It is all about lifestyle in multifamily living

It is all about lifestyle in multifamily living. Apartment complexes, condominium developers and even home owners associations are trying to attract buyers and renters not only offering a housing solution but a whole lifestyle. In recent years it is more important to offer the right amenities and lifestyle than the physical configuration of a specific unit, although this will always have an impact on a buying or leasing decision but to a lesser degree. The following article from GlobeSt.com shows what condo developers are doing in Miami, amenities never seen before in a condominium project.

From Globest.com "MIAMI—Developers are working hard to differentiate their Downtown Miami condos, but the market hasn’t seen anything quite like this yet. Paramount Miami Worldcenter will be home to America’s first outdoor soccer fields in a high-rise residential development.

Soccer is the world’s most popular sport and is gaining massive attention in Miami as the city works through details of a new soccer stadium. In the meantime, residents at Paramount can have kick all the goals they want in an indoor regulation size soccer field located within a two-acre sports complex on the ninth floor of the 60-story tower.

“The world’s number one sport is coming to Paramount Miami Worldcenter,” says developer Daniel Kodsi, who has developed a real estate portfolio of over $1.1 billion in mixed-use, multifamily, condo and single-family homes over the past 25 years. “We are including amenities for families who wish to live in the core of Downtown Miami but also want plenty of open green space to play. Paramount has already attracted buyers from around the world…”

Beyond soccer, the outdoor sports complex will be home to tennis courts, a running course, yoga deck, and basketball court or use the fitness center or boxing studio inside. Meanwhile, a “jam room” will come fully equipped with drums, guitars, a piano and recording studio. Private outdoor bath houses offer serene pools with 180-degree view from a top-floor indoor lounge.

“An amenity like the soccer field really catapults Paramount Miami Worldcenter into a league of its own,” says OneWorld Properties’ president and CEO Peggy Olin Fucci, who is leading marketing efforts for the property. “We have already received tremendous feedback from South American, European and Asian buyers.”

Paramount Miami Worldcenter is located on Biscayne Bay and surrounded by the American Airlines Arena, Adrienne Arsht Center, and the Pérez Art Museum Miami. The tower will be within walking distance of the new pedestrian 7th Street Promenade, which will be home to premier restaurants and outdoor cafes.

The project features 473 city and bay-view residences. Residences will range in size from 1,300 to 2,300 square feet, with prices averaging $700 per square foot. The project is scheduled to break ground in the second quarter of 2015 with occupancy slated for the third quarter of 2018.

Downtown Miami condo prices are soaring. Prices for resale condo units in Downtown Miami from the last boom have increased 75% over the past two years, rising from an average of $230 per square foot to $400 per square foot. The DDA credits most of appreciation to value recovery stemming from market stabilization and the launch of new projects since 2011.

“Strong buyer demand, appreciating prices, and growing appeal among renters continue to fuel the downtown Miami condo market,” says Anthony M. Graziano, senior managing director forIntegra Realty Resources in Miami, whose firm conducted the study. “While we expect price increases to slow with time, downtown is well positioned to absorb the new condo inventory currently under development should present-day buyer trends hold.”

A Green Building Culture

Model D (09/23/14) Mondry, Aaron

The Green Garage, a renovated historic Model T showroom in Detroit, typifies a growing green building culture in that city, using as many sustainable design elements as possible. The building weathered one of Detroit's snowiest winters and rainiest summers with built-in stormwater management, high-resistance insulation, UV-light-blocking windows, solar panels, radiant heat, and other features that enabled the building to use just 15 percent of the energy of a comparable office building. Another historic Detroit building, 71 Garfield, was retrofitted with geothermal heating and cooling, foam insulation, and a rooftop solar array, among other improvements. It uses one-third of the energy it used before the renovation. Meanwhile, Detroit-Wayne Joint Building Authority president Gregory McDuffee renovated the Coleman A. Young Municipal Center with simple and inexpensive changes that are expected to save approximately $1.8 million a year. Some of the changes included cutting energy for lighting by having cleaning staff clean during the day rather than at night, using single-stream recycling to reduce waste, and retrofitting 4,000 cooling boxes to save energy. More efficient insulation and windows are "relatively simple changes that pay for themselves within a year," says EcoWorks' Jacob Corvidae. Making buildings more energy efficient enables businesses to use saved capital for business expansion. "It gets back to our competitiveness as a city and as a nation," says Green Garage owner Tom Brennan. "If we have high infrastructure costs that have to be born in our products and services, then we're setting our businesses up for failure."

Security Deposits and Advance Rent in Residential Tenancies in Florida

We are not lawyers and therefore do not provide any legal advice to clients but want to point out some important aspects of the Florida Landlord Tenant Act which are very important and we see mistake after mistake made by Landlords and even some Landlord's agents.

Whenever money is deposited or advanced by a tenant on a rental agreement as security for performance of the rental agreement or as advance rent for other than the next immediate rental period, the landlord or the landlord’s agent shall either:

(a) Hold the total amount of such money in a separate non-interest-bearing account in a Florida banking institution for the benefit of the tenant or tenants. The landlord shall not commingle such moneys with any other funds of the landlord or hypothecate, pledge, or in any other way make use of such moneys until such moneys are actually due the landlord;

(b) Hold the total amount of such money in a separate interest-bearing account in a Florida banking institution for the benefit of the tenant or tenants, in which case the tenant shall receive and collect interest in an amount of at least 75 percent of the annualized average interest rate payable on such account or interest at the rate of 5 percent per year, simple interest, whichever the landlord elects. The landlord shall not commingle such moneys with any other funds of the landlord or hypothecate, pledge, or in any other way make use of such moneys until such moneys are actually due the landlord; or

(c) Post a surety bond, executed by the landlord as principal and a surety company authorized and licensed to do business in the state as surety, with the clerk of the circuit court in the county in which the dwelling unit is located in the total amount of the security deposits and advance rent he or she holds on behalf of the tenants or $50,000, whichever is less. The bond shall be conditioned upon the faithful compliance of the landlord with the provisions of this section and shall run to the Governor for the benefit of any tenant injured by the landlord’s violation of the provisions of this section. In addition to posting the surety bond, the landlord shall pay to the tenant interest at the rate of 5 percent per year, simple interest. A landlord, or the landlord’s agent, engaged in the renting of dwelling units in five or more counties, who holds deposit moneys or advance rent and who is otherwise subject to the provisions of this section, may, in lieu of posting a surety bond in each county, elect to post a surety bond in the form and manner provided in this paragraph with the office of the Secretary of State. The bond shall be in the total amount of the security deposit or advance rent held on behalf of tenants or in the amount of $250,000, whichever is less. The bond shall be conditioned upon the faithful compliance of the landlord with the provisions of this section and shall run to the Governor for the benefit of any tenant injured by the landlord’s violation of this section. In addition to posting a surety bond, the landlord shall pay to the tenant interest on the security deposit or advance rent held on behalf of that tenant at the rate of 5 percent per year simple interest.

(2) The landlord shall, in the lease agreement or within 30 days after receipt of advance rent or a security deposit, give written notice to the tenant which includes disclosure of the advance rent or security deposit. Subsequent to providing such written notice, if the landlord changes the manner or location in which he or she is holding the advance rent or security deposit, he or she must notify the tenant within 30 days after the change as provided in paragraphs (a)-(d). The landlord is not required to give new or additional notice solely because the depository has merged with another financial institution, changed its name, or transferred ownership to a different financial institution. This subsection does not apply to any landlord who rents fewer than five individual dwelling units. Failure to give this notice is not a defense to the payment of rent when due. The written notice must:

(a) Be given in person or by mail to the tenant.

(b) State the name and address of the depository where the advance rent or security deposit is being held or state that the landlord has posted a surety bond as provided by law.

(c) State whether the tenant is entitled to interest on the deposit.

(d) Contain a specific disclosure stated in the Law

(3) The landlord or the landlord’s agent may disburse advance rents from the deposit account to the landlord’s benefit when the advance rental period commences and without notice to the tenant. For all other deposits:

(a) Upon the vacating of the premises for termination of the lease, if the landlord does not intend to impose a claim on the security deposit, the landlord shall have 15 days to return the security deposit together with interest if otherwise required, or the landlord shall have 30 days to give the tenant written notice by certified mail to the tenant’s last known mailing address of his or her intention to impose a claim on the deposit and the reason for imposing the claim. The notice shall contain a statement in substantially the following form:

This is a notice of my intention to impose a claim for damages in the amount of   upon your security deposit, due to  . It is sent to you as required by s. 83.49(3), Florida Statutes. You are hereby notified that you must object in writing to this deduction from your security deposit within 15 days from the time you receive this notice or I will be authorized to deduct my claim from your security deposit. Your objection must be sent to   (landlord’s address)  .

If the landlord fails to give the required notice within the 30-day period, he or she forfeits the right to impose a claim upon the security deposit and may not seek a setoff against the deposit but may file an action for damages after return of the deposit.

(b) Unless the tenant objects to the imposition of the landlord’s claim or the amount thereof within 15 days after receipt of the landlord’s notice of intention to impose a claim, the landlord may then deduct the amount of his or her claim and shall remit the balance of the deposit to the tenant within 30 days after the date of the notice of intention to impose a claim for damages. The failure of the tenant to make a timely objection does not waive any rights of the tenant to seek damages in a separate action.

If the Landlord hires a professional management company to lease and manage the property, then the company will place most likely all security deposits and advanced rents in a security deposit non-interest bearing escrow account in a Florida financial institution and will have the proper notification in the lease agreement. This makes it easier for Landlords to keep, handle and disburse security deposits and advanced rents, being able to comply with the Law. 

Requiring Renters Insurance from multihousingnews.com

In the article “Owner Beware,” by Keat Foong (originally posted on multihousingnews.com), we learn that apartment companies are increasingly requiring residents to obtain renters insurance. According to a survey of apartment companies conducted by the National Multi Housing Council (NMHC), 66 percent of lessor respondents required renters insurance, which is up from 44 percent in 2009, and in 2008 only 24 percent required the insurance.

Large apartment companies like Greystar seem to be the driving force behind the policy. “We consider [requiring renters insurance] an industry best practice that eventually will become an industry standard,” says Michael Greene, senior director of business operations at Greystar.

There are a variety of reasons why apartment companies are beginning to implement renters insurance more, the most important benefit being the owner’s ability to recover damages. If a resident happens to damage the property the apartment company’s master insurance may cover the cost, but there’s the possibility of a deductible and raised rates.  With renters insurance the landlord would simply recover the costs from the resident’s insurance company. Landlords are also protected in the event that there is a theft or loss that a tenant blames on the property owner.

Coverage under a renters insurance policy usually covers damage caused by smoke, fire, explosions, and water. The typical policy has three fundamental components of coverage: Liability coverage, personal possession coverage and external living expenses coverage.

Although landlords are increasingly electing to require tenants to carry renters insurance, there are often state statutory limits on the amount of control a lessor can exercise over the resulting insurance purchase transaction.  Under most states’ laws, apartment companies are not allowed to requireresidents to use a particular insurance company. However, the landlords are allowed to provide a list of insurance companies as an option to residents. Indeed, landlords may identify favored insurance companies with which they have agreements for lower rates and pre-approval. Such arrangements offer incentives for both the landlord and tenant.

As the requirement of renters insurance becomes more common in the apartment marketplace, there appears to be little pushback by renters. In fact, it is reported now that residents have begun to not only accept, but almost expect the requirement.

Are foreclosures over?

The U.S.housing market is beginning to show signs that it has turned a corner. According to the latest home price report from Trulia, asking home prices were up 5.1% in 2012. This is a big turnaround after falling 4.3% in 2011. Las Vegas and Seattle topped 2012’s biggest turnaround markets according to the report. The report also mentions that nationally, rents rose 5.2% year-over-year, with Houston, TX and Oakland, CA experiencing the largest percent change in rents. According to data from Realty Trac the crisis may not be over and opportunities exist for investors of single family homes, since the rental market may get better in 2013, at least in some areas.

Let's look at the 12 leading States with largest number of foreclosure filings in November 2012:

In Washington State 1 in every 756 homes received a foreclosure notice  in November 2012, this is up 45.37% from a year before.

Wisconsin  has the same ratio of new foreclosure filings but this reflects a 21.70% down from the previous year. Indiana had 1 in every 684 homes, up 31.14% from the previous year, Michigan 1 in every 621, down 47.04%, Georgia 1 in 494 down 32.9% and Arizona 1 in 468 which is down 43.51% from 2011. Then you see Ohio with 1 in every 458 homes, up 9.96%, South Carolina 1 in 455, up 16.68% and California 1 in 430, down 50.08% but still a lot of filings. 

Nevada had 1 in every 390 homes which is actually down 53.82%, Illinois 1 in 392, which is up 9.05%.

Then we get to the State of Florida where we operate. Florida showed 1 foreclosure filing in November 2012 for every 304 homes, which is actually up 19.7% from November 2011. Especially in South Florida we have seen a lower inventory of single family homes and therefore some positive trend and prices. International private investors plus many domestic institutional investors moving to increase their single family rental portfolios, may be the driving force, but still high unemployment and an economy with many unsolved problems may hurt our local market and trends may change. It is difficult to quantify the shadow inventory of single family homes held by financial institutions and somewhere in the foreclosure process but it is there and these new foreclosure filings are also there and a sign of possible problems for our Florida market. Of course South Florida may be the area with the best positive influence but still something that opportunistic investors should take into account and move fast in their investment decisions.

Our particular view is that the train has left the station but there is still a chance to catch it, investors still have an opportunity, and it may greater than many think, to acquire quality residential real estate for their rental portfolios and Florida is a key State with a bright future. The time to act is now when there are still opportunities out there as the numbers show. 

Future of Residential Rental Market

No question that the mortgage meltdown and real estate debacle of the last 5 years, have had consequences in all of us, one way or another, that never were possible in our minds as Americans. The concept of homeownership, part of the American Dream, it is not present in the minds of new generations as it used to be. Availability of capital to purchase a home and Creditworthiness of Buyers is at the lowest level in history. Even with interest rates at historical low levels, and maybe dropping more in the short term, and lower home prices, it is not easy to afford a home these days. The Census Bureau shows 17.5% increase in rentals between 2005 and 2010, but many areas have seen much higher increases. Chicago 40%, Phoenix 70%, san Antonio 48%, Dallas 38% Austin 40%, Las Vegas 67%, Orlando and Denver 22% and Orange County California 37%. Apartment vacancies dropped from 8% in 2009 to 5.6% in 2011 as a national average, pushing national rent prices up 2.5% nationally. We will see more investors come into the single family rental business and we predict that millions of dollars will come from institutional investors and REITs into the single family rental market. We do not think Congress will get rid of the mortgage interest deduction for primary residences but if they do rents will skyrocket, renting will become more much attractive that owning, even for those that can afford to purchase a home. Some may point out that unless we allow rent paid for a primary residence to be a tax deductible item, something common in other countries, we are putting extra weight on those forced to rent, but we do not think this will have any life in Congress, based on the current deficit and fiscal cliff. Such a measure will also push rents up. Our personal opinion is that either home buying is fueled by homeownership or rental investment acquisitions, the need for shelter will continue to push real estate development of new homes and purchases of existing homes, having a healthy real estate market at the end, one way or another. Population growth and employemnt rate are crucial for the health of the real estate market.

Tenant Protection Act of 2009

landlords and Tenants must know about the Tenant Protection Act enacted in 2009 as a consequence of the foreclosure crisis. Simply put the Act states the following: Protecting Tenants at Foreclosure Act of 2009 The Protecting Tenants at Foreclosure Act protects tenants from eviction because of foreclosure on the properties they occupy. These provisions took effect on May 20, 2009, and originally were scheduled to expire on December 31, 2012. However, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) changed the expiration date to December 31, 2014. The tenant protection provisions apply in the case of any foreclosure on a “federally related mortgage loan” or on any dwelling or residential real property. They provide that “any immediate successor in interest” in such a foreclosed property, including a bank that takes title to a house upon foreclosure, will assume the interest subject to the rights of any bona fide tenant and will need to comply with certain notice requirements. Under this law, the immediate successor in interest of a dwelling or residential real property must provide tenants with a notice to vacate at least 90 days before the effective date of such notice. The date of a “notice of foreclosure” is defined as the date on which complete title to a property is transferred to a successor entity or a person as a result of a court order or pursuant to provisions in a mortgage, deed of trust, or security deed. Tenants also must be permitted to stay in the residence until the end of their leases, with two exceptions: (1) When the property is sold after foreclosure to a purchaser who will occupy the property as a primary residence or, (2) When there is no lease or the lease is terminable at will under state law. However, even when these exceptions apply, tenants must still receive 90 days notice before they may be evicted. The protections of this law apply to tenants under a “bona fide” lease or tenancy. A lease or tenancy is “bona fide” only if: (1) The mortgagor or a child, spouse, or parent of the mortgagor under the contract is not the tenant; (2) The lease or tenancy was the product of an arm’s-length transaction; and (3) The lease or tenancy requires the receipt of rent that is not substantially less than fair market rent or the rent is reduced or subsidized due to a federal, state, or local subsidy The law states that “federally related mortgage loan” has the same meaning as in section 3 of the Real Estate Settlement Procedures Act of 1974 (12 USC 2602). The definition includes any loan secured by a lien on one-to-four family residential real property, including individual units of condominiums and cooperatives.