Dec 03

From Rebecca Knox at Brew City REI Club

********Brew City: If you are concerned about the MPS referendum suggesting a SIGNIFICANT PROPERTY TAX INCREASE 64-128% and want to relay your thoughts on this, the LAST MEETING with the task force will be at 5:30 p.m. at Bradley Tech High School, 700 S. 4th St, Dec. 10.
********

All of the meetings will be open to the public. The panel is expected to make a recommendation to the school board in December ūü§®ūüė≤ This is the last meeting they are having.

We spoke to District 4 elected MPS board member, Annie Woodward and she said there are a lot of agendas going on and encourages everyone to share their opinions.

The current conversation across our industry is Evictions.

What will happen to tenants who are already near failing, when tax bills force widespread rent increases?

What will happen when rental owners, who are already operating on slim margins, cannot find tenants that can pay the increased rents that mirror the increased taxes.

What will happen to homeowners who are barely keeping up with expenses today?

If property taxes double, which is the mean predicted increase, Milwaukee, and Milwaukee alone, could easily see a foreclosure/failure rate comparable to 2008.

Owners in the rest of the metro will be unaffected, making rentals and homes there more valuable and desirable, furthering the exodus from, and the decline of, the City of Milwaukee.

The Journal reported just two weeks ago of the harm caused by 28% of City workers leaving the city for the burbs.

Jan 03

Okay, time for a rant here…

For the sixth time in less than ten months, Pitney Bowes postage (PB.com) has posted late fees to our account for payments received posted two or more days prior to the due date.
 
Pitney Bowes has gone from the industry leader in SMB postage solutions to adopting slimy, time-consuming business practices.
 
If it has happened to us, then I’m sure it is happening to countless other small businesses. If it happened to you I would like to hear from you. ¬†Maybe it is time for legal actions.

 

I would also like recommendations for alternative services for businesses sending 400-1000 pieces of mail a month.
 
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.

 

Jan 02

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 ‚Äď $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.

 

Oct 06

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. ¬†ūüėČ ¬†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.

 

Jan 09

Real Estate Ideas for 2013 Part Five: Tech Meets Real Estate

What can be done collectively to improve our businesses, save costs or generate additional revenue?

On January 1st I posted a list of ideas that I had that some of us could consider to collaboratively work on.  I intend to pursue one or two of the ideas presented and may entertain partnering with the right person or persons.

This post is the fifth and final of my more in depth notes on the ideas.  I will post others over the next week or so as time permits me to clean my notes into coherent sentences. If any of the topics interest you comment either on the list or directly to me at:Tim@ApartmentsMilwaukee.com


Part Five:

Tech Meets Real Estate

There certainly huge opportunities for software/web solutions for things that cause frustrations for owners and perhaps tenants.

I see this as the greatest opportunity of those presented by me.  We are in an industry that has low margins and high expenses. A 10% swing in effectiveness can mean the difference between wildly successful and a miserable failure.

Some thoughts on where tech and rental real estate may intersect:

  • Setting rents to market rates. How much are you losing because your rents are too low or how much have you lost due to your rents being too high and your vacancies languish? Me, too, to some extent. ;-( ¬†What if there was a site that effectively tracked what other rents are at in your area?
  • Property acquisition.¬†Look at what sites like SpotProperty are doing elsewhere, but not here.
  • Vacancy filling Craig‚Äôs List used to work, but now there is too much spam and fraud. What about a system where the tenants need to prequalify before actually applying. While pre qualifying without processing the full app ¬†by an individual owner may be problematic from a fair housing standpoint, a proper third party system could work.
  • Tools for ¬†group maintenance supply buying¬†mentioned in Part One of this series¬†where owners could opt into a group purchase of bulk supplies
  • Improved tenant screening. ¬†Things like “Bad Tenant Lists” are illegal, but there must be things that are not being done today or being done in a manner that is more difficult than necessary or simply be improved by tech solutions.
  • A site for creating and serving 5-day notices¬†etc. by certified mail or personal service from your computer without ever having to leave your home or office.
  • Put your solution here…

Where tech helps our industry today

Obviously MLS is the big tech tool of real estate.

The right property management software is essential for all but the smallest of property owners.  Our company uses very customized management software that makes many tasks and decisions automatic or semi automatic. In general a click a button and the machine does exactly what a well trained person would. Receive a WE Energies service termination notice and a work list item is created to check for vacant. Tenant collection actions are automatically determined on amount due, last pay date and how long they have been a tenant. One button and it select the proper notice or reminder for all tenants. Of course there are overrides as special circumstances require special treatment.

Automation of routine tasks frees our employees to think about things that need thought about, rather than thinking about the repetitive and mundane.  Computers are great at those tasks.

Another example of tech meeting rental real estate is the free eviction notices we provide members on the AASEW site.

Outside of MLS, management software, five days and the examples above, there are certainly other solutions and improvements just waiting for us to identify. ¬†Well, waiting for you to identify, as I’ve put all I can think of in the above list.

If any of the topics interest you comment either on the list or directly to me at:Tim@ApartmentsMilwaukee.com

Jan 04

 Real Estate Ideas for 2013

What can be done collectively to improve our businesses, save costs or generate additional revenue?

On January 1st I posted a list of ideas that I had that some of us could consider to collaboratively work on.  I intend to pursue one or two of the ideas presented and may entertain partnering with the right person or persons.

This post is the third of my more in depth notes on the ideas.  I will post others over the next week or so as time permits me to clean my notes into coherent sentences. If any of the topics interest you comment either on the list or directly to me at:Tim@ApartmentsMilwaukee.com


Part Three: 

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.

What if the¬†archives¬†were used to form a new reference tool, perhaps a Wikipedia style ‚ÄúBest Practices‚ÄĚ Guide¬†for Milwaukee rental owners. ¬†My vision is a user contributed, user edited tool that would be a ready reference to many topics we discuss on these lists.

It would include everything that a property manager runs into. Who is the best plumber, what notice do you use for the tenant that decided that partying till 6 AM everyday is being neighborly.

Many of us know a lot, but none of us know it all. Things change in our industry nearly daily.   Contractors and suppliers who were the best may have become expensive  sloppy or retied.   New vendors and contractors come on the scene every day. Bad tenants learn new ways to circumvent screening. Laws change. Judges and Commissioners change their views on how laws are implemented.

Similarly a Mastermind Group could reap benefits if the right people were involved. Here is a good overview of how Mastermind groups work.

Another model is what groups like StartUpMKE are doing in the tech field.  It is similar to what the Apartment Association does, but they seem  more involved in actual business creation.

Lunch with ¬†AASEW board members was an interesting idea. ¬†If you don’t recall this you can read more about lunch with AASEW board members here. ¬†When I look back on our prior attempt, I think this would work better if the sponsor board members would set a date, place and topic. ¬†Then if there was enough interest for that particular meeting it would move forward.

Bottom line: There is power in shared knowledge and we should do more to harness that power

Jan 03

Real Estate For Ideas 2013 Part Two

What can be done collectively to improve our businesses, save costs or generate additional revenue?

On January 1st I posted a list of ideas that I had that some of us could consider to collaboratively work on.  I intend to pursue one or two of the ideas presented and may entertain partnering with the right person or persons.

This post is the second of my more in depth notes on the ideas.  I will post others over the next week or so as time permits me to clean my notes into coherent sentences. If any of the topics interest you comment either on the list or directly to me at:Tim@ApartmentsMilwaukee.com


Part Two:

More Effective Maintenance Labor/Contractors/Service Providers

As mentioned in part one, 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 Effective Maintenance Labor/Contractors/Service Providers

The ability to have skilled, cost effective maintenance available on demand is typically a missing element for small owners.

If all of your unit preps are done two days after move out you will have far less vacancy income loss. If you can respond quickly to emergency repairs less tenants will move.

Even larger owners such as our company can’t do this efficiently with typical staffing. Either you have too few workers the first week of the month or too many the rest of the month.

The million dollar question¬†is ‚ÄėHow do can you have an on demand workforce without the risk of uninsured “contractors” who may later be deemed employees by taxing authorities or injured and not covered by your property insurance?‚Äô

A couple of years ago Affordable Rentals rolled out Rental A Worker, where we ‚Äėrent‚Äô other owners our maintenance people by the hour for small or large jobs. We benefit as we can have a larger workforce to meet the up and down demands of maintenance, while being able to share them when our workload is lighter. ¬†We can also justify having highly skilled people on staff full time, such as certified heating techs.

The big advantage this offers other owners over hiring Joe off the street is our people are insured and have taxes withheld. There is a real danger and expensive otherwise. For the longer version read: Your Handyman-Cheap Contractor or $60000 Mistake?

The real vision for Rent-A-Worker is to expand it to a temp like service where there is an on demand workforce that can ramp up when there are a lot of preps etc and then can work for another temp agency on slow times.  This would hold an advantage for our company as well as other owners who participate.

Such a system would have a worker rating system, whereby the owners would grade them and their opportunity to work and future pay rate would be based on those grades.  So the best workers would achieve full time employment at a decent wage.

All the workers, whether they are laborers or small uninsured contractors would be treated as employees with the temp agency withholding taxes, maintaining worker‚Äôs comp etc., thereby¬†eliminating¬†a potential career ending risk for owners who were hiring “handymen” for cash. ¬†The guy in the Cheap Contractor or $60,000 mistake went under. ¬†I assume this was the cause

I pursued the temp angle a bit a year a half ago.  We hired a college grad who was formerly a manager a temp agency that moved out of the area. Excellent resume and references. I held a lot of hope for him to do well at this, but in the end it did not work out. By that time I was distracted with the purchase of a commercial property in Hollywood FL to house my wife’s businesses.  The basic software framework exits as well as some operating procedures.

I still believe an available,  flexible workforce  is the brass ring for our industry; seeing so much benefit for my company as well as many other owners. This may be the top new project to aggressively pursue this in 2013. The open question on this is does Obamacare make this in anyway less practical today if the number of temps exceeds 50.

Jan 02

Real Estate Ideas for 2013 Part One

What can be done collectively to improve our businesses, save costs or generate additional revenue?

On January 1st I posted a list of ideas that I had that some of us could consider to collaboratively work on.  I intend to pursue one or two of the ideas presented and may entertain partnering with the right person or persons.

This post is the first of my more in depth notes on the ideas.  I will post others over the next week or so as time permits me to clean my notes into coherent sentences. If any of the topics interest you comment either on the list or directly to me at:Tim@ApartmentsMilwaukee.com


Part One:

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.

Do the math on your units over an extended time period. Do not forget to include a reasonable value on your time. You chose $10 an hour? Why not work for me or McDonalds. ¬†Make more per hour and avoid all the hassles of ownership? ūüėČ

A quick check of city data files shows there are 159,658 rental units in the City of Milwaukee alone, inclusive of rented units in owner occupied buildings. Let’s assume a low ball $50 per unit per month in repairs, replacements and improvements. Annually that is a whopping $95,794,800. Yes, nearly $100 million per year. It actually could be a much larger number. Even 1% savings  is a lot of money.

So what can be done?

Improve supply sourcing: Collectively finding the best deals and creating good deals through group purchases.

We did this a couple years back when the CO detector law went into effect. Prices then for COs were in the twenty dollar range. My company alone needed around 2,000 CO units. So we shopped the best deal and found where the quantity price breaks were. We brought in a bunch of other larger owners and the final price dropped to eleven something each due to the number of pallets ordered. So four or five hours of my staff’s time saved our company and the other participants collectively tens of thousands of dollars in a single transaction.

Last spring myself and another midsize owner went to the Hardware Show in Las Vegas. Between us we buy some products in quantities that equal or exceed an independent corner hardware store. In Vegas we found good deals on a number of products and vendors we continue to use today. You can read more about this trip here: http://justalandlord.com/2012/05/13/thoughts-ideas-from-the-national-hardware-show/

This brings us to the million dollar question‚Ķ¬†‚ÄėHow can we use our collective shopping experiences and buying power to improve our bottom-line on a daily basis in 2013?‚Äô

Obviously group buying is a large opportunity.  There are some details that would have to be worked out to prevent this from being a burden to anyone.  The CO detector deal worked because the larger the group the lower the price for all of us.  I knew the other owners, but even then some backed out or reduced the number of units they wanted.  In this instance it was not a problem as the request I received after placing the order exceed the ones that were not taken.  But the situation could have left me with $11,000 of detectors I had no immediate need for, but a bill that would need to be paid within 30 days.

The most viable option that I can think of is a web based system where an item would be presented and people would commit to their purchase with a credit card that would have an authorization hold on the amount of the commitment, but the card would not be charged unit we reached the magic number. Once we were ready then the charge cards would be processed and the order placed. ¬†For this to work we would need a pretty short time frame to order. ¬†Seven days? If the quantity was not reached then the authorizations would be released and nothing would be charged to the owners’ credit card.

The website would show how many widgets needed to be ordered to get x pricing and how many to get y.  Emails would go out saying we are X number of units away from placing the order or X number of units away from the next level price break.  Some larger owners could quickly do the math and figure out if they bought an extra 50 widgets that the price break savings would make it less than they were paying for the original amount.  (That happened with the CO detectors.)

There would of course be some upfront costs here, but not a lot.  There would also be some admin costs finding and securing the orders.

Sharing our purchasing experiences could be an opportunity too.¬†¬† If we had some easy way of sharing what we were purchasing from whom for how much we would all know the best places to buy. ¬†I just do not see reaching a level of participation that would make this work. ¬†(But I’d enjoy being proven wrong)

If any of the topics interest you comment either on the list or directly to me at:Tim@ApartmentsMilwaukee.com

 

Jan 01

What can be done collectively to improve our businesses, save costs or generate additional revenue?

I will post my in-depth thoughts on these topics over the next week or so as time permits me to clean my notes into coherent sentences. If any of the topics interest you comment here or email me at: Tim@ApartmentsMilwaukee.com

  • Reduce Maintenance Costs
  • Become better at sharing our collective knowledge
  • Group purchase of a distressed block or two
  • IT meets real estate

Reduce Maintenance Costs

Improve supply sourcing: ‚ÄėHow can we use our collective shopping experiences and buying power to improve our bottom-line on a daily basis in 2013?‚Äô ¬†More thoughts on better material sourcing.

More effective Maintenance Labor/Contractors/Services The ability to have skilled, cost effective maintenance available on demand is typically a missing element for most small to medium sized owners. Read more on  effective maintenance labor solutions that could change our industry.

Become better at sharing our collective knowledge

The ApartmentAssoc@YahooGroups.com is good beginning. But the idea could be greatly expanded upon. Perhaps a Wikipedia style ‚ÄúBest Practices‚ÄĚ Guide* for Milwaukee rental owners. It would include everything that a property manager may run into.

Similarly a Mastermind Group could reap benefits if the right people were involved. Here is an overview of the Mastermind concept.

Also look at what groups like StartUpMKE are doing in the tech field.  Read my thoughts on increasing the sharing of knowledge.

Group purchase of a distressed block or two

Choose a very small geo area of Milwaukee. Think something on the terms of both sides of a block or two maybe three at the max. It should be depressed, as in make Detroit look like a nice place to live, depressed.

Apologizes to Detroit, but many people know of Detroit’s challenges and fewer of the challenges of Milwaukee.

Yes, unfortunately, there are many areas like this in Milwaukee and the numbers are increasing as foreclosures work their way through the system.

The plan would be to assemble a group of investors and turn the area for fun and profit. My  expanded thoughts on group purchasing of a distressed block.

Tech meets real estate

There certainly huge opportunities for software/web solutions to things that cause frustrations for owners and perhaps tenants.

Some ideas:

    • Setting rents to market. How much are you losing because your rents are too low or how much have you lost due to your rents being too high and your vacancies languish? Me, too. ;-(
    • Property acquisition tools Look at what sites like http://www.spotproperty.com/ are doing elsewhere, but not here.
    • Vacancy filling Craig‚Äôs List used to work, but now there is too much spam and fraud. What about a system where the tenants need to prequalify before actually applying. While pre qualifying by an individual owner may be problematic from a fair housing standpoint, a proper third party system could work.
    • Custom Management tools My company‚Äôs secret sauce is our highly customized management software. Nearly every task is one or two clicks and the computer makes many mundane management decisions on its own.
    • Put your solution here

You can read my thoughts on tech and real estate here

Conclusion

What? This is not enough ideas for one year? Then post yours on the comments!

Shy, then email directly at: Tim@ApartmentsMilwaukee.com either for my review only or to repost anonymously as you direct.

 

 

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