Jan 26

 

This past week, taking advantage of the moderate weather, we began our annual exterior survey of our properties a bit earlier than normal. We walk around the exteriors of all the properties to set a prioritized project list for spring/summer 2015.

The neighborhoods we operate in are the near Southside, from just north of National to Cleveland, 1st to 36th.

While the primary focus is reviewing our properties, we also get a good sense of what is happening generally in the neighborhoods.

If this was a rock band I would have called this the “Fresh Mud and New Green Board Tour” It was absolutely surprising how many properties have been bulldozed and how many more properties are boarded and abandoned since doing the fall review in Sept/Oct of last year.

Anyone who tells you the real estate market on the near Southside has or is rebounding from the 2008 housing bubble hasn’t been out much. ūüėČ I wrote about what I was seeing in the past ¬†and again here.¬† It is much worse now.

Many of the new board ups are nice looking properties. However as they accumulate city ‚Äúreinspection fees‚ÄĚ and fines they get to the point they cannot be sold and languish until they are stripped of all value, foreclosed upon by the city for taxes and ultimately razed.

But at least the city was able to tack some fees on it. Fees that they never collected because when the City becomes the owner the only thing left to do was bulldoze  them. (The one pictured in the link is now a mud lot).  Many of these are Zombie Houses

We are seeing sale prices in Milwaukee that make Detroit almost look like a healthy market.

The sales below are listed in¬†the Journal’s Recent Deals sales listing

$11,000: 2356 W Becher St – MILWAUKEE (01/06/15)
$4,000: 2328 S 4th St – MILWAUKEE (01/15/15)
$1,000: 1962 S 16th St – MILWAUKEE (01/02/15)
$3,375: 4624 N 29th St – MILWAUKEE (01/13/15)
$2,850: 323 E Chambers St – MILWAUKEE (12/05/14)
$2,625: 2904 N 16th St – MILWAUKEE (11/24/14)
$37,000: 3410 S 1st PL – MILWAUKEE (01/16/15) ‚ÄĒ a pretty nice neighborhood.

May 26

The Mayor and head of DNS discuss the “zombie” housing problem in ¬†this Milwaukee Journal article. ¬†The article is interesting,¬†the comments even more so.

“City officials define [zombie housing] a bit more precisely: when title to a property remains with someone who believes he or she has lost the property as a result of foreclosure.¬†“

“Both Dahlberg and Barrett say they don’t understand why banks allow the problem to proliferate.¬†“

While zombie housing seems to be a new phenomena to the city officials, we discussed it since at least July 12, 2009.

https://groups.yahoo.com/neo/groups/ApartmentAssoc/conversations/messages/11702

https://groups.yahoo.com/neo/groups/ApartmentAssoc/conversations/messages/11828

http://justalandlord.com/?s=zombie

At that time I predicted the ordinances that had just been passed to make lenders more accountable would actually result in many more properties abandoned by both the owner and the lender.

The city also makes matters worse through reinspection fees. ¬†I’m sure they think this is a cash cow, but it is a further cause of the abandonment problem. ¬†On the front end these fees force marginal owners into failure and on the back end they make it less likely the lender or owner can sell the property. ¬†Banks that control foreclosures in Milwaukee have adopted a policy of not paying taxes until the property sells. ¬†When they receive offers they run title prior to accepting offers. Too many fees and they let the property revert to the city.

This was the case with two singles on one lot that I made an offer on a couple of years ago.  Bank ran title and rejected the offer due to reinspection fees (the front house was owner occupied, there was a sewer back up that they could not afford to fix and suddenly they were being billed $375 a month)   The city then foreclosed on taxes, the property was stripped of metal, druggies used it as a dry place to get high and finally they started the one house on fire, that in turned burned down a neighboring house, taking it off the tax roll too.  All along the city has had to mow the yard, shovel the walks, reboard it as it kept getting broken in.

Here is a post on how the city’s ordinances, no matter how well intended or logical on the surface, are actually contributing to the problem.

Apr 30

 

Bloomberg reports on a case in CA where  Deutsche Bank is being sued for evicting the tenant of a foreclosure in violation of the federal Protecting Tenants at Foreclosure Act of 2009

Rothschild, legal director at the Western Center on Law and Poverty, said the January ruling established that tenants can take owners who acquire properties through foreclosure to state court for violating protections Congress afforded renters under the 2009 Protecting Tenants Against Foreclosure Act. The law doesn’t give renters the right to sue in federal court.

An attorney for the United Trustees Association states:

The overly broad decision may lead to a proliferation in lawsuits for breach of the lease imposed upon purchasers at a foreclosure sale. With no prior knowledge, a purchaser at a foreclosure sale now may be burdened with a lease with unlimited combinations of potential contractual obligations ranging from unilateral renewal rights to mandatory substantial improvements to the property.

All of this could make buying an occupied or recently vacated unit a dicey situation.

Mar 25

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. 

Dec 29

The Milwaukee Journal reports that Representative Evan Goyke has introduced a series of bills to address foreclosures.  The 5 bills as described by the authors are:

  1. Realtor Incentive Bill (LRB-3010) – This bill seeks to create an incentive for realtors to sell properties that have a foreclosure judgment and a sale value of less than $50,000. It is our hope that this incentive will attract realtors to invest more time and energy in the foreclosed home markets and neighborhoods. The bill would remove income tax reporting requirements for the commission income made by a realtor working as the agent for either the buyer or seller of the property.
  2. Demolition Bond Bill (LRB-2431) РThis bill is designed to ensure that municipalities do not bear the financial burden of demolition of a property when the lender initiates a foreclosure action. The bill would require, as a matter of civil procedure at the time of filing a foreclosure action, that the plaintiff in the matter post a demolition bond of $15,000.  The bond will be held by the clerk of courts for the county in which the foreclosure action is filed.  In the event that the property is neglected, deteriorates, and becomes a blighted property in need of demolition, the $15,000 demolition bond will be applied for the cost of demolition.  In the event that the property is no longer owned by the plaintiff in the foreclosure action, the demolition bond shall be returned to the plaintiff.  Similarly, in the event that the foreclosure action is dismissed, the demolition bond shall be returned to the plaintiff.
  3. Security Lighting Bill (LRB-2774) РUnder current law, mortgagees may file a foreclosure action against a borrower when the borrower meets certain criteria regarding non-payment.  The plaintiff mortgagee in the lawsuit must pay a filing fee with the appropriate county clerk of courts to initiate the lawsuit.  In general, these fees are used to pay the operational costs of the court. Under this bill, the filing fee for each foreclosure action is increased by $50.00 with the additional filing fee being routed by the county clerk of courts to the designated department for installation of lighting on existing abandoned homes.  The lighting that shall be used shall generate and regenerate its own power through solar energy (as by definition, the existing foreclosed homes do not have electricity running to them). The lighting will help deter theft and vandalism to abandoned properties.
  4. HOME GR/OWN Bill (LRB-2368) РEarlier this year, the City of Milwaukee was a finalist in Former Mayor Bloomberg’s Philanthropies’ Mayors Challenge, which was a competition created to inspire American cities to generate innovative ideas that solve major challenges and improve city life. Milwaukee became one of the top finalists based on the City’s innovative idea to transform foreclosed properties into community assets that improve public health and spark economic opportunity. Unfortunately, Milwaukee was not chosen as one of the recipients of the reward, but we feel this should not deter Wisconsin from pursuing the goals of the challenge.
  5.  Property Stabilization Bill (LRB-3431) РCurrent law does not allow municipalities or lending institutions the authority to enter into a property that is subject to a foreclosure action.  When the property is abandoned, this may lead to deterioration of the property, which greatly decreases the property’s resale value and places additional burdens on local property tax payers. This bill seeks to extend authority to a municipality or lending institution to enter the foreclosed property and address any possible problems within the property, such as winterizing the plumbing. This bill also seeks to extend civil immunity to agents of either the municipality or lending institution engaged in the rehabilitation or repair of the property, so far as the agent is acting in his or her official capacity in carrying out actions allowable under this bill.

Something must be done to address this problem. But remember we are at this point because the government at many levels encouraged the purchase of homes by buyers who were ill prepared for homeownership and without the financial resources to weather the smallest of storms. These policies drove sales prices to unsustainable levels. We now pay the price.

At this point many of the vacant foreclosures need to be bulldozed as they have been gutted by thieves looking for a few dollars in copper to buy their next fix.

Rep. Goyke’s proposals, while good for starting a conversation, for the most part are unwise.

I doubt the IRS is on board with the non reporting of commissions.

The demolition bond has the potential of causing far greater problems than it cures. Already today banks are refusing to take possession of foreclosed properties. Many owners believe they were foreclosed upon and moved out only to find the city hunting them down for fines and fees because the banks never took possession. One such case, Bank of New York v. Carson, recently was heard by the Court of Appeals.

We;ve already seen cases where the lender has sued on the note, but as civil cases rather than foreclosures, leaving the title in the buyer’s name along with the liens for mortgages and the court judgments. Mr Goyke’s proposed bond will cause more incentive for banks to do this, creating a larger amount of Zombie housing, i.e. housing that can never be sold due to the liens and title problems.

I do however like the proposal to install solar powered security lights, if they are vandal proof.

Dec 03

Four  years ago I wrote of a scary trend I saw emerging, Zombie Housing.  These are homes that lenders begin foreclosures on but never take title.  This leads to homes that cannot be sold due to the liens upon them.  While these houses sit vacant they are vandalized beyond repair.  Yet the owners, who think they are the former owners,  remain on the hook for city fines, taxes, demolitions and liability for injuries.

No one paid much attention to this.  However this past week  the Wisconsin Court of Appeals issued a recommended for publication decision in Bank of New York v. Carson to address foreclosed, abandoned properties and force their sale upon expiration of a five week redemption period.

¶16 In sum, because the trial court had the authority pursuant to WIS. STAT. § 846.102 to amend the judgment to find the property at 1422 West Concordia Avenue abandoned, and because the trial court had the authority to order a sale of the property upon the expiration of the statutorily designated redemption period, we conclude that the trial court erred as a matter of law in deciding that it did not have this authority

In the short term this ruling will put a lot of properties on the market, most of which have now been stripped of all value and will ultimately face the bulldozer.

A current question is “Are banks required under current law to take title if no one bids at auction?” If the answer is yes I will assume a lot of banks will do the reasonable thing from their perspective and not foreclose on mortgages if the property is abandoned and of little value. Instead they may sue for a money judgement on the note. ¬†I’ve seen cases where banks have done this on near Northside rental properties. The banks can also simply do nothing and abandon their interest or issue satisfactions on nonperforming loans on abandoned properties and wash their hands of any legal responsibilities.

If the banks respond in this manner it will make the problem much worse and it is unlikely current legislation can hold the bank to the financial responsibilities of those properties if they do not foreclose.

Reuters had an interesting article on Zombie Housing that was referenced by the Court of Appeals.

So the foreclosure crisis is far from over in areas where property values are low and city regulation of lenders in possession are tough.

Nov 12

Interesting paper on forced ownership i.e. prohibitions against abandonment by owners or lenders

Forcings by Lee Anne Fennell::SSRN

Despite some efforts to force lenders to foreclose when mortgagors vacate the premises and cease paying, defaulting mortgagors may be forced to retain ownership and the obligations that follow¬†from it‚ÄĒincluding liability for homeowner association dues.¬†A sale of the property is often blocked by the fact that the mortgage balance far exceeds the likely sales price. The inability of the¬†homeowner to come up with the difference locks her into ownership, unless the lender either agrees to a short sale or¬†forecloses on the property‚ÄĒand it may legally choose to do neither.

Mar 11

In a previous post on foreclosures in Milwaukee I mentioned that rental owners spend $90 Р120 million per year in repairs and renovations, to which a reader expands upon by asking what do rental owners pay in property taxes per year.  I thought that an interesting and relevant question so we dug into it a bit.

Rental property owners in Milwaukee pay about $266 million per year in property taxes, another $26 million or so in special assessments, which could be everything from fire inspections to alley and sidewalk repairs to so called reinspection fees. The includes owner occupied properties with a rental unit, as they are landlords as well.

As a side note I was surprised to see how many properties that were clearly investor owned, the owner address was not the same as the property address or the owner is a LLC or corp,  were listed by the city as owner occupied.

Rental owners also pay somewhere around $32 million a year in sewer and water plus associated fees.  This number is much harder to arrive at and may be higher than this. I simply took the gross amount and divided it by number of dwelling units.

One very interesting factoid that I stumbled across while searching for the answer is the number of properties actually taken by the city through tax foreclosure was 745 in 2012, a very significant 60% increase over the 464 taken in 2011.  The treasurer is budgeting even a slightly greater number for 2013.  1152 properties entered the city tax foreclosure pipeline in 2012.  Source: Milwaukee City Treasurer Dept Metrics

Per the U.S. Census around 54.5% of all dwelling units in the city are rentals.  City assessment data puts that number higher, around 64%. The city publicly claims higher owner occupancy as they report the percentage of residential parcels rather than units that are owner occupied.  The census puts vacant housing units at 11.3% with rental vacancies at 4.2% 302,000 people in Milwaukee are tenants. Source: U.S. Census Fact Finder

Mar 09

The Journal is reporting:

Over the next three years, Barrett said raze orders in the city are expected to grow to 1,600 homes, with a cost of $24 million. ¬†“We have a very severe problem right now,” Barrett said.

No kidding we have a “severe problem ” ¬†This a problem that continues to grow rather than moderating. ¬†The number of¬†abandoned¬†and foreclosed houses was bad nine months ago and with fresh snow on¬†the¬†ground you can see even a greater number of unoccupied properties than ever before. At least here on the Southside of Milwaukee these numbers are far worse than what is being reported by the city.

How much of the $24 million of anticipated razing costs could be avoided by making it more favorable to rehab properties and restore them to the tax rolls?

Perhaps the city would do better by working with, instead of against people willing to invest their own money, time and effort into putting foreclosures back in service. ¬†I’m not even suggesting a hand up, just not the current beat down attitude. Not only would there be less spent on bulldozing, but more of the tax base would remain plus the positive economic impact for the community due to spending by owners to maintain and operate this housing.

Between taxes and the sewer and water bills the city gets  at least $5-6 million per year from 1600 functional properties. In the three year period Barrett defines this is a potential of $18 million in city revenue if the buildings were returned to occupancy. Add this to the $24 million to bulldoze and you are north of 40 million dollars.

Can every property that is deemed to be worthy of razing able to be salvaged, of course not.  But many that are in the pipeline today can be.  Every day that a property sits unattended is a day closer to the wrecking ball being the only option for that property.  There are many properties sitting vacant today that are worthy of repair, but will not be so six months or a year from now.

Additionally every time someone like you or I take on the challenge of putting properties back in service the local economy sees a benefit through the wages and materials we pay to get the job done. ¬†All but one of my employees live in the city. ¬†While the money you spend at the Home Depot doesn’t stay in Milwaukee, ¬†the person who is employed by the Home Depot lives in the area and spend their wages here.

A downside for us, but an upside for the community is a greater amount of housing stock available holds rents down.  A more competative market also forces owners to do more to properties to get and keep them rented.

Once the property is back in service ongoing maintenance similarly impacts the local economy in a positive manner. It is estimated that repairs and improvements to rental properties represent $90 -120 million a year¬†in the city of Milwaukee alone. ¬† (These numbers are derived from our company’s experiences, the experiences of other long term owners that I’ve discussed this with and data from the Census Bureau’s¬†Property Owners and Managers Survey. ¬†Our data and that of many other owners indicate a slightly higher number than the Census)

Our company has the capacity and had the will to do 10-12 such projects a year without any government monies.  Heck if the environment was more favorable I could see us doing two properties a month.  We have not made an offer in MIlwaukee since November due the unfavorable policies adopted by the city. See my prior post on buying foreclosures in Milwaukee.  I talk to a lot of other owners with similar capacities that say the same thing.

Milwaukee acts like they are the only girl at the dance Рas though real estate investors need to accept their petty obstructions and poor treatment because they are the only game in town.  But there are many other places to invest that treat owners much better.  One of our members is doing a big rehab in Beloit.  When I asked his project manager how it was going with the city he said they were unbelievably nice and truly seem they want to see the project succeed.  We are actively looking at the South Florida market today.

A few notes:

These 1,600 properties must be city owned or near to being city owned. ¬†If they were bank owned the city could and would force the banks to demo the properties on the bank’s dime. ¬†A growing trend is banks that ¬†simply walked away from the mortgage rather than be subjected to the bad side of city regulations and fees. In another instance I spoke to an owner who the bank sued- he thought he lost the properties to foreclosure only to find out later that it was a money judgment only suit. ¬†This adds to the zombie housing effect. ¬†And you though only borrowers walked away. ¬†ūüėČ

Our police chief is in the news speaking about the link between foreclosed and abandoned housing and crime.  I am certain he is correct on this.  But the Milwaukee Police do not do what they should in cases of property vandalism. See my prior post on property vandalism and the lack of police response.  This vandalism accelerate the rate of properties that are no longer viable for rehab.

Mar 03

The Journal had an article last week wherein city officials were lamenting about the effects of foreclosures on the quality of life in Milwaukee. Below is my experiences as we put a number of properties back on line without any government funding.

Short version

Think twice before buying foreclosures in Milwaukee as the city will add unnecessary costs and aggravation to your project.

Longer version:

We were buying a number of foreclosures over the past two years.  We would go in fix them up and put them back on line.  This was good for the city in general in that the properties would remain on the tax rolls rather than being vandalized and ultimately bulldozed.  This is good for neighbors in that these were no longer boarded eyesores.  It was good for the people we employ as it kept them working and in fact resulting in a couple of additional full time positions. And of course it was good for our company or we would not have purchased the properties.

About a year ago the purchasing became more difficult. Not because there was no inventory, there was more property available in our market than ever. ¬†Not because prices¬†were rising, prices were actually the lowest I’ve since 1985. ¬†No, the problem was that the selling banks were now verifying how much was outstanding in city taxes and city¬†fines/fees before they accepted the offer.¬† If the city had too much in junk fees the banks would walk from the deal and apparently let the property revert to the city for back taxes. After a while the property is ¬†vandalized to the point they have no economic value and are beyond rehab.

We had three offers that listing agents said our offers were solid, but the amount due the city in taxes, fines and fees exceeded that value.  All three properties dropped off MLS.  A couple of weeks ago I noted two remain boarded, vacant and today, a year later, vandalized. The third address I did not go by recently.

Here is another property I anticipate will revert to the city before long and will end up bulldozed instrad of on the active tax roll

At the beginning of this year the city threw yet another wrench into the process of putting boarded vacant and often vandalized properties back on line.  It used to be that only houses with orders to obtain a certificate of occupancy were required to go through this.  If you are unfamiliar with the process it involves paying for an expensive permit, then electrical, construction, plumbing and code compliance inspectors come through and find anything they think maybe a code violation.  They then require you to get plumbing, electrical and construction permits. They look at the dates on water heaters, furnaces etc and issue quad fee permits if someone in the ownership chain upgraded without permits.

Certificate of occupancies require odd expensive things. ¬†In one such inspection we had a house with 1 1/4″ cast iron drain pipes for the bathtub. ¬†Obviously this was installed¬†either during original construction or sometime not too far after as all drains today are PVC and for many years before PVC was common drains were galvanized steel. ¬†Cast iron is hard to work with, hard or impossible to¬†find and expensive if you can find it. ¬†The drains worked fine and did not leak, but the inspector ordered the drains changed to 1 1/2″ at a cost of nearly $1,800.

Back in October we bought a nice little single family on South 15th Place. The interior was in amazingly good condition and we had it rented a couple weeks after purchase.

There were a handful of minor exterior orders prior to our purchase.  These orders were issued upon the prior owner in September.  Even though the orders would have to be dismissed and reissued upon sale, we began them the Monday after the purchase. We also sided the property, which was not on the order.  The inspector signs the order off shortly thereafter.  Then the same inspector issues eight items on two notice letters in November.  It appears nothing on these notices were on the original September notice.  Petty, petty stuff Рfine we do it a few days after we receive it.   Inspector signs it off. So far just a PITA and a waste of taxpayer money as well as wasting our money having staff chase a seemingly never ending list of things to do.

Same inspector comes back in December for the certificate of exterior code compliance. This inspection is required when you buy a one or two family rental property. ¬†Four more petty, petty “violations” but this time he now¬†also wants an occupancy permit. ¬†I call his supervisor and am told it is now their policy to demand occupancy permits for anything they think was vacant for more than six months¬†even if no order exists. ¬†He even threatened to have the tenants removed. ¬†At least his boss put an end to that nonsense.

Then in January we get a letter from the vacant building program. We responded that the inspector has seen the property occupied at least three times. ¬†The person who answers the phone for the vacant building registration program says it doesn’t matter that an inspector saw tenants there in October, November and December, we need an appointment to meet you there to confirm it is occupied. And it wasn’t just one inspector that they may not have trusted enough to confirm occupancy, by then we had the certificate of occupancy inspections as well so three more inspectors were through the place and saw it occupied. Yet we had to meet someone from DNS there to prove it occupied. ¬† You just cannot make stuff like this up…

Not an isolated incident:

This same inspector on another exterior code compliance application wrote defective siding on a house that was vinyl sided. I could not see any siding code violation.  I meet him there.  We walk around the house a couple of times because he is having a hard time finding what he wrote up. He points out an inch and a half crack in a piece of J channel by the back door and what may or may not be a missing shake on a gable end.  I pointed out the house adjoining our to the north as well as one across the street should be placarded due to the condition they are in. The inspector agreed with my comment that ours was the best on the block Рand this is a highly visible block on an arterial street on the Southside.  Here are pictures of this property on the day of inspection as well as those neighboring it.

The larger effect of this:

I’m sure DNS and the city is all giddy over the hundreds of dollars in permits they collect from each property under their current scheme. ¬†However, this is short term expedient and long term costly for the city.

As the city continues to make it more expensive and difficult to turn around vacant homes there will be an increasing number of properties that are no longer economically viable to rehab. This results in more houses being bulldozed and taken off the tax rolls due to unchecked vandalism and theft of anything metal inside them.

Despite what the City Assessor espouses, boarded, vacant, vandalized properties suppress all property values in their immediate neighborhood.

As more properties leave the tax roll the city will be forced to try and squeeze more money out of those that are left while providing less services.

The current city attitude is a no win for everyone.

Bottom line:

If you are thinking of buying foreclosures or other vacant property in Milwaukee make sure you figure in the extra costs and hassles associated with certificate of occupancy inspections.  Then decide if it is still worth it. There are plenty of other areas that welcome your investment of time effort and money as well as the jobs our industry creates.   Perhaps your investment would produce better results elsewhere.

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