About steve@bayintegratedmarketing.com

Steve Ulrich is a principal at Bay Integrated Marketing: www.bayintegratedmarketing.com. I have been working with people to maximize their use of social media and internet publishing, optimize their websites to turn prospects into customers, and establish their personal brand on the internet. We are also working with Eco Distribution, Inc. to find and implement practical solutions to help clean up our air and the environment. Eco Distribution, Inc. is a California based Distributor and Representative Firm dealing in environmentally friendly and Green solutions. We have leveraged 30 years experience in responsible construction management to provide solutions for some of the most impactful challenges facing our air, water, and land. We have an oil/hydrocarbon remediation system that is effective on everything from simple oil stains on a driveway, to complex oil disasters in the ocean. My approach to social media and internet marketing is simple. Instead of spending a fortune “buying” keywords and ads that don’t return anything we concentrate on three areas: I CAN GET YOU FOUND ON LINKEDIN - NUMBER ONE, PAGE ONE.

Legislature passes housing package before close of 2017 session

The California Legislature has passed a package of CAA-endorsed and sponsored bills intended to help solve the state’s housing crisis.

Gov. Jerry Brown will have until Oct. 15 to sign or veto the bills.

The legislative package seeks to remove regulatory hurdles to residential development — a key to fixing the state’s jobs-to-housing imbalance.

The package also seeks ongoing funding sources for affordable housing programs, including a bond measure and fee on certain real estate transactions.

“Today we took a step toward addressing a housing crisis that has been plaguing California for years,” Assembly Speaker Anthony Rendon, D-Lakewood, said Thursday, as reported in this San Jose Mercury News story.  “The package of bills we approved today addresses funding, project streamlining, stricter enforcement, and real accountability – all the affordable housing elements necessary to help more Californians pay the rent or buy a house.”

Bills that increase California’s housing supply can help ease rental prices and quell calls for onerous policies such as rent control.

Brief summaries of key housing bills approved by the Legislature:

SB 35 by Sen. Scott Wiener, D-San Francisco, would create a streamlined approval process for housing in cities that have failed to meet their housing goals. Streamlined projects would be approved “by right,” meaning they would move forward without a drawn-out review process.

SB 2 by Sen. Toni Atkins, D-San Diego, would establish a permanent funding source for affordable housing through a fee of $75 to $225 on recorded documents. The bill, however, exempts  residential real-estate sales. The fees would likely generate between $229 million and $258 million annually.

SB 3 by Sen. Jim Beall, D-San Jose, would place a $4 billion statewide affordable housing bond before voters in the November 2018 election.

SB 540 by Richard Roth, D-Riverside, would streamline the approval process to spur housing construction by having cities identify where housing needs to be built and adopting specific, up-front plans and conducting all necessary environmental reviews and public engagement.

AB 678 by Assemblyman Raul Bocanegra, sponsored by CAA, and a companion bill SB 167 by Sen. Nancy Skinner, D-Berkeley, would financially penalize local governments that deny housing permits in violation of state law.

AB 352 by Assemblyman Miguel Santiago, D-Los Angeles, is a CAA sponsored bill to boost construction of micro apartments. It would help prevent local governments from establishing roadblocks to “efficiency dwelling units,” which usually measure 220 square feet or less. This bill won final approval in the Legislature earlier this month and now awaits the governor’s signature.

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There Will Be More Retail Stores Opening Than Closing In 2017

You read the headline right, there are more retail stores opening this year than there are stores closing. You may say, but when I walk down almost any shopping street, I see so many vacancies where there were previously tenants, so… how can there be more openings than closings?

new report out by IHL Group answers the question. The kind of store that’s opening now is different.  If you look at the chart below, you’ll see that the most significant closings are due primarily to the Radio Shack bankruptcy and the closure of a lot of fashion stores. The fashion-related vacancies you’re seeing are dominating the list of store closures. You could blame technology for that, but that wouldn’t be entirely fair. It’s more fair to say that technology accelerated the decline of retailers who have not been in touch with what their consumers wanted as much as their competitors. Technology helps consumers see more of what’s available and that makes the comparison between brands so much more stark and apparent.

Major Store Closings in 2017

What’s Opening Now

Here’s a chart listing the retailers that are opening more stores than any other.

Major Store Openings

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One of the things you’ll see on the chart above is that the list of stores opening this year is dominated by discount and convenience stores. (You might not recognize some of the names. Couche-Tard is the corporate owner of Circle K stores, and Aldi and Lidl are large European grocery chains that are expanding in the US.)

The data highlight changing lifestyles and tastes. Fashion is less important in physical retail stores. It’s being shopped for more and more online and it’s becoming less of a focus for younger consumers who are more willing to spend money on experiences than on fashion products.

What’s the net difference in stores in total? The chart below tells the story (they are calling mass merchants what I call discounters like Dollar General and Dollar Tree). The discounters and convenience store openings are opening in a big way and the fashion retailers are closing almost as fast.

Net Store Openings

The reason why you see so many vacancies even though more stores are opening than closing is that the footprint and locations of the stores being closed aren’t suitable for the stores being opened. The old stores’ formats can’t be transformed and their locations don’t work for the new stores that are opening. Hence, more vacancies for you to see on major shopping streets. (Here’s an article I previously wrote about what will happen to the retail spaces that are vacant now.)

Restaurants

Of all the experiences that consumers are starting to prefer over purchases of things, food is always at the top of list. It’s one of the few things that applies to everyone so the market for restaurants is enormous. Ergo, any look at retail locations opening and closing should also be looking at what restaurant doors are opening and closing too. Here are the restaurant brands with the most store openings:

Largest number of restaurant openings

These are the restaurant brands that are having the most store closings:

Largest number of restaurant closings

At first glance, it’s hard to see trends in these store opening and closing numbers. For example, why is Starbucks closing stores and Dunkin Donuts is opening? Why is Pizza Hut closing stores and Noble Romans (also pizza) opening more stores than anyone else?

I had a conversation with my trend-seeing friend Irma Zandl about it. Zandl says “Dunkin Donuts, which is rebranding to just ‘Dunkin,’ has impressed me since Nigel Travis got on board as CEO in 2009. He really gets consumers. Their impending rebrand that drops the ‘Donuts’ name, suggests they realize how trendy donuts have become and they don’t want to be caught up in the donut backlash.” About Starbucks, Zandl says they are “at a tipping point. There are so many other, better, coffee places…hundreds of local places…” She adds, “as an aside, most of the people who still go to Starbucks are very corporate and Howard Schultz’s tirades against corporate America don’t help Starbucks’ cause.”

The big driver of these numbers according to Zandl is convenience. Noble Romans, the pizza brand opening more stores than any other restaurant business, is “all about expanding licensing and franchising into grocery and convenience stores… it’s all about the food and convenience these days, not so much groceries of cigarettes and definitely not the gas.”

Greg Buzek, President of IHL Group that wrote the report, says there are a few reasons for what looks like a disparity in the trends that the numbers reflect:

Those explanations are good and there’s more.  Burger King and McDonald’s are convenient, low-cost options whose store count is declining. That’s telling us that consumers want low price and convenience but they also want newness, they’re tired of many long-established brands. In addition, casual restaurant concepts are challenged by newer brands and fresher environments that give consumers the feeling they’re new and the next big thing. Hence the decline in store numbers for Applebee’sRuby TuesdayLone Star Steakhouseand others.

The Takeaway

Consumers haven’t gone into hiding and they’re not spending less. They’re spending more and there are more new stores — but tastes have changed. One of the most important things about these changes is that they are happening faster than ever before. There’s lots of reasons for that and plenty to debate about it but there’s no way to avoid the constant adaptation that’s now required.  Organizations now need to be able to process new ideas at a rate that’s faster and more efficient than ever before. If you’re a legacy retailer of any kind, it’s hard to change quickly enough and that creates an opening for more nimble competitors. It’s not enough just to have something new, it has to keep evolving. That’s a challenge both for younger companies as well as the established players and it will be for the foreseeable future.

Preventing Cyber Attacks, Part 2: How The Board Can Protect HOA Data


Cyber security is not something that your homeowners association (HOA) can afford to take lightly. A constant flood of cyber attacks hits businesses, governments and individuals every day, and many of them have affected Californians.

In May 2017, one such attack shut down the largest terminal in the Port of Los Angeles. In 2016, ransomware prevented a number of California hospitals from accessing important information, with hackers demanding money to unlock the data. Hackers also disrupted the San Francisco Muni system that same year. And according to cyber security experts, the severity of these attacks is only going to get worse.

To tackle the growing problem of cyber crime, the California Cybersecurity Task Force was created as a statewide partnership in 2013. A few years later, the California Cybersecurity Integration Center was created to improve coordination of information and help reduce the number and severity of incidents. In addition, representatives from all levels of California government attend the Cybersecurity Symposium each year to share their concerns and get the latest information.

Clearly, the state of California takes cyber security very seriously – and so should your HOA’s board of directors. Keeping sensitive information safe is part of your fiduciary duty to the homeowners in your community. But how does a board made up of volunteers address this issue?

In the first article in our two-part series on cyber security, we discussed how homeowners could do their part to prevent cyber attacks. In part two, we examine the steps that your board of directors can take to protect HOA information.

The Increase of Rental Property in Community Associations (HOAs) – The Subscription Economy

Subscription Economy Driving Increased Rental Property in Community Associations and HOAs

The increase of rental property throughout community associations and HOA’s is on the rise, there’s no doubt. And just because you’re a “tenant”, doesn’t necessarily mean you don’t care.

When is the last time you bought a DVD? How about the last time you bought a CD? The preference of buying and selling goods and services on a subscription model, rather than a one-time purchase, is becoming mainstream and probably sits somewhere between the early and late majority on the adoption curve – I’d argue it’s still early.

Subscription-Economy-Neighborhoody-Blog-Post

What is the Subscription Economy?

Subscription models have been around for a really long time. The surge of the subscription model is trending and becoming preference for many – both business and consumer. Think trade unions, magazines, Blockbuster, and contracted services as early adopters. Today we have Netflix, Amazon, and even Walmart pursuing the subscription business model. What’s so great about a subscription model anyways? You could argue it’s two fold:

  • It’s better for the business
    • Steady cash flow
    • Increased focus on long-term value
    • Predictable revenue
    • Reduced cost in customer acquisition
    • and much more…
  • It’s better for the customer
    • Flexibility
    • Better support and service
    • Easier to budget
    • Less upfront commitment

Although I don’t believe the subscription economy is the only contributing factor to the increase of rental properties throughout Community Associations and HOA’s, it may play a large part in why we might be seeing an increase in tenants, especially as the newest generations begin living on their own and others realize they don’t want the long-term commitment anymore.

The American Dream

In the United States, The American Dream is/was built on a foundation of owning your own home – it made sense when the world was less accessible globally, real estate was cheap, and careers were spent at a single place of employment. In my opinion, that’s no longer good supporting evidence. I have friends, under 30, that have had 2-3 professional careers already. Real estate is a 30 year “investment” and I can be anywhere in the world in less than 24 hours.

Times have changed and I believe purchasing and or owning a home is becoming a downward trend. It’s not even a generational thing, it’s a cultural shift. People are realizing that owning a home doesn’t really pan out to be a good investment if you want to be agile, work for multiple companies, and enjoy the freedom of less commitment. Granted, if you plan on staying put and you buy at the right time, it’s a great investment. The argument can go both ways, dependent on your future plans and commitment level.

What actually drives the increase in rental property throughout the community association? I’d be interested in hearing other’s thoughts on this topic.

Some other factors I believe contribute to the increase in rental property within HOA’s and Community Associations:

  • Access and speed to information
  • Real estate downturn during youth (2008 R.E. crisis)
  • Increased speed/pace of life
  • Career duration and frequency
  • Institutional investors purchasing within common interest developments

The student housing sector is hotter than ever—here’s what you should know

The number of people enrolled in higher-education programs—20.5 million at the start of the current school year—explains much about investor interest in the student housing niche. Find out who’s buying and who’s lending now.

Of all the statistics tied to education, one number does much to explain why lenders and investors look favorably on communities geared to college students: 20.5 million. That’s how many people attended institutions of higher learning last fall. What’s more, enrollment will continue to rise well into the next decade, according to the National Center for Education Statistics.

“What really attracts (investors) to our biz is the stability of cash flows,” said EdR Chairman & CEO Randy Churchey during a panel discussion at the 2016 NMHC Student Housing Conference and Exposition last fall. “When you remind investors that when the economy goes into a recession, enrollments go up—a light goes on in their heads.”

Financing remains in high demand on multiple fronts, driven in large measure by record deal volume. Transaction levels hit a new high for the sixth consecutive year in 2016: $9.8 billion, more than double the previous year’s total and three times 2014’s volume, CBRE’s National Student Housing Group reports. Even taking into consideration $3.3 billion worth of large-scale portfolio acquisitions, 2016 sales outpaced 2015 by 16 percent.

Topping the list of student housing lenders last year were the government-sponsored enterprises, which completed $4.2 billion in student housing loan purchases between them. That breaks down to $2.6 billion for Fannie Mae and $1.6 billion for Freddie Mac, all of it for acquisition or refinancing, and represents a 27 percent year-over-year increase.

The GSEs’ vehicles for the sector are their DUS Student Housing Loan Programs, which offer permanent fixed-rate and floating-rate products starting at $3 million, typically for five- to 15-year balloon terms, or 20 to 30 years’ full amortization. Maximum loan-to-value is 75 percent of the asset’s appraised value.

Life companies were also an important source of capital for student housing deals in 2016, including some for construction, though they tend to prefer Class A assets in major markets. Also, many life loans are at lower loan-to-values, usually 65 percent or less. Trailing behind were CMBS and commercial banks.

INTRICATE STACKS

As student housing matures as an asset category, sophisticated players are pursuing larger transactions that require intricate capital stacks. “When I started out, smaller investors were the only ones interested in student housing,” said Brendan Coleman, a managing director for Walker & Dunlop. “That’s changed. Institutional investors are now very interested in the property type, and they’re more sophisticated borrowers, so the deals tend to be a lot more complex.”

A case in point is the financing for two student housing portfolios acquired by Scion Student Communities LLC, a joint venture of The Scion Group LLC, the Chicago-based owner-operator; GIC, which manages foreign investments for the government of Singapore; and the Canada Pension Plan Investment Board. Both portfolios were financed through Fannie Mae facilities arranged by Coleman and Will Baker, a Walker & Dunlop colleague.

For the first acquisition, which involved six student housing assets, Walker & Dunlop drew on the expansion and borrow-up features of an existing Fannie Mae credit facility to achieve $233 million in proceeds. A second Fannie Mae facility of $416 million was structured for the acquisition of 11 assets. That facility offers fixed- and floating-rate components with varying maturities. Many of the properties qualified for the GSE’s Green Certification Program, which discounts interest rates for properties that have been certified sustainable by a recognized organization.

The lion’s share of student housing acquisition deals tend to require somewhat less complex structures. In February, for example, HFF secured $45.4 million in financing for St. Croix, a 540-unit apartment community near the University of South Florida’s main campus in Tampa. HFF’s client, The RADCO Cos., obtained a seven-year, floating-rate loan through Freddie Mac’s Green Advantage Program.

REFI FLEXIBILITY

Refinancing is another source of considerable demand in the student housing subsector, and those deals often require a touch of creativity. Such was the case when Capstone Capital negotiated a loan for The Boundary at West End in Greenville, N.C., which provides 550 beds for East Carolina University students. The sponsor, Taft Family Offices, sought at least $40 million in order to take out $34.4 million worth of existing debt plus its development equity.

To fulfill that wish list, Capstone Capital negotiated 14 waivers to standard Fannie Mae underwriting. The upshot: a $42 million loan with 10 years of fixed-rate financing at 4.21 percent, including two years of interest-only, followed by a 30-year amortization. Taft Family Offices took $7.4 million in proceeds to fund two new developments.

Development financing, too, is in demand, as attested by the 15,400 units that the National Center for Education Statistics estimates were in the pipeline at the end of 2016. Creative structures are emerging to meet these needs. Blinn College, a 134-year-old county institution in eastern Texas, is relying on a public-private partnership to expand housing at its flagship campus in Brenham. Servitas LLC is developing the 465-bed facility, which will meet the growing needs of a resident population that already numbers more than 1,300, the most of any community college in Texas.

At the heart of the plan is a partnership with National Campus and Community Development Corp., an Austin-based nonprofit that specializes in structuring public-private ventures. A nonprofit entity, National Campus and Community Development (NCCD)-Blinn College Properties LLC, would recieve a loan from the U.S. Department of Agriculture. The college would then lease the facility from the nonprofit for 40 years. When NCCD-Blinn College Properties repays the loan, ownership of the facility would revert to the college.

One hitch is that USDA financing is on hold, which has pushed back completion a year to fall 2018. To move the project forward, Blinn’s trustees authorized $2 million in interim financing, which will be repaid from the proceeds of the USDA loan, or if necessary, from the proceeds of bonds issued by the nonprofit New Hope Cultural Education Facilities Finance Corp. If the plan does pan out, it could serve as a model for cash-strapped schools with a need for housing.

 

Source: multihousingnews.com

Preventing Cyber Attacks, Part 1: How Residents Can Protect Your HOA


Ignorance is not bliss, especially when it means potentially leaving your homeowners association (HOA) at risk of a cyber attack. And that’s exactly what you’re doing if you don’t recognize that your HOA is as much of a target as any other small business.

Small businesses, including those in California, have become more attractive to cyber criminals, as a variety of sources indicate. For example, the February 2016 California Data Breach Report notes that small businesses accounted for 15 percent of the data breaches reported to the California Attorney General from 2012 through 2015. California, which was the first state to mandate data breach reporting, continues to tweak its legislation, with the most recent change likely to impact its future analyses. As of 2017, encrypted data that is breached will be subject to the same notification requirements as unencrypted data.

Another source that points to greater vulnerability among small businesses is Malware Trends for Small and Medium Businesses Q1 2017. It reports that California small- and medium-sized businesses experienced an increase of nearly 612 percent in spyware incidents from Q1 of 2016 to Q1 of 2017, ranking the state fifth in the country. In addition, an FBI report reveals that Californians lost more money to cyber crime in 2015 than any other state – more than $255 million.

Unlike other small businesses, your HOA is probably not run by business professionals and is even less likely to have technology experts among its leadership. So what can you do to keep your data safe?

In our two-part series, we share some tips that your association can apply to protect your community from cyber attacks. Read the first article to learn how residents can play a role in your HOA’s cyber security.

Rental Inspections: What Landlords Need To Know

rental inspectionPosted on Sept 5, 2017

If you are only checking the state of your rental unit when your current tenants move out, you risk letting a problem go unchecked until it could cause thousands of dollars to fix. Responsible landlords and property owners should strive to check the condition of their rentals quarterly. Not only can this limit property damage or misuse of your rental property, it can help you plan for upkeep and maintenance. Learn why you should switch to quarterly inspections and what to look for during a property check.

Why Do a Quarterly Rental Inspection?

Often, property damage occurs cumulatively, for instance when a renter’s pet scratches at the door or when a tenant starts to hoard possessions. By the time you get around to a move-out inspection, the damage is already done. The carpet is stained, the rental is filthy or the door is scratched beyond repair. The question becomes, how much will your earnings suffer as a result? What’s more, how long will your rental unit sit vacant while repairs are made?

Renters often treat your property better when they know you’ll be checking in regularly. Why would renters sell drugs or throw big benders when they know you’re keeping an eye on the property?

It’s a good idea to develop a rental inspection checklist and share this with your tenants. This brings your renters on board with keeping your property safe while setting them up for success.

Rental Inspection Tips for Landlords

Your tenants have the right to enjoy their apartment without unauthorized visits from you. So you are in compliance with local laws, give your tenants a 24-plus hour notice you’ll be doing inspections and keeping your visits brief. Share the rental inspection checklist ahead of time, so they know where you’ll be.

While your first inspection may take longer, it should not take more than 20-30 minutes to inspect your rental once you’re familiar with the process. Don’t forget to examine the outside of the unit — gutters, roofs, yards, basements, and porches or decks need your seasonal attention, too.

Along with checking for damage to the apartment, these visits are a great opportunity to perform light maintenance your unit requires. You may wish to replace air filters in the HVAC system, check smoke detectors, or install or remove storm windows during these visits. Lengthier projects can be completed at a follow-up date, or you may wish to hire someone to perform the needed services.

If you find a problem, take photos that illustrate the problem and write notes while everything is fresh in your mind. When you’re calm, discuss what happened and how to proceed. You may wish to give the renter a chance to fix the problem, or you may prefer to hire someone and bill him or her.

Get more advice on preparing for a rental inspection — including tips on what tools to bring with you for a quarterly inspection — from American Apartment Owners Association.

Disclaimer:The information provided herein is for advisory purposes only and AAOA takes no responsibility for its accuracy. AAOA recommends you consult with an attorney familiar with current federal, state and local laws.