Just a Landlord

What I’ve learned in the past few months

I wrote a while back about my trip to the ASD retailer show in Vegas. We followed this up a few weeks later by returning to Vegas, along with Jeff of J & J Rentals, for the National Hardware Show.

We were looking both for new products as well as opportunities to buy items that we currently buy in case and pallet lots. We were not expecting to hit a home run on the latter as, although we purchase $25,000 to $35,000 of hardware, building supplies and paint per month, those number probably were not enough to interest large wholesalers.

We actually hit a home run on both as well as finding products for my wife’s event supply business.  Ironically it turned out my son was at the show too. He left radio and is now working for a public relations firm. They were there helping promote a fertilizer infused grass seed.

Cool new products found at the show

Number one has to be TeleSteps telescopic type 1 250# and 1A 300#  rated ladders with OSHA and ANSI certs. These were originally developed for military and law enforcement use. At the show they had a couple of the flat black anodized military versions on display.

The advantage of these over an extension ladder is they fit in the trunk of your car instead of requiring a truck with a ladder rack. What was happening is we would send a maintenance guy out and if the job required a longer ladder we would have to divert a truck with a ladder rack to deliver and then pick up the ladder.

I purchased one telescopic ladders and sent it out with a crew leader. He came back, said he loved it and asked if he could keep it. I said sure as long as he took good care of it. He said he would treat it as well as he treats his girl. I cautioned him not to bring my ladder back in the same condition as his girl, pregnant.

Now two other crews are requesting their own telescopic ladders.

Next cool item:

SaniSeal wax ring replacement. This is the “donut” that fits between the toilet and the sewer pipe flange. The problem with regular wax rings is if there is any movement they tend to leak causing the floor to rot or water damage to the apartment below. It a heavy person sits on the toilet the wax ring can compress and they do not return to their original form afterwards.

The SaniSeal product is made of polyurethane foam that does not permanently compress and is reusable if a toilet needs to be unmounted for things like drain cleaning.

We have purchased a case of these.

Speaking of drain cleaning:

General Wire was at the show with their sewer and drain cleaning machines. Not too much special there, but they have a new head for both small drain cleaners as well as sewer machines called the ClogChopper. It looks like it could handle roots better than a normal blade. We bought one and will try it the next time we run into roots, which is often as the city in their infinite wisdom tend to plant trees at the curb line right above the sewer.

We also found a couple of new tools for clearing sink drains.  Probably the best of breed is the “DRAIN KING” MINI-SNAKE

Painting:

There is a tremendous amount of time wasted in set up and take down on painting jobs as tThey have to clean their brushes, rollers etc. I’m pretty sure I lose an hour a day per painter. In fact during the summer we run our paint crews ten hours a day four days a week to cut some of this cost, plus the guys like three day weekends.

We ran into a neat product that can cut the set up/tear down cost a bit. The Kovrd 3 IN 1 PAINT TRAY BAG & DROP SHEET is an air proof bag that just zips shut to keep the rollers, trays and brushes fresh. It also works as a mini drop cloth for painting doors etc.

No one in the upper Midwest carries the product, so we bought a case and had it shipped up to Milwaukee.

Water, water everywhere…

Milwaukee sewer and water costs are out of control, but you knew that.

We found some interesting water conservation products. One that may or may not save a lot of money depending on how well it is accepted by the tenant base are flush valves that convert standard toilets to dual flush, using half the water for liquids that solids.

A few seemed like well educated people would have a hard time understanding them and were expensive such as the Toilet Guardian AquaOne.com, but one shows promise.

The One2Flush by One2products.com is relatively inexpensive, in the $25 range in quantities, and appears simple enough that it will not confuse tenants which results in service calls. We are going to do a limited test on a handful of properties to see the results. The valve itself has been used in europe for many years.

In the past we’ve tried the FluidMaster water sentry. This is a fill valve that shuts off when it detects a running toilet. The results were not that encouraging, but it was a few years ago. Korky, has come out with their version of a similar product called WaterWISE™ We ordered a dozen of these for a test.

Faucets

When it comes to faucets you can get cheap plastic faucets that constantly need replacing or you can get metal faucets that last but cost 3-4 times as much.

We found a distributor of good solid metal faucets at the price point of the plastics. These are made for the hotel industry, and weigh enough that you could probably take them to Miller Compressing, a local scrap yard, and get the price back in scrap metal. They have all the listings such as NSF, CSA, etc. and are approved for CA, which has some of the most stringent requirements in the nation.

We located a manufacturer of fire extinguishers and another of CO and smoke detectors. Both seem to offer a good price compared to what we are buying today. We are working out the shipping before placing an order.

Really cool thing

We were at the Frost King booth, you know, the weatherstrip, carpet bar and plastic manufacturer.  The salesman that spoke to us was no other than Mel, the founder and owner.  I like the product and was impressed that a guy of his position still works the floor, talking to even t smallest of buyers.  No wonder they have been so successful for so long.

Final thoughts

We also found a few general suppliers, but I feel those those will be of limited interest to the readers at large.

I’m sure I left out a few important points and will write more later.

We recently expanded my wife’s Event Decorating Academy to sell wedding and event decorating supplies to students and professional decorators.  We were buying from distributors who supply various retailers and small wholesalers such as ourselves.

End of last month my wife and I attended the ASD retail merchant trade show. This trade show is held in March and August in Vegas. They also have one in NYC in September.

As a result of  attending the ASD show are now buying directly from the same sources as many of our suppliers, cutting 35-40% off the distributor price we were paying.  Many of these items we buy by the pallet so savings is huge.  The largest example is curtains used for fabric draping at weddings and events. We sell thousands of these a month.

Cool, but what does this have to do with landlording?

A lot actually.  At the show I found a number of products that we buy in quantity for the properties we own and mange at prices that were surprising.  For example passage sets and deadbolt locks for $3.00 a piece.   These are steel latch ANSI Grade 3, similar to the Defiant or Legacy brands at Menards and Home Depot.  We actually upgraded to the “off brand” a number of years ago when Kwikset changed to a plastic latch in their 200 series that would break and lock tenants in their room.

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The following is a pretty good overview of the new law from Margit Kelley, Staff Attorney at the WISCONSIN LEGISLATIVE COUNCIL   The Legislative Council is a nonpartisan research agency of the Wisconsin Legislature.

Read their full analysis

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A reader of the ApartmentAssoc Yahoo Group asks:

Am I correct when I say a 2 story 4 unit building w/ a basement would need 7 co detectors installed.  Can they be combo smoke/co detectors or do we need separate detectors for each function?  Any help would be appreciated…..Thanks

My reply cleaned up a bit from the original is below As of April 1st, 2010 Wisconsin began requiring CO detectors in all multifamily buildings. As of February 1st, 2011 the requirement expanded to all residential buildings including owner occupied single families.  There are a few exceptions such as units that have electric heat AND do not have attached garages AND do not have gas stoves; as well as those with sealed combustion furnaces and water heaters that are inspected regularly.But most WI residential buildings now must have carbon monoxide detectors.

Where to install and how many carbon monoxide detectors are required depends on a number of factors. Continue reading »

Accounting Today has a good article on the Senate bill to amend the 1099 filing requirements

It looks like if this is signed into law we won’t have to send 1099s to the Home Depot.

However this does not appear to repeal the new 1099 requirements under the Small Business Jobs Act for landlords

As you recall the Small Business Jobs Act expanded the1099 reporting to all landlords when they pay more than $600 to non-corporate service providers such as your local handyman.

With very few exceptions, all single family and duplexes in Wisconsin will be required to have carbon monoxide detectors installed as of February 1st 2011. You can read about the multi unit building version of the CO detector law here

The important part of the law for most of us is:

“101.647(3)(a) The owner of a dwelling shall install a functional carbon monoxide detector in the basement of the dwelling and on each floor level except the attic, garage, or storage area of each dwelling unit. A carbon monoxide detector wired to the dwelling’s electrical wiring system shall have a backup battery power supply. Except as provided under par. (b), the occupant of the dwelling unit shall maintain any carbon monoxide detector in that unit. This paragraph does not apply to the owner of a dwelling that has no attached garage, no fireplace, and no fuel-burning appliance.”

“(b) If any occupant who is not the owner of a dwelling, or any person authorized by state law or by city, village, town, or county ordinance or resolution to exercise powers or duties involving inspection of real or personal property, gives written notice to the owner that the carbon monoxide detector is not functional, the owner shall provide, within 5 days after receipt of that notice, any maintenance necessary to make that carbon monoxide detector functional.”

While the law does not contain a penalty for not complying, failing to have a working CO detector may result in additional liability should a problem occur at your property.. The law was passed and signed into law last year.

Efforts to repeal the 1099 reporting provision in the Obama Health Care Bill fails. Bad news in many respects for small property owners and businesses.

Owners who are unaware of the new 1099 provision will either get caught up in the whole ‘your contractor is a statutory employee’ argument or lose legitimate deductions for work performed.  If you are not up to speed on the problems you can face by improperly classifying what the government considers an employees that you are treating as a contractor read this post

I am being told that you may even have to file a 1099 on your local government for services like sewer, water and trash collection or lose those deductions.

This will be a HUGE paperwork nightmare even for those of us that only use regular employees for our maintenance. I can hear hectares of tress falling in the background to make the paper that will be needed even as I write.  But at least this will solve unemployment as it will take a heck of a lot of people to process the billions of 1099s this will generate. And jobs that are simply shuffling papers add nothing to the productivity of our nation, putting us another step behind other countries as we vie for market shares in a down economy.

From the National Apartment Association

1099 Repeal Effort Fails

Efforts to include a repeal of onerous new 1099 reporting requirements enacted in the health care reform law (P.L. 111-148) were unsuccessful.

Starting in 2012, businesses will be required to file a 1099 report to every business from which it purchases more than $600 in goods and services. (Prior law restricted the reporting requirement to the purchase of $600 or more in services only.)  See my note below* –Tim

Despite bipartisan agreement that the provision should be repealed, there is no agreement over how it should be paid for.  As a result, repeal provisions were not included in the tax bill and is not expected to pass before the lame-duck session adjourns.  Lawmakers are expected to take up the issue early in the 112th Congress, and NAA/NMHC will continue to aggressively advocate for repeal.

*More accurately the old law also excluded services performed by corporations. The new law includes all services and purchases over $600 per year per vendor.  This greatly increases the number of 1099s required.  Also most smaller property owners were exempt under the old law,  Not so now.  If you own a single home that you rent you are subject to this.

We use employees almost exclusively, for a number of reasons.

Worker Comp insurance is important as your homeowner’s policy does not cover people working on your property.

More importantly the tax implications if a contractor is reclassified as an employee.

Why is the tax issue more important than the workers comp? You can and should have a worker comp policy even if you feel most of your worker bees are contractors.  So go out, get it and sleep well.

Now onto the consequences of a contractor being reclassified as an employee for tax purposes.  A number of years ago we had a lady who cleaned carpet for us.  She had her own machine.  She used her own chemicals.  She charged a fixed rate based on the number of rooms.  She had a number of other clients at the time we started using her. We found her through an ad she ran in the Shopper.  And she set her own schedule.

Well she also had a full time job and was laid off after she began doing our carpets.  She did not earn enough at the full time job to get the top unemployment benefit so she decides to include the earners from carpet cleaning to up the benefit.  The state ruled that she was an employee based on the following: She never filed taxes for the carpet cleaning income.  She did not have a FEIN.  At the time she was laid off we were her only remaining client.  And ONE time we told her a job absolutely positively had to be done on a certain date.  Well had I hired Adelman to clean the carpets I would have told them the same thing on that job.

Over a six month time period we paid her a bit over $400 for doing a dozen carpets.  The penalties and taxes we had to pay due to the reclassification were a bit over…$400.

You would have thought the government would have shown us some consideration as we had fifty some payroll  employees that year, so clearly we were not trying to skirt the law. But they use a 21 step test.  Fail an important one, or a few lesser ones and the person doing the work is an employee.

But $400 was a cheap lesson I guess. Earlier this year I spoke to an AASEW member and part time landlord who is fighting $20,000 in penalties.  Just last week I spoke to yet another part time landlord who is facing $60,000 in penalties due to reclassification of his “contractors” to employees. If you get this wrong and don’t file the proper employment tax forms the government can look back for something like six years.

And calling your workers contractors is became much more risky with President Obama’s signing of a new 1099 provision into law this week.

Today, unless I can find you in the Yellow Pages and you want to work for us it will be as an employee.

Fellow landlords

What services, tools, resource, supplies, innovations, changes in laws, grants, education, support from fellow owners etc. do you find lacking, unavailable, too expensive, too difficult to obtain, change etc.?

You get the idea…what do you see as the three, four or twenty things that would make your business more successful? Skies the limit. If it has to do with landlording or real estate investing throw it on the list.

Don’t worry if you think it is “doable” or not, Wild Ideas welcome and encouraged. But also don’t put off posting the more pedestrian needs and wants either.

You can leave comments, here or via private email to me at Tim [at] JustAlandord.com (makes sending the truly wild and innovative stuff easier for shy folks like me.)  I’ll compile the list for all to see.

Some will have readily available solutions that will be posted and shared, I’m sure.  Others are things our industry should be working on finding, changing, designing etc.

Some rather thought provocative comments below. Many of these were sent via email or posted on one of the list serves and reposted here as a central collection place. Please throw yours into the mix — Thanks Tim

A valid question asked in response to the AASEW’s EPA comments:

Thanks for these comments. You devote a lot of energy to criticizing the rule. Given the health problems caused by lead-based paint, what kind of rule should the EPA write? Let me know, and thanks.

My reply (edited to remove at least a few of my many typos):

The very short version

Everyone who works on older housing should receive lead safe training.  Such training could be accomplished in four hours and should be provided at no or low cost to anyone desiring it.

Our association provided this type of training to our members until our state health department required that only lead training course certified by them could be provided in WI.

A more detail explanation with support documents:

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