Page 18AA —
COLORADO REAL ESTATE JOURNAL
— December 16, 2015-January 5, 2016
D
o you remember the
first time you signed
a lease? Most first-
time renters are young and
inexperienced in the respon-
sibilities of committing and
understanding what it means
to put their name on a lease. As
the property manager, you can
better prepare these inexperi-
enced renters to make it suc-
cessful for both you, the land-
lord, and for them, the tenants,
so that everyone is happy and
successful. It would be wise to
develop a process to guide and
explain the rental process to
these new renters.
Lease signing.
Discuss with
renters the legal importance of
the lease. Review the monetary
commitment they are signing
and explain that a security
deposit is required upon sign-
ing the lease; also, explain that
the security deposit does not
cover the first month’s rent.
Discuss the
amount of
each month’s
rental pay-
ment
and
that a late
payment will
be assessed if
late.
Co-signer.
Make sure
they under-
stand a co-
signer may
be required
to guarantee the lease, and that
a background and credit check
will be completed on the renter
and the co-signer.
Checklist.
When leasing, pro-
vide a checklist to assist ten-
ants with other services and
commitments that they must
initiate. This helps minimize
problems on move-in day. This
checklist can include a list of
services that must be started
in their name by move in.
Examples include local phone
numbers and websites of the
area’s utility company, cable
and Internet options, water,
sewer and trash. It also is help-
ful to give the tenants the date
by which the services must
be moved to their name. And
warn them that they might
have to pay security deposits
to start a service in their name.
Move-in day.
Walk through
the property with an inspec-
tion checklist that the tenant
and the property manager fill
out. Have the tenants sign the
inspection checklist and inform
them that the property must
be left in the same condition
as reported and agreed to on
the inspection form. This is a
good time to tell them that the
security deposit will be used to
cover any expenses for dam-
ages to the property, including
nail holes and stains on the car-
pet. Also, this is the best time to
explain to the first-time tenant
that they are responsible for
changing light bulbs, cleaning
and unclogging toilets, shovel-
ing the sidewalks in winter, etc.
As first-time tenants they prob-
ably have not thought of this.
You do not want tenants to call
you continuously for items that
are their responsibility.
Also explain under which
circumstances they should
call you, such as water or roof
leaks, electrical outlet issues or
kitchen appliances not work-
ing. Explain who is respon-
sible for what at move-in so
it is clear. Those renting for
the first time are inexperienced
and, as the property manager,
you can assist, guide and teach
to ensure that all parties are
successful.
s
A
s a society, we often
look to early adopt-
ers to pave the path
of comfort until the masses
embrace a new paradigm shift.
For example, think back nearly
six years ago when the first
iPad was released. The crit-
ics questioned its usefulness,
when a phone and a laptop had
the same capabilities. Fast for-
ward to today, the tablets func-
tion as everything from mobile
personal computers to DJ mix-
ing stations to cash registers.
Asimilar trajectory surrounds
the concept of socially impact-
ful businesses, like Toms shoes.
Started in 2006 as a pioneer of a
new business model, the “one
for one,” a buying-and-giving
concept, heightened social
responsibility and translated
across several businesses.
Finally, it seems multifamily
development is on the brink of
a paradigm shift itself – slowly
moving toward prioritizing
true sustainability, seeking less
adversely impactful ways of
building, and integrating tech-
nology that supports user inter-
action and energy efficiency.
As the population of Denver,
as well as other flourishing cit-
ies, continues to grow, we need
to focus on ways to develop
smarter, denser developments
that provide shared ameni-
ties, creative access to outdoor
space and cater to the sectors
of the population that need less
space and more convenience at
an affordable price.
Green building is certainly a
manifestation of this change.
While
the
smallest of
these dens-
er, simpler
spaces may
not
meet
the
needs
of a fam-
ily of four,
the
devel-
o p m e n t s
increasingly
are meeting
the needs of
millennials,
prof ess i on-
als without
kids and the
empty-nester
population.
One of the greatest challenges
for developers is embracing the
trend of smarter, denser devel-
opments while still finding a
way to make the pro forma
work, all within the boundar-
ies of zoning and use regu-
lations, parking requirements,
density limitations and poten-
tial neighborhood pushback.
Part of the job of developers
is to work with and educate
the communities to the benefits
that smarter development can
provide. While the inevitability
may be more development, we
can collectively work together
to promote “better” develop-
ment.
There are several trends that
are moving the industry toward
better development, including:
• Building smarter, not bigger
– Higher density, thoughtful
use of space (built-in storage,
large windows, high ceilings),
shared amenities, economies
of scale in development and
energy-efficiency prioritiza-
tion; and
• Integration of technology
– Not just for high-end “smart
homes,” but rethinking the
potential of technology in real
estate at all levels as a means
to reduce operating expenses,
make properties more acces-
sible and affordable, and have
an improved impact on the
environment.
The coming years are an
exciting time for multifamily
real estate. We will see consum-
ers value a different standard of
development: one that they feel
as good about actively being
part of as they do supporting
the developers who embrace
the paradigm shift.
s
O
n April 5, 2012, Presi-
dent Obama signed
the Jumpstart Our
Business Startups Act. This act
made changes to securities law
and helped to modernize the way
startups were treated. One of the
biggest changes was Title III of
the JOBS Act, which allowed for
the legalization of investment
crowdfunding. In 2013, the Secu-
rities and Exchange Commission
changed rule 506 of Regulation D
to allow for the general solicita-
tion of investors.
Basically, before the change,
mass marketing was not allowed.
Brokers had to rely onpre-existing
relationships. Since those changes,
real estate investment crowdfund-
ing opportunities started.
However, to invest in these
opportunities, investors must be
certified as accredited investors.
The SEC defines an accredited
investor as someone who meets
one of two
requirements.
He
must
either have
a net worth
of at least $1
million, not
counting his
primary resi-
dence, or have
an
income
of $200,000
a year, for
the past two
years. Com-
panies such as
Fundrise and
Realty Mogul
are providing
these invest-
ments to accredited investors.
There are a number of changes
for investors as well as the syndi-
cations as a result of crowdfund-
ing. The first is lower minimum
investments. Previously, commer-
cial real estate syndications typi-
cally had a minimum investment
of $25,000 due to the difficulty of
securing a high number of inves-
tors. Most real estate crowdfund-
ing investments have minimums
of $5,000. This will change the
way investors can diversify their
funds. While real estate invest-
ment trusts provide a vast diver-
sification, crowdfunding provides
diversification while still invest-
ing in specific properties. With
the current minimums, investors
can choose up to five times more
properties with the same invest-
ment than previous real estate
syndications.
The second change is the speed
at which investment can occur.
Before the ability to mass adver-
tise, the time it took to raise capi-
tal was dramatically longer. Now
it is much quicker. For example,
the last two Fundrise investments
that each raised a little over $1
million sold out in 49minutes and
two hours, respectively.
The ability to raise money
quickly makes the investment
in property development more
attractive. For instance, one of
Fundrise’s completed invest-
ments is a ground-up, mixed-use
Denver apartment development
at 35th and Larimer streets.
The final major change is that
people can invest in income-
producing properties that were
previously out of their invest-
ment range. While there always
have been real estate syndications
and REITs, the addition of real
estate crowdfunding will allow
for more investment. The invest-
ment in commercial real estate
is fairly cost-prohibitive even for
accredited investors. Being able
to pool money and gain investors
who previously have not invested
should only increase the value of
commercial real estate.
s
Connor Corrigan
Student, University of
Denver
Lauren DeBell
Student, University
of Denver Master’s
Program. DeBell is a
project manager for
iUnit and previously
was a commercial
real estate broker.
Ethan Draper
Senior, University of
Denver. Draper works
in the bankruptcy
administration
industry at Upshot
Services and
previously worked at
the BLM and the SEC.
The following articles were
submittedbyUniversity of Den-
ver undergraduate and gradu-
ate students of the Franklin L.
Burns School of Real Estate and
Construction Management. DU
offers undergraduate as well as
graduate degrees in real estate
and the built environment.
The curriculum at the under-
graduate level first grounds
all students in a full spectrum
of business fundamentals and
provides a solid introduction to
all aspects of the built environ-
ment – real estate, construction
management and facility man-
agement. Once understanding
the integrated nature of the
industry, students choose from
one of three concentrations: real
estate, property development
or construction project manage-
ment.
At the graduate level, stu-
dents can choose from one of
three tracks: real estate, prop-
erty development or integrat-
ed project delivery. The Burns
School, currently in its 76th
year, recognizes the need to
integrate the “business side”
and the “build side” of the
real estate and construction
industries.
s
As the property
manager, you
can better
prepare these
inexperienced
renters to make
it successful for
both you, the
landlord, and for
them, the tenants,
so that everyone
is happy and
successful.
Most real
estate
crowdfunding
investments
have minimums
of $5,000.
This will
change the
way investors
can diversify
their funds.
