Categories
Code Enforcement Foreclosures Government Behaving Badly Recovery

What I learn by walking the neighborhoods

I walk the neighborhoods where are properties are located as often as I can. My walks are in the two to five mile range. It is a good way to combine some light exercise with managerial work.     We also do exterior surveys every spring to set the agenda for our summer efforts.  I try to combine the surveys and walks as much as possible.

You can learn things about a neighborhood on foot that you would never see driving through at 25 MPH. This gives me a more insightful way of checking up on maintenance crews, properties and deciding on properties to purchase. Yes, we are buying again, but that is another story for another day.

I noticed two major things this spring while doing my neighborhood walks/exterior surveys of our properties.

Vacant and abandoned housing

The first is there is a large number of vacant/abandoned/foreclosed properties throughout the Southside (53204 & 53215) that are not listed for sale on MLS and do not have for sale signs.

I began writing down the some of the addresses. When I get back to the office I look to see if they are listed for sale on MLS.  If not I will run ownership on a few of them.

For those not listed on MLS, almost inevitably ownership records show that they are owner occupied.  More times than not they are not registered as vacant buildings with the Department of Neighborhood Services.  Ironically a few had Christmas decorations in their windows.  Many had orange electric company shut off tags on their front doors.

Being a curious lad I look up a few of the listed owners on the court system.  A lot of them show no foreclosure actions naming the listed owners.  Perhaps the owners received notices from their lender and just assumed they were going to be put out on the street?  Who knows.

While my little bit of info gathering during my walks is by no means a statistically correct study, it certainly appears to me that the foreclosure mess is larger that reported and  we are not anywhere near the bottom of the crisis.

Condition of owner occupied housing compared to rentals

The other thing I noticed is if a house is in truly deplorable condition or needs major repairs such as failed roofs or porches,  it is almost always owner occupied or an abandoned formerly owner occupied property .

Inspectors doing fire inspections etc on our rentals will see a couple of blown off shingle tabs or a downspout that isn’t sealed to the sewer and write an order. Yet the owner occupied properties will have failed porches, missing siding, roofs that needed to be replaced five years ago, yet no city orders.

I am not the only one who witnessed this phenomena.  Click here to listen to Mary Hennen, Senior City Assessor’s take on the difference of conditions between owner occupied and rental housing.

We need to assure all properties are held to the same standards by code enforcement, not just rentals.

 

 

 

Categories
Investing Strategy

Is real estate investing dead?

Some days it seems like all the smart people think real estate is dead.  One of the larger real estate clubs in Milwaukee has changed their focus from real estate to a mix of  other investment ideas.

Back in 2004-2008 it seemed like everyone was “investing” in real estate even though the numbers did not work.

I had a twenty something kid in my office in .. 2007?.. showing me his Excel spreadsheet and explaining how my model was wrong.  I said ‘Wow! looks like you will be richer than Bill Gates in ten years.’  He said ‘Well,  not richer than Bill Gates, but a Multi! Multi! Millionaire.’  He even offered to sell me a copy of his spreadsheet.  Unfortunately I would not part with $500, even though it it did a nice job at predicting future property values at 25% per annum appreciation.

Last year a lender contacted me,  suggesting I should buy all of his former rental properties.  They were pretty rough, so I passed.

Today relatively  few people are buying in our market, however the numbers can make sense now, while few deals made sense in 2006.

Remember there is a big difference between the wisdom of crowd and a crowd mentality. Go against the stream when, and only when, it makes sense.

Being a contrarian for no good reason is just a fools bet.

 

 

Categories
Cost Controls Maintenance & Repairs

Thoughts & Ideas from the National Hardware show

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.

Categories
Act 143 Omnibus Bill ATCP 134 Legislative WI L/T law

Act 143 Landlord Omnibus Bill Update

Wisconsin’s Act 143 Landlord Omnibus bill has been of great concern to owners that have read the content as well those who have read the Legislative Council memo on the bill.

AASEW Attorney Heiner Geise had researched this a bit and came to the conclusion it is not quite as bad as originally thought.  He received an opinion consistent with his view from the Leg Council.

Categories
Selling Strategy

Selling out in today’s market

This post is being written for a couple of  purposes.

Those of us with any significant amount of real estate need to plan better for what will happen if you suddenly die.  Your spouse and kids probably will not enjoy landlording as much as you.  Wait, few people “enjoy” landlording, so let’s use the word tolerate instead.  You need to have a list of people in the industry that you trust. Keep that list handy for your family so they can get their hands on it if they need to.

My other purpose is to acknowledge real estate broker Graig Goldman who pulled off what many thought would be the impossible. He sold over 100 properties at a good price in less than two months.  If you attended the March Apartment Association meeting, Graig was the presenter on buying foreclosures.

Categories
Collections Filling Vacancies Industry stats

Time for rent increases?

HUD is reporting

Rental housing markets in major metropolitan areas of the Midwest region are balanced to tight, with rent increases reported in all major markets, continuing a year- long trend of strengthening conditions.

http://www.huduser.org/portal/periodicals/ushmc/winter11/USHMC_4q11_regional.pdf

(The linked document contains rental and housing stats for the entire nation)

Categories
Code Enforcement Government Behaving Badly Magner v. Gallagher

Congress is now involved in the landlord lawsuit against St. Paul!

Leading members of the U.S. House Committee on Oversight and Government Reform are pressuring St. Paul Mayor Chris Coleman to explain if the Obama administration played a large role in getting the city to withdraw a housing case scheduled to be argued before the U.S. Supreme Court on Feb. 29.

http://www.twincities.com/stpaul/ci_20410240/u-s-house-committee-seeking-details-over-st

Categories
Cost Controls Maintenance & Repairs

What happens in Vegas … can save owners money here?

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.

Categories
ATCP 134 Leases & Rental Agreements Legislative Maintenance & Repairs WI L/T law

Official overview of WI’s new landlord tenant law

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

Categories
5-Day Notice Act 143 Omnibus Bill ATCP 134 crime Evictions Leases & Rental Agreements Legislative WI L/T law

WI Landlord Omnibus bill, leases and criminal activity

The Wisconsin Landlord Tenant Law Omnibus bill was signed into law by Governor Scott Walker around 4 PM March 21st, 2012.  You must be in compliance with the provisions for tenancies  entered into beginning April 1st.

One thing the bill does is add a new prohibited lease provision: