2021 – Page 20

So You Don’t Have To Waste Your Time…

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Here Are FAQs on the Eviction Moratorium Background CDC issued its initial order temporarily halting residential evictions of covered persons for nonpayment of rent on September 4, 2020. That order was set to expire on December 31, 2020. On December 27, 2020, the President extended the expiration date of the CDC order until January 31, 2021. On January 29, 2021, the CDC Director modified and further extended the order until March 31, 2021. On March 29, 2021, CDC modified and further extended the order until June 30, 2021. On June 24, 2021, CDC modified and extended the order until July 31, 2021. CDC issued a new order on August 3, 2021, which is set to expire on October 3, 2021. This new order is more limited in scope than prior orders and is intended to target U.S. counties with “substantial” and “high” coronavirus transmission. What does the Order do? The order temporarily halts residential evictions of covered persons for nonpayment of rent after the order was issued on August 3, 2021 through October 3, 2021. This means that covered persons cannot be evicted for nonpayment of rent from any residential property in any U.S. county or U.S. territory where the order applies. How does this Order differ from CDC’s prior Orders? This new order is more limited in scope than prior orders. While the prior orders applied nationwide, this order only applies in U.S. counties and territories experiencing substantial or high levels of community transmission of COVID-19. To determine if your county is covered by this order, visit CDC’s COVID-19 Integrated County View website to learn your county’s current level of community transmission. Who is a “covered person” for purposes of the Order? A “covered person” is any tenant, lessee, or resident of a residential property who provides to their landlord, the owner of the residential property, or other person with a legal right to pursue eviction or a possessory action, a declaration under penalty of perjury that: 1)The individual has used best efforts to obtain all available government assistance for rent or housing; 2) The individual either (i) earned no more than $99,000 (or $198,000 if filing jointly) in Calendar Year 2020, or expects to earn no more than $99,000 in annual income for Calendar Year 2021 (or no more than $198,000 if filing a joint tax return); (ii) was not required to report any income in 2020 to the U.S. Internal Revenue Service; or (iii) received an Economic Impact Payment (stimulus check); 3) The individual is unable to pay the full rent or make a full housing payment due to substantial loss of household income, loss of compensable hours of work or wages, a lay-off, or extraordinary out-of-pocket medical expenses; 4) The individual is using best efforts to make timely partial payments that are as close to the full payment as the individual’s circumstances may permit, taking into account other nondiscretionary expenses; 5) Eviction would likely render the individual homeless—or force the individual to move into and live in close quarters in a new congregate or shared-living setting because the individual has no other available housing options; and 6) The individual resides in a U.S. county experiencing substantial or high rates of community transmission levels of SARS-CoV-2 as defined by CDC. If you are eligible for protection under the CDC Order, do you still owe rent to your landlord? Yes. The CDC order does not cause your rent to be forgiven. You must still fulfill your obligation to pay rent and follow all the other terms of your lease and rules of the place where you live. You must use best efforts to make timely partial payments that are as close to the full payment as their individual circumstances permit, considering other nondiscretionary expenses. What does it mean when a tenant has declared themselves to be a covered person under the CDC Order? Covered persons located in U.S. counties and territories in which this order applies may not be evicted solely on the basis of the failure to pay rent or similar charges at any time during the effective period of the order. Landlords may continue to charge rent and accept partial payments from tenants during this time, but a covered person cannot be physically evicted while the order is in effect unless and until the tenancy is terminated for a legitimate reason other than nonpayment of rent. After the issue had gone to press, the Supreme Court struck down the eviction moratorium, ruling that it can only be extended via action from Congress.

Professional Property Management Has Entered the Experience Economy

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The Future Belongs to the Professionals, the Trusted, the Innovative by Andrew Smallwood There are 3 questions driving the future of value creation in professional property management: How do we create an experience so good that residents never want to leave? How do we create an experience so good that investors never want to sell? How do we create an experience so good that talent wants to be in this business forever? The word experience is key. Whoever creates the best experiences will create the most economic value as the service side of property management becomes commoditized. In Joe Pine’s book, The Experience Economy, he reveals a critical insight that transcends real estate to other industries. It is about the staging of value creation through the lens of commoditization and customization. In today’s highly competitive world, companies often focus solely on process improvement, optimization, cost-cutting, and driving efficiencies. While these are critical to remain competitive and improve margins, they are the playbook of a game that ends with operating a low-margin commoditized business. Some business leaders even talk about their industries being commoditized as a badge of honor. Interestingly enough, that thinking is self-fulfilling; by not focusing on creating higher-value offerings, they are riding the train to commoditization. The Experience Economy History contains many examples of innovations so groundbreaking that they captivated people and led the way for economic prosperity. Included are artificial light, telecommunications, automobiles, to name a few. While these were all once higher-margin innovative offerings and the most attractive businesses to be in, they have grown to be stale and competitive industries, forced to compete on price, leading to lower profits and company value relative to size. For example, Ford and GM, once praised as innovators in manufacturing goods, are now in a sea of competition and worth a mere 0.4x revenue at the time of this writing. The Experience Economy dives into these macroeconomic trends and shows the change over time in their Progression of Economic Value chart. The macroeconomic trends demonstrate how we have gone from extracting commodities to making goods to delivering services to, finally, staging experiences as the current primary driver of economic growth. One of the many great examples included in the book is the staging around a birthday party. A birthday party at home that consisted of a cake and a celebration requires the commodities (flour, sugar, butter etc.) to make at a cost of <$0.10. Then, companies began offering “cake mix” which was more convenient that cost $1.00, followed by bakeries making the whole cake as a service for $15. Now, people outsource the whole birthday party to a venue like Dave & Busters or a party planner. There’s a party, invitations, custom napkins, entertainment, and yes, a cake is part of it. So, someone can be in the pennies for cake materials business, the quarters for cake mix product business, dollars for a fully-made cake, or thousands of dollars for a full birthday or wedding or celebration event experience. That’s the commoditization to customization journey. Shifting From Service to Experience Many property managers have correctly said, “We’re in the service business.” However, looking at where the most economic value will be created, today’s industry leaders have already started the shift to “We’re in the experience business.” They’re seeing different opportunities, which lead them to different choices that yield different results, and they find themselves in differentiated businesses. Professional property management is fast approaching a “hotelification” phase, where premium amenities and hospitality-grade service are creating a rental experience so good that more people choose the rental experience for longer periods of time. Hotel staff are called upon to enhance the experience of a proposal, an anniversary, a birthday celebration. And the great ones answer and emotionally connect. They are “moment-makers’’ who create enduring loyalty, allowing them to drive more economic value. Consider how many of life’s meaningful and memorable moments are created at home. But how many people can name the owner of the apartment they lived in as easily as the hotel that elevated that special moment? So what are property management leaders doing today and talking about doing tomorrow to create the #1 resident experience? The occupied experience is being defined by the “Resident Benefits Package.” From conference events like IMN, to NARPM, to PM XChange and PM Grow, it is hard to find an agenda that doesn’t include it. It’s a hot topic. Property managers and service providers have figured out how to turn persistent problems into a suite of proactive solutions that residents will pay for. Some of these services have been amenitized, like 24/7 maintenance coordination, vetted vendor networks, home-buying assistance, multiple payment options, and more that have become standard practice in professional firms. But there’s also a list of emergent ancillary services that are making their way from initial adoption to the definitive standard in the professional management experience. Move-in Concierge. Getting utilities and home services set up is a hassle for residents. Instead of four phone calls to get water, energy, internet, and TV services set up after researching who services the address, now residents can make one phone call and speak to a concierge who has looked up the discounts and promotions available and can confidently guide them through the process. In the future, this service likely expands to moving itself, deals on furniture with offers to assemble it, coordinated home cleaning, and landscaping. Air Filter Delivery. HVAC has been the #1 maintenance line item in SFR in most markets, second to plumbing in more temperate markets. And it has been a persistent problem of getting residents to change their filters on time. A 2020 HVAC Data Study that looked at over 7,900 SFRs in 4 markets, over an 18-month period, showed a 38% reduction when comparing a scheduled filter delivery program over the status quo of leaving a stack at move-in or hoping the resident remembers to go to the store. Every 2-3 months, residents are getting a box on

Choosing the Right Insurance Partner

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Consumers Demand Modern Insurance Products Similar to the Other Tech They Love by Darren Nix Being a rental property owner comes with several significant financial considerations, including having the appropriate insurance coverage for your investment. Financial losses for property owners are not uncommon. According to the Insurance Information Institute, home insurance losses in 2017 amounted to $56.5B, with an average property claim of $15,532. For landlords with large multi-family buildings, these claims can be even greater. What is landlord Insurance? Landlord insurance is needed when the property owner does not physically live in the home. Similarly, you are only eligible for homeowners insurance if you use that property as your primary residence. Due to the restrictions on what makes a home eligible for homeowners insurance versus landlord insurance, you are generally unable to have both policies simultaneously. Both types of insurance will provide liability coverage for the policyholder, and both will cover property damage. The most basic level of landlord insurance is called a “DP1” or “Basic” and it protects against some catastrophic things like fires and explosions, but it excludes water damage, which is the most frequent cause of loss for landlords. That’s why most landlords choose a higher level of coverage called “DP3” or “Special”, because it covers almost all causes of loss except earthquakes and floods. Why Work With a Landlord Insurance Company Once you’ve aligned on the right coverages for your needs, picking out an insurance company can mean the difference between claims being properly covered or being left high and dry. For many property owners, there are significant advantages to working with a specialized insurance company who has familiarity with the unique needs of rental property investors. It is important to work with a provider who can quickly educate you on available coverages for all circumstances and apply discounts and savings whenever possible. Beyond specialized knowledge and expertise, there are additional time savings and convenience benefits to working with a modern landlord insurance company. Far from the days of visiting a local agent’s office, modern insurance companies offer quotes online in minutes—over the phone, email, or SMS—whichever you prefer. Customers can get personalized rates and coverage 24/7, including evenings and weekends, with coverage starting as early as the next day. Instead of taking multiple days, companies like Steadily can help you get the process done in minutes, with coverage starting the very next day. This comes in especially handy when you need proof of insurance in order to close on your loan. Agents can secure coverage in all 50 states while offering localized knowledge specific to your portfolio of properties—be it a new purchase to fix and flip, a buy and hold, or a short-term rental. What a Partner Program is Like for Property Managers As a rental property investor, ensuring that your property is protected and kept at a high standard doesn’t end with getting the right insurance coverage. Most insurance companies will recommend you also have a property management company to oversee your property or portfolio. Properties are often in better condition when maintained by a third-party manager, and landlords can receive insurance discounts simply for working with a property management company. Vice-versa, it is highly preferable from a property manager’s perspective for investors to have adequate insurance coverage. A significant benefit for property managers is being added to the insurance policy as an additional insured, meaning that actions conducted by a property manager on behalf of the property are covered under the policy. Traditionally, integrations between insurers and potential partners can be a lengthy and technical process or are performed manually offline. InsurTech providers like Steadily have enabled insurance and property management partnerships to work seamlessly by building digital insurance solutions directly into property management websites, portals and dashboards. The setup can be completed within half an hour or less and requires no complex APIs or development resources. These low lift onboarding options integrate with a partner’s existing tech, including a drop-in website widget with custom branding options. By integrating directly onto property management sites, investors are able to manage aspects of the property’s finances, work with the property management company, and get insurance all without having to leave the property manager’s branded web environment. Through this integration, property managers can also set policy requirements such as minimum liability limits, receive updates on policy claims, and verify the policies meet the requirements expected of a rented property. Understanding that many property managers need a one-stop solution for both renters and landlord insurance, companies like Steadily have built widgets to cover both sides of the equation. Once installed, the tool provides partners with data-driven reporting and analytics and real-time insights into their portfolio coverages. This means transparent reporting to ensure property managers are aware of all newly written policies, when coverage is lapsing, and if any action is required on their part. Referral compensation is also common between parties. Lastly, many insurance companies maintain lists of preferred property management companies to refer to their insureds. This is a great opportunity for property managers to tap into a network of potential landlord clients who are in need of property management services. Like many other industries, the global insurance market is experiencing a significant disruption in the traditional business model. Consumers are demanding modern insurance products that are similar to the other tech and tools they love. As the insurtech industry continues to evolve, new opportunities will emerge for adjacent categories to benefit from innovation in the space. For property managers, partnering with an insurtech company provides additional value to clients, helps with risk mitigation, and leads to new revenue streams. By working together, insurtechs and property managers can better ensure their clients are protected and benefit mutually along the way.

Realizing the Dream of Homeownership for a New Generation

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Single-Family Rentals Are Part of the Solution to the Housing Crisis by Doug Brien Institutional investors have been crowding into the housing market, buying up homes at a record pace, with some $48.5 billion spent on almost 68,000 single family homes in the second quarter of this year alone, according to Redfin. That’s up from $38.9 billion in the quarter before, and $20.9 billion a year earlier. Outlets from NBC News to Bloomberg have reported that the competition from Wall Street ata large scale is driving up housing prices and crowding out families looking to purchase their first homes—many headed up by millennials.  We here at Mynd can empathize with would-be homeowners who are frustrated with the housing shortage in big cities across America. Every day, team members in the Bay Area share maddening stories about the battles they engage in to buy a home. One woman bid on three homes before beating out 10 other offers (contingencies waived). Another early-stage startup entrepreneur tried to buy his first home by making an offer of $500,000 above list on a $1 million home and lost the bidding war.  And it’s not just the Bay Area. One home in Puyallup, Washington, received 45 offers in February, the Seattle Times reported. A Mynd vice president based in Los Angeles reports bidding on homes that received 85 offers. Previously sleepy outposts like Bend, Oregon, and Coeur d’Alene, Idaho, have also seen demand skyrocket and prices follow. The median home sales price was $374,900 in the U.S. the second quarter of 2021, a 16.2% increase from a year ago, according to the Federal Reserve Bank of St. Louis.  These price hikes reflect the unbending law of supply and demand. Construction companies have underbuilt for decades, and the U.S. was some 3.8 million homes short of demand as of the fourth quarter of 2020, according to Freddie Mac. A report commissioned by the National Association of Realtors pegs the number at 6 million housing units dating back to 2001, caused by an “underbuilding gap.” Then there was the perfect storm in the last 18 months of spikes in lumber prices, supply chain issues for other materials, labor shortages, and a rush to buy in the suburbs as the pandemic made office life suddenly seem anachronistic. Do Not Blame Institutional Investing But while some parts of the U.S. are undoubtedly experiencing a housing shortage, the data does not support institutional investing in single family homes as the root cause. The truth is that less than two percent of homes in America are owned by institutional investors, though that share is likely to grow in the coming years. (By contrast, some 55 percent of multi-family homes are owned by institutions.)  And institutional investment in single family homes is not a recent development. My former company, Waypoint Homes, bought up distressed single family homes during the peak of the financial crisis in 2008. Other large companies bought as well. Blackstone Group, through its then-subsidiary Invitation Homes, spent $7.5 billion to buy 40,000 mostly foreclosed homes in 2013. The Atlantic reported that some of the world’s largest private-equity groups and hedge funds spent a combined $36 billion between 2011 and 2017 on more than 200,000 homes in markets across the country.  The single-family rental market has been the fastest growing segment of the single family housing market in the last decade, according to the National Rental Home Council, but large SFR companies own only about 0.2 percent of the country’s residential real estate, and no more than 1 percent of the homes in any state. Some states will continue to struggle to meet housing demand, especially places like California, where the regulatory environment and strong local opposition are barriers to development. (And home prices will reflect that; the median home sales price was $819,630 in June.)  Investing Remotely The good news is that would-be investors in areas with a high cost of living can now buy in parts of the country that are more affordable, allowing these folks to participate in America’s greatest vehicle for creating generational wealth: real estate. My current company, Mynd, offers an all-in-one platform for investors to find, purchase, rent, manage, and sell SFR properties, while fully remote. The ability to invest remotely empowers individual investors who no longer have to look for properties that are within driving distance of their homes. People living in coastal cities with high home prices can now search for affordable properties in different parts of the country. Some millennials may find that their starter home will turn out to be a rental because the entry price is too high, and the single-family rental market will be one of the solutions to the housing shortage. Turning real estate into a portable asset class is a challenge, but much the way that online trading platforms like Charles Schwab and E-Trade made investing in the stock market more accessible (and then offered trades for free), proptech firms are making it feasible. The widespread availability of cloud computing and artificial intelligence, applied to ever larger data sets, enables investors to make better decisions. Not Everyone Needs (Or Wants) A House The benefits of renting are not to be overlooked: renters avoid the significant closing costs associated with buying, and rentals afford people more mobility to adjust to the changing job market. Studies show that those paying off a mortgage are less likely to start a business, discouraging budding entrepreneurs from taking risks. Not everyone wants to, or needs to, buy a house. Mynd and others in the single-family rental space are dedicated to putting more high-quality, well-managed rental properties on the market to meet this demand, as Americans migrate to where the opportunities are.  Managing real estate goes beyond an investor’s return. The feeling of a home is very different from a house, and our team is taught that they need to communicate and empathize with residents. And every member of our team is encouraged and coached on how to prosper through real

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LRES Corporation, a diversified REO/Asset Management and Valuations company, announced that it has signed a definitive agreement to acquire Keystone Asset Management, Inc., a Pennsylvania corporation. The deal is expected to be completed September 1, 2021, and the joined companies will operate under the LRES Corporation name. “Keystone has been a well-known and respected player in the REO/Asset Management business as well as the appraisal and valuation businesses for over twenty years. We know the management team well and have admired their growth, innovation, and resiliency. It was an easy decision to join forces,” said Roger Beane, CEO of LRES. “Roger and I have talked for a long time about finding a way to align forces,” said Jane Hennessy, founder of Keystone. “We are delighted that this acquisition has occurred. LRES brings an additional layer of Tier One delivery capabilities. It is an exciting time for our team.” Ryan Hennessy, Chief Executive Officer of Keystone adds, “Having known the LRES team for many years, I’m extremely excited. The two companies have a lot in common, have had a great working relationship over the years, and present a formidable solution to the REO and valuation ecosystems.” The acquisition of Keystone complements LRES’ continued drive to expand its servicing solutions channel and the customers it serves. “Keystone brings with it tremendous talent and technology capabilities,” said Mark Johnson, President of LRES. “An exciting byproduct of this union is that we now have a talented team located in the Eastern time zone.” About LRES Founded in 2001, LRES Corporation provides property valuations, REO asset management, HOA, and commercial trustee solutions for the mortgage and real estate industry. At LRES, “We Hear You.” Our team is committed to delivering superior service and customized, real-world solutions that help our clients effectively manage compliance and financial risks associated with property valuation and mortgage-related assets and drive profitability. For the latest LRES information, visit the LRES Newsroom at www.lres.com/category/articles/

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Lenders will benefit from reduced cycle times and increased efficiencies on the path to close with EXOS CD ServiceLink’s best-in-class EXOS Technologies is strengthening its Closing offerings with the rollout of EXOS Closing Disclosure (CD). With EXOS no-touch CD, ServiceLink lender partners will benefit from increased efficiencies on the path to close as it digitizes and automates every step of the closing disclosure process – including revisions – for faster origination. EXOS CD is now incorporated into ServiceLink’s workflows, which are powered by EXOS Title, the industry’s longest standing and most-trusted digital title product. EXOS Title provides lenders with an instant title decision and clear-to-close commitment within seconds using localized machine learning rules and logic, natural language processing and optical character recognition (OCR) technology. This automation allows for a more streamlined title production process, now made more efficient with EXOS CD. With EXOS CD incorporated, additional “stare and compare” manual processes in the loan closing lifecycle have been automated, reducing the time and effort required for data preparation and ultimately, reducing cycle times and improving quality. Moreover, any revisions that may be needed throughout the closing process can now be processed virtually, with the ability to CD prep within a minute with appropriate workflows. “We are committed to challenging the status quo in the mortgage landscape by thinking of smart solutions that not only benefit the lender and their bottom line, but improve the borrower experience in the process. EXOS CD is an extension of that commitment,” said Dave Steinmetz, president of origination services at ServiceLink. “Our partners leveraging EXOS CD have reported improved accuracy, reduced cycle times and have enjoyed the ability to schedule their closings immediately after receiving clear-to-close commitments. We’re proud to bring these efficiencies to our partners, particularly during this high-volume period.” To learn more about EXOS CD and its benefits, visit svclnk.com/exos/closing-disclosure/.