arizona rental housing journal - january 2015

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January 2015 - Vol. 7 Issue 1Rental Housing Journal Arizona

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A Monthly CirCulAtion to More thAn 10,000 ApArtMent owners, property MAnAgers, on-site & MAintenAnCe personnel

Well it’s the first of a new year. I bet you are expecting me to write about planning for the

New Year. Isn’t that what everyone should do? A new year, a new begin-ning – right? Set your goals and objectives, write down you action items, promise to do better, etc. Nope. Not going to do it with one excep-tion.

While the seasonality of our mar-ket is somewhat predictable, as an investor there is nothing about your investing that is seasonal. Why in the world would you plan only once a year? Why would you only adjust your strategy once a year? Why would you only rededicate yourself once a year? It’s just silly.

If you are looking for a New Year’s resolution that converts into actual success try this one:

I will state “my purpose – my why” out loud every day. I will review my objectives to ensure they support “my purpose – my why” every quarter at a minimum. I will write down my action plan on a quarterly basis including measure-able items. I will write down and execute the necessary activities weekly to ensure I achieve my quar-terly action plan.

Here is the beauty of this resolu-

2. Commercial Property Winterization3. Mitigation: What it Means to Landlords4. Innovators Beware: Dangerous Intersection Ahead5. Five Tips to Full Occupancy6. Multifamily Green Light

7. Metro Phoenix New Apartment Construction8. Is Print Advertising Dead? The Evidence Says No!9. The Coach: Property Management Reference Checks… Are They Really Necessary?

Much has been written about the benefits of selling a property and utilizing

the proceeds to “1031” into another property. As a real estate broker, who has been on every side of IRC 1031 exchanges, this article is devoted to seller's negotiating techniques, when 1031 tax deferred exchanges are uti-lized.

Experience Arizona listing agents know that Arizona apartment com-plexes look like a “bargain” com-pared to income properties in other

states. Arizona cap rates are in the 7-10% range, and for the price of a California four-plex with a 2% cap rate, you can often buy 20+ units in Arizona.

Statistically, buyers utilizing IRC 1031 exchanges normally pay higher prices for properties, compared to non 1031 purchases. The reason for this is that a buyer, wanting the 1031 tax deferred benefit of an exchange, has only 45 days after closing the sale of their property, to designate a

Benefits of IRC 1031 Tax Deferred Exchanges for Apartment Complex Sellers

Negotiating the Sale of Your Apartments

www.rentalhousingjournal .com

...continued on page 4


Most will likely occur in the Phoenix area while Tucson

continues to lag in recovering from the 2008 recession.

In the race of states to attract new business, Arizona is gaining ground on its economic development efforts and looks good for greatly improv-ing its economy in the next five years, according to recent magazine rankings.

Sadly, Tucson is not pulling its share of economic development for the Grand Canyon state.

Both Forbes and Area Development Site and Facility Planning magazines give Arizona high marks for its efforts to attract companies with high-quality economic development.

Arizona in Top Half of Forbes List

Forbes magazine ranked Arizona 22nd in its annual “Best States for Business” list for 2014. We at Commercial Real Estate Group find that just about right, in line with Arizona’s 19th ranking in the Pollina Corporate Top 10 Pro-Business States for 2014.

“The Grand Canyon State’s job

and economic growth forecasts over the next five years are among the best in the United States,” says the Forbes ranking based on six factors. “Population growth through 2018 is expected to be the fastest in the country.”

This is how Arizona fared in the six factors based on his-torical data:

• 5th in growth prospects

• 17th in labor supply and in re ula-tory environment

• 25th in business costs

• 40th in quality of life

• 47th in economic climate.

While Arizona’s economic climate was dismal in the last five years,

Try this New Year’s Resolution

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2 RENTAL HOUSING JOURNAL ARIZONA • JANUARY 2015

RENTAL HOUSING JOURNAL ARIZONA

By Cliff HockleyPresident, Bluestone & Hockley Real Es-tate Services

It was cold, really cold. Let’s just say that it was below freezing. News reports had been report-

ing for hours that the roads were icy and that everyone would be better off staying home.

Our property managers and maintenance team had been prepar-ing for days for this cold snap. Property inspections had been sched-uled to make sure that all rented and vacant commercial spaces we man-aged would be weatherized. Nevertheless we had a few prob-lems.

First off, the ice storm downed tree branches and trees. This meant that many of our buildings lost power (and no power means no heat and a higher likelihood of frozen pipes). At one of our smaller two-story buildings the waterlines in the attic were not insulated and broke. When the thaw came a couple of days later, water was everywhere and we had to relocate a couple of tenants for a week until we dried things out.

Finally, to add insult to injury, a riser froze in the sprinkler room of

one of our retail strip shopping cen-ters. When that began to thaw out we had a huge problem with flood-ing and no fire protection. The Fire Marshal learned about this (because an electronic monitoring alarm went off) and insisted that we post a 24-hour fire watch.

Did I mention that these events occurred after we prepared all of our properties for the cold snap and went through our checklist ahead of time?

Before the StormFor reference, I have summarized

that checklist for use at your proper-ties.Winterization Checklist

• Fire sprinkler systems:

• Dry systems: check operation of air compressors/gauges and verify the system is completely drained down. Note: if a water flow fire alarm is received on a dry system and not due to an actual fire, the water flow is oftentimes caused by a compressor failure and therefore the system will need to be drained down once the compressor is repaired or replaced.

• Wet sprinkler systems: check to ensure they have antifreeze in them.

• Vacant tenant spaces:

• Those with operable HVAC systems: set the thermometer to at least 40 degrees.

• Those without operable HVAC systems: provide space heaters to maintain a temperature of at least 40 degrees.

• Fire riser/valve rooms: verify that the heat is turned on to at least 40 degrees to prevent freezing pipes.

• Irrigation system: verify that the landscape contractor has fully drained down the system to pre-vent freezing pipes.

• Exterior water faucets (hose bibs): shut off the water source, drain and cover with insulated covers.

• Basement crawl spaces: inspect to ensure exposed domestic wa-ter lines are insulated to prevent freezing. Close any openings ex-posed to the outside, consider in-sulation, and/or a heat source.

• Canopy/soffit crawl spaces: in-spect to ensure that exposed do-mestic water lines are insulated to prevent freezing. Close any openings exposed to the outside, consider insulation, and/or a heat source. Refer to the above regard-ing canopy fire sprinklers.

• Snow plowing/sanding/shovel-ing/de-icing service: contact the landscaping and/or parking lot sweeping companies to arrange for sidewalk, parking lot and drive lane snow services. Define

the scope/level of service ahead of time and arrange for auto-deploy-ment.

• Store snow shovels, a supply of granular de-icer and a spreader onsite so that the maintenance staff is able to clear snow on the sidewalks.

• Roof drains/downspouts: ensure that roof drains and downspouts are clear and in working order so that snow melt is able to appropri-ately drain from the roofs.

• Disconnect all outside hoses: any-time outside weather is freezing all hoses on the outside of the building should be disconnected.

How to RespondOnce the snow and ice hits, ten-

ants may be calling to report broken pipes, property conditions and other issues. It is important to have an office open and staff on standby to receive those calls and coordinate additional services. Verify that your snow service vendor has in fact dis-patched a crew to your property. Maintenance staff needs to be prepo-sitioned with snow blowers, chain-saws and vehicles with studded tires allowing them to travel to properties so they can provide the required ser-vice. You may want to consider hav-ing a supply of sleeve clamps or “Shark Bite” couplings on hand for repairing pipe breaks in addition to a heat gun to melt frozen pipes.

If the snow is very heavy and icy crews need to be dispatched to clear the snow from buildings with flat roofs, in particular the drains need to be cleared so the water can drain off

Commercial Property WinterizationHow to Prevent Winter Emergencies - The Real Deal: A Worst-Case Scenario


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RENTAL HOUSING JOURNAL ARIZONA • JANUARY 2015 3


Property management profes-sionals should be familiar with the term “mitigation.” You can

find the term not only in the Arizona Residential Landlord and Tenant Act (ARLTA), but also throughout appel-late case law that interprets landlord-tenant issues.

• A.R.S. § 33-1305 states:• A.R.S. § 33-1305. Administration

of remedies; enforcement• A. The remedies provided by this

chapter shall be so administered that the aggrieved party may re-cover appropriate damages. The aggrieved party has a duty to mitigate damages.

Mitigation is a legal term that has always been a part of basic contract law. It means that you, as a landlord, have to take all reasonable steps to reduce or limit your damages. This usually occurs in two sets of circum-stances.

CircumstancesThe first is during the tenancy or

lease term. For example, the air con-ditioning goes out in the renter’s apartment at approximately the same time his or her rent is due. The resident refuses to pay the rent

because management has yet to cor-rect he problem. The landlord could not refuse to fix the air conditioning because the individual has not paid the rent, just as the resident could not refuse to pay rent until the prop-erty makes repairs. Management must take all reasonable steps to make the repairs, just as the renter would need to follow the notice and remedy ARLTA provisions if the landlord did not address the issue in a timely manner.

The second instance involves renters who breach the lease. This is the most common situation. A resi-dent vacates the unit prior to the end of his or her lease term. It could be an eviction, a situation where the individual no longer can afford the rent and moves before any court action occurs or a renter illegally ter-minating the lease by not giving proper justified notice. In any case, management is left with a vacant apartment.

The law requires the landlord to now use all reasonable steps to re-rent the apartment, as the renter remains responsible until the lease ends or a new individual enters into a new lease for the unit. It only requires management to do what it normally would to rent the unit.

This could include putting up a “For Rent” sign, running an advertise-ment, and either showing the vacant apartment to prospective renters or letting them know if is available.

A potential problem for manage-ment occurs when the resident says it did not take reasonable steps to re-rent the apartment. The individu-al will instruct someone to either visit the community or inquire on availability to see if the landlord mentions the unit or offers it as avail-able. The former renter could also demand to see advertisements and records on how the landlord showed the unit. The burden to prove rea-sonable marketing is on manage-ment, so good record keeping is a must.

Keep in mind the law only requires a reasonable effort to miti-gate, not, as on court stated, a “hero-ic” effort. If a landlord can re-rent the apartment, but the market dic-tates a lower rate or additional con-cessions, he or she should be able to prove mitigation and be entitled to loss of income suffered on the new lease.

ExampleConsider the following example:Jay Lowe and Ben Afflicted rent a

unit at the Star Gazing Apartments. Manager Tom Cruzin has the two sign a one-year lease with monthly rent of $800. Jay Lowe and Ben Afflicted have a falling out and decide to go their separate ways. They move out without giving prop-er notice.

Tom Cruzin immediately puts the apartment back on the market, set up a “For Rent” sign, and adds the unit to his list of available apartments. Every time someone wants to see this particular apartment floor plan, he notes it in his vacancy log.

Due to poor credit, Leo Decapitated, Drew Barryless and Justin Timberpond do not qualify to rent the unit. Tom Cruzin is finally able to re-rent the unit to Kelly Ripoff, but her lease only requires her to pay $700 per month. Tom Cruzin can now charge Jay Lowe and Ben Afflicated the lost rent from their departure to the new lease date with Kelly Ripoff, plus the extra $100 per month loss on the new lease.

Andrew M. HullHull, Holliday & Holliday, PLC

www.doctorevictor.com602.230.0088

Mitigation: What it Means to Landlords



Resolution ...continued from front page

tion. Even if you only do the first part and say out loud your purpose/why then you will be more success-ful. Your success will only increase as you are able to hold yourself to the other three parts. As you are able to do each part your success increas-es. Don’t believe me? Try it! What do you have to lose? Let me ask a differ-ent question, do you believe that doing all or part of the above could possibly make you less successful?

So, come New Year’s Day 2016 you aren’t starting over as it relates

to your real estate investing. You aren’t rethinking everything. You are on cruise control, making adjust-ment as you need to. You have maxi-mized your time, energy and you have accelerated your success.

Okay, I said there was an excep-tion. If you are just now coming to real estate investing as a way to achieve your purpose and haven’t had a chance to complete your plan-ning or for some reason have never properly completed your planning, then you’ve need to get started

sometime and now is the best time. The fact that it coincides with the New Year really doesn’t matter. But, if the New Year gives you the reason you need then great! Just do yourself a favor. Make this the last time you use the first of a year to get re-moti-vated as it relates to your real estate investing.

Alan LangstonExecutive DirectorArizona Real Estate Investors

Association – AZREIAAmerican Rental Property Owners

& Landlords Association - ARPOLA480-990-7092www.AZREIA.

orgwww.ARPOLA.orgAZREIA serves its 1700+ members

through chapters in Phoenix, Tucson and Prescott providing extensive mar-

ket information, education, networking events and support. ARPOLA serves

members in all 50 states providing assistance with ownership and opera-

tional aspects of rental property.

By: Neal Thornberry, Ph.D.

Innovation is not for the faint of heart, as Galileo learned when he said that the Earth revolved

around the sun. He was scorned, threatened with death and eventu-ally put under lifetime house arrest.

Innovators are not always wel-come guests even within their own organizations, and their challenges are heightened by a dangerous orga-nizational intersection: where Complexity meets Wackiness. The

more complex an organization, the more difficult it is for the innovator to figure out where to go with a good idea and how to weave it through the organization to implementation and eventually value creation.

Growing organizations cannot avoid complexity. They add process-es and people, divisions and special-ists. Since we can now measure almost everything, they often believe if one measurement captured in a report is good, then more are better.

One company, with whom I worked, learned that its sales people

were losing a month of selling each year because of the time spent filling out reports required by the finance department. This example of com-plexity gone awry drove the organi-zation into Wackiness -- sacrificing revenues for reports.

There are many other examples of Wackiness getting in the way of innovation – and examples of stealth innovators circumnavigating them. One of my favorites is the tale of Jim Repp, head of Jeep design at the old Daimler Chrysler Corp.

Jim knew that many Jeep lovers

spent thousands of dollars upgrad-ing their Wranglers for serious off-roading. This gave him the great idea for a mass-produced Jeep with all the upgrades built in at half the cost. When he shared his idea with mar-keting, they said there was no mar-ket for that type of vehicle and besides, you’re an engineer, not a marketer.

Undeterred, Jim and a small band of innovators I call Innovation Judo masters built a secret prototype. They took it out on the Rubicon Trail in California for off-road trials and

Innovators Beware: Dangerous Intersection Ahead

...continued from 10



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Five Tips to Full OccupancyBy John Wilhoit Jr.

In multifamily property manage-ment, there is always more to do, but there are certain things that

must be done. In the effort to main-tain full occupancy, these five tips are in the “must be done” category.1. Renewals!

The straightest line to maintain-ing high occupancy in multifamily is focusing consistent attention on renewals. Ignoring this makes main-taining full occupancy near impossi-ble.2. Be Ready! Never show a unit to a potential ten-ant that is not ready to occupy. This includes “almost ready” and “gon-na be ready next week” multifam-ily units. It’s either ready to occupy or… wait.3. Know Thy Competitors!

Know where you can compete and where you cannot. Wendy’s res-taurant has tried many times to get in on McDonald’s breakfast revenue. They just cant do it. Know thy com-petitors and what concessions they are offering in the present tense. Leasing agents should know ameni-ties of competitor properties and how/where your property can out-perform. Example: older units almost always have greater square feet than newer product. Accentuate

the positive!4. Social media is a main-stay! Integration of Internet based ad-vertising/media is a must no mat-ter how small the multifamily mar-ket. The renter market is younger people (still). Young people are glued/stuck/fastens to their smart phones…. smart phones with con-nectivity to available apartment homes.5. Two-way communication! Leasing Agents are far from order takers- they are the front line rep-resenting your asset. A potential tenant coming to your Leasing Office is looking for a place to live and insight on the lifestyle repre-sented. A big part of leasing, then, is to dialogue and convey to potential

tenants what they are buying.This is accomplished best by cre-

ating two-way communication. Leasing Agents should be asking open-ended questions that draw information from potential tenants to better understand their needs and wants. This allows Leasing Agents to provide information on features and benefits offered by the develop-ment that meet potential customers lifestyle desires. People may look for features, but they buy benefits. The only way to know what benefits they are looking for is to ask.

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ly property owners, operators and investors in executing specific tasks

that allow multifamily assets to operate

at their highest level of efficiency. We discuss real world issues in multifamily management and acquisitions. This blog is intended to be informational only and

does not provide legal, financial or accounting advice. Seek professional counsel. We discuss best practices in

multifamily management and methods related to how to buy apartment com-plexes. Our focus is sharing strategies

and tactics that can be implemented and measured. For more information, visit:

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Forecasters have begun to warn of potential overbuilding in the multifamily sector, but con-

cerns from pundits are premature. Multifamily development in the U.S. has yet to meet pent-up demand, and annualized effective rent growth was 4.1 percent in August 2014, the high-est since October 2011. At the current rate of development, we anticipate production capacity and demand will reach equilibrium by mid-2015. Subsequently, the industry could enjoy up to six additional years of sustainable production, if develop-ers and lenders carefully monitor demand and modify deliveries ac-cordingly. It has been said that multi-family is in the middle innings of an extra inning game.

Statistics on the U.S. supply of multifamily units clearly show the sector is not in danger of being over-built, although a few markets are the exceptions. Even areas such as Northern Virginia, which recently experienced oversupply conditions, are showing signs of improvement. Here are notable signs of a robust multifamily sector:

• The national multifamily occu-pancy rate rose to 95.2 percent in August 2014 after being at 95 percent since May, according to research firm Axiometrics. Oc-cupancy rates are holding steady despite the new supply from developers.

• There is fresh demand each year for 400,000 to 450,000 units, but developers are completing only 325,000 units a year.

• 1 to 1.25 percent of the existing multifamily inventory in this country is demolished each year, a metric that when not taken into consideration, skews perception of demand. With considerable at-tention currently on urban devel-opment, the trend will continue in the near term.

“In The Top 100 U.S. Markets, Demand for Apartments was More than Double that of the Number of Units Delivered.”

Fundamentals remain strong on the demand side as the need for rental units continues to rise. In the top 100 U.S. markets, demand for apartments was more than double that of the number of units deliv-ered, with 55,561 units completed

and 129,162 units absorbed, accord-ing to a second-quarter 2014 report from MPF Research. Job growth is expected to continue for the next five years, according to economists at Axiometrics, barring an unforeseen shock to the economy. Job growth will drive demand for multifamily projects, and as more job formation drifts to the suburbs, so will rental demand. In a somewhat surprising observation, the National Multifamily Housing Council reports that almost 50 percent of new renters are Baby Boomers, rivaling Millennials as the biggest driver of demand. Baby Boomers are becom-ing “renters by choice” who trade house and yard maintenance for con-venient live/ work/play environ-ments.

For the time being, several factors are holding the supply/demand ratio in check. The number of Millennials entering the renter pool continues to increase − a circum-stance that will not change in the near term. Millennials will constitute 24 million new households between 2015 and 2025, thus driving up demand for rentals and starter homes, according to “The State of the Nation’s Housing 2014,” a report by the Joint Center for Housing Studies

of Harvard University. Immigration is also driving additional household formation in ever-increasing num-bers. Renter growth in 2013 remained well above the 400,000 average annual absorption rates of the last few decades, the study reports. In addition, stringent mortgage under-writing and growing student debt push homeownership further out for many young individuals and fami-lies.

Also curtailing supply are barri-ers to entry, which exist in coastal markets as a result of the high costs of land and construction. Artificial barriers in other U.S. markets are a consequence of zoning restrictions and public opposition to higher den-sity projects that are necessary to make some deals financially feasible.

Finally, the lack of skilled labor is putting stress on construction capac-ity, driving up labor costs and length-ening construction timetables. Many former and would-be construction workers have been lured to the oil and gas industry by higher wages, leaving the development community without enough tradespeople. While commodity prices are increasing moderately, contractors are pushing up margins to recoup losses incurred

Multifamily Green LightU.S. Development Pace is Sustainable for Years to Come




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The Kasten Long Commercial Group specializes in mul-tifamily brokerage and has

been providing apartment market updates and identifying future trends for metro Phoenix in quar-terly newsletters since 1998. Current and past issues plus detailed market data are available on their web site (www.KLCommercialGroup.com).

New apartment construction con-tinued at a rapid pace in metro Phoenix. At the end of the 3rd quar-ter of 2014, there were 33 apartment communities under construction with a total of 9,089 units. Most of these are in Scottsdale, Phoenix and Tempe. In addition, there were 61 projects (14,148 units) in the rezon-ing – permitting pipeline. That’s a combined total of 23,237 units that may enter our market over the next few years – with more to come. To date, there were 3,821 units com-pleted in 2014 with a projection of 5,000 units by year-end and about 6,500 new units projected in 2015.

To put this in perspective, over the past four years (2010 to 2013), the average number of units entering the market was 2,018/year. The previ-ous 15 years (1995 to 2009) averaged 6,139/year. The lack of new con-

struction was obviously a driving force for the sharp decline in vacancy rates – currently at a seven-year low at 6.5%. Whether we see an increase in vacancy rates in the 4th qtr or early next year – the increased apart-ment supply will soon have an effect. At present, however, the new proj-ects are leasing more quickly than projected and for higher rents.

The overall quality of most of the new apartments is a significant step-up – and the rental rates reflect this quality. Up-scale builders like Alliance and Optima with under-ground parking, expanded common areas and many amenities have rates at $2.00/sf – $2.20/sf after adding on extra fees for water and common area. Builders such as Wood Brothers and Mark Taylor have surface park-ing, but their interiors are getting close to condo-quality. Their rates are in the $1.30/sf to $1.60/sf range – again, including add-on fees. While the amenities may pull some tenants from the nearby class “A” properties and have a negative rental effect, the class “B” and “C” properties may be able to actually increase their rental rates since they will be able to offer larger units and often with block solid (low noise) units at much less

cost. One of the concerns for the pro-

jected population boom for Metro Phoenix is that many of the new jobs will not be for high-dollar positions. Again, this would provide a lesser demand for the class “A” properties, but may bode well for the older properties with lesser rents – typical of the “B” and “C” communities.

The location of the new apart-ments tends to be along the metro Light Rail route, in dynamic areas of

Scottsdale and Tempe, in the expand-ing cities of Chandler and Gilbert and a number of in-fill locations in Phoenix. What we see happening in many in-fill locations is that a new apartment community will attract upscale coffee shops, more retail, more restaurants, etc. – all adding value to the area – and to the nearby “B’ and “C” properties.

In summary, if you own a “B” or “C” property – you should look for-

Metro Phoenix New Apartment ConstructionGreat for Class B and C Properties

Metro Phoenix Q3 2014 Apartment Units in the Pipeline by Percentage

Kasten Long Commercial Group

1.9%

Chandler 16.6%

Gilbert 2.5%

0.3%

Goodyear 5.4%

Mesa 6.2%

Phoenix 18.9%

Scottsdale 22.3%

Tempe 25.9%

0.2% 1.4%

14,148 units in Pipeline


Negotiating the Sale ...continued from front page

property to buy with the exchange proceeds. Double this with an out of state buyer making long distance trips to look at property and do inspections, and you have a very motivated stressed purchaser that is “under the time gun”.

After receiving an offer or letter of intent on a property, a seller should question if the purchasing funds are coming from a IRC 1031 exchange. In addition, a verification of funds should be requested from the 1031 facilitator and the buyer should clar-ify where he or she is in the 45 day designation process.

The closer that the buyer is to the end of his 45 day inspection period, the stronger the negotiating position of the seller. Other important buyer information is:

1. In what geographical areas, is the buyer, considering purchasing. The wider the buying area, the less potential negotiating power, for the seller.

2. Amount of similar local invento-ry. How many similar complexes are locally available for sale? Is it currently a buyer's or seller's mar-ket? Has the potential buyer offered on any other local proper-ties?A good negotiator sizes up his

opponent and negotiates according. When selling a property, find out if the buyer is utilizing an IRC 1031 tax deferred exchange. Ask lots of ques-tions. Use the answers and common sense to formulate a strong negotiat-ing position. This knowledge may net you thousands of additional dol-lars, at the closing table!

Jade Bossert is a licensed Real Estate Broker with Tierra Antigua Realty in

Tucson. She has sold investment prop-erties for over 30 years and can be

reached at 520-797-6900 or [email protected].

vis i t us atwww.rentalhousingjournal .com



By Devan Gilbert, Staff Writer, Rental Housing Journal

Rumor has it in the marketing and advertising world that print advertisements are out-

dated and inefficient. The numbers, however, say otherwise. It’s time to squash this misinformation and get to the truth about the power of the print.

The younger generation doesn’t read print anymore:

False. Many like to claim that print advertising is incapable of reaching the younger generation, but research proves differently. While social media is an effective way to target the 18-30 year old demograph-ic, it is not the only way.

National Public Radio reported a study that found a quarter of 18-24 year olds had read a newspaper within the past 24 hours. The New York Times announced that 10 per-cent of its hard copy subscribers are between the ages of 18 and 24. According to Mediamark Research and Intelligence, magazine reader-ship has increased by 4.3 percent in the past five years. The Association of Business Information and Media Companies reported that 96 percent

of business-to-business clients still read print publications. If businesses made the fateful decision to disre-gard print advertising all together, they would be disengaging from a massive list of potential clients.

Multimedia is the only way to get readers to spend with my company.

False. A December 2012 Valassis survey was conducted, focusing on the connection between print adver-tisements and the spending habits of the generations born in the 1980s and 1990s. Here is the break-down of the results.

• Over half said they would spend less money if they didn’t look at print ads.

• 91 percent said they used coupon cutouts from print advertisements to save money.

• 51 percent admitted that print ads inspire their spending habits.

• 30 percent said they refer to online websites seen in print ads to obtain more information

• 87 percent use print to choose a restaurant. Print ads make it easy to target

certain demographics. Instead of throwing an advertising banner on Facebook or Twitter, you can send

magazines, flyers or catalogs to homes in certain areas. Nordstrom, a billion dollar company, still spends a pretty penny on print advertising. Strategically, different versions of catalogs are printed and are distrib-uted according to how much a spe-cific customer spends annually and which departments they shop in. Nordstrom is able to target where and who its catalogs should be mailed out to. Finding the appropri-ate audience for a company’s adver-tising is made easy with print result-ing is less wasteful marketing spend-ing and increased profits for a com-pany.

Why should I use print ads? Large companies aren’t using them anymore.

False. Nordstrom isn’t the only company not falling for the rumors. In 2011 Nike spent $113 million on advertising that did not involve the Internet. Google spent $1 million on non-internet advertising that year as well. We all know these companies have some of the most brilliant mar-keting teams in the world, which is exactly why they are still using print advertisements. Madison Hildebrand, a star of the Bravo show, “Million Dollar Listings,” has had massive success as a Realtor and is well-known by most television view-ers and Internet users. However, it should not be assumed that every potential client uses the Internet or watches cable TV. Mr. Hildebran knew this and recently advertised himself in a four-page spread in Homes and Land magazine. If busi-ness thriving people and companies are still using print advertisements then why shouldn’t everyone else?

What makes print ads “work”?

Great question. As stated before, print is easy to target. People also tend to pay more attention to mate-rial they are subscribed to rather than a pop-up ad or an ad interrupt-ing their music on Pandora. Websites tend to be skimmed quickly, adver-tising on TV or on the Internet is only there as long as it is paid to be there. A magazine tends to find a home on a coffee table or in a den-tist’s office where it is picked up and sifted through by dozens of people over several months. The Internet these-days is full of scams and fake “news”. Print advertisements are more trustworthy to potential cus-tomers. The Internet has helped bring us a fast-paced world. Many people turn to the Internet to accom-plish something quickly and effi-ciently, but that is not necessarily the best place for an advertisement. Can you recall the last advertisement that popped up on your computer screen? What about the company that was advertising itself? Most likely not, and you are not alone. These ads

don’t pique most people’s attention. It is not uncommon for somebody to unwind by reading a magazine or newspaper. In a relaxed environ-ment is where information, in this case an advertisement, will be noticed.

New advertising techniques are always better.

Wrong again. “Out with the old, in with the new” shouldn’t apply to everything. People may argue that spreads with advertisements are flipped past, happens to the hun-dreds of emails consumers receive a day titled “Cyber Monday sale” “Going, going, gone” or “All orders over $50 take $5 off!” They go direct-ly into the deleted items folder. Although the saying “print is dead” has been echoing through the adver-tising world, research shows differ-ently. Penn State conducted a study, that concluded that print ads stick with customers more than online ads. Print is also an advertising tech-nique that can stimulate multiple senses. Take sample perfume ads in magazines, or shopping catalogs, or sample textures in home improve-ment magazines and pamphlets. A potential customer is not going to be feeling, or smelling anything through the Internet. By stimulating senses, an advertisement becomes more interesting and memorable.

Internet and multimedia ad-vertising is important

True. Although print advertising continues to prove itself in the mar-keting world, other forms of adver-tising are important as well. Many print ads include the company’s website to provide more informa-tion. Integrated marketing programs have been proven to be extremely successful if correctly executed and almost always involve print ads.

The use of print advertising is increasing.

True. The biggest myth of all is that print advertising is quickly slip-ping through the cracks. This couldn’t be more wrong. According to Media Radar, the medical and pharmaceutical, home furnishings, technology, and beverages categories have all published more print ads than the year before. Ralph Lauren, Chanel, Calvin Klein and Louis Viton amongst other luxury brands have dramatically increased their print ad spending since 2012.

Is Print Advertising Dead? The Evidence Says No!



According to the Society of Human Resource Man-agement {SHRM} over 50

percent of the information presented on a resume by a job candidate may be false or misleading. These are alarming statistics, and as the execu-tive of your property management company, it continues to be increas-ingly important to understand the mindset of the job candidates that are applying for positions within your company. This article will help you and your company strengthen your reference checking process and eliminate those who will not be a perfect fit, long before a position is ever offered.

Some reference checking statis-tics: A recent SHRM survey at www.shrm.org was sent to 2,640 human resource members regarding refer-ence checking. The survey conclud-ed that job candidates frequently present misleading information about their length of stay with for-mer organizations, their past/cur-rent salary levels and their college credentials. More specifically, 53 percent of companies involved in this survey discovered falsified infor-

mation about length of employment from job candidates and 51 percent discovered falsified information about past salaries. In addition, 61 percent of job candidates falsify their college credentials, a credential that can be easily researched during the reference checking process.

Tip From The Coach: Based on the above survey information, con-ducting thorough reference checks must continue to be an important step in the selection and interview process of hiring SuperStars for your property management company.

Developing a reference checking process: The first step is to deter-mine how reference checks are going to be done in your property manage-ment company and to establish or strengthen your written policy for how reference checks fit into your interview process. With some of our property management clients, their human resource department handles this important step before a formal job offer is made. With other prop-erty management clients, all hiring executives handle their own refer-ence checks, based on the specific level of position being offered or the

compensation range being present-ed. As for references, three or more business references should be sup-plied by a job candidate as early in the interview process as possible. We highly recommend asking for references early in the interview pro-cess because this will give your hir-ing executives additional time to contact each organization submitted by a job candidate. This also means that your hiring executives will not be rushed to do reference checks in the final hours before making a job offer. This makes for a more thor-ough and complete reference check-ing process.

Tip From The Coach: In addition to reference checks, many property management companies are now asking permission to do background checks, credit checks and criminal checks as part of their hiring process. Based on the SHRM survey statistics above and your own professional experience, have you recently reviewed your reference checking process? This process will help to link talented SuperStars to compati-ble positions within your property management company and will

reduce the chances of hiring low per-formers.

Questions to ask when calling a reference: It has been our experience that all of our property management clients want to create their own cus-tom reference checking form. Here are some sample questions to get you started with yours: How would you characterize his/her success with your company? How would you characterize his/her energy level? How was this person viewed by his/her peers? Describe the types of decisions this person made on a daily basis? How did this person manage their time? Tell me about a disagreement or a challenging situa-tion and how this person handled it? Specifically, how was this person paid? Why did this person leave your company? Based on what you shared today, would you hire this person back?

Tip From The Coach: We know that many companies are no longer giving references on past employees based on legal and liability concerns. Most of our property management clients now ask a job candidate to

continued on page 11

Property Management Reference Checks… Are They Really Necessary?©

Ernest F. Oriente, The Coach {Article #224…since 1995}

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ward to a new apartment community being built in your area. Something else you might consider is to reposi-tion your property – make it a bit more upscale – and thus offer a slightly lesser-cost option for the quality-driven tenant. If you are looking for an investment opportu-nity – look for an older property with good bones – with the idea of gutting and completely repositioning the property. We’re seeing this done in many areas across metro Phoenix.

The Kasten Long Commercial Group has specialized in apartment brokerage in metro Phoenix since 1998. Agents

have brokered more than 1,000 commu-nities with gross sales in excess of 1 bil-lion dollars. The company also provides

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the roof as the snow melts instead of leaking into the tenant spaces. This is important because the weight of snow and ice can stress the roofs and cause them to cave in. Additionally, you also need to keep the air han-dlers clear of snow. If snow blocks the air flow it stresses the compres-sors and then you can’t generate heat either.

PreparationPreparation is the name of the

game. The more you inspect, plan and prepare for catastrophe the more likely it is that you and your proper-ties will survive them with minimal damage. Make sure your documen-tation is well organized with prop-

erty maps, and the locations of water shut offs and roof drains are easily available for you and your staff to access. Also, make sure to have 24-hour maintenance staff, plumb-ers, electricians and emergency response contractors’ phone num-bers in your cell phones to speed up your response. Finally, you will need easy access to your property insurance agents just in case you have a loss and need repair approv-als and checks right away.

Clifford A. Hockley is President of Bluestone & Hockley Real Estate Services, greater Portland’s full service real estate brokerage and property man-agement company. Founded in 1972,

Bluestone & Hockley’s staff totals nearly 110 employees, including 20 licensed brokers. The company’s prop-erty management division serves com-mercial buildings, apartments, condo-minium associations and houses in the Portland / Vancouver metro area, while the brokerage division facilitates both leasing and sales of investment proper-ties throughout Oregon and Washington.

Cliff earned a degree in Political Science from Claremont McKenna College and holds an MBA from Willamette University. He is a Certified Property Manager and has achieved his Certified Commercial Investment Member designation (CCIM). Bluestone & Hockley Real Estate Services is an Accredited Management Organization

(AMO) by the Institute of Real Estate Management (IREM). Cliff is a mem-ber of the Institute of Real Estate Management and was named Certified Property Manager of the year in 2001 and 2003. Cliff is a frequent contributor to industry newsletters.

Bluestone & Hockley offers custom-ized brokerage, property and asset man-agement, as well as maintenance ser-vices to property owners and investors throughout the Portland/Vancouver metro area. The company’s full-service approach benefits busy property owners and investors, who know they can count on Bluestone & Hockley for high quality real estate services start to finish.

invited the senior executives to watch. Jim’s prototype outperformed the other Wranglers and, as crowds gathered around it, the executives saw their enthusiasm. They immedi-ately authorized production of what is now a best-selling icon, the Jeep Wrangler Rubicon.

Fortunately for Chrysler and other companies, there are a few pas-sionate innovators like Jim who won’t let go of their idea no matter what. They’ve developed a special set of skills (I call them Innovation Judo) that allow them to bypass those blocks.They are:

• Discipline• Leverage• Speed• Openings• Circling• Unbalancing• Redirection

The Jim Repp story illustrates the application of several of these prin-ciples. The discipline to plan for building a secret prototype; leverage in getting senior executives to sup-port his idea; utilizing the opening at the Rubicon Trail; and then using the surprise (a tactic of unbalancing) of a Jeep that looked like all the other jeeps on the trail but outperformed

them. Since it takes so long to correct the

dangers at the Complexity/Wackiness intersection, identifying and supporting a few Innovation Judo Masters can go a long way in overcoming some of the most diffi-cult barriers to innovation.

Neal Thornberry, Ph.D., is the founder and CEO of IMSTRAT, LLC a consulting firm that specializes in help-ing private and public sector organiza-tions develop innovation strategies. He

serves as the faculty director for innova-tion initiatives at the Center for

Executive Education at the Naval

Postgraduate School in Monterey, Calif. Thornberry, author of “Innovation

Judo:Disarming Roadblocks & Blockheads on the Path to Creativity” (www.NealThornberry.com), holds a

doctorate in organizational psychology and specializes in innovation, corporate entrepreneurship, leadership and orga-nizational transformation. A respected

thought leader in innovation, Thornberry is a highly sought-after

international speaker and consultant.


Winterization ...continued from page 2

Innovationrs Beware ...continued from page 2

Green Light ...continued from front page

during the recession, and the addi-tional costs will price some projects outside the realm of feasibility. The same labor dynamic is slowing the building of homes, which, conse-quently, also adds to the number of people in need of rental units.

Opportunity still abounds in the robust multifamily sector, but future projects will face greater scrutiny from debt and equity sources, par-ticularly as interest rates begin to rise. The “easy” opportunities are largely done and developers must be creative in originating the next round of development opportuni-

ties. As long as developers exercise constraint, it appears we will have a number of years of positive invest-ment environment for multifamily.

By Mark CulwellManaging Director, Multifamily

DevelopmentTranswestern Development

Company

MARK [email protected]

214.534.1458



sign a reference authorization form giving permission to their previous employers for a full and candid ref-erence while also waiving any legal liability. In addition, we strongly advise our clients to call each refer-ence given by a job candidate and when the reference conversation is complete --- ask this person, “Is their someone else within your company who can give me an additional refer-ence on this job candidate?” Speaking to a second person within the same company is the secret to getting accu-rate and detailed references.

Want to hear more about this important topic or ask some addi-tional questions about how to build a custom reference checking form or to see a sample reference authorization form? Send an E-mail to [email protected] and The Coach will E-mail you a free TeleForum invita-tion.

Author’s note: Ernest F. Oriente, a business coach/trainer since 1995

[33,000 hours], serving property man-agement industry professional since

1988--the author of SmartMatch Alliances™, the founder of

PowerHour® [ www.powerhour.com ], the founder of PowerHour SEO [ www.

powerhourseo.com ], the live weekly PowerHour Leadership Academy [

www.powerhourleadershipacademy.com/pm ] and Power Insurance & Risk Management Group [ www.pirmg.com ], has a passion for coaching his clients

on executive leadership, hiring and motivating property management

SuperStars, traditional and Internet SEO/SEM marketing, competitive sales

strategies, and high leverage alliances for property management teams and

their leaders. He provides private and group coaching for property manage-

ment companies around North America, executive recruiting, investment bank-

ing, national utility bill auditing, national real estate and apartment

building insurance, SEO/SEM web strategies, national WiFi solutions [

www.powerhour.com/propertymanage-ment/nationalwifi.html ], powerful tools

for hiring property management SuperStars and building dynamic

teams, employee policy manuals [ www.

powerhour.com/propertymanagement/employeepolicymanuals.html ] and

social media strategic solutions [ http://www.powerhour.com/propertymanage-

ment/socialmedialeadership.html ]. Ernest worked for Motorola, Primedia

and is certified in the Xerox sales meth-odologies. Recent interviews and arti-

cles have appeared more than 8000+ times in business and trade publications

and in a wide variety of leading maga-zines and newspapers, including Smart

Money, Inc., Business 2.0, The New York Times, Fast Company, The LA Times, Fortune, Business Week, Self

Employed America and The Financial Times. Since 1995, Ernest has written 225+ articles for the property manage-ment industry and created 400+ prop-erty management forms, business and marketing checklists, sales letters and

presentation tools. To subscribe to his free property management newsletter go to: www.powerhour.com. PowerHour®

is based in Olympic-town…Park City, Utah, at 435-615-8486, by E-mail

[email protected] or visit their website: www.powerhour.com

Interested in Buying or Selling Multi-Family Properties in Metro Tucson?FREE market analysis & automatic email alerts of newly listed properties.

Contact: Jade Bossert, Associate Broker successfully selling investment properties in Arizona since 1979.

Tierra Antigua Realty(520)797-6900 [email protected]

according to the report’s metrics, its-future is promising.

Arizona Wins Silver Shovel Award

Area Development gave one of its 2014 Silver Shovel Awards to Arizona for its “achievements in attracting-high-value investment projects that will create a significant number of new jobs in their communities.”

Arizona was one of three to win the silver award in the category of states with populations between 5 million and 8 million. The other two were Indiana and Tennessee. Missouri won the category’s top honor called the Gold Shovel Award.

“Bioscience is quite strong, gener-ating $36 billion in annual revenue and employing more than 100,000 workers,” the magazine said about Arizona. It noted that the finance and insurance sector is expanding and that the “hottest sector” is IT.

The publication ranked states

based on their top-10 job-creation and investment projects that started in 2013. Arizona’s top 10 projects totaled nearly 9,900 new jobs and represented a nearly $2.4-billion investment.

All of those projects occurred in the Phoenix-Mesa-Glendale metro-politan statistical area (MSA). That means Tucson, as the state’s second largest MSA, contributed nothing to the state’s award.

Indeed, when Area Development took a look at 379 MSAs to see what areas are in good positions to take advantage of the new economy, Tucson ranked a disturbing 313th.

Phoenix-Mesa-Glendale came in at 115th and Flagstaff earned a rank of 172nd in the “Leading Locations for 2014” list. Tucson’s position was between Fresno, Calif., and Colorado Springs, Colo.

The magazine used four cat-egories to rank the MSAs.

• In “Prime Work Force,” which measures the quality of the labor pool, Tucson ranked 259th.

• In “Economic Strength,” including employment and gross manufac-turing product, Tucson ranked 305th.

• In “Recession-Busting Cities,” which measures how well cit-ies recovered from the recession, Tucson was 312th.

• In “Year-Over-Year Growth Cities,” measuring short-term economic growth, Tucson came in 330th.“This is a disaster for Tucson,”

says Michael Coretz, principal of Commercial Real Estate Group of Tucson. “Granted, this report ranks areas based on past numbers, but this proves that we have not recov-ered yet from the recession and fare much worse than many, many other cities.” Coretz believes there is posi-

tive movement, including

• The University of Arizona’s estab-lishment of Tech Launch Arizona that will more quickly bring to market innovation and invention from its faculty

• better efforts to strengthen inter-national trade with Mexico

• steady growth in the bioscience industry.“However, we have a long way to

go before Tucson can be a meaning-ful contributor to Arizona’s emerg-ing success in bringing companies and their quality jobs to our state,” he adds.

Commercial Real Estate Group of Tucson specializes in representing ten-ants and corporate users across the United States, Latin America, Europe and Asia as a member of ITRA. For more information call 520-299-3400.

Ready for Growth ...continued from front page

Referance Checks ...continued from page 9

arizona rental housing journal - january 2015

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