Aug 23

We spent much of week two of our three weeks out west in the warehouse district of Los Angeles. I was shocked at how large LA’s homeless population is. I was also a bit shocked as how bad the area smelled – stale urine, extreme heat and no rain to wash it away is not very pleasant.

It is really a sad scene given the overall wealth of our country and of SoCal in particular.

An interesting real estate related concept in LA was the number of what appears to be privately owned SRO (Single Room Occupancy or rooming houses) Nice, modern buildings.

So even in this most economically, and probably socially, challenging housing environments, rental owners are able to find workable solutions by providing housing uniquely suited for a specific population.

The third thing I learned while out west for much of July is the most interesting. It has kept me busy for the past three weeks. … More to come 😉

Aug 05

Every year we spend about three weeks in the southwest. Typically it starts with four days at a database developer conference, this year and last were in Vegas. While I was honing my computer skills, my wife offered some classes and coaching for her Vegas area students of the Event Decorating Academy. We then rented a car and headed to Los Angeles to reconnect with vendors that supply the Event Decor Mart.

Carmen put on a couple of more classes and coaching sessions while in LA.  The trip ends in Vegas for the ASD trade show.  In general, I do not like Vegas. It is expensive, and we are not gamblers or night people. Although one night I did stay up to 11 PM;-) It is also triple digit hot every day.

I always return with a lot of new database techniques and skills.  More importantly to this conversation, I am a constant student of the housing industry, taking every opportunity to learn something while away from home.

 

First takeaway from this year’s trip: Short Term Rentals

 

We rented furnished apartments in both Vegas and LA through Hotels.com. These are units that the property management has set aside just for this purpose. If you have mid to upscale rentals, this might be an opportunity to increase your occupancy. It appears the going rate per week is around the half the monthly rent, plus a $100-150 fee per rental for cleaning.

Renting an apartment for extended work trips is a heck of a bargain for the consumer. The cost is half that of renting a hotel room in the same area. Plus you get a full kitchen to make your meals, which is important given Carmen’s extreme food allergies, and a washer as you are not going to make it three weeks without doing laundry.

In LA we stayed in a one bedroom at the Apex, just a block or so from the Staple Center. The Apex is a modern glass high-rise with a good sized living room, which Carmen needed for her coaching sessions.  In Vegas, we found a place half a block from the Convention Center – two bedroom, two baths, kitchen and laundry with a large living room for far less than the cost of a Vegas hotel.

From an owner’s perspective,  weekly furnished business rentals could help owners of mid to upper-end apartments in high demand areas increase their collected rent. I’m sure AirBnB also fits in here.

Municipalities often oppose things like weekly rentals and AirBnB because they cut into the hotel tax revenue. So if you are going to give this a go I would check local ordinances as well as with your city’s taxing authority to make sure you stay on this side of the law.

Jul 29

There was a recent question about the legality of imposing a non-refundable $40 application fee in Wisconsin even if the prospective tenant was providing their own, current credit report.

ATCP 134.05(4)

(4) Credit check fee.

(a) Except as provided under par. (b), a landlord may require a prospective tenant to pay the landlord’s actual cost, up to $20, to obtain a consumer credit report on the prospective tenant from a consumer reporting agency that compiles and maintains files on consumers on a nationwide basis. The landlord shall notify the prospective tenant of the charge before requesting the consumer credit report, and shall provide the prospective tenant with a copy of the report.

(b) A landlord may not require a prospective tenant to pay for a consumer credit report under par. (a) if, before the landlord requests a consumer credit report, the prospective tenant provides the landlord with a consumer credit report, from a consumer credit reporting agency that compiles and maintains files on consumers on a nationwide basis that is less than 30 days old.

Note: Paragraph (b) does not prohibit a landlord from obtaining a more current consumer credit check at the landlord’s expense.

Here, the $40 fee fails on two points.  1) It exceeds the $20 cap, and 2) You can’t charge a fee at all if the tenant is providing a copy of their credit report that is less than 30 days old.  Could the tenant forge a copy of their report that they are providing … sure.  So I would not rely on that report, but would run my own at my cost.  I would also compare the two copies as an honesty check.

How about if you call the fee something else like a processing fee?  Can you keep the money then? Again the Wisconsin landlord-tenant law is clear.

ATCP 134.02
(3) ”Earnest money deposit” means the total of any payments or deposits, however denominated or described, given by a prospective tenant to a landlord in return for the option of entering into a rental agreement in the future, or for having a rental agreement considered by a landlord. “Earnest money deposit” does not include a fee which a landlord charges for a credit check in compliance with s. ATCP 134.05 (3).

Some owners feel that they can ignore this and charge the fee to offset the rerental costs. What tenant will go after you in court because you kept 20 or 40 bucks that you may not have been entitled to?  The risk here is that if a tenant does sue,  you owe the tenants’ court fees and attorney’s costs.  So you are risking perhaps thousands of dollars to keep a couple of bucks here and there.

Personally, I find it more important to attract tenants and quickly fill vacancies with the best applicants than it is to recover the minimal amount of a credit report.  If I were looking for an apartment I would start with the ones that do not have an app fee.  That makes those owners charging the fees less competitive and they will lose more than the fees charged.  The old saying pennywise and pound foolish kind of fits here.

 

Jul 03

A reader writes of the frustration he was having after being charged by the city for mattresses dumped at his property that were not from his tenants.  With the ever exploding bedbug problems in urban areas, there are a lot more mattresses hitting the garbage.

We had a similar problem with properties in Milwaukee.  At one property mattresses would appear behind it once a month or so even though there were no move outs.  We would the get gigged for the $100 repeat litter fine even though we had our clean out crew drive past the property every couple of days and remove any trash well before getting notified by the city.   Somehow it seemed the city inspector was there the day the mattress was dropped off each month.

I wanted to catch who ever was dropping the mattresses in the act so I bought a trail camera and mounted it to view the garbage area.  Mattresses quit appearing immediately after that.  We have since installed trial cameras or wifi cameras at a number of locations.  The problems generally stopped upon installation (deterrent effect)  In one case we caught a neighbor who is a small contractor dumping.  He quit after being given a picture of him unloading his truck in the garbage cart area of our property.  I’m sure he is now dumping at someone else’s property to avoid paying the construction debris fees at the self help dump.  Most bad happens after dark so Infrared (IR) technology is important for night vision.

An example of a trail camera that uses an SD memory card to record images.  We have a number of the Moultrie cameras.  In fact they were being sold in the sporting goods section of Wal Mart at a similar price to Amazon.

A 64GB card holds a lot of images.  Set it to overwrite when full and then retrieve the card when there is a problem.  These can be mounted anywhere as they are battery powered. A set of batteries lasts three months or so.

If you have a cooperative tenant with internet or provide internet to your building, the other choice is wifi enabled security cameras.  The under $100 ones need to be building mounted for the power, but you can upload to cloud storage and keep a month’s worth of images or movies.

Netgear makes a battery powered wifi camera system that intrigues me, but haven’t bought any yet.

Why do my Amazon links start with smile instead of www?  AmazonSmile donates a portion of the sale to any charity you select.  I chose Children’s Hospital of WI, but there are a million 501 (c) (3) organizations that you can choose from.

 

Jun 26

Us old timers use the rule of 72 for quick off the cuff financial calculations.  I recently ran across a post that explains the Rule of 72 in a clear, useful manner.


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