Source: Active Duty Passive Income
Imagine owning a property where your investment not only grows but also nurtures a thriving community—welcome to the world of mixed-use properties!
In the diverse world of real estate investment, mixed-use properties are a unique and increasingly sought-after asset class. These developments, which blend residential and commercial spaces within a single project, present numerous benefits that attract both seasoned investors and those new to the field. This blog post will delve into the multifaceted advantages of investing in mixed-use properties, highlighting the potential for higher income, risk diversification, and enhanced property values.
What are Mixed-Use Properties?
Mixed-use developments are properties that combine residential units, like apartments or condos, with commercial spaces, including retail stores, offices, or restaurants. This configuration allows for a dynamic community where individuals can live, work, and relax all in one place. The setup of these properties can vary widely, ranging from a single building to an entire neighborhood designed around the mixed-use concept.
The Advantages of Investing in Mixed-Use Properties
- Diverse Revenue Streams
A key advantage of mixed-use properties is the diversification of income sources. By combining residential and commercial leases in one location, investors can access multiple streams of revenue. Residential units generally provide a steady income through rent, while commercial spaces can command higher rental rates and offer longer lease terms, contributing to a more stable cash flow.
- Reduced Investment Risk
Investing in mixed-use properties can also lower risk. These properties tend to be less affected by economic fluctuations than single-use buildings because they are not dependent on just one sector. For example, if the commercial market experiences a downturn, the residential side of the property can still generate revenue, and vice versa. This balance offers investors a degree of protection during economic downturns.
- Increased Tenant Retention
The convenience of having amenities and work close by can lead to higher tenant satisfaction and retention in mixed-use developments. Happy tenants are less likely to move, which helps to reduce turnover costs and vacancy rates. Additionally, the businesses operating in the commercial spaces benefit from the constant foot traffic from the residential community, which can help sustain their operations.
- Enhanced Property Value
Mixed-use properties often become key elements of the neighborhoods they’re in, driving up property values. Well-maintained commercial spaces can make residential units more appealing, while a lively residential community can attract businesses to the commercial spaces. Moreover, these properties often spur further economic development and revitalization in the surrounding area, leading to an overall increase in property value.
- Tax Incentives and Zoning Advantages
Investors in mixed-use properties might qualify for various tax incentives aimed at encouraging urban development and revitalization. These can include lower tax rates, grants, or other financial perks. Zoning laws in many cities are also increasingly supportive of mixed-use developments as part of a broader initiative towards more sustainable and efficient land use.
- Sustainability
Mixed-use properties promote sustainable urban growth by minimizing the need for extensive commuting, thus reducing carbon footprints and enhancing the pedestrian-friendliness of an area. This aspect of sustainability attracts tenants and customers who prioritize environmental concerns and seek convenience and quality of life in their residential and shopping experiences.
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Challenges of Mixed-Use Development
Despite the many benefits, mixed-use developments come with challenges, including the complexity of managing different types of spaces and tenants, higher initial capital requirements, and the necessity of choosing a strategic location that supports both residential and commercial activities. Investors must also navigate complex zoning laws, building codes, and an often demanding approvals process.
Mixed-use property investments offer compelling advantages for those looking to expand their investment portfolios and capitalize on the synergy between residential and commercial real estate. By understanding the unique benefits of these properties, investors can realize enhanced returns while contributing to the development of dynamic, sustainable communities. As urban populations continue to grow, the demand for integrated living and commercial spaces is likely to increase, making mixed-use developments an intelligent choice for proactive investors.
Whether you’re a seasoned real estate professional or just starting out, mixed-use properties are worth considering for their blend of flexibility, stability, and sustainability, standing out as a smart investment path for the future.
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By John Triplett
New data from the U.S. Census Bureau shows a growing number of Americans are spending at least 90 minutes each way traveling to and from work, a practice known as “super-commuting,” Apartment List says in a new report.
While the super-commuting trend is not new, the pandemic provided a “brief respite, eliminating commutes for many and reducing commute times for the rest as traffic abated. As the economy went remote, the number of super-commuters fell by over 1.5 million even as demand for suburban and exurban living remained strong,” the report’s economists say in the report.
The report says the city-to-suburb migration is more recently focused on homeownership and affordable cost-of-living options. That has encouraged families to head to the lower-density suburbs while keeping jobs in the central city.
The latest population estimates from the U.S. Census Bureau show suburbanization vividly, with high-growth counties forming visible rings around urban cores.
Wages Are Higher for Those Willing to Commute Long Distances
“The latest census data clearly show that workers are willing to trade lengthy commutes for higher incomes. In 2022, the median wage eclipses $50,000 for workers who spend at least one hour commuting, and is actually lowest for those who live within a quick 15-minute trip to work,” the Census Bureau report shows.
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The nationwide super-commuting rate is 2.7 percent, but double-digit rates can be found along the peripheries of several large metros in California and Texas, as well as Seattle, New York, and Washington, D.C.
The Los Angeles region has more super-commuters than anywhere else. The nation’s highest super-commuter rate can be found in Palmdale, a 60-mile drive from Los Angeles, where 16.9 percent of all workers commute at least 90 minutes for work.
Super-Commuting and its Implications
Apartment List senior research associate Rob Warnock writes, “The relationship between where people live and where they work continues to evolve. A record number continue working from home; however, many employers appear to be shifting back to in-person or hybrid arrangements.
“This is putting more commuters on roadways and transitways daily – including more super-commuters – and resuming the pre-pandemic trend. Worsening commutes for drivers increase car-related expenses, impact physical health, and amplify the environmental consequences of suburban sprawl. Meanwhile, worsening commutes for transit riders harm quality-of-life in urban cities and disproportionately affect the car-free households that tend to be lower-income. Altogether, this trend may increase tension between workers and employers, as they negotiate working arrangements that affect their commutes.
“Housing is, of course, central to any attempts at cutting back on super-commuting. In cities and suburbs alike, dense construction and infill development (built at a rate that scales appropriately with job growth) can improve housing opportunities so that those who wish to live closer to work can afford to do so,” Warnock says.
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By Kathelene Williams, The Fair Housing Institute
Occupancy limit policies are crucial for managing apartments, whether located in a
densely populated city or a quiet suburb. However, developing and revising these
policies can be complex. Not only do you need to be aware of fair housing laws,
but also know local laws and municipal ordinances on occupancy limits.
How could you hope to balance it all? Better yet, balance it all while trying to avoid that fair housing violation? This in-depth look into not only building your policy but also enforcing it can help you achieve that balance. First, let’s take a look at how occupancy limit policies differ depending on the type of housing.
NAVIGATING OCCUPANCY POLICIES: FEDERAL GUIDELINES VS. PRIVATE SECTOR
Starting with federally funded housing, occupancy policies are already predetermined. You can review the Keating Memo from HUD, which further explains the two person per room rule for this type of housing. However, this rule does not apply to housing such as private market or tax credit.
In all actuality, this rule has been labeled by HUD as possibly discriminatory based on familial status. Because of this, other forms of housing face the challenge of having to create their own occupancy policy and having to undergo constant revision.
BALANCING OCCUPANCY POLICIES: GUIDELINES, LEGALITIES, AND FAIR HOUSING
The best rule to follow when revising or creating your own occupancy policy is that of balance. Using the term balance as your foundation can be a little confusing, so let’s break it down.
A Balanced Policy:
First off, you need to decide upon clear guidelines without creating too much restriction. Top priority must be given to any local laws or any municipal code your property is governed under. Ensure your policy meets their minimum requirements for residents per unit or individuals per room.
The second step is to take a look at your units and your property as a whole. What can the size
and layout of the unit accommodate? Another great tip when revising or creating a policy is
resident details. This may include details such as whether a unit is occupied by all adults or if
there are children residing there as well.
There is an important note to remember when it comes to details for your residents within the
policy. You need to ensure that you do not mention specifics, such as age and gender, in order to avoid a fair housing violation. Sex is a protected category and in many states, age is a protected class.
What NOT to do:
A recent example of a property forgetting these details resulted in a fair housing
discrimination case. An apartment complex in Louisiana had a policy in place stating that two
children of the opposite sex could not share a room. Leasing agents falsely claimed that the property’s policy was based on state law when, in fact, they were discriminating against both age and sex, inciting a fair housing violation.
ENFORCING OCCUPANCY POLICIES: STEPS AND FAIR HOUSING CONSIDERATIONS
Now that you know the foundations of a good occupancy policy, it’s time to understand how to enforce it without inciting a violation. The key first step: make sure you have all the information before proceeding with a lease violation. Once you can confirm that the resident is indeed breaking your property’s occupancy policy, there are a few follow-up steps to take.
Second, follow up on disciplinary measures as laid out by your property’s policy. This may be the requirement for the resident to move to a larger unit or simply cite a violation in the lease
agreement. Remember, as a landlord, you are permitted to enforce your policy. However, there is one fair housing hurdle you and your team should be aware of.
HANDLING ACCOMMODATION REQUESTS WITHIN LEGAL LIMITS
Accommodation requests are inevitable. This includes requests from residents that break policy, including those on occupancy limits. While you want to do your best to ensure that your residents’ needs are met, there is one factor that needs to be considered. No reasonable accommodation can supersede local law or municipal codes. As an example, let’s say a resident submits an accommodation request stating that they need to break policy on a certain unit’s occupancy limit. If that policy is based on local laws stating how many individuals can be in that size unit, you will have to find a different solution for that accommodation. If the request does not break any local laws, then it is safe to follow your property’s procedures to accommodate that resident.
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KEY TAKEAWAYS FOR EFFECTIVE OCCUPANCY POLICY MANAGEMENT
In short, balance is key when it comes to any kind of policy. In the case of occupancy limits, balancing both fair housing standards and local laws and ordinances when taking a look at your policy is the best course of action. If you’re starting a new policy or revising one currently in place, there are a few key steps that should be on your checklist:
✓ Ensure your policy is clear and concise but not too specific. Take care to avoid
discriminating against certain protected categories and classes. As shown in the court
case discussed earlier, these kinds of details in your policy can lead to a fair housing
violation.
✓ As a property manager, it is your responsibility to enforce your policies. Be careful when
investigating, documenting, and explaining any lease violations you carry out.
✓ Reasonable accommodations that violate your property’s policy can happen. Ensure that
whatever the request, it doesn’t break your state’s laws on occupancy limits.
Remember, balance is key to any property with these policies, no matter the location. Let this guide help you to ensure that your occupancy limit policy meets Fair Housing standards, keeping your residents safe in their homes and locking in that property management win.
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Source Rent.
In today’s fast-paced world, renters have diverse preferences when it comes to apartment hunting. Offering a variety of tour options is key to attracting a wider pool of qualified applicants. Here’s a breakdown of the most popular tour types and how to leverage them:
The in-person classic: building rapport and trust
- The gold standard: In-person tours remain a valuable tool. They allow potential renters to get a real feel for the space, ask questions, and connect with the leasing team.
- Pro tip: Schedule tours during daylight hours and highlight natural light. Be prepared to answer questions about the neighborhood and amenities.
Virtual tours: convenience at your fingertips
- Perfect for long-distance inquiries: Virtual tours offer a convenient alternative for renters who can’t visit in person.
- Maximize impact: Invest in high-quality virtual tours with 360-degree views and narration highlighting key features. Make them easily accessible on your website and social media platforms.
Self-guided tours: flexibility for busy schedules
Catering to busy renters: Self-guided tours allow potential renters to explore the property at their own pace, 24/7.
Ensuring security: Implement a secure access system with clear instructions. Provide detailed maps and highlight important features with signage.
Pre-recorded video tours: a quick look and feel
- Showcasing multiple units: Pre-recorded video tours are a time-saving option, especially when showcasing multiple units with similar layouts.
- Keep it updated: Ensure video tours reflect the current state of the property and highlight any recent upgrades.
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The power of choice:
By offering a variety of tour options, you cater to different preferences and schedules.
- Highlight your options: Clearly advertise the various tour options available on your website and listings.
- Flexibility is key: Allow potential renters to choose the tour format that best suits their needs.
Remember:
- Regardless of the tour format, prioritize high-quality visuals, clear communication, and a professional presentation.
- Leverage technology to offer interactive elements like 3D floor plans or virtual staging.
- Train your leasing staff to be knowledgeable and engaging during in-person tours.
By providing a variety of tour options, you cater to every click and make your property accessible to a wider range of potential renters. This translates to a more efficient leasing process and a higher chance of finding the perfect match for your units.
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By Richard Berger
There are new refrigerant requirements coming for apartment communities in the HVAC field for 2024 and beyond to replace R-22 and R-410a.
For apartment communities, there is massive change ahead regarding refrigerants.
While the changes are not at the technician level yet – and won’t be until later this year regarding behavior and supplies – the financial impact is expected to be huge beginning in 2025, according to Paul Rhodes, founder, Directional Maintenance Services.
In response to regulatory changes, the refrigerant industry has been doing its best to create a refrigerant that will most adequately replace R-22 and R-410a. There are several alternatives, and each presents its challenges for apartment maintenance technicians, owners, and customers.
Last year, the Environmental Protection Agency (EPA) adopted a final rule accepting several refrigerant alternatives for use in new residential and light commercial air conditioners and heat pumps.
So, which one should you use? Well, that depends. The two main reasons refrigerants are being replaced are due to how much they deplete the ozone – measured as ozone depletion potential (ODP) – and much heat they trap in the atmosphere, measured as global warming potential (GWP).
The new refrigerants must have a low enough GWP to meet AIM Act standards.
The Most Common Apartment Refrigerant Replacement Contenders
Currently, the most common replacements to be used in systems designed for R-22 are R438A, which is also known as MO99, R422D, and R421A. These replacement refrigerants are often referred to as being “drop ins.”
“When that term is being used it often means you must change the oil, clean the line set, change the line drier, and then make sure compatible oil is being used,” says Mark Cukro, president of Plus One, Inc. “Think of it this way: An automobile owner could use several types of oil in a vehicle, but it is harmful to mix them or have multiple types in a system at the same time,” he says.
For systems designed to use R-410A, there is no replacement. Instead, the entire system will require replacement to be compatible with R-454B and R-32. These system changes are due to the new refrigerants being slightly flammable and require certain safety measures.
One big change is that both are listed as A2L by ASHRAE instead of the rating that R410A has (A1). The rating change means that due to increased flammability concerns, the new system is not allowed to be mixed with portions of the old system.
What’s Required by 2025
R410A is the apartment refrigerant being used in systems currently being produced. While it has no ozone layer effect, it does have a significant negative rating in terms of climate change, meaning a high GWP. There is no “drop in,” so the price of it will rise, by design, to encourage the change to the newer systems/refrigerant.
These are the systems that the AIM act requires to be no longer used after 2024 to force adoption of the new refrigerants. Parts for systems containing all refrigerant types will continue to be available if repaired and may remain in service.
The new refrigerants found in residential systems required to be produced in Jan 2025 are either R32 or R454B. These are the A2L-listed refrigerants referenced above. They have no effect on the ozone layer and minimal impact on climate change.
Due to this distinction, there is no compatibility with R410A, which leads to the large cost that properties will need to absorb.
Example: If a straight cool/split system condensing unit is to be replaced to an A2L refrigerant system, the property is required to replace the evaporator/air handler as well. In the change from the R22 to R410A systems, if performed correctly, the property would only be required to replace the outside unit.
More refrigerant options are on the way, Cukro says. However, the industry overall has not yet really settled on one refrigerant as “the one” to be the industry-wide replacement, he says.
“Select one replacement refrigerant that suits you best and stay with that,” Cukro recommends, “so you don’t wind up with an unknown number of alternatives in the field that can’t be easily identified.
“While it may be tempting to purchase the least expensive refrigerant each time, if that leads to having six different refrigerants on the same property it may be counterproductive, very costly, and difficult to keep good records,” he said.
“R410a is still the choice refrigerant being used by contractors for new installations. So, keep everything simple to track, easy to work on and purchase, and make sure you have the correct equipment as the safety requirements are updated and change.”
On a positive note, the new refrigerants work quite well, are safer for the ozone layer and have a lower warming potential than the refrigerants being phased out.
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Managing HVAC System’s Service History
The apartment industry will need to adjust and adapt as the new apartment refrigerant replacements emerge, Cukro says.
Rhodes, host of The Maintenance Mindset Podcast, says that in the short term, if maintenance teams know how to properly work with current refrigerants, the impact will be minimal procedurally because the same safe-use rules apply. The cost of materials (refrigerant and systems) will accelerate depending on the supply/demand economics.
Thinking longer-term, at the end of this summer, R410A equipment will begin to sell out as suppliers will not want overstock to carry into 2025. At the same time, manufacturing companies will transition their manufacturing lines to new refrigerants so that they have stock before January 2025. Prices will continue to increase.
Maintenance mobile work order apps such as AppWork help maintenance teams to track HVAC work-order data such as the number of callbacks, completion times, and service ratings. It automatically identifies HVAC work orders from the work-order description and uses that to categorize, prioritize, and even assign the work order, accordingly.
Technicians can include the Freon used during work orders and the Freon levels so the next time a technician works on the AC they can check the unit’s service history to see what they or another technician did the last time the unit was serviced.
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Source: Apogee Capital
Ever since we started investing in real estate, we had friends approach us and share how they too were interested in investing in this type of asset class. After a number of these interactions, we began to see a pattern in the conversations.
Someone would begin the conversation about how they had heard about the benefits of real estate but they did not have the time to manage a property, patience to deal with difficult tenants or knowledge to identify a profitable deal.
Having been landlords of single-family homes ourselves, we understand firsthand the challenges these individuals were considering. We have seen many people who have made a real estate purchase that did not turn out as they expected either because of problems with the property or tenants. This resulted in them not achieving their expected returns or simply being more stressed and frustrated than what it is worth.
One alternative to this dilemma is passively investing in real estate deals.
There are numerous ways to do this, but we want to mention just a few of the benefits specific to passively investing in a commercial multifamily property. First, you have the economies of scale that come as the result of investing in multiple units. When you are invested in say 50 units instead of 1, should one of the units be vacant for an extended time or a large expense come up you still have 49 other units producing income during this time. This means that you are losing 2% of your income instead of the 100% that you would lose if this happened with a single house.
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Secondly the acquisition, management and disposition of the property can be handled by knowledgeable professionals. When you are flying in a plane and suddenly enter an area with large turbulence, you do not start saying “I sure wish I was piloting this plane right now!” Why not? Perhaps because the plane is being flown by a pilot who has the knowledge and experience to successfully navigate this difficult scenario and your safety is truly best placed in his hands.
While investing is certainly not too difficult for any individual to learn, there are strong merits with placing your hard-earned money in the care of those who best know how to handle the turbulent situations that are sometimes encountered in real estate investing. Multifamily investing employs a team of professionals that includes not only the syndicator but also the property manager, real estate attorney, CPA and others.
Finally, multifamily offers the opportunity to passively invest in a recession proof asset class. Based on a CBRE research report, “multifamily rents have outperformed those of the other major property sectors during and after the 2008-2009 recession in three ways. The sector experienced the lowest level of rent decline, the fastest recovery to pre-recession peaks and the longest post-recession period of rent growth.”
We know that people have to have a place to live which supports the demand for attainable housing regardless of economic conditions.
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By Lauren Wingo
Dealing with an outside AC unit not turning on can be frustrating. Here are a few reasons why it could be happening and how to handle it.
Q: Living in a Southern state, we have the AC on for much of the year. But when I went outside earlier, I noticed that the outside AC unit wasn’t running. Why is my outside AC unit not turning on, and how can I get it working again before my house becomes a sauna?
A: During the hot summer months in particular, homeowners rely on their AC unit to stay cool. So, when an outside AC unit isn’t turning on, it’s essential to figure out why and find a solution as soon as possible.
Even the best air conditioners can have mechanical issues from time to time. If the AC unit has a split cooling system, two pieces allow the AC to turn on: an indoor evaporator and an outdoor compressor or condenser. If both pieces aren’t operating in tangent, the AC won’t turn on or produce cool air. Whether the AC outdoor unit turns on and you can’t feel it working, or it’s not starting at all, don’t worry—there are a few different things to try to get it working again. And if all else fails, you can contact one of the best HVAC companies (such as One Hour Heating & Air Conditioning or Aire Serv) to come out and fix the issue ASAP.
1. Make sure the thermostat is on, set to cool, and working correctly.
If the air conditioner is not cooling or isn’t even turning on, the first thing to do is examine the thermostat and see what temperature it has been set to. Someone else in the household could have raised the indoor temperature or turned the thermostat off entirely.
If it’s off, simply turn the thermostat back on, ensure it’s set to cool, and change the temperature to five degrees lower than what the ambient temperature of the room feels like. If the room starts cooling down, there most likely isn’t an issue with the outside AC units.
If it still doesn’t seem to be working and the thermostat is battery-powered, try replacing the batteries with fresh ones. Contact a specialist to examine if the wiring has gotten crossed or pests have chewed through the wires inside the wall.
2. The shut-off or emergency switch might be flipped.
Several sources of power an AC unit has that could have been accidentally turned off if the air conditioner is not turning on. Since the air conditioner outside unit has a different power source than an indoor AC unit, go outside to where the unit is located. Next to the unit, there should be a place that houses an emergency or shut-off switch. Someone could have left this switch in the “off” position accidentally. Ensure everything is plugged in and switched to the “on” position before going inside to see if the problem has been fixed.
There also may be a reset button on the outside AC unit that can be pushed. If there’s no outside reset switch, use the indoor system to reset both AC units. Turn off the breaker or thermostat and wait at least a minute before turning it back on. After it’s been reset, check to see if the outside unit powers back on and the room is cooling down.
3. Check the circuit breaker and see if there is a blown fuse.
There could have been a blown fuse to the circuit breaker that caused the outside AC unit to stop working correctly. A blown fuse is caused by an overloaded circuit breaker, which can happen if the AC unit is overworked or the wires are loose and aging.
Head to the home’s circuit panel and check to see if any breakers have tripped. Next, turn them off then back on again. There may be an electrical problem if the breaker immediately trips once it’s turned back on, in which case an electrician will need to assess the situation. It’s important not to turn the circuit breaker back on again, as it could further damage the outside AC unit or other household appliances.
If the home has a fuse box, replace any fuses that appear to have blown. The home’s AC unit may also have its own shut-off box. If the fuse is blown there, an HVAC contractor will have to replace it.
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4. The capacitor might be failing.
A capacitor holds the energy that the AC unit outside needs to power on. There may be a buzzing noise coming from the outside AC unit if the capacitor fails because the AC condenser fan is trying to spin without power from the capacitor. An AC unit has two capacitors: a run capacitor and a start capacitor. A start capacitor provides the first push to spin the condenser fan. A run capacitor varies between two subtypes, a single run and a dual run.
No matter which capacitor a home’s AC unit has, they age and wear over time, causing it to fail. Overwork, extreme heat, or power surges can speed up this process.
To test whether the capacitor is failing, attempt to spin the condenser fan using a thin piece of wood to avoid pinching fingers. If it’s a dual-run capacitor and the AC fan starts spinning, there may be debris or dust in the AC fan motor, or the AC fan motor is damaged. With both single and dual capacitors, if the AC fan doesn’t spin at all, the capacitor has most likely failed.
5. There might be a problem with the condensate drain line.
An AC condensate drain line works by eliminating the water built up when the AC’s evaporator converts refrigerant from liquid to gas. If it’s not cleaned, algae and grime can build up in the drain line.
A line can also get clogged due to high humidity. Once it’s clogged, the line will trip a safety switch that turns the air conditioner off. To unclog the condensate drain line, turn off the HVAC unit and use a wet/dry vacuum to clear what’s clogging the drain. If the problem persists, seek a professional’s assistance to minimize damage.
6. The unit may be low on freon.
Freon is a chemical refrigerant that cools warm or hot air from the outside before entering the home. Freon usually runs through a closed loop within the home, meaning that there’s most likely a leak within the system if the unit is low on freon. This can cause the AC to stop working. Signs of a leak include ice buildup on the outside unit, only warm air coming out of the vents, and a hissing noise near the AC, signifying a more extensive leak. Since refrigerants can be dangerous to handle, the Environmental Protection Agency (EPA) requires a licensed professional to purchase and handle refrigerants.
While there are many reasons why an outside AC unit may not be working correctly, there are steps to pinpoint the problem. Once the issue is discovered, be sure to consult a professional who can assess the damage and safely restore the system to normal. In the meantime, consider investing in one of the best portable indoor air conditioners to stay cool while the AC is not functioning.
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Provided by Bigger Pockets
The question is asked all the time: How can I estimate average rehab costs? Well, there is no average rehab cost because there is no average rehab.
Some properties will need major structural modifications; others just a lipstick approach. Some may have a recently remodeled kitchen, and others may have a 1950s galley kitchen.
But since this is such a popular topic, let’s see if we can try to make it at least (a little) feasible for a newbie to the construction world.
Ways to Go About It
First, there are several ways to get a price range for needed work on a property:
- Have a general contractor walk the property.
- Have a home inspector give you a report and use that to put together a budget.
- Develop a square footage cost per square foot for the whole project.
- Develop a square footage cost for each trade, like tile and drywall.
- Use an online calculator.
- Ask friends for help—ones that have had a recent remodel or may have some kind of construction experience.
Who to Work With
Of course, the best and by far the safest way, in the beginning, would be to use a veteran general contractor (GC) to walk the property and throw a rough number at the necessary and/or desired repairs or improvements. This is certainly possible, but most contractors will expect to be paid, and they cannot always fit such a small task (for them) into their schedule because you have a deadline due to escrow.
And note that I used the term “veteran” in describing this GC. It does you no good to use a new or young contractor fresh out of the exam room. You need someone with decades of experience, who can throw out a semi-accurate price just by looking at a property in an hour. They must have done dozens or hundreds of projects to be able to throw out an accurate price after a one-hour walk-through a house they have never seen before.
Note: You can (and many do) find a good general contractor who will walk every property for/with you and always give you a good, solid number. But be mindful that everyone—even this veteran old GC—can and will be wrong on occasion. Or sometimes, there are surprises hiding in the house that you will not see until demo is complete, or the building inspector makes his first visit to the property.
You can also use a home inspector to gather a list of information on needed repairs and deficiencies. You will (and should) use a licensed home inspector to inspect the property that you are considering purchasing. You do this once you have an accepted offer on the property, it is under contract, and you are within the inspection period.
But they can’t and won’t be able to throw a number at those tasks for you. It’s just not their job. Home inspectors are specialists, and most will have no true construction background. They might see it as opening themselves up to liability issues or, worse yet, a conflict of interest.
How to Calculate Costs
However, once you have this list, it’s certainly a good starting point. Then, you can use the internet to attach a price to each item on their report. This is a sensible and fairly safe approach.
But what about additional improvements you might want to have done, like adding a bathroom or remodeling the kitchen? Maybe you’d like to open up an old, claustrophobic house and convert the living room, dining room, and kitchen into a great room. Now you’re back to square one.
Develop a square footage cost. This will take longer, but as you complete a few jobs, just do the math and keep track of what you are paying. Does the tile contractor always seem to get about $5 a square foot for his installation? Does the drywall crew always end up at about $6 a square foot? These are real-world numbers that you can rely on.
You can also try to contact various subs and see if they will give you this square foot price. Some will, but many will not want to be bound by it.
There are online calculators out there, even one on the BiggerPockets site. They can be of some use, but I would warn not to completely rely on these. They cannot always account for different areas, or current price fluctuations, or a sudden change in the economy. But they can be very handy in assisting you get together a well-priced scope of work.
Ask people that you know and trust about their recent projects. Maybe you’ll get a good price on kitchen cabinets from one friend, and another will let you know what she paid to have her bathroom retiled.
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How to Customize Your Approach
I would suggest using a different approach for different sizes and types of projects. For example:
- You find a house that needs a complete remodel, right down to the studs. This will absolutely demand that you hire a GC to go to the site and walk it (with you there to watch and learn) and give you a rough price. You cannot be off by 20% on a $150,000 remodel project—there goes your profit, and that might actually turn into a loss. That’s not why we got into the business.
- You’ve found a nicely priced older home that has been well cared for, but nothing new or modern has been done to it in 30 years. It needs a modern kitchen, two new bathrooms, new flooring and paint, and a new roof. That’s maybe $45,000 worth of work. Once again, you can call the GC, or in this case, you can call subcontractors yourself and ask for prices on each trade. How much is the cost of cabinets? How about paint, tile, flooring?
- For a small job, $10,000 or so, possibly needing only paint, carpet, and new appliances, measure (very carefully) and go shopping yourself. Don’t forget to include all costs like taxes, delivery, installation, and the like.
It can be a sound approach to use a variety and combination of these possible choices until you find the most comfortable way for you to come up with a price range that you are willing to invest.
And it must be noted that, as you would expect, prices vary greatly by region, from state to state, and even city to city within a state, i.e., San Diego versus Los Angeles or San Francisco, or New York versus Buffalo.
Final Thoughts
The more you get your hands dirty and invest some of your own elbow grease in this process, the better you will get at estimating prices. It’s not easy, and yes, you can make mistakes that can cost a lot of money. But it is absolutely invaluable to be able to walk through a prospective fixer-upper house and put a pretty firm number on your construction costs. This will set you apart from your competition and should help you become profitable—there is a lot of money to be made in fixing up distressed houses!
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Provided by Fair Housing Institute
In the fast-paced world of property management, HUD complaint notices are not just another administrative task. They are a ticking time bomb that can detonate your operations if mishandled. This article exposes three common pitfalls property management professionals encounter when dealing with HUD complaint notices and offers a strategic roadmap to navigate these challenges effectively.
1. Misjudging Your Case’s Severity
One of the most common errors in handling a HUD complaint notice is underestimating its seriousness. It’s easy to dismiss the urgency of these notices with thoughts like, “It will take ages for an investigator to look into this, so it can wait.” This type of thinking can be dangerously misleading. Every HUD complaint should be treated with immediate attention and gravity, as neglecting the early stages of the investigation can spiral into more significant issues later.
Immediate Action is Crucial: The initial response to a HUD complaint should involve a thorough review of the allegations, alerting your insurance carrier, and considering a consultation with legal counsel, especially if the potential for liability is high. Legal experts can offer a preliminary assessment of the risks involved and guide the following steps, including collecting specific documentation and preparing for interviews with all parties involved. In less complex cases, while upper management might handle the situation, the nuances of HUD regulations may require legal expertise.
2. Lack of Evidence: Before and After the Complaint
Before the Complaint: Proper documentation is the backbone of effective property management. A robust documentation strategy supports operational efficiency and serves as critical evidence in disputes. Unfortunately, many property managers maintain inadequate records, which can severely weaken their position when a complaint arises. Essential documents include lease agreements, resident communications, maintenance logs, and formal complaints and resolutions. These documents are necessary to avoid unfavorable judgments and costly settlements.
After the Complaint: The initial complacency often extends to the post-complaint phase. Some managers delay vital investigations, such as in-depth interviews with staff and residents, and hesitate to collect necessary evidence promptly. This procrastination can lead to a scramble when deadlines approach, resulting in poorly gathered and presented evidence. To counter this, beginning a structured evidence-collection process is crucial immediately after receiving a complaint. This includes securing all relevant documents and digital communications, as well as preparing a list of potential witnesses and interviewing them. Also, a thorough review of your company’s policies and procedures is warranted. This way, you can see if there are any gaps and determine if they were properly executed by staff. These steps ensure you are better prepared to respond to the inquiry and defend your practices or provide relevant material to your legal team.
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3. No Post-Mortem Analysis of the Complaint
Whether a complaint is resolved in your favor or not, each case presents a unique learning opportunity that should be noticed. The absence of a structured post-mortem analysis is a critical oversight many property managers make. Reflecting on handling each complaint can reveal significant insights into operational weaknesses and areas for improvement.
Learning from Every Outcome: Successful complaint resolution doesn’t necessarily mean the approach was flawless. Similarly, an unfavorable outcome isn’t just a sign of failure but an opportunity for critical adjustments. Conducting a detailed review of the process, decisions made, and the effectiveness of the evidence presented can help refine complaint-handling procedures. This review should involve all stakeholders, including legal advisors, and result in actionable policy and practice changes where necessary.
Key Takeaways: Lessons Learned from Handling HUD Complaints
Proactive Management: The ultimate goal is not just to manage and resolve complaints but to prevent their recurrence through proactive management and continuous improvement of practices. Property managers can significantly mitigate risks and enhance service quality by understanding the gravity of HUD complaint notices, ensuring comprehensive documentation before and after complaints, initiating swift and thorough investigations upon receiving complaints and engaging in continuous learning from each case.
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Provided by AAOA
The current rise in application fraud is alarming. As a result of it, alert landlords now routinely request bank statements to determine cash flow and pay stubs to verify employment and income.
Unless a person is extremely well versed in computer technology, it is difficult to get creative with a bank statement, so they are usually dependable. On the other hand, a pay stub is fairly easy to counterfeit. There are even websites that will create custom pay stubs for use as proof of income using an online pay stub generator.
But when confronted with a counterfeit pay stub, how is a landlord or property manager to know that it is not real?
Obvious Red Flags
The most obvious red flag when looking at a fake pay stub is when the formatting is off. Look for a variety of fonts and columns that are not properly aligned. Spelling, awkward language and grammatical errors are sure signs of counterfeiting. Inspect the stub for blurry or pixelated elements.
Next, look for missing information that would typically be included on a pay stub:
- Employer’s logo, name and address.
- Employee identification number.
- The pay period’s start and end dates.
- Total hours worked.
- The total amount earned before taxes (gross pay) and the amount left after deductions (net pay).
- Deductions, such as amounts withheld for taxes, health insurance, retirement funding and other programs.
- Other non-taxable additions, such as expense reimbursements and paid time off (PTO).
Check the Numbers
If you carefully examine the numbers on the pay stub, there are some sure giveaways that the stub is not legitimate:
- Amounts are rounded up to zero. As an example, the net pay may be listed as a rounded number, such as $2,300 instead of $2,296. After deductions, it would be unusual to see a perfectly rounded figure.
- When the letter “O” replaces the number “0”, it’s a strong indication of a fake pay stub. Companies employing payroll software rarely make this oversight. Authentic documents often use a slashed zero “Ø” to avoid confusion.
- If the numbers don’t add up or if deductions don’t seem to correlate with the gross pay, take caution. You may be dealing with fake pay stubs.
Inconsistencies
One of the easiest signs that someone has submitted a falsified pay stub is inconsistent data. Watch out for the following examples:
- Miscalculations regarding a pay period, uneven totals or discrepancies between gross pay and net pay are sure indicators of a fraudulent pay stub.
- Deductions for Medicare taxes, Social Security taxes, insurance deductions and retirement contributions are always included on a legitimate stub. Federal, state and local tax rates should be cross referenced if the amounts don’t appear to be accurate based on the stated income.
- Is the applicant’s income as reported on the pay stub consistent with the industry standard for his stated job title or is the pay stub displaying exceptionally high earnings or bonuses for that position?
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Employment Verification to the Rescue
Artificial Intelligence software and machine learning are becoming more popular and will make generating pay stubs easier, making it more difficult to spot a counterfeit pay stub.
Although third-party verification services have access to databases with real-time employment data and can confirm the accuracy of an applicant’s employment with ease, they are also very expensive to use.
Fortunately, you have easy access to AAOA’s Employment Verification service. For a modest fee, AAOA’s experts will contact the employer directly and ask the questions you want to know:
- Is the applicant employed at that company?
- What is (was) their title?
- When did they start? Are they still employed there? If not, when did they leave the company?
- What kind of an employee were they? Did they get along with their co-workers?
- Would you hire them again?
By using this service, You don’t have to guess whether the applicant actually works at the company they claim they do.
Employment Verification can be ordered at the same time you order an AAOA rental credit report and/or tenant background check or on its own as an individual report.
Don’t be a victim of application fraud. It’s critical that you recognize the red flags to safeguard your investment.
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