Many real estate investors are aware of how critical interest rates are in the evaluation and performance trajectory of their investment properties. As a result of the 2008 financial crisis the Federal Reserve (the Fed) is taking unprecedented action and raising interest rates more frequently than they have in the past. In the past 3 years the Fed has raised short term interest rates 6 times. It has been suggested that they increase exponentially by the end of 2018.
This article also suggests that investors to run sensitivity tests upwards of 5% interest when developing pro forma on ventures.
See Full Article Below
On Wednesday the 10 Yr Treasury Yield hit a level (3.04%) not seen for the past seven years, i.e., since 2011. See chart below.
10 Yr T Yield - Past 8 Years
The Federal Reserve rate setting committee meets next week, and five more times thereafter during 2018. The Fed recent history of raising rates is not consoling. Since December 2015 through March 2018 the Fed has raised short-term rates six times.
None of us know what will happen to rates in the next 6 - 12 months. However, members of the Federal Reserve rate setting committee have been saber rattling. Some have suggested that the Fed will increase short term rates three or even four times during the balance of 2018. Looking out further into an even less discernible future, they have suggested another three rate increases in 2019.
What does that portend for long-term interest rates? Who knows? However, if you are running development pro forma on projects it would be advisable to run sensitivity tests at 5.0% interest up to 6.0% interest.
Obviously, the arithmetic of increasing rates is to drive down the amount of loan principal that can be supported by higher debt service burden. Debt Service Coverage mandates will eat into loan proceeds.
Moe Therrien with Valbridge Property Advisors recently submitted his quarterly survey. This is a very thorough report that includes, historic data on rents and vacancy by bedroom count. Additionally, it breaks down apartments from those with full amenities, Boise downtown, and Low Income Housing.
The data is supported by providing multi-family building permits, Ada County single family home prices, and employment statistics. Currently, there are just over 2,200 units within the Boise area under construction with another 3,300 proposed to start within the next 6 months. Year to date there are over 2,400 units that have been completed since 2016. The survey is conlcuded with a Boise Vacancy Report reflecting how many vacant units each project has. This report includes Rent Ranges, number of occupied units, total units, and the percent of occupied units at each complex. Boise is still growing very quickly and is projected to continue to grow and remain in high demand among renters. Please see the attached survey from Moe Therrien for additional details. Moe Therrien with Valbridge Property Advisors Survey
When I was first interviewed at First Rate, I was asked, “Who do you think is the most important; our property owners, our vendors, or our tenants?” Would they want me to say the property owners? After all, it’s the management fees that pay the bills. What about our vendors? Without them, we wouldn’t be able to maintain the rental unit. Of course, tenants are important because they pay the rent. I considered this for a moment before telling them what I thought: “they are all important”.
Without our property owners, we have nothing to manage. We should respect what we were entrusted to take care of. Without our vendors, we can’t maintain the properties. We must cultivate a solid and honest working relationship with every business that we utilize. Finally, our tenants must be valued as well. They are the reason for the rental property existing – without tenants, where is our business?
It’s not lost on me that there is a common idea that property managers or landlords are the “bad guys.” I’ve even had that mentality myself with property management companies I’ve rented from. “They’re just here to collect a check”. I honestly believe, particularly regarding the value of tenants, and in my time here at FRPM, I have been pleasantly surprised at the mentality here at First Rate.
Since working at First Rate, I am now very aware that this is simply not the case, at least not with FRPM. From my very first week here it was shown to me that tenants are to be respected, looked out for, and treated with the same care that any employee here would want to be treated.
It’s important to remember that FRPM is entrusted to care for the place where people live. A company that does not value those they rent to are destined to struggle to rent again. And it’s not only the right thing to do; treating tenants with empathy and compassion is also an intelligent business decision.
It’s important to be a company that property owners are interested in doing business with. We want to make sure our business has the quality and integrity that owners look for when finding a company to manage their investment. The appeal to property owners, however, is just half of the equation.
With so much new housing popping up in the area and several property management companies to look after it, tenants have a nice diverse market to pick from. Speaking from a renter’s perspective, the address is only part of what I evaluate when looking to live somewhere. The moment I know who’s managing an area, I do my research and see what I can find about the property manager. All it takes is a couple bad reviews online or some negative opinions from friends for me to rethink renting from that company.
Think about when you rented an apartment or a dorm or a room in someone’s house, and think back to both the positive and negative experiences that it entailed. Take a breath, pause, and think to yourself, “How would I like to be treated if I was renting from a property management company?”
Swope Investment Properties regularly sends out a newsletter that includes good articles and listing information. In the most recent article, realtor Eric Uhlenhoff shared his perspective to rising prices. Click http://boise-rentals.com/investor-newsletter-email-sign-up here to subscribe to Swope Investment properties newsletters.
Finding Value Despite Shrinking Margins
In Shane's article in the Nov 17 newsletter, he described the buyer challenges in
the current market. Not much has changed since then, but we are seeing a bit more
inventory in the residential income space. Yes, margins and cap rates continue to
decline, and we've seen some rising interest rates too, which isn't helping our
Buyers! So, is this another bubble or what?
Back in 2007, when evaluating income properties in the Treasure Valley, using a
sensible downpayment, finding a property with a positive cashflow was like
searching for unicorns. Rents didn't support the values and yet many
buyers willingly accepted negative cashflow in hopes of feasting upon rising prices in
the future. However, in today's market, we're still seeing discerning buyers insist on
cash-on-cash returns. And of course financing with nothing down is not a thing
the way it was back in 2007, so fundamentally, this market is way different
So, where's the value for a buyer? Well, several things haven't changed. Financing
a residential income property (4 units or less) can still be done on a 30-year fixed
loan (thumbs up!) and the tax laws governing depreciation and other tax benefits
are all still in place and may have gotten better depending on individual
circumstances (two thumbs up!).
No question, the sale prices have come up, but so too have the rents. Consider
also that overall vacancy rates are historically low and with rising interest rates this
is likely to keep that vacancy low. All these changing conditions should force
change in our analysis and in this market, we should always take a solid look at
the achievable rents when doing your evaluation as many sellers are not keeping up
with the market.
Continuing to look at cash-on-cash returns and/or cap rate is still okay (and
important!). However, in this market, add in the principle pay-down and the tax
benefits, and compare these combined returns against the risks associated with a
very high stock market and rising inflation. This is both smart and necessary.
My crystal ball is far from clear when looking out beyond what I am having for
lunch. Real estate investing should be for the long term and when time permits,
allow the Swope Team to help analyze and advise a strategy... cuz there's value out
Read full Newsletter here: February 2018
2 months in to the 2018 rental year we are still seeing low vacancy. FRPM vacancy right now is 1.12% which is slightly higher than our rate in January but still low compared to the national average. We are seeing lots of activity on the rental side with increased amount of phone calls and property inquiries. The market trends and vacancy are still allowing for rental increases. FRPM predicts that this low vacancy trend and higher rates continues as we approach Spring/Summer, which is the peak season for rentals in Boise area.
Recently Forbes Real Estate Council posted an article, titled, Four Trends that Will Impact Rental Markets in 2018, and we have included the full text below. The article below seems to be written by Nathaniel Kunes with AppFolio, which is a property management software. We enjoy comparing national trends to what we are seeing here in the Boise and surrounding areas. One thing for sure, Boise seems to fit their #2 and #3, which are population shifts, affordability, and hot markets.
1. Occupancy Rate Fall and rent Growth Slows:
Even though we don't consider Boise a major metropolitan area, we're still finding the Boise market to be hot. This article talks about most areas within the US, especially single family rentals, slowing with falling occupancy rates. We must admit, that January has been a very slow month for single family rentals here in Boise, but we do not believe this is due to any negative market trend. Historically Boise rentals, especially single family rentals are much more difficult to rent in the winter months. When it comes to single family homes, it's best to have leases expire outside the school year. People just don't like to move while their kids are in school. Click here to view the SW Idaho Chapter of the National Association of Residential Property Managers 4th quarter rental market update.
2. Population Shifts and Affordability Reshape the Landscape:
According to this article, there are two things that drive the rental market - population shifts and affordability. Boise's population and job growth continue to climb and although home and rent prices also continue to rise, their still considered very affordable in comparison.
3. Hottest Market Opportunities:
Boise fits their definition of a hot rental market because of the job and population growth. According to this article investors looking to expand their properties should consider regions like Boise.
4. Tech Disruption:
Technology was late to getting to property management, but it's here now and moving at a rapid pace. It will surely play a role. Let's be real, technology is expensive and unfortunately I think we'll see further considaton of property management companies which I think long-term, will hurt the non-institutional investors.
Nathaniel Kunes, Forbes Councils
As we embark on 2018, there is a multitude of changes and trends in the real estate market that will impact all aspects of the rental industry, and it’s important for real estate professionals to explore them. From investors keying into market growth areas to property managers making adjustments to meet tenant expectations, creating strategies that align with market trends will lead to greater success in 2018 and beyond.
1. Occupancy Rates Fall And Rent Growth Slows
Rent demand, while hot in major metropolitan areas, is actually slowing in most areas of the United States, especially in single-family rentals. Where we’ve been seeing 6–8% growth in rental prices in years past, we’ll see that trajectory stall out, eventually nearing historical rent growth average (around 2%). Much of that may have to do with falling occupancy rates, which often result from increased supply in some cities as construction catches up. There is also a pent-up demand for moving as many people have been in their current rental much longer than historical trends.
With less demand, property managers will need to get more aggressive about attracting and keeping renters.
To attract residents, smart marketing is critical. Investing in automated vacancy posting syndication and moving marketing spend to areas with the highest returns are sure-fire ways to be certain posts gets attention, and quickly.
It’s also important to differentiate when trying to fill vacancies. Through unique perks or amenities, property managers can not only attract more renters but also target specific segments of renters through the amenities they offer. For example, if in a market that caters to younger generations, property managers should consider adding common areas throughout a building to inspire a sense of community, something that millennials and Gen Z value.
However, cool amenities alone won’t keep the renters. Retaining them requires meeting tenants’ needs and expectations. Having systems and the appropriate technology in place to handle maintenance requests immediately can dramatically change tenants’ perceptions of their living situation and make them more likely to renew a lease. Offering excellent and quick service is essential in keeping renters happy.
2. Population Shifts And Affordability Reshape The Landscape
There are two things that drive the rental market — population shifts and affordability. As affordability becomes a more pressing issue for many Americans, we will see the government, especially state governments, stepping in more frequently to offer affordability programs and tax credits. There already exist laws in many states that require a certain ratio of every new residential building to provide affordable housing. Additionally, for people who work in expensive residential areas but cannot afford housing there, we’re starting to see local movements and initiatives working to help those people afford to rent or buy housing. In San Francisco, the city is spending $44 million for a teacher housing initiative, enabling teachers to live and work in one of the most expensive cities in the country.
The biggest trend in affordable housing is the shift away from public housing to housing choice voucher programs. This will privatize much of the affordable housing stock and require a greater number of property managers to understand and be able to manage affordable housing programs. There is also a lot of compliance involved in both affordable and rent-controlled housing, so, if not an expert in this type of housing, investors should look to a specialized property management company to manage this kind of property.
Demographic shifts will also reshape parts of the real estate landscape. An increasing trend for baby boomers and the empty nester population is to actually move out of the suburbs and into urban environments, often choosing to rent instead of buy. This has dramatically changed the profile of the modern renter to one that spans age demographics. It’s important for property managers and investors to take into account both the older demographics and the youngest demographics (Gen Z) when determining the most appealing spaces, amenities and how to align service with tenant expectations.
3. Hottest Market Opportunities
While we have all heard about the popularity of moving to cities like Nashville — the entire Southeast, in fact, and the Northwest are becoming a popular living destinations for many. After all, hot rental markets tend to follow job and population growth. Investors looking to expand their properties should consider these regions.
Other, non-geographic opportunities are senior housing, affordable housing and commercial. Senior housing, in particular, will be a huge market segment. The population of U.S. adults 65 and over will more than double by 2060, reaching 98 million. That will be nearly one-quarter of the population, a number that reinforces a strong need for senior housing. Taking multifamily complexes and converting them into independent 55-plus communities could be a smart choice for developers and investors, depending on their local senior housing needs.
4. Tech Disruption
The use of intelligent systems, machine learning and AI applications in software will, increasingly, be a huge agent of change in the real estate industry. This disruption will alter everything from property valuation all the way to property management — an area where the use of AI and chatbots can offer tenants better service and automate maintenance workflows.
Consider this scenario: A tenant finds a toilet leaking and can alert management via text. They then receive an automated response from a chatbot communicating next steps, and the tech automatically creates a work order for the vendor.
Voice technology will also become huge in property management, potentially even allowing renters to pay rent by voice and make maintenance requests.
Tech disruption even changes the game in real estate marketing, letting agents use virtual reality to offer prospective tenants a tour of the inside of a home or apartment unit without ever meeting in person.
Ultimately, real estate professionals who are able to act on some of these emerging changes will find greater success. They’ll make more strategic business decisions that align not only with the ever-changing variables of the real estate landscape but also with the evolving set of modern-day tenant expectations, giving them an edge with market competition.
As of January 1, 2018, there are some major tax changes that small businesses and property owners can get excited about! To start the list off is the new Pass Through Tax Deduction. This new deduction, if eligible, can reduce your passive taxable income by 20% right off the bat, and you can take this deduction whether you itemize your deductions or not! There are new rules pertaining to the Section 179 Deduction, as well as decreased tax rates for some brackets. This article does a fantastic job of laying out these new, big changes that are happening in the tax world. Take the time to read it and save some money this coming year!
See Article below and also the link:
How the Tax Cuts and Jobs Act Affects Landlords
The new tax law has some major changes in store for landlords.
By Stephen Fishman, J.D. Share on Google Plus Share on Facebook
The Tax Cuts and Jobs Act (H.R. 1, “TCJA”) has been passed by Congress. Landlords are among the biggest winners under the new law. Virtually all landlords will save money--many, to quote our President, will save “bigly.” Enjoy it while you can.
The main provisions of the TCJA affecting landlords are discussed below. Except where otherwise noted, all of these provisions take effect on January 1, 2018, so they will not affect your 2017 taxes.
New Pass-Through Tax Deduction
For landlords, the most stunningly good provision of the TCJA is a new tax deduction for owners of pass-through businesses. This includes the vast majority of residential landlords who own their rental property as sole proprietors (who individually own their properties), limited liability companies (LLCs), and partnerships. With these entities, any profit earned from the rental activity is “passed through” to the owner or owners’ individual tax returns and they pay tax on it at their individual income tax rates.
Example: Alice, a single person, owns a duplex she rents out. In 2018, she earns a total profit of $20,000. Alice is a sole proprietor. She reports her rental income and expenses on IRS Schedule E. She adds her $20,000 rental profit to her other income and pays tax on it at her individual tax rates. In 2018, her top tax rate is 24%, so she pays $4,800 in income tax on her rental profit.
The TCJA creates a brand new tax deduction for individuals who earn income through pass-through entities (new IRC Sec. 199A). If your rental activity qualifies as a business for tax purposes, as most do, you may be eligible to deduct an amount equal to 20% of your net rental income. This is in addition to all your other rental-related deductions. If you qualify for this deduction, you’ll effectively be taxed on only 80% of your rental income. Thus, the effective rate for taxpayers in the top 37% tax bracket is 29.5%.
This extremely complex deduction goes into effect in 2018 and is scheduled to end on January 1, 2026. All the ins and outs of the deduction have yet to be made clear by the IRS; however, it basically works as follows:
Taxable Income Below $315,000 ($157,500 for Singles)
You qualify for an income tax deduction equal to 20% of your rental income if:
you operate your rental business as a sole proprietor, LLC owner, partner in a partnership, or S corporation shareholder, and
your total taxable income for the year from all sources after deductions is below $315,000 if you’re married filing jointly, or $157,500 if you’re single.
Example: Assume that Alice from the above example had $100,000 in taxable income in 2018. Since she was a sole proprietor, she may take a pass-through income deduction of 20% x $20,000 rental income = $4,000. This saves her $960 in income tax.
This deduction is phased out if your income exceeds the $315,000/$157,500 limits. It disappears entirely for marrieds filing jointly whose income exceeds $415,000 and for singles whose income exceeds $207,500.
This is a personal deduction you can take on your return whether or not you itemize. However, it is not an “above the line” deduction that reduces your adjusted gross income (AGI).
Income Above $415,000 ($207,500 for Singles)
If your annual taxable income is over $415,000 if you’re married filing jointly, or $207,500 if you’re single, you are still entitled to a pass-through deduction of up to 20% of your rental activity income. However, your deduction cannot exceed:
50% of your applicable share of the W-2 employee wages paid by your rental business, or
25% of your share of the W-2 wages paid by your business, PLUS 2.5% of the original purchase price of the depreciable long-term property used in the production of income—for example, the real property you rent.
Since most residential landlords have no employees, the 25% plus 2.5% deduction will be of most benefit to them.
Example: Assume that Alice from the above examples earned $250,000 in total taxable income during 2018. She has no employees in her rental business. Thus, her pass-through deduction is limited to 2.5% of the purchase price of the long-term property she uses in her rental activity. This consists of her duplex, which she purchased five years ago. Her depreciable basis in the duplex (purchase price minus value of the land) is $100,000. Her pass-through deduction is limited to 2.5% x $100,000 = $2,500.
The 2.5% deduction can be taken during the entire depreciation period for the property, which is 27.5 years for residential property. However, it can be no shorter than 10 years.
Increased and Expanded Section 179 Expensing
A provision of the tax code called Section 179 enables rental business owners to deduct in one year the cost of personal property used in a rental business, such as furniture and appliances. During 2017, the maximum amount that can be deducted under Section 179 is $500,000. Starting in 2018, the Section 179 maximum is increased to $1 million. The $1,000,000 amount is reduced (but not below zero) by the amount by which the cost of property placed in service during the year exceeds $2,500,000.
One significant limitation on Section 179 is that is has never been available for rental property owners to use to deduct the cost of personal property used in residential rental units. In a major victory for landlords, the TCJA eliminates this restriction starting in 2018.
100% Bonus Depreciation Through 2022
Currently, business owners may deduct in a single year up to 50% of the cost of personal property they purchase for their business. The TCJA increases this amount to 100% for property acquired and placed into service from September 27, 2017 through December 31, 2022. Moreover, 100% bonus depreciation would apply for the first time to both new and used property, instead of new property only. The bonus depreciation amount will be phased down in 2023 and later years as follows:
80% for property placed in service during 2023
60% for property placed in service after during 2024
40% for property placed in service during 2025
20% for property placed in service during 2026
0% for 2027 and later.
Bonus depreciation may not be used for real property, except for real property improvements such as landscaping or grading, and other components that have a depreciation period of 20 years or less. Thus, landlords may not use it to deduct the cost of their rental buildings or major building components. However, landlords can use bonus depreciation to fully deduct in one year the cost of personal property they use in their rental activity, such as appliances, laundry equipment, gardening equipment, and furniture. But landlords can often do this already under existing provisions in the tax law—for example, the de minimis safe harbor enables landlords to fully deduct in one year any personal property that costs $2,500 or less. Section 179 can also now be used.
Listed property must be used over 50% of the time for business to qualify for bonus depreciation. Listed property includes cars, and entertainment property like televisions and cameras. Computers were classified as listed property as well, but the TCJA removes them from this classification starting in 2018. Thus, bonus depreciation may be used to deduct computers used less than 50% of the time for a rental business.
Landlords Will Not Be Required to Pay Self-Employment Taxes
As you probably know, people who own their own businesses are required to pay Social Security and Medicare taxes on their net business income, as well as income taxes. These taxes are commonly referred to as self-employment taxes. One of the nice things about owning rental property is that rental income is ordinarily not subject to self-employment tax, only income tax. However, there is one exception for landlords who provide substantial personal services to their tenants and are effectively running a bed and breakfast business or hotel, not a normal rental operation.
The House version of the TCJA contained a provision that removed the rental income exemption from self-employment taxation. However, as many tax experts expected, this was dropped from the final version of the bill. Thus, landlords who do not provide substantial personal services to their tenants remain exempt from having to pay Social Security and Medicare tax on their rental income.
Lower Individual Tax Rates
As mentioned above, almost all residential landlords pay income tax on their rental profits at their individual tax rates. The TCJA reduces these individual rates. Starting 2018, the individual tax rates are as follows:
Married Filing Jointly
$0 - $19,050
$0 - $9,525
$9,525 - $38,700
$77,400 - $165,000
$38,700 - $82,500
$165,000 - $315,000
$82,500 - $157,500
$315,000 - $400,000
$157,500 - $200,000
$400,000 - $600,000
$200,000 - $500,000
These rates are scheduled to expire after 2025.
No Deductions for Not-For-Profit Rental Activities
The vast majority of rental activities qualify as businesses or investment activities. However, rentals that are not profit-motivated must be classified as not-for-profit activities, also called hobbies. Under prior law, expenses from a hobby could be deducted as a personal itemized deduction on IRS Schedule A to the extent the exceeded 2% of the taxpayers adjusted gross income. However, such deductible hobby expenses could not exceed hobby income. The TCJA completely removes the personal deduction for hobby expenses. This means that while the income from a rental activity classified as a hobby must be reported and tax paid, no expenses may be deducted.
Mortgage rates are on the rise and experts are expecting them to continue to rise! So what does that mean for our investors?
Buying and Selling:
Single Family and Multi-family sale prices should continue to rise. When mortgage rates increase, the housing supply will decrease. Many people to do not want to downsize/upsize when they will be jumping over a percentage point on their mortgage rate. As a result, it is expected that fewer homes will be put on the market.
Rents should also continue to rise. As homes become less and less affordable, more people will turn to renting which could mean great things for landlords in the near future.
You can read the original article below or by clicking the link:
Mortgage rates jump to the highest point in 4 years, an ominous sign for spring housing
Published 11:15 AM ET Mon, 29 Jan 2018 Updated 23 Hours Ago
A huge sell-off in the bond market is about to make buying a home more expensive. Mortgage rates, which loosely follow the yield on the 10-year Treasury, have been rising for the past few weeks, but are seeing their biggest move higher Monday.
"Bottom line, rate sheets are going to be ugly this morning," wrote Matthew Graham, chief operating officer of Mortgage News Daily. "Some lenders will be at 4.5 percent on their best-case-scenario 30-year fixed quotes."
That is the highest rate since 2014.
The average rate on the popular 30-year fixed started the year right around 4 percent but then began to climb on positive news in the U.S. economy, solid company earnings reports and a shift in foreign central bank policies which appear to now be following the Federal Reserve's tightening of monetary policy. The rate was at 4.28 percent by the end of last week.
"Apart from central banks, there's a ton of bond market supply coming down the pike due to infrastructure and tax bill spending," Graham said. That new supply will send yields and, consequently, mortgage rates higher.
December new home sales fall to 625,000 annual rate December new home sales fall to 625,000 annual rate
While mortgage rates are still historically low, they were even lower in the years following the financial crisis. That not only helped juice the sharp increase in home prices, but it has also given borrowers a new sense of normal. Both will hurt affordability this spring on several fronts.
"Today is one more reason for Realtors and buyers to move up their spring schedule," said Chris Kopec, a mortgage loan consultant at Chicago-based Lakeside Bank.
The housing market is already facing a supply crisis, with demand substantially higher than the supply of homes for sale. Higher mortgage rates will exacerbate that problem because most current homeowners have likely refinanced to rates in the 3 percent range over the past few years and will be reluctant to give those rates up, either to downsize or upsize to a new home. Hence, fewer new listings.
For first-time buyers, even a quarter point difference in mortgage rates could price them out of the type of home they're looking to buy. Today's buyers are saving less, due to high levels of student debt and high rent rates. Confidence in the current economy is driving spending even higher and savings even lower.
"With spending rising faster, what also drove spending was credit card debt as the US savings rate is down to just 2.4 percent in December from 2.5 percent in November and 3 percent in October. September 2005 was the last time it was this low," Peter Boockvar, chief investment officer with Bleakley Advisory Group, wrote in a note to clients. "Lower taxes and higher wages couldn't have come at a better time for the average consumer, but some of that will likely go towards paying down some of the accumulated debt."
Wages may be growing, but the rate is nowhere near the now-nearly 7 percent annual home price growth. Price gains are highest on the lower end of the housing market, where demand is highest and supply is lowest. That is also where buyers are most sensitive to mortgage rates because they are already squeezing to make the monthly payment.
The Southwest Idaho Chapter of Narpm just completed its 4th quarter Vacancy Survey. The resutls show a slight increase in vacancy but rental rates are still going strong. The overall vacancy for the treasure valley is still pretty low compared to past years. The market is still allowing for rents to be pushed a little higher with out causing a vacancy spike.
FRPM has showed on average .5% vacancy for most of the 4th quarter. This is due to FRPM not having leases expire in the winter months. FRPM has found that it can be more difficult to fill a vacancy in the winter so by not having any leases expire with in that time frame we are not faced with the challenge of vacant units.
2018 should be an interesting year with the market still claiming to be "HOT". Only Time will tell just how high those rents can be pushed while vacancy remains low.
Read the full report here: SW Idaho Narpm Vacancy Report Quarter 4 2017
This PetScreening platform provides property managers with the resources to be able to easily review, approve, and track their renters' pet profiles. The sign up instructions are user friendly and easy to follow. For pet owners, this provides a secure pet management system to store and share their pet's profiles and records electronically. These records are transferable between dog-friendly hotels, veterinarians, groomers giving these vendors easy access to vaccinations, allergies, or behavioral history.
Pets are rated on a scale of 1-5 "paws" based off of their vaccination history, behavioral history, and breed and/or size. This helps property manager to be able to make a secure and informed decision to allow pets in the unit. The owner is able to feel confident that their properties are being taken care, it will reduce the cost of repairs when the tenant moves out, and ensure that the pets in the unit are low risk to surrounding tenants.
Read Full Article - Click Here
Today, property managers and landlords have very little insight into the legitimacy of their tenants’ pets. There’s very little information – let alone consistency – gathered on a potential renter’s pet.
Let’s say you own an investment property, and it’s been occupied by a nice renter with a labrador retriever – which you approved via email – for the past few months. One day, you make a scheduled visit to the house to complete some routine maintenance, you notice that the lab that was mentioned looks an awful lot like a pit bull. At this point, not much can be done.
Potential renters lie on applications because they don’t want to be turned down, and more times than not, they vouch for their pets over the phone or an email. So as the property manager, the approval process – all based on trust – is susceptible to inconstancies, lacks concrete data, and is difficult to re-trace correspondence months down the line.
Now let’s say your nice renter’s dog has an unfriendly temperament and bites someone on your investment property. In most cases, the dog owner will get sued – but it doesn’t stop there. The property owner and the property manager may also face suit.
John Bradford, who built his property management business – Park Avenue Properties which specializes in management for single-family homes – to be one of the largest in the Southeast, experienced this first hand.
“In 2015 and 2016, my company was sued twice over pet bites. And these were properties that we inherited with tenants already in place and they had pets already in place,” Bradford said.
His company essentially did nothing wrong as they didn’t place the tenants nor the pets, but as they were the property manager at the time of record, they were responsible.
Around this same time, while at a conference in March of 2016, Bradford heard the assistant deputy director of HUD give a presentation on this very issue. The majority of the industry was trying to figure out how to best operate in this gray area. So, Bradford recognized this was a huge issue.
“It was in that room that I looked around. I said, ‘I’m going to go build a product to help address this,’” Bradford said. “We need to bring some consistency, standardization, and some help on the assistance animal side too, and if I can bundle that all up in a product – I think other people like us will love it.”
Thus, PetScreening was started.
Bradford’s goal was to get a quality product up, tested and into the market as fast as possible, so he partnered with Castle Digital Partners – a local venture service firm – to make it happen.
The product benefits both the property manager and the pet owner.
For the property manager, PetScreening simplifies the pet screening process and puts structure around the pet information collected.
Bradford calls it the ABCs: affirmation, behavior, and compatibility.
When a pet owner completes a pet profile for a property rental application, he/she will affirm the accuracy of the information and understanding of the implications regarding bites and property damage. The owner will also describe the pet’s past and current behavior as pets’ temperament can vary based on breed, development, age, etc. Lastly, the pet profile will illustrate the compatibility of the pet in relation to the asset owner’s pet policy – type and breed restrictions, size limits, etc.
Simply, the PetScreening platform gives property managers an easy way to review, approve, and track their renters’ pet profiles.
There’s added benefit for pet owners, as they can leverage PetScreening as a secure pet management system to store and share their pet’s profiles and records electronically. So whether they’re going on vacation and need to share information with a dog-friendly hotel or hiring a new groomer who wants more details about the pet, they will have easy access to the pet’s profile.
In April of this year, PetScreening beta-tested with Bradford’s property management company, and after a few months of learning and working out user-experience bugs, they opened the product to the public. Bradford and the PetScreening team have designed the platform to have a simple sign-up system, so managers and pet owners can easily and quickly create an account without any handholding.
So Bradford, having built and grown a successful property management company, is more than ready to do the same in the tech space with PetScreening, while helping alleviate the pet gray area for as many as possible.
He’s also a husband, father of four, and is serving his second term in the NC House of Representatives for District 98, so his pursuit of entrepreneurship is the result of his desire to solve problems.
“If you have the entrepreneurial spirit, you just have to make the jump at some point,” Bradford said.
So his advice to aspiring entrepreneurs is: “Take the jump.”
- Boise Area Rental Market
- Property Management
- Boise Area Real Estate Market
- Interest Rates
- Boise Real Estate Market
- Boise and Idaho in the News
- Deferred property maintenance
- Rental Property Maintenance
- Fair Housing
- SW Idaho NARPM Vacancy Trends Q2-2018
- Ada County Vacancy Trends
- HUD files against Facebook
- Increased rents create parking issues
- Absolutely Reliable Prediction on Interest Rates
- Julie Tollifson
- Tony Drost
- Melissa Sharone
- Jim Sharone
- Tyler Selee
- Kurtis Tarbet
- Kristen Curtis
- Tyler Brown
- Tara Pecora
- Marie Swanson
- Lizz Loop