Just a Landlord

The LA Times has an interesting discussion on an issue that concerned landlords get wrong.

Let’s say you have an applicant with a noticeable walking disability.  Being a caring person you try to steer  the prospective tenant to a first floor unit without steps as you feel that would be more convenient for them than the second floor walk up they are interested in. They insist they want the upper, you feeling they will not be comfortable with the upper insist they take the lower instead.

Pointing out you also have lowers available is good business and a service to the applicant, refusing or actively discouraging renting an upper is a fair housing violation.

This seems counter intuitive when all you were trying to do was what you felt was best for the applicant, but, maybe they like many others feel safer from crime on a higher floor and are willing to make the trade off of the inconvenience of steps for the added feeling of security.  As a landlord this is not your decision to make and what may be your personal preference in a similar situation may not be your tenant’s.

Same thing with the family with kids that wants to apply for an upper.  You offer them a lower because you fear the kids running around will create problems for lower tenants and may result in you having to evict them.; or you have a complex with kid buildings and no kid buildings; or prohibiting families with children from living in units nearer to the pools.  These too are fair housing violations.

In these cases it is up to the parent to insure their kids are safe and follow the rules. You have the ability to check their rental history and reject them if they or their family were disruptive at prior residences.  But it is the disruption and not the kids that must be your deciding factor. Really what does it matter to you if it is kids running around making noise or the old man coming home drunk and loud every night – disruptive behavior is disruptive behavior.

 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 “Best Practices” 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

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: ‘How can we use our collective shopping experiences and buying power to improve our bottom-line on a daily basis in 2013?’  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 “Best Practices” 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’s 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’s 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.

HUD is reporting

Rental housing markets in major metropolitan areas of the Midwest region are balanced to tight, with rent increases reported in all major markets, continuing a year- long trend of strengthening conditions.

http://www.huduser.org/portal/periodicals/ushmc/winter11/USHMC_4q11_regional.pdf

(The linked document contains rental and housing stats for the entire nation)

A question was raised on one of the email list I subscribe to:

I need a set of screening criteria to use so I can weed out unpotential renters. Does anyone have a set they use. Also I am in Wisconsin, are their things you can and can not include?

In WI you cannot include any of the “Seven Deadly Sins” i.e. violations of ATCP 134.08. An overview of prohibited WI  lease terms can be found here.

A screening criteria is not  one size fits all.  Rather you must formulate it match your property, the community the property is in (college neighborhoods have a different set of concerns from an upper income condo, which is different from rural farm housing, which is different from lower income urban areas…) , your management style etc.
A properly written and enforced screening criteria can save you some hassle if fair housing questions are raised.   A poorly written criteria or one that is not evenly enforced will aggravate your problems if a fair housing complaint is filed.

For example a husband and wife who happen to be the same ethnic background as you apply.  Your criteria is income must be 3 times rent.  They make $2500 a month and want to rent your $950 three bedroom unit.  You like them, they seem like nice people.  So you accept their application even though they should earn $2850 to meet the criteria.

A month later a little green man from mars applies.  His job with NASA pays $1200 a month.  He wants to rent your $500 one bedroom.  You say “Sorry, our criteria is income must be three times rent.  You would have to make $1500 to qualify”  Uncle Martin (the Martian from my favorite Martian)  goes to HUD to complain.  Through their investigation they uncover that you bent your rules for those applicants that looked and talked like you, but refused to do so for little green people from Mars.  You are now facing a much bigger problem than had you had no screening criteria at all.

As to income criteria make certain that you don’t violate fair housing as to lawful sources of income.  For example requiring a recent pay stub to document income is troublesome as there are many lawful sources of income that do not provide pay stubs.  SSI, W-2, Child Support if applicant wishes to include it, retirement benefits,  and many more.  You must also include food stamps n.k.a SNAP in any income based criteria.

You can change your criteria at will, however all those screed after the change must be held to the same standards.

Our company’s criteria for rejection includes:

• First time tenants may be required to have a collectable cosigner
• Evictions within past 3 years
• Felony drug or violent crime convictions in 5 years
• Misdemeanor drug or disorderly charges in past 3 years
• Non verifiable income or insufficient income
• Non verifiable rental history or bad reference from any prior landlord

We have debated our criteria with neighborhood groups who would want a one strike and your out policy that would reject someone for having a misdemeanor possession charge twenty years ago, and with tenant advocacy groups that feel Charlie Manson and Attila the Hun both should be accepted.   Neither group likes them, but neither could find legal fault with them either.

NOTE: Our criteria would be illegal in Dane County and Madison due to criminal background being a protected class in those communities.

I think this is an important enough issue to share it here  – cleaned up from my original post :

While language is neither a Federal nor a Wisconsin protected class,  you need to be careful that the rejection is is not perceived to be discrimination against national origin, which is a protected class.

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