Although we list our vacant properties for rent in a number of places, I have been avoiding listing the vacancies on craigslist. About a year ago, I was selling my old Dodge 1 ton truck and posted it on craigslist. Within 24 hours, I received 5 email inquiries on it and every single one was bogus. However, I decided to list one of our apartment complexes in Weston on it last week, just because I don’t want to miss out on potential leads.

We have had one or two “tire kicker” inquiries… a number of “ads” from people saying we should advertise the apartments on their site.. and then this one.

On Sunday, March 14th, we received this email from a person “named” Gary Grahams:

Hello,

I saw your AD on CL and am interested in renting it and I will like to know if this apartment/house is still available for move in. I will be signing a one year lease for it and want to know the requirements for renting it. i.e.

Monthly Fees:
Security Deposit:
Electricity/Utility Bills:

I will be staying with my wife… Please email me back if still available.

The language and grammar was a little confusing because the CL ad was for apartments in an apartment complex and the ad describes studio, 1, 2 and 3 bedroom units along with the prices of each. However, we have received some fairly interesting legitimate emails (not the best grammar, spelling, etc.) on our listings that came from people visiting our website over the years, so the language in that inquiry alone is not enough to raise any flags.

On Monday, March 15th, my property manager answered his email with the following response:

Good Morning:

Not sure which apartment you are interested in, but we do have one 3 bedroom, several 2 bedrooms and a couple of 1 bedrooms available.

The rent is based on size and security deposit is the same as 1 month’s rent…. Utilities would depend on which apartment you are interested in.

Please let me know what you are looking for, and I can give you better answers to your question.

We heard nothing in response and thought nothing of it (very often you don’t hear back on responses) until earlier today. The email mailed around noon to us on Friday, March 19th reads:

Thanks for your email, I will be willing to pay 1 month rent to start with plus the security deposit in order to secure this unit prior to my arrival, am coming to stay with my wife only, NO pets.

I am an Engineer by profession and I am currently working with McNicholas Construction Company, Ltd. I will be coming to the state for the next one year and during my stay, I will be working with Layton Construction a leading Global Engineering, Consulting and Construction Company specializing in infrastructure development in energy, water, telecommunications, management consulting, federal and environmental markets and will be paid $7,000 monthly which will be $84,000 per annum.

My sole financier who is based in the United States will be handling the rent deposit payment on my behalf, I will instruct him to send you a Certified Check or payment into JPMorgan Chase for this as soon as you give me the go ahead to make out payment to you. Due to the limited time that we have before our arrival, we are making arrangements with a furniture company to supply the home with furnitures, so we will need you to provide us with the following:

Measurements of the living room and bedroom.

Picture viewing the living room and bed room(s).

As regards the lease agreement and application, I want you to send it to me for my review. I will eventually have it filled and signed on my arrival in your place as I am of the opinion that such documents are best filled and signed physically by appending signatory at best physical. We can start the lease by ASAP and I will be doing a one year lease. You can prepare the lease in my name (Gary Grahams).

Let me know how to move ahead as I intend to complete this deal before I move in a couple of days. I want all the arrangement to be solidified so I settle comfortably when I arrive. I will let you know the exact date as soon as I get a booking on a flight to the states.

I will forward to your email with the required information. Thanks and sincere regards from me and my precious family. I await your urgent response.

As regards the rent and deposit required to be paid by me in order to secure this rental prior to our arrival of 20th of March, I will need you to provide me with the following information:

{He requests information including landlord name, address, amount of money needed, phone number, and if I bank with JPMorgan Chase, my routing and account numbers.}

Regards

Ring me at +447024020715

Reference:
{he provides the name and phone number of the CFO of Layton Construction, which was verified on the Layton Construction website}

This just smelled fishy to my property manager so she brought it to me after I got back from running some errands this afternoon. Unlike a cabinet making scam I chased down for a friend of my construction supervisor, the companies mentioned in this email are legitimate. Also, this person’s name and “+44” phone number did not come up on a google search.

However, it did not take me long to find a press release on the Layton Construction website describing in detail this scam.

http://www.laytoncompanies.com/120909_PR.htm

I post this for a couple of reasons. However, the main one is that if this person tries this with someone else using the same name or the same number, anyone doing a google search will now get this blog entry and hopefully I will save an unsuspecting landlord from losing some money.

All week, the editorial board of the Wausau Daily Herald has been meeting with many of the candidates who are running for local office, those meetings continue this afternoon and into the early part of next week. At 5 PM, I am back on the air at WNRB-LP, 93.3 FM after missing the show last week. It will not be a full hour show, I will have to end things around 5:40 or 5:45 so that I can head to the Village of Weston’s Public Safety Committee meeting. For the last few months, a Task Force which I chaired has been working on re-writing their Chronic Nuisance ordinance, and our final draft goes before their committee, which meets tonight at 6 PM. Then I will try to make it back to the Daily Herald office by 7 PM for more candidate interviews.

Basically, the topic of tonight’s radio show will be a re-cap of some of the things we discussed in the Capitol yesterday. Things like protecting CCAP, like opposing legislation that would terminate a rental contract upon death (when other contracts carry over to the estate), like supporting proposed legislation that would allow a landlord an easier path to terminate a tenancy because of certain kinds of criminal behavior (SB 607), and a personal issue: what can we do to at the state level, with the help of WHEDA, to solve the severe lack of housing for very low income families.

Sen. Decker was not in the Capitol but I did have a nice discussion with one of his staffers. Rep. Seidel serves on the committee that was taking testimony on the faith healing bill you may have heard about in the news, so I also had a nice discussion with one of her staffers. However, after our meeting, her staff member took me to the hearing room and she did come out in the hall for a few moments to say hello. That was a pretty big deal to me… so thank you for that. She also made sure that I had the new version of the Wisconsin Blue Book. Finally, I also met with Rep. Petrowski and had a really good discussion with him that lasted well over an hour. We talked about my apartment association issues but also had a nice discussion about many other topics, including the aspirations that I have to someday serve in Madison. I learned a great deal about the legislative process that I didn’t know, and how things get done… and how the process changes when you are the party in the majority vs the party in the minority. The low-income housing issue is one that he took a particular interest in and he would work to set up a meeting with him and a representative from WHEDA the next time I am in Madison. I again do not think that I can thank Donna and Jerry enough for the effort they made to spend some time with me on my visit to the Capitol.

However, my Thursday blog posts are normally focused on the radio show, and of course because of my duties as WAA president, I had to cancel last week’s show. However, the week before that the main topic of the show were things you should consider if you are having trouble selling your home and think that renting it out until the market improves would help out with your finances.

The first piece of advice I would give someone thinking of renting their home instead of selling it is to become familiar with Wisconsin’s landlord-tenant laws, at the very least, get a copy of a booklet put out by the Dept. of Agriculture, Trade and Consumer Protection titled “The Wisconsin Way.”

One of the benefits to renting the house is that it may help you in the short term on your taxes. Just like the interest portion of a mortgage payment is tax deductible on owner-occupied homes, the interest continues to be deductible for rental properties. In addition, you are allowed another tax deductible expense known as depreciation. Although I would recommend you talk to a tax accountant for more information as it pertains to your specific situation, often even if you are making money on a rental property with some positive cash flow, adding depreciation expense can actually lower the amount of profit, and sometimes even result in a net loss. So there are some nice, short term tax benefits to renting the property.

However, those short term tax benefits could be wiped out and then some depending on how long the property is used as a rental. Again, you would want to consult with an accountant about your specific situation, but there are tax laws that allow someone to not have to pay taxes on the gain on the profit made from selling a house that was their primary residence. “Gain” is the tax term for profit you make when selling something for more than what you paid for it. So, if you bought a house 15 years ago for $70,000 and you are looking to sell it for $140,000, that $70,000 in increased value is gain, and is normally taxable. However, with certain restrictions, if you have owned the house for at least 5 years, and that house was your primary residence for at least 2 of those 5 years, that gain you receive from selling the house is often exempt from taxes. However, if you rent that house for more than 3 years, you will no longer meet one of the requirements for this gain tax exemption, and you would now have to pay the taxes on the capital gains.

I cannot emphasize enough that you really need to talk to an accountant familiar with your situation to determine how the benefit of depreciation or the potential loss of the capital gain tax exclusion would affect you.

Two other issues are the mortgage and insurance on the home. Insurance policies for home owners and insurance policies for rental housing are very different, with very different levels of risk. You want to talk with your insurance agent, but a standard homeowners policy almost never will cover the property if it is instead used as a rental property. Policies on rental properties tend to be more expensive, and there are some companies that will no longer insure a house if it is a rental.

Worse than an insurance crisis could be a mortgage crisis. Most mortgages have in their fine print a “Due on Sale” clause. Basically, if you sell the house, the mortgage needs to be paid. You may think this isn’t a big deal because you are not selling the house, you are renting it. If the house would sell, you would use those proceeds to pay off the mortgage. The whole reason you are thinking about turning the home into a rental is because you can’t find a buyer. The hook is that those “due on sale” clauses cover “actual and equitable” transfers of title. An “actual” transfer is just that, you actually gave the deed to someone else. An “equitable” transfer is when you have given someone the rights of ownership, without actually giving them the deed. When you rent out a property, you are giving the tenant many rights of ownership, including exclusive possession. Renting the property is considered an “equitable” transfer of title and in most cases, will meet the guidelines where the bank would have the right to demand that the mortgage be paid in full. Ouch! Like with insurance, there is more risk involved with rental properties than there are with owner occupied properties. The interest rates are higher, the underwriting standards are higher, and there are some banks that won’t even do loans on rentals. So, when they offered you that loan on your home, they did so with the understanding it was not going to be a rental, but instead by occupied by you.

The final thing to consider is the fact that houses are different than homes. Often when I write about rental housing, I use the word “house.” You may have noticed in this blog post, I tend to use the word “home.” There is a difference between a “house” and a “home,” that difference is primarily an emotional attachment. It is your memories and your history that made your house into your home. As a landlord, that real estate is an investment and it is all too common that tenants don’t take care of the property to the level you wish they did. And without proper screening (and even sometimes with proper screening), damage can be done to the property that is quite literally criminal. For me, that is a cost of doing business. Some tenants do a much better job of taking care of the property than others. For some, it is where they live. For the better tenants, they make their rental housing “home.” However, if a renter trashes a place, or causes physical damage, I need to repair the damage, try to collect against the tenant, and review my screening methods to see if I can do better next time. It is a cost of doing business.

However, if you cannot make that emotional disconnect… if you would be devastated if someone destroyed some aspect of the house that you had some history with… if you expect the renters to have the same emotional attachment that you had and therefore the same level of respect that you had… if you don’t think that you could go to treating your “home” as though it were a “house”…. Then you really don’t want to consider renting it out.

See you later on the radio for a shortened version of the Dr Rent Show at 5 PM on 93.3 FM, WNRB-LP. Until then… HAPPY RENTING!!

Although I have been president of the Wisconsin Apartment Association (WAA) since January, I am really now feeling the weight of the duties that this position holds. There is always something going on: a board meeting in January, Leadership Day last month, Legislative Day next week, and another board meeting in April. However, I figure if I make it through this week, I can make it through anything.

Saturday morning I was in Hudson, a small town on the Wisconsin side of the WI-MN border just before the Twin Cities meeting with a group of property owners discussing the future of their local apartment association. Monday evening after work it was off to Oshkosh where I addressed the Winnebago Apartment Association. Tuesday after work, the drive was a little shorter where I was a guest of Wisconsin Rapids’ local apartment association. I took the night off last night (although I could have easily made the drive to the Central Wisconsin Apartment Association meeting in Stevens Point, where my presence would have simply been as a member and not the invited feature speaker). Tonight, I am back on Highway 45 as I will be attending the meeting of the Fox Valley Apartment Association in Appleton. And of course, on Wednesday, the entire day will be spent at the Capitol Building in Madison with our state association’s Legislative Day activities.

Speaking of my increased roll within the Wisconsin Apartment Association, there is a minor issue of my online presence that has been brought to my attention that I should probably quickly address.

In addition to the WAA, I wear a number of hats. I of course own my company, HelpRent, Co. and manage another property management company here in town. I am the president of the WAA and an active member of the CWAA in Stevens Point. I am also a member of the National Apartment Association. Although no longer a member of our local group, the Wausau Area Apartment Association, I still discuss issues with them on a regular basis and at times am given the authorization to speak on their behalf. I am also a member of our local VFW Post 388. I am an active member, and one time program manager, of our little WNRB-LP radio station. I have participated in governmental committees, including Schofield’s Long-Term Planning Committee and most recently Weston’s Task Force creating their draft Chronic Nuisance Ordinance. My writing style and the popularity of my blog(s) has resulted in very active rolls in many local online forums. I was a former front-page contributor to the now-defunct WausauBlog, I am a front page contributor to Citizen Wausau, and was recently invited to participate as a reader-member of the Wausau Daily Herald editorial board.

Not only do I really stretch myself thin with all of these various organizations, my comments on-line can sometimes be very confusing to readers who know about all of these various hats that I wear. Was that comment or that article coming from John H. Fischer? Or, was that article actually written by someone representing the Wisconsin Apartment Association? When I write an article for the front page of Citizen Wausau, are my views in that piece the official stance of the Citizen Wausau ownership? When I talk about things going on in Weston, is that my voice or am I doing it as the Chair of the Task Force that I serve(d) on? When I comment on an article on the Daily Herald’s website, am I speaking for me, or am I speaking for the Editorial Board of which I am now a part of? When I testify at a public hearing, am I presenting my thoughts as an individual, or the thoughts of one of the corporate entities that I represent? When I talk about our little radio station, am I doing it as someone who hosts a show on it, or am I speaking on behalf of the radio station in where my leadership has been both formal and informal over its history?

During my radio show on Thursday evenings, at some point during the show I am required to say the following: “The views and opinions of this informational program are solely the views of Dr. Rent, they may not reflect the views of our management group (The Friends of WNRB-LP) or our owners (the Wausau Area Hmong Mutual Association).”

It would be silly to have a similar disclaimer for all of my blog posts, front page articles and forum comments… so instead I will say this:

When ever you read a comment, whether it be on Citizen Wausau, the Wausau Daily Herald, or any other online forum from me (and on some boards I use my real name of John H. Fischer, and on some boards I use my screen name of Dr. Rent), those statement are my PERSONAL opinions and views. They do not reflect the views of any other group that I am a part of or that I may speak for from time to time. If, in fact, I am speaking on behalf of one of these groups, I will sign the work/post as such. For example, if I make a post and sign it: John H. Fischer, President, Wisconsin Apartment Association; it is a safe assumption that I am speaking on behalf of that group.

I apologize if, in the past, any of my comments were associated with a group of which I am a part of simply because they came from me. I hope this clarifies the situation.

So.. again… no radio show tonight. But I will return next week, Thursday, 5 PM on 93.3 FM. Until then…. HAPPY RENTING!!!

This was a wonderful weekend in the Wausau area if you are a weather fan. High temperatures were flirting with the 50’s. People were out walking and jogging and going shopping without their heavy winter coats or 50 lbs insulated boots. The lines at the car washes led out to the street, and those clean cars seldom stayed clean for more than a mile. The future Mrs. Rent, here visiting, is enjoying this early spring (the weather she claims she brought with her).

I am a landlord, however, and spring in Wausau means that I am about to have to do a lot of work, almost all of which gravity has played a roll in.

The snow that is melting turns into large puddles. Not all of our parking lots are as level and sloped as they used to be. Some lots have puddles large enough that I have some concern about the DNR declaring them “navigable waterways.” Today, I noticed that one lot that has a drain also had an especially large “navigable waterway”, telling me somewhere in the nether regions the drain lines are clogged or frozen.

Once that snow is gone, it uncovers all kinds of things that gravity brought to the ground. Tree limbs that came down with some of the heavier snow falls are now displaying themselves. Any rocks or gravel or other things that got plowed off the driveway into the large snow piles are now all in large piles on the lawn. If you can call it lawn… more like green mud. At home, the area where the dog does his business didn’t need attention as he would go, snow would fall making it all clean, he would go, and the cycle continues. With the snow’s melting, I realize just how many cycles there have been. (Does anyone have a tractor-mounted pooper-scooper?)

Let’s not forget how saturated the ground is with the water that is the thawing snow. That is not lawn; that is mud waiting to suck the shoes right off your feet. As cars cut corners around edges of parking lots, they dip into the grass leaving large trenches. Even in my own driveway today as I backed out, I got off the gravel and into the lawn, the nearly 10,000 lbs vehicle has left a gouge in what once was the lawn over 6” deep.

The winter weather is not the best time to move, and many don’t because of not wanting to deal with the weather. Many are not able to because landlords will put in lease provisions not allowing winter move outs. Well, it’s not winter any more and may the move outs begin. And the early spring move outs are the worst; the tenants will back the moving van right up to the patio door at best leaving trenches like the one I found in my yard today. At worst, the now laden U-Haul will get stuck and the entire front yard look like an exploded mine field, the building “wearing” most of the debris.

Any of you out there who think that as a full-time landlord I have the perfect job; who think I just sit on my yacht and watch those unearned rent checks come in; who think that because I have hired maintenance staff that my hands stay clean… to those of you with that belief, I would be more that willing to have you join me for a day. Join me for the fun that is landscaping repair, making units ready (units where tenants have no idea of what things like brooms, mops, or vacuum cleaners are), join me in the manhole cover trying to unclog a parking lot drain.

Yes, I am happy that spring is here, as spring leads to summer… summer leads to softball. Summer also leads to fall… and this will be a very very special fall this year. But although I am happy about the arrival of spring, I am not pleased with gravity taking advantage of the situation.

No real questions came up in this last week, but two short topics we will discuss before getting into the main topic of the show has to do with crime of absconding and the financial disclosure requirements after you have a judgment.

Absconding is when a tenant “skips out” on a landlord owing them money and not giving them any forwarding address, and it is an actual crime in Wisconsin. Yet, it is not often prosecuted. Watching Channel 7’s piece last night about what crimes in Lincoln County don’t get prosecuted because of lack of resources brought up this old pain in my side.

My main topic tonight will be addressed to home owners who have been trying to sell in this market and have been having a hard time. Some are thinking maybe they should rent the home out for a while instead, to at least generate some revenue to help pay the bills. There are pros and cons, and that is what we will cover.

Last week we talked about Weston’s proposed nuisance ordinance. Weston created a task force of stake holders to draft it after their original version met with a lot of criticism last fall (and yes, much of that criticism came from me). Unlike Wausau, who when they formed a “task force” to address the housing situation in town, had the task force made up of three council members and three city employees, and this task force met with other city employees, and then came up with a whole page of useless recommendations to make the situation better (I say useless because had they included some stake holders, they would have gotten better ideas), when Weston created their task force, it was made of people who were actually going to have to deal with this law once it was on the books. There was an owner of large multi-family units, an owner of a number of duplexes, an owner of a mobile home park, and an owner of a single family home. Although three city staff people where also on the task force, they were there as a resource only.

I think we came up with a pretty good proposal. It just needs to have a few small tweaks made and it is scheduled to be presented to the Weston Public Safety Committee. It is the recommendation of our little task force that before the new rule is passed, they hold a public hearing on it.

Basically, to be declared a “chronic nuisance”, a residential property needs 3 or more enforcement actions within 2 months (non-residential properties have different guidelines). Each unit is considered individually when I say “residential property”. These actions are not limited to police actions, they can also be code enforcement violations or other issues that result in citations of some kind. A police call doesn’t count, something has to happen… an arrest, a citation, etc. Also, certain actions don’t count toward these “3 strikes”. Any police call that has to do with domestic violence doesn’t count (that is a state law), any call that originates from the property owner doesn’t count (because if they are making the call, they are trying to take care of the problem), and actions that have nothing to do with the property don’t count (there was a foot chase and they just happened to catch the guy in your front yard).

After this threshold is met, the appropriate dept head can declare the property a chronic nuisance. The property owner does have the ability to work with the department head to do an abatement plan. The label of “chronic nuisance” doesn’t apply as long as an abatement plan is in place. However if the property owner and department head just cant seem to come to some type of agreement to a solution, the issue of whether the property is a “chronic nuisance” goes to a hearing before the Village Board.

What does this label of “chronic nuisance” mean? It means that you are using more than your fair share of the public resources, and the Village will now start billing you for those resources. And, because this is a service being provided, these bills for service can be added on to the property tax bills if they go unpaid (where unpaid fines cannot).

This is a very over-simplified summary of the ordinance, but once we have the final draft done that is going to committee, I will make sure to post it on my blog. There are also provisions for chronic nuisance landlords. Most of these times, these problems are an isolated incident. However, if the same landlord seems to have more and more of their properties fall into this category, the Village can declare them a Chronic Nuisance Landlord. This identification will be made public at Village Hall and other places, however to avoid this label, mitigation plans that include education, better screening, etc. will be allowed to try to address the problem first.

Although I am never a fan of having the landlord having to pay for when the problem is actually the tenant… I think we came up with a piece of legislation that addresses the concerns of property owners as well as gives the Village power over those property owners who do actually contribute to the problems created by the tenants by their apathy.

So… if this blog post is coherent… the radio show probably will be as well… until then..

HAPPY RENTING!

Sunday was more of an overcast day and better for working inside… but for most of the afternoon it felt like I had something caught in my throat. By Monday morning, it was much more pronounced and you could feel a bit of congestion building up behind it.
For the first time for an editorial board meeting, I had brought something to drink with me to try to help.

I have four units coming vacant. Three of them are people who are transferring to different apartments, and one is an eviction. I had the keys back on two of the inter-company transfers so I checked out those units yesterday and while working outside doing that, I could slowly feel the congestion move up.

Although I may be “Dr” Rent, I do have an issue with doctors and medicines and I feel that people nowadays are way too reliant on pills for this or that. Therefore, I tend to avoid both doctors and medications at all costs and am a subscriber to the “walk it off” method of health care. However, by Tuesday evening it was time to see what magical wonders Mrs. Rent had in the bathroom cabinets and found some DayQuil and NyQuil gelcaps. SOLD!

This morning, that sensation of something caught in my throat is pretty much back to where it was on Sunday, but the congestion has completed its journey up to my head. It feels like my head is going to explode from the pressure, and even the littlest noise like the high-pitched hum of the ballasts of the florescent lights in my office is deafeningly loud.

I am hoping I can shake this really quickly because this is seriously bad timing. Of course, the first few days of the month with rental payments and working on move outs is the busiest for landlords, the rest of the week is already booked solid.

Tomorrow at 5 PM is the Dr Rent radio show. I remember once back at NTC where I was feeling about 10 times worse than I am now, but the show must go on… so I had a mixture of Tylenol, NyQuil, and just to make things interesting… some allergy meds. Luckily no one listens to the show. The only listener I had was Dino, who at the time ran the station. Afterwords he caught me in the hall and asked me if I had any idea what I was rambling on about. To be honest… I didn’t. I had barely remembered even being in the studio and was actually impressed that I had not fallen asleep at the mic (which I have also done once when not feeling well – kind of interesting during a talk show).

After the show tomorrow, I am heading straight down to UWMC for my final Continuing Education class of the spring semester, a Step by Step Guide to Evictions that will run from 6:30 PM to 8.

On Saturday morning, it is up at what we in the military used to call “zero-dark-hundred” because I am meeting with a group of landlords from the Hudson area Saturday morning at 9 AM. Hudson is the border town when heading to the Twin Cities on I-94, so a good 2 ½ drive.

Next week, my scheduled “guest appearances” all over the state really kick in. Monday after work it is off to Oshkosh to meet with a group of their landlords and present my “Top Ten Mistakes Landlords Make” seminar. Tuesday evening I am in Wisconsin Rapids presenting a seminar on collections to their landlord association. Thursday, it is back to the shores of Winnebago again as the “Top Ten” seminar is being presented in Appleton.

I don’t know that there is really ever a good time to have a cold or be sick… but some times are worse than others… and right now is clearly one of those times.

The next few Thursdays are going to be busy days. Next week, after the March 4th radio show, I will be teaching my “Step-by-Step Guide to Evictions” at UWMC. This is a 90 minute course that gives you the basics. It defines a breach of lease, goes over the 6 different notices and which notice gets used when. It addresses how these notices must be delivered to the tenant, and finishes up with the court procedure here in Marathon County, including copies of all the forms you will need. There is still time to sign up for this course, you just need to contact Vickie or Michelle at UWMC’s Continuing Education Office.

The following week, March 11th, there will be no Dr Rent show on the radio, I apologize in advance for that as my duties as president of the Wisconsin Apartment Association will take me away from the area Thursday evening as I will be a guest of the Fox Valley Apartment Association for their monthly meeting in Appleton.

We had some pretty good questions come up in the last week that will be addressed on tonight’s radio show. A tenant rented an apartment in a building that had a secured entry, and that secured entry was a significant factor in choosing this location. However for some time now, the lock on that entry hasn’t worked. Is this grounds for the tenant to break the lease early?

A landlord contacted me not about which notice to use to terminate a month-to-month tenancy, but how to give that notice to the tenant. So, we will cover the legal ways to get notice to the tenant, and then my preferred ways of doing it. I will include some “tricks of the trade” to help you in court if the tenant contests receiving the notice. (This is also one of those things I cover in depth in that UWMC Eviction class.)

What is my advice to a tenant whose landlord refuses to give them a copy of their lease and refuses to give receipts for cash payments?

And of course, my open invitation for any candidate for Wausau City Council to take some of my air time at WNRB-LP to address my listener(s) about issues that impact rental housing, housing in general or real estate continues.

One other item I will remind people of are some cost changes at the Sheriff’s Dept. if you plan on using them to serve process. Effective March 1st, the cost for serving papers (such as summons and complaints) goes from $65 to $75. The cost of serving and executing writs (which can only be done by the department) will increase from $65 to $100.

Our main topic for tonight’s show will be going over the proposed Weston Chronic Nuisance Ordinance. This was proposed last fall. However, with discussions with Weston’s leadership, it was decided that maybe this should be put on hold to have a task force get stakeholder input. Unlike Wausau’s housing task force that was made up of a few council members and city staff who came up with some rather drastic recommendations after meeting with other city staff members and getting ZERO stakeholder input, the Weston task force was made up of people who are going to be affected by this ordinance and the three city employees on the task force did not have a vote and their roles were advisory only in nature. The finishing touches are being put on the draft ordinance but it is, for the most part, complete and tonight will be the first look that the public will have at this ordinance which will go before Weston’s Public Safety Committee in March.

Last week’s main show topic were my thoughts on the Trolley Apartments and the WHEDA program that they were getting much of their funds from. I have already done a blog about this (that has made it as a front-page article at Citizen Wausau) so I see no reason to re-hash that here again.

One of the questions last week had to do with getting the security deposit (and/or the statement of claims) back to the tenant. In Wisconsin, the landlord has 21 days in which to do this. But a common question is: 21 days from when? The legal answer is 21 days from when the tenant “surrenders” the property, however I am sure that didn’t answer the question. What does it mean to “surrender” the property?

With a few exceptions, “surrender” happens on the last day of the rental agreement. If the lease ends March 31st, that is the surrender date. What if the tenant moves out before March 31st? March 31st is still the surrender date UNLESS the tenant, IN WRITING, makes the landlord aware that they HAVE VACATED the unit. So, if the tenant comes in on March 15th with the keys and a letter saying they have moved out, the day the landlord gets that note starts the “21-Day Clock.” If the tenant gives the keys but nothing in writing saying they are out, the 21 days starts with the end of the month like normal. If the tenant comes in on a Friday with a letter saying they will be moving out over the weekend and leaving the keys in the unit on Sunday, that will not start the “21-Day Clock” even though the notice is in writing. The notice has to be delivered after the fact, saying they HAVE VACATED, saying that they are going to vacate doesn’t count.

If the tenant vacates after their tenancy (tenancy means their right to live there) has ended, then the 21 days starts when the landlord knew or had reason to believe the tenant had vacated. So, if on March 31st, the tenant was still there but left a phone message for the landlord on April 3rd saying they were out and the keys were in the unit. When the landlord got that message on April 5th is when the 21 days would start. This applies to any holdover. If a 5-Day Notice was issued because of a tenant breach, the deadline of that 5-Day notice is when the tenants right to live there (tenancy) ends. So, whenever the landlord learns that the tenant has vacated becomes the trigger to start the “21-Day Clock” when there was a breach of lease and notice involved. If the holdover goes all they way to an eviction, the 21 days start when the sheriff executes the writ (physically removes the tenant from the property), unless the landlord had reason to believe they vacated before it got to that point.

Speaking of the Security Deposit, what is the Security Deposit? Landlords can get in trouble with this because they will sometimes charge non-refundable fees and other charges that are not allowed under Wisconsin law. Per ATCP 134, any amount of money that a tenant has paid that is more than one month of pre-paid rent is security deposit. A landlord can call a charge anything they want (the most common I hear of are pre-paid carpet cleaning fees). However, no matter what you call it, all that is not rent is deposit, and therefore refundable within 21 days of surrender.

This also applies to pre-paid rents. If a tenant paid 6 months of rent in advance, which is not unusual when renting to students as they often get their funding in a large lump sum and want to pay off rent so they know that is taken care of., and then they “surrender” the property 3 months in; all of that pre-paid rent that has not yet come due must be treated as though it were security deposit.

So, as you can see, there is always really good information on the Dr Rent Radio Show for tenants as well as landlords. So, hope you tune in at 5 PM this evening and until then….

HAPPY RENTING!

Historically, Leadership Day has been a weekend conference where the “leadership” of the association has gotten together and had speakers or done other activities to help us become better leaders. Attendees would include members of the Board of Directors of the WAA, as well as those in leadership positions of our various local affiliates.

However, just because we have always done something a certain way has never been a good enough justification for me that is the way something should be done. I am open to new ideas and trying different things. You will never know if trying something completely different is a good or bad idea until you actually try it. So, I decided to do leadership day differently. Instead of the same old theme of topics to help make us more effective leaders, I invited anyone who wanted to come and the main topic would be the committee structure of our mostly volunteer organization.

I wanted the members to give the leadership direction. This is, after all, their association and in order to most effectively serve them as president, I need to know what is important to them. What do they think we do really well, what do they think are areas that we have room for improvement. We held it in La Crosse because that is where our annual Educational Conference and Trade Show is going to be later this year in October, so it will also provide those who attended a preview of our venue and what the La Crosse area has to offer.

Although it was not very well attended (just over a dozen members came and participated), I am still calling the WAA Leadership Day 2010 a great success; mainly because of the number of great ideas and suggestions. Many are just small improvements that we can do, but two of them are HUGE ideas that change the essence of what we do and how we do it. These are ideas that I will be bringing to our Board of Directors at our April meeting.

The idea I am most excited about has to do with education that WAA offers its members. A large part of the mission of the Wisconsin Apartment Association is to educate investment property owners… landlords. And, we do a pretty good job of that with a selection of nearly 20 different courses on everything from landlord-tenant law to fair housing to proper screening techniques to lead-based paint issues to general maintenance classes. In addition, our annual conference has a number of other classes given by speakers in many different topics.

However, a big idea that came out at Leadership Day comes into the essence of what it means to be a member of the Wisconsin Apartment Association. How is a landlord who is a WAA member different from any other landlord? Yes, the WAA landlord has made an additional investment, depending on the local this could be well over $200 per year. Yes, the WAA landlord gets a monthly magazine from the WAA and a newsletter from their local association. Yes, the WAA landlord has more chances to interact with their peers through local and state association functions. But… really… what makes a WAA landlord “better”? Why should a tenant rent from me because I am a WAA landlord instead of someone else who is not a member of our association?

Our “focus group” that was discussing education came up with a great idea to not only help answer those questions, but also gets right to our mission. I stated that the WAA (through its educational foundation, Rental Housing Resources), has about 20 different classes that it can offer. However, those classes are not free. Much time and research and work was done to create these copyrighted classes, plus instructors had to be trained and have to take time out of their schedule to go and teach these classes, that are designed to last about 3 hours each. Therefore, although these classes exist, they are only “available” if a group contracts with us to provide a specific class.

Two of these classes get to the core of what every landlord should know. We have what we call our “101” and “102” classes. “101” covers Wisconsin’s statutory landlord-tenant law, WI SS 704. “102” covers the administrative rules that cover residential rentals, ATCP 134. Although there are many other laws that landlords need to follow, if you have a good understanding of WI SS 704 and ATCP 134, easily 90% to 95% of issues that come up fall under these areas. These laws cover things like security deposit withholdings, prohibited lease provisions and prohibited rental practices, maintenance requirements, and the specific notices needed when there is a breach of lease and how those notices are to be delivered. Good Stuff! The kind of stuff that every landlord really not only should know – BUT NEEDS TO KNOW!!

So… this radical proposal?? Make it a REQUIREMENT to be a member of the Wisconsin Apartment Association to have taken the 101 and 102 classes. This also will help set landlords who are WAA members apart. If a tenant rents from a landlord who is a member of the WAA, that tenant then KNOWS that their landlord has taken classes and understands the rules that affect rental housing here in Wisconsin.

This means that how these two courses are offered needs to change. We don’t want to mimic the government and provide “unfunded mandates.” We don’t want the locals to be required to have their members have this training and now the locals have to pay to bring these classes to their area.

The proposal would be for us, as a state association, to provide these classes. The WAA has divided the state into 5 geographic regions. And the WAA would offer the 101/102 class at least twice a year in each region, so each year there would be 10 opportunities for members to get this training. And, this would be a benefit of membership. Members would be required to attend these classes, and therefore would not have to pay to take these classes, this would be included in their membership dues.

This may also act as a recruitment tool. One of the missions of the WAA is to provide education to landlords, not just our members. So, when we offer these 10 classes all over the state each year, any landlord would be able to attend. We would need to figure out a cost for non-member attendees, but there are a couple of details we would work out.

Like I said, a couple of really good, “big picture” ideas came out of our meetings on Saturday, but this one alone made our “Leadership Day” a success. I am excited to present this to our board and hope that we can turn this suggestion into reality.

Since my blog post yesterday on the basically “market rate” apartments being proposed on the river front using WHEDA tax credits designed for low income housing, I have learned a lot more about this WHEDA program. I have been researching information WHEDA has on their website, and talking with a couple of landlords around the state who are much more familiar with this program that I am. I will share, on the air on tonight’s radio show what I have learned so far. I think the basic problem is that WHEDA has an interesting definition of what they consider “low income.”

Yesterday was also what will probably be the last meeting of the Weston Chronic Nuisance Ordinance Task Force. The last step is just to add the recommendations we made to the current draft, review the final draft, and if the word-smithing matches our intent, it will be ready to present to Weston’s Public Safety committee. As time permits on the show, I will share with you a preview of some of the specifics which, in my admittedly biased opinion, is the best chronic nuisance ordinance in the state.

I am in the middle of my Landlord-Tenant Law class at UWMC, and a few questions came up while we were discussing the ATCP rules (134 to be specific) that I felt many people (landlords AND tenants) have, so I will hit those questions on the air as well. First, in Wisconsin a landlord has 21 days to return the security deposit. But, 21 days from when? Well, 21 days from “surrender”. What does that mean? So, we will answer the question – 21 days from when? With that question, we will discuss what actually is the Security Deposit. ATCP 134 says that any money received in excess of one month’s pre-paid rent is the Deposit, but what does that actually mean?

Last week was a very informative show. We covered the question about whether or not a property manager could represent the property owner in small claims court. In most counties, yes, that is not a problem. However there are a few counties, Milwaukee County especially, that have gotten very “letter of the law”-ish (versus intent of the law) on who can represent themselves. A good idea would be to make sure by calling the Clerk of Courts in your county and asking if they have a problem with this.

A tenant called me because the landlord billed them for the water used in the unit, and it was a pretty big bill for nearly a year worth of use. The lease no where indicated that the tenant was responsible for the water bill. Per state law, it is assumed utilities are included unless the rental agreement makes them the responsibility of the tenant. The tenant had no obligation to pay the bill (again assuming it was not covered in the lease or another agreement between the parties). If the landlord tried to evict the tenant for non-payment of the water bill, they would not be successful.

As a follow up, the tenant did pay the water bill as they were worried about the possibility of being taken to court. Does that mean they have to pay future water bills? The answer there is probably. Although not covered in the contract, often the terms of the contract can be “trumped” based on the actions of the parties. For example if a lease ends January 31st, but the tenant doesn’t move and continues to pay the rent, AND the landlord continues to accept the rent, the rental agreement shall continue (based on the action of the parties). In this case, the landlord billed the tenant for water, and the tenant paid the bill for water… it is very likely that the court will see the action of paying the water bill as an acceptance of that responsibility. To not be responsible for the future bills, you may be in “lawyer land.”

Finally, if a tenant wants to break their lease, there are a few clauses in a lease that will make the agreement void. If there is a lease provision that makes the attorney fees of the landlord the responsibility of the tenant, that is a violation of ATCP 134.08 (3) and the Wisconsin Supreme Court decided that would void a lease. Many people (including attorneys) will tell you that any violation of 134.08 will void the lease. That is not technically true. The Supreme Court was specific in their 4-3 decision that they were only talking about (3), which covers attorney’s fees. However, based on the arguments used in that case, it would not surprise me if a court would use that case to void ANY provision covered in 134.08, which includes clauses that allow eviction without going through court, allows for acceleration of rent payments, and a few other items.

Other provisions that could void a lease is language that would make a police call a lease violation. Also, if the tenant is in a renewal term of an automatically renewing lease and the landlord never reminded the tenant of the automatic renewal clause before it kicked in; a landlord cannot enforce that renewal against a tenant. Finally, a landlord not disclosing to a new tenant that they are in a foreclosure also gives the tenant the right to void the lease, which I will discuss more on.

Of course, the topic of last week’s show was what rights tenant’s have if their landlord is faced with a foreclosure action. Normally when a property is sold, the leasehold interest goes with the property. If the tenant has 9 months left on their lease, the new owner has to honor that. However, if the property is foreclosed, any interest in the real estate that is subordinate to the mortgage (which almost always includes the leasehold interest of the tenant) gets knocked out and on the day the new owner (often the bank) gets the deed to the property, it is theirs and if they want the tenant out, they can get the tenant out. Tenants were often named as co-defendants in foreclosure actions to ensure that the mortgage did, in fact, wipe out any leasehold rights. Both of these things changed with some recent changes in the law.

Recently passed WI SS 704.35 protects new tenants. If a foreclosure action has been commenced, the landlord must notify a prospective tenant IN WRITING that a foreclosure action has been commenced, and if a judgment has been entered, when the redemption period ends. The rental agreement needs to confirm this with a separate written statement attached to the lease that is signed by the tenant acknowledging this. Without this separate statement, the tenant can void the lease. Existing tenants were also given new protections under WI SS 846.35.

When a bank forecloses on a landlord, a tenant must be sent copies of notices so they know what is going on. The tenant needs to get a notice that the foreclosure action has been filed, within 5 days of filing. The tenant needs to get notice that a judgment was entered within 5 days of it happening and be told when the redemption period ends. Once the confirmation hearing is scheduled, they need to be told the time and date of that hearing. All of these notices either need to be officially “served” or mailed certified, return receipt requested.

Once the foreclosure is done, the new owner (often the bank) cannot just remove the tenant. The tenant has the right to stay living there for two months after the end of the month that the confirmation happened. Also, because the new owner is not very likely to give the tenant their deposit back, the tenant can legally withhold their deposit for the last month’s rent.

Also, although the tenant must receive these various notices, they cannot be named in the notice unless their ownership interest is more than just a standard lease. If the bank doesn’t notify the tenant as they should, or if the tenant is named as a party in the foreclosure action, the fine against the bank is $250, which is paid to the tenant. The tenant can also recover their attorneys fees.

So, as always, lots of good information to tune in for… and of course, this will be the second time I am trying out my new closing song, by Alvin and the Chipmunks. So, until then… HAPPY RENTING!

Last night, as you may have read in DJ Slater’s article in the Daily Herald, the zoning change was approved for a 40-Unit apartment complex near downtown. It would be located where the Zastrow Beer Distribution facility is, on the river just south of Bridge Street. This is not the first I have heard about this. Last night the meeting was to get the parcel rezoned, but about a year ago they were working on a developer’s agreement with the City where the City of Wausau (through various sources, including funds allocated toward development of low-income housing) was going to be thrown at this project to the tune of $450,000. I do not believe these are loans…. I believe these are grants… “free money” as I like to call it… However, as I started, I don’t know everything and I invite anyone who has the specifics to correct my misunderstandings so that I may set the record straight.

Before I start my Rant about how this project, appears to me, to be an outright ABUSE of those systems in place to help with our “affordable” housing crisis, it is important that I make a few of my thoughts clear.

I do NOT oppose a development of this nature in this location. Those apartments that were approved out on 25th Street just boggle the mind from an urban planning perspective, but this project does make sense. The property is currently zoned manufacturing, which made sense back when we floated logs down the river. However, a mixed use of commercial and high-density housing along the river front makes sense from an urban planning perspective. So, I don’t object to multi-family housing on this parcel of land, nor do I have any problem with the CDA using funds it has available to limit blight to help encourage this (or any) development. The shape of our river front truly is a waste.

Yes, the market for apartments and rentals is saturated. You have seen the articles in the Daily Herald and the City Pages that went into great detail on that fact. Yet, even though I am trying to work my way through this saturated market, you will never see me object to a private multi-family development that is proposed for land that is properly zoned as such, or makes good urban planning sense. If a private developer wants to through private money at a project, even though the market is saturated, that is their business… and I am a free-market kind of guy.

When I have problems, is when a developer realizes that they will not make money on a project because of market conditions, so need for the City/State etc. to throw money their way, to help the project cash flow better. That, my friends, is where the good Dr. here says WAIT!!

At the hearing, I testified neither in favor or against, but more for informational purposes. I understood this was a zoning request and like I said, from an urban planning perspective, this is a good thing. However, my problem is with the nearly half million dollars the City of Wausau feels they need to throw at this to make this happen. And, although the developers agreement already signed by the City wasn’t on the table last night, and I was sort of out of order by doing so, that was the specific area that caused me concern, and I made sure that my voice was heard.

We have a crisis when it comes to low-income housing. Most of our subsidized housing developments have waiting lists. The Section 8 waiting list has gotten so long, with so few people coming off of it, that the Housing Authority isn’t even taking applications any more. When I went to the hearing, I was okay with the City helping with housing that will help with this need…. But thanks to the questions answered, this is NOT that type of housing. This developer has found a way to use CDA funds and WHEDA tax credits to develop market-rate multifamily housing that if I remember right from last year, even gets some pretty serious property tax breaks from the City!!

To give you an idea how much $450,000 is, the average amount that I get as the Section 8 part of the rent for my Section 8 tenants is $260 per month… but let’s say that $300 per month is an average amount spent. That means that someone who just needs a safe roof over their head costs the section 8 program about $3,600 per year (lets call it $4,000). At $4,000 per year per family, over 50 families (10% of those on the waiting list) could get safe housing for over 2 years…

However, money can only be used certain ways… so I know this $450,000 can’t go to fund the voucher program. If, instead of cash for clunkers or new home buyers credits the federal government would put some funding in the Section 8 program, we could solve the problem of this huge waiting list of families that need help AND solve the problem of record vacancy levels in market rate units AND at the same time… however, that is a federal issue, and would make way to sense. We don’t have time for solutions that make sense!!!

So… here we have a $6.9 million multifamily development. That comes out to well over $170,000 per unit. When calculating the financial feasibility of multi-family projects, a good rule of thumb is you need $100 per month in rent for $10,000 of value. That is just a guideline. If the market says you can get $600 per month in rent, you are looking at about $60,000 per unit. Now if you are close, say $80,000.. the project may still cash flow, you just need to sharpen your pencil… but if you can only get $600 per month and the costs are going to be $120,000 per unit, there is no way to make that thing profitable. Here we are talking about a project that is $170,000 per unit, with rents (according to information given at last night’s meeting) that run $600 on the low end to $750 on the high end.

So, the only way to make that work is to not spend your money. You do this by getting WHEDA tax credits designed for low income housing. You do this by getting the City of Wausau to throw money at the project. Apparently, you don’t do this by looking at the cost of the project and seeing if there is anyway to cut the costs.

They said by getting these WHEDA tax credits, they have to keep the rents “low and affordable” for low and moderate income individuals and families. I am sorry, but $600 for a 1 Bedroom, that is not low income housing.. that is market rate. Actually, if you look around, that is actually a little higher that what the market charges for 1 Bedroom units.

As a matter of fact, only a few of these units will even take those people who do manage to get off the waiting list and get Section 8 vouchers (though I don’t know of too many landlords in town who would turn down a Section 8 tenant).

Based on the information handed out last night, of the ten 1 BR units, only 2 will be at rates that are eligible for Section 8. I had been told by Mary Fisher of the housing authority (no relation, not even spelled the same), that the highest need is for 2 BR units. Of the nineteen 2-Bedroom units, again only 2 are priced where a Section 8 tenant could live there. The rest are from $650 to $775 (the highest priced 2 BR unit Section 8 will allow is $631).

Like I said, I don’t know everything… but I understand the system to be well enough that this made me so mad that I couldn’t sleep last night. WE HAVE A NEED FOR HOUSING THAT IS AFFORDABLE TO OUR LOW INCOME FAMILIES!!! WE HAVE PROGRAMS AVAILABLE AT THE STATE AND CITY LEVEL!!! AND THOSE PROGRAMS ARE BEING THROWN AT A PROJECT THAT DOES NOTHING – NOTHING, NOTHING!!! TO HELP ALLEVIATE THOSE NEEDS.

I need for someone to explain to me what I am understanding incorrectly… because if I am right, a great disservice is being done, not only by the City of Wausau, but also by WHEDA.