Oct 30

As many of you know I like data.  Okay – maybe “like” is a little weak.  Perhaps its love, or at least a dangerous obsession.

Our industry, at least in regard to small properties,  shies away from meaningful data collection and utilization.  However, you can do so much with the right data – from setting your rents in the sweets spot between charging too little and losing money to charging too much, having your units remain vacant and … losing money.  What is that house you are looking buying at really worth and how much rent can you really expect to receive? In many neighborhoods paying assessed value is paying two to three times what everybody else is paying.  In a few high valued neighborhoods assessed value is a steal.  Ask the listing broker how much rent you can expect and some will tell you the sky.

Lately we’ve been looking at a lot of data points from rents, to evictions, to city orders, to special assessments, to tax assessments in general, to foreclosures and a ton of other interesting things.

For example we are developing an internal tool for suggesting rents that is using for rent ad data, including rent amount as well as other thing such as how long the ad has appeared, how many times in the past two years has the unit been for rent and mashes that up with property data – age, size, assessed value, date of last sale, how many units are owned by that owner and a dozen other metrics. Then combine this data with city order data, eviction data, tax delinquency and foreclosure information for the subject property.  While we haven’t finalized the algorithm, we are getting close.

Another fun project is trying to identify properties that will fail.  We look at when they were purchased, if they are tax delinquent, if they are on the DNS monthly reinspection list, if there are evictions, if the water bills have been placed on the tax roll, etc.

We started doing this with database tools, Python scripts and a lot of manual acquisition.  We’ve found a lot better methods since.

One of the tools we use for data acquisition is import.io. Today I was in San Francisco for their Extract conference.  The theme was “Data Stories Worth Sharing”  There were 600 in attendance, with what appeared to be an equal distribution of data scientists, data analysts, and application developers. Oh and there was one landlord.

I wanted to attend the last two but either the timing was bad or the event was in London, which is quite a trip for a one day conference.  Today was so great I regret not attending the previous events.

If people thought I was a pain in the butt before with my data obsession, I’ll be downright dangerous now. 😉

If you want to play with the tools I play with, another one to look at is Mirador, a data visualization tool developed by Harvard and others primarily for things like Ebla research.  This is a radically cool tool  for seeing patterns in data.  Before that we were only testing patterns against assumptions.  Mirador points out the patterns for you.  

To visualize the results there is Tableau or for the more adventuresome there is a Javascript library D3

I think I should call this “Big data about small properties.”

If you are interested in data and rental hosung and want to talk about this more, drop me an email at Tim@ApartmentsMilwaukee.com





Oct 28

In the case that a tenant owes rent or other easily determinable charges, it is safest to send the letter as soon as practical and bill them separately for other damages.  

Returning keys may or may not be important in establishing the date the clock starts rolling.  More importantly is when did you know they were out and what was the termination date of their agreement.  

§704.28 (4) (b) was a big change.  Let’s say a tenant on a year lease vacates four months early, depending on when the unit gets rerented, the 21 days could start up to four months after they vacate.  

This also applies to month to month occupancies. If the tenant moved without notice, the notice date is implied to be the date the owner learned they moved out.

I look at (4) (b) as more of a safety net for owners that are sloppy in their response times or did not know the date the tenant vacated.  A far better approach would be to send a deposit transmittal letter as soon as you learn they left before the end of the agreement, stating the deposit is being applied to the rent due and that they are liable for the rent until, for example, Feb 29th, 2016 unless the unit is rerented prior to that date.  Also note that you are attempting to rerent the unit. 

Even if (4) (b) keeps you from losing a deposit lawsuit, it probably does not keep you out of court as tenants still believe the 21 days start the day they left and not the last day of the lease that could be months in the future. 

I feel it is very important when a tenant owes rent equal to or more than the deposit that you limit the deposit withholding letter to the rent with a notation that they are being billed separately for other damages.  If you have late fees in the written agreement those too can be part of the undisputed deposit withholding letter. [EDIT: Attorney Tristan Pettit points out that I was not clear that late fees must also be included in the non standard provision. ] 

There have been a few cases, including an outstate unpublished appellate decision, where the courts have doubled the wrongfully withheld items on a deposit transmittal letter and then applied that to a determination of double damages and attorney fees even though the rent alone exceeded the deposit.  For example the tenant has one month’s rent as deposit and leaves owing a month’s rent.  The landlord, being angry they left in the middle of the night puts $500 charge on the deposit letter for changing the locks. Tenant now is also angry and takes the landlord to court.  Some courts will mistakenly double the wrongfully withheld $500 and then clip the owner for the tenant’s attorney fees on top of that. Had the deposit letter just had the rent due on it and the owner billed the tenant for the questionable charges it would not have made the owner any less of a butthead, but he would have some money left to sign up for meditation or anger management classes.

You should also use the separate bill method for other things that are legit, but cannot be deducted from the deposit such as carpet cleaning if written into the rental agreement.  Note that our company does not change for carpet cleaning, but the WI Attorney General has said you may, as long as you do not deduct the charge from the deposit.

 704.28 (4) Timing for return. A landlord shall deliver or mail to a tenant the full amount of any security deposit paid by the tenant, less any amounts that may be withheld under subs. (1) and (2), within 21 days after any of the following:

(a) If the tenant vacates the premises on the termination date of the rental agreement, the date on which the rental agreement terminates.

(b) If the tenant vacates the premises or is evicted before the termination date of the rental agreement, the date on which the tenant’s rental agreement terminates or, if the landlord rerents the premises before the tenant’s rental agreement terminates, the date on which the new tenant’s tenancy begins.

(c) If the tenant vacates the premises or is evicted after the termination date of the rental agreement, the date on which the landlord learns that the tenant has vacated the premises or has been removed from the premises under s. 799.45 (2).

Oct 24

I recently read a book “The One Thing: The Surprisingly Simple Truth Behind Extraordinary Results” by Gary Keller.  The author is a real estate professional, but the book is not about real estate per se.  The entire premises of the book is:

What’s the ONE Thing you can do such that by doing it everything else will be easier or unnecessary?

While simple, it is a great question.  Perhaps making an entire book out of it is a small stretch, but none the less a great question.

So let’s apply it to our industry.  What is the one thing that would change everything for us?

A few ideas that come to mind:

  • Enforceable tenant responsibility
  • A cooperative rather than confrontational relationship with local governments
  • Superior screening tools
  • Access to labor
  • Reduced cost supplies
  • Software
  • Financing

What is your ONE thing that would change everything – lets decided and then decide to make it happen,  Post your ideas in the comments or over at the ApartmentAssoc Yahoo Group



Sep 24

If your business model relies on using workers that you classify as “independent contractors” the latest interpretation from the US Department of Labor should be of extreme concern you.

Hat tip to Attorney Tristan Pettit for alerting me to this.

I have written a number of post about the dangers of calling a worker an independent contractor when they met the definition of employee.   Well that bar was just raised substantially.

Rather than the old tests, the new ones are fairly bright line:

Ultimately, the goal is not simply to tally which factors are met, but to determine whether the worker is economically dependent on the employer (and thus its employee) or is really in business for him or herself (and thus its independent contractor).

But the ruling goes even further than is the worker dependent on the pay they receive from you.  Below are a few paragraphs of the Department of Labor document worth noting.

If the work performed by a worker is integral to the employer’s business, it is more likely that the worker is economically dependent on the employer.


In sum, in order to inform the determination of whether the worker is in business for him or herself, this factor should not focus on the worker’s ability to work more hours, but rather on whether the worker exercises managerial skills and whether those skills affect the worker’s opportunity for both profit and loss.


The worker should make some investment (and therefore undertake at least some risk for a loss) in order for there to be an indication that he or she is an independent business.


For example, investing in tools and equipment is not necessarily a business investment or a capital expenditure that indicates that the worker is an independent contractor.

So if the guy is a licensed electrician doing work for dozens or hundreds of other owners – pretty much he is a contractor.

However if you are paying a painter $10 an hour, or even $20 for that matter, and he works primarily for you – he is an employee and you would be well served to consider making him a legitimate employee or hire out a company that uses employees.

Remember too that if someone working on your property  is injured your rental property liability policy will not cover them.  Either you or they need to have a worker comp policy.  And this risk is even greater than the DOJ coming after you.

Sep 11

What I’ve seen in Milwaukee County Small Claims Court over the years is mixed. Some Court Commissioners accept §704.07(3)(a) [below] as applying and require the tenant to “reimburse the landlord for the reasonable cost” although a couple of commissioners have taken ATCP 134.06(4)(b)  to mean actual costs only. But a strong argument against this position is ATCP 134.06(4)(a) also allows for “reasonable compensation”

There was a published case, which for whatever reason I cannot find, that allowed an owner’s $15 per hour labor charge.

There is also a unpublished Court of Appeals opinion where an owner had an hourly rate in his non standard “The court also awarded the Hofackers $45 per hour for labor, pursuant to one of the [nonstandard] provisions.”  I would not rely on this case as the amount per hour sounds excessive to me, plus it was a District III decision, which often rules far differently than District I. Also note that the landlord ultimately lost the case at the trial court on other issues and was charged $11,417 in attorney fees plus $3,796.64 in double damages for withholding a $1,300 deposit, some of which the court allowed as a deduction.  This case should be a warning to those who overstate charges even when they are entitled to withhold all or part of the deposit.

Despite Hofacker being a poor case, having a nonstandard provision where the labor rate is more inline with normal labor costs may be helpful for owners that do their own work.

The best option though for those who do some work on their properties, but also pay to have work done, is to direct the paid labor towards deposit type issues and work on items that will not be charged to the tenant yourself

The Statute and Admin Code

§704.07(3)(a) If the premises are damaged by the negligence or improper use of the premises by the tenant, the tenant must repair the damage and restore the appearance of the premises by redecorating. However, the landlord may elect to undertake the repair or redecoration, and in such case the tenant must reimburse the landlord for the reasonable cost thereof; the cost to the landlord is presumed reasonable unless proved otherwise by the tenant.

ATCP 134.06(4)(b) No landlord may intentionally misrepresent or falsify any claim against a security deposit, including the cost of repairs, or withhold any portion of a security deposit pursuant to an intentionally falsified claim.

ATCP 134.06(4)(a) If any portion of a security deposit is withheld by a landlord, the landlord shall, within the time period and in the manner specified under sub. (2), deliver or mail to the tenant a written statement accounting for all amounts withheld. The statement shall describe each item of physical damages or other claim made against the security deposit, and the amount withheld as reasonable compensation for each item or claim.

P.S. Reread the disclaimer:  I am “just a landlord,” NOT an attorney or even a doctor despite having terrible handwriting. If you need legal advice or have appendicitis, don’t rely on something you read on the internet and do it yourself. Rather, hire a competent professional.

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