Apr 04

From a Fair Housing perspective, you probably must account in some manner for the value of the Section 8 payment when calculating an income multiplier guideline.

I’ve read of the argument made in other jurisdictions that if an owner is using a rent multiplier, that it should be on net rent to the tenant. This is probably not a workable answer for either tenant nor the owner. If the net payment by the tenant is $20 with a three times multiplier, a $60 per month income is not going to cover living expenses like heat and lights. A good discussion of this issue from a while ago is at: Bigger Pockets

In WI you must include the value of child support, food stamps and perhaps* Rent Assistance Vouchers in income calculations. So if the gross rent is $800 and the tenant receives $700 RA, $500 in food stamps, they would need to earn $1200 additional to meet the three times multiplier.

*Wisconsin Lawful Source of Income definition:

Wis Admin Code DWD 220.02(8)  “Lawful source of income” includes, but is not limited to, lawful compensation or lawful remuneration in exchange for goods or services provided; profit from financial investments; any negotiable draft, coupon or voucher representing monetary value such as food stamps; social security; public assistance; unemployment compensation or worker’s compensation payments.

There is a 1995 federal case, Knapp v. Eagle Property Management Corp, that found the value of Section 8 vouchers are not required to be included as income.

But that was nearly 25 years ago. Sentiments have changed over that time. I believe that if Knapp was tried today the court would find against the owner on this question as concepts like disparate impact were not widely argued then. Today we are restricted by HUD in using criminal records in screening because of the disparate impact on members of protected classes.

The plain language reading of the WI code makes not including the voucher value in the rent multiplier calculation open to expensive litigation, which the Knapp court determined that their insurer had no duty to defend.

To form your own opinion on this and other WI fair housing standards, a good starting point is:

STATE OF WISCONSIN Fair Housing Plan Analysis of Impediments to Fair Housing and Actions to Overcome Them Update to the 2015-2019 Consolidated Plan

Jan 13

The Spring 2019 Apartment Association Landlord Tenant Law Boot Camp is February 9th, 2019. (Less than a month away.)

Even though I know the law well, we’ve sent our staff.  It is good for them to hear the rules from someone else.  Plus if they learn one new thing, it more than pays the modest cost.

Tristan knows the latest law, but that’s the easy part.  He also is one of the most prolific landlord tenant attorneys in Southeastern WI.  That gives him great insights into how the courts are ruling today and what the most recent “Gotcha’s” are.

At $179 for members, it is far cheaper than learning from your mistakes.  Not only does it help prevent costly errors, you also will learn how to screen better and other things that will result in profitability.

AASEW Landlord Boot Camp 2019

WHEN: Saturday, February 9, 2019

WHERE: Four Points Sheraton 5311 S. Howell Avenue, Milwaukee, Wisconsin, 53207 (Across from the airport)

Registration opens at 7:10 AM

The seminar runs from 8:30 to 5 PM with a 30 minute break for a complimentary lunch. There will be a one hour question and answer session afterwards, ending promptly at 6 pm. Many will find the Q&A invaluable, therefore you may wish to arrangements to stay until 6 pm.

Updated to include information from Wisconsin ACT 317!

INCLUDED: 100 plus page manual to help you put what you learn into practice.

 

More info and sign up at LandlordBootCamp2019.com

Aug 29

For years I struggled with setting rents. Too much under market rents and the properties did not perform as well as they could. Too much over market rents, they sat vacant and do not perform as well as they could. There seems to be a theme developing here. 😉

To succeed you need to know what others are charging for rent in your very specific market. To that end, we spent a lot of my time, my staffs’ time and effort trying to collect comparable rents.

Ten, fifteen years ago our team manually enter details from for rent ads in the local papers, Craigslist, Zillow and anywhere else we found them. Then we would combine that information with city property records, trying to get an accurate view of what the market rent was for a particular unit. This was expensive and annoying.

We tried freelance data collectors through oDesk (now UpWork) to collect and correlate the records. Better, but still costly and the results still were not exactly what I wanted.

Then I saw promise in AI and Machine Learning, using tools like BlockSpring. Better results, but then Craigs and others started blocking automated collection tools.

We went back to manual data collection where we had to and automated what we could.

We were doing the rent surveys once or twice a year due to the hassle and costs. Quarterly would be better to catch trends.

I had looked at Rent-O-Meter in its early days. It seemed promising but had far less data than even our rudimentary data set.

Last October I relooked at Rent-O-Meter. Wow. We have been using it ever since.  They have both a free version and a free trial of the “Pro” version that goes for about $200 per year.  Setting one rent wrong will cost you more than that. You may want to take a look.

Note: while this may sound like an ad for Rent-O-Meter, it is not.  I’m just a happy, paying customer of theirs.

May 22
A lot of PhDs say the same thing we’ve said for years about landlording in general and Section 8 in particular in peer reviewed papers.  Typically we only see those critical of owners, but there are many that accurately explain the dynamics of rental housing.
Here is a excerpt from two.
 
How to attract more landlords to the housing choice voucher program: a case study of landlord outreach efforts –  David P. Varady , Joseph Jaroscak b and Reinout Kleinhans
Our interviews suggest that existing stereotypes of Section 8 (HCVP) landlords as greedy and unconcerned about their tenants are inaccurate. Moreover, our findings provide new support for the classic studies of inner-city landlords cited earlier. Currently, many landlords in the HCVP are themselves experiencing significant financial burdens and risks as they try to deal with the low-income rental market. Tenants exhibiting various forms of problematic behavior, such as drug dealing, substance abuse, and violent crime, exacerbate the problem.
Urban Landlords and the Housing Choice Voucher Program – Prepared for U.S. Department of Housing and Urban Development by The Poverty and Inequality Research Lab Johns Hopkins University Philip Garboden Eva Rosen Meredith Greif Stefanie DeLuca Kathryn Edin
Of small properties with affordable rents (below the regional median), only those without debt service are viable. Only 25 percent of mortgaged properties have positive cash flow (Garboden and Newman, 2012). Taken together, these quantitative analyses and our own findings described in the following suggest that much of the stock is financially precarious, which could theoretically lead to under maintenance, abandonment, and conversion.
June 11th, 2018: The publication is back up on HUD USER at a new address above
Note: this publication has been removed from HUD USER.  I reached out to the authors who said it will be reposted soon, that the removal was to improve the formatting
Mar 11

Follow up to the Milwaukee County Proposal on making Rent Assist a protected housing class.  with a hearing is Monday March 12th, 9:00 AM at the Milwaukee County Courthouse building, Room 201B,  901 North 9th Street,  Milwaukee, WI 53233

My company accepts,  and likes the Rent Assist program.  We also have not found the inspections particularly cumbersome.  In our market we see Rent Assist as a benefit to both owner and tenant.

Yet, I oppose the bill.

  1. Mainly because it attempts to hide the fact that the true reason that people do not get Rent Assist is that Milwaukee County does not provide as many vouchers as there are folks eligible to receive vouchers.If Ms Dimitrijevic wanted to help tenants in need of Rent Assist she would look at her own branch of government and say ’We need to increase the available vouchers.’  If that was her proposal the Association and I would fully support her, as would most tenant advocates.Instead she tries scapegoating owners, making it look like discrimination against voucher holders is the problem.
    Ask Ms Dimitrijevic if there are more applicants than vouchers and how many months or years the Rent Assist waiting list is.The other reasons I oppose this are:
  2. Rent Assist does not allow for month to month occupancies.  Owners are more likely to take a chance on a questionable applicant if they can use a month to month and terminate tenancies that are not working as expected.  If you are a tenant, I’m sure you do not want to live in an apartment next door to a disruptive neighbor and when you complain the owner tells you that this person that is making your apartment less enjoyable has to stay for 11 more months due to a year lease.
  3. Another issue is that per the RA contract an owner must serve both the tenant and the RA agency with notices of default, such as non payment.  This creates an additional opportunity for an eviction for good cause to have problems.
  4. Finally, an owner may have to wait for the first payment.  While not a concern to our company, this is a big problem for mom and pop owners who are often under capitalized.

What the bill actually does.

Supervisor Marina Dimitrijevic, the bill’s author,  states on FaceBook:  “This change to the ordinance does not mandate acceptance of certain sources of income rather it makes it illegal to discriminate against tenants based on source of income.”  The bill is worded consistent with her statement.

Currently.

Prospective tenant:  ‘Hi, I have a Rent Assist voucher.  Will you accept my app?

Landlord:  ’Sorry.  We do not do Rent Assist.’

Prospective tenant:  ‘Okay,  There are thousands of other owners that love the program and I am one of a few tenants who are eligible.’ and under her breath says ‘What a donkey’

Result: The tenant does not waste time and possibly money apply for a unit they will not receive.  Everyone understands upfront.  And the owner who does not accept the Rent Assist voucher holder loses a  great tenant, and the accompanying revenue,  that we end up with. 😉

Image what a terrible experience this will be for the tenant under the new law if they apply with an owner that will not accept Rent Assist vouchers.

Prospective tenant:  ‘Hi, I have a Rent Assist voucher.  Will you accept my app?

Landlord:  ‘Of course you can apply. I follow all laws.’

Prospective tenant: ‘Was my app approved?

Landlord:  ‘Why yes.  You met all my requirements and seem like a wonderful tenant!’

Prospective tenant: ‘Great!  Here is the Rent Assist app you must sign.’

Landlord:  ‘Sorry.  I do not accept Rent Assist, but I did accept you.’  and legally the owner could say ‘By the way, because you are accepted I expect you to take the place or forfeit the earnest money’

Prospective tenant: ‘WTF! This is an outrage.

Landlord:  ‘Sorry. This is the unintended consequences of  Ms, Dimitrijevic’s law.’

Result:   Confusion, a terrible experience  and possible negative financial consequences.

Instead of this bill, a true tenant advocate would require that owners disclose in advance of taking an app if they will accept Rent Assist or other programs.  That is what is fair and equitable, not some non discrimination code that will harm and confuse tenants.


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