily owners and operators ask a series of questions regarding trust and safety systems. He shares, “In addition to doing background checks and utilizing decibel meters and ID verifications, ask, ‘Does the flex rental operator also have cigarette and marijuana sensors, predictive risk scoring, and motion and Wi-Fi over usage detection? Does the operator track incident rates, and, if so, how does their incident rate benchmark to others?’”
Outside of direct concerns related to short-term guests, he says it is important to look at how a particular program typically impacts the lease-up and value to long-term residents for the rest of a property as well as the online reputation of a STR provider’s properties. To look at guest review scores, a quick Google search of properties and checking TripAdvisor can paint a clear picture.
However, before even approaching the possibility of offering STR units or resident hosting, city regulations can pose some obstacles. Pedan says, in some instances, a regulatory approval process to operate a flex rental is necessary. “These processes can be as straightforward as an over-the-counter license obtainable in a week or a few weeks to a longer process. The longer processes, while more difficult upfront, serve as a deterrent for competing buildings from activating the same program and serve to distinguish a property that activates flex rentals from competing properties in the same city,” Pedan says. “At the same time, cities benefit from the added tax revenue from the occupancy taxes that flex rentals generate.”
He notes that STR or flex rentals can also add to city housing supply because they can help be the difference between a property that is able to access construction debt and equity capital to be developed versus a property that is not financeable. From his experience, he says, “In such a case, allowing a portion of a property to operate as flex rentals adds to the housing stock of a city since a portion of the property operated as furnished rentals allows for the whole property to get built.”
For developers, Pedan says Kasa units typically begin generating cash flow much earlier during lease-up and can generate cash flow in excess of a market rent at property stabilization.
Amid the country’s dire housing shortage, to finance more development through this additional channel is an opportunity that could rise in popularity. However, the newer STR industry has evolved—and will continue to evolve—in its brief time of operation. Stein says, “The pandemic caused a lifestyle shift for millions of people, and suddenly people could travel and work simultaneously. With many still working from home or in a hybrid model, this flexibility is a key part of the Airbnb-friendly apartment offering, allowing renters to take advantage of their flexibility from a monetary standpoint.”
In the near future, Greystar’s Hill says, “The STR or flexible living industry is expected to see consolidation among ‘branded short-term home managers’ due to funding challenges, regulatory restraints around ‘professional hosting,’ and lending requirements. Despite this, the demand for flexible living is not expected to slow down.”
She continues, “Resident hosting is poised to fill a portion of the gap resulting from a lack of supply of STR providers in certain markets. The sharing economy and the rise of digital nomads will continue to influence how the multifamily sector views alternative accommodations.”
While the addition of STR or flexible living options can present various challenges, according to all five professionals in the industry, the benefits of increased income and reduced cash flow risk can heavily outweigh the risks, especially in a time where market uncertainty is prevalent.
Pedan shares, “Flex rentals give owners or buildings access to a growing and not correlated demand segment. Take how they can be used to protect against future new supply in a market, as an example. As new supply gets built, a property without flex rentals will lose occupancy and thus cash flow.”
Yet, STRs and flex living options can provide added protection that is also easily removable if needed. He concludes, “A property with flex rentals can increase the percentage of furnished flex rentals [when a property loses occupancy] and increase exposure to the uncorrelated demand segment. This staves off a reduction in cash flow. Of course, if the flex rentals are not producing enough income, owners can always convert them back to unfurnished rentals. The impact of this is that a property with furnished rentals will have fewer volatile cash flows mathematically, which conceptually means the cash flows are less risky.”
As multifamily communities air on the side of hospitality through flexible and shorter stays, the same ingredients found in luxury hotels and exclusive clubs are making an appearance in apartment living.
Concierge services, unexpected amenities, and keyless entry are just a few additions many multifamily communities are implementing. Sentral president Lisa Yeh says, “In most multifamily communities, amenities like fitness centers and workspaces are simply a box to be checked. At Sentral, though, we’re committed to offering luxurious amenities and custom programming that bring residents together in fun and unique ways while creating an exclusive atmosphere reminiscent of a private membership club.”
She adds, “We also host a steady stream of unique residents-only events–everything from cooking classes to private performances by the San Francisco City Ballet. While we see rents slowing down in certain markets, Sentral is outperforming the submarket by up to 25% for our unfurnished products thanks to our ability to drive higher rents through our hospitality services and offerings.”
In addition to programming, real estate investment and management firms like Jamestown are launching new hospitality living concepts to boost the flexible living experience. In Atlanta’s Ponce City Market, Jamestown is developing Scout Living, a 405-unit development that prioritizes flexibility with virtual check-in, keyless locks, and 24/7 access to building and tech support.
The community will offer flexible lengths of stays from a single night to a year, and anything in between. With a rooftop pool, a wellness studio, a terrace, reservable residential-style living rooms, and a chef’s kitchen, Scout Living has been envisioned to provide the comfort and community of home with hospitality-inspired services and amenities.
“Over the past few years, there has been a shift toward a more meaningful integration of live, work, and travel,” says Michael Phillips, president of Jamestown. “Designed to meet that evolution and serve a broad range of lifestyles, Scout Living can be a starter residence for someone new to a city or home base for someone living and working across multiple cities. With Scout Living, we are creating a new, flexible living experience that recognizes the need to anchor home in convenience, connection, and community.”
Scout Living will provide access to food, services, and goods at the touch of a button, as well as private Wi-Fi networks, which will reach throughout the building, the firm says. Guests will also be able to request laundry and dry-cleaning services, restocking of necessities for longer stays, housekeeping, and more.
In similar fashion, with Placemakr’s mission of flexible-use hospitality and multifamily operations, the company continues to launch pop-up hotels through partnerships with multifamily owners and developers. The latest concept being Placemakr Cathedral Heights in the heart of Washington D.C.
Offering studios to two-bedroom units, the signature pop-up hotel allows guests the ability to experience what it’s like to be a resident at Upton Place, a newly constructed luxury apartment building developed by Donohoe and Aimco. The property houses 689 residential units, 150 of which will be available for short-term guest booking for a short period of time.
Source: Multifamily Executive
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Tenant screening is a crucial element of any rental property business. A detailed look into an applicant’s criminal, financial, and eviction history gives landlords insight into a potential tenant’s history before committing to a business relationship.
But there is another type of screening that goes beyond the routine: drug testing. With housing resources scarce and the consequences of an unfit tenant potentially disastrous, you may wonder if you can drug test tenants who apply to live in your rental property.
The answer is yes. You can drug test applicants as long as you test every prospective tenant who applies to your dwelling. Once tenants move in, however, you can’t randomly screen residents unless your process is specified in the lease and agreed to by the tenant. However, different housing arrangements, such as sober living facilities, may require drug testing as a condition of housing.
Of course, as with most things related to the legal system, there are a number of considerations you’ll need to be aware of before including drug testing in your screening processes.
Did you know that instead of collecting a large application fee and having to issue a receipt showing what that fee was used for, you can just send a link to your tenant to pay for their own screening fees? At TurboTenant you can do this and so much more using the amenities of a FREE account!
As it relates to Fair Housing Act (FHA) protections, formerly addicted drug users are considered a protected class. You cannot simply deny an applicant due to past drug addiction as long as they’re deemed rehabilitated and can prove it via documentation.
It is important to state, however, that those FHA protections don’t apply to those in active addiction to illegal substances. In other words, if an applicant continues to use illicit drugs, they’re not considered a protected class.
The issue with drug testing prospective tenants arises when landlords seek to only drug test individual applicants on suspicion of drug use or revelations of past drug addiction. Suppose a renter suspects a landlord is singling them out and forcing them to drug test as a condition of renting a property while other prospective tenants aren’t facing the same scrutiny. Now, suppose they’re correct in their assumption.
In that case, the tenant could sue the landlord for violating fair housing laws. The bottom line: If you’re going to drug test your applicants, you must test every single one.
Of course, unlike illicit drugs, alcohol is not an illegal substance. As a result, different rules apply. Those experiencing alcohol abuse disorder can be considered disabled and are, therefore, a protected class. You cannot deny this protected class housing based on the fact that they have an alcohol addiction.
While these rules aren’t strictly related to drug testing, you should understand the difference between how the FHA regulates alcohol and illegal drug addiction.
Protected classes aren’t free to pose threats to property or other tenants and still be considered protected under the FHA.
No matter the disability, whether drug, alcohol, or another disability, nothing in the FHA requires housing providers to make a dwelling “available to an individual whose tenancy would constitute a direct threat to the health or safety of other individuals or whose tenancy would result in substantial physical damage to the property of others,” as noted by the Cornell Law School.
In other words, if you were to rent to an individual with an alcohol use disorder or another addiction (treated or not) who poses a threat to your property or others in the community, their tenancy would not be guaranteed based on the fact that they have an addiction. They still need to contribute to a safe living environment.
For a deeper dive into the rules and regulations, the National Housing Law Project breaks down the actions a landlord can take, and the evidence-based requirements landlords must meet to take further action.
As mentioned briefly above, not all housing situations are the same. In these cases, drug testing may not constitute a breach of the FHA.
Housing specifically designated for sober living or recovering people with an addiction might feature drug testing policies as a part of their residency requirements.
Drug testing might be permissible under specific company policies when housing is directly tied to employment, like living on company property.
Some leases might outline drug testing with the tenant’s explicit consent. Even in these cases, however, landlords should tread carefully to avoid claims of coercion.
If you’re a Section 8 housing provider, you must account for the federal rules set to enforce safe housing conditions and how individual public housing authorities apply those rules.
The 2013 Journal of Public Policy Development and Research article “Alcohol, Drug, and Criminal History Restrictions in Public Housing” reports that some housing authorities require drug testing to receive PHA funds.
“The Indianapolis Housing Agency (2010) imposed mandatory drug testing of applicant households, whereas the Charlotte Housing Authority (2012) required applicants to sign consent forms allowing the PHA to contact third parties involved in an applicant’s life (for example, social workers, police officers, and landlords).”
The critical takeaway is to contact your public housing authority for information regarding drug testing if you use these programs. Housing authorities can enforce federal regulations via the rules they deem appropriate, and there are significant differences between PHAs.
Landlords who disregard Fair Housing Act protections and implement selective drug testing risk facing significant legal consequences.
Tenants denied housing due to a drug test can file lawsuits against the landlord for violating the FHA, provided they have the evidence to back up their wrongful denial. For example, if a potential tenant takes opioid pain medication for a disability yet is denied housing based on the results of a drug test, they can sue.
In addition to applicant lawsuits, fair housing advocacy groups or the Department of Housing and Urban Development (HUD) may sue the landlord.
If the court finds the landlord in violation, they may be required to compensate the tenant for emotional distress, moving costs, and additional expenses.
The court could order the landlord to cease the discriminatory practice and offer the wrongfully denied tenant housing.
The HUD can impose civil penalties on landlords who violate the FHA.
If you choose to drug test every tenant who applies to your rental, you’ll have an additional layer of cost and administrative work to manage. Drug tests aren’t free, and tenants aren’t likely to foot the bill.
Plus, tenants who must complete a drug screening to rent your place may choose to bring their money elsewhere. In competitive markets, a drug testing requirement may extend vacancy times and compel renters to look for properties that don’t have drug screening requirements.
Of course, every situation is different. If you’re subject to specific PHA rules, you may have no choice but to drug test prospective tenants.
However, if you’re not bound to PHA regulations, we think there are valuable alternatives you can utilize to ensure your tenant treats your property with care, maintains a safe environment for other tenants, and ensures the rent gets paid monthly.
While subject to legal limitations, background checks reveal information about criminal history or prior evictions. If an applicant has a criminal history related to drug use, manufacture, or distribution, you can choose another tenant.
But be careful; different states legislate the offenses you can deny. For example, in some states, if the tenant has a deferred sentence that wasn’t revoked, you can’t deny housing based on the charge.
Credit checks provide insight into a would-be tenant’s financial responsibility and ability to pay rent. While a credit score won’t give you the best idea of whether or not a tenant will pay their rent on time, a history of on-time payments can provide peace of mind.
Contacting previous landlords or employers for reference checks (with tenant permission) can offer valuable insight into a tenant’s rental history and behavior.
While background checks and credit checks can create a sketch of a potential tenant, conversations with those around the applicant will fill the sketch with color.
Verifying employment (with tenant approval) enables landlords to confirm an applicant has the means to pay rent on time. It’s a good way to verify that what the applicant says is accurate and that they’re employed.
Now included with TurboTenant Premium, Income Insights provides landlords with an additional check; landlords can now use information from TransUnion to compare against renter-reported income.
You don’t have to drug test applicants to ask questions related to drug use. While we don’t expect people with something to hide to answer these questions truthfully, there are some questions that landlords can ask prospective tenants.
Just be sure to ask every applicant so as not to discriminate.
Here is a list of acceptable drug-testing-related questions from Cornell Law:
(4) Inquiring whether an applicant for a dwelling is a current illegal abuser or addict of a controlled substance;
(5) Inquiring whether an applicant has been convicted of the illegal manufacture or distribution of a controlled substance.
Simply asking these questions can help you let potential renters know that you’re serious about these factors, which may be enough for them to consider other properties to rent. If they bristle at the questions, you’ll have something to consider.
Depending on your circumstances and reasoning for drug testing tenants, the process could end up being more trouble than it’s worth. Between paying for drug tests, navigating FHA laws, and risking legal action, consider a thorough screening process from a trusted partner instead.
TurboTenant’s tenant screening service delivers industry-leading screening reports that cover:
When you pair a comprehensive report with thorough reference checks, you’ll give yourself the best opportunity to land quality tenants who’ll fulfill their end of the bargain.
And if you’re a landlord looking to simplify your property management process, TurboTenant is more than a great tenant screening service. When you sign up for a free account, you gain access to rent collection, maintenance management, property advertising, and other features to help you save time and money.
By Ryan Squires
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By Kenneth Gordon
Here are 5 easy upgrades for your rentals this summer as the weather is getting nicer, the sun is shining brighter, and the days are longer, so time for upgrades to attract tenants during the moving season.
For many rental property owners, this means it’s time to get started on summer projects, which can range from very small updates to the interior to major renovation projects, such as remodeling a bathroom or replacing siding all to help attract tenants.
You can still make a huge impact by making minor changes that are simple and don’t cost a ton of money
One of the most popular trends—especially in preparation for the summer—is replacing old, out-of-date, or damaged windows with new ones. Most people don’t realize this, but we lose 25 to 30 percent of the heated and cooled air our HVAC systems produce through our windows and doors.
In other words, that’s 30 percent of the energy we pay for that ends up completely wasted. You can prevent this from happening by installing windows that provide better insulation, helping keep cool air in during the warm summer months, preventing heat loss during the winter, and reducing the frequency at which your A/C unit runs. The less you have to depend on your HVAC system, the less you’ll have to pay in energy costs.
When shopping for new windows, look for high-quality, durable materials that are insulating and will help reduce heat transfer, such as vinyl and fiberglass. When selecting glass for your new windows, choose dual-pane Low-E (low-emissivity) glass with gas fills between the panes. The more glass panes, the better—two or more will provide greater energy efficiency, improved impact-resistance and sound insulation. Low-E coatings on the glass reflect infrared light, which keeps heat out and helps protect your home’s interior furnishings from damage from UV light.
This is one of the 5 easy upgrades for your rentals that will really make a difference. With summer comes lots of sunshine and rising temperatures that can make your home feel uncomfortable – while increasing your energy costs. Not only that, but sunlight streaming through your windows can be annoying. And with more evening hours for neighbors and curious eyes to peer in, tenants will want to find a way to cover windows.
Whether you need to add window treatments to your home or replace your existing window coverings, installing new blinds or shades is a great way to help keep your home cool during the summer, improve your privacy, and update your home’s style.
When it comes to shopping for new blinds or shades, there are a variety of styles available on the market. Gone are the days when homeowners had only a few options to choose from. These days, homeowners can select from a range of styles, such as room-darkening shades, wood or faux wood blinds, and Roman shades, as well as bamboo blinds and woven shades for those who are looking for more unique and environmentally friendly coverings.
There are also a range of colors and control mechanisms to choose from, including cordless operation, which is recommended for apartments and rental homes with small children and pets.
Ceiling fans have a reputation for being noisy, outdated, and terrible for design—and perhaps this may have been true at one point in time. However, much like window treatments, ceiling fans now come in more modern options that are quiet, sleek, and elegant. There are many benefits to incorporating ceiling fans into your rental unit that go beyond simply moving air and keeping rooms cool.
For example, ceiling fans can help dramatically lower energy costs by up to 40 percent by making rooms feel cooler, allowing you to raise the thermostat and be just as comfortable. Ceiling fans are also extremely versatile and come in a variety of styles, sizes, and finishes to complement your home’s style. Many come with lights for greater illumination.
To get the biggest energy savings out of your ceiling fans, make sure you have them set to rotate in the correct direction. In the summertime, ceiling fans should rotate counter-clockwise, allowing the blades to push cooler air down; in the winter, reverse the direction so that the blades rotate clockwise, pulling cool air up toward the ceiling.
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Another simple upgrade you can make is to provide tenants with slipcovers for their furniture or your furniture in a furnished unit, to protect them from becoming damaged in the sun. You can prevent sunlight from shining in by keeping your blinds or shades closed, but for added protection—and for beautiful days when tenants want to keep the windows open—consider adding slipcovers to furnishings.
One easy upgrade that makes a huge impact is swapping out your bedding. Our needs for our homes can change greatly depending on the time of year it is. In the winter, we need thick blankets with cozy layers and plushness to combat the cold; in the summer, we need bedding that’s airier and light.
Choose breathable fabrics, such as cottons and linens that won’t suffocate you in the heat and humidity, and store your down comforter until the temperatures start to cool down again. Another simple and quick update you can make to your space is to place a few new pillows around the house to give your rooms a crisp, summery feel.
After hibernating in your home during the cold winter months, the summertime allows us the opportunity to open our windows and invite sunshine and warm weather in. Whether you have the budget to take on larger updates or you simply want to make a few small changes, these five simple updates will improve your home and invite you to enjoy it this summer in style.
These 5 easy upgrades for your rental homes will impress your tenants and keep them happy.
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Many single-family rental investors look beyond their local market to diversify their portfolios and benefit from market variety. When these out-of-state investors start, the first thing they do is research the market. They look at financing, data on home sales, rental demand, price points, local industry, job market health, etc.
Up to a certain point, the properties themselves don’t matter. After all, it’s not a personal residence. You don’t need it to suit your tastes.
At the same time, certain things about the investment properties you buy matter—a lot. As you navigate the world of single-family investing, focus on these five essential elements of due diligence.
If you’re buying remotely, you’ll need a turnkey partner. The definition of “turnkey” varies, so you’ll want to thoroughly investigate exactly what’s being offered versus not. Ideally, you’re looking for a company that owns and invests in the properties they’re selling. They’re not middlemen. They are just there to broker a deal. They should have experience, well-developed operations, and in-house or highly trusted partners for property management and renovations.
Ask hard questions. Do your homework. Know their mindset and philosophy. And most importantly, know what you want and need so that you can choose a partner that aligns with your vision.
We can’t stress this enough: No matter what property you buy or who you buy it from, get your own inspection. Remember, turnkey might mean something different to everyone. Problems you consider big might not be significant to the seller or turnkey provider.
It’s worth repeating: Get your own inspections done. Never waive them. You may want to go above and beyond for peace of mind—get the crawl space looked at and ensure your pain points are addressed.
Remember, you’re not likely going to be there for any final walk-throughs or see things for yourself in person. You need trusted eyes and ears on the ground.
We have been partners with TurboTenant for a while now. We love them for newer rental property owners because many of their services are FREE. These would be expenses that a lot of landlords do not include in their budget, like some of the costs associated with finding a new tenant.
Advertising your rental property is completely free and goes out to dozens of rental sites like Rent.com, Apartments.com, Redfin, Craigslist, and many more! So, create one ad and TurboTenant gets it out to all those sites…for FREE.
They handle tenant applications and screening, also no cost to the landlord. They have an option where you can have the tenant pay for this service, so you never have to handle reporting or recording the receipt of these fees.
Collecting rent is always FREE for landlords! Only tenants will pay if they choose to use a credit card for payment. Otherwise, ACH (our recommended method) is no charge.
Upgrade to a premium account and they provide unlimited personalized leases for less than $10 per month ($8.25). This is HUGE for DIY rental property owners! Regardless of the state where your property is located, you are covered by state specific leases and addendums. Rather use them on an as needed basis? Custom leases are $29 each.
Manage your rentals and organize your documents all in one place. Efficiency is key and you will be able to streamline your rental property business with features such as in app messaging with tenants, handle maintenance requests, plus upload and store their rental insurance information. Available for the premium upgrade noted above ($8.25 per month).
If you are looking for a straightforward, easy to navigate, and low-cost option to help you manage your rental properties, look no farther. TurboTenant is our go to recommendation of property management software for newer landlords or for ones that presently only own a few doors.
In addition to considering what your ideal residents want, consider what they don’t want. We’ve all seen properties that are just…off. Weird layouts, outdated design choices, quirky features—while these might be things someone likes, most people won’t.
You want to focus on ergonomic, appealing, and convenient properties. If they aren’t presently like this, what renovations would it take to get it there?
Sometimes it’s hard to see how inconvenient or frustrating a property can be until you’ve lived there for a while. That isn’t an option in this case, so anticipate needs and pain points. Listen to feedback as you go and seek out solutions. The more user-friendly a property, the less likely residents will have a reason to leave at the end of their lease.
Location matters in both a broad and a specific sense. It’s the one thing you can’t change about a property. Be strategic. An imperfect house can be improved over time if the location is ideal.
At the same time, a perfect property in a poor location may have trouble staying occupied. Be mindful of the specifics.
You’re investing from a distance. Sometimes, it’s hard to know all the details, let alone focus on them. This is where your turnkey partner and property management team come into play. From the very beginning, you should only be with partners you trust to uphold a standard of excellence you can sign off on. They’re the ones who will see things and fix things—or not.
Sloppy renovations and corner-cutting maintenance efforts aren’t good enough. Leave your property in the hands of people who value quality from every angle. No investment property will be perfect—but they can get close! Choose stewards who show pride in their work and value your investment.
Provided by REI Nation
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By Tom Scalisi
Wildfires are dangerous and destructive. Following these tactics and tips can help safeguard your home—and your family.
The damage caused by wildfires can be absolutely devastating. According to a 2020 study by the nonprofit research group Headwater Economics, wildfires destroyed nearly 89,000 structures between 2005 to 2020. Worse yet, 62 percent of the losses occurred in 2017, 2018, and 2020 alone.
While wildfires might seem unstoppable (and in many ways, they are), there are ways to protect your property from fire damage. With the right information and a proactive approach, anyone can take steps toward safeguarding their homes.
In some parts of the world, wildfires also are known as brush fires because they feed on the dead brush, vegetation, and trees in drier regions. One way to slow a wildfire’s approach is to keep the property clear of those combustible materials. Cutting down dead trees as well as removing dead brush, grass, leaves, and other debris will provide less fuel for a wildfire, slowing its approach across the property.
Creating a defensible zone around your property is one of the best strategies to lessen a home’s risk during a wildfire. This zone includes everything within a 100-foot radius of the house, and it’s best to break the property into smaller, manageable zones:
The National Fire Protection Association (NFPA) publishes a guide to defensible zones that contains additional useful information on the topic.
Since flying embers from wildfires are often the causes of structure fires, protecting the roof is key. Using Class A-rated shingles will help to lessen the chances that an ember landing on the roof causes a fire.
The good news is that your roof might already be Class A-rated; most asphalt shingles are Class A-rated, and all metal roofing is Class A-rated. While these shingles won’t fireproof the home, they offer protection for its most vulnerable surface.
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Flying embers are just as likely to float into open windows, cracks in vents, and open eaves. If the threat of a wildfire approaches, it’s important to safeguard these areas from danger. Sealing off attic vents and windows with ⅛-inch metal screening will prevent embers from floating in while still allowing airflow. As for exposed rafter tails and open eaves, it’s best to box them in even though it will affect the aesthetics of the home.
If a fire approaches and you are told to leave or feel threatened, be sure to close all windows and doors and leave them unlocked. If you have time, remove flammable window coverings and move flammable furniture away from windows and doors.
You can take all the precautions in the world to protect your property from wildfires, but if you live in a densely populated area, your home is only as safe as your neighbors’ homes. Work with your neighbors to create safer yards and ultimately a safer neighborhood by following these protocols on their properties as well.
If you’re told to evacuate, ignoring the evacuation order and staying at home puts you, your family, and the crews responding to the fire at unnecessary risk. Instead, prepare an escape route. Keep your vehicle full of fuel and prepare a bag with some necessities. Also, know a few different ways out of your neighborhood to ensure you can escape regardless of the fire’s direction.
The smoke from nearby wildfires can reach across several states and affect air quality. Consider purchasing an air purifier before a local or regional wildfire starts to ensure your breathing air is safe while at home and when you return after evacuating.
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