Area’s Urban Rental Properties Still Face Headwinds Short-Term

Rental Housing Journal MetroSponsored ContentDo DSTs Work for a 1033 ExchangeDue to Eminent Domain or Involuntary Conversion?Understanding the Rules of a 1033 Exchange aka Involuntary ConversionDSTs Provide Replacement Options for a Property Sold Under Eminent DomainBY DWIGHT KAY, CEO OF KAY PROPERTIESAND INVESTMENTSAND THE KAY PROPERTIES TEAMProperty owners initiating a 1031 Exchange oftenend up in that situation by choice after deciding tosell an investment property or business. But whathappens when that decision to sell is out of yourhands? That is the case when the governmentsteps in to acquire a property by exercising itspower of eminent domain.WHAT IS EMINENT DOMAIN?Eminent domain applies to situations where thefederal, state or local government uses its authority to acquire private property for a publicuse or the greater good. Eminent domain hasbeen around for decades with cases dating asfar back as the late 1800s. It is commonly usedby government entities to assemble land to buildinfrastructure, such as roads, interchanges orairport expansion. The government also has beenknown to step in and utilize its powers of eminentdomain to acquire property to pave the way forprivate-sector development that will in some waypotentially serve the community or help raise thetax base, such as a new convention center, hotel,or hospital. Eminent domain or condemnation alsocan come into play when a property has beendestroyed by a natural disaster, such as flooding,hurricanes, or wildfires.Although eminent domain sounds a bit onerous,property owners are entitled to fair compensation for that property. Once that eminent-domaintransaction is complete, the question is: What todo with that pile of cash? Just as with any propertysale where the transaction generates a profit, anyincome recognized from that eminent-domain ac-quisition is subject to capital-gains tax. One way topotentially defer that tax bill is to roll the proceedsfrom the sale into a tax-deferred like-kind exchange. Whereas the 1031 Exchange is used fortax-deferred reinvestment in most property sales,eminent domain has its own separate categorythat falls under a 1033 Exchange.KEY DIFFERENCES AND SIMILARITIES IN 1031AND 1033 EXCHANGESA 1031 Exchange and a 1033 Exchange weredesigned for exactly the same purpose. Each issanctioned by the IRS as a means to defer capital-gains taxes. However, there are some key differences that an owner should be aware of whenconducting a 1033 Exchange. One notable item isthat similar to a 1031 Exchange, a 1033 Exchangeallows the taxpayer to fully defer both capitalgains and any potential depreciation to recapturetaxes that may be incurred from the governmentacquisition. In other words, 1033 Exchanges havethe potential for the taxpayer to avoid an evenbigger tax bill. In addition, the rules on a 1033are considered by many to be a bit more relaxed,giving property owners more time and flexibility tosuccessfully execute the exchange. Some of thosekey differences are: More time to execute. The IRS gives taxpayers two years from the date the sale closesto complete a 1033 Exchange (three years ifgranted a further one-year extension) compared to 180 days for a 1031 Exchange. No limit on replacement IDs. The taxpayer hasno restrictions on the number or dollar valueof potential replacement properties they canidentify for their exchange. In contrast, 1031Exchanges have reporting rules that requireAbout Kay Properties and www.kpi1031.comKay Properties is a national Delaware Statutory Trust (DST) investment firm.The www.kpi1031.com platform provides access to the marketplace of DSTsfrom over 25 different sponsor companies, custom DSTs onlyavailable to Kay clients, independent advice on DST sponsor companies, full due diligence and vetting on each DST(typically 20-40 DSTs) and a DST secondary market. KayProperties team members collectively have over 115 years ofreal estate experience, are licensed in all 50 states, and haveparticipated in over 15 billion of DST 1031 investments.This material does not constitute an offer to sell nor a solicitation of an offerto buy any security. Such offers can be made only by the confidential privatethat a limited number of replacement properties be identified within a 45-day window. No need for a qualified intermediary. In a 1033Exchange, funds do not need to be handledby a qualified intermediary (also known asan exchange accommodator or facilitator),as is the case with a 1031 Exchange. In fact,funds can even be placed into shorter-terminvestments, such as a bond or CD, until theyare needed to close on the purchase of 1033Exchange replacement assets.DO INVESTORS UTILIZE DSTS FOR 1033 EXCHANGE REPLACEMENT PROPERTY?Yes, DSTS are commonly used in 1033 Exchanges. DSTs work just like other investment realestate, the difference being that it is fractionalownership. All of the same reasons why a DSTwork well for a 1031 Exchange also apply to casesof eminent domain where an owner is conductinga 1033 Exchange. For example, DSTs provide asolution that allows for portfolio diversification andpassive ownership in real estate as well as incomepotential.Despite the longer timeline to complete a 1033Exchange, the clock winds down quicker thanmany people realize. Some simply put off identifying replacement properties because they don’tknow what to buy, or perhaps they are waiting outthe market for better opportunities or pricing. So,it is not unusual for clients to focus on DSTs asreplacement properties for their 1033 Exchange atthe eleventh hour, knowing they can reinvest proceeds in one or more DSTs in as little as a week’stime. For a free list of available DST investmentsfor your 1033 Exchange please visit www.kpi1031.com.placement memorandum (the “Memorandum”). Please read the entire memorandum, paying special attention to the risk section prior to investing. IRCSection 1031, IRC Section 1033 and IRC Section 721 are complex tax codes;therefore you should consult your tax or legal professional for details regardingyour situation. There are material risks associated with investing in real estatesecurities including illiquidity, vacancies, general market conditions and competition, lack of operating history, interest-rate risks, general risks of owning/operating commercial and multifamily properties, financing risks, potential adversetax consequences, general economic risks, development risks and long holdperiods. There is a risk of loss of the entire investment principal. Past performance is not a guarantee of future results. Potential cash flow, potential returnsand potential appreciation are not guaranteed. Securities offered throughGrowth Capital Services, member FINRA, SIPC, Office of Supervisory Jurisdiction located at 582 Market Street, Suite 300, San Francisco, CA 94104.Can You Charge Non-Refundable Pet Deposit for Support Animal?By Hank Rossidisability. In other words, a podiatrist can’t say you needan emotional support animal for psychological issues.Dear Landlord Hank: Can a landlord charge a nonrefundable pet deposit if the animal in question is notclassified as a pet, but as a support animal? -FrankDear Landlord Frank: In Florida, no-pet rules don’tapply to legitimate emotional-support animals. A tenantor applicant must have real documentation stating that anapplicant is disabled, that the disability affects a major lifefunction (and what that function is), and how the animalreduces the effects of the disability. If an applicant ortenant provides fraudulent information or documentation,he or she is committing a 2nd degree misdemeanorwith consequences. Also, even if the animal has beenRental Housing Journal Metro · April 2021classified as a support animal, the animal must berequired by the tenant. Lastly, the provider producing thedocumentation for you must have personal knowledgeof the tenant (this means an online certificate won’twork) and be knowledgeable in the area of the tenant’sHank Rossi started in real estate as a child watchinghis father take care of the family rental maintenancebusiness and was occasionally his assistant. In themid-’90s he got into the rental business on his own,as a sideline. After he retired, Hank only managed hisown investments, for the next 10 years. A few yearsago Hank and his sister started their own real estatebrokerage focusing on property management andleasing, and he continues to manage his real estateportfolio in Florida and Atlanta. Visit Landlord Hank’swebsite: https://rentsrq.com3

Rental Housing Journal MetroRental-Criteria Sheet Could Keep You Out of TroubleContinued from Page 1You decide to provide an adverse actionletter to Javier and move on to the nextapplicant.In the week that follows, you receivea phone call from an attorney with FairHousing asking why you denied theapplicant.Was it because of his ethnicity? “No,”but you explain all the negative historyyou found relating to the applicant andthe risk he would be to your property andinvestment.The attorney then asks a series ofquestions:Did you tell the applicant that you didnot accept people with evictions? “No.”Did you tell him he needed a certaincredit score to qualify? “No.”Did you lay out your requirements inrelation to criminal history? “No.”Can you provide a copy of your rentalcriteria that details how you treat everyapplicant the same? “I don’t have one.”The attorney then drops the hammerwith the final question: Is possible thatyou treat every applicant differently asa result of not having a written, basequalifying criteria?Javier believes he was disqualifiedbased on his ethnicity and subsequentlyreported a potential violation.Imagine how different this scenariolooks for you as a landlord if prior toshowing the property to Javier, youhanded him a criteria sheet with crystalclear information about credit, criminal,collection, and eviction history qualifyingparameters. It also had income andresidential history requirements as wellas your policies regarding no smokingor pets on the property. If after seeingthe property and performing yourdue diligence there was disqualifyinginformation, it is easy to indicate toyour applicant exactly which part of thecriteria was not met. If the phone call thencomes from Fair Housing or the attorneygeneral’s office, you have the ability toclearly show the reason for denial basedon behavioral history alone.Simply said, if you do not have a writtenPublisher/GeneralManagerJohn TriplettEditor-in-ChiefLinda WienandtAssociate EditorDiane PorterVice President/SalesTerry HokensonAccounting ManagerPatricia SchluterSample Criteria CRIMINAL HISTORY Any felony relating to or regarding a person, property or drugrelated criminal activity in the past seven years from the date of theinvestigative report to the date of the conviction, release from custodyor parole, whichever occurs last.Approved 700 and above Conditional 550 to 699 Denied 549 and belowEVICTION RECORDSAny open eviction. Any unsatisfied eviction judgment in the past(7) seven years. Any satisfied eviction judgment in the past (5) fiveyears.Just like every applicant is unique, sois every property. Each property shouldhave its own criteria based on the risk ofthe investment. If a property commandshigher rent, then you should considerupping the income ratios or requiringhigher credit scores. On the other hand,a property in an economically challengedpart of town might have a lower criteriadue to the average applicants that apply.As landlords, filling our properties withthe best applicants helps us accomplishour financial goals.BANKRUPTCYAny bankruptcy filed or discharged in the last (1) year. Any openbankruptcy will be automatically denied.RESIDENTIAL HISTORYTwo (2) years verifiable (non-family) history is required. Co-signersconsidered for lack of rental history. 12 months proof of rentalpayments.EMPLOYMENT HISTORYLast four (4) paycheck stubs or proof of income.verifiable employment.Two (2) yearsby category. These should be reviewedand modified by your local attorney torepresent what is legal in your specificjurisdiction.(Email info@rentperfect.com if youwould like an all-inclusive criteriasample.)criteria, then everyone qualifies. That’sright, everyone qualifies. As a landlord,you know that is a recipe for disaster.The graphic above has some examplesof criteria that have been strategicallywritten to protect you, broken downRental Housing Journal is a monthlypublication of Rental Housing Journal, LLC.Websitewww.RentalHousingJournal.comMailing Address4500 S. Lakeshore Drive, Suite 300Tempe, AZ 85282Emailinfo@rentalhousingjournal.comPhone(480) 454-2728 - main(480) 720-4385 - ad salesThe statements and representations made in advertising and news articlescontained in this publication are those of the advertisers and authors and as such do notnecessarily reflect the views or opinions of Rental Housing Journal, LLC. The inclusionof advertising in this publication does not, in any way, comport an endorsement of orsupport for the products or services offered. To request a reprint or reprint rights, contactRental Housing Journal, LLC at the address above. 2021, Rental Housing Journal, LLC. All rights reserved.4This may seem obvious, but if youever find yourself in court as “the bigbad landlord” versus “the victim tenant,”you can show the judge how you tried toeducate the applicant on what he or shecould do to protect themselves. Whena judge sees the steps you have taken,they will know you are a quality housingprovider who has the tenant’s interest inmind.CREDIT SCORES In addition to a well-explained criteria,I recommend having a tenant-advisorysection that tells applicants what theyneed to do to find success in renting withyou. For example: the tenant review the CCRs of thedevelopment.If the property was built prior to1978, a lead-paint disclosure formwill be provided.A move-in checklist should beprovided by the landlord andreturned to the property managerwithin (5) five days of move-in.Review the residential lease priorto signing it.Reviewtheresidential-leaseowner’s property-disclosure form.If the property is in an HOA, haveThe Final Word: Never, ever departfrom your criteria. You might find youreally like some applicants; they say all theright things, have money in their pockets,and are ready to move in today. Do notlet your feelings override your criteria.Subjectivity is out the window as theyqualify, or they do not. Overriding yourcriteria puts you in a position of treatingpeople differently, and that pushes youinto lawsuit territory at an alarming rate.If it’s time to update or create a criteriathat matches your property, reach out tous at info@rentperfect.com for assistanceor a sample criteria.David Pickron is president of RentPerfect, a private investigator, andfellow landlord who manages severalshort- and long-term rentals. Subscribeto his weekly Rent Perfect Podcast(available on YouTube, Spotify, andApple Podcasts) to stay up to date onthe latest industry news and for experttips on how to manage your -MAIL ADDRESSI am an:OWNERINVESTORPROPERTY MANAGERVENDOROTHER*Print subscriptions 25/yearI would like:Editions:VISAPRINTE-MAILARIZONASALEM/EUGENE, ORCOLORADOSEATTLE/TACOMAPORTLAND, ORUTAHMASTER CARDCARD NUMBERNAME ON CARDBILLING ADDRESSEXP.CVVOR MAIL A CHECK TO:Rental Housing Journal4500 S. Lakeshore Drive, Suite 300Tempe, AZ 85282Rental Housing Journal Metro April 2021

Rental Housing Journal MetroEvictionMoratoriumExtendedto June 30FTC WarnsLandlordsNot to Evictin Violationof MoratoriumsRental Housing JouRnalThe Federal Trade Commission has issued a warningto landlords to not evict, or threaten to evict, tenants inviolation of the Centers for Disease Control and Prevention(CDC) moratorium or any other applicable state or localmeasures, according to a release.“Evicting tenants in violation of the CDC, state, or localmoratoria, or threatening to evict them without apprisingthem of their legal rights under such moratoria, mayviolate prohibitions against deceptive and unfair practices,including under the Fair Debt Collection Practices Act andthe Federal Trade Commission Act,” said Federal TradeCommission Acting Chairwoman Rebecca Kelly Slaughterand Consumer Financial Protection Bureau (CFPB) ActingDirector Dave Uejio in the release.“We will not tolerate illegal practices that displacefamilies and expose them—and by extension all of us—tograve health risks.“In the ongoing economic and public health crisis, millionsof American families are at risk of losing their homes. Arecent CFPB report found that renters are particularlyendangered, with over 8.8 million tenants behind on rent.Rental Housing Journal Metro · April 2021Continued from Page 1person with legal right to pursue evictionor possessory action, shall not evict anycovered person from any residentialproperty in any jurisdiction in which thisorder applies during the effective periodof the order.”These tenants at risk of homelessness are disproportionatelypeople of color, primarily Black and Hispanic families.“Federal, state, and local governments have put in placeprotections against evictions to keep people in their homesand to stop the spread of COVID-19. Research has shownthat eviction moratoriums save lives.”The CDC on March 29 extended the federal moratoriumon evictions by three months.FTC WARNS MULTISTATE LANDLORDSIN PARTICULAR“Unfortunately, there are reports that major multistatelandlords are forcing people out of their homes despite thegovernment prohibitions or before tenants are aware of theirrights. Depriving tenants of their rights is unacceptable.Many of the tenants at risk of eviction are older,” the releasesays.“Staff at both agencies will be monitoring andinvestigating eviction practices, particularly by majormultistate landlords, eviction-management services, andprivate equity firms, to ensure that they are complying withthe law.”The CDC said “evictions threaten toincrease the spread of COVID-19 asthey force people to move often intoclose quarters in new shared housingwith friends or family, or congregate insettings such as homeless shelters. Theability of these settings to adhere to bestpractices such as social distancing andother infectious disease-control measuresdecreases as populations increase.”The order does not prohibit evictions forcriminal activity on the leased premises.DECLARATION FORMS REQUIREDThe declaration forms are still required,and the CDC added that “a tenant, lesseeor resident of a rental property mustprovide a completed and signed copy ofa declaration with the elements listed inthe definition” of who is a covered personunder the order “to their landlord, ownerof the residential property where they liveor other person who has a right to havethem evicted or removed.”5

Rental Housing Journal MetroRevisiting Portland’s FAIR Ordinance:Lost in the Hoopla Surrounding COVID-19By BRaDley s. kRausattoRney at laWThroughout most of 2020, the worlddealt with the COVID-19 pandemic. Thismassive upheaval of our lives and thelegislative actions that followed shiftedthe focus away from one of the largestchanges in the law since Senate Bill 608.Effective on March 1, 2020, Portland’sFAIR Ordinance dramatically changedhow landlords in Portland deal withapplications, screening, and securitydeposits. While the FAIR Ordinanceis too convoluted to cover in thisshort article, as we near the end of theCOVID-19 pandemic, it may be prudentto revisit these changes for your Portlandproperties.One of the largest changes to the lawafter the implementation of FAIR is howlandlords may screen their prospectivetenants.The FAIR Ordinance provides fortwo screening methods: low-barrier andlandlord-choice.THE LOW-BARRIER MODELThe low-barrier model sets specificstandards for items such as criminalhistory, credit history, and rental history. Ifa tenant fails to meet these low standards,a landlord can usually deny the applicantconsistent with the ordinance. However, itis important to note that a landlord, whenapplicant or keep the denial in place.deposit to cover.While this process is described withinFAIR, savvy landlords should also befamiliar with this process, as it is a FairHousing Act requirement.Finally, the ordinance also requires theinclusion of a Notice of Tenants’ SecurityDeposit Rights with the accountingrequired under ORS 90.300, along withother documentation in support of anydamages the landlord may claim.THE LANDLORD-CHOICE MODELusing the low-barrier model, is requiredto perform an individualized assessmentfor any criminal basis for which he or sheintends to deny an applicant.The very concept of an individualizedassessment does not lend itself to acheckbox approach and is difficult todescribe within the space this articleprovides. However, it involves weighingthesupporting/mitigatingevidenceprovided by the applicant as it relates tothe criminal history, against a varietyof factors—including an analysis of thecrimes themselves, length of time sincecriminal activity occurred, evidenceof rehabilitation, and other relevantmitigating documentation. This analysis,and an evaluation of risk assessment withyour attorney, results in a decision toeither overturn the denial and accept theIf landlords choose to utilize thelandlord-choice model, they may set theirown screening criteria as they would havepre-FAIR. The difference, however, is thatif a landlord uses this method, he or sheis required to perform an individualizedassessment for any basis upon which thelandlord intends to deny the applicant.That means if the applicant is beingdenied based upon credit history, thelandlord is required to consider anymitigating evidence provided by theapplicant as to this issue. The failure todo so is a violation of FAIR.The FAIR ordinance also dramaticallyalters both the amount of the securitydeposit landlords can collect and theprocess by which landlords are ableto withhold monies from the securitydeposit. As to the former, the ordinancenow puts an upper limit on the amountof the security deposit based on whetherthe landlord also collects a last-month’srent deposit. As to the latter, the FAIRordinance now requires significantdocumentation as to the age, diminishedvalue, and condition of any items forwhich the landlord wants the securityWhile many landlords may not beaccustomed to these requirements asthey do not exist under state law, thefailure to follow them can prove costly. Alandlord’s failure to comply with FAIR’srequirements for the security deposit notonly potentially prevents the landlordfrom withholding the deposit, it alsopotentially creates exposure under FAIR’sdraconian damages provision—twice theamount of the deposit and exposure toattorney fees.While there are some exemptions tothe FAIR ordinance, most landlordswill be required to comply with thesame. Accordingly, connecting with theattorney of your choice to evaluate yourprocesses and procedures is critical toavoid the minefield that is Portland law.Bradley S. Kraus is an attorney withWarren Allen’s landlord/tenant practicein Portland. He graduated cum laudefrom Lewis and Clark Law School.Along with landlord/tenant law, Krausassists clients in various civil litigation,probate, and family law matters. Reachhim at 503-255-8795 or kraus@warrenallen.com.YOUR TENANTS DIRTYLAUNDRY, OUR PROBLEM.Hainsworth — keeping properties and tenants clean and happy for 55 years. State-of-the-art brand name equipment24/7 personalized assistanceFriendliest and fastest response timeEasy-to-use app for payments and rewardsResidual income stream for your propertyCall 800-526-0955 today to get started.6hainsworthlaundry.comRental Housing Journal Metro April 2021

Rental Housing Journal MetroSponsored ContentCOVID-19 — Protect Yourselves, Protect Your PropertiesBY BARB CASEYMARKETING DIRECTOR,KENNEDY RESTORATIONWhat an unbelievable year it hasbeen. We are in the middle of apandemic unlike any we have seenfor the past 100 years. When the calendar flipped to the year 2020, therewas so much optimism and hope.And, SNAP, our entire worlds wereflipped upside down, both personallyand professionally.Almost overnight, COVID-19 had animmediate impact on the workplace.Not only were workplaces immediately shut down, but the health andsafety of company employees was aparamount concern.Terms like WFH (working from home)and “hybrid” became the new buzzwords, offering workers an opportunity to stay home and work or go to theworkplace at random or at staggeredhours.These impacts resulted in a lot of additional issues: child-care concerns,school closures, the introduction ofZoom meetings, parents working fulltime at home and being responsiblefor children attending online schoolclasses; the list goes on and on.Nobody was prepared for these mas-sive impacts. All of a sudden, masking, social distancing, mental-healthissues, and economic concerns werethe topics of each and every day.In multifamily housing, many concerns were raised, including but notlimited to the safety of the onsitestaff, the residents, and the maintenance teams performing ordinarywork orders, with additional attentionbeing paid to resident retention, rental payments and leasing units duringthis pandemic.We all slowly began to hear of ourfriends and family getting the virusand it became very common to knowat least a few close friends, familymembers and acquaintances whohad been infected.The year 2021 is here and with itcome many of the same problems,concerns and issues we faced in2020, along with regulations thataffect rents, schools and vaccineopportunities. But there have beenwonderful advances over the year tomitigate the impact of this virus, andone of these is these is the commonpractice of COVID-19 cleaning forpreventative and confirmed cases.COVID-19 cleaning should only beperformed by a biohazard material-certified restoration contractor.The pr

rentalhousingjournal.com Rental Housing Journal, LLC PORTLAND VANCOUVER Published in association with Multifamily NW, Rental Housing Alliance Oregon, IREM & Clark County Association Rental Housing Journal, LLC 4500 S. Lakeshore Drive, Suite 300 Tempe, Arizona 85282 PRSRT STD US Postage PAID ALBANY, OR PERMIT NO. 188 2.95 Sign up today .