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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

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Denver Outlook

Last week, EPIC Asset Management Group and Regency Investment Group closed on The Fairview Apartments in the Denver area. We look forward to a successful partnership with Regency and are excited to to expand our business to an up-and-coming state such as Colorado.

Denver has experienced excellent growth in recent years. According to Marcus & Millichap and CBRE reports, Denver has continued its strong job growth which will help help drive the multifamily market. In addition, low vacancies and steady rent increases in the B and C class apartment market generate great investment potential for the city and the surrounding suburbs.

If you’d like to see detailed reports from Marcus & Millichap and CBRE on the Denver market and projections for the remainder of 2017, click on the links provided below.

Marcus & Millichap – Overview

CBRE Denver Market Report – In-depth

 

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Phoenix Heating Up?

Phoenix has been experiencing steady improvements as of late, and it seems as if the capital of Arizona could continue trending upward for years to come. Yardi Matrix recently published the Spring 2017 Phoenix Multifamily Market Analysis. According to the report, new supply is on pace with demand, resulting in high occupancy rates, employment is on the rise, and job growth is strong thanks to low cost of living.

Other interesting facts and statistics included in the report:

  • Phoenix rents rose a nation-leading 5.1% year-over-year through March.
  • Yardi projects Phoenix rents to continue growing at above-trend 6% in 2017.
  • Strong investor demand: Over $5 billion worth of multifamily properties have changed hands since the start of 2016.
  • Over 1.1 million square feet of office space added to Phoenix market in first quarter of 2017.
  • $7 billion investment by Intel in the Fab 42 plant, which could produce ~10,000 local jobs.

The Yardi Matrix report contains a number of graphs, charts, and other helpful information so review the complete report for a complete understanding of the Phoenix multifamily market as of Spring 2017.

Click here for the entire Yardi Matrix Spring 2017 Phoenix Multifamily Market Analysis

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Top ZIP Codes for Millennial Renters

HomeUnion, an online real estate investment firm, recently conducted a study to discover the best ZIP codes for millennial renters. Each renter’s market was evaluated based on median rent, commute time, and school ranking percentage.

According to the results, the top three ZIP code for millennial renters are: 

1) Elm Grove, Wisconsin 53122 – Suburb of Milwaukee

2) Middletown, Kentuky 40243 – Suburb of Louisville

3) Central Austin, Texas 78705

Click here to see the other top 21  millennial renting markets in the U.S.

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Tax Reform and its Potential Impact on Multifamily

Last week, the National Multifamily Housing Council (NMHC) published an article examining the recent tax reforms proposed by the Trump Administration. The article provides a visual breakdown of how Trump’s tax plan compares to current tax laws and the House Republican Tax Blueprint.

A number of principles from each proposal have potential to make a significant impact on multifamily housing and investment. For example, one principle from the House Republican Tax Blueprint proposes to eliminate the Low-Income Housing Tax Credit (LIHTC), a program responsible for financing almost 3 million apartments and serving over 13 million residents since 1986. Contrary to elimination, the NMHC is insisting lawmakers expand the program by 50 percent. Also, the House Republican Tax Blueprint would tax investment income only 16.5 percent, rather than the current 20 percent plus 3.8 percent on net investment income.

The Trump Administration have some impactful provisions outlined, as well. A proposed 15 percent tax rate for all business would be 10 percent lower than the House Republican’s proposed maximum rate of 25 percent, and a whopping  24.6 percent below the current maximum business tax rate of 39.6 percent. Furthermore, the Trump proposal looks to eliminate the estate tax and cut individual tax rates by consolidating today’s seven tax brackets down to three.

Tax reform was scheduled for the August recess but has been postponed until later this year.

 Click here to see the Tax Plan Comparison Table and a highlight of the Trump Administration tax plan 

*House Republican Tax Blueprint Highlight*

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Over 50,000 New Apartments to Come in DFW Area

The Dallas-Fort Worth area has been a hotbed for real estate construction for many years, and is set to stay on the rise as the first quarter of 2017 comes to an end. According to a recent article from The Dallas Morning News, DFW has experienced a 95% surge in new-construction starts in the first two months of 2017. The spike in new builds is estimated to result in 50,000 apartments with 30,000 of them hitting the market before year’s end.

Most of the new construction is taking place in the Frisco-Prosper and central Dallas areas. Frisco-Prosper is in the process of adding about 6,400 units to the market, and central Dallas has started construction on an estimated 5,700 new apartments.

The recent growth in new construction has been easily absorbed by the job growth in the DFW area. A large portion of the tenant base are relocating to the Dallas area for work, as the region adds about 100,000 jobs to the market every year. Furthermore, Drew Kile with Institute of Property Advisers forecasts the North Texas population increasing by 780,000 people in the next 5 years, so demand is projected to remain strong.

Click here to check out the full article by The Dallas Morning News. 

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Managing Online Reputation

Not long ago, reputations were formed through direct experiences, word-of-mouth, and paid advertising. But since the emergence of the internet and social media, a person or business’ reputation can change as fast as someone can hit ‘send’. On one hand, society’s constant connectivity can be very beneficial, as it allows people to reach large audiences faster than ever before. But just as easily it can bring a company to new heights, the speed and scope of the internet can run even the best reputations into the ground with one wrong misstep. Here are a few tips to avoid ending up on the negative side of online reviews. 

“Google” yourself. A business can’t manage its reputation effectively without understanding the status of its online perception. That understanding begins with a simple search on any and all search engines, social media platforms, customer review sites, and user forums. A simple Google search won’t suffice with such an abundance of online outlets that can directly affect a business’ reputation, so thorough research is critical.

Monitor online reviews. We’ve all heard the cliche, “The customer is always right”, which is, to a certain extent, true. It’s especially true with services such as Yelp!, TripAdvisor, UrbanSpoon, and many others, where customers can describe their positive or negative experiences with businesses behind the safety of their devices without an uncomfortable, personal confrontation with owners, managers, or employees.   One bad review can have a snowball effect, and before long, acquiring customers can seem impossible. That said, there will always be an unsatisfied customer, justified or not. Monitoring review sites allow a business to understand which aspect(s) of their product or service needs improving. In addition, if they have the ability to do so, business should reply to as many reviews as possible. It demonstrates pro-activity, a touch of personal care for each customer, and a desire to satisfy customer needs.

Maintain an active social media presence. In most cases, a business can’t reach its full potential without a social media presence. Networks such as Facebook and Twitter offer excellent opportunities to interact with and advertise to customers at little to no cost.  In addition, social media is often an accurate indication of current and upcoming trends among customers, so businesses can stay updated with their customers’ needs and adjust business strategies accordingly.

Keep it professional. Unless a business has an established focus on a specific political or social cause, it’s usually prudent to separate such opinions and stances from the business environment. Also, business’ should carefully consider the context of any created content available to the public. One offensive tweet or distasteful Facebook post can disrupt customer approval ratings, or even permanently ruin a business’ reputation.  These are just a few initial steps any business can take to harness the power of the internet to maintain or improve their online reputation. A good reputation has to be earned. It requires constant focus tobuild, and even more discipline to maintain. Ultimately, a company’s strategies and tactics can only take their reputation so far. Demonstrating excellent service and maximizing satisfaction will inspire customers to express their positive experiences to others and generate invaluable word-of-mouth no amount of marketing dollars can buy.

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Tenants Experiencing "Sticker Shock" in Dallas

In a recent local news report from Channel 8 News, Dallas, TX, renters in the area described their experience with a pattern of frequent rent increases.

According to the news report, “The newly published April 2017 Dallas Rent Report shows prices across the city remain above the national media. On average, one-bedroom apartments were leasing for $1,260. Two-bedroom units were renting at $1,760.”

While property owners gladly invite the increase in rent prices, tenants are finding it difficult to keep up. Despite new apartment complexes springing up across the city, the demand for apartments in one of the many trending areas of Dallas remains constant; which could be contributing to rising rent rates.

Click here to read Channel 8’s full article, and to see a quick video of local tenants and realtors offering their experience and expertise with rising rents in Dallas.

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The Good and Bad of Owning A College Town Property

College towns create a unique opportunity for property owners and investors. Similar to any other market, owning property in a college town has its pros and cons. But if an owner can take advantage of the pros and mitigate the cons, a college town property has potential to be one of his/her best-performing assets. Listed below are a few of the positives and negatives of a college town real estate market.

Pros

Large Pool of Tenants:
In our previous blog post, we highlighted a study that examined 21 cities where renters outnumber homeowners. Many of the cities mentioned in the study are homes of major universities with a large population of students in need of housing, consequently creating a consistent flow of current and prospective tenants.

Low Vacancy:
While they are not a guaranteed cause and effect, there is a definite correlation between large pools of potential tenants and low vacancy rates. Each semester, a college town experiences an influx of new students and employees who replace the seniors, graduates, and transfer students on their way out. That said, in most cases, the only reason a property would have high vacancy rates is poor management, or a bad reputation throughout campus and the community.

Stable Rent:
With the demand for rentals being so high in college towns, rent rates remain relatively stable. In addition, many students get their rent paid for by their guardians, so there may be many opportunities for higher rent prices.

Market:
When you own property in a college town the area sells itself. The university and the activities it offers attracts people from all over the country. Whether it’s athletic events such as football or basketball, culture or entertainment like art exhibits or concerts, or renowned food and shopping destinations, each college town offers a unique environment that cannot be experienced anywhere else.  Cons The pros of owning property in a college town are certainly enticing, but it’s important to consider the cons as well, as they can make even the best owners regret their investments.

Tenant Turnover:
We’ve established the excellent potential a college town’s large renter’s market offers. The problemis not finding potential customers, it’s retaining tenants for an extended period of time. Best case scenario, a property retains a student tenant for their entire college career, which averages four to five years. This is a rare situation, and with many students moving multiple times during college, it’s hard to get them to extend their lease, especially when it’s for a two-year period.

Wear and Tear:
Maintenance expenses are notoriously high for college town properties. There multiple factors that contribute to high amounts of damage college student inflict upon their living space. The combination of immaturity and high alcohol consumption by student tenants often leads to a lack of respect for their living space. Furthermore, when a student’s rent is paid for by their parents, it can sometimes remove the tenant’s sense of accountability. A thorough screening process can help minimize repair costs and the number of destructive renters a property endures, but every once and awhile a bad tenant manages to slip by.

Off-Season:
During the summer, universities experience a significant drop in student population. Some students head home for a few months while others go on vacation before the upcoming semester. Either way, without the right countermeasures, property occupancy rates are very vulnerable during the summer-time. The best way to counteract a big drop in student population is to have tenants sign a minimum of a twelve-month lease. With tenants signing on for an entire year, they are on the hook to pay for the summer months, even if they don’t intend on occupying the living space during that time frame.  There’s a lot of upside in owning property in a college town, but it’s very dependent on the market, and the owner or investor. Managing some of these pros and cons can be a dangerous game to play, but if you succeed, the risk will be well worth the expended time, money, and effort.

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21 Cities Where Renters are Outnumbering Homeowners

In their recent study of the country’s apartment renting market, ABODO, a user-friendly apartment searching service, examined the top 21 cities in which renters outnumber homeowners and what makes each market so friendly to renters.

ABODO’s research provides an abundance of detailed information including a breakdown of age groups in the renter-majority markets, renter household type, and renter growth compared to housing costs. Each breakdown also includes visual aids to help understand how some markets compared to others.

Click here to see ABODO’s research in its entirety.