Oct 27

An update:

The bookmarked link we used yesterday, the one we used for years to look up DNS records no longer works today.  The link from the Assessor page to DNS no longer works in a meaningful manner.  Using the city site to find owner information for screening purposes does not return the phone number, just the information found on the Assessor’s site.  Plus it takes a lot of clicks to get to.

Yesterday we called an inspector who met with us two weeks ago to sign off an order because the order showed as open in the city computer system.  First thought – the inspector failed to sign off the order.  It has happened before with this inspector.

 
The inspector’s response was enlightening, if not scary.  It seems DNS recently replaced their computer system with a new one that works so poorly that they must do everything by hand, as in paper and pencil by hand.
 
I asked ‘What was wrong with the old system?’  His answer, ‘Nothing, it worked fine.’
 
So then I asked the obvious why.  His answer – The Mayor demanded the change. I thought it odd that a mayor would be dictating database software, sounds more like the job for IT. The inspector speculated that the purchase of the new, nonfunctional system was the Mayor returning a political favor.
 
Glad to see the original HeathlCare.gov* programers landed on their feet. 😉
 
Seriously though if you have completed orders from the City of Milwaukee you should check to make sure the status in the city system is correct.  If not, call 414-286-2268 and ask that a supervisor fixes the problem. You do not want to have an open order for say a smoke detector,complete the order and then have a fire with that order remaining open, or you fixed a broken step but it remained open and now someone tripped there.
 

* The GAO report on the failure of the original HealthCare.gov

http://www.gao.gov/assets/670/668834.pdf

Sep 16

My daughter was flying home from Atlanta and the following was a game provided by the airline to pass the time:

img_3295

Fight the landlord

I forgot to send this. A game that was available to play on my flight home from ATL. They had screens in each of the seats. -Jess

Sep 14

Yesterday I attended an all day Crowdfunding seminar held by Venture Hive,  a Startup Incubator and Accelerator located in downtown Miami.

The main speakers were Jason Best and Woody Neiss from Crowdfunding Capital Advisors. Neiss was the founder of FlavorRX, a company that created the flavor additives that are available for a pharmacist to add to kids liquid prescription meds so your child will actually take them.

Why do these guys matter? They are the coauthors and promoters of Title III of the 2012 JOBS Act (overview of Act) that allows for equity and debt crowdfunding.

I was really surprised at the quality and depth of the presentation. Both guys were engaging speakers.

The day started off with Jason speaking about the political process and how both parties tried to pull them to “their” side. They resisted those forces and in doing so the bill received bipartisan support, changing SEC rules that dated back to 1933 and 1934. There is a lot to be learned from them on political success.

What is crowdfunded equity? I’m sure most of us are at least basically familiar with how stocks work. You pay a few hundred dollars and now own 1/1,000,000,000th of General motors or some such thing. If GM does well the value of your portion of the company goes up. If they fail and the government has to bail them out your stock value plummets or disappears completely.

Crowdfunding equity is similar but for smaller offerings with a cap of $1 million per year per business. Investors need to be “accredited” (see below) and are limited to how much each investor can invest. Those limits are 10% of their income/net worth, up to $100,000, for investors with more than $100,000 of income or assets and 5% for those with income and assets less than $100k. Everyone is permitted to invest $2000 per year regardless of income.

You are required to use an approved platform for the offering, think of something like Kickstarter, as well as a licensed broker-dealer to promote it

Regulation A+ has changed to allow for offerings up to $50 million per year. Only accredited investors may invest, but now offerings may be offered and sold publicly. There is a ton, read expensive, paperwork involved in a Regulation A+ offering.

The interesting thing is using these tools for debt. So rather than give up a portion of ownership, you can crowdfund debt, i.e. mortgage money.

Manhattan Attorney Douglas Ellenoff presented via video feed.   His presentation was on the ethics requirements and how painful it is to get it wrong.

Ellenoff is a founder/principal in iDisclose.com, an online tool for creating the required SEC disclosures.

He also is a founder/principal in LexShares.com, an investment platform for commercial litigation.  You can think of this in the context of the recent case where billionaire PayPal co-founder Peter Thiel took out his arch enemy Gawker media by funding Hulk Hogan’s litigation against Gawker.

The real use of a litigation equity tool is in allowing cases that would make a difference be heard despite the cost involved being too great for any individual to cover.  For example,  you have a  case that could change our industry.  There is so much at stake you realize that if you win, your opponents will appeal, perhaps all the way to the US Supreme Court.  How the heck do you afford a case that will cost perhaps hundreds of thousands of dollars or more?  This is where litigation investing comes in.

So what does this mean to us in rental real estate? Let’s say you found this great deal on a $4 million property. But there is that sticky wicket of the $800k downpayment. Something like this could conceivably work, although those numbers are at the outer edge and realistically would impossible to achieve, at least until you had a couple of successful offerings. But I see this as viable for smaller deals, allowing small investors to be in properties that they otherwise could not.

Heck, with Reg A+ you and your buddies could conceivably buy something really big. A $50 million down payment would go quite a ways.

If you are thinking about giving crowdfunding a go, be prepared to spend a lot of time learning the ropes and a bit of money getting the legalities correct.

A couple of mainstream articles on real estate crowdfunding

Inside the Real Estate Crowdfunding Land Rush

Crowdfunded Real Estate: Should You Jump on the Bandwagon?

What is an accredited investor?
It is a person with a net worth of at least $1 million, excluding the value of their primary residence, or have income at least $200,000 each year for the last two years (or $300,000 combined income if married) and are expected to make the same amount this year.

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.


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