Property Management

In recent years, the Biden administration has planned and pushed for greater regulation of the housing industry. For instance, in May 2022, the White House unveiled a Housing Supply Action Plan, with the goal of lowering costs for renters and closing the housing supply gap within five years. 

This was followed in January 2023 by a set of actions aimed at increasing renter protections, including the establishment of a blueprint for a Renters’ Bill of Rights. 

More recently, the Federal Trade Commission proposed a rule prohibiting junk fees in November, and HUD plans to impose a 10% cap on rent increases per year at some subsidized housing properties, according to The Washington Post. 

With so many pieces of legislation swirling around, the industry is going on the offense. For instance, the National Apartment Association is opposing expanded federal involvement in landlord-tenant affairs.

“We have been very actively engaged in federal regulatory advocacy in response to the White House blueprint for the Renters’ Bill of Rights,” Nicole Upano, assistant vice president of housing policy and regulatory affairs at the NAA, told Multifamily Dive.

There are also hundreds of state-level bills related to multifamily and rental housing in play across the country. The NAA’s State Legislative Tracker, which aggregates legislation related to particular topics at the state level, lists 213 active bills related to rent control across the country as of early April 2024, and hundreds more on a diverse range of housing-related topics. 

Of that number, 74 bills related to rent control were filed in the first quarter of 2024. As of April, some of the most high-profile examples include:

• Washington HB 2114, which would implement a 7% rent increase cap statewide. The bill was passed in the House, but stalled in the Senate and has been returned to the House.
• Pennsylvania SB 1095, which would limit rent increases to 10% per year or the increase in a given area’s median income, whichever is greater. The bill is currently in committee.
• A California ballot measure that would remove exemptions from the state’s existing rent control laws for single-family homes and multifamily units built after Feb. 1, 1995. This question will be decided during the November election.
• Colorado HB24-1259, which would prevent rent increases above a certain percentage for two years after the declaration of a disaster in a given area. If passed, this law would bypass the state’s rent control preemption. The bill passed the House and is currently in the Senate.

The sponsors of Colorado HB24-1259 say the bill is a direct response to the aftermath of the Marshall Fire in 2021, in which local rents skyrocketed after a large number of residents lost their homes, according to the Colorado Sun.

“When a community suffers from a disaster, they shouldn't be faced with landlords seeking to profit off their devastation,” said Colorado Rep. Mike Weissman in a release from the Colorado House Democrats. “We’re extending Colorado’s consumer protection laws to prevent unscrupulous landlords from taking advantage of victims of disasters during their time of need."

However, the NAA sees rent price gouging laws as de facto permanent rent control in areas where disasters are frequent. 

“There are 35 states that prohibit price gouging during a natural disaster or a declared emergency,” Upano said about Colorado HB24-1259. “And especially in places where natural disasters are happening annually or multiple times throughout the year, it's now another way for proponents to get rent control policies passed … it keeps folks in a perpetual state of control.”

Other rent control-related bills in play include potential legislation related to preemptions, which are favored by the NAA and are on the rise. These laws, on the books in 33 states, limit or prohibit municipalities within the state from passing or enforcing rent control laws. The latest of these is House Bill 545 in Idaho, which was signed by Gov. Brad Little in March 2024. A similar bill is in committee in West Virginia. 

“We’ve seen preemption laws double since [2023],” Upano said. “[Idaho’s law] also did preempt other types of legislation that are damaging, like… Boise's source of income mandate that's intended to to require housing providers to take Section 8. That bill also targeted the application fee limitation in Boise, which is $30.”

A focus on fees

Fees have become a hot topic not only at the federal level with the FTC proposal, but in state legislation as well, where over 60 bills related to fees are in play.

Virginia has two fee-related bills on Gov. Glenn Youngkin’s desk — HB 996, which would require landlords to provide fee information upfront to potential tenants, and HB 1519, which would prohibit electronic transaction fees of any kind and processing fees for rent or other tenancy-related payments. As of April 9, Gov. Youngkin has reviewed the bills and submitted reccomendations for amendments to the House. 

“We, of course, are very much supportive of disclosure and transparency of rental housing costs and fees or any other charges that a renter may experience throughout their tenancy,” Upano said. “But some of these proposals… just don’t align with what is actually happening out in the market.”

Other issues

Beyond fees and rent control, the NAA is also watching a number of bills related to resident screening and sources of income, particularly housing vouchers. These include Connecticut HB 5242, which would prohibit owners from considering an applicant’s felony record after a certain period of time, and Missouri HB 2385, which would prohibit municipalities from passing laws requiring property owners to accept certain sources of income.

“Something that we're notably seeing is an increase in scrutiny, not just legislatively, but legally, on what governments are seeing as abusive, or predatory practices by housing providers,” Upano said. 

On top of this, the NAA is also still working on its top federal priorities, including the YIMBY Act, the Choice in Affordable Housing Act and the Respect State Housing Laws Act. 

“Those first two we think are the best ways to address housing affordability challenges that are being experienced all across the country,” Upano said. “And we do agree with President Biden on the pro housing solutions that are coming out of the administration. So we're hopeful that does move forward.”

When it comes to keeping tenants happy, apartment owners and managers must first understand what makes them unhappy. 

Top pet peeves include a lack of communication, technology failures, maintenance holdups and a lack of transparency, according to a recent survey from Appfolio. Successful property management means understanding and responding to all these items, and then some. 

This is especially true in the post-pandemic era, when renters can afford to be somewhat choosier, said J. Turner Batdorf, senior strategist at Houston-based J Turner Research. In a tight market, owners and operators are striving to respond to renters’ concerns in a manner that will keep them satisfied — and in place — for the long run.

“Companies appeared to be less focused on resident satisfaction during COVID because they were not suffering from lower occupancy rates,” Batdorf told Multifamily Dive. “The tide is turning, however, as the market shifts. Residents have more options making, it necessary for management companies to prioritize resident satisfaction.”

While property managers might think about rent increases and maintenance requests first and foremost when it comes to tenant satisfaction, communication is quickly rising as a key metric. This applies to every facet of property management. 

In Turner’s recent “How to Ride the Wave” report, only 2% of residents said that staff overcommunicates. 

“Communications is the second most negatively mentioned category,” said Batdorf. “We caution management companies against centralizing staff given how much of the resident experience is related to customer service and communication.” 

This is a huge area of opportunity, and modern-day solutions are readily available. Don Jensen, vice president of multifamily at Allbridge, a property technology solutions provider, said the company recommends its clients get proactive in this regard. 

Because there are so many avenues to communicate today, there’s no excuse to overlook it. Additionally, today’s communications tools make it seamless to keep tenants in the loop on all issues, even in real time. 

“Keeping communication open and educating renters on their rights and responsibilities can ensure that the relationship between renters and property management is one of professionalism and mutual respect,” said Stacy Brown, director of technical training at Waco, Texas-based management firm Real Property Management. 

How to communicate

For most Gen X and younger tenants, having easy-to-use technology tools is an expectation when it comes to choosing an apartment. They want portals, apps and more for payment, maintenance requests and to receive notifications from landlords. That said, the platforms must be user friendly. 

“Successful technology has always been measured by user benefits,” said Jensen. “Does it work as promised? Is it intuitive and easy to operate?”  

It's essential to answer “yes” to all the above. Where technology is less of priority, however, is in providing a smart home. “It’s a nice to have, but not a necessity,” said Batdorf, whose recent student housing survey found that even the youngest renters would not pay extra for smart tech. 

“We recommend you focus on doing the basic well first, like communications, customer service, and maintenance,” he said.

Remember, too, that the older generations are not as adept at tech tools, and you must offer them traditional methods, too, for completing all rental-related tasks. 

Quick fixes

No one likes a broken-down washing machine, but even worse is a property management company that leaves its tenants wondering when it can fix that machine. The key, again, is staying in contact with renters on the status of repairs. 

That’s how Brown’s company approaches it, she said: “As a general rule, our franchise offices respond to maintenance issues within an hour and begin the repair process within 24 hours, barring mitigating circumstances. When there are timelines or obstacles outside our office’s control, we communicate these circumstances to our residents in a timely manner.” 

Beyond maintenance and technology, financial issues are the third most negatively mentioned category in J Turner surveys, largely with regard to transparency surrounding fees. 

“Our recommendation is that companies are transparent with their tenants on why they’re being charged, especially with things like amenities or move-out charges,” said Batdorf. 

Despite those results, rent increases remain a perpetually touchy subject, said Brown. 

“They are a necessary part of doing business,” she added. “Renters are demanding more services for the rent. Resident benefit packages will and should become the norm for renters to ensure quality service from a property management company.”

David D. Cross is partner and chair of San Francisco-based Morrison Foerster’s antitrust litigation practice and is a first-chair trial lawyer representing domestic and multinational companies in complex matters.

Opinions are the author’s own.

Antitrust scrutiny of the rental housing industry has reached new heights in the form of nationwide class actions, federal and state investigations and congressional inquiries. A key focus is the longstanding use of algorithmic revenue management software, which critics argue allows housing providers to increase prices above competitive levels. 

President Joe Biden, in his State of the Union address, talked about using federal antitrust laws to lower rental housing prices.

In addition to the high-profile multifamily cases focused on RealPage and Yardi, private plaintiffs have targeted additional third-party software and data providers, mobile home providers and large hotels with conspiracy claims regarding rental prices. In addition, members of Congress are urging regulators to investigate potential antitrust violations in the multifamily housing industry. 

The Department of Justice has ongoing antitrust investigations into RealPage’s revenue management software and its use. In late 2023, DOJ expressed support for the private plaintiffs’ claims pending in federal court in Nashville, but the court notably rejected DOJ’s position that the plaintiffs alleged a per se offense. 

DOJ, along with the U.S. Federal Trade Commission, filed a similar statement of interest in support of plaintiffs’ claims against Yardi and various housing providers in Washington. 

In March 2024, Politico reported that DOJ had expanded its ongoing civil investigation into the rental housing market by opening a criminal investigation into RealPage and certain users of its revenue management software. The article confirmed rumors about a criminal probe in the industry — one of the only known criminal investigations involving algorithmic pricing tools. 

State attorneys general are pursuing their own investigations into these concerns, and two already have filed suit. On November 1, 2023, the District of Columbia sued RealPage and 14 property managers. Arizona filed a similar lawsuit against RealPage and 10 property managers on February 28, 2024.

Mitigate risk

With lawsuits and investigations mounting, housing providers and others in the industry need to be aware of increasing antitrust risks associated with information sharing and algorithmic software. 

Although it is of course not an antitrust violation for firms to use such software to help with their own independent decisions, including setting their own prices and managing their own inventory, unfortunately even meritless lawsuits and investigations can impose enormous expense, exposure and business disruptions for both providers and users of such software. 

Exchanges of certain types of commercially sensitive information can increase this risk even when entirely lawful due to growing actions by private plaintiffs and antitrust enforcers. Property managers and owners would be particularly well served to implement a robust antitrust policy and compliance program that addresses these and other emerging technologies.

They can also mitigate antitrust risk by taking certain steps. Although these steps should not be needed to insulate lawful, independent action against antitrust exposure, they nonetheless are highly valuable in the current climate. They are: 

Use software as a recommendation

It is prudent to treat revenue management software as one input among others when setting prices and managing inventory. Recommendations generated by the software are best treated as exactly that: recommendations, or suggestions, that each user independently decides to accept or reject for any given rate.

Document each decision

Revenue management users are well served documenting in real time their independent decision-making, both when licensing the software and when subsequently using it to help set prices and manage inventory. 

Importantly, revenue maximization is not the same as price maximization. Maximizing revenue often involves reducing prices to sell more volume, which revenue management software frequently recommends. Maintaining a record highlighting independent action and decision-making — including the reasons for the decisions — can help show government enforcers and courts that any concerns about collusion with competitors are meritless.

Know what you’re working with

Revenue management users should try to understand how the software works and what data sources it relies on for its recommendations. Software that is not fully understood by the users and operates like a “black box” can increase antitrust risk if only because the users themselves may struggle to show enforcers and courts that the software fully complies with the antitrust laws when in fact it does.

Identify the source of information

Revenue management programs that do not rely on non-public, commercially sensitive data from competing users for price or inventory recommendations present less antitrust risk than software that does in the current climate. 

To be clear, this is not necessary to comply with the antitrust laws. But it can help avoid getting drawn into costly, burdensome investigations and litigation designed to expand the scope of the antitrust laws. 

Provide training

Adopting a written antitrust compliance policy with accompanying employee training can help significantly reduce antitrust risk. The policy should be written in simple terms that employees at all levels can readily understand. 

Employees including senior leadership should be trained to identify potentially anticompetitive conduct and encouraged to promptly flag any such concerns for company counsel. Firms without in-house counsel would be well served to engage competent antitrust counsel to help prepare an appropriate policy, administer training and handle any reports of potential anticompetitive conduct within the protections of the attorney-client privilege.

Hopefully, the courts will bring the issues surfaced by private plaintiffs and government enforcers to a swift conclusion. In the meantime, businesses should take reasonable measures to mitigate risk, including consulting experienced antitrust counsel.

Morrison Foerster attorneys Mary G. Kaiser and Benjamin E. Campbell contributed to this article.

A growing number of properties are cooking up novel ways to incorporate food and drink into their amenity offerings — from additions to standard lounge areas to entirely new concepts that blur the line between community and public spaces. 

While refreshments have been a staple offering at multifamily communities for a long time, today’s renters are looking for something beyond the standard coffee or tea station. A number of properties have integrated self-service drink options into resident lounges in the form of taps, whether a cold brew tap in a coworking space or a beer or wine tap in a bar area. 

At Toll Brothers Apartment Living’s Riverworks in Phoenixville, Pennsylvania, each resident is given a personalized 12-ounce growler and a card which entitles them to two free pours per week from an undercounter beer fridge and lockable tap in the resident lounge. Toll implemented a similar concept at its Notion property in Decatur, Georgia, which includes a wine tap at a coffee/wine bar station.

“The tap serves as a social hub … which activates the surrounding spaces,” said Mary Cook, whose firm, Chicago-based Mary Cook Associates, worked on the Riverworks and Notion properties. “The interplay between design and programming informed considerations such as seating configuration, table heights, lighting and materials.” 

A similar concept centered around food rather than drink is grab-and-go markets, popularized in hospitality and now making their mark in multifamily. These can take the form either of a mini-market inside the lobby, with residents charging purchases to their units, or a high-concept vending machine.

“Vending machines offering fresh and healthy choices have gained popularity in multifamily as well as student housing communities,” said Cook.

Social gatherings

In addition to year-round offerings, food and drink can be used as a means to facilitate special events, whether they are simple social gatherings or even programming centered around food. These could include beer and wine tastings or a neighborhood food festival hosted by a local chef, according to Cook.

Residents have responded very positively to this level of social programming, according to Barb O’Steen, senior director of real estate at Charleston, South Carolina-based multifamily giant Greystar. This is especially true of higher-end communities, where expectations are high — food and drink are a level of service that adds value to the property, she said. 

The Guild, a Greystar property located in the same development as the firm’s Charleston headquarters, provides fresh pastries daily to its residents, with the exception of Wednesdays, when a local juicer provides fresh-pressed juice. Daily happy hours and an annual oyster roast round out the calendar of events. 

“Many of [our residents] are moving to new areas and find the opportunity to mix and mingle with neighbors very satisfying,” O’Steen told Multifamily Dive. “This typically allows for people to develop meaningful relationships at the community because of the opportunities and offerings within these programs.”

Blending community and public spaces

Beyond connecting residents to each other, food and drink can also bring the property in contact with the wider community. While food service retail tenants are a common trend, many properties have begun taking this service into their own hands. 

For instance, the lobby at Society Orlando, a Florida property by New York City-based developer Property Markets Group, will feature a public cocktail lounge and restaurant operated by Orlando-based Thriving Hospitality. It will be open to residents and non-residents alike. 

“Residents are drawn to the notion that their lobby will be a neighborhood social hub where they can enjoy craft cocktails and dishes for any occasion without leaving home,” Brian Koles, senior director of corporate development for Property Markets Group, told Multifamily Dive.

Columbus, Ohio-based property developer Lifestyle Communities has taken this notion and fully integrated it into its multifamily offerings, creating an entire suite of wholly owned retail and restaurant brands as tenants for its properties. 

The Goat, its restaurant and bar brand, has 11 locations across LC properties in four cities — Columbus, Ohio; Nashville, Tennessee; Durham, North Carolina; and Austin, Texas. In addition to food and drinks, The Goat also hosts concerts, events, trivia nights and a volleyball league for residents and locals. Morning Ritual, its cafe, serves coffee and breakfast all day in five locations in Columbus, Nashville and Durham.

Overall, operators that take the extra time and care to elevate the food and drink experience have seen positive returns, leaving tenants feeling that their property is going a step beyond the norm. 

“Our residents respond very favorably to refreshments as an integral part of the social program,” O’Steen said. “Residents view refreshments as hospitality and often that translates to a high-end or luxury-style offering that adds value.”

While digital payments are now the most common way for tenants to pay rent, four in 10 renters still pay via check or money order, according to a survey of multifamily professionals from San Diego-based property management automation company Zego.

The median cost of receiving a paper check is $1 to $2 across all businesses, according to the 2022 Association for Financial Professionals Payment Costs Survey, This does not include the time and labor employees spend on processing paper checks, which could include physical delivery to a bank. 

Based on this information, a 10% increase in digital payments across a portfolio of 1,000 apartment units could result in savings of thousands of dollars per year for the property owner, according to Zego’s report.

Automated Clearing House payments, or direct electronic fund transfers between banks and credit unions, are the top choice for digital payments, making up 64.8% of transactions among renters at properties in Zego’s client base. A smaller share — 22.4% — use debit and credit cards to make rent payments.

The median cost range for ACH payment fees is $0.26 to $0.50 per transaction, according to the AFP. The Zego report suggests that one reason electronic payments aren’t more popular is transaction fees imposed on renters.

When asked about tech features they would find useful, an overwhelming majority of renters — 84.2% — said they wanted to be able to pay rent online without incurring a service fee, according to a report by SatisFacts. On the other hand, paying rent online with a service fee was deemed the least useful tech feature at a property in the same survey.

In a sample of multifamily portfolios with 1,000 to 5,000 units, companies that absorbed ACH processing fees for residents saw an average digital payment utilization rate of 84.71%, while companies that passed the fees to residents had a 47% utilization rate, according to Zego data.

When paper checks do come in, adopting digital processing methods can blunt the costs and time associated with them, such as an in-house check-scanning system, according to the report. This would allow property staff to deposit checks without needing to physically bring them to the bank.

Incentives and flex payments 

Zego’s report includes tips for incentivizing digital payments by making the process easier, such as by providing automated email reminders or absorbing transaction fees. It’s also important, the report says, to ensure renters are aware of all their payment options.

“Whether your company is new to digital payments or not, you should create and implement an awareness plan to drive online payments,” the report says. “This not only keeps your preferred payment options top of mind for renters, but it also gives your on-site teams a roadmap for getting a high percentage of digital payments.”

In a time when many renters are struggling with housing affordability, some providers have also adopted services that allow renters to make flexible payments. These can include in-house programs where renters can pay in installments, or third parties that pay a resident’s rent on the first of the month, then receive payment back from renters over time.

Flexible payment solutions are designed to address the imbalance between all the payments residents have to make on the first of the month, which include utilities, car loans and insurance. However, landlords need to be aware of the risk that buy now, pay later services could encourage residents to take on more expenses than they can afford and exacerbate money troubles.

On March 25, 2024, the Maryland Supreme Court ruled in favor of five former tenants of properties owned and operated by Westminster Management, a real estate company owned by New York City-based Kushner Cos. The tenants are seeking a class action lawsuit against the company for illegal late fees, among other issues.

Maryland state law caps late fees at 5% of monthly rent, inclusive of any costs incurred in order to collect that rent, according to the lawsuit. However, the suit alleges that Westminster Management charged writ fees, agent fees and summons fees on top of the 5% late fee.

Other issues named in the suit include the definition of payments counted as rent and the allocation of rent payments to non-rent obligations. The court ruled in favor of the tenant plaintiffs in all three situations.

The Kushner case was initially filed in 2017 in Baltimore County Circuit Court, but the court denied certification for a class action suit in April 2019, according to the Baltimore Sun. The Maryland Supreme Court overturned this decision in March 2023, according to court records.

The plaintiffs lived at Carroll Park Apartments and Whispering Woods Apartments, both in Middle River, Maryland, and Dutch Village Apartments in Baltimore. All three properties have since been sold to other owners, according to the Sun, and the Middle River properties have been renamed.

While Westminster Management defined rent in its leases as “all payments from tenant to landlord required under the terms of this lease,” including any and all fees charged, the Maryland Supreme Court, in its ruling, held that rent is “fixed, periodic payments a tenant is obligated to pay for use or occupancy of the leased premises” as written in Maryland law.

The court also held that a clause in Westminster leases, in which the company said it could allocate rent payments to non-rent obligations, violates Maryland law. Reallocating rent payments in this way, the court said, would allow the company to evict tenants for nonpayment, even if the rent was already paid, if it had been allocated to another purpose.

Kushner Cos. is owned in part by Jared Kushner, former senior advisor to and son-in-law of former president Donald Trump. Kushner stepped down as CEO of the company in 2017 to join the Trump administration, but remains a partial owner, according to the Sun. Kushner Cos. did not respond to a request for comment.

Fee troubles

In 2022, Kushner Cos., through Westminster Management, settled a separate lawsuit brought by the Maryland attorney general alleging unfair and deceptive trade practices, including substandard living conditions and illegal fees, at 17 separate Baltimore-area properties, including the three involved in the 2017 suit. The company paid a $3.25 million fine, including restitution, for which more than 30,000 current and former residents are eligible, according to ProPublica.

The lawsuits are among a number of court actions brought against multifamily companies for fee practices, including a recent suit against Greystar. 

In addition, the Federal Trade Commission has drafted a proposed rule that would ban the charging of junk fees, defined as fees not initially disclosed in a transaction, across all businesses, including apartment leases. In a joint statement on the announcement, the National Apartment Association and a coalition of other real estate organizations stated that the rule’s broad application did not fit the multifamily industry’s needs or accommodate state-level regulations.