What Investors can Do to Bring Value to their Rental Communities

As investors, many of us buy properties with grandiose dreams of big returns and how this property will be a great addition to our portfolio.

A broker calls us and says he has a deal. We run the comps, complete the due diligence inspections, apply for a loan and make sure the area is not in decline.

We prepare for the transition and begin the on-boarding of the property just prior to closing so we don’t miss a beat in the process. We look at the rent roll to see where we are with each resident and decide whether to increase the rental rates.

The one thing that many investors never tend to consider is what else we can bring to the community that we are now a part of. How can we enhance the experience and quality of life of the residents living in one of our communities? Here are a few things to consider:

• Anonymous suggestion box

• Bike-friendly storage areas

• Barbecues in the open common areas

• After school programs for your residents’ children

• Create activities for the elderly to be involved with

• Have a small business office with internet access for people to come work in

• Have a meeting space for the residents to use

• Have an event space for the residents and your community to use

• Gyms can be good if they are maintained properly

• Offer classes for some of the residents like knitting, computer, cooking

• Child care (part time)

• Create a dog run for their dogs (this also minimizes waste on the property)

• Create a dog/pet wash room

• Community events such as local fair, petting zoos (many local retailers would chip in and help pay if they can have a booth or give items to your residents)

• Hold a community meeting so everyone feels like they have a voice in their community

Some of these may be a bit difficult to immediately implement in your community, but if you can take the time and make an effort, you will find that when you get a vacancy, it will rent faster.

Most likely, it will be from a referral from a resident who wants someone they know to enjoy the experience of living in your community, which will therefore, cut down your marketing expenses and improve your ROI.

As an example, Teruko Springs, a 73-unit multifamily property in Dallas, Texas, has implemented a free after school tutoring/mentoring program for its residents’ school-aged children.

The center has computers with educational software and provides a tutor four days a week. The center is also utilized by the adults in the community to conduct online job searches and complete online educational courses.

During the school year, the center provides after school snacks for the community’s students, and during the summer months breakfast and lunch are served through a local church group.

According to the manager Sheryl Garza, the results of having this facility and these programs for the community have been lower turnover, and when they do get a vacancy, they fill it quickly thanks to referrals from their resident. There’s less on-property crime, and residents who socialize more with one another are both more involved and concerned with their neighbors and their neighborhood.

Garza is a firm believer in having this offering in her community and believes that it not only helps her property maintain quality residents but also helps to improve the entire community due to the fact her residents take pride in the community they live in.

After seeing the positive effects of how these efforts have enhanced the properties they have been implemented, I am convinced that working in a few of the above options will create a higher ROI on your investment and make the assets easier to manage.

By offering amenities that show you as the landlord care about the residents, your residents will in turn be happier and less likely to leave. This can save a property substantial amounts in expenses by minimizing unit turns, and it also increases the overall income by not having to fill a vacancy.

The most basic of these options may not seem like much to you and me, but to your residents, it shows that you are making an effort to make their quality of life better.

What investors can do to bring value to their rental communities

The Americans with Disabilities Act for Landlords And Property Managers

The Americans with Disabilities Act, commonly known as “ADA” is a federal civil-rights law protecting the rights of people with disabilities. The ADA places guidelines for access to:

• Employment

• State and local government programs, services and buildings

• Access to places of public accommodation such as businesses, transportation, and non-profit service providers

• Telecommunications

• George Bush signs the Americans with Disabilities Act of 1990; standing left to right Reverend Harold Wilkie, Sandra Parrino of the National Council on Disability; seated left to right, Evan Kemp, Chairman of the Equal Employment and Opportunity Commission, George Bush, Justin Dart, Chairman of the ‘s Committee on the Employment of People with Disabilities. Washington DC, USA, 26 July 1990. (Photo by Fotosearch/Getty Images).

The scope of the law is fairly broad and addresses many of the obstacles affecting the participation of people with disabilities within society. Many of the ADA’s civil rights protections parallel the Civil Rights Act of 1964, and the protections it established for racial, religious minorities and women.

Occasionally, management companies may be faced with a lawsuit for non-compliance with ADA laws. These compliance problems are usually preventable as many times they result from violations which stem from the lack of proper guidelines, policies, procedures, and/or practices regarding accessibility. Implementing current policies can go a long way toward avoiding the expense associated with ADA lawsuits.

As owners, landlords, managers, and tenants can be jointly and severally liable in the event of non-compliance. Making it important to ensure you have safe practices in place to address any ADA issue. Although a landlord may not shift liability for ADA compliance to their tenants, a properly drafted lease may call for the tenant to remediate. Remember though, tenants cannot be held liable for violations in areas which are not under their exclusive control, such as common areas.

Investors who purchase real estate need to take a serious look at their property during the inspection period. Acquiring an asset which does not comply can be a large expense when bringing it to code. It also puts you in a position for a potential lawsuit.

If you find the property you are acquiring does not meet current ADA standards, be sure to get a bid from a licensed contractor who is adept at addressing ADA issues to bring the property to code. Also, hold additional funds in escrow or ask for a reduction in the sales price to adjust. Alternatively, an investor may want to hire a professional ADA consultant to determine if the building (due to the age of construction, use, and possibly the cost to remediate) is exempt for ADA compliance.

Property Management companies typically are not held liable for the ADA compliance (unless they purposely act in violation of the law), as they are acting as agents for the landlord. As a property owner, you want to be sure you have a property management company you know will not put you at risk. I always recommend taking regular meetings with your property management company to go over all aspects of your investments, and confirm all inspections are handled. It also goes without saying, get it in writing!

Real estate agents need to be aware of the rules governing the ADA, but it’s not common for them to offer any advice. Typically it goes beyond the scope of their job and may create liability for them. However, they should be able to refer you to a reputable, professional ADA compliance consultant to advise on compliance.

For further information go to https://www.ada.gov/

The Americans with Disabilities Act for Landlords And Property Managers

What Happens if I Ask Someone to Co-sign a Loan and Then Cannot Make the Payments?

There are many reasons someone may require a co-signer for a loan, if you have a poor credit, or maybe you are a college student with very little credit, or you are on the border of qualifying on your own based upon the debt to income ratios. In a lender’s eyes, a co-signer adds legitimacy and lessens the risk of their loan. Bank are in the business of making money so having an extra individual who is responsible for the loan gives them a little more piece of mind.

Who should you ask to cosign?

As you might have guessed college students typically turn to their parents. However, if you are asking someone to co-sign for your business, you will need someone who is financially stable enough and has good enough credit to make it work.  Depending on what they will be co-signing for, another consideration is if they have any business experience, specifically in running the type of business similar to yours.

What happens to the cosigner if I don’t make my payments?

Having someone you know co-sign for a loan makes them legally responsible to make the payments you can no longer make. In turn, their credit score will be affected if they cannot make those payments and the account goes to collections. This is a terrible situation to get into. Having to tell someone who has trusted you to make these payments can be extremely difficult and filled with emotions.

If neither party is unable to make payments, the next steps will be for the Lender or an assigned debt collector to file a lawsuit against both you and the co-signer for any unpaid part of the debt. If either party chooses to file bankruptcy and their account is discharged, the lender will more than likely still hold the other party liable for the remainder of the balance. We always recommend speaking to an attorney early on so you know the right steps to take.

Prior to having the loan go to collections, some avenues you can consider are: selling the asset and paying off the loan; transfer your interest to the co-signer; or see if the co-signers’ credit will allow them to refi the existing loan, or get a new loan.    Another option is to ask the lender to restructure the existing loan by adding payments to the end or maybe ask them to make lower payments for a designated time period and add the balance of those payments on to the end of the loan.

Either way, communication is the key in these situations. Although it is a hard conversation to have, it will be better in the end if you address it sooner than later.

Resident Retention Tips For Property Manager & Landlords

Resident retention in the real estate industry is a critical part to an investor’s success. Several factors go into the cost of acquiring residents, marketing, and make ready costs. There is also lost revenue from vacant units, making it a key part of your ROI. We put some tips together to help you retain your residents.

A key factor in a resident staying is they feel they belong to a community. Their apartment should be more than a place to sleep and eat.

• Create a social media presence for your community. Try to get your resident to utilize your page to talk about the events you hold on the property. Talk about your staff and the community. Look to create experiences within the community.

• The day a new resident moves in, you should have a nice welcome gift waiting for them. Something they can use in their new place. Also, a popular idea is a gift certificate to a local restaurant for takeout or pizza. After a long day of moving, it’s nice to order some food and relax.

• Creating events for your property can give your residents a sense of community, and allow them to get to know each other as well. Fun events like cook-offs, BBQs or events for their children are usually big winners. An added benefit is once your residents get to know one another, they become more vested in the community, looking to better it, and taking a pride of ownership mentality.

• Training your staff in the professional manner which your residents should be treated is a key to success. Sometimes staff can be tested by a resident, making it key for them to know how to handle situations as they come up. Also, staff should eventually know all of the residents’ names, by site. This kind of personal attention goes a long way to making everyone feel at home.

• As you walk your property, be sure to speak to the residents you run into and engage them. Talk about the community, their apartment/home, and their life in general. Ask for their opinion on what might be done better.

• Recognize the personal moments of a resident’s life, send birthday cards, get-well-soon wishes, notes of congratulations or praise, as well as invitations to recurring events happening on site.

• After a resident has been in your property for 90 days it’s always a good idea to send them a note asking how their stay is going, and if they feel you could do something more to service their needs.

• 60 days prior to their lease coming due you should reach out to them and remind them it is coming due, and ask if it’s OK to go ahead and send the new lease for them to look over so when the due date comes they can simply sign and return.

• If a maintenance item ends up getting overlooked (this happens more than we would all like to admit) consider offering them an accent wall, or coupon to a local restaurant or a gift card.

These tips are just some basic ideas we hope can help you retain your residents, with the bottom line being to make your tenants feel appreciated, after all, if it wasn’t for them, you wouldn’t have an investment.  It can also be really helpful to sit down with your team to discuss their ideas and how you will implement them, or what they would like to see as well.

What goes into Employee Background Checks: The OFAC Patriot Act Search

Following the September 11, 2001 terrorist attacks, Congress passed the lengthily named “Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act,” commonly known as the “Patriot Act.” This piece of legislation was aimed at arming law enforcement with tools to both detect and prevent acts of terrorism. While the Patriot act has had both supporters and nay-sayers, it has become of great value to employers. One of the services included in theRRD’s employment screening packages is the OFAC Patriot Act Search. This tool screens for individuals and groups associated with terrorism. By screening your employees with this service, you’re helping to prevent potential terrorists from receiving an income for their terrorist activities. You’re also helping to ensure the safety of your own employees.

History Of OFAC

During the administration of President Jimmy Carter in 1977, Congress enacted the International Emergency Economic Powers Act (IEEPA). This law authorizes the president to regulate commerce after declaring a national emergency in response to any unusual or extraordinary threat to the United States from a foreign source. The provisions of IEEPA are administered by the Office of Foreign Assets Control (OFAC) under the Department of the Treasury, which publishes a list of individuals and companies owned or controlled by, or acting for or on behalf of, targeted countries. It also lists individuals, groups, and entities, such as terrorists and narcotics traffickers designated under programs that are not country-specific. Collectively, such individuals and companies are called Specially Designated Nationals (SDNs).

Once the president has identified a particular event a national emergency to US interests, this gives OFAC the authority to search for targets. Once they have compiled evidence against a particular group or individual in the form of large financial records, they send it to the Department of Justice for verification and review. Usually, when OFAC declares sanctions against a group or individual, other regulatory agencies will follow suit, resulting in assets being frozen in a number of different countries. If a name is flagged as a match and this person is then identified as a bona fide SDN, their assets are blocked and U.S. persons are generally prohibited from dealing with them. This list is available to be searched for the name of an individual they are looking to do business with, and the page will return either a perfect match, a partial match, or no match whatsoever.

Here Are Some Of The Databases Checked By The OFAC For A Screening

·        Australian Department of Foreign Affairs and Trade (DFAT), Bank of England Consolidated List of Financial Sanctions, Office of the Superintendent of Financial Institutions Terrorism Financing, European Union Consolidated List, Office of Foreign Assets Control, Monetary Authority of Singapore – Consolidated lists of all organizations and individuals which are subject to targeted financial sanctions or travel bans under Australian, United Kingdom, Canadian, European Union, United States of America, Hong Kong, and Singaporean sanctions laws, respectively.

·         Bureau of Industry and Security – A list of all organizations and individuals for which there exists a strict export prohibition, a specific license requirement for exporting, or the presence of a “red flag”

·         DTC Debarred parties – A list of organizations and individuals prohibited from participating directly or indirectly in the export of defense articles for violating the Arms Export Control Act in the United States of America

·         FBI Hijack Suspects, FBI Most Wanted, FBI Most Wanted Terrorists, FBI Seeking Information, FBI Top Ten Most Wanted, Interpol Most Wanted – Lists of particularly dangerous individuals wanted by the FBI and Interpol for hijackings, terrorism, and a variety of other crimes.

·         Terrorist Exclusion List – A list of organizations with known ties to terrorist groups, and which can disqualify an associated individual from living in the United States

·         Unauthorized Banks – A list of any financial institution operating without a license or charter

·         Non-cooperative Countries and Territories – A list of countries which are perceived to be non-cooperative in the global fight against money laundering and terrorist financing

·         Non-proliferation – A list of groups and individuals involved in the attempted proliferation of nuclear weapons to terrorist groups and countries around the world

·         Politically Exposed Persons – A list of particularly prominent individuals- and their relatives- who are at a higher risk for involvement in bribery and corruption by way of their position

·         Primary Money Laundering Concern (PMLC) – A list of foreign groups and individuals identified by the Financial Crimes Enforcement Network as seriously involved in money laundering

·         World Bank Debarred Parties – A list of groups and individuals ineligible to be awarded a World Bank-financed contract because they have been sanctioned under the Bank’s fraud and corruption policy