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PRESIDENT’S CORNER

It’s been an exciting start to 2016 so far, and we’re on track to have a fantastic year at NVAA. The

year started big with a move into our new office space at 4600 N. Fairfax Drive. We have a modern

office now with a large meeting space, beautiful views, and plenty of space for us to grow. I

encourage everyone to stop by for a visit and see first-hand the new space.

Of course, this year we’re celebrating sixty years of service to the multi-family industry. We have had

an amazing sixty years that could not have happened without the amazing support we receive

from property owners, management companies, and all of our associate members. When I hear

stories about how far the organization has come in just the last several years, I am excited and

encouraged to see everything we can put together in the next sixty years. We’ll be celebrating this

milestone year on October 22 with our 60th Anniversary Gala, a black-tie affair that will be the toast

of Northern Virginia.

This year we will be introducing some new initiatives to benefit all our members. The first will be this

newsletter you are reading now. The Inside NVAA newsletter will be distributed each quarter, and

will provide valuable insights into the multi-family industry. From emerging trends and market

statistics to financing changes and budgeting tips, the publication will provide you with updates

and information on what is happening in the world of multi-family housing.

I am also happy to announce that we will be expanding our presence at the local legislative level,

to better represent our members in the Northern Virginia markets. We have partnered with Walsh

Colucci, Lubeley & Walsh, PC to provide regular insight and information into what is happening in all

the Northern Virginia jurisdictions. Keep an eye out this spring for our inaugural report.

Thank you for reading our first newsletter, and for all of your continued support to this great

organization. I welcome any feedback, whether on the newsletter or the organization at large, so

please let us know if there is anything we can do to better help you. 2016 will certainly be an

exciting year for NVAA, and we look forward to sharing it with you.

Thank you,

Kevin Eakin

President

4600 North Fairfax Drive

Suite 604

Arlington, VA 22203

nvaa@nvaa.net

Office: (703) 671-6777

NVAAOnline.com

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Freddie Mac’s Multifamily Outlook 2016 Report

predicts an overall strong year for multifamily,

but notes some key factors that could affect

the industry’s performance. The Outlook points

to steady economic growth and key drivers

such as job growth and rental demand as the

factors keeping the multifamily market moving

forward in 2016. In terms of supply and de-

mand, 2016 will largely continue where 2015

left off. Last year saw higher than expected

rental demand that kept up with the influx of

supply that was delivered in 2015. About

306,000 multifamily units entered the market,

the most in any year since the 1980s, accord-

ing to the report. That level of supply is ex-

pected to remain robust in 2016, though some

markets are starting to moderate. While this

increased supply resulted in a slight uptick in

the national vacancy rate to 4.4% in Q4 2015

and will increase slightly to 4.8 % by 2017, the

rate will remain below the long term average

of 5.3%.

Freddie Mac expects low vacancy rates, com-

bined with strong household formation, to al-

low rent growth to remain strong in 2016. One

factor that could slow rental household for-

mation is the declining affordability of rental

housing, but Freddie Mac expects household

formation to remain strong due to favorable

demographics and pent up demand. It be-

lieves that 2016 will also be a good year for

the mortgage market, with multifamily origina-

tion volume exceeding the 2015 volume of

$225 billion. The 2016 volume could reach $240

-250 billion, due to increased property prices,

more multifamily construction in the pipeline

and a relatively low interest rate environment.

The origination growth among GSEs can large-

ly be attributed to Freddie Mac itself, which

along with Fannie Mae, constituted the largest

portion of 2015’s increase over 2014. However,

regulatory guideline changes could affect

multifamily origination volume and could low-

er the total 2016 volume, the report warned.

Despite these concerns, the multifamily market

proved to serve Freddie Mac well, as the GSE

became the largest multifamily lender in 2015

with $47.3 billion in volume, up from $28.3 bil-

lion the previous year. Management attribut-

ed much of this success to its increased efforts

in workforce and affordable housing, sectors

in which they intend to increase.

Freddie Mac Multifamily helps ensure an am-

ple supply of affordable rental housing by pur-

chasing and securitizing mortgages on apart-

ment buildings nationwide. The loans range

from $1 million to several billions and roughly

90 % support rental units for low and moderate

income households. Source: Multi

Housing News.com—February 11, 2016

FREDDIE MAC REVEALS 2016 OUTLOOK FOR MULTIFAMILY CAUTIOUSLY OPTIMISTIC

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The multifamily market has been red-hot and

brokers are as busy as they’ve ever been. That

said, some owners who’ve tested the sales

waters have decided to hold their assets be-

cause they either didn’t like the potential sale

price or, most likely, are unsure of where to put

their proceeds.

Property management firms regularly provide

recommendations to owners about ways to

increase ROI while holding an asset. Because

of the strength of the market, most apartment

communities have seen natural rent growth

without any major improvements to the prop-

erty. However, at some point, rent growth will

taper, so properties have to do more than just

ride with the tide. A solid plan that will increase

rents further and faster can be a make-or-

break for a property in the event of another

crash or rising interest rates.

Owners who are planning a long-term hold

have a variety of options to add value to a

property, including renovating units and add-

ing extra amenities. By making smart upgrades

to unit interiors, owners can justify additional

increases and set themselves up for lower ex-

penses down the road. For example, many

owners replace carpet with tile or vinyl plank-

ing because it will last longer without as much

upkeep. Refinishing countertops is the cheap-

est way to get a visible pop. In higher-end

properties, owners are trying out recycled

glass countertops instead of granite. The at-

tractive product is in line with the cost of gran-

ite, but gives properties something a little bit

different to tout to renters. Owners of C+ or B-

properties are adding linoleum countertops

but with beveled edges which visibly reduces

the seam and gives the apartment a higher-

end look without the cost of natural stone.

Cabinets are another quick and easy fix be-

cause they enable owners to add new doors

and paint the boxes instead of replacing

whole cabinet systems. For owners willing to

dig a little deeper in their pockets, swapping

out old white or taupe appliances for black or

stainless steel immediately gives an apartment

a more modern feel.

Points to Consider Before Deciding to Reno-

vate

There’s a wide range of improvements that

can be made and varying costs associated

with making them. Before deciding on which

renovations to do, it’s important to think

through what you’re trying to get out of a rent

increase. How long will it take to recoup these

improvements? Can rents even rise to that lev-

el in your submarket? What will it cost to im-

prove the units to a level that will justify those

prices? These are all important questions to

contemplate before you begin remodeling.

Quality is also key. When making upgrades for

a long-term hold, it’s important to invest in

long-lasting, durable improvements that don’t

need to be replaced often. Preventive

maintenance is also critical. By spending mon-

ey on big-ticket items, like roofs, your proper-

ties will be better prepared to weather the

next downturn, when replacement funds

might not be so plentiful.

During the last recession, the owners who

struggled to recover the most were those that

pocketed the profits from 2003-2006 without

CREATING VALUE FOR A LONG-TERM HOLD

Advertising Opportunities

Available!

Inside NVAA Quarterly Newsletter is a

great way to reach the entire NVAA

membership!

Contact us for more information.

nvaa@nvaa.net

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reinvesting those funds in their properties.

When the market took a turn for the worse, the

properties that were starved for capital in the

good times went into disrepair during the

downturn. It’s important for owners to learn

from the past and invest a portion of the cur-

rent, record-high profits back into their assets.

It’s inevitable that at some point values will

drop and the market will slow down. Hopefully,

it will be a less brutal downturn than a few

years ago, but, at some point, the pendulum

will swing back. One could compare it with a

hurricane- owners should be investing in storm

shelters and generators now so they’ll be bet-

ter equipped to withstand the storm and

come out with their properties intact.

Source: Multifamily Executive February

2016

Platinum Sponsors

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NVAA

2016 Partners

For more information on how

you can become a Partner in

the NVAA Partnership

Program contact the NVAA

Office at 703.671.6777

Save the Date Northern Virginia Apartment Association

Invites you to celebrate 60 Wonderful Years of Success

Saturday, October 22, 2016

6:00 pm – 11:00 pm

Westin Arlington Gateway Hotel

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The following ten ideas are ways to find $10,000 on each of your properties. Some may increase

revenues and some may reduce costs- either of which will increase net operating income (NOI).

Some of these ideas can produce $10,000 by themselves and some of the smaller ones can

combine to realize significant increases in NOI.

Answer every phone call. Every phone call is a potential lease. Large Real Estate Investment

Trusts (REITs) have proven that answering every call can directly impact revenue generation

to the tune of 1-2% per year. For multifamily assets with $1,000,000 in annual revenue this

equates to $10,000-20,000 a year.

Enforce late fee collections. Adhere to the terms of the lease. Both parties, property

management and tenant, have agreed to the terms of the lease. The lease has a provision

for payment of late fees. Enforce the provision.

Thinking time. Get ideas from those that know the properties best. Have a brain-storming

session with site personnel; management, leasing and maintenance. Make it fun. Have

food! No one knows the property better.

Increase on-site coin operated washer/dryer fees by $0.25 per use. Load factors are pretty

easy to figure out. On 1,000 loads (wash/dry) per month a $0.25 increase generates an

additional $250 per month, or $3,000 annually.

Charge monthly pet fees. It’s common practice to charge a one-time pet fee at the time of

the original lease. An alternative strategy is to lower this fee (not eliminate the entry fee)

and charge a monthly fee for each pet. This could be as little as $10 per month per pet. Size

the fee based on the average length of tenancy. This will provide guidance on the total

pet fees earned per pet per lease. On a 200 unit property with 20 units having pets, a $10

monthly fee converts to $200 a month or $2,400 a year.

Early termination fees. Make sure each new lease and each lease renewal has a clause for

early termination fees (if allowable in your state). This amount can range from 1-3 months’

rent for breaking a lease. This provision can add several thousand dollars each year to

revenue.

Review existing loans for re-finance opportunities. The savings here can be significantly higher

than $10,000 all by itself. This is one area where we prefer to stay away from the word

“presume”. Talk to real lenders and see what is possible.

Utility Audit/Sub-metering. Sub-metering saves money. A review of all utility expenditures is just

good business.

Energy efficiency review. What energy upgrades were accomplished at your property

recently? Lighting, roofing, windows, insulation? New air filters or weather strips? What can

you implement with the least costs and most immediate benefits? Install energy-saving light

bulbs…. everywhere. And while we are all switching to CLF, check out the next generation

in light bulbs: LED.

Review all service contracts. Few properties are outsourcing the watering of plants anymore

but there are plenty of places to look for savings. Example: reduce mowing/landscaping

service by 25% if possible without getting over-zealous. If the mowing crew is cutting the

same two inches of growth from three weeks earlier, consider skipping a week. Or two

weeks. Source: Multifamily Insight.net February 2016

TEN WAYS TO FIND $10,000 ON YOUR PROPERTY

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NVAA 28th ANNUAL GOLF CLASSIC

Stonewall Golf Club

Friday, June 10th

Given the positive experience at our 2015 Golf Classic, NVAA expects the 2016 Golf Classic will

sell out quickly. Register Early - - This is one tournament you don’t want to miss!

FOURSOME FEE - $1,600 – Includes: Green Fees; $200 Nike Gift Card for each Player; Food and

Beverages all day long; Ticket to the Awards Dinner; Great Contests – Great Prizes!!

ATTENTION: NVAA OWNER MEMBERS – If you want to play in the NVAA 28th Annual Golf Classic

and can’t get a foursome team together here is your chance to play in the tournament for

“FREE”. Contact Barbara at the NVAA Office for more details. . . . . 703.671.6777

or nvaa@nvaa.net . Sorry this offer is not being offered to our Associate Members.

Be a Sponsor at the Golf Classic > >

We have sponsorship levels from $350 to $5,000. This is a

great way to meet our members and network all day long!!

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UPCOMING EVENTS

NVAA Membership Meeting with Chip Dicks April 28

HVAC Preventative Maintenance Training Session May 12

Taco Tuesday: Manager Appreciation Luncheon May 17

NVAA 28th Annual Golf Classic June 10

NVAA 3rd Annual Summit June 14

Fair Housing Training Session June 21

For more information and to reserve your spot today,

please visit our website:

NVAAOnline.com