Aug 23

This past week there has been a lot of talk about bedbugs on the Apartment Association online discussion group.

Bedbugs made a resurgence after DDT was banned due to its harmful effects on the environment and humans.

Diatomaceous Earth works well and is non toxic to mammals and in fact is feed to dogs, cats and even humans in some parts of the world to rid internal parasites like tapeworms.  Therefore you don’t have to worry about toxicity to tenants.

Downsides of Diatomaceous Earth:

  • It is a bit messy – white powder in the application area.  This can be lessened by using a cattle duster or plant duster.
  • It is not a fast as chemical based or heat solutions.  The trick is to do a knock down with a pyrethrin based chemical first.  Pyrethrins are semi organic, derived from chrysanthemum plants.  They are alleged to be people and pet safe, have been in use for many decades and have little residual.  The latter is great from a toxicity concern, but not so great at keeping bugs at bay.
  • It is odorless.  Why is that a downside?  People tend to believe stinky products are more effective products.

If you are going to go the pure chemical route JT Eaton products work well and are consumer labeled.  Apply the red one and then a week later the blue.  Cyonara 9.7 is also currently effective.

[Update] Brian Peters sent me a message that reminded me that DNS has a good bedbug brochure that you can provide your tenants.

Do It Yourself Pest Control has a really good overview of how to effectively treat for bedbugs.  They often, but not always, have the best prices if you are buying in quantity.

Here is a visual overview of how to treat for bedbugs

Tagged with:
Mar 29

 

Remember  Your handyman – cheap contractor or $60,000 mistake?

Many of you attended the Apartment Association’s Meeting earlier this month featuring employment law attorney John Murray.

Here is a link to the State of Wisconsin’s guidance on the issue.  Most owners I’ve met that call their workers contractors fail on four or more of the test outlined in the guide.  Failing only one of the nine tests will cost you substantially.  This is why we use employees exclusively, except for licensed trades like electricians.

Under section 102.07(8)1 of the Wisconsin Statutes, a person is required to meet a nine-part test before he or she is considered an independent contractor rather than an employee. A person is not an independent contractor for worker’s compensation purposes just because the person says they are, or because the contractor over them says so, or because they both say so, or even if other regulators (including the federal government and other state agencies) say so. The nine-part statutory test set forth under s. 102.07(8) of the Act, must be met before a person working under another person is considered not to be an employee. To be considered an independent contractor and not an employee, an individual must meet and maintain all nine of the following requirements:

1. Maintain a separate business.

2. Obtain a Federal Employer Identification number from the Federal Internal Revenue Service (IRS) or have filed business or self-employment income tax returns with the IRS based on the work or service in the previous year. (See note below.)

3. Operate under specific contracts.

4. Be responsible for operating expenses under the contracts.

5. Be responsible for satisfactory performance of the work under the contracts.

6. Be paid per contract, per job, by commission or by competitive bid.

7. Be subject to profit or loss in performing the work under the contracts.

8. Have recurring business liabilities and obligations.

9. Be in a position to succeed or fail if business expense exceeds income.

Note: When requesting a Federal Employer Identification Number (FEIN) from the IRS, you must inform the IRS that you are required by Wisconsin Worker’s Compensation law to obtain a FEIN. A social security number cannot be substituted for a FEIN and does not meet the legal burden of s. 102.07(8).

Apr 19

 

My wife provides training for professional event decorators, and those who wish to become one through her business, the Event Decorating Academy.  Most of the classes are held at a facility in Hollywood, FL.  However occasionally she does seminars elsewhere. I generally go along on the road trips to lift heavy things.

Earlier this month she held a week long session in Ocho Rios, Jamaica.  We had quite a few students from Jamaica and nearby islands such as Haiti as it is hard for them to get visas to come to the US. ‘

Typically the first stop when doing a tour date is at the local Home Depot or Lowes to pick up pipes, conduit and assorted fittings used to make the frame work for fabric and balloon decor.  There are no Home Depots in Jamaica, but there is a large chain of True Value Building Centres – so we were set.

We were in for quite a culture shock at the local Jamaican building material supply store.

Jamaica_True_Value

 

12 pieces of PVC pipe and two fittings cost us $7,748.91.  Fortunately those were Jamaican dollars which equal $71 USD.  Our driver mentioned this was the first time in his career he was asked to take an American to a building supply store.

Jamaican_HammerFriendly people, but clearly they do not have an equivalency of  OSHA, or traffic cops for that matter as there was a lot of chaos both at the building center and on the roads.

We got back to the upscale resort where the seminar was being held and realized that our staff forgot to pack a hammer.  We asked the hotel if we could borrow one.  “No problem mon” said the head of maintenance as he handed us his hammer. Upon further inquiry this was the best they had.

Moral of the story is we do not realize how good we have it in the States until we venture outside to do something other than a tourist trip.  Boy, I missed Home Depot that week.

Jan 02

A year ago I wrote of my five top ideas for real estate for 2013.

Of those ideas I have implemented .. not much.   Shortly after the first of the year 2013 we found that my wife’s ongoing back pain was being caused by a large benign tumor. She had it surgically removed on Valentine’s day and is fine today, but it upended things for a while

Today as I reflect on the past year and think about this coming year I reread the ideas posted last year. A year later they all hold value.

Two have been implemented as part of an effort to increase the value of membership by the Apartment Association of Southeastern WI’s  board of directors under the leadership of Joe Dahl.

The Association now has quarterly small group meetings as part of the Professional Membership. These meetings are an important element of #3 on the list, improving  how we share our collective knowledge

In a big step towards #1 on the list, reducing maintenance supply costs, the Association has teamed up with Home Depot, Pittsburg Paint, Sherwin Williams, and a number of other organizations to provide discounts to our members.

Home Depot offers a whopping 20% discount on paint and 2% cash back rebate on most purchases to our members. Sherwin Williams offers members discounts on paint equal to the discounts that major contractors receive. Pittsburg has similar discounts.

I would add a sixth and seventh opportunity for 2014, Crowdsourcing/Crowd funding for real estate.  I’ll post my thoughts on these in the next couple of days

The five most important Real Estate Ideas for 2014 remain:

(Clicking on the topic’s title takes you to the full article)

  1. Reducing Maintenance Supplies costs
    Pre 1950 buildings in lower income neighborhoods require around $100 per month per unit for repairs, replacement reserves and improvements. Newer buildings in more affluent neighborhoods perhaps $50 – $65. This is all maintenance from leaky faucets and unit turnovers to new cabinets, new roofs, electrical upgrades, replacing parking lots ect. (more)
  2. More Effective Maintenance Labor/Contractors
    Maintenance, replacements and improvements to rental housing represents nearly $100 million per year in the city of Milwaukee alone. A savings of even 1% is a lot of money. (more)
  3. 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. (more)
  4. Group purchase of a distressed block or two
    There has been this wild idea floating around in my head for years, acquiring a distressed block with a group of active owners and turn it around for fun and profit. (more)
  5. Tech Meets Real Estate
    There certainly are huge opportunities for software/web solutions for things that cause frustrations for owners and perhaps tenants. (more)
  6. Crowdsourcing for real estate, posting later in the week.
  7. Crowdfunding for real estate, posting later in the week.

 

Dec 26

Our company buys a lot of products from Amazon – from office supplies to maintenance parts to bug spray.

We do this for no altruistic reason,  Amazon is less expensive and faster for many items. Amazon Prime rocks if you buy even a modest amount!

Amazon has a really cool program where they give 1/2% of your purchases to a charity of your choice. Our company chose Children’s Hospital of Wisconsin. Children’s does good work and have helped my granddaughter as well as many thousands of other kids.

If you are an Amazon user, I would encourage you to sign up and let your purchases help an organization you believe in. If you are lost for a worthy charity – Children’s Hospital of Wisconsin is a great choice.

More info at:

http://smile.amazon.com/

Nov 04

A reader of the ApartmentAssoc Yahoo Group asks:

I am about to hire someone to cut some trees around houses. I told him that I would like him sign something to knowledge that I will not be responsible of his personal injury from this job if it happens. What kind of form and where I can find it? and is it enough or something else I have to do to insure that I will be absolutely OK if his personal injury from work actually happens

It is not possible to have someone sign away their rights or your liability under Wisconsin worker comp laws.  The only safe options are to have a minimum worker comp policy of your own or only hire companies that are insured.

Remember that a dwelling liability policy will not cover injuries to those working on the property.  This is an area that a lot of owners of small multi families run into problems with when they assign a tenant to do lawn work or snow removal for a discount in rent.

There is really a great risk in not having the coverage or in hiring people without coverage. I had an employee that was making a minor repair to a small first floor porch overhang. He made a wrong move, fell and the worker comp carrier had to pay out $140,000.  If we would have been uninsured that would have been me paying out the $140k, and probably more as insurers get discounts from the medical providers.

If you have employees, or non employees deemed to be statutory employees,  then the law requires coverage.

I think the minimum worker comp policies are around a grand a year, but am not positive.

Jan 04

 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

Jan 03

Real Estate For Ideas 2013 Part Two

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 second 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 Two:

More Effective Maintenance Labor/Contractors/Service Providers

As mentioned in part one, maintenance, replacements and improvements to rental housing represents nearly $100 million per year in the city of Milwaukee alone. A savings of even 1% is a lot of money

More Effective Maintenance Labor/Contractors/Service Providers

The ability to have skilled, cost effective maintenance available on demand is typically a missing element for small owners.

If all of your unit preps are done two days after move out you will have far less vacancy income loss. If you can respond quickly to emergency repairs less tenants will move.

Even larger owners such as our company can’t do this efficiently with typical staffing. Either you have too few workers the first week of the month or too many the rest of the month.

The million dollar question is ‘How do can you have an on demand workforce without the risk of uninsured “contractors” who may later be deemed employees by taxing authorities or injured and not covered by your property insurance?’

A couple of years ago Affordable Rentals rolled out Rental A Worker, where we ‘rent’ other owners our maintenance people by the hour for small or large jobs. We benefit as we can have a larger workforce to meet the up and down demands of maintenance, while being able to share them when our workload is lighter.  We can also justify having highly skilled people on staff full time, such as certified heating techs.

The big advantage this offers other owners over hiring Joe off the street is our people are insured and have taxes withheld. There is a real danger and expensive otherwise. For the longer version read: Your Handyman-Cheap Contractor or $60000 Mistake?

The real vision for Rent-A-Worker is to expand it to a temp like service where there is an on demand workforce that can ramp up when there are a lot of preps etc and then can work for another temp agency on slow times.  This would hold an advantage for our company as well as other owners who participate.

Such a system would have a worker rating system, whereby the owners would grade them and their opportunity to work and future pay rate would be based on those grades.  So the best workers would achieve full time employment at a decent wage.

All the workers, whether they are laborers or small uninsured contractors would be treated as employees with the temp agency withholding taxes, maintaining worker’s comp etc., thereby eliminating a potential career ending risk for owners who were hiring “handymen” for cash.  The guy in the Cheap Contractor or $60,000 mistake went under.  I assume this was the cause

I pursued the temp angle a bit a year a half ago.  We hired a college grad who was formerly a manager a temp agency that moved out of the area. Excellent resume and references. I held a lot of hope for him to do well at this, but in the end it did not work out. By that time I was distracted with the purchase of a commercial property in Hollywood FL to house my wife’s businesses.  The basic software framework exits as well as some operating procedures.

I still believe an available,  flexible workforce  is the brass ring for our industry; seeing so much benefit for my company as well as many other owners. This may be the top new project to aggressively pursue this in 2013. The open question on this is does Obamacare make this in anyway less practical today if the number of temps exceeds 50.

Jan 02

Real Estate Ideas for 2013 Part One

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 first 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 One:

Reducing Maintenance Supplies costs

Pre 1950 buildings in lower income neighborhoods require around $100 per month per unit for repairs, replacement reserves and improvements. Newer buildings in more affluent neighborhoods perhaps $50 – $65. This is all maintenance from leaky faucets and unit turnovers to new cabinets, new roofs, electrical upgrades, replacing parking lots ect.

Do the math on your units over an extended time period. Do not forget to include a reasonable value on your time. You chose $10 an hour? Why not work for me or McDonalds.  Make more per hour and avoid all the hassles of ownership? 😉

A quick check of city data files shows there are 159,658 rental units in the City of Milwaukee alone, inclusive of rented units in owner occupied buildings. Let’s assume a low ball $50 per unit per month in repairs, replacements and improvements. Annually that is a whopping $95,794,800. Yes, nearly $100 million per year. It actually could be a much larger number. Even 1% savings  is a lot of money.

So what can be done?

Improve supply sourcing: Collectively finding the best deals and creating good deals through group purchases.

We did this a couple years back when the CO detector law went into effect. Prices then for COs were in the twenty dollar range. My company alone needed around 2,000 CO units. So we shopped the best deal and found where the quantity price breaks were. We brought in a bunch of other larger owners and the final price dropped to eleven something each due to the number of pallets ordered. So four or five hours of my staff’s time saved our company and the other participants collectively tens of thousands of dollars in a single transaction.

Last spring myself and another midsize owner went to the Hardware Show in Las Vegas. Between us we buy some products in quantities that equal or exceed an independent corner hardware store. In Vegas we found good deals on a number of products and vendors we continue to use today. You can read more about this trip here: http://justalandlord.com/2012/05/13/thoughts-ideas-from-the-national-hardware-show/

This brings us to the million dollar question… ‘How can we use our collective shopping experiences and buying power to improve our bottom-line on a daily basis in 2013?’

Obviously group buying is a large opportunity.  There are some details that would have to be worked out to prevent this from being a burden to anyone.  The CO detector deal worked because the larger the group the lower the price for all of us.  I knew the other owners, but even then some backed out or reduced the number of units they wanted.  In this instance it was not a problem as the request I received after placing the order exceed the ones that were not taken.  But the situation could have left me with $11,000 of detectors I had no immediate need for, but a bill that would need to be paid within 30 days.

The most viable option that I can think of is a web based system where an item would be presented and people would commit to their purchase with a credit card that would have an authorization hold on the amount of the commitment, but the card would not be charged unit we reached the magic number. Once we were ready then the charge cards would be processed and the order placed.  For this to work we would need a pretty short time frame to order.  Seven days? If the quantity was not reached then the authorizations would be released and nothing would be charged to the owners’ credit card.

The website would show how many widgets needed to be ordered to get x pricing and how many to get y.  Emails would go out saying we are X number of units away from placing the order or X number of units away from the next level price break.  Some larger owners could quickly do the math and figure out if they bought an extra 50 widgets that the price break savings would make it less than they were paying for the original amount.  (That happened with the CO detectors.)

There would of course be some upfront costs here, but not a lot.  There would also be some admin costs finding and securing the orders.

Sharing our purchasing experiences could be an opportunity too.   If we had some easy way of sharing what we were purchasing from whom for how much we would all know the best places to buy.  I just do not see reaching a level of participation that would make this work.  (But I’d enjoy being proven wrong)

If any of the topics interest you comment either on the list or directly to me at:Tim@ApartmentsMilwaukee.com

 

Jan 01

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.

 

 

Tagged with:
preload preload preload