To be successful at landlording you must approach it as a business. No better way to be innovative than to liberally steal ideas, grabbing the best from other industries and repurposing them for ours. I also have been thinking a lot about starting an incubator for physical businesses in Milwaukee that employee people that have a hard time finding good jobs.
Good artists copy, great artists steal. — Pablo Picasso
This past Saturday John Lee Dumas, who does the podcast “Entrepreneur on Fire” was speaking at the inaugural Young Entrepreneur Convention in Des Moines. If you have heard his podcast you know how great they are. If you haven’t, go take a listen. His format is doing an interview a day with a different entrepreneur, seven days a week. He is an ex-tank commander in the Middle Eastern wars, turned successful podcaster and author.
I find such valuable insights in his stuff that I decided to go to Iowa to see him in person. I did not even look at who the other speakers were. After hearing him speak, if the Young Entrepreneur Convention been JLD alone, the trip would have been worth it.
I was pleasantly surprised at the quality of every one of the presenters.
Kevin Harrington and Carmen Ballering at the Young Entrepreneur Convention
Probably the best known was Kevin Harrington, one of the original Sharks from Shark Tank.
His interesting story: He got his start after seeing a knife pitchman at a county fair and noticing that the Discovery Channel was dark six hours a day in the early days of cable. This was the beginning of “As Seen On TV” and the entire infomercial craze.
Carmen spoke to Kevin Harrington off stage about doing a promo for the Event Decorating Academy. I think what he offered is a valid idea to try.
The other surprising presenter was Jeff Hoffman, founder of PriceLine.com, the company that brought low-cost easy travel to the masses as well as the creator of the airport ticketing kiosk. There was some irony in seeing him Saturday and then having a terrible experience with American Airlines on the way home the next day. His interesting story: He got kicked out of Yale for not having the complete tuition. He solved it by creating a B2B software company even though he could not program himself at the time.
Jeff Hoffman, founder of Priceline, with Carmen Ballering
Two big take aways from Jeff Hoffman: Create BIG goals, envision that you have achieved them and then work backward each step until you are where you are today. That is how he arrived at doing concerts with Elton John, Britney Spears, and NSYNC. He also has produced a profitable indie movie.
The other, which is a to our businesses, is to look at what is occurring outside of your industry and see what opportunities presents themselves. PriceLine.com was based on his reading articles on perishable goods, distressed inventory, and spot pricing.
As I wrote earlier, every presenter was great.
The guy that put the event together was Brandon T Adams. He had created the (3rd?) largest Kickstarter campaigns and is a 2012 Iowa State University grad.
Two of the presenters are from Madison. Megan Watt ,who just released her first book, is a leadership trainer at her company, Dream Catalyst Labs. I paged through the book after hearing her presentation and bought it. The other is Jenna Atkinson, who gave a great presentation on marketing and social media.
Center, Ken Shamrock, “The most dangerous man in the world”, Carmen Ballering, who may just be the most dangerous woman in the world, and Tim Ballering
Cactus Jack Barringer is a very entertaining marketer. Guy holds a dozen patents.
There were a bunch other presenters during break out sessions that I did not get to see. You can see the YEC 2016 speaker list here.
One that we did see that I did not see a tie into our businesses but was cool to meet as our son-in-law and his brother are both MMA fighters, in fact, Monday of last week the brother, Kevin Vazquez, had his first major UFC fight was Ken Shamrock “The World’s Most Dangerous Man”. Shamrock and his partner were pitching a project to team retiring celebrities with young entrepreneurs.
The event was so great I can’t wait for next year’s conference.
#YECDM
On March 7th, 2016 Matt Desmond, author of EVICTED was interviewed on the Diane Rehm NPR show, guest hosted by Tom Gjelten. I was privileged to be an invited guest on the show. I do not feel I did as well as I wished but am sharing it as this show was a good overview of the issues presented in the book.
EVICTED will have a huge impact on our industry for many years. Whether that impact is positive or negative to rental housing is up to us and how we react.
Listen to NPR’s Diane Rehm Show EVICTED Interview with Matt Desmond
The Milwaukee Journal Editorial based on Matt Desmond’s new book Evicted builds upon some misperceptions about the rental industry.
A NYT reader’s comment on Desmond’s Evicted more closely follows what typical owners see when trying to run lower income housing.
The Journal editorial echoes Desmond’s advocating for legal representation for tenants in most evictions. If you frequent eviction court you seldom see a day without Legal Action representing tenants. ATCP 134 provides enticement for attorneys to represent tenants tenants tin cases where the owner is doing wrong.
Implying tenants need legal representation simply perpetuates a myth that wrongful evictions are common and owners somehow benefits from an eviction. In fact by the time it is over the owner has lost two to three months rent and often more. Legal representation for tenants in evictions seldom does more than simply let the tenant get another month of nonpayment before leaving.
In an average month eviction judgments in Milwaukee County exceed $847,000 – every month. But this is but a fraction of the losses suffered by property owners. Of those evictions, only a third of the cases had money judgments other than the court applied fees. Was this because the tenant did not owe rent? No, more likely because the owner did not want to waste more time chasing a judgment they will never collect. Those in our industry as well as those outside of the rental business will tell you that less than a quarter of uncollected rent ends up in eviction court.
This is money removed from housing and increases costs for the rest of the tenant population. While some tenants may use the money for real needs like shoes for kids, some use it for other things that further harm the community.
Then there is the comments about constructive (illegal) evictions. While statements like this flame the fires of hatred against landlords, such acts seldom occur and when they do there is adequate remedies for the tenant. I own two duplexes that a guy walked away from his 1/3 down and eight years of payments after he spent a weekend in jail because he threw the tenants’ belongings out on the front yard and changed the locks. Seems the tenant did not pay rent and when he went to find out why, he also found they broke the front picture window. His first stop after getting out of jail was my office to see if I would buy them for the remaining mortgage. Small owners take these things too personally…
Desmond’s book has brought the issue to the forefront. And this is good. Its is our industry’s job to make sure this does not turn from what it is, the bringing a real problem to light, into yet another excuse to bash the rental housing industry.
The part of the discussion that would be helpful to the overall community is increased housing vouchers. Universal food stamps for people in need was a good first step many years ago. Housing and utilities vouchers for those who need them the most would be a good next step.
Yesterday I wrote about 2016 revision to the Wisconsin Landlord Tenant Law. Over on FaceBook Brian Peters, whom I respect, responded. I thought the discussion warranted bringing it over here for those who do not follow me on FaceBook.
Brian Peters Unfortunately, those changes, along with other changes in past, allow for abuses by bad landlords. Which is why I’ve been calling them the Slumlord Protection Acts.
For example, you mentioned drugs. I doubt people who do “white collar” crimes will find themselves tossed out. This will impact some people more than others.
This provision is also dangerous as it makes it easier for a landlord’s prejudices to come into play.
Finally, do you really want landlords to be in that position? You once told me about how community prejudices would cause calls to building inspectors. Do you really want calls from neighbors claiming they saw suspicious activities and demanding you evict the person?
While you and I often agree on many issues, I think you have this one wrong.
The notion that landlords enjoy or profit from evictions is a myth perpetrated by those with a bias against landlords or rental housing. The typical eviction costs the owner at least two months rent, court fees and damage to the property. I have yet to meet an owner who enjoys the process or comes out ahead. Landlord’s prejudices, although rare today, most likely appear in the application selection process. This law will not add to nor prevent this.Owners already face demands by neighbors and city officials to evict for activity where there has been no arrest or even credible evidence that the tenant is engaged in wrong doing. This provision will not add to nor prevent this as it is the result of the neighbors’ prejudices that elected officials willingly participate in hopes of getting reelected. This is a nationwide issue. Google Minority Threat Theory to read many scholarly articles on this, or read the work of Matt Desmond that was based on his work in Milwaukee. Matt will be in Milwaukee for a book signing on Tuesday. I will email you a copy of our HUD complaint.The new law does not allow for eviction for use or simple possession, which actually makes it harder to evict by invalidating the Cobbs case, which permitted eviction for simple possession or use in Section 8 Housing
The change in the law however allows owners to act when there is a major problem. I would expect that you would want an owner to address rampant drug dealing or the violent person next door to your home. This change allows that to happen easier, but contains protections for the tenant.
One change included that I wanted is the one that permits the use of 5 Day notices to address lease violation in month to month tenancies. The law, as it was, only permitted the use of a 14 Day termination without the tenant having the right to cure when a month to month tenant violated the rental agreement. Now we can give the tenant a 5 Day to address things like the pit bull they brought home. If the tenant removes the dog, then they cannot be evicted and everyone wins.
How does it benefit the tenant to not have the opportunity to cure the violation?
I was imprecise with my language earlier, BTW-good that you clarified it for anyone reading this.
You have this backwards. The new law ADDS a right to cure notice for month to month breaches where none existed before.
We championed the addition of the right to cure notice because our industry wants to avoid evictions when possible, but we also want disruptive removed as soon as possible if they will not make the correction. Remember all evictions are costly to both landlord and tenant.
I realize that. I guess you see the bad tenants while I see the bad landlords so we both have our perspectives.
Tim
Actually I see very few bad tenants. While some fail due to economic fragility, I would not call them bad. Out of approx a thousand tenants last year, it looks like we evicted 7 during the year that would be considered bad.
Tenants and landlords need each other just as Clownfish and anemones need each other. A quick view of this is at the post: The enemy of my customer is…. Of course it is more complex than that.
Both sides need to be careful not to be played by people who try to create strife between us only due to their dislike of tenants for reasons unrelated to housing.
Governor Walker is scheduled to sign AB568 into law on Monday 2/29/16. Link to the text of the new 2016 Wisconsin Landlord Tenant law, ACT 176 This is the third major revision to WI Landlord Tenant Law in three years.
It will take a while to digest all the implications of the new bill, even for those of us who watched it go through the legislative process over the last six months or so.
Some of the highlights:
There are a bunch of changes that should help keep local governments a bit more in check. This legislation:
Time of Sale protections
The new law also changes things with regards to sprinklers, historical buildings, trespass and towing.
Stay tuned as we get more information on what these changes mean to us and what lease language will be updated.
A reader asks:
I would like to know if all of you fill these out for tenants? I have had several to complete and return to them. They take time and the financial benefit is for the tenant. Does anyone know if we are required to complete them?
The short answer is yes, you are required to complete the Homestead Credit Form.
Milwaukee’s wave of violent crime has not subsided.
Yesterday (8-14-15) a unit prep crew for one of the other larger Southside owners were robbed at gun point while unloading their van at 8:30 AM. The crime happened on 24th and Maple.
One work suffered serious injuries from being struck with an iron bar across the face. The guy has a broken lower jaw, upper jaw, nose and eye socket.
What did the thieves get from this violent attack? $40. They did not even steal any tools. What was the most the criminals could have expected to get robbing a couple of apartment painters art work? Maybe… $40. WTF. Who robs paint crews at 8:30 in the morning?
Two guys in a grey Hyundai were driving slowly down the street, as though they were looking for an address. They pulled in and parked a couple of car lengths ahead of the worker’s van. Two workers were unloading the stuff they needed to finish the prep.
One of the bad guys calmly walked up to a worker and asked him for a light for his cigarette. The worker gets out his lighter, looks up and sees the gun. Fixated on the gun, as you would be, he doesn’t see the other guy until he was struck in the face with the iron bar. Had the worker turned his head he could have been hit across the back of the neck.
The worker never had a chance to simply hand over his wallet. These criminals were willing to possibly kill someone for a couple of dollars.
How do you even protect yourself in a situation like this? Even if the worker had a carry permit, there would have been no time to react between this being a stranger looking for a light and a violent attack.
Later that same day two people were shot in a robbery on 34th and Lincoln. A few days earlier and a few blocks east, a ten year old was shot in his own home as bad guys decided to shoot out in the street outside. Things are seriously headed in the wrong direction.
I used to walk the neighborhood that are properties are located in every chance I got. Today walking what use to be the fairly safe Southside, would be insane. We are close to eclipsing Detroit as the most depressed city in America.
Taxpayer’s leasing activities are not only non-charitable, but also commercial. The manner in which a business is carried out indicates whether its purpose is exempt or commercial. Living Faith, 950 F.2d.at 372. If an organization competes with commercial entities, uses market pricing, and other terms, and accumulates a large surplus, it will be deemed to operate for commercial purposes. Taxpayer provides normal property services to its tenants, presumably in competition with for-profit landlords, and has accumulated a very large surplus. These factors lead to the conclusion that it is operating for commercial purpose. See B.S.W. Group, 70 T.C. at 358, Living Faith, 950 F.2d at 373. Therefore, Taxpayer’s rental activity during the examination years constitutes a substantial commercial purpose, and this activity is fatal to Taxpayer’s exemption. Better Bus. Bureau. 326 U.S. at 283.
Sewer, water and municipal service fees have become a major operating expense. I’m sure these runaway fees have lead to the failure of many newer, under capitalized owners.
Last month the law changed on municipal utility charges, making it more practical to have tenants be responsible for these charges. We owe a lot of thanks to the work done by Gary Goyke in making this law a reality, as well as the support of the members of the Wisconsin Apartment Association, the Apartment Associations of South Central WI and of course the members of the Apartment Association of Southeastern WI
In addition to the potential financial benefit to owners, there is a societal and environmental benefit as this will certainly result in conservation. No more walking into a unit, only to see the tenant thawing dinner by running cold water over frozen meat for half an hour. Remember when you paid for heat and would find windows open on sub freezing days or when you paid for hot water and found your basements being used as a laundromat for friends and family.
The most important aspects of the law effect the 2015 billings. However there are some things we as owners need to do now to ramp up.
First, you cannot bill tenants directly for utilities that are not separately metered. This means for multiple unit properties the water needs to be separated and an additional meter added. In older Milwaukee duplexes this is not going to be a major job. The two plumbing contractors I spoke to felt it would be a $600-1000 per duplex to separate the water and install a second meter horn. Remember that in this style building you only need to separate the cold water to the lower unit faucets and toilet as well as the feed to the lower water heater and possibly laundry facilities.
Older side by sides and four families will take more work, read $, as they typically have a single cold feed to the upper units.
Second, for the benefit of tenants, owner occupants and the city’s ability to collect their utility bills; we must urge the city to go to monthly billings
Attorney Tristan Pettit shared the attached doc from the League of Wisconsin Municipalities that should be the first step in the road map to making the change.
