Apr 24

 

Over on the ApartmentAssoc Yahoo Group an owner asks:

The person who would occupy the second floor apartment is older, and I have no real accommodation for mobility issues… is there a polite / legal way to ask before hand since I wouldnt be able to put them in once the person is there (( is there a list / guide to requirements in this regard ? )). 

You should make sure the applicant understands what they are renting ‘This is a second floor apartment’ , but not is a tone to discourage them from renting.    Obviously you cannot say ‘I think you are too old to climb our steps.’  

As far as accessibility modifications, in general you are required to permit the reasonable modifications but are not required to pay for the modifications in pre 1991 housing.  You can require the tenant at the time of move out to restore it to how it was prior to adding the accessibility modifications.  However in most cases doing so would be foolish as you the mod could be a high demand attribute that would make your unit more desirable to other tenants with similar needs. 

Apartments built or substantially modified after 3/1/1991 are required to meet the ADA standards. If that standard was not met during construction, the owner must update it to the ADA requirements. Of course you may be able to sue the builder to pay for it. 😉 

Here is a real good guide to the reasonable modifications requirements

You are required though to make reasonable accommodations, which is different than reasonable modifications.  An example is assigning a parking spot closer to the door for a person with mobility issues if they request this.  

One reasonable accommodation request  that many owners get wrong – if a person is on SSI due to a disability and therefore receives their check on a day other than on the first, you must modify their rent due date and not charge late fees. [Case]

When you decide it is up to you to determine what may or may not work out for a prospective tenant is when you get in trouble. 

There is a Fair Housing case from La Crosse where a landlord refused to rent to a single mom because the property had a long drive that was the tenant’s responsibility to shovel, which the landlord felt would be difficult for her to do.  The landlady’s attempt to take it upon herself to determine what would or would not work for the tenant cost the landlady $15,000 plus I’m sure some costs.  The right thing for the landlady to do would have been to point out to every prospective tenant that shoveling the driveway was their responsibility and failing to do so was a lease violation.

There are countless cases of owners who got in trouble for restricting families with children from living on the second floor, or living next to the pool.  The former being for the convenience of the other tenants and the latter being out of fear of children drowning.  Neither are legitimate reasons within the confines of Fair Housing.

Apr 21

The Diagnostic and Statistical Manual of Mental Disorders describes hoarding as a mental disability and therefore most likely covered by the Americans with Disabilities Act and the Federal Fair Housing Act.  As such property owners are required to make reasonable accommodations. I would concur with this.

However there is also the health and safety exception to the reasonable accommodation requirement. This is where it gets difficult for the property owner, those doing social intervention and of course the person with the hoarding behavior. Hoarding can contribute to issues like insect and rodent infestations. Hoarding also can create fire hazards. Often hoarding is a violation of the local housing codes.

In response to a reasonable accommodation request an owner would have to balance the actual risk to health and safety to determine if the request was reasonable or not. Note actual risk and not potential risk that are not directly related to this tenant or applicant.

The ability for an owner to address the situation in a manner that does not involve eviction is often hampered by DNS’ response of placarding or threatening to placard buildings due to clutter and housekeeping. A few years ago I had a long term (~15 years) tenant who always kept her house immaculate until her son was murdered. After that she would not get rid of anything. We had to evict her due to the threat of placarding.

In my view, especially after that case, is hoarding is a disability. Having some sort of intervention available other than homelessness is the right thing.

There is the newly formed Milwaukee County Hoarding Task Force. I think this is a great potential resource not only for those with the disability but to help people in our industry make proper decisions in response to finding hoarding and or clutter at the properties.

I invited the Task Force to submit an article for the Apartment Association newsletter as well as speak at a future meeting if they wish and/or distribute informational materials at our meetings.

Mar 31

Over on the ApartmentAssoc Yahoo Group an owner asks

“I had a person call me today that said his criminal record was being expunged by the governor of Illinois and that it is discrimination to reject applications due to criminal convictions. “

Fair Housing concerns are a two step process.  First, is the applicant a member of a protected class?  Be sure to check local, state and federal fair housing rules.  In most of Wisconsin criminal arrest records are NOT a protected class. Dane County may or may not be different.  Make sure you read the full list including the fairly recent  protections for victims of domestic violence. Also note the law is different for hiring.

The second part of the test is did the landlord or their agent take adverse action due to the applicant being a member of a protected class.  However just because a person is a member of a protected class does not mean you must accept them if they fail other reasonable screening criteria equally applied to all applicants.  

You get into trouble by applying different criteria to different applicants.  So for example if you have an income criteria and you allow people that look, talk and worship like you to slide in with income that is a bit less, but do not make the same accommodations for those who do not look, talk or worship like you, you will get into trouble.  

Therefore you should have  written criteria and apply it to all applicants equally.  This does not mean you can’t change it if you find it isn’t working, but make that change apply to all applicants from that day forward. 

Your criteria must be yours, for your type of properties.  I feel a reasonable criteria has time limits for consideration of things like criminal convictions and evictions.  We have four classes of crimes that different lengths of rejection periods.  With that said we personally do not accept registered sex offenders regardless of how old their crime is.

Remember too that you must make reasonable accommodations for people with disabilities.  So for example if someone needs to pay on the third because they are on SSI for a disability you MUST change your late policy for that person. 

Finally, if you have an income based criteria you must include all sources; retirement, W-2. Child Support, Social Security, Food Stamps, Unemployment Compensation, etc.

In WI the protected classes are:

https://dwd.wisconsin.gov/dwd/publications/erd/pdf/erd_9523_p.pdf

erd_9523_p

Mar 29

 

Remember  Your handyman – cheap contractor or $60,000 mistake?

Many of you attended the Apartment Association’s Meeting earlier this month featuring employment law attorney John Murray.

Here is a link to the State of Wisconsin’s guidance on the issue.  Most owners I’ve met that call their workers contractors fail on four or more of the test outlined in the guide.  Failing only one of the nine tests will cost you substantially.  This is why we use employees exclusively, except for licensed trades like electricians.

Under section 102.07(8)1 of the Wisconsin Statutes, a person is required to meet a nine-part test before he or she is considered an independent contractor rather than an employee. A person is not an independent contractor for worker’s compensation purposes just because the person says they are, or because the contractor over them says so, or because they both say so, or even if other regulators (including the federal government and other state agencies) say so. The nine-part statutory test set forth under s. 102.07(8) of the Act, must be met before a person working under another person is considered not to be an employee. To be considered an independent contractor and not an employee, an individual must meet and maintain all nine of the following requirements:

1. Maintain a separate business.

2. Obtain a Federal Employer Identification number from the Federal Internal Revenue Service (IRS) or have filed business or self-employment income tax returns with the IRS based on the work or service in the previous year. (See note below.)

3. Operate under specific contracts.

4. Be responsible for operating expenses under the contracts.

5. Be responsible for satisfactory performance of the work under the contracts.

6. Be paid per contract, per job, by commission or by competitive bid.

7. Be subject to profit or loss in performing the work under the contracts.

8. Have recurring business liabilities and obligations.

9. Be in a position to succeed or fail if business expense exceeds income.

Note: When requesting a Federal Employer Identification Number (FEIN) from the IRS, you must inform the IRS that you are required by Wisconsin Worker’s Compensation law to obtain a FEIN. A social security number cannot be substituted for a FEIN and does not meet the legal burden of s. 102.07(8).

Mar 24

In the past few months I have had nearly a dozen of conversations with other rental property owners that have turned to some variation on the question ‘What do you attribute your success to’ My story is simply not that interesting.

It is a story of working hard at generally boring things. Yes, I have lived well off landlording for three decades. Yes, I now have time to walk  thirty-five to fifty miles a week, often barefoot on wet sand. Yes, I have the time to travel around the country to help my wife with her business.  I still work remotely when I am away form the office, just not the insane hours I did as a kid.

But the truth is mine is just not an exciting story.  Seems most people want to know how to be independent and wealthy by July.  They do not want to hear about the multi year, multi decade journey it took me.

I used to say ‘Everyone says they want to be me, but none of them are willing to do what it takes.’ That was too egotistical sounding and I only used it in private conversations with folks who pushed me to tell them “the secret.”

A couple of years ago I read a quote by Hugh MacLoed which I like better.  In fact I liked it so much I bought a numbered MacLoed print for my office wall.  At least it was there before my staff redecorated the offices … I haven’t checked in a while.

“What people say they want and what they’re willing to work their ass off to get are two different things. ” – Hugh MacLeod

I simply focused on one thing most of my life,  pursued boring fundamentals with dogged persistence and took the time to learn the laws that affect my business.  For me this worked well.

Focus. Today the buzzword in business start ups is ‘pivot’ and the mantra is ‘pivot early and pivot often’, meaning a complete change in direction when things get tough.  Tough seems to mean in their terms that you aren’t ready for a one hundred million  dollar IPO and it’s already been six months so it must be time to do something else. I wonder how many of these young entrepreneurs  give up just before success.

As I criticize the pivot I must admit I too had a major pivot in the very early days. When I was in my early twenties I wanted to own a state of the art contract computerized manufacturing (CNC/CAD) company.  My background was in manufacturing and CNC machining. I loved the challenges and logic of making things.  I started buying rentals with the goal of using them to finance the machine shop.  That dream hit a bump in the road.  My potential business partner had some legal problems that I was unaware of until we went for financing.  I stayed with the rentals and grew that business.  So on some level this was a pivot, but not in the sense it is used today.

Instead of the pivot I went for incremental improvement.  For thirty years I did little else for income that did not involve rental housing. Every day I try to do this better than we did yesterday.

It was only in the last few years that I diversified a bit from Milwaukee rentals by helping my wife with her business and began exploring Southeastern Florida real estate as well as some angel funding stuff. You will not create the next PayPal, eBay or Google through incremental improvement, but it is a path to a decent sustainable lifestyle.  I see it as a fault of mine that my dreams were not larger, but I am fairly content where I’m at.

Persistence is still being there when everyone else gets tired and goes home.  Persistence is when you still show up and giving it your all even though you’ve had  three bad months in a row. Persistence is eating Kraft instant macaroni four times a week for months on end to finance a rehab. Persistence is leaving for work at 6 AM and not arriving home until 10 PM every day for weeks on end.  (See my follow up post on ten things I should have done differently) Persistence is staying the course when everyone around you says it is a no win game.

Despite how it is spelled, there is no fun in the fundamentals. Once the adrenaline rush of buying a building wears off so does the enthusiasm of many.  Rental real estate is a tough business.  When my son said he wanted to follow me into the business I told him to find something better to do with his life.  And landlording is a business, not an investment, at least not at the levels we are dealing with.

Bookkeeping, taxes, employees/HR, purchasing, collections, filling vacancies, evictions, customer service and dealing with bureaucrats are all part of the unfun fundamentals.

To succeed at landlording you have to focus on these fundamentals and pay attention to a myriad of laws and rules that affect us. I’m pretty sure that must every business out there is similar in this regard.

I’ve done all of those, others who are successful today have shared similar stories.  Then there are those who seemed to hold such promise at the beginning but suddenly were washed out.  Most of them looked for a shortcut, ignoring the fundamentals and then gave up when it got a wee bit hard.

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