Apartment Market Digital Spring / Summer 2015

Apartment Market Digital • Spring 20151 www.apartmentsforsale.com

2015ALSO IN THIS ISSUE:• Why Apartments Build

Wealth Safely

• Micro-unit Apartments

• Renters Insurance: What You Need To Know

• Tips for Finding the Ideal Resident

• For Apartment Managers: Creative Ways to Use Social Media

• The Growth of Income vs. Rent in the United States

• Tips for Buying Multifamily Real Estate

Preparing for Climate Change as a Property Owner

The Growth of Crowdfunding

Is Your Property Prepared for Natural Disasters?


If you are considering investing in real estate, you need to think about investing in apartments. Apartments are a better invest-

ment than a single residence as they have better cash flow. For example, imagine you own a ten-unit apart-ment block and a house. You have one unit empty and the house is va-cant. When translated it means you have 10% vacancy in your apartments and 100% vacancy in the home. This means you will still be getting rent from the other 9 rental units but no money from the house.

Additionally, you may force ap-

preciation. This you can do by buy-ing an apartment complex that is poorly managed with rents that are below what is recommended. When you raise the rents to market rates and improve management, the value of your apartment complex increas-es and you get more returns from your investment.

Apartments help you save money on taxes as you will easily write off capital expenses, mortgage interest, and depreciation every taxable year. The period of depreciation for apart-ments is shorter than commercial properties. The tax benefits are also

higher.Apartments are also appealing

to a large population of renters. De-mand for suburban houses has de-creased, and many people want to settle closer to the city. Most want to live near metro stations, restaurants, and malls; apartments will easily ca-ter for this. Furthermore, there is a staff employed to take care of the common areas and gardens, and all your tenant will pay is the mainte-nance fee. Demand for apartments is unlikely to decreas.

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Why Apartments Build Wealth Safely

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For years, young profession-al people have had difficulty finding affordable apartments right in the heart of the big

cities in which they work. New York City, Boston, Seattle--you name the city, and living space is at a pre-mium with rents for one bedroom units rivaling mortgage payments in less prosperous cities throughout the United States and in countries abroad, too.

Real estate professionals – both those who develop and those who sell – have recognized the burgeon-ing popularity of micro-unit apart-ments, tiny, self-contained pods of living space clustered in reused buildings such as old factories and warehouses. And, the advantages

are many:

• For the renter, cost is a fraction of larger apartments, and the public transportation, cultural amenities and professional life of big urban America is easily accessed.

• For the real estate developer, profits run high as multiple units are snatched up by hard-working millennials as soon as the spaces become available.

• For the building reuse conscious, old buildings are rehabilitated, lively and producing plenty of in-come.Micro-unit apartments seem to

be a win-win-win situation--except for the obvious. Renters live in real-

ly tight quarters--with 200 to 300 square feet being the norm. Renters say you have to be able to get along with people, and true privacy is at a minimum.

In addition, the apartments them-selves hold no more than 1 to 2 in-dividuals. There’s room for a Murphy bed, couch, fridge and stove. Storage space? People learn to live Spartan, and shelving units work better than more expensive cabinetry.

As populations shift back to urban areas where technology and health-care are exploding, expect the trend in micro-unit housing to continue to expand. Of course, the units them-selves won’t get bigger--just the number of them available.

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Micro-unit Apartments


To both the tenant and the landlord, renter’s insurance is a must. Why cut down on po-tential applicants by requiring

renter’s insurance? Because much more than just personal property is covered under most rental insurance policies, benefiting all parties.

With renter’s insurance, the tenant is insured for many events, including break-ins and theft, natural disas-ters, fires, and visitors becoming in-jured on the property.

This may seem all to the benefit of the tenant, but coverage is use-ful to you in many of these events, providing protection against several scenarios.

First, the renter is less likely to

sue you, the landlord, in the event of property damage caused by a fire or flooding if personal belongings could not be replaced or fixed oth-erwise.

Also, coverage of injury to guests on the property eliminates the pos-sibility of the landlord being sued by a visitor who has an accident on the premises- say a dog bite or a fall.

Additionally, renter’s insurance hastens repairs to the property. In the case of fire or flood, many be-longings are often ruined along with the property itself. As renter’s in-surance covers repairs and replace-ments to the renter’s items, these are replaced faster and give you space to fix any damage to the property it-

self. Without renter’s insurance, you run the risk of the tenant leaving the damage and the property behind.

Finally, with renter’s insurance it is more likely that the tenant will stay on the property after an unhappy event. Without renter’s insurance, it is easier for a tenant to leave without addressing the damage to property, and then you are left without tenant, without rent, and with a lot of dam-aged items to be discarded or fixed.

Clearly, renter’s insurance benefits everyone. If the tenant is covered by renter’s insurance, so are you.

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Renters Insurance: What You Need To

Know


Preparing for Climate Change as a

Property OwnerClimate change refers to the

changes in the global cli-mate due to the increasing global temperatures caused

by the emission of greenhouse gas-es into the atmosphere. It is char-acterized by increased droughts, change in climatic patterns, flood-ing, and other extreme weather forms. Property owners are in-creasingly becoming aware that the effects of climate change are here with us, and there is need to erect sustainable buildings that enhance our safety and survival.

Fortunately, there are a number of possible interventions that you as the property owner can adopt to develop sustainable buildings that can thrive in the changing future cli-

mates.1. Embracing green infrastructure

in your property. This involves incorporating nature into your buildings as a way to protect against excess heat and flood-ing. That could be in form of;(a) Green roofs and green walls

– This helps to reduce excess runoff by retaining rain wa-ter and purifying the local air as well as improving the soil quality.

(b) Rain garden and rain bar-rel systems in buildings – To reduce the effects of storm-water runoff, these two ap-proaches enable you to col-lect and filter runoff hence reduce flooding.

(c) Permeable pavements in the parking lots and alleys.

2. Developing safe and energy effi-cient building practices through;(a) Using local resources like in

compact building and use of solar power.

(b) Fitting your apartments with energy saving compact fluo-rescent bulbs.

(c) Installing thermostats that can be programmed to adjust automatically your tempera-tures at minimal energy.

(d) Using energy star rated air conditioners that can mini-mize the emission of green-house gases that contributes to global warming.


Presentation and Marketing Message

Of course the best way to attract the most ideal residents is to offer and present a clean, updated apart-ment with fully functioning in-unit and on-site appliances. Amazing-ly, according to numerous reports, there are actually a great number of property managers who fail to prop-erly prepare their units for viewing and move-in. Marketing messages and advertisements should be pro-fessional, polite, informative, and proofread statements that reflect the quality and stature of the build-ing, as well as the hospitality of the staff.

First Impressions

Once you have established that

your building’s appearance is immac-ulate, completely in order, reflects well on the apartment owners, and on your abilities as the attendant in charge, you will be ready to meet and make visual and verbal assessments about your potential clientele. Tak-ing notes on your initial impression of an applicant over the telephone is always advisable, as persons will sometimes provide additional infor-mation about themselves over the telephone. When meeting in person, you will want to notice the person’s dress and grooming, the car that they drive, and well as their man-ners, punctuality, and overall behav-ior. These characteristics can often reflect on the amount of respect and consideration the occupant will have with the property and the staff.

Official Screening Process Conducting an online search is a

fast and easy way to initially screen a resident. Occasionally informa-tion about individuals will pop up through a simple Google search; sites such as Linked In and Face-book often provide detailed profiles for example. During the application process, advise the applicants to fill in as much information as possible. Following the interview, you’ll in-vestigate your applicant’s financial status; judgments, liens, collection accounts, credit history, and bank-ruptcy filings, while keeping federal, state, and local laws in mind.

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Tips for Finding the Ideal Resident


CrowdFunding is the act of requesting funds from out-side sources, spreading the total cost amongst a

large number of willing participants to support projects that might oth-erwise be out of the requester’s reach. There is no limit to the rea-sons someone might start a crowd-funding campaign other than what will attract donations, and a number of websites have cropped up that make running one infinitely easi-er. These include well-known sites such as GoFundMe, Kickstarter, In-dieGoGo, Crowdfunder, and Rock-etHub. A frequent tactic is to offer incentives for different levels of investment, encouraging more do-nations on top of those that might

come from altruism alone.A branch of crowdfunding focus-

ing on real estate has emerged re-cently, and it functions similarly to an open call for investments that offers tiered returns. Most of the websites are still in the early stages of refining their processes, but the list is grow-ing rapidly as the concept solidifies. Sites focused on real estate crowd-funding include iFunding, Fundrise, and Realty Mogul.

This model is incredibly attractive for MultiFamily housing and apart-ments, pulling in startup money while obliviating or mitigating the need for loans from a bank. By skip-ping the middleman in the money lending process, developers can in-crease their profit margins. For the

investor, it provides a way to achieve a much more attractive rate of return on investment than a savings ac-count while remaining within reach for a much larger list of potential do-nors.

An additional benefit of real es-tate crowdfunding is the direct con-nection between the investor and the property, allowing small donors to support renovations and develop-ments for their local communities in ways previously reserved for large companies.

Considering the low cost of real estate crowdfunding, it would be-hoove investors and developers to seek out their options while the mar-ket is still fresh.

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The Growth of Crowdfunding


While you hope that you never need it, everyone needs to have a plan in case of natural disaster.

If you are dealing with a multi-fam-ily property, you will need to spend a little more time planning and pre-paring.

Reviewing the RisksThe first place to start is always de-

termining what the most likely risks are. If you live in an area that is at higher risk for earthquakes you will need a different plan than a location that is at higher risk for hurricanes. Once you know what the greatest natural disaster risks are, you need to review the different standards and requirements.

Creating a PlanOnce you know the risks and re-

quirements, you can create a re-sponse plan to cover the most likely disasters. Here are the items your plan should contain.

• A stated objective so that it is clear what the plan is meant to accomplish. This will likely be along the lines of keeping as many people as safe as possible. In the event of something like a flood though, your objectives will likely be slightly different depending on the extent of the flooding.

• Determine how communication will occur during the disaster. Have a point of contact so that

people can check in as needed.

• Determine which parts of the building are the most vulnerable.

• Create a protocol for the actions that need to be taken.

• Create an emergency checklist for each of the families on the proper-ty.

• Develop a team and assign tasks in the event of a disaster.As natural disaster become in-

creasingly common (there have been a spike in disaster types over the last 10 years), you need to start planning in case something does happen. By dedicating time to planning and co-ordinating, you can minimize loses.

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Is Your Property Prepared for Natural

Disasters?


According to recent re-search, there is little traffic from apartment seekers on Facebook. Considering that

Facebook is the largest social media network, we are safe in assuming that social media sites are not where many people are apartment search-ing.

That being said, having a Face-book business page or community page is a must. You can still post your available units and upcoming available, because your residents will see this and may pass on the word to their friends. What better adver-tising than word of mouth? Things that you should be posting

on Social Media:• Community news and events for

your complex

• Local area events and happenings

• Photos of your complex and events hosted

• Employment opportunities- free ads are awesome

• Networking items for other businesses

Things you should not be posting on Social Media:

• Memes and irrelevant items• Personal information about staff

or residents without permission and a reason

Where else you should be present in Social Media:

• Google My Business• Google+ Local• Pinterest

• Twitter• Instagram

You want to have a presence in social media. By using social media and linking to your website, you are creating SEO that will increase your Google and other search engine rankings. Then, when prospective residents are searching for apart-ments, they will find you some-where. Use your Google tools: Ad-Words, keyword tools, Google+ and business pages. These all will help increase your SEO. Also, be sure to utilize business listings. If you have good branding, relevant content, and useful information around the web, it will increase your popularity and occupancy.

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For Apartment Managers: Creative Ways to Use Social

Media


Multifamily real estate--it’s a whole branch of real estate investing onto itself. With all the properties out there

in the urban environment, what should the buyer look for, and what’s a smart way to buy?1. If you are just getting started in

purchasing multi-unit dwellings, start small. Experienced landlords say buy a 4-apartment build-ing or smaller. This way, you will learn the ins and outs of picking and managing tenants and also, building maintenance on a more manageable scale. Later, you can expand.

2. As your experience grows, pick buildings with a larger number of

units--e.g. 3 or 4 units rather than, say, a duplex. More units mean more rent and better cash flow. In addition, select one large build-ing rather than several smaller ones. This puts all your roof, lawn and other assorted maintenance chores in one location, saving you money and time.

3. As you acquire more properties, consider hiring a manager. This will free up your time to scout out and invest in more multifamily real estate.

4. When considering a property, think seriously about its condition and how handy you are. It’s great if you are skilled enough to han-dle a fixer upper, but if you are not

handy, you will have to hire out the work.

5. Learn all you can about the rents in the area and also the types of ten-ants you may expect. For instance, multi-unit dwellings near the uni-versity will attract students. Are the current tenants young fam-ilies or older adults? The tenant profile impacts security deposits, upkeep, noise level and a host of issues which increase or decrease how hands-on you will need to be.

Bottomline, do research, and talk to an experienced real estate inves-tor. Learn as much as possible about multifamily real estate to maximize success.

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The Growth of Income vs. Rent in the United States


Multifamily real estate--it’s a whole branch of real estate investing onto itself. With all the properties out there

in the urban environment, what should the buyer look for, and what’s a smart way to buy?1. If you are just getting started in

purchasing multi-unit dwellings, start small. Experienced landlords say buy a 4-apartment build-ing or smaller. This way, you will learn the ins and outs of picking and managing tenants and also, building maintenance on a more manageable scale. Later, you can expand

2. As your experience grows, pick buildings with a larger number of units--e.g. 3 or 4 units rather than,

say, a duplex. More units mean more rent and better cash flow. In addition, select one large build-ing rather than several smaller ones. This puts all your roof, lawn and other assorted maintenance chores in one location, saving you money and time.

3. As you acquire more properties, consider hiring a manager. This will free up your time to scout out and invest in more multifamily real estate.

4. When considering a property, think seriously about its condition and how handy you are. It’s great if you are skilled enough to han-dle a fixer upper, but if you are not handy, you will have to hire out the work.

5. Learn all you can about the rents in the area and also the types of tenants you may expect. For in-stance, multi-unit dwellings near the university will attract stu-dents. Are the current tenants young families or older adults? The tenant profile impacts secu-rity deposits, upkeep, noise level and a host of issues which in-crease or decrease how hands-on you will need to be.

Bottomline, do research, and talk to an experienced real estate inves-tor. Learn as much as possible about multifamily real estate to maximize success.

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Tips for Buying Multifamily Real

Estate

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Apartment Market Digital Spring / Summer 2015