Feb 15

Two bills being proposed by the WI legislature. One allows for eviction moratoriums, the other restricts using eviction records for screening. This emphases the dangers that face our industry if we are not actively involved legislatively.

Bills like this, if passed, increase the cost of housing for tenants who pay their rent as the rent losses will be spread across the entire tenant population.

Back in the early nineties there was a Christmas eviction moratorium that basically allowed tenants who did not pay December rent to stay until mid to late January. We fought it and defeated it. It made to the New York Times.
https://www.nytimes.com/1991/12/29/us/scrooge-visits-tenants-in-milwaukee.html

WI Proposed Law Allowing for Eviction Moratoriums

http://docs.legis.wisconsin.gov/raw/proposal/2019/-0131

Analysis by the Legislative Reference Bureau
Under current law, no city, village, town, or county may enact or enforce an ordinance that imposes a moratorium on a landlord from pursuing an eviction action against a tenant of the landlord’s residential or commercial property.

This bill repeals that provision.


WI Proposed Law Restricting Use of Eviction Records for Screening

http://docs.legis.wisconsin.gov/raw/proposal/2019/-0201

Analysis by the Legislative Reference Bureau

This bill provides that it is discrimination under the state open housing law to do any of the following:

1. Inquire, whether orally or in writing, of a prospective tenant or any other individual about any eviction of a prospective tenant that occurred more than five years prior. The bill prohibits a prospective tenant from being asked about prior evictions unless the prospective tenant is informed that evictions more than five years old need not be disclosed.

2. Refuse to rent housing to an individual, or otherwise treat an individual unequally in the terms, conditions, or privileges of rental of housing, because of an eviction of the individual that occurred more than five years prior to the date of a rental application.

The open housing law is administered by the Department of Workforce Development, which receives, investigates, and evaluates complaints of violations and may order relief in appropriate cases. Persons who allege a violation of the open housing law may also bring a civil action.

Dec 14

The is a great, worth the time to read, article on landlord regulation over at BiggerPockets.

Oct 03

On top of the dire shortage of affordable rental homes, the rising number of evictions has only exacerbated tenants’ housing issues. In 2016, landlords in the United states filed an estimated 2.3 million evictions against tenants—an average of four evictions per minute.9 Nearly 900,000 of these filings resulted in an actual eviction,10 leading to more than 2.3 million people being displaced from their homes that year.11 Like the shortage of affordable homes, evictions also disproportionately harm marginalized communities. 

https://www.americanprogress.org/issues/poverty/reports/2019/10/02/475263/right-counsel-right-fighting-chance/

The authors try to make the argument that evictions somehow add to the shortage of affordable housing and tenants having attorneys to help delay the eviction would help.

The much more unpleasant truth is in delaying evictions, and thereby causing more loses for the owner.

Only the tenant that is not paying benefits. Tenants that are meeting their obligations are actually suffering as owners have to raise all rents to compensate for the loses caused by the few tenants that don’t pay or are destructive.

Evictions add to housing shortages? Really? Obviously if there is a shortage of available units, evictions are making units available to someone else who also needed housing.

However, providing tenants with attorneys with the intent of delaying evictions based on legitimate causes actually may be adding to the overall rental housing shortage. How so?

Mom and Pop: I’ve seen many owner occupant duplex owners refuse to rent their upper unit after a bad experience in eviction court. Often these folks let tenants get away with excuses and promises to pay until the tenant owes thousands of dollars.

Large investors: You can invest in the Dow Jones Industrials and have seen an average 8% annual return 1957 to today, 10% since 1926. With index funds your work is checking your bank account. With rentals its so much more. Invest in the next FaceBook, Microsoft or the next big thing.

The point that is missed by many is we don’t have to be landlords and every time a landlord sells out, the next has to increase rents as they now have larger mortgages and less capitalization.

Dec 02

Last week my son sent me the following text:

I read this from time to time and thank you for it

The Public Policy Forum a few months back said Milwaukee’s really short of low-cost rentals. If more people went into the business, researchers said, it could help. Yet Ballering, who’s owned for 32 years, told his son to find another occupation: “It’s such a difficult business,” said Ballering.

“There’s better things to do with your life.”

Not what a city in need of rental housing wants to hear from entrepreneurs who provide it.

Source: http://archive.jsonline.com/news/opinion/59534347.html/

The back story:

My son was nearing high school graduation.   I asked him what his plans were.  He said that he was going to follow me into the rental business.  He was initially upset with me when I told him no.  Today he is happy as a partner at a major marketing firm.

Although being in rental housing has done well for me, it is a harsh business.  There is little to no appreciation for the amount of work and risk involved. Many who enter the industry leave broke and broken. Your properties get damaged, your tenants do not pay and, to quote the late Rodney Dangerfield, we get no respect.

The government, who would benefit from successful rental housing, seldom support us or gives us the tools we need to succeed.  As an urban housing provider, you become responsible for the misdeeds of your tenants, while those who commit crimes are often not prosecuted.

There is an eviction crisis.  Yet instead of putting resources towards the causes, poverty and social issues, those claiming to want to solve the problem are providing more resources to free legal helps so that the nonpaying or disruptive tenant can stay a month or two longer due to an undotted i or uncrossed t.

So, yes, being a marketing professional seems like a much better life.

Jul 11

A worthy read:

Evictions: They Are Not The Terrible Landlord’s Fault

Apr 23

Heartbreaking Photos Of Eviction Day In America

Matt Desmond’s NYT best seller “Evicted” is impacting our industry in ways that even he probably never predicted.

In speaking to him, my company had a small mention in the book as well as Desmond and I were on an NPR broadcast on evictions, I do not feel he is anti landlord, nor that he puts the blame solely on our industry. Rather his objective appears to be universal housing vouchers, kind of Rent Assist on steroids.

Let’s face it, evictions are economically hard on rental property owners as well. Anything that would address the root cause would be good for owners and tenants alike.

But many “advocates” are reading the title of the book, and probably not much more than that, combining it with the eviction statistics Desmond has assembled and are using this as a rallying cry to end all evictions, blaming landlords in the process. They fail to realize or admit that tenants that do not pay rent or are causing problems are increasing the costs to those tenants who are paying as they should.

Apr 12

From today’s Milwaukee Journal Schneider: Desmond’s ‘Evicted’ is a flawed masterpiece

The article misses the mark in some aspects.
 
Homes in Milwaukee’s poorest areas often can be bought for as little as $8,000, with rents running upwards of $500 a month. In virtually no time, landlords can own the properties free and clear and the rent they collect is pure profit — as long as they can collect. As succinctly put by one of the landlords featured in the book, an African-American woman named “Sherrena,” (pseudonyms are used throughout the book) “The ‘hood is good.”
 
This furthers the misperception that landlording is a “get rich quick” scheme. Sherrena made statements to Desmond that sent up red flags, at least to us in the industry,  that she was already in the throes of failure at the time of the interviews.  

Attorney Heiner Giese did the research to discover Sherrena’s identity.  She was not becoming wealthy on these properties.  Instead, Sherrena began losing her buildings to foreclosure shortly after the Desmond interviews and was out of business well before the book was published.  Many of her properties have since been razed.

However, Schneider does recognize a fact that is missed by many who look at rental housing and urban issues from the outside

 

Further, despite the book’s grim portrayal of landlords, one can only imagine how far these neighborhoods could fall if landlords weren’t there to keep at least some semblance of order. If housing laws were to squeeze the amount of money property owners could make on their rental units, they may simply abandon these homes altogether, leaving a lawless landscape devoid of structure.

 

Mar 25

Published in the 3/25/16 Milwaukee Journal
By Heiner Giese

Matthew Desmond’s book “Evicted” with the subtitle “Poverty and Profit in the American City” has generated much discussion in the Milwaukee community and among us Milwaukee landlords. We generally agree with the Journal Sentinel’s March 13 editorial calling for more discussion on how to provide decent housing for the poor.

While Desmond does an excellent job of presenting and humanizing the struggles of the poor to pay their rent, he doesn’t adequately cover the “profit” aspect of his subtitle. Out of 30 landlords interviewed, he only presents case studies on two successful ones. The marginal operators and the failed shoestring capitalists (to say nothing of the many nonprofit housing groups who have failed) are not featured.

I have been involved in housing issues for over three decades — as a former hands-on landlord, as attorney for the Apartment Association of Southeastern Wisconsin and as an attorney representing landlords (and sometimes tenants) in eviction and foreclosure court.

My clients have properties in all areas of Milwaukee and nearby suburbs. But in the inner city, many landlords have failed. I have sued them or defended them when their rental property was foreclosed on because they couldn’t make the mortgage or land contract payment because the rent money wasn’t coming in. A good chunk of the abandoned houses you’ll see when driving through central city Milwaukee were once owned by landlords.

Desmond is right in pointing to two correlating equations: difficulty paying your rent because you’re poor = getting evicted; getting evicted = getting deeper into poverty. And there is a third equation: getting evicted once = getting evicted again.

The details are not in the book but one of Desmond’s featured tenants had seven evictions filed against her in the 12 year period from 2003 through January, 2015, three of them since she was in his survey in August 2008. So ask yourself, what responsible landlord who needs the rent to pay the mortgage, the taxes, the water and sewer bill and the repair costs for the windows broken by neighborhood vandals would rent to this struggling lady?

Housing vouchers for all, so no one pays more than, say, 40% of their income for rent is an answer. Except you wonder if it is politically doable. Will John and Mary Homeowner give up some of their mortgage interest tax deduction so their government subsidy can instead help their neighbor on the other side of the tracks pay her rent?

Converting part of cash welfare benefits to a voucher for those who have an eviction record would make them more acceptable in the private rental market.

Another remedy touted by Desmond is to provide lawyers for those facing eviction. But that will not prevent eviction for the vast majority of defendants in eviction court who are behind on the rent.A lawyer can only help them delay the eviction. So they get another free month out of their landlord and who winds up paying for that “free” month? It is their low-income neighbor in the unit upstairs whose monthly rent is $50 higher than it should be to make up for the landlord’s loss. No wonder, as Desmond shows, that rents in the inner city aren’t much less than in the suburbs.

Some solutions proposed by Desmond would work, but others won’t or can’t garner legislative support in today’s political climate.

Ron Hegwood, our association president, recently wrote: “A good tenant is worth their weight in gold. How can we create more good tenants and protect and help the ones we have?” We look forward to meeting with tenant advocates and public officials to seek answers to that question.

Heiner Giese is a Milwaukee attorney who represents the Apartment Association of Southeastern Wisconsin, Inc.

Mar 19

Desmond and others have a nifty little saying “Rent eats first” that implies landlords get paid at the expense of people eating.  The truth is food stamps (SNAP/Food Shares) are given to most people and families under the poverty level while housing assistance is given to very few.  That’s why we read about evictions and homelessness and not about starvation.  In a country as wealthy and great as America, we should not be hearing of either.

One workable voucher program could be similar to food stamps where all people and families below the poverty level, in addition to food stamps, would receive a housing allotment that can only be spent on housing.

The recipients would have a choice of renting from anyone without the government saying, for example, ‘you have two small kids so you are only eligible to rent a two bedroom in the $630 price range and we will pay $500 of that’   Instead the recipient would receive a $500 housing allotment.  They then could rent a $500 place and pay nothing out of pocket or decide they want to rent a $750 three bedroom in a different neighborhood and must figure out how to pay the other $250 themselves.

Such a plan would help stabilize the private housing industry while at the same time would allow the recipients much more freedom of choice in their housing decisions.  It would also be less costly to manage than Section 8.  To achieve this the payments would have to be available to all rental owners except of course those banned due to fraud or similar.

Some of the money could come from adjusting the current W2.  As the vouchers would earmark monies for housing the volume of evictions should subside.

Mar 18

On March 7th, 2016 Matt Desmond, author of EVICTED was interviewed on the Diane Rehm NPR show, guest hosted by Tom Gjelten.  I was privileged to be an invited guest on the show.  I do not feel I did as well as I wished but am sharing it as this show was a good overview of the issues presented in the book.

EVICTED will have a huge impact on our industry for many years.    Whether that impact is positive or negative to rental housing is up to us and how we react.

Listen to NPR’s Diane Rehm Show EVICTED Interview with Matt Desmond

preload preload preload