Jan 24

Separate from any eviction moratorium that was applicable to lessors under the CARES Act, evictions of persons from properties securing FHA-insured Single Family mortgages, excluding actions to evict occupants of legally vacant or abandoned properties, are also suspended through March 31, 2021.


Note this covers all tenants in HUD insured single family properties

Jan 18

President elect Joe Biden proposes a $15 minimum wage claiming it will lift 1 million people out of poverty.

Clearly, it is not possible to pay current rents working full time at the current minimum wage. That needs to be addressed. I said similarly in New York Times interviews in 1991 and 2010:

“On $673 a month, how do you buy tennis shoes for the kids, clean shirts for school and still pay your rent?” Mr. Ballering said.
($673 was the W2, WI’s welfare program, cash payment in 2010)


I do not think increased minimum wage is the answer though. Such programs will cause rapid inflation, leaving those making minimum wages in a similar position in a few years as they are today. A better answer is something like FoodShare for Housing, which addresses the needs without rampant inflation.

The person with some skills who is making $15 dollars an hour today is not going to accept the person with no skills making the same amount, they will demand more. Now that the former $15 an hour person is making $25, the one-time $15 an hour person will expect $40—this causing the costs of goods and services to rapidly increase.

The other factor is it will result in far less lower-paid jobs, as companies will move work overseas and automate all that can be done by a machine. But you can’t replace the hamburger flipper … oh wait, they just did. Miso Robotics Flippy robot for $30,0000 replaces 3-4 employees, produces better quality and works 100,000 hours between major servicing. 24/7 staff for 30¢ an hour, no overtime, no worker comp, no paid holidays, no calling in sick because there was a Packer Game last night…

At many fast food places, when you talk into the drive-through speaker, you are speaking to someone that is in an off-site call center. When was the last time you were at Home Depot or or the large grocery chain store that the checkout person was not you? 😉

The winners of the increased minimum wage programs will be people who own hard assets when the increase becomes law. THe more you own at the beginning of an inflationary cycle, the more you win at the end.

The biggest winners will be those with a fixed rate mortgage. Let’s say you own a $100,000 duplex with a $75k loan. Today you have $25k and 25% equity. Ten years at 7% inflation, and it is worth just shy of $200k. Now you have $125k and 62% equity, plus your principal paydown. If inflation hits 12%, you reach those numbers in 6 years.

Crazy- This will never happen. But it did. From 1973 to 1981, we saw an average of 9.25% inflation, with three years over 12%. Mortgage interest rates in 1981 were north of 18%. Interest rates were over 8% for the entire period of 1973 to 1992.

If they pass a new minimum wage, the smart answer might be to buy as much highly leveraged real estate as you can manage, unless, of course, the inflation it causes and the trillions spent on COVID relief crash the entire economy…

Jan 17

The overview of Jesse Tree is at https://www.jessetreeidaho.org/. The details of their Badge program are at https://www.jessetreeidaho.org/sign-up-for-workshops. They promote eviction prevention through rental assistance, mediation services, and working with property owners. A quote from their homepage:

It costs $1,000 on average for Jesse Tree to keep a family housed, compared to $5-10,000 for a family to find new housing after being evicted.

Evictions also result in significant costs to the property owner. TransUnion found in a 2014 study that “the true cost of an eviction can range from $3,500 up to $10,000” TransUnion infographic on eviction costs.

Between the cost incurred by the renter and the cost incurred by the property owner, as well as hidden costs incurred by the community such as the impact on MPS, evictions have a significant economic impact on the community

The Jesse Tree Badge workshops remind me of the 1990s UW-Extension “Good Neighbor/Good Tenant Program” for Milwaukee County residents.   HACM, Milwaukee County, and the City of West Allis provided the funding. It was a $52,500 County budget item in 1995. 

The UW program provided training to renters with evictions or no rental history. Renters that completed the program were given a partial move money grant. More importantly, the program had a rent guarantee for the first year of the tenancy that would pay a month of rent if the renter failed to pay. With what was in essence, two months security, owners were more likely to take a chance on a renter that would not otherwise meet screening criteria. Owners that participated had to offer certificate holders a special deal. I think most owners gave a 25/month discount if the rent was paid by the 5th.

My company was a participating owner in the Good Neighbor/Good Tenant Program. I considered the program successful.

Jan 07

There was a discussion on the free  Apartment Association listserv about application fees and move-in fees. One member told of how large management companies charge many hundreds of dollars in application and move-in fees.

In WI an owner can charge for a credit check fee up to $25 actual costs and, if the applicant is from out of state, additional actual background costs, up to $25. In WI all other application and move-in fees appear to be illegal.


134.02 (3) “Earnest money deposit” means the total of any payments or deposits, however denominated or described, given by a prospective tenant to a landlord in return for the option of entering into a rental agreement in the future, or for having a rental agreement considered by a landlord. “Earnest money deposit” does not include a fee which a landlord charges for a credit check in compliance with s. ATCP 134.05 (3).

coupled with

134.05 (2)(b) A landlord who receives an earnest money deposit from a rental applicant shall do one of the following if the landlord enters into a rental agreement with that applicant:

1. Apply the earnest money deposit as rent or as a security deposit.

2. Return the earnest money deposit to the tenant.

makes it clear that all application and move-in fees, except credit reports and out of state background checks, are illegal in WI.

Owners that try to circumvent this with fancy wording will eventually find themselves in trouble as “any payments or deposits, however denominated or described” is extremely clear.

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