REI INK

Charlotte, North Carolina

Queen City Real Estate Ramps Up in 2021 by Carole VanSickle Ellis Charlotte, North Carolina, is probably best known for banking. Despite trailing 21 other U.S. cities in size and falling firmly into the “second-tier” or 18-hour city categories in economic parlance, the Queen City is the second-largest banking center in the United States (behind only New York City) and has been successfully luring major employers, including Fortune 500 behemoths like Honeywell, into the metro area for years. The results of this dedicated, pro-business approach in Charlotte kept the local economy on solid ground during much of the 2020 COVID-19 lockdowns and appear quite likely to solidify the city’s standing as a thriving, recession-insulated market in 2021. “Charlotte is a hot market for investors whether they want to renovate and flip, buy to hold and rent, or invest in multifamily properties,” said Marco Santarelli, founder and CEO of Norada Real Estate Investments. “Even with the short-term impact of the ongoing global pandemic that impeded real estate sales activity in the entire nation, in the long term, the Charlotte real estate market remains strong.” Santarelli added he expects housing demand in Charlotte to continue to outpace supply thanks to strong demographic momentum as young professionals move to the area for work, a high quality of life, relatively affordable cost of living, and a wave of conscientious redevelopment. A Near-Perfect Combination for Sustained Growth The Charlotte metro boasts the unique combination of being an attractive place to live, an attractive place to work, an attractive place to start or own a business, and an attractive place to retire. This is likely why Charlotte has grown faster over the past year than almost every U.S. city (trailing only Phoenix, San Antonio, Fort Worth, and Seattle). The Charlotte housing market ranked ninth on PriceWaterhouseCooper’s “U.S. Markets to Watch in 2019” and fifth in 2020 on Forbes’ list of “Best Cities for Jobs”. 2020 also brought more accolades from U.S. News & World Report, including a sixth-place spot on the “Best Places to Live” list and a 23rd-place ranking on the “Best Places to Retire” list. Both of these rankings represent significant leaps upward, 14 spots and nine spots, respectively. “At the top of this year’s Best Places to Live rankings, we see a combination of metro areas that…offer a balance between cost and quality of living,” explained Devon Thorsby, real estate editor at U.S. News & World Report. Regarding the city’s sixth-place ranking on her publication’s “25 Best Places for Young Professionals” list, Thorsby cited competitive annual salaries, the city’s growing population, and “new construction in the area” including more stores and restaurants “attracting downtown visitors” as attractions for the city’s burgeoning millennial population. Investors should note that although the ongoing COVID-19 global pandemic and associated health policies have affected Charlotte’s retail and restaurant scene, the city has made notable efforts to keep retail and restaurants open, albeit at limited capacity. The state remained at a state-delineated “phase 3” level of operation and imposed and extended a statewide curfew from 10 p.m. to 5 a.m. for multiple months. “I think [Governor Roy Cooper] is doing everything in his power not to shut us down,” said one Charlotte restaurant owner after Cooper extended phase 3 restrictions for a third time at the end of December 2020. The owner admitted gross revenues are down for his restaurant by 30 percent since he reopened in June 2020, but noted that weekends have been especially busy since he reopened. Charlotte’s relatively short winter season and humid, subtropical climate are conducive to outdoor eating and entertainment, a boon during a period when consumers are encouraged to socially distance and gather outside or not at all. Strong Fundamentals in the Queen City Although North Carolina was historically known for tobacco and textiles, Charlotte has been a force to be reckoned with in the financial and banking industries for years. Bank of America has been headquartered in the Queen City since 1998, when NationsBank and BankAmerica merged to form today’s BOA (see sidebar). Thanks to low taxes, pleasant weather, and what FIG Partners bank analyst Christopher Marinac describes as “progressive banking culture,” Charlotte is now home to Wells Fargo and Bank of America headquarters. BB&T and Suntrust (now Truist) moved their combined headquarters to the city in 2020. “Banking really is an ecosystem,” Marinac noted. “You see it in Charlotte pretty clearly.” Wells Fargo head of digital business development, Jonathan Hartsell, cited his bank’s presence in Charlotte as, in part, the result of a decision to work together with other banking institutions to “have a bigger impact”. He explained, “Growing fintech talent and resources within the region benefits all of us as we seek to accelerate innovation in our industry.” With more than two decades of major banking activity and a growing presence in the biotechnology, energy, and information technology (IT) sectors, Charlotte is perfectly positioned for 2021. While other areas of the country lost employers, jobs, and population, Charlotte welcomed two new Fortune 500 companies (Honeywell and Truist), retained 18 Fortune 1000 companies in the area, kept unemployment in the mid-range single digits (between 6 and 7 percent), and ranked 7th on SmartAssets’s “Best Cities to Work from Home” list. Even prior to the pandemic, Charlotte already was attracting companies and residents who valued the ability to work productively from home, making it an extremely attractive market in the pandemic and post-pandemic economies. The Charlotte economy is rounded out with a variety of other sectors, including energy-oriented industries that have earned the city the nickname, “The New Energy Capital”. Charlotte also serves as a major distribution hub for the east coast and is home to the NASCAR Hall of Fame. Although NASCAR’s corporate headquarters are located in Daytona Beach, Florida, nine in 10 NASCAR teams operate within 75 miles of Charlotte. Dedicated Support for Local Employers Large & Small Charlotte’s determined support of local businesses, both large and small, has played a huge role in the city’s ability to

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Paving the Way for Investor Success

DLP’s Company Culture Creates Laser Focus on Productivity & Returns by Carole VanSickle Ellis After Don Wenner, founder and CEO of DLP Real Estate Capital, attended his eighth-grade career day, he plotted his career path as a financial advisor based on a salary chart that showed financial advisors made more money than doctors, lawyers, and accountants. “I was good at math, entrepreneurial, and driven. I thought, ‘Hey, I could do really well at that,’” Wenner recalled. As it turned out, he was right, but the journey ultimately led him to something much bigger than financial advisory. Instead, he became the founder and CEO of a multifaceted organization dedicated to “leading and inspiring the building of wealth and prosperity through the execution of innovative real estate solutions,” the DLP family of companies. Before Wenner could imagine and ultimately found DLP, however, he had to encounter the vast potential of real estate investing firsthand. This happened thanks to a surprising series of events. Throughout college, he worked at big firms like BlackRock and McGladrey & Pullen [now RSM] and waited tables on the weekends. One evening, a frequent patron of the restaurant, Nathan Robinson, recruited him to sell alarm systems. “He convinced me that if I came to work for him, I would make $2,000 per week. At 19 years old, that sounded really great,” Wenner recalled. His first weekend, he earned more than twice that, and the numbers climbed from there. Soon, Robinson, who was also a real estate agent at Keller Williams, had recruited Wenner to sell real estate as well. “I was still determined to become a financial advisor, but I quickly obtained my real estate license,” Wenner said. By October 2006, the young financial advisor was applying his practical, pragmatic strategies to the housing market, using a guaranteed sales program that would be the template for many of the numerous, similar programs agents often offer today. “From day one as a real estate agent, my message was, ‘Your home sold in 68 days, guaranteed, or I will buy it,” Wenner said. It was the peak of the real estate market, and his message was a perfect fit for the times. Wenner developed a lifelong love of real estate, a deep-seated passion for helping people invest in real estate both as a personal home and as an investment vehicle, and a firmly grounded belief in the importance of having a clear plan and vision. “If you can see it, you can do it, as long as you have the vision, a plan, and disciplined people [ready to take] action,” he explained. Today, Wenner is the founder and CEO of DLP Real Estate Capital, the parent company of a family of DLP companies specializing in investment housing funding (DLP Lending), innovation solutions for homebuyers and sellers (DLP Realty), property, asset, and construction management (DLP Real Estate Management), loan servicing (Alliance Servicing), and title services (Alliance Property Transfer). Jumping in with both feet when the market was at its height taught Wenner another lesson he would never forget: A company only grows when its people and its culture are in harmony. “I always wanted to hire people who were hardworking, willing to wear many hats, tended to be driven and curious, and who had ‘can-do’ attitudes,” Wenner explained. His first employee, a part-time assistant, is still with the company, and so are many others who came to work with DLP in those early years. “I always hire people who understand how the organization operates and who are willing to support our culture,” Wenner explained. “That is why so many from my original team are still with us today.” A Foundation in Learning, Self-Improvement & Growth Part of understanding the company culture involves understanding and embracing Wenner’s 10 core values—and being excited about participating in a workplace that embraces each of these multifaceted goals and characteristics in an industry that conventionally recommends keeping the core values at three or fewer. “We started with six, which is arguably too many according to some people, but over the years we just had to add four more,” Wenner laughed. “We evaluate them every year to make sure they are representative of us, and they really are the values that drive our organization.” Those core values (see sidebar) drive every aspect of DLP’s organization and form the foundation of a company that has grown exponentially since its founding. “I understood from very early on that there is only so much that one person can do and took steps from the beginning to bring on great people with incredible skill sets to help me build and expand what became the DLP family of businesses,” said Wenner. “I never wanted to be a ‘time-teller’ who was always personally needed when a challenge arose in my business. I wanted to be a clock-builder, investing in leaders and organizations that would take control and ownership within DLP.” The expansion of DLP was fast and, Wenner says, organic. As the housing market headed into a full-blown crash in 2007 and 2008, Wenner’s sell-your-home-guaranteed program took off. As he began buying and holding his own real estate during that time, other investors began asking how they could be involved and build their own portfolios. “Things moved fast from there,” Wenner said. By 2012, DLP had a real estate portfolio, was building a management company, running a construction company, and starting a brokerage. “We were investing capital, buying and flipping homes and apartment communities, and beginning to raise capital,” Wenner recalled. “That was the most challenging part of all.” By 2014, however, his reputation for solid, dependable, and impressive returns and asset management had taken hold and the company was thriving. In fact, in the first eight years in operation, DLP grew its annual revenues by at least 60 percent, Wenner said. That consistent, significant growth indicated to him that it was time for the next step. “We started to think about where we wanted to go next, and we decided to

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Risk Reward

Do Your Diligence on Foreclosure Homes by Rick Sharga Buying a property always comes with some degree of risk. That is true when buying a brand-new home or buying a property that is a century old. The trick, for real estate investors and homebuyers alike, is to do the due diligence necessary to minimize that risk. Foreclosure Properties: Higher Risk, Potentially Higher Returns Buying foreclosure properties adds a few elements of risk that aren’t generally factors in a traditional home purchase. Investors who specialize in buying foreclosure homes understand that, but are willing to take on that added risk due to the larger potential profits they often realize. There are three different types of foreclosure properties investors can purchase. First, there are pre-foreclosure properties. These are homes in the earliest stages of the foreclosure process, called a Notice of Default in states that practice non-judicial foreclosures and Lis Pendens in judicial states. In this stage, the homeowner is typically 90-120 days past due on their mortgage, and officially defaulted on the loan. The clock has started to tick on the foreclosure process, and the homeowner has a predetermined period of time (which varies state-to-state) to make up the missed payments, or the home will be sold at a foreclosure auction. If the default isn’t cured during this initial notice period, the lender sends a Notice of Sale, which informs the homeowner that the property is going to be put up for auction, either via a Trustee Sale or a Sheriff’s Sale, depending on the state laws. Properties at this stage of foreclosure are generally referred to as auction properties. At the auction, one of two things happens: either someone attending the auction bids a high enough amount to meet the lender’s sale price, or the lender repossesses the property, which in industry parlance then becomes an REO—or “real estate owned” asset which the lender will ultimately resell on the open market. These properties are generally referred to as REO homes or bank-owned homes. Those three types of homes—pre-foreclosure properties, auction properties, and bank-owned properties—all fall under the general heading of “foreclosure properties.” But there are significant differences in how to purchase them, the potential savings, and the respective risks involved in purchasing them. Navigating the Foreclosure Risk/Reward Spectrum Let’s take a look at the risk profile of each type of foreclosure property, and some of the things to look at in order to optimize results. Pre-foreclosure properties are probably the least risky of all foreclosure homes. Investors can negotiate terms directly with the homeowner either with or without the assistance of a real estate agent, and usually purchase the property using traditional mortgage financing. An investor can typically buy the property at a modest discount compared to similar properties, since the owner generally needs to close a deal quickly and with a high degree of certainty in order to avoid losing everything to a foreclosure auction. Ideally, the investor and homeowner settle on a price that covers what’s owed to the lender, is below full market price, and still leaves the homeowner with some cash as they exit the property. Very much a traditional home sale, which just happens to be on a property in the early stages of a foreclosure. But investors need to take a few extra steps before buying a pre-foreclosure home. First, they need to find out how much is actually owed to the lender before agreeing to a sale—there are often fees and fines that have accumulated during the default period and those will need to be covered by the sales amount. Second, investors should do a preliminary title search to see if there are any other encumbrances on the property, like a second mortgage, tax liens and mechanics liens – if the owner wasn’t making mortgage payments, there’s a good chance some other payments weren’t being made as well, and some of those past due amounts could be attached to the house. Finally, never buy a pre-foreclosure property without having a thorough property inspection done. Financially-distressed homeowners have been known to let maintenance slide (and sometimes do damage on purpose out of anger towards the lender), so diligence is critical. Auction properties probably represent the highest risk and highest potential returns of any of the foreclosure homes. Lenders sometimes offer these properties for the amount owed on the defaulted loan, plus fees and fines, in order to avoid having to take possession of the home. It’s rarely that an auction property is sold at or above full market value, since the bidders are almost always investors, and investors need to buy at a below-market price that allows them to make a profit. Property condition is probably the biggest risk with auction properties. There are no internal inspections available on these properties, since they’re occupied, and the residents aren’t generally inclined to be cooperative. Seasoned investors can get an idea about the interior by taking a look at the exterior, but there are often surprises and hidden issues to account for when estimating repair costs. There’s a risk of the occupant resisting the eviction order after the foreclosure sale, so it’s helpful to know how the local sheriff’s office handles those situations. Some investors set aside some “cash for keys,” where they offer the occupant a payment to entice them to leave without being physically removed (and hopefully without them damaging the property). A very unique risk when purchasing this type of property is the auction itself. More than a few investors have found themselves caught up in the excitement of a bidding war on a property they ABSOLUTELY MUST HAVE! And over-paying significantly. So, doing research on local property values, then having the discipline to set—and stick to—a “not-to-exceed” bid, is extremely important. And the note above about doing a preliminary title search is even more important for these properties than for pre-foreclosures. Plan to attend a few auctions before you bid at one, just to see how the process works, and familiarize

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Additional Investors Flock to Single Family Rental

Will diligence standards degrade based on competition and lack of inventory? by Jennifer McGuinness Currently, there are approximately 49 million rental units occupied in the United States of which, approximately 12 million are Single Family detached rental homes and 2.8 million are leased townhomes. Most of these units are existing homes on scattered lots versus new construction. To date, over 5 million homes have been converted from owner occupied properties to rentals. Based on this approximate 17 million units and their performance, there continues to be significant investor interest in the sector. Today, the market presents fundamentals that could lead investors to be uncertain about how investments could perform, but even in a time of uncertainty, Single Family Rental Investors continue to report record occupancy levels and rental growth. DBRS Morningstar recently reported that that rents in institutionally owned single-family rentals have grown more than 3% (annualized) in 2020. Invitation Homes as an example, reported renewal rent growth for pre-existing tenants to be up 3.3% in the second quarter of 2020 and new tenant lease growth up 5.5% in the same timeframe. Another driver of investor interest has been the Single-Family Rental REITS (Real Estate Investment Trusts), as they generally outperformed the broader REIT Market in 2020 by 23%, thus exceeding other real estate sectors by significant margins (i.e., exceeding multi-housing by 9%, office by 22% and shopping centers by 33%). Additional Investors and New Capital Away from occupancy and rent growth, the COVID pandemic and the subsequent stay-at-home orders have forced many to work from home and educate their children from home; hence, individuals and families are seeking more space. The two largest Single Family Rental Investment Trusts, Invitation Homes and American Homes 4 Rent, own a combined 135,000 units, which makes up less than 2% of the total units. According to Amherst Capital Management, there are more than 25 institutional landlords in the space today. Even historical investors like Blackstone, who sold off their remaining interest in Invitation Homes last year to JP Morgan Asset Management, have remained invested in the sector in some capacity, e.g., they still hold a minority stake in Tricon Residential. Additional capital has been raised and acquisitions have been made that indicate the investor appetite is strong in this sector. Examples of recent announcements include, a $375MM joint venture between Rockpoint Group and Invitation Homes, a $625MM joint venture between JP Morgan Asset Management and American Homes 4 Rent, and a $300MM fund raised by Brookfield Management, amongst others. On the acquisition front, Front Yard was initially to be acquired by Amherst Holdings for $2.3B but the parties terminated this agreement in May of 2020, opting instead for an equity investment by Amherst of 4.4MM shares of common stock, at the initial offering price of $12.50 ($55MM invested). They also provided a $20MM committed two year unsecured and committed financing facility to the company. Fast forward to October 2020, just 5 months later, when Pretium and Ares Management Corp. partnered to acquire Front Yard for $2.4B and initially for $13.50 a share but later revised this to $2.5B and $16.25 per share to its investors (a 63% premium over Front Yards closing share price). This acquisition just closed. Supply and Demand The big questions in my mind and I am sure many market participants are: Is there enough supply for the investment demand in this sector? When looking at the capital raised, if there is not enough supply, will the investment managers have to become too aggressive in their acquisition strategies to be able deploy their capital? If this should occur, does this mean that the due diligence of the properties (and/or of the tenants that reside in them) could be “relaxed” to be competitive and thus increase the risk profile of the investments driving a change in the stable cash flow curve the sector has historically experienced? And, if so, could this adjust the potential of continued capital appreciation that many investors are betting on today?  When looking at the market today, the biggest challenge I see initially is that demand does outweigh supply if you are solely looking at “for sale” real estate and mortgage rates. For example, the National Association of Realtors (“NAR”) reported that as of October of 2020, homes for sale were down 20% from October of 2019. It is important to note, however, that generally unsold inventory is on the market for 2.5 months whereas it was 3.9 months a year ago. Homebuyers are also “paying up” for real estate and there are many renters in cities seeking more space and now looking to live in the suburbs, due to both COVID and the fact that they are now at the age to acquire homes. The demand of the homebuyer, coupled with the demand of the Institutional investor, continues to drive home prices up in many markets. A good example is California, where NAR reports that the average price of a home increased more then 15% from 2019 to 2020. This, hand in hand with record low mortgage rates, has well positioned home buyers to make better purchase offers which could result in lower investment returns for investors, should they have to increase “buy prices” to acquire additional real estate. What the market is not looking at as closely however, is how many of the homebuilders have now either entered joint ventures with investors to “build for rent” communities or have started rental community divisions of their own. Single Family housing starts have increased by over $1.2 million in November per the Census Bureau which is more then a 25% increase from 2019. We have not seen this number of housing starts since before the financial crisis. While a lot of the new construction will go to owner occupants, this significant addition of new homes will begin to equalize the lack of supply for investors. Also, with the release of the COVD vaccine, if the country begins to truly open again, we believe we will see

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Risk Mitigation and Due Diligence in the Pandemic

What Investors Must Do to Ensure Favorable Outcomes and Future Earnings by Erika Garcia It is vital to fully understand the risks and rewards of real estate investment during our current economic decline caused by the coronavirus pandemic. Investing in real estate can provide the potential for a stable income stream and value appreciation, along with generous tax benefits. However, real estate investors must recognize that the pandemic may impact where people work, spend their money, and the location they choose to live. The pandemic has impacted investment property types differently. Commercial properties such as hotels, restaurants, gyms, etc., have taken the bulk of the hit. At the same time, residential properties are now more in demand than before the pandemic. Due to the coronavirus, renters in high-rise condominiums started looking toward renting single-family homes. This is clearly fueled by people wanting to remove themselves from the overly crowded markets and living conditions. The coronavirus has led society to yearn for more private outdoor spaces, distance between household members, and more room for all to enjoy and feel comfortable amidst this pandemic, thus creating an increase in demand for single-family rentals. Increased Demand for SFR Inventory Even though the SFR market was strong before the coronavirus pandemic, it seems the demand for inventory has only grown stronger. The increased demand for SFR’s persists due to the lack of new single-family rentals and a decrease in rental turnover. So, to meet demand, investors must remain steadfast in their due diligence efforts and avoid the allure of quick turnaround and shortsighted due diligence. While the need for standard procedures and reviews are necessary to ensure the right fit, price, and returns, today’s market, one fueled by the coronavirus pandemic, requires a due diligence process that may look and feel a bit different. Due diligence requires investors to look at: Strong Population in Migration Low Unemployment Rate Hybrid of Physical and Virtual Site Visits Comprehensive Inspections and Appraisals While Maintaining Mandated Health and Safety Precautions Alongside these tried-and-true guidelines, there are several other factors investors must look into and investigate to ensure favorable outcomes and future earnings. Today’s markets see potential buyers and renters moving all over the country for various reasons. The new “remote working” or “hybrid” work approach has changed people’s approach on managing their day-to-day lives. This, in turn, changes where people live and how they live. Factors such as unemployment, rentability, population density, demographics, and their purchase/rent buying power must be viewed through today’s lens and are crucial to making great real estate investments. These will be vital factors in the future of single-family rentals and other investment properties. As the pandemic continues to have a significant impact on the economy, real estate investors are challenged with navigating the effects of portfolio performance. It is increasingly essential to ensure that portfolios yield the most significant possible results by invigorating portfolios with newly vetted real estate investment and placing greater emphasis on the risks of those portfolios given the current landscape. Four main categories are crucial to risk mitigation. Diversification by Asset Type Diversification by Geography Avoidance of High Rent Asset Types Tax Benefits of Real Estate Investing Diversify by Asset Type Diversification of their real estate portfolios by asset type will help avoid the risk of over-concentration in one particular category of property. Diversify by Geography Diversification of their real estate portfolios across different cities and states will alleviate the risk of over-concentration in a particular market. Specifically, keeping an eye out for cities and states with lower unemployment levels. Avoid High Rent Asset Types The real estate market is continually changing. As we see today, any pandemic, economic circumstance, financial condition, and supply and demand will all impact the capability of profit of a real estate investment at a given time. Keeping an eye out on market rent and staying within the “affordable” range would be vital in avoiding high turnover or vacant properties. Tax Benefits of Real Estate Investing Real estate is one of the most tax-advantaged types of investment in the US. Deductions for depreciation are available to all investors. Moreover, some direct real estate investments may qualify for like-kind exchange treatment, known as 1031 Exchange. This can save investors up to 40% on their tax bills when net gains are on property sales. Now more than ever, investors must look for new and innovative ways to build diverse and profitable portfolios. Through the uncertainty of the coronavirus pandemic, the impact on different real estate asset types is unknown. It can be essential to enlist the services of professional real estate asset managers who can help develop defensive market strategies aimed at preserving cash flow while positioning assets and portfolios for future market opportunities. 

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Rental Property Risk Management

Preventative Measures for Successful Risk Mitigation by Shaun Shenouda While there is no stopping acts of God, you fortunately can mitigate many of the risks pertaining to your rental properties relatively easily and inexpensively. As you might suspect, some of the most prevalent risks pertain to losses caused by the residents. Given the increased propensity to spend more time at home due to COVID-19, there is an overall increased risk. Proactively taking steps to evaluate those risks and putting best practices in place to minimize those risks could save your rental property as well as lives! Fire! According to the National Fire Protection Association (NFPA), there were 340K house fires in 2019 (26 percent) resulting in 2,770 civilian fire deaths (75 percent); 12,200 civilian injuries (73 percent), and $7.8 billion in direct property damage (52 percent). Over the past three years, house fires have resulted in 40% of SES Risk Solutions overall losses which sustained an average loss of $70K per fire. We have also seen an uptick in frequency due to more people working from home, overloading their outlets, cooking fires, etc. WIRING Nearly 1/3 of the properties we insure were built in the 1960s and 70s, which coincidentally is when aluminum wiring was often used as opposed to the more expensive and higher performing copper wiring. Aluminum conducts electricity safely. It’s the connections that pose the most issues. According to the U.S. Consumer Product Safety Commission (CPSC), homes with aluminum wiring are 55 times more likely to have “fire hazard conditions” than homes wired with copper. Since permit data is often incomplete and/or unavailable, our investors do not always have easy access to determine if the wiring has since been updated. Solution: Engage with a professional contractor to inspect the property(s) to determine if the wiring has since been updated. Our research suggests the cost to be between $1500-$3000 to upgrade, if needed. FIRE EXTINGUISHERS Another highly effective and affordable best practice is equipping all your rental properties with a fire extinguisher. In a study performed by FETA (Fire Extinguishing Trades Association) where it recorded over 2,600 incidents, they concluded that in 81.5% of cases the portable extinguisher successfully extinguished the fire and in 74.6% of the cases the fire department was not required to attend. Despite the effectiveness, according to the PEMCO Insurance Northwest Poll, 27 percent of Northwest residents live without a fire extinguisher in their home. The poll suggests that among the most at-risk are renters, who are significantly less likely than homeowners to have fire extinguishers—58 percent of renters vs. 82 percent of homeowners. Solution: Generally, fire extinguishers are around $20. While they are easy to use, they will only be used if they are easily accessible. They also have a shelf life, so it is important to implement a recurring replacement process. We also recommend incorporating the location of the fire extinguishers and how to use them into your property management process.  SMART HOME DEVICES Despite marketing advantages, better tenant satisfaction and increased profits, the value proposition for most smart home devices has only recently become more compelling as the price point for these devices has come down considerably. In fact, demand for smart home devices is growing so fast that experts have coined the term IoRE—or Internet of Real Estate—to describe the booming market in smart home devices. The smart home device market has doubled in size from about $44 billion to $91 billion over recent years and is expected to reach $158 billion by 2024, according to data from Precise Security. While tenants are likely to value smart lights and virtual personal assistants (VPAs), installing smart home products in your rental property can also be an easy and cost-effective way to protect your property. The acronym “Smart” comes from “Self-Monitoring, Analysis, and Reporting Technology”. Some insurance companies, like SES Risk Solutions, value this increased real-time awareness and may even offer a premium discount for landlords that have invested in installing such devices. Solution: Evaluate the specific needs of your property and investment strategies when considering Smart home technology options. The two we have found to provide the most value are: 1)  Flood or moisture detectors. Renters may not place a high degree of value on these devices, but for a small price, moisture sensors can potentially save landlords a considerable amount of money through water damage prevention. Easy to install and affordable, these detectors can alert you to problems like slow leaks that may otherwise go unnoticed before they turn into major issues. They can also quickly inform you of big problems like burst pipes that can do major damage quickly. 2)  Smoke and carbon monoxide (CO) detectors. Smart smoke alarms and carbon monoxide detectors take safety a step further than traditional models. Rather than just sounding an alarm, these smart versions can also alert you and/or your renters if there is a problem via an app. VACANCY Another very important set of loss prevention best practices are centered on vacancies. With nationwide occupancy rates above 94%, according to John Burns Real Estate Consulting, vacancy risk management may not be top of mind for investors. However, according to SES Risk Solutions loss history data, losses on vacant properties are over 1.5 times more prevalent and severe. There is the obvious increased risk of slow detection of an issue be it smoke, water leaks, etc. There is also an attractive nuisance, which can draw in squatters and thus increase propensity for vandalism, theft and arson as well as bodily injury. Solution: Top 3 suggested preventative measures: 1)  Inspections. The landlord or property management company should physically inspect the vacant property on a regular basis (weekly). They should perform regular maintenance, remove fire-prone debris, check the plumbing, ensure the smoke detectors are functioning, confirm there has been no intrusion, etc. 2)  Winterization. Make sure plumbing is drained and heat remains on. 3)  Secure the property. Set up motion-activated exterior lights and put interior lights on a timer (simulate real usage). Home security

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