Jan 24

ht: Joe Murray

Most recent rent control measures use the day of the introduction of the bill as the baseline rent. Owners would be wise to review their rents now. If you are being generous to that good renter who has been with you a decade and pays far less than market rent, not only will you be stuck at low rent even after they move, but your building will be worth less when you decide to sell as the new buyer will also be held to the same cap.

The compounding effect.

“There is no force in the universe more powerful than compound interest,”

attributed to Albert Einstien

If you’re renting a unit for $900 and the neighboring house is at $1,000 today, you have a $100 difference. But that difference grows. Let’s say the government is generous and allows 4% per year increases. After ten years, the $900 rent becomes $1,332, while the $1000 rent is $1,480, a difference of $148, perhaps long after the renter you were being generous to has moved. Your property would also be devalued compared to that adjoing property due to the lower allowable rent.

If the inflation rate continues at 6.5% and the government allows that generous 4% rent increase, your $1000 rent in ten years is $776.33 in today’s dollars. The $900 is worth 698.70 in today’s dollars. I’m certain many properties would fail or fall into serious disrepair well before they hit the $200-a-unit-a-month haircut.
https://www.wealthmeta.com/calculator/compound-interest-calculator


Nationwide Rent Control? – WSJ

The Editorial Board Jan. 22, 2023 5:55 pm ET
Ideas that start on the progressive fringes have a way of becoming government policy these days, as President Biden’s $400 billion student loan cancellation shows. Lo, Democrats in Congress are now pressing the President to impose rent control nationwide.

Aug 22

This is not about the streetcar per se, which is a political lightning rod, but rather effective use of available resources.

I was reading an article on the eviction moratorium and Emergency Rental Assistance on the Fox 6 site. Ironically the next suggested article was “Milwaukee streetcar sales tax floated to fund $330M expansion

This made me once again question our governments’ spending priorities. Unpaid rent in Milwaukee County is at least $36M to $48M a year,  BC (before COVID). For the price of a novelty bar hopping ride, we could end all the problems associated with the nonpayment of rent for 7-9 years. This kind of funding could solve many housing and social issues for far longer due to the benefits of stability.

The median rents in 53204 and 53208, two zips with lots of renters, is less than $800 per Census data. The median rent of two-bedroom units that are currently available is $950/$850 in 53204 and 53208 respectively, using rentometer.com So the streetcar expansion will cost 367,000 to 412,000 months of rent…

Streetcar or no streetcar will have limited impact on those who will use it. ~400,000 months of rent on the other hand could have a significant impact on a great number of people as well as the overall local economy.

Sure, 80% of the $330M is federal, but we can’t give a pass to any level of government for not using taxpayer money for the greatest good.

Mar 07

The article linked below is so wrongly anti-housing provider. If the rent is paid, the need for free legal representation disappears in most cases. Discriminatory housing policies are not those of the property owners. We want our houses full as that is the only way we make money. Instead, for the most part, discriminatory housing policies were created years ago through government programs. But now, we are being made the scapegoat by the very governmental bodies that created this mess. 

Redlining of mortgages and insurance, leading to housing segregation or worse? These were federal government-mandated rules. https://en.wikipedia.org/wiki/Redlining

But articles like the one below try to paint property owners and managers as the causation. The truth is housing and renters must succeed for the other to succeed as well. We are two sides of the same coin. There are those who profit from encouraging conflict between owners and renters. This harms both residents and housing providers alike.

Contrary to the conclusion of the article, rental assistance is the solution. If the U.S. enacted a FoodShare for Housing program, where people below a certain threshold would receive portable housing vouchers, this would change many urban American problems. Multiple studies show the costs of such a program to the taxpayer are less than what we now pay for intervention when renters fail. 

Addressing extreme housing precarity requires more than rental assistance; it requires an overhaul of the system and redress of the longstanding discriminatory housing policies that led to this moment.

https://theappeal.org/the-lab/explainers/the-american-eviction-crisis-explained/
Feb 22

[Thank you to Joe Murray for the research]

First, let me preface this that in general, I feel that Governor Evers has done well in the distribution of housing aid during the pandemic.

However, his proposed budget has a number of concerning provisions.  And how the heck does Wisconsin allows laws unrelated to spending to be part of a budget is well beyond me.

  • If passed, municipalities will be able to restrict how you screen, what you can charge, prohibit showing occupied units, making certain you lose a month or more between tenants, limit charging for damages, limit or prohibit security deposits and allow for rent abatement for minor issues.  
  • If passed municipalities will also be able to enact their own eviction moratoriums.
  • If passed, you will be inhibited from evicting for criminal activity. That should make other renters and neighbors feel safe — Not!  
  • If passed you can be required to disclose code violations “regardless of whether the landlord has actual knowledge of the violation

Actual details are below.  
—————————— 
Local landlord-tenant ordinances

Current law prohibits political subdivisions from enacting certain ordinances relating to landlords and tenants. Political subdivisions may not do any of the following:

1. Prohibit or limit landlords from obtaining or using certain information relating to a tenant or prospective tenant, including monthly household income, occupation, rental history, credit information, court records, and social security numbers.

2. Limit how far back in time a landlord may look at a prospective tenant’s credit information, conviction record, or previous housing.

3. Prohibit or limit a landlord from entering into a rental agreement with a prospective tenant while the premises are occupied by a current tenant.

4. Prohibit or limit a landlord from showing a premises to a prospective tenant during a current tenant’s tenancy.

5. Place requirements on a landlord with respect to security deposits or earnest money or inspections that are in addition to what is required under administrative rules.

6. Limit a tenant’s responsibility for any damage to or neglect of the premises.

7. Require a landlord to provide any information to tenants or to the local government any information that is not required to be provided under federal or state law.

8. Require a residential property to be inspected except under certain circumstances.

9. Impose an occupancy or transfer of tenancy fee on a rental unit.

10. Current law also prohibits political subdivisions from regulating rent abatement in a way that permits abatement for conditions other than those that materially affect the health or safety of the tenant or that substantially affect the use and occupancy of the premises. 

The budget bill eliminates all of these prohibitions.

Local moratorium on evictions

Current law prohibits political subdivisions from imposing a moratorium on landlords from pursuing evictions actions against a tenant. 

The budget bill eliminates that prohibition.

Notification of building code violations

Under current law, before entering into a lease with or accepting any earnest money or a security deposit from a prospective tenant, a landlord must disclose to the prospective tenant any building code or housing code violations of which the landlord has actual knowledge if the violation presents a significant threat to the prospective tenant’s health or safety. The bill eliminates the condition that the landlord have actual knowledge of such a violation and that the threat to the prospective tenant’s health or safety be “significant”; under the bill, the landlord must disclose to a prospective tenant a building code or housing code violation, regardless of whether the landlord has actual knowledge of the violation, if the violation presents a threat to the prospective tenant’s health or safety.

The budget bill eliminates these provisions.

Terminating a tenancy on the basis of criminal activity

Current law allows a landlord, upon providing notice to a tenant, to terminate the tenant’s tenancy, without an opportunity to cure the tenant’s default, if the tenant, a member of the tenant’s household, or a guest of the tenant 1) engages in any criminal activity that threatens the health or safety of other tenants, persons residing in the immediate vicinity of the premises, or the landlord; 2) engages in any criminal activity that threatens the right to peaceful enjoyment of the premises by other tenants or persons residing in the immediate vicinity of the premises; or 3) engages in any drug-related criminal activity on or near the premises. 

The budget bill eliminates these provisions.

Dec 30

Matt Desmond author of EVICTED often claims “the rent eats first.”

However, the truth is municipal governments are first at the table for that rent check, with their ever-increasing property taxes, sewer and water bills, those extras that are attached to the water bills as well as all the special assessments added to the tax bills.

Municipal governments also are the ones who will be paid even if you don’t and even ahead of the mortgage holder.

If rents increased year over year the same 9-286% as the city taxes, there would be rioting in the streets. There are a lot of news articles where there has been outrage at modest rent increases because that is not what one expects in an economic downturn.

However, owners will have to raise rents substantially to cover these tax increases. Add to that the reduction in rent collected many owners are experiencing this year and 8-20% rent increases will be required just to maintain the financial position of last year.

When costs exceeds the property’s income, the property will eventually fail. If this happens on a widespread basis, all tenants will be harmed and face much higher rents in the future.

Dec 19

I am hearing from more and more owners who are not paying their mortgages, utilities, and even fire insurance because they can’t, due to uncollected rent.  Maintenance was the first casualty.  

If you are facing similar problems and would be willing to share with your elected officials and or the media, please email me. Tim[at]ApartmentsMilwaukee.com

https://www.cnn.com/2020/12/17/success/landlords-struggling-rent-eviction/index.html

If landlords are struggling, tenants will also be affected as home maintenance slides.

“I’m seeing landlords who can’t pay for trash removal,” Gray said. “We’re getting ‘no heat’ calls. They aren’t paying real estate taxes. They aren’t paying their mortgage.”

For the typical landlord in trouble, which he said is someone who bought their property in the last five years and is leveraged to the hilt, there are no reserves. “Despite tenant protection laws, these landlords don’t have the cash reserves, nor the equity in their building to get loans,” he said. “With the moratoriums, they’re taking hit after hit.”

Some landlords, he said, are being paid less and seeing the wear and tear on their property increase as grown children or friends double up after losing their own housing. Routine maintenance that was supposed to take place this year has in some cases been delayed or canceled because landlords just don’t have the money, said Gray.

“They can legislate the need to do timely repairs,” he said. “But for many landlords, there is no money.”

Oct 05

Canceling rent will initially cause landlords to fail.  This will have a cascading impact on municipal budgets and local economies as contractors and vendors aren’t paid or given work.  Banks will suffer, but they’ll probably get bailed out again. 

Ultimately it will be the tenants who pay the greatest price as rents will increase dramatically due both to attempts by owners to cover the added debt they accumulated and the reduction in available rental housing.  
At the lower end of the housing market expect to see abandonment that leads to buildings being razed. At the mid market expect that well financed Wall Street corporations will buy up much of the housing stock. 2021 will make 2008 look like a small trial run.

Don’t expect to see much new residential rental construction.  Why would smart people invest in something the government can take away, without compensation, with the stroke of a pen.

Or of course, the Feds could do what is right and create a nationwide housing voucher that would protect both tenants and housing, as well as preventing the further collapse of the economy.   

Demand a fix

The National Apartment Association has an “Easy Button” to help you connect with your Congresspeople and Senators.


The National Multifamily Housing Council has a similar tool to reach out to your elected officials.

But don’t stop there.  

Even though most of the funding, if it comes,  will be Federal, reach out to your local officials as well.  Not only may they find state and local funding, many of these folks have the ear of the national political party bosses.  (It the national parties had leadership, the problems of not being able to pay rent would have been solved decades ago. – Just sayin’)


Why ‘Cancel-Rent’ Hasn’t Worked in The City That Tried It | Time

https://time.com/5889749/cancel-rent-ithaca/

While largely sympathetic to renters, who make up 73% of Ithaca’s residents, several members of the council worried about the well-being of small landlords as well. What happens to the landlords who still have mortgages to pay? What happens to contractors who are employed by those landlords? What happens to the city’s budget, which relies on those landlords paying their property taxes? “I don’t understand why we would want to take the pain and economic hardship of one group of our citizens and put it on another group of our citizens,” Ithaca Alderman George McGonigal said at the meeting. “We may create a bunch of problems for everybody in the community, including ourselves.”

Myrick saw the flaws, too. He too worried about Ithaca’s smaller landlords, in addition to the city’s already meager budget. “If you just cancel rent, there will be some landlords that lose money, there’ll be some landlords that lose so much money they can’t make their mortgage or tax payments, which could lead to defaults, and tax foreclosures would lead to less revenue for the city, which would mean we could support fewer social services,” he says. “This kind of thing can trigger [an economic] depression.”

Ultimately, after 30-plus minutes of contentious debate on June 3, the rent cancellation measure passed, on a 6 to 4 vote. The Ithaca Tenants Union, which coordinated with a couple city council members and Myrick to conceptualize the order, celebrated. “When your business is in providing people housing, that’s a certain responsibility you take on if it goes under to not put people on the street,” says Ary Stewart, a 24-year-old member of the renters coalition. If this results in landlords falling behind on their own debts, Stewart says they should “take it up with the bank.”

Sep 30

Residents may face higher property taxes after largest state reimbursement gap ever is reported

https://www.nbc15.com/2020/09/29/residents-may-face-higher-property-taxes-after-largest-state-reimbursement-gap-ever-is-reported/

MADISON, Wis. (WMTV) – Cities across the state are facing the largest gap on record in state reimbursements for costs that serve state facilities and some residents may face higher property taxes this year in exchange for the benefit of housing state properties.

The Wisconsin Policy Forum reported Tuesday that estimated municipal costs for services like police, fire protection and waste removal have risen sharply in the past decade, while state leaders have decreased funding for the program that provides reimbursement for such services.

Sep 12


https://shepherdexpress.com/news/features/the-new-eviction-moratorium-is-half-the-solution-but-is-it-e/#/questions

This issue will affect both parties. Heiner Giese, an attorney with Apartment Association of Southeastern Wisconsin (AASEW) says, “The question is, how are these people going to get paid? Will people lose their housing? What will landlords do in the meantime about municipal water bills, taxes, insurance or maintenance.”

Aug 15

HT: Joe Murray

https://www.governing.com/next/Legislative-Watch-Addressing-Americas-Eviction-Crisis.html

It’s an extraordinary dilemma, in which public health risks weigh so heavily that government is compelled to require forbearance from landlords and mortgage holders. While contagion may be held at bay, property owners are not the only ones who will suffer. Property tax revenue will be affected, and those who provide water and sewer service, gas and electricity will also feel the strain. 
 

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