Airbnb and its Impact on Real Estate

If there are any Airbnb listing located near an apartment community, odds are that multifamily property has experienced some benefits.

According to a new academic study conducted by researchers from MIT, UCLA, and USC, a 10% increase in Airbnb listings would lead to a 0.39% increase in rents and a 0.64% increase in home prices in a zip code on average, meaning neighborhoods with listings are becoming more valuable. Data was collected by MIT Research Assistant Kyle Barron, UCLA Professor Edward Kung and USC Professor Davide Proserpio, as they compiled research from resources such as Google Trends, Zillow, Airbnb, and the Census Bureau.

While the report proves an increase of Airbnb listings has an effect on home prices, perhaps the most noteworthy finding from the report, especially for the multifamily industry, is Airbnb’s  impact on rents appearing to be linked to the availability of commercial listings in a particular market.

Fast Company’s writer, Ruth Reader explains, “They found that the percent of non-owner-occupied units listed in a given region determines the rate at which rents will increase. Rents rise more heavily when there is a preponderance of home listings that the owner is not living in.” More specifically, the study shows rental rates increase when landlords/owners take long-term inventory and move them to short-term markets like Airbnb.

As services like Airbnb and VRBO become more popular, it is only a matter of time before this new form of housing market has a larger effect on residential, commercial, and multifamily real estate from a monetary and regulation standpoint.

Read the entire Fast Company article here

AXIOMetrics – July 2017 Jobs Report

Earlier this week, AXIOMetrics, a market research company that provides strategic insight reports for real estate professionals, issued its July 2017 jobs report.

Here are some major takeaways:

  • 209,000 jobs were added to the U.S. economy in July
  • The national unemployment rate slightly dropped from 4.4% to 4.3%
  • Top five annual job growth markets – New York City, Dallas, Atlanta, Los Angeles, Orlando
  • Washington D.C. and Minneapolis-St. Paul move into top 10 of job-gaining metros

Beyond the major takeaways from the July jobs report, AXIOMetrics breaks down job growth by industry, analyzes how the Federal Reserve may interpret the current and upcoming economic climate, and explains how metrics like inflation and unemployment interact with each other.

The report also includes numerous graphs and visual aids to show how certain statistics compare to past metrics, but given the abundance of useful information provided by AXIOMetrics’ research, a personal analysis of the report is suggested to ensure a full understanding of job growth in the U.S. during July 2017.

Click here for the full AXIOMetrics July 2017 jobs report

An Expert’s Opinion

Yesterday we discussed some useful research tools commercial real estate professionals can take advantage of to gain insight on their targeted market. We highlighted Yardi Systems as one of the industry leaders in real estate investment and property management software by providing detailed analyses pertaining to market characteristics such as demographics, median incomes, and other important micro and macro indicators.

Today we will be listening to a recent interview provided by Multifamily 5, a podcast hosted by the Dallas-based multifamily broker, Mark Allen, aimed at interviewing real estate investors, brokers, and other industry pundits to learn some of their keys to success.

In this particular podcast, the leader of the Yardi Matrix team, Jeff Adler, discusses his top six markets that are poised for success in the near future, how the real estate industry interacts with Yardi Matrix software, the benefits of class B, value-add properties, future economic cycles, and much more.

Click here to hear Adler’s expert opinion on his top six markets and how to use Yardi software programs to gain a better understanding of your desired market.

Helpful Research Tools

Accurately assessing the real estate industry takes much more than a good hunch. Gaining a full understanding of a market takes years worth of knowledge and experience, solid relationships with other industry professionals, and continuous research to stay updated on current and future trends.

Fortunately, with so many useful tools, software programs, and other analytical technologies readily available, making well-informed, successful real estate decisions is more achievable than ever before.

For example, Yardi Systems, an industry leader in real estate investment and property management software, provides valuable research to real estate professionals in markets such as multifamily, single family, senior, military, and many other housing categories. Yardi also offers business solutions to other real estate market segments such as retail, self-storage, office, and industrial property types.

Click here for more information on Yardi multifamily research and business solutions: Yardi Matrix  

Aside from Yardi, there are numerous corporations such as CBRE, CoStar, and REIS who provide industry reports and research insights to assist asset managers and owners in making the most informed real estate decisions possible.

Check out tomorrow’s blog post for an in-depth interview between DFW-based multifamily broker, Mark Allen, and Jeff Adler, Vice President of Yardi Matrix Products. Discussions include Adler’s top six markets to keep an eye on and how industry professionals can benefit from Yardi Matrix Products.

The Advantages of Online Property Management Services

Recent technological advances have made online property management tools less expensive and easier to use, even for smaller portfolio owners and managers. Online portals and other software programs make the renting process easier for all parties involved. As a result, online services are no longer viewed a bonus for tenants, but more so an expectation.

Having the ability to pay rent online is arguably the best perk of online property management services. Paying rent online offers multiple benefits for renters. For example, tenants don’t have to take the time to hand-deliver their monthly rent check, setting up automatic online payments ensures their rent is paid on time, and it eliminates the possibility of a tangible rent payment being stolen, lost, or misplaced.

Owners and managers see similar advantages when tenants pay rent online. In a recent article for Multi-Housing News, Ray Szabo, residential and commercial property manager with Santa Barbara Real Estate & Investment, stated:

“Having an online payment system eliminates the opportunity for a myriad of excuses that residents have for why they weren’t able to pay their rent on time, such as issues with the mail, running out of checks and so on.”

But making and receiving rent payments is not the only benefit of online property management services. An invaluable resource of online property portals is the ability to centralize maintenance management. Tenants can issue maintenance requests in the touch of the button, schedule preferred repair times, and track when the request was issued and completed. 

On the other hand, the maintenance team has an organized system to promptly and efficiently maintain the well-being of the property. Furthermore, maintenance workers are held more accountable with the online portal documenting the maintenance progress throughout the property.

Online rent payments and maintenance management are only two of the many benefits of online property management services. If property owners and managers correctly utilize such services, managing the property and communicating with the property’s community should become more stable and effective.

Trump’s Affect on Multifamily, or Lack Thereof?

Since stepping into the political realm, Donald Trump has been one of the most polarizing figures in the world. And after being elected president, the real estate industry started holding its breath to see how Trump and his administration would impact the economy. Some were cautiously hopeful for business-friendly policies while others had their reserves about approval rates and beliefs.

Fast forward to today. Six months have passed since Trump entered the Oval Office and the economy has had some time to adjust to new leadership. But how have those adjustments affected the multifamily sector, if at all?

Recently, the National Apartment Association (NAA) issued anarticle examining how Trump has impacted the multifamily and real estate industry. A number of industry CEO’s such as Ric Campo of Camden Property Trust, Greg Mutz of AMLI Residential, and David Schwartz at Waterton chime in to tell how the political climate has affected their actions and the real estate market as a whole.

Click here to read the full article and gain insight on what the Trump election has meant to the real estate sector so far.

Apartment Demand Continues to Rise

Last week, Multifamily Executive published an article pertaining to the continuously rising demand for apartments across the country. Substantiated data provided by RealPage and Axiometrics indicate 2017’s second quarter meets less than half the current level of apartment demand.

Chief economist for RealPage, Greg Willett, accredits high apartment demand to strong job growth, limited loss of renters to home ownership, and attractive new apartment communities.

Click here for the full Multifamily Executive article and additional detailed statistics from RealPage and Axiometrics regarding apartment demand, occupany rates, and rent growth for the second quarter of 2017.

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Lowering Summertime Energy Costs

Summer is a fun time of the year, but it can also create a multitude of headaches for multifamily property owners.  For many regions of the country, the summertime heat can reach 100° Fahrenheit on a daily basis. As a result, residents consume an increased amount of energy to mitigate the heat.

Air conditioners constantly running, ceiling fans being left on,  personal auxiliary cooling devices, are just a few reasons for higher energy costs during the summer. Fortunately for property owners, there are proven steps to counteract some of the stifling energy bills that come along with summertime.

ProudGreenBuilding.com is a company focused on adopting high-performance strategies, systems and products for all types of buildings and multifamily homes. Furthermore, ProudGreenBuildings provides relevant digital information and knowledge needed to create dependable, efficient buildings. For example, the sustainability-focused company recently posted an article providing tips for lowering a multifamily property’s energy output.

Here are the three highlights of the article:

Quick and Easy Upgrades –Todd Feist, sustainability program manager at the Institute of Real Estate Management (IREM), said one of the easiest and most affordable things small-portfolio owners can do to make their properties more sustainable is upgrade the lighting.

“Inefficient lighting can take up a substantial part of a building’s energy profile, and upgrading to LED lighting is fairly simple and the return on investment is easy to measure and understand for a lot of people,” he said. Also, consider benchmarking, which Feist says is fundamental.

“You can’t manage what you don’t measure,” he said. The EPA created ENERGY STAR Portfolio Manager, a free energy management tool for owners looking to begin their journey toward sustainability.”

Timing Is Key – There are other common systems in multifamily buildings that consume a lot of energy, but they may not be as simple to upgrade for small-portfolio owners who have limited resources.

“Old HVAC systems are a drain on energy, but these can be a little more difficult to replace and the return on investment perhaps isn’t as apparent as upgraded lighting,” Feist said. “People usually want to use the HVAC to the end of its useful life, and then consider upgrading to a more efficient system at that point.”

It’s especially important to strategically time property improvements to not displace renters and disrupt inflows.

“A good time to complete upgrades is during lease turnover, when you can more easily swap out old equipment and fixtures for more sustainable options. If you have any big cosmetic or design renovations planned, this could also be a good time to make some energy-efficient upgrades,” he said.

Programs and Benefits – There has been an increase in state and federal programs promoting green energy in recent years, and it can be difficult to determine what you qualify for and which program is best suited for you. Since programs and tax benefits vary, Feist recommends checking out the DSIRE database, which is searchable by state.

Utilities companies are ramping up their offerings to promote energy efficiency by offering incentives. 

“A lot of times they will even go above that and offer walk-through’s and assessments of your property to identify opportunities for additional efficiency,” Feist said. “Depending on the program, the assessment could be free, and they’ll list out recommended upgrades and provide you with a quote.”

Financing companies have also increased their offerings to encourage sustainability. Well-known programs such as Fannie Mae’s Green Rewards program and Freddie Mac’s Green Advantage program are great options for small-balance owners improving existing properties.  Additionally, IREM created the Certified Sustainable Property program, a green-building certification that provides a framework for smaller owners and operators to get a handle on how to best make their properties energy efficient.

For small-balance multifamily owners, making sustainable, energy-efficient upgrades can require careful consideration.

“Owners and managers are being pulled in a million directions as it is, so it’s important to make upgrades that don’t require a huge shift in staff and resources,” Feist said. “Partner with providers that you trust, and don’t fall for improvements just for their flashiness. Make sure you have a thorough understanding of how all upgrades and improvements will benefit you and your residents.”

Click here for ProudGreenBuilding.com to learn more about energy efficiency and sustainable building strategies. 

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What Your Employees and Residents Need to Know About Pests

Allowing a property’s pest problem to go unaddressed can quickly spiral out of hand. Informing employees and residents how to prevent and detect pests can save everyone involved a substantial amount of time, money, and frustration by stopping the infestation before it occurs. So, who’s better input than that of a certified entomologist? 

In an article for multifamilyexecutive.com, Hope Bowman, a technical specialist and board-certified entomologist with Western Pest Services, covered some basic facts for employees and residents to keep in mind when preventing/detecting pests:

1. Poor sanitation can lead to pests
Pests such as rodents, flies, and cockroaches are often drawn indoors because they detect a food source. Maintaining a clean space and taking out the trash daily can help deter them.

2. Water attracts pests
Pests need water to survive, so have residents report or fix leaky faucets, empty any bowls and cups collecting water in the sink, and remove any other sources of standing water in their units.

3. Cleanliness doesn’t prevent bedbugs
It doesn’t matter how clean one keeps one’s space; bedbugs can survive anywhere they can find a blood meal—and they prefer to feed on humans. So ask tenants to stay vigilant, especially when returning from a trip out of town. If they suspect they or their belongings might have been exposed to bedbugs while they were away, tell them to contact the maintenance staff before bringing suitcases and other trip items back into their apartment.

4. Pests can spread from unit to unit
Apartments share walls, noise—and pests. When one unit has a problem, other units are often affected too. That makes it even more critical to educate all your residents about taking the proper precautions, and periodically reiterating that message with friendly reminders.

5. Management should be notified early and promptly whenever a resident detects a problem
If pests aren’t reported, they can quickly lead to an infestation. Encourage your residents to report any pests as soon as they spot them.

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Preparing for Peak Leasing Season

Peak leasing season generally takes place during the second and third quarter of the calendar year. It’s also when a multifamily property should be performing at its highest level by bringing in revenue and attracting new tenants at a higher rate than slower months of the year. Being ill-prepared for peak season can almost guarantee a property playing catch-up for the rest of the year chasing lost revenue dollars, and as a result, negatively affecting overall returns on investment.

In a recent article from National Real Estate Investor, author Scott Wickman, regional vice president of Western National Property Management, highlighted some essential techniques to use before peak leasing season that can boost a property’s performance in terms of value, revenue, and tenant retention/attraction.

Click here to see the entire National Real Estate Investor article and learn how to take full advantage of peak leasing season