Just a Landlord

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.

You Are Naturally Short Housing

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.

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.

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.

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File under “Buying Single Family Rentals Has a Downside”

Our crew shows up to work on a vacant property this morning and finds the siding and storm windows gone. It was an okay looking place yesterday. Now it needs to be resided.

At least this time they did not steal the plumbing and electric wiring.

A year ago a similar thing happened.  A tenant that lived in another of our homes a couple doors away saw the neighbor stripping our property and called 911.  The police said ‘have your landlord file a report so he can file an insurance claim’ and did not send out a squad.  By the end of the weekend the neighbor had stripped all the plumbing, heating and electric wiring from the house.

I sent the police and the DA photos my tenant took showing the neighbor loading the siding on to his car.    We ended up razing the property as the damage was so extensive.

No one was ever prosecuted, even though the damage exceeded ten grand.

“Going Green” is usually a positive phrase. Business that go “Green” are looked at as innovators and use this for a market advantage. It is hard to say anything bad about this type of greeness

However the way the city of Milwaukee is going grheck scares the heck out of me. .

As I drove the Southside neighborhoods finishing up our annual fall exterior surveys of our properties, I was shocked at the number of green boarded and abandoned homes and duplexes in that area. Even more than there were in spring

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The who’s who of Milwaukee rental housing were in attendance at Joe Peter’s funeral.  So many that one person commented that if a bomb hit the church nobody in Milwaukee would have to pay rent again.  A lot of folks I had not seen in years.  It’s sad that the only time we see these people anymore are funerals for friends.

One such person was Mike, a former board member of the Apartment Association.  He asked if I remembered having lunch with him a number of years ago.  I admitted I didn’t and kiddingly asked if I had skipped out on my portion of the bill. He assured me I hadn’t and that he just wanted to thank me for the sage advice I had given him that helped him succeed when others failed.  I had him remind me of what I shared with him that he felt was so valuable.  Once he told me, I felt it still rings so true that I would share it again.

At that lunch back in probably 2005 or 2006, the height of the silliness we were seeing in real estate pricing, Mike wanted to know how to acquire more units.  I cautioned him that his focus was wrong.

It’s not about how many units you own.  It’s about being sustainably profitable.

Unit fever is a disease that has wiped many owners in both good and bad economies. So don’t aim to have 50,100, 200, a thousand units.  Rather do the math and aim to only own profitable units and create scalable infrastructure before getting big.

A different way of municipalities interacting with property owners

In Washington  D.C. they have  The Housing Provider Ombudsman a information resource for small housing providers.

Blacklisting bad tenants

THE NAMES of 400,000 Australian renters have swelled national blacklists for crimes ranging from pouring concrete down toilets to stealing entire kitchens from properties. [Source]

The untimely passing of Joe Peters taught me another lesson –  no matter how well things seem it can all end tomorrow.

Today is probably as good as day as good as day as any to write down some instructions for those things that only you know, but your employees, friends and family  will have to know to put the pieces together when you are gone.