Just a Landlord

The AASEW’s ever popular Landlord Boot Camp is just around the corner.  It will be held on Saturday, October 4, 2014 from 8:30 am – 5:30 pm at the Clarion Hotel located near the airport.

At this Fall’s Boot Camp I will be updating everyone on how the courts have been handling and interpreting all of the law changes since Act 76 was passed back in March of this year.

I will also address numerous other of topics that will help you navigate Wisconsin’s complex landlord – tenant laws.  Learn how to run your properties with greater profit while staying out of trouble.  Landlording can be pretty complex, with a seemingly never ending myriad of paperwork, rules, landlord-tenant laws and simple mistakes that can cost you thousands.

Some of the other topics that will be covered include:

1) How to properly screen prospective tenants

2) How to draft written screening criteria to assist you in the tenant selection process

3) How to comply with both federal and state Fair Housing laws including how to comply with “reasonable modifications” and “reasonable accommodations” requests

4) How to legally reject an applicant

5) What rental documents you should be using and why

6) When you should be using a 5-day notice versus a 14-day notice, 28-day notice, or 30-day notice and how to properly serve the notice on your tenant

7) Everything you wanted to know (and probably even more than you wanted to know) about the Residential Rental Practices (ATCP 134) and how to avoid having to pay double damages to your tenant for breaching ATCP 134

8) When you are legally allowed to enter your tenant’s apartment

9) How to properly draft an eviction summons and complaint

10) What to do to keep the commissioner or judge from dismissing your eviction lawsuit

11) What you can legally deduct from a security deposit

 12) How to properly draft a security deposit transmittal  (“21 day”) letter

13) How to handle pet damage

14) What to do with a tenant’s abandoned property and how this may affect whether or not you file an eviction suit

15) How to pursue your ex-tenant for damages to your rental property and past due rent (and whether it is even worth it to do so)

There will also be time for “Q&A” and Lunch is included!

If that is not enough you will also receive a manual that is over 100 pages that includes all of Tristan’s outlines on the various topics and various forms.

 Who:         Taught by Attorney Tristan Pettit, who drafts the landlord tenant forms for Wisconsin Legal Blank.

When:       Saturday, October 4, 2014  from 8:30 AM – 5:30 PM —- Registration opens at 7:00 AM

Where:     Clarion Hotel 5311 S. Howell Avenue, Milwaukee

Price:        AASEW Members only $159 .  Non AASEW Members  – $249

Register:    Go to www.LandlordBootCamp2014.com and you can register online and read prior attendees testimonials.

Last year’s AASEW Landlord Boot Camp was filled to capacity.  So much so we even had to turn people away.  So register early to reserve your spot.

I hope to see many of you there.

Thanks

Carl Bayerl passed away after a long battle with diabetes.  He was an Apartment Association member since 1986.

You could count on Carl to be the first one in the door at every legislative hearing, every Association event and meeting.  When it took getting up at 4 AM, Carl would be there ahead of guys half his age.

Carl was never a man of many words publicly, but he loved the legislative trips to Madison.   One of my fondest memories of Carl was at one of these hearings.  When it was his turn to speak, he walked up to the committee with a telephone book, put it on the table and said something like ‘Landlords already have a stack of rules bigger than this!  And you want to add more?’ That was it and he sat back down.  It probably had more impact than all the twenty minute arguments made by me and others.

Memorial will be on Wednesday from 11pm to 1pm at

Prosser funeral home  3235 s. Howell ave.

Burial is at the VA in union Grove. This is where John Chitko is also buried.

Long time AASEW member, Attorney Cheryl Baraty passed away yesterday after a difficult battle with cancer.  Many times I thought she would win the fight.

Cheryl represented quite a few of our members in eviction court and other actions, as being active with the Association in some legislative battles.  She was a close friend to former board member Kim Queen.

One of her more interesting achievements was finding that the Department of Neighborhood Services (building inspection) court section was “robo signing” court docs  long before anyone noticed that banks were doing it also.  That resulted in a number of cases being dismissed.

Thomas Russom writes on the ApartmentAssoc YahooGroups email list:

At our  recent monthly meeting [of the Apartment Association of SE WI] Attorney Doug Pessefall presented an overview of the “Recent Trends in Wisconsin’s Property Tax Assessment Process”. Tim Ballering has retained Attorney Pessefall to challenge the City of Milwaukee assessments of sales of foreclosed properties. We all know that there a huge difference between the assessed value of a foreclosed property and its market value reflected in the actual sale. Tim Ballering has a compelling argument that if the property cannot be sold, for cash, at the assessed value, then THE ASSESSED VALUE IS WRONG.

A past member of my church showed up for visit this past Sunday. He is a head assessor in the City of Milwaukee in charge of educating other assessors. I asked him what was the reason for these huge differences in the assessed value of the foreclosed property and the actual market sale of the property.

He replied, ” THESE  SALES ARE NOT NORMAL, they are motivated sales. Banks want to get these properties off their books so they are motivated short sell the properties. If the banks would have kept these properties on the market for a longer selling period of time the sale of the property would have met the burden of the assessment.”

This sounded to me like the liberal nonsense of “if we believe it then it is true” regardless of reality. I pursued the conversation further by telling him of a rural farm house I had to bulldoze. We did not initially follow up on a rehabber offer to purchase the house because a member of the family could not bear to have Grandma’s house turned into a  rental. The house followed the enviable fate of abandoned property- animal entry, vandalized and KOed by a weather event., but that took two years to occur. I said to him” You know that that process occurs much faster in the City”. He replied, “Yes,I know. When they( foreclosed properties) are heavily vandalized they have no value.” When the City’s plan to sell foreclosed properties to only new first home owners and not to rehabbers does not work,they will  beg for bulldozer dollars from the state (taxpayers on the hook) and blame the Governor for not caring about Milwaukee.

Let’s take your (or someone else’)  non foreclosed, non vandalized house in the City of Milwaukee.   Could you sell it for cash or conventional mortgage for the assessed value?  Very unlikely and therefore your assessment is excessive.

Certainly the number of foreclosures has an impact.  In fact Milwaukee’s former chief assessor, Peter Weissenfluh, had won an award from the International Association of Assessing Officers for an article he wrote on how foreclosures suppress the value of nearby  non foreclosure properties

A former long term board member began a slow process of selling off his properties one at a time using a few different brokers.  A smart, knowledgable, diligent guy.  All of the properties were well maintained and occupied.  He was in no hurry to sell.  He was trying his best for top dollar.  Of the sales I am aware of the details it appears he received 30-55% of assessed value.

Of the properties I bought in 2012, one third of these properties were not foreclosures and were exposed to the market on MLS for months.  I did not know the seller, nor the listing broker.  The average price I paid for these was 19.05% of assessed.

The two thirds were indeed foreclosures.  None of the foreclosures we purchased seriously vandalized, most had vinyl siding and vinyl windows, with good roofs etc.  In general they needed little more than had they been vacated by a three year tenant.  Most were ready to rent within a couple weeks.  We paid on average 24.95% of assessed value or more than we paid on average for the non foreclosures

The argument made by the city that the banks were in a hurry to sell has a hole in it as many of the foreclosed properties I bought had been listed on MLS for months.

The city also works hard to hide the truth in valuations.  Of the properties we purchased in 2012 only one appears in their listing of sales data that is posted at:http://assessments.milwaukee.gov/mainsales.html

One would expect that a listing such as this would show all sales or have a disclosure that states that it only includes those sales that supports their assessments.  But it does not.

In 2011 a total of 33 one and two family properties sold in the 12th District.  The average sale price was nearly 35,795 less than assessed. Nearly a$1.2 million less for just 33 sales.   Only two of those sold at or slightly above assessed.  In 2010 it was 38 sales and an average of 26,943 less than assessed value.

The only areas that sales consistently were sold for assessed or more than assessed were the Eastside and one or two assessment neighborhoods in Bayview. This means the most affluent neighborhoods are being subsidized by owners of lower valued properties.

So again I will state, if you could not sell your property within 90 days for cash or conventional financing at assessed value you are being overcharged. 

A year ago I wrote of my five top ideas for real estate for 2013.

Of those ideas I have implemented .. not much.   Shortly after the first of the year 2013 we found that my wife’s ongoing back pain was being caused by a large benign tumor. She had it surgically removed on Valentine’s day and is fine today, but it upended things for a while

Today as I reflect on the past year and think about this coming year I reread the ideas posted last year. A year later they all hold value.

Two have been implemented as part of an effort to increase the value of membership by the Apartment Association of Southeastern WI’s  board of directors under the leadership of Joe Dahl.

The Association now has quarterly small group meetings as part of the Professional Membership. These meetings are an important element of #3 on the list, improving  how we share our collective knowledge

In a big step towards #1 on the list, reducing maintenance supply costs, the Association has teamed up with Home Depot, Pittsburg Paint, Sherwin Williams, and a number of other organizations to provide discounts to our members.

Home Depot offers a whopping 20% discount on paint and 2% cash back rebate on most purchases to our members. Sherwin Williams offers members discounts on paint equal to the discounts that major contractors receive. Pittsburg has similar discounts.

I would add a sixth and seventh opportunity for 2014, Crowdsourcing/Crowd funding for real estate.  I’ll post my thoughts on these in the next couple of days

The five most important Real Estate Ideas for 2014 remain:

(Clicking on the topic’s title takes you to the full article)

1. Reducing Maintenance Supplies costs
   Pre 1950 buildings in lower income neighborhoods require around $100 per month per unit for repairs, replacement reserves and improvements. Newer buildings in more affluent neighborhoods perhaps $50 – $65. This is all maintenance from leaky faucets and unit turnovers to new cabinets, new roofs, electrical upgrades, replacing parking lots ect. (more)
2. More Effective Maintenance Labor/Contractors
   Maintenance, replacements and improvements to rental housing represents nearly $100 million per year in the city of Milwaukee alone. A savings of even 1% is a lot of money. (more)
3. Become better at sharing our collective knowledge
   The ApartmentAssoc@YahooGroups.com is good beginning. However it does not work real well as a reference tool as the posts are not organized by topics nor apparently easily searchable for many users. (more)
4. Group purchase of a distressed block or two
   There has been this wild idea floating around in my head for years, acquiring a distressed block with a group of active owners and turn it around for fun and profit. (more)
5. Tech Meets Real Estate
   There certainly are huge opportunities for software/web solutions for things that cause frustrations for owners and perhaps tenants. (more)
6. Crowdsourcing for real estate, posting later in the week.
7. Crowdfunding for real estate, posting later in the week.

Our world is full of traps for rental owners… Fail to document the deposit return letter when was sent and a $300 deposit turns into $5,000 with attorney fees. Try to be helpful and not rent the third floor walk up to a person with a bad leg and pay $10,000 in a Fair Housing claim. Likewise tell the person with the companion dog that there is no way you are renting to a person with a Pit Bull and pay another ten grand. Give the tenant with a year lease a 14 day for disturbing the neighbors and breaking your windows or the tenant with a month to month a 5 day for the same reason and you will have to start your court case all over again. The list of pitfalls is endless and growing.

So how do you collect your rent, fill your vacancies and evict tenants without getting in trouble or having expensive do-overs?

You could throw your arms in the air and give up, but that probably is not the most effective approach. You can go through life figuring these are things that only happen to the other guy or to”bad” landlords. That works for a while until you become the other guy. You could hire an attorney to be along side you for every decision, but that probably is not financially effective.

The only viable answer is to know the laws that affect us well enough to either know the answer or know when you need help. You can venture out and learn as you go through your own mistakes, usually a very expensive education – there is a reason they call it the school of hard knocks, or you can get as much education as practical before you find yourself on the losing end of a legal battle.

I started with the learn as you go method. It cost me three grand in 1982 dollars when a tenant that snuck out in the middle of the night sued for their deposit. I lost because I did not know the law well enough to make the proper argument that the 21 days did not start on the day they skipped out, but rather on the day I found they moved. So my letter sent seven days after I found a vacant apartment was proper, but laws only work for those that know them.

My next education was a Bob Smith Landlord Tenant Law course at Marquette. Much more informative and less expensive. A couple of years later Bob condensed this into a full day landlord tenant law for the Association. It cost somewhere around two hundred dollars and included his book “Landlord Defense: Eviction and Collection manual” that had most of the forms needed. For those who want to stroll down memory lane, here is a Sentinel article with a really young picture of Bob:

The Association continues to offer the best landlord tenant law course out there. The Landlord Boot Camp gives you the fundamentals in a full day Saturday class. It is updated to include the latest law changes and includes a 100 page plus manual. It is presented by Attorney Tristan Pettit who writes the standard landlord tenant forms for Wisconsin Legal Blank. Tristan also worked on SB179 that may become law later this month. If it does pass he will have an insiders view on how this law can be best utilized by owners.

The next Boot Camp is Saturday October 26th 8:30 AM to 5;30 PM. Costs is $159 for AASEW members and $249 for non-members.

Learn more or sign up at:
http://landlordbootcamp2013.com/

For the past two and a half decades or so, I put a lot into the Apartment Association.   I remain a board member and avid supporter of the organization.

We did some good and prevented some bad during my tenure on the board.  We’ve had very impressive leaders before and after my presidency such as Dave Domres , Attorney John Savage and Attorney Tristan Pettit.  We’ve also had some of the brightest minds working behind the scenes to make things happen, such as Jeff Chitko, Bill Lauer and Attorney Heiner Giese. Countless others did a lot for the Association and industry  such as Jim Dropp, Joe McLean, Bob Jovanovich, Dave Ohrmundt, Richard Bishop, Kim Queen and many, many more. The list of achievers is truly too long to list here.

This crowded slate of superstars really makes standing out difficult for even the best.

Then along comes our latest president, Joe Dahl and I am in awe.  The guy has been AASEW president for 10 months now.  In that short time he has accomplished the near impossible.

During the housing downturn Home Depot cut back on Pro reps and dropped their AASEW membership.   I tried for a couple of years to get them to return as a sponsoring member. No dice.

Not only did Joe get Home Depot to rejoin, but in the process secured a 20% discount on paint and a 2% rebate on everything else for our members.  Then he went on to get member discounts* from Sherwin Williams, Wisconsin Legal Blank, Pittsburgh Paint and many more vendors we use everyday.  The rebates more than pay for most member’s dues.  To stay competitive in this industry you will almost have to be a member.

We had a couple of good trade shows when Carmen produced them, but let’s be truthful, the last few year’s shows were dogs.  This year Joe enlisted the help of Shari from Sid Grinker, who along with Bill from ABC Sewer made this an outstanding event for both the industry and the vendors. The place was packed.   When you see either of them give them a big thanks.

Joe convinced some outstanding people to join the board such as Jon Krause, formerly of OnMilwaukee.com, Steve Johnson and Aaron Moseer.  These guys are young and sharp. (young of course being relative)

Our general membership meetings this year were often at capacity.  This was due to good marketing and strong subject matter.

Although not an Association event, Joe personally put on a very successful and impressive fund raiser for Senator Lasee who has been a friend of real estate and housing.  Something like 60 influential people from the rental industry attended.  I’m sure the Senator was pleased.

This kid — and  I can call him a kid because he is a couple of years younger than my oldest son —  is sharp and willing to do the work.  Joe holds an MBA, while at that point in my life all I held was a hammer and a paint brush.  😉  So far the only bad thing I can say about Joe is sometimes he swears enough to make a sailor blush, but he promises me he is working on that.

If you were a member, but no longer are, or if you never were a member, you should check out what the organization is becoming under Joe’s leadership. If you are a member you should take advantage of the discounts* and throw your support behind Joe and his team. If you are a larger owner that is not in the Milwaukee area it may make sense for you to join just for the discounts.

The 1980’s group Timbuk3 must of been thinking of us when they wrote “The future’s so bright, I gotta wear shades”  Bit of trivia – Timbuk3 was a Madison WI band.

* November 18th general meeting, which is the board election, the Association will be presenting a guide to all of the discounts and how to use them to your best advantage. I believe this is a member only event, but will verify and post more later.

You look at conversions such as the knitting factory being turned into loft apartments on the near Southside and you wonder ‘How could they afford to do this, in this market?’

The answer is Low Income Tax Credit Financing.  A brief overview is you design a project, go to the state (WHEDA) and apply for tax credits.  If all goes well you and you are approved,  receive federal income tax credits.  There is a formula based on the amount you spend, the number of units that are reserved for occupants below the county median income and a bunch of other factors.

These credits will be far in excess of what a normal investor/developer can personally use.  So they “syndicate” the tax credits to an investment group.  The investors get income tax saving in exchange for the money you need to put the project together.

It is a very competitive application process.  It is a very intense process. It is a fairly expensive process.  If you are looking for an easy dollar, you are looking the wrong way.  I speak from the experience of having tried and failed at obtaining tax credit financing to create accessible infill housing on the near north and near south sides of Milwaukee a bit over a decade ago.

But if you can break into this market you can do well, while doing good.

So it was a decade ago and I haven’t tried since, so why bring it up today?  The July Apartment Association meeting features Keith Broadnax of Great Lakes Capital Fund, one of the tax credit financing investment groups.  Years later I still find this was an intriguing opportunity. Maybe someone in attendance will become the next Gorman and Company.  😉

When: Monday, July 15, 2013 at 7:00 p.m.

Where: The Best Western, 1005 S. Moorland Road, Brookfield 53005

Who:  Keith Broadnax of the Cap Fund

Cost:  Free for current AASEW members, $25 for guests and expired members.

In my embarrassingly long time at rental real estate, I started in 1977, I have seen low prices, I have seen low interest andI have seen easy money, but never all three at once. If real estate investing was a horse race this would be the trifecta.

Today there are really powerful opportunities as interest rates are at record lows, real estate prices remain depressed and there is actually money available for the right deals and the right borrowers.  As far as depressed pricing you can purchase properties today at the prices they were going for in the mid 90’s but now those properties have vinyl siding, new windows and good roofs.  Interest rates? HUD has 35 year, assumable, fixed rate multifamily loans available at silly low rates.  LTV of 83%. I think they are even non recourse.   Friday the rates for the 223 (f) were posted as 2.95%.

Find the right larger deal today, get it financed under these terms and you could quite honestly be set for life, barring of course our government doing something really stupid and destroying the entire economy.

AASEW president Joe Dahl has arranged to have four leaders in Milwaukee area lending speak to the Apartment Association tomorrow Monday May 20th.

The meeting is free for current AASEW members and $25 per person for those who are not members, but at $99 a year who would be in this industry and not be a member.

When: Monday, May 20th, 2013 at 7:00 p.m.

Where: The Best Western, 1005 S. Moorland Road, Brookfield 53005

More info about the meeting and the Association at:

http://apartmentassoc.org