The Importance of Industry Associations

 

Host: Trey Stone

Co-host: Bobby Duncan

Topic: Amazing work being done by the Apartment Association for real estate investors

 

For local information visit:

Houston Apartment Association and Texas Apartment Association

 

For national information visit:

National Apartment Association

 

The association has representation at the local, state, and national level.

 

-Andy Teas is the local lobbyist for the political action committee through the Houston Apartment Association. According to the HAA website, 

Andy Teas monitors government actions in Houston, Harris County and surrounding cities and districts, as well as the state and federal levels. Keeps members up-to-date on government action - pro and con - and works with government policymakers to see that the needs of the apartment industry are considered.

 

-David Mintz is the lobbyist at the state level. According to the Texas Apartment Association website, 

David oversees the association’s government affairs activities, legislative agenda and PAC.

 

Real Estate Investing: An Industry with Powerful Support

 

The apartment association has a huge lobby and support for this industry. Real estate investors have this network and this resource, which sets them apart from other industries who don’t have this community to address local, state, and national politicians. Trey is an advocate for getting involved with the apartment association at any level.

 

One example of this support became clear during the pandemic. At first, the apartment industry workers were not deemed “essential.” Trey grew concerned because he knows the importance of having onsite managers and maintenance workers for safety and to maintain essential utilities like refrigeration for important medicine. He called their local representative, David Teas, to discuss this challenge and simultaneously Trey received an email addressing this issue. David and the Apartment Association advocates had already reached out to the local government and received updated information and exceptions for teams like Trey’s. Trey was able to email it out to his employees and they could go to work confidently, knowing they had this documentation to support their reason for being there onsite during the pandemic.



An ongoing example of this support is the involvement of the apartment association with legislation. Trey recalls being inspired in legislative trips that he was involved in where the association delegation would go to the state capital or the nation’s capital to sit down with senators, congressmen, and White House officials to discuss how certain policies and proposed bills would impact the industry. They had the opportunity to break it down for them so they could understand what the results of those laws would be. Most of the time, they were there trying to prevent problematic legislation. The people writing the bills don’t always understand the ramifications and the ability to loop in industry professionals really makes a difference.

 

Through the lobbying efforts, you can see how well organized this industry is compared to other businesses. They have addressed all types of legislation and they have access to local, state, and national lawmakers. One example is redundant legislation- sometimes laws are proposed because of a specific instance and there’s no thorough check to see if it had been addressed before. The association’s involvement helps prevent redundancy and helps to focus on enforcing laws already in place. A second example is legislation with unintended consequences. The association advocates for allowing affordable housing to grow with new property development and challenges any laws that contradict the mission to provide affordable housing. Another example is how the association defends the industry’s investors from hidden taxes or fraudulent fees. The apartment association is really an advocate for everyone involved in the process of rental housing. Even within other real estate groups, you don’t have the same type of advocacy that you have with multi-family property investments.

 

When you think about investing in an industry, you need to consider if you have the type of advocacy that the apartment association provides. The government can be dangerous to an investor in terms of unpredictability. As an investor, you need to have a good understanding of the rules but you also need to feel comfortable that the rules won’t change unexpectedly. When the government interferes in private business, it can be really harmful. The association comes together in a compassionate way and considers how laws and policy affect residents, stakeholders, and the community as a whole. There is even a resident relations committee to advocate for the residents against landlords who aren’t treating them right. Through this committee they are able to address the quality of properties and maintain quality standards.

 

The association is also a great tool for owners and investors in the industry in terms of their advocacy for tax laws. There are some tax laws that work in favor of investors. For example, if you own a portfolio of multi-family properties, you have a “depreciation” that you note as a paper expense under the concept that your building gets less valuable as it gets older. Trey shares that his properties actually become more valuable year over year because he invests in them and upgrades them but this tax law allows him to take an expense that prevents him from owing taxes on that year’s cash flow. It results for a lot of apartment owners to have a generous income without paying the level of taxes people are accustomed to during the withholding period. Often for investors, almost half of what you make goes towards taxes. This isn’t the case in multi-family investments, for example Trey earned 2 million dollars last year in cash flow and did not owe taxes on that. These favorable conditions only happen when an industry gets organized and there’s a voice in the government. 









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