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It is no secret that expenses have increased substantially in the recent past. In the last five years, the Seattle region has seen general apartment expenses rise nearly 25%.  With expenses steadily increasing, it is imperative for owners to make sure the income their property produces follows suit. 

In the past five years, we have seen steady increases in rent, however, not all buildings and owners have taken advantage of these increases — specifically properties that are self-managed and have long-term tenancy. These properties are at risk of falling behind in their income/expense ratio. Rental increases are common and even expected by tenants in today’s market. As an owner, if you are not issuing yearly rental increases, you are falling behind. 

Implementing a utility bill-back system is becoming standard practice, with tenants typically expecting to pay for utilities in addition to their rent. One way, is RUBS. RUBS stands for Ration Utility Billing System, and uses an allocation formula that divides a property’s water bill among its residents based on a ratio of floor space, number of occupants, or some other quantitative measures. There are many third party companies who handle this type of system and even bill the tenants directly. Another option is a flat rate billed directly to the tenants in addition to their rent. 

Parking space is another income-producing feature that is often overlooked or taken for granted.  Buildings that have parking will be in high demand, and previously where parking was a bonus will now be a paid amenity. Charging for parking can bring in a substantial amount of additional yearly income, and is a great way to bring in extra income and help subsidize increasing expenses.

Now more than ever, it is worth your time to strategical decide the best ways to keep your income streams on an upward trend.

Get a Leash on the Three P’s of Pets:

Pet Deposits, Pet Fees, and Pet Rent

Whitney Hahn | Paragon Real Estate Advisors | 

Many landlords question whether or not they should allow renters to have pets in their apartments. This topic has become one of the most debated topics for landlords, and has also become a hard choice. With an increasing number of Seattle renters, more and more tenants are in search of suitable rental properties that will also accommodate their pets.

With the demand for more pet-friendly rentals, knowledgeable landlords will want to know the difference between pet deposits, pet fees, and pet rent.

Pet Deposits

Deposits, as defined by Washington State law, are refundable. The State of Washington has not established any parameters on differentiating rental deposits for individuals or pets. This helps landlords feel justified when requiring high deposits to cover potential damage. Landlords who incorporate a written definition of damage within their lease agreement will minimize disputes with tenants.

Example: Damage includes, but is not limited to, stains on carpets, scratches on hardwood floors, damage to woodwork and walls, etc.

If you charge a refundable pet deposit, you need to return it if no damage has been caused by the pet when the tenant moves out. If the pet did cause damage, you need to send your tenant an itemized list of how much you spent to repair the damage (with copies of charges,) which justifies keeping all or part of the pet deposit, just as you do for a tenant’s security deposit.

Example: $100 - $300 deposit required for each pet upon move in. Limit two pets per apartment. Must fill out pet application, complete the “pet interview,” and sign the pet agreement.

Pet Fee

A “pet fee” is simply the one time admission price for having a pet in the rental. It is mistakenly referred to as a non-refundable pet deposit. Washington State residents are not allowed to use the terms “refundable fee” or “non-refundable deposit.” All fees are non-refundable and all deposits are refundable if certain conditions are met. As a landlord, you keep the pet fee whether the pet causes damage or not. Common pet fees in Seattle range from $150 to $350 per pet. Additionally, some landlords have benefited from including a clause that explains what would happen if an unauthorized pet is found in the apartment.

Example: “A fee of $500 is due immediately or at landlord’s discretion for having a non-authorized animal on the premise at the time of occurrence. No other animals are allowed on the premise without the landlord’s written permission.”

Pet Rent

Pet rent is charged on a monthly basis and is separate from the pet deposit. This monthly charge covers a pet actually being in your rental. Pet rent can be a flat rate or a percentage of the monthly rent. It often varies based on the number, type, and size of the pet(s). The most common factor that plays a significant part in the rate charged is the weight of the pet. Typically, the larger the animal, the more the pet rent will be.

Example: $25 per month per pet. “Please note: Our apartment building does have weight restrictions on dogs and some breed restrictions. Not all residents are comfortable with some breeds of dogs and we want to be respectful of that. Please ask the property manager for more information.”

In the end, each landlord has to decide for themselves whether or not to allow pets in their rental property. Whether you choose to charge a pet deposit, a pet fee, pet rent, or no extra charges, understanding the differences and being able to implement them properly will enable you to do what works best for you. It is infinitely important that you outline your desires for your tenant and their pet at the initial lease signing.

Note: Fair housing laws require that service animals be permitted in all units despite “no pets” rules.

Whitney Hahn is a broker at Paragon Real Estate Advisors, a leading real estate investment firm for apartment sales in Washington State. If you are interested in gaining more information about this article or learning more about the value of your apartment building, please contact Whitney.

Just this year, Bill Nye the Science Guy made a bold statement saying that the “greatest generation” has arrived. But have you heard of them? At 75.4 million strong, they are now the largest living generation in the US. 

Born between 1982 and 1995, Millennials (also known as Generation Y) are around the ages of 16-35 years old. A generation of “digital natives” (those who have grown up with technology and social media), Millennials are diverse, as well as the most educated generation up to this point.

According to The Demand Institute, a research firm focused on consumer demand, Millennials will spend over $600 billion on rent within the next four years. Their purchasing power is expected to increase rapidly, with an expected $1.4 trillion in disposable income by the year 2020 (socialmediatoday.com). They are one of the main components in the changes we see in the housing industry, and will continue to be for years to come.

With the future in mind, it should come as no surprise that building owners, landlords, and property management companies are working hard on cracking the code on what amenities Millennials want when renting. According to Mike Scott of Dupre + Scott Apartment Advisors, Seattle “will add 125,500 jobs between now and the end of 2020.” This translates into a demand of 37,500 new multi-family rental units in the Greater Seattle Area.

Just in the last two years, we have already seen an increase of Millennial-targeted luxury rental buildings that offer high-end conveniences. Common amenities in these luxury apartment buildings include high-end rooftop decks, pet-friendly options, bicycle repair and storage rooms, shared co-working spaces, and tech-focused lobbies.

On the other hand, what about the apartment buildings that don’t fall under the umbrella of new development? How can local apartment building owners appeal to “the greatest generation” and better position their older apartments to remain competitive in light of all the newly constructed units?

To answer these questions, here are some of the top upgrades any landlord can make to appeal to the Millennial generation:

Get OnlineDid you know that most Millennials don’t own a checkbook? They prefer to receive electronic bank statements, use digital coupons, and pay their bills online. Consider investing in an online portal such as Activebuilding.com, which can make your building very appealing to Millennials. A portal will allow your tenants to pay rent, sign up for utilities, submit service requests, and engage with their community — all online. Talk about convenience!

Got Wi-Fi?Whether a building has been around for a while or is newly developed, a top priority for Millennials when searching for an apartment is Wi-Fi and the internet. Millennials desire to be constantly connected to the outside world, and if they can’t find it at your building, they will go elsewhere. Websites like WifiApartments.com will install Wi-Fi in your building for free with no long term contract, for as little as $3.00 per unit. While a strong internet connection may not be the sole reason someone moves in to your apartment building, a weak connection could definitely be the reason they move out.

Reconsider you Anti-Fido PolicyIn Seattle and in many other cities, a dog is not just a pet, it’s family. Just last year, Forbes Magazine examined pet friendly rentals in the top 25 markets, and determined that Seattle’s pet friendly rental market is the second best in the US. The article highlights that 29% of Seattle’s pet friendly apartments allow small dogs, with only 2% allowing large dogs. Seattle pet friendly tenants can expect to pay roughly $25 in pet rent monthly, and $400 in pet deposits and fees.

In 2013, The Seattle Times showed that Seattleites have more dogs than children (roughly 75% have pets.) This means that pet owners are spending roughly $1,379 on their pets per household annually. If you don’t currently offer any pet perks, not to worry. Buildings that don’t offer “pawdicures” (yes, pet pedicures) or currently have a dog park could benefit by advertising the closest park to your building and providing trash bins/doggie bags along the way.

Many landlords have reported that dog washing stations are the most used amenity in their building. Instead of bathing a dog once a season, many pet owners now groom their pet every two to six weeks, or as often as needed. Dog washing stations can be integrated into a property designating an area outside the building to wash Fido, or by creating a space within the laundry room where there might be extra room.

Other honorable mentions include:>Creating a secured bicycle room that offers a work station.
>Creating a common space where the apartment community can mingle.
>Offering a car charging station, or setting up a car sharing program.

With a total of approximately 4,279 new apartments having been added to Seattle’s local inventory in 2015 (Yardi Matrix Data), there is serious value in reaching out to one of the largest generations in history.

To sum it up, Millennial author David Burstein said it best, “Understanding Millennials isn’t just about understanding young people, it’s about understanding the future.”