Jun 20

Since yesterday’s post on Milwaukee rent stats I’ve spoken to a number of people, both landlords and tenant advocates, who felt rents had significantly increased in Milwaukee over the past couple of years.

I took a look at this using Rent-O-Meter’s rent analytic tool.  (I highly recommend this tool for accurately  setting residential rents) In moderately priced neighborhoods both on the Southside and Northwest, their data is showing that for two bedroom units rents have actually dropped quite a bit from 2016.  Three bedroom unit rents remain stable.

Not sure what to attribute this to.  There has been a softening of occupancy levels over the past year or so, which nearly always causes price corrections.  No money/low money mortgages are reappearing.  That temporarily drives up vacancies, but as we saw in 2008, that bubble pops.

 

 

Rent-o-Meter data NW Milwaukee

Rent-o-Meter data NW Milwaukee

Jun 19

Rents have not changed significantly in Milwaukee (2008-2012) compared to 2013-2017)

What has changed significantly is the number of people paying over 35% of their income in rent.  That percentage DROPPED from 50.1% in 2008-2012 to 45.9% in 2013-2017.

While there is still room for improvement, it looks like the financial status of Milwaukee’s tenants is improving.  This is a good thing for all.

Table is from the US Census Data:
Milwaukee Rental Data From US Census

Milwaukee Rental Data From US Census

Dec 02

Last week my son sent me the following text:

I read this from time to time and thank you for it

The Public Policy Forum a few months back said Milwaukee’s really short of low-cost rentals. If more people went into the business, researchers said, it could help. Yet Ballering, who’s owned for 32 years, told his son to find another occupation: “It’s such a difficult business,” said Ballering.

“There’s better things to do with your life.”

Not what a city in need of rental housing wants to hear from entrepreneurs who provide it.

Source: http://archive.jsonline.com/news/opinion/59534347.html/

The back story:

My son was nearing high school graduation.   I asked him what his plans were.  He said that he was going to follow me into the rental business.  He was initially upset with me when I told him no.  Today he is happy as a partner at a major marketing firm.

Although being in rental housing has done well for me, it is a harsh business.  There is little to no appreciation for the amount of work and risk involved. Many who enter the industry leave broke and broken. Your properties get damaged, your tenants do not pay and, to quote the late Rodney Dangerfield, we get no respect.

The government, who would benefit from successful rental housing, seldom support us or gives us the tools we need to succeed.  As an urban housing provider, you become responsible for the misdeeds of your tenants, while those who commit crimes are often not prosecuted.

There is an eviction crisis.  Yet instead of putting resources towards the causes, poverty and social issues, those claiming to want to solve the problem are providing more resources to free legal helps so that the nonpaying or disruptive tenant can stay a month or two longer due to an undotted i or uncrossed t.

So, yes, being a marketing professional seems like a much better life.

Jul 03

Milwaukee Journal has an article about Milwaukee’s new ordinance that requires deconstruction, as opposed to bulldozing, pre 1929 single families and duplexes.

A Milwaukee ordinance went into effect in January requiring single-family homes and duplexes built in 1929 or before to be deconstructed.


The extended timeline and need for more workers causes deconstruction to often cost nearly twice as much as demolition.

Bloomberg just had a piece on how recycling in general is failing.

Similarly a decade ago or so one of the Milwaukee TV stations followed a couple of DPW trucks full of recycling bin plastics to a landfill. The response was they were ‘just storing them underground’ until they could reuse the plastic.

None of these well-meaning things work as government mandates, but often take off when they are profit motivated.

Look at the electric car. Great for the environment but little interest among the general population. Then along came Musk with his Tesla Roadster. Not a utilitarian, save the planet vehicle, but a quick, sharp looking sports car that enthusiast liked, oh and it also happened to be electric. That changed the topic. His later vehicles are like little high tech spaceships from the Jetsons. Today, there is even Formula E racing, similar to F-1. The buying public, including gearheads, is now getting excited about electric cars and all the major manufactures are racing to beat Tesla. Soon gas may be a thing of the past.

Deconstruction will only work well when there is similar economic motivation to do so, such as a marketplace for used lumber and consumer desire for the materials.

But deconstruction of older properties has the additional problem that many of the materials cannot be reused due to containing lead, asbestos and who knows what other chemicals that will prevent its direct reuse.

 

Feb 01

You now are required to install 10 year sealed battery smoke detectors in Milwaukee. We have the law in a large part because Kiddie, the smoke detector manufacturer,  lobbied hard in Milwaukee for the law.

The sales literature claims the life to be ten years from the activation. Now if the ten year detectors actually worked for ten years, without being removed, disabled, or the battery dying they would be a bargain for owners compared to replacing batteries once a year.  However, will they?  I doubt it.

The marketing of a ten year detector may in fact cause more problem as home owners and perhaps some landlords will think ‘Okay, this January 2018, I’ll make a note on my calendar to replace the detectors in December 2027.’ and not continue to check them annually at least.

 

Let’s be clear: You still need to check the ten year units, just as you did with the regular units.

A worrisome fact is they have an “off” selector that drains the battery and permanently disables  the unit. From their literature

 

Q: How do I disable my alarm?
A: Remove the alarm from the mounting plate by rotating it counterclockwise (as indicated by the arrows on the cover of the alarm). Next, on the back side of the alarm, locate the area marked with a long arrow on the product label. Break through the label with a screw driver and turn the screw to the “OFF” position. This will deactivate the alarm, stop the end-of-life warning and render the alarm safe for disposal by draining the battery.
IMPORTANT: Deactivation of the alarm is permanent. Once the alarm has been deactivated, it cannot be reactivated or mounted back onto the mounting plate and will no longer detect smoke or carbon monoxide. This is why it’s imperative to replace your alarm immediately.
The ten year warranty only covers repair or replacing the unit, not the damage caused by them failing to work in a fire seven years from now,  your labor to replace them or even the postage to and from the manufacturer.  Some highlights of one warranty:

 

The obligation of [manufacturer] under this warranty is limited to repairing or replacing the alarm or any part which we find to be defective in material, workmanship or design, free of charge, upon receiving the alarm with proof of date of purchase, postage and return postage prepaid,
 
 In no event shall the Manufacturer be liable for loss of use of this product or for any indirect, special, incidental or consequential damages, or costs, or expenses incurred by the consumer or any other user of this product, whether due to a breach of contract, negligence, strict
liability in tort or otherwise.
 
The Manufacturer shall have no liability for any personal injury, property damage or any special, incidental, contingent or consequential damage of any kind resulting from gas leakage, smoke, fire or explosion.
Nov 03

The Milwaukee Journal reports

Lax city oversight allowed sham nonprofit to snag and flip Milwaukee properties

The article has nothing to do with a landlord, and everything to do with with fraudsters using real estate as the vehicle for their criminal activity.
.

Yet just like the other non-landlord related articles in the series, the html title tag is “Landlord Games:…” , the caption to the attached video reads “Some Milwaukee landlords game the system, taking advantage of potential renters and home buyers” and the footer:

Read the investigation

To read the Milwaukee Journal Sentinel’s Landlord Games investigation, which examines ways landlords game the system and how city officials allow it to happen, go to jsonline.com/landlordgames.


 Certainly not a “landlord game.”  But the Milwaukee Journal Sentinel continually mis-captions anything negative about housing as being  “landlord” caused.

Sep 25

Barrett’s budget [Link to J/S article on the Budget]:   Police and firefighter cuts, property tax increase

The City of Milwaukee would lose 33 police officer positions and 75 firefighter jobs under the 2018 budget plan, which Mayor Tom Barrett is set to introduce this week.

Every budget starts with cutting Fire Fighters and Police Officers, plus they usually throw out the idea of cutting out the mobile mammogram testing in the poorest neighborhoods, but that isn’t in the article so it may no longer exist.

Are Police and Fire Fighters really the only place to cut the City’s budget and more importantly, is it wise to reduce Police positions in Milwaukee, which  MSN reports as the 5th most dangerous city in the nation?

With out of control violent crime, it is harder to attract major businesses and thereby turn around the local economy – and an influx of jobs would cure a lot, including a reduction in crime.

The Effects of Unemployment on Crime Rates in the US – SMARTech
A one percent increase in the unemployment rate will increase the violent crime rate by 14.3 per 100,000 inhabitants. … A one percent increase in the poverty rate will increase the violent crime rate by 23.9 per 100,000 inhabitants, and is statistically significant at the 1% level.

Even property crimes hurt.  I can’t tell you how many times have I had good tenants move because they came out to their car in the morning to find the window broken and their $50 radio stolen.

Better from a long-term perspective would be a shift from an austerity to a prosperity mindset.  Milwaukee should have fought tooth and nail to have Foxconn locate within the City. That could have changed everything well into the future.

There are public hearings scheduled if you wish to comment on the budget, or call your Aldermen (414) 286-2221.

Apr 12

From today’s Milwaukee Journal Schneider: Desmond’s ‘Evicted’ is a flawed masterpiece

The article misses the mark in some aspects.
 
Homes in Milwaukee’s poorest areas often can be bought for as little as $8,000, with rents running upwards of $500 a month. In virtually no time, landlords can own the properties free and clear and the rent they collect is pure profit — as long as they can collect. As succinctly put by one of the landlords featured in the book, an African-American woman named “Sherrena,” (pseudonyms are used throughout the book) “The ‘hood is good.”
 
This furthers the misperception that landlording is a “get rich quick” scheme. Sherrena made statements to Desmond that sent up red flags, at least to us in the industry,  that she was already in the throes of failure at the time of the interviews.  

Attorney Heiner Giese did the research to discover Sherrena’s identity.  She was not becoming wealthy on these properties.  Instead, Sherrena began losing her buildings to foreclosure shortly after the Desmond interviews and was out of business well before the book was published.  Many of her properties have since been razed.

However, Schneider does recognize a fact that is missed by many who look at rental housing and urban issues from the outside

 

Further, despite the book’s grim portrayal of landlords, one can only imagine how far these neighborhoods could fall if landlords weren’t there to keep at least some semblance of order. If housing laws were to squeeze the amount of money property owners could make on their rental units, they may simply abandon these homes altogether, leaving a lawless landscape devoid of structure.

 

Feb 09

For the past couple of years, we have sold out both the spring and fall sessions of Attorney Tristan Pettit’s AASEW Landlord Tenant Law Boot Camp.

It looks like we are on track to do the same for the upcoming February 18th, 2017 Boot Camp.

Last fall I waited too long to sign up my new staff members and could not get them in. I signed up three staff people very early for this one. 😉

You may ask ‘Why would Tim pay $537 plus wages to send three people to Boot Camp when he knows the laws so well?’

The answer is easy: One small mistake or missed opportunity will cost us far more than this. It is important that my folks know the law as WI landlord Tenant Law is not always what a reasonable person would assume it to be. And this is ever evolving, with both new laws, new interpretations by courts and new tricks by tenant advocates*. This is not the first time we’ve sent staff either.

This course is presented by Attorney Tristan Pettit. Tristan’s law practice focuses on landlord-tenant law, he is a current board member of the Apartment Association as well as former president, and drumroll please, he writes all the standard landlord tenant forms for Wisconsin Legal Blank.

If you want to go, now that my seats are secure ;-), you can sign up online or call Joy at the Association 414-276-7378 and reserve a spot.

http://www.landlordbootcamp2017.com

* Most “tenant advocates” only advocate for tenants that break the rules. This ultimately costs the rest of the good tenants more in increased rents and decreased service or more noise and disruption… but this is another story for another day.

Feb 09

I previously wrote about problems with Milwaukee’s DNS computer system.  They now have their new system online.

I spoke to a couple of people that have attended a recent DNS presentation on the new property information system.

At this presentation, the attendees were told that DNS was prevented from collecting contact information, such as phone numbers, through property recording due to ACT 176.  This is not accurate but is just more “Fake News”  that our industry has been subjected to so much lately.
 
ACT 176 explicitly permits the collection of the contact information for the authorized contact person for the property. This exclusion was supported by the Apartment Association as most owners find value in having people be able to contact them or the people they have managing their properties so that they may address small problems before they become big problems. We also find it useful to be able to contact other owners during screening.
 
Here is the law as enacted by ACT 176:
 
66.0104 (2) (e) No city, village, town, or county may enact an ordinance that does any of the following:

1. Requires that a rental property or rental unit be inspected except upon a complaint by any person, as part of a program of regularly scheduled inspections conducted in compliance with s. 66.0119, as applicable, or as required under state or federal law
.
2. Charges a fee for conducting an inspection of a residential rental property unless all of the following are satisfied:
a. The amount of the fee is uniform for residential rental inspections.
b. The fee is charged at the time that the inspection is actually performed.

3. Charges a fee for a subsequent reinspection of a residential rental property that is more than twice the fee charged for an initial reinspection.

4. Except as provided in this subdivision, requires that a rental property or rental unit be certified, registered, or licensed. A city, village, town, or county may require that a rental unit be registered if the registration consists only of providing the name of the owner and an authorized contact person and an address and telephone number at which the contact person may be contacted.
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