Category: Multifamily

How Rent Control Reduces the Affordable Supply

The Institute of Real Estate Management’s director of government affairs takes a hard look at the economic and social impacts of these policies.

Rent control is often considered by some state and local government officials as a means to create more affordable housing by limiting the amount a property owner can charge for renting out a home, apartment, or other type of real estate. As rental rates rise, demand for apartments increases and Americans see a larger portion of their income go to paying rent. As policymakers search for answers to combat this growing problem, one of the first solutions they consider is rent control.

Over the last few years, property managers and owners have addressed rent control legislation in their respective states. Rent control (also known as rent stabilization) is a government-enforced price control measure limiting the price of rents that property owners may charge for rental housing.

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As Southeastern Cities Experience Strong Job Growth, They Are Also Seeing a Rising Demand for New Apartments

Southeast cities including Nashville, Tenn., Atlanta and Charlotte, N.C. are seeing rising demand for apartments.

Strong economies are quickly filling new apartments in Southeast cities including Charlotte, N.C., Nashville, Tenn. and Atlanta.

“The Southeast’s major metros have posted terrific apartment sector performance during this cycle,” says Greg Willett, chief economist for RealPage Inc., a provider of property management software and services based in Richardson, Texas. “Investment returns have rivaled the results generated in traditionally favored gateway markets, without the volatility sometimes seen in this part of the country during the past.”

Charlotte and Nashville rank among the markets where construction has been the most aggressive in this cycle. In Charlotte, apartment inventory has grown by an average of 3.6 percent per year since early 2010, the fastest expansion rate nationally, according to RealPage. Nashville follows close behind, with annual inventory growth averaging 3.3 percent, according to Willett.

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GSE Reform Might Really Happen, According to Multifamily Experts

After 10 years of inaction, legislators and agency leaders consider reform of Freddie Mac and Fannie Mae.

Ten years after the federal government seized control of Fannie Mae and Freddie Mac, both Congress and President Donald Trump are calling for change for the two mortgage giants.

“The President is directing relevant agencies to develop a reform plan,” said the White House in a March 27 letter that called on legislators to “end the conservatorship of Fannie Mae and Freddie Mac.”

Not to be left out of the process, the chairman of the Senate Banking Committee, Sen. Mike Crapo (R-Ind.), released his own outline for reform and privatization.

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How to Implement Value-Add Strategies at Apartment Buildings Without Making Them Too Expensive

Careful repositioning decisions can keep apartments affordable for middle-income renters.

Turns out value-add investment strategies, in which developers renovate older apartment buildings, can make apartments too expensive for many lower-income renters, according to industry experts.

“As an industry, we are taking too many class-C apartments and trying to make them class-As,” says Daryl Carter, founder and CEO of Avanath Capital Management, an investment firm based in Irvine, Calif., that focuses on renovating older apartments.

Firms like Avanath take a different approach. They try to renovate apartments in ways that modestly increase rents and also repair deferred maintenance problems like leaky roofs and pealed paint. That can help keep the buildings operating while keeping the units affordable for middle-income renters for decades to come.

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Multifamily Borrowers Still Have Lots of Options for Constructions Financing

Banks continue to have an appetite for loans on multifamily construction projects.

Investors can still find the financing they need to develop apartment properties.

“If you can get a site to build, there are people who would love to lend on it,” says Bill Leffler, vice president in the multi-housing group of real estate services firm CBRE.

Interest rates remain low and many lenders are willing to make multifamily construction loans. However, these lenders have become more cautious as the cost of construction has grown faster than apartment rents in many parts of the country. Lenders are looking very carefully at the sponsors who ask for construction loans and the markets where they plan to build.

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Keep Bridge Loans in Your CRE Finance Arsenal

As banks raise their requirements and construction costs rise, these loans have become an even more useful tool in the value-add and redevelopment space, says Calmwater Capital’s Tristine Lim.

In today’s commercial real estate lending climate, owners and developers increasingly see bridge loans as an essential tool―almost a magic bullet―that can overcome hurdles to remain competitive in the multifamily marketplace. As the cost of home ownership continues to price middle-income earners out of the buyers’ market and into the rental marketplace, multifamily owners continually invest in their properties to attract this group and grow profits.

When it comes to the cost of value-add construction or redevelopment―whether it’s the cost of construction, the need to refinance or consolidate debt, or a desire to buy out other owners―bridge loans have become the weapon of choice in this segment of the market.

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Americans still favor owning over renting, but for how long?

67% of American homeowners believe owning is easier than renting.

With a homeownership rate of 64.2%, it’s safe to say the American dream of homeownership is alive and well. However, lackluster growth in the sector suggests the market might be turning, especially as affordability remains a top concern.

In a recent analysis, LendingTree surveyed 2,095 American homeowners aged 22 and older about their perceptions of owning a property versus renting.

According to the company’s study, 67% of American homeowners believe owning a home is a better option than renting. However, LendingTree discovered that for many American homeowners, renting is still a viable option.

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What are the Top 10 Most Commonly Collected Types of Ancillary Income?

Over the past few months, we developed a research study on apartment community use of Ancillary Income, and to start off, we wanted to develop a comprehensive list of the most common types of income in this vein. In total, we amassed a list of dozens of types of income, although please feel free to add your own in the comments so we can improve this research in the future! You can download the entire list of ancillary income types, as well as see how much communities are charging for application fees, admin fees, pet rent, and a variety of other charges and fees.

Here are the 10 most commonly collected forms of ancillary income: (Percentage shows percent of responders who collected that type of income)

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The Next Big Thing in Multifamily Revenue Management

Pricing and Revenue Management (PRM) in multifamily turned 18 years old this year. For those interested, the first-ever deployment of a PRM system took place in February 2001 at the Hunters Run apartment complex in Austin, TX. When we sat down recently with 20 multifamily executives to discuss the industry outlook towards 2020 and beyond, we invited them to provide their perspectives on the current state of PRM.

We discuss the results of our research in greater detail in our 20 for ’20 white paper. Below we have summarized the feedback that we received on possible future PRM advancements and areas of opportunity. We found that PRM system-specific feedback fell into two broad categories: how to improve the current models; and more radical improvements and future direction.

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The Importance of a Move-In and Move-Out Checklist

A landlord/property manager is required to document any expenses that are taken out of a tenant’s security deposit; therefore, good documentation is vital. A move-in/move-out inspection with a checklist, pictures and/or a video is essential.

These Checklists can be Beneficial to the Property Owner and Tenant

The Move-In/Move-Out Checklist is a convenient, all-inclusive and reliable way to document the property’s condition. Tenants can benefit from a Move-In Checklist because any existing conditions will be predated to his/her occupancy. This checklist helps the landlord/property manager by reducing liability risks due to disagreements related to security deposit reimbursement; thus, protecting the value of the property.

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