Author: Tim Ballering

Categories
Cost Controls Crowdsourcing employees Filling Vacancies Investing Maintenance & Repairs Milwaukee Our industry real estate 2013 Resources Strategy

RE Ideas to pursue for 2013

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.

 

 

Categories
Apartment Association

The Apartment Association is going through some changes.

As most of you know, the Association membership elects the board in November and then the board elects the president from those elected to the board in December.

In December 2008 Tristan Pettit graciously accepted the challenges and responsibilities of being the AASEW president.

Last year Tristan was hesitant to accept the position again citing the amount of work it entails but acquiesced to the will of the board. Arm twisting and thumbscrews had the desired effect.

This year Tristan was emphatic stating that he could not accept another term. His growing law practice is more demanding and he wishes to spend more time with his year and a half old son. Both worthy pursuits. Fear not, though. Even as Tristan is no longer president, he remains an active board member.

I was president of the AASEW for a decade and will attest to the tremendous amount of work that comes with the position.

Don’t feel bad for AASEW presidents. They are rewarded by learning more about the industry than could otherwise be learned. This benefit far outweighs the efforts put forth. I now know the quickest way to excel at a trade or profession is to jump in and become active in something like our board.

After Tristan made his intentions known we were very fortunate to have Joe Dahl step forward and express an interest in leading the Association for 2013.

Many of you met Joe when he spoke at our August meeting. Joe has an MBA, is the President of Milwaukee Metro Management and has been featured in a Journal article on his profitable renovation and preservation activities. Joe is also energetic and dynamic.

I was psyched when we landed Tristan as president with his impressive knowledge of landlord tenant law, which included drafting the standardized forms available at Wisconsin Legal Blank.

I’ve had meetings with Joe and those encounters leave me equally enthused that Joe has accepted the challenge to become president of the AASEW. Those of you who have heard him speak know of his enthusiasm and desire to move this association forward.

Joe brings with him a new, forward thinking, larger vision for the future AASEW. He has also taken the bold step of asking long time member, Bill Peretz, of ABC Sewer who recently joined the board, to assist him.

While Joe has the fresh views and big ideas, Bill is old school and wants to see events like the Trade Show return to their former glory. Both Bill and Joe have set a goal of getting more owners involved with the Association. A large, stronger membership is essential to achieving any other goals we may have.

This combination is bound to move us beyond where we are today without losing our heritage. Of course Tristan, Dave, Richard, Kim, Wendy, Ralph and I are still on the board to assist in seeing that we stay true to our core goals and values.

Tim Ballering
Tim@ApartmentsMilwaukee.com

 

Categories
Investing Strategy

Housing from a stock trader’s perspective

You Are Naturally Short Housing

Your house is not an asset. It is a hedge.

You are born with a natural short housing position. For the rest of your life, you will need somewhere to live. Ideally, somewhere with a roof. To use a (slightly tortured) trading analogy, you are born with a short housing position.

Read the full article (It’s worth reading)

Categories
Property Taxes

Milwaukee Property Tax Delinquencies

As of the First of December Milwaukee property owners owe a whopping $60,527,762 in delinquent property taxes. Yes $60 million dollars. This amount does not include the interest and penalties that are due.

Forty one percent are owner occupants.  2575 of balances are greater than $5,000.  Some have taxes due back to 2000, yes eleven years of back taxes.

Study it yourself with the City Treasurer’s Data

Prediction: A lot more foreclosures are on the horizon

Categories
Apartment Association

Dec 10th: The “Don’t Miss” real estate event of 2012

Christmas_card.jpg

Every year the Apartment Association of Southeastern Wisconsin’s Holiday party is theevent to socialize with other owners in Southeast WI.

This event brings out many of our long term members who may not often attend general meetings.  These folks are the wisdom of the industry.

You must be an  Apartment Association of Southeastern Wisconsin member or guest to attend. No better time than today to join.  To join call 414-276-7378 or go online at:

The Apartment Association of Southeastern WI Sign Up

 

Monday, December 10th.  Doors open at 5:30 p.m. Dinner at 6:30 p.m.

The Clarion Hotel 5311 S. Howell Avenue, Milwaukee

$30.00 per person, includes appetizers, dinner, coffee and dessert and door prizes prizes! Cash bar.

 

More details on the holiday party are posted at:

Apartment Association of Southeastern WI
Categories
Government Behaving Badly Property Taxes Recovery Strategy

Reduced tax deductions for homeowners may further erode values

In addition to possibly increasing the middle income tax burden, some of the proposed changes may cause real estate values to fall up to 15%.

The effect will most likely hit neighborhoods with the highest rates of owner occupancy the hardest.

This is similar to how Milwaukee short changed owner occupants when they shifted various costs from property taxes to the water bill. By that move a few hundred dollars that were deductible as property taxes simply became a nondeductible out of pocket expense.

Read the LA Times’ view on removing tax deductions for homeowners.

 

 

 

Categories
Foreclosures Recovery

What I learned in NYC – All Real Estate is local.

For the past two weeks I was in Brooklyn NY helping my wife with a big seminar she was putting on for her business, the Event Decorating Academy.   My involvement on tour dates is mostly lifting heavy things,  running to the Home Depot and various vendors for materials and keeping the computers running.

Carmen leaving FLL for NYC

Carmen as she leaves Ft Lauderdale airport for NYC. The Skycap asked if she was moving

So when she is on tour I drive around a lot.  This trip I got to see a large part of Brooklyn, queens and a bit of Manhattan as we have a number of suppliers for the Event Decor Mart located in NYC.  I was was in some nice areas and some not so nice areas.  We rented a condo for the two weeks in Mill Basin Brooklyn using AirBnB.com  Very nice area.  It was far nicer to have a two story townhouse with three baths than a couple of hotel rooms.  I will use AirBnB.com again.

I was absolutely shocked at the lack of for sale signs and appearance of vacant, abandoned homes and residential properties.  The foreclosure crisis does not appear to have had nearly the impact in NYC as it did to us in Milwaukee.

I was talking this over with a buddy.  He felt  the health of housing is reflective of the local job market.  I have to agree.

Categories
Fair Housing Government Behaving Badly

Ordinances restricting number of unrelated occupants

On one of the list I subscribe to a question was asked:

My city is considering an alteration in the ordinance that limits to 3 the number of unrelated occupants in a single family residence .

Throughout the discussion of the change around town and in our newspaper, I have been particularly concerned about the lack of any objective, concrete information that supports the ordinance…

Milwaukee has such an ordinance.  In my view such ordinances violate familiar status protections under Fair Housing laws.  THe upside to you as a property owner is such schemes cause vacancy rates to fall as what is today is one household, will now become two or three.  This may or may not cause rents to fall, dependent on the amount of available housing within a reasonable distance to the school.

There are a couple of good interesting U.S. Supreme Court cases on the issue.  Justice Marshall wrote a very interesting dissent in Belle Terre v. Boraas, 416 U.S. 1 (1974) which was prior to the inclusion of familiar status protections available on line at:A more recent case is Edmonds v. Oxford House, 517 U.S. 725 (1995)

I would encourage you to read both opinions, but here is the most relevant part of Belle Terre:

MR. JUSTICE MARSHALL, dissenting.
The instant ordinance discriminates on the basis of just such a personal lifestyle choice as to household companions. It permits any number of persons related by blood or marriage, be it two or twenty, to live in a single household, but it limits to two the number of unrelated persons bound by profession, love, friendship, religious or political affiliation, or mere economics who can occupy a single home. Belle Terre imposes upon those who deviate from the community norm in their choice of living companions significantly greater restrictions than are applied to residential groups who are related by blood or marriage, and compose the established order within the community. 4 The village has, in [416 U.S. 1, 17]   effect, acted to fence out those individuals whose choice of lifestyle differs from that of its current residents.
The bottom line in my opinion is while governments use Fair Housing as a weapon against rental housing providers for the least infractions, they believe themselves to be excluded from fair housing rules and use methods contrary to these rules to enforce their own political and social agendas
Categories
ATCP 134 Security Deposit

Security Deposit withholding for cleaning

Over on the ApartmentAssoc YahooGroups email list a member asks:

I heard that a very large rental company in the area has a Non Standard Rental Provision included with their Rental Agreements that lists each item to be cleaned and how much the tenant will be charged per item if they are not clean upon vacating.

Is this legal?

My reply:

Assuming WI and assuming we are talking about normal cleaning and not the house that was left with dog manure on the living room carpet:

There are actually  three questions presented:  First is it okay to charge a tenant for routine cleaning; Is a list of liquidated damages legal and if so; Can you take these charges out of a security deposit.

It seems pretty clear that you can have a lease that requires a tenant to return the property in the same state of cleanliness as they received it.  A list of charges for cleaning is probably legal.  BUT I do not believe you can take those charges out of a security deposit.  Therefore you would have to give them back the deposit and then sue them for the cleaning if they did not pay.

ATCP 134.06 (3) (c) “This subsection does not authorize a landlord to withhold a security deposit for normal wear and tear, or for other damages or losses for which the tenant cannot reasonably be held responsible under applicable law.

Note: For example, a landlord may not withhold from tenant’s security deposit for routine painting or carpet cleaning, where there is no unusual damage caused by tenant abuse.”

In other areas of the country liquidated damages in residential leases are legal and customary.  I believe that liquidated damages can be a benefit to both parties.  For example in FL the standard one year residential lease has a two months rent clause as liquidated damages for early termination.   There is no arguments over whether the landlord tried hard enough to mitigate the loss and there is no risk to the tenant that they could be on the hook for 11 months rent due to a job change.

This all changes if the cleaning necessary reaches a level of being “waste”.  Then you are entitled to double damages.  The case on waste is:

Three & One Company v. Geilfuss, 178 Wis. 2d 400, 504 N.W.2d 393 (Ct. App. 1993), the Wisconsin Court of Appeals found that tenants who allowed their cats to use the unit as a litter box committed waste. If waste is found the owner is entitled to double the damages pursuant to Wis. Stat. § 844.19.

Law on deposit withholding:

http://docs.legis.wisconsin.gov/code/admin_code/atcp/134/06/3?view=section

Liquidated damages

http://en.wikipedia.org/wiki/Liquidated_damages

Categories
Act 143 Omnibus Bill ATCP 134 Government Behaving Badly Leases & Rental Agreements

CONFUSED ABOUT THE WI LANLORD OMNIBUS LAW ( ACT 143 )?

(Read about the law here)

Not sure what it means to you as a landlord?  Do not miss one of the most important Apartment Association meetings of the year!

Tristan Pettit, Heiner Giese, Bob Anderson of Legal Action of Wisconsin  and others will discuss the changes in the law and what it means to you as a landlord and how to be compliant.

When:   Monday June  18th 7 PM

Where:  The Best Western, 1005 S. Moorland Road, in Brookfield

Who: AASEW Attorneys Tristan Pettit and Heiner Geise along with Bob Anderson, a tenant advocate attorney to present an opposing view.

Cost:  Free to current AASEW members, $25 to guests, or $59 with a 2012 AASEW membership included.

The focus of the meeting will be on Wisconsin’s new Landlord Omnibus Law (Act 143).  We will have two landlord attorneys (myself and AASEW attorney Heiner Giese) and one tenant attorney (Bob Andersen of Legal Action of WI) on our panel.

We will discuss the major changes to the law, give our opinions as to how those changes will be interpreted by courts, and advise you as to what you will need to do to be in compliance with the new law.  Oh yeah . . .  and we will also answer your questions.

And you will get FREE food as well.

The meeting will be held at the Best Western Hotel located at 1005 S. Moorland Road in Brookfield WI.

Cost to attend is free to members of the AASEW and $25 for non-members (or choose to become a member and pay only $59 and avoid the $25 fee).

It should be a great evening of discussion and education.  I hope that all of you can attend.