REINCheck

VO [00:00:06] You're listening to REINCheck with Andrea Rice, Contracts and Industry Specialist at REIN, where you get the latest member news and information delivered straight from the source, REIN MLS.

Andrea Rice [00:00:16] Hello and welcome to REINCheck. I'm your host, Andrea Rice, and today we are checking in with Gladys Fain, Craig Wool, and Nick Chandley who are all members of REIN's Property Managers Advisory Committee for an update on the current state of property management in Hampton Roads. Gladys, Craig, Nick, thank you so much for taking time today to join me for this topic.

Gladys Fain [00:00:41] Thank you, Andrea.

Nick Chandley [00:00:43] Thanks for having us.

Gladys Fain [00:00:44] Pleasure to be here.

Andrea Rice [00:00:46] Right, yeah, I'm really happy to have you all here. You know, several changes hit the rental community about a year and a half ago. There was the source of funds requirement and exemption because source of funds became a protected class. We also had the declaration of ownership interest form that was introduced and then the elimination of the SCRA waiver. So I wanted to follow up to see how these changes impacted the local rental community. But before we get started, I would like to let our listeners know that all of these topics were covered in detail in separate episodes of REINCheck last year. So be sure to go back and take a listen to those if you need a refresher. But let's go ahead and get started with source of funds. So there was some confusion when source of funds was first introduced as a protected class. REIN added a source of funds exempt field to the rental input sheet to kind of help identify which rental properties were exempt from that new protected class requirement. Do you find that, in practice, everyone better understands these sorts of friends requirement and when the exemption applies? And do you see that the checkbox on the rental data input sheet is being used as intended?

Gladys Fain [00:02:04] I'll take this one, Andrea. I think there might still be some confusion as far as who is exempt and when and all that because I do see that sometimes in auditing my own listings. Where the property manager has checked the exempt when they're really not exempt. So to have a clear understanding of source of funds and when you're exempt and when you're not exempt, the declaration of ownership interest clearly a form that REIN came up with, clearly explains it in detail as to when an owner is not exempt, which is if they own or have 10 percent interest or more in four rental units in the Commonwealth. And for owners that own four or more, they're not exempt, and therefore owners that own four less are exempt, or have that 10 percent interest, are exempt from that requirement. But they can also, those owners that are exempt, can opt into accepting the Section Eight voucher.

Andrea Rice [00:03:30] Ok, I think that's an important point that you make. That they can opt-in, they don't have to be exempt if they do meet the requirement.

Gladys Fain [00:03:39] Correct.

Andrea Rice [00:03:41] Alright, and you also mentioned the declaration of ownership interest form, which I do want to talk about that too, because I think that was an important component, like you said, of source of funds. You know, PMAC created a declaration of ownership interest form to help ensure compliance with the source of funds requirement. And Craig, I'll direct this to you. What kind of feedback can you provide when it comes to declaration of owner ownership interest and the form and how it's being used?

Craig Wool [00:04:10] Well, we use it. We even track if we received them back from the landlord in our software on top of the requirements in the fair housing law change. There's been two places currently in Landlord Tenant Act, where the same criteria is being used to determine what you what kind of a late notice you have to send if you own four or more houses. If you own more than four, you have to opt. You have to propose a payment plan in the late notice. If you have less than four, then you do not. That runs through July one of this year. And then at that point, it'll drop off to a five-day notice like it used to be. They're probably going over all this stuff in Richmond right now, but it should fall back to a five-day material noncompliance notice rather than a 14 days now. Also, there's a component of when you're if you don't rent to a prospective tenant and you own more than four properties, you have to do some additional work on notifying the tenant to ensure that you're not discriminating against them for lack of a better word for what happened to them during COVID. And that's going to be with us until 2028, according to this. And then they're going to go to something else and it will be eliminated. I don't know if any of that will last. But there are three different law sections that will require you to know how many properties a particular owner has. And if they don't return the form, you need to come up with a strategy of how to handle that as well. But it is something that we do on a regular basis. We track it through our computer system. Otherwise, you run afoul of law or risk it anyway.

Andrea Rice [00:06:00] Right. So, anyone who has not really taken a good look at the declaration of ownership interest form, I would suggest you go to the REIN library and check that out. Read it, read it over. Do you find that most people are exempt that you're dealing with or they're not?

Craig Wool [00:06:19] Well, [inaudible] the hard part about it is we may manage three properties for them, but they may have nine in northern Virginia, and if they don't send the form back I don't know what they're doing, but I put them in a category that they own more than four since they're not responding. I've got to have some sort of defense mechanism to keep me out of harm's way of fair housing and those kinds of things. Most of ours are ones and twos. They own one or two. But until I get the form back, you have to treat them differently. Or at least that's our theory here.

Andrea Rice [00:06:51] Err on the side of caution, right?

Craig Wool [00:06:53] Correct.

Andrea Rice [00:06:54] And then lastly, I wanted to talk about the SCRA waiver. REIN removed the SCRA waiver from its library of forms in July of last year. And Nick, I'll direct this to you. Have you seen any impact in the field as a result of removing that waiver?

Nick Chandley [00:07:13] Any particular impact? No, I think as property managers, we you know in our day to day business the I guess the SCRA waiver became problematic from a certain perspective because it became so commonplace that service members were being asked more often than not to waive very specific sections of the SCRA, which is permissible under that law in order to rent property. There were some things, such as a 90-day stay, you know, kind of an open-ended thing for retirement orders and that kind of thing that we were just trying to address. And in conjunction with that, there's a section of the Virginia Residential Landlord Tenant Act that also addresses how you treat military folks who are getting retirement orders, and those weren't really in agreement with each other in all aspects. So we were trying to sort of find the middle ground on the one hand and on the other hand, trying to plug what we perceived as being some fairly large loopholes in the federal law. But once military status was incorporated in the Virginia Fair Housing Law, then it really gets troubling to place any sort of requirement on somebody who now falls into a protected class. And so we had to go back and look at the SCRA waiver and say, look, you know, we're kind of making servicemembers jump through hoops here in order to rent property that could be perceived as being exclusionary to some extent. And so the decision was made that the our ability to rent to service members, really, we could not make that contingent on their signing of a waiver. So the waiver basically went away. There are a couple of things that if you know in the more recent version of the leases that will address certain things like do you currently have transfer orders or the things that we're interested in with service members. But in terms of any kind of a waiver of their rights under SCRA, that's basically gone away. And the Virginia Residential Landlord Tenant Act now is really specific about the fact that you cannot ask a service member to waive any of their rights. The only point at which you could potentially do that is the point at which there is a conflict and some sort of a concession is made. Or in order to attain some sort of resolution with the tenant, you would then address what they need to waive or what you need them to waive, and there'd be a little back and forth go on. So the waiver thing is effectively dead.

Andrea Rice [00:09:57] Good. Thanks for that information, and again, if you guys missed that episode last year, we had attorney Brandon Alred discuss the legal aspects of that change with Virginia code. So go back and take a listen to that. And that's a lot of great information. And lastly, I just wanted to, you know, check in with all of you because the last time we touched on any of these topics, it was when these changes were first implemented. And I think it's always nice to go back and see after it's been a little bit of time. How these changes play out. And this next question is really to all of you. So whoever wants to go first or whoever has anything to add, what changes or trends have you seen or do you expect to see in property management this year or in the next few years?

Gladys Fain [00:10:52] Well, that's a heavy question. But, you know, we're seeing it now where there's low inventory, rents going up. The demand is high. Multiple offers for rental properties, which was not the norm, is now the norm and may continue if the market continues to be this way. You know, unfortunately, my crystal ball is broken, so I can't predict the future. But I think hopefully as the sales market stabilizes and investors come in to play a little bit more and buy properties that we can help them manage throughout the years and have the housing available for people. People are always going to need housing. So we're here to service the public in general, you know, to help them manage the properties and to help find them a home to live in for at least a year, hopefully, and move on that way. And I know it's difficult nowadays. It's a challenge for people trying to find a home, whether renting or purchasing.

Andrea Rice [00:12:11] Yeah, for sure.

Craig Wool [00:12:12] It is extremely difficult. One of the things that I've never experienced before is if you give notice to a tenant, they don't leave. And we're having to fight him out in court just to get him to move so the guy can sell his house or whatever he wants to do to it. But I've never we've had multiple eight or 10 cases up in the last couple of months where we were given proper notice to vacate and the people had nowhere to go. They couldn't find a property. So difficult.

Nick Chandley [00:12:42] It's always troubling when you have more demand than supply and you have people who are probably well qualified to rent who get beat out. Of course, that's nothing new in the sales market. You know, the sales market's been red hot and people get a ridiculous number of offers on a house and all of that kind of stuff. But in our world, there generally aren't more than maybe two or three folks at one time wanting a rental property. And the way it's been because of diminished supply for us is you'll get 15, 20 folks show up within a 24 hour period and want to rent a unit. And, you know, the renting process, on the customer side. I haven't been a reader in quite some years, but you know, the renting process, if you kind of flip that around and put yourself in their shoes, it's a very tedious, kind of arduous, uncertain thing to do. Sometimes when their paperwork comes to us, it can take a few days to, you know, for us to understand who we're dealing with and get our screening done and all that kind of stuff. I mean, it's a very, very tense time for these folks. So you have to try to be sensitive to that. But of course, at the same time, you're not building the houses, so you've only got five houses and 25 people want them, 20 people are going to be unhappy. The other thing that I think may be coming in the future to some extent, mostly because of the escalation of rents due to the supply-demand lopsided situation we've got right now is you keep reading about the kind of the investment groups wanting to buy blocks of single-family homes. I was reading something yesterday about Disney apparently is going to start building communities and it's not going to be, you know, it's a small world or something. It's not going to be a Disney thing, but they're actually doing planned communities where they're going to have certain sections of like 55 and older housing and various things. So housing is once again becoming something that investment groups are looking at, mostly because the rents have escalated. But on the other side of that, you know wages have not gone up dramatically. So home prices and rents, particularly for any of us who are old enough to have grown children, you know, it's tough for a young person in their mid-20s to go out here on the market and rent by themselves because you've got to be making $50,000-$60,000 a year to qualify for the average rent. Most 25-year-olds aren't doing that. So, you know, there are some challenges ahead, as Gladys said when the sales market sort of comes back into balance. You know, it tends to kind of swing opposite when sales are great, rentals are not so great. When rentals are terrific, you know, sales aren't so great. We like things to have a little more equilibrium to them, and I think that'll probably come over the next 12 or 18 months. It's just that some of the things that have been done housing wise and like the things that we've been discussing earlier, are going to linger well into the future. And some of them, frankly, may never go away. And it may be that we have to relax qualifications or that sort of thing in order to make sure that we can provide enough housing out here to folks who we might not have taken a look at six or eight or 10 years ago.

Andrea Rice [00:16:05] It's really kind of unpredictable, unprecedented time. And unfortunately, Gladys' crystal ball is not working. So I mean, really, I was hoping I was hoping.

Gladys Fain [00:16:16] Yeah. Property management is not for the weak.

Andrea Rice [00:16:21] Not for the faint of heart, right? But, you know, as uncertain and crazy as it can be. It always really helps to talk to people like you who, you know, you're experts in what you do and you're really plugged in. And you know, I really appreciate you all being here today to share your insights and your expertise with us. So, thank you, Gladys, Nick, Craig I really appreciate it. I want to thank all of you out there who are listening. And for those of you who may have a suggestion for our Property Managers Advisory Committee, please submit those to PMAC@reininccom and we will make sure that your suggestion gets on an upcoming meeting agenda. Thank you and have a great rest of your day.

VO [00:17:08] You've been listening to REINCheck with Andrea Rice. Stay in the know from those who know. Delivered straight from the source, REIN MLS.