GUEST POST: A Brief Overview of Wisconsin Options To Purchase

By Attorney David J. Espin of Petrie + Pettit S.C.

Many landlords in Wisconsin are looking for ways to persuade their tenants to put some “skin in the game," and eventually to purchase the property they are renting. Tenants with a financial stake in the property will often take better care of the premises, and are less likely to walk away from their lease obligations. In order to accomplish this, landlords often turn to land contracts so that tenants will build equity in the property, or rent credit programs structured to incentive tenants to save towards a down payment.

Unfortunately, these alternatives come with formidable downsides. In the event of a breach of the land contract, the property owner must go through a costly and time-consuming foreclosure process before it can proceed with an eviction. Rent credit programs risk garnering the attention of regulators who may interpret them as mortgage financing instruments in disguise, which, without the proper licenses, could result in significant fines and penalties. However, there is another alternative: the Option to Purchase.

Landlords can structure an Option to Purchase as part of the lease, or as a separate stand-alone agreement. Although there are many variations, an ordinary Option to Purchase usually contains the following key provisions:

• Tenant agrees to pay an upfront fee, usually called an “option fee," for the exclusive right to purchase the property pursuant to the terms of the agreement.
• Landlord and tenant agree upon the purchase price for the property. This can either be a fixed dollar amount, or some other methodology, such as an appraisal, used to determine the property's value if and when the option is exercised.
• For some finite period of time, the tenant has the exclusive right to purchase the property at the agreed upon purchase price.
• If the tenant lease breaches the lease, the Option to Purchase is voided.
• Regardless of whether the tenant exercises the Option to Purchase, the landlord retains the option fee. The consideration for the option fee is the tenant's exclusive right to purchase the property, and the landlord's agreement to keep the property off the market for the duration of the option.

If drafted and structured properly, the Option to Purchase can be a great way for landlords to take in some extra cash at the front end of the lease, give their tenants an incentive to maintain the property and abide by the terms of the lease, and potentially sell the property once the lease expires

Good News For Rental Property Investors - Rental Weatherization Program Is Eliminated

I apologize for the delay in getting this post published but there is good news for rental property investors -- the much maligned rental weatherization program was eliminated as part of the passing of the state budget (2017 Wisconsin Act 59) which was signed into law on September 21, 2017 and the program will sunset as of January 1, 2018.

Back in 1979 the legislature passed a law requiring that all rental properties be weatherized prior to the property being sold. The Department of Safety and Professional Services developed minimum energy efficiency standards which focused on windows, patio doors, inward-swinging exterior doors, weatherstripping, caulking, moisture control and insulation. The program went into effect in 1985 with the goal that all rental properties being transferred would meet a minimum of energy conservation standards. So prior to a rental property being sold, the seller had to have an inspection, make any necessary repairs as advised by the inspector, and obtain a certificate of compliance with the program.

To avoid this obstacle, in practice, the buyer of the property typically entered into a stipulation agreeing to meet the requirements within 1 year of purchase. The new owner frequently did not have an inspection or make any improvements within the one year period. However, there was very little enforcement of the program and as a result an open stipulation for compliance would remain open indefinitely or until there was another sale of the rental property.

Under the latter scenario, the program requirements became an impediment when the initial purchaser wanted to sell the rental property to another because the open stipulation would be discovered at the last minute and real estate agents, attorneys, title companies etc. ended up running around to figure out what needed to be done to satisfy the stipulation so as not to impede the sale.

So while the program had high hopes and goals, it was not implemented very well and caused delay and confusion. The program will now end as of the first of the year.

GUEST POST: Views on "Landlords Games" Series and the City of Milwaukee's Task Force on LLC's

This is a Guest Blog Post authored by Tim Ballering

Recently the Milwaukee Journal ran a series “Landlord Games" that inaccurately portrayed LLCs as being used simply to avoiding paying property taxes and fines. The result is the Milwaukee Common Council is creating a committee to study LLCs and rental housing. Text of proposal. The rental industry is again, noticeably absent from those invited to the table.

View as formatted pdf with footnotes

Let's agree that all property owners pay a cost when someone fails to pay their taxes or their property is foreclosed and abandoned.

The Apartment Association of Southeastern Wisconsin (AASEW) does not support bad actors. None of those owners featured in the Journal article are members of the Association.

Rather we see the importance of the city, and private investors working together to make rental housing, and therefore neighborhoods, succeed for the mutual good of both.

Rental housing is an important and integral element of Milwaukee. About 58% of the residents of Milwaukee are tenants. In some neighborhoods, such as 53233 the number of renters exceeds 97%. The success or failure of neighborhoods and rental housing are closely tied.

Rental Housing is the largest small business in Milwaukee with over $7 billion invested in Milwaukee. (MPROP assessor records October 2015) Rental properties account for well over a half billion dollars a year of economic impact, starting with $190 million in property taxes, sewer and water charges, maintenance, insurance and everything else that goes into running rental housing. The Census Bureau found the yearly median operating costs per unit for multifamily rental properties vary between $3,600 per unit for small properties and $5,170 per unit for large properties, adjusted to 2016 dollars. These numbers exclude interest and mortgage servicing.

Providing rental housing in older, poorer neighborhoods is difficult, challenging and unappreciated work. Many have failed, some are opportunists or worse, but the majority were simply overwhelmed financially and mentally by the task at hand.

Owners are impacted by the financial and social problems of their tenants, the high costs of maintenance and lack of capital to address those problems. It is not the owner's lifestyle that contributes to insect infestations or broken windows, yet it is the owner and not the occupant that is accountable both financially and recently in the media.

Not only do private owners suffer these burdens. One only needs to look at the long history of failure among Milwaukee's nonprofit housing providers. (see excerpt below) These groups had every advantage over the small private investor. They had significant financial resources, typically through Block Grant and other government funding and grants; they had well-paid and well-educated staff; they often obtaining properties without costs, and they had access to the best tenants on Rent Assistance. Nearly all of Milwaukee's nonprofit housing providers failed financially.

These groups had every advantage over the small private investor. They had significant financial resources, typically through Block Grant and other government funding and grants; they had well-paid and well-educated staff; they often obtaining properties without costs, and they had access to the best tenants on Rent Assistance. Nearly all of Milwaukee's nonprofit housing providers failed financially.

Or one could look at the Milwaukee's Housing Authority budget to see the costs they incur housing low-income Milwaukeeans. Here too is an organization that gets Rent Assistance tenants, tenants who risk losing their housing subsidy if they fail to comply with the rules or pay their rent. HACM does not rent to the populations with bad histories, leaving the segment most in need of housing to the private sector.

Milwaukee should strive to encourage a successful private rental housing market in this once great city, but since the mid-1980s' the city adopted a culture of hatred towards private rental owners. That has not produced positive results, but instead, discourages the right people from participating.

If Milwaukee rental housing became more sustainable, where people willing to invest their time and money were to make reasonable profits, it would be harder for the few charlatans to exist because of increased competition for available properties. An added benefit is more interest in investing in Milwaukee's rental housing will result in an increase in values and therefore an increase in the tax base.

Alderman Witkowski, who is the co-author of this proposal, created a Local Business Action Team to help small business succeed. Rental housing is the largest segment of small business within the city and one that may have the greatest impact on the well-being of the city. With our half billion dollars a year of economic impact, a similar effort should be undertaken towards making private rental housing more successful.

Let's look at the recent Journal Sentinel series on landlords.

This investigative reporting – using easily available public records – showed that the individual owners behind LLCs could be revealed and that other properties owned by these individuals or different LLCs could also be exposed. Changes in the LLC laws are not necessary, contrary to the assertions of Aldermen Murphy and Witkowski that bad landlords are operating in secret. The City Attorney's office has recently been successful in having a receiver appointed for the various ownership entities used by inner city landlord

Within existing laws, the city could have caused most of the featured landlords to go out of business, through docketing and enforcing code enforcement fines, and foreclosing of tax delinquencies. For whatever reason the city allowed these owners to continue unabated.

Perhaps most troubling is the relentless attack on James H. Herrick, who works for Baird, which went as far as the Mayor calling for the guy to be fired. He is not a member of the Association nor known to us.

The Journal reported that inspectors show up and find basement doors illegally padlocked. In the article, the owner's manager states he did this in an attempt to keep drug dealers from entering the property.

There is no argument that inoperable fire doors are an unreasonable risk to occupants. Clearly, this was a novice mistake made by someone who did not understand fire codes.

The correct response by DNS would be for the inspector to explain the problem and demand the owner's rep immediately remove the padlocks. If the owner did not comply, the Department of Neighborhood Services has an essential services program where the city can order a repair and then bill the owner.

Instead, the inspection supervisor chose to placard the building and force 50 families out onto the street. Closing a 50 unit building would not have been the DNS response had the property been located on the Eastside, Bayview or the Southwest side. In these more affluent neighborhoods DNS would have compelled a solution that kept the tenants safely in their homes.

But this building is in a poor, minority neighborhood. The city's response was harsh as it typically is in these neighborhoods. The DNS employees who acted out of spite towards the owners and a disregard of the tenant population, instead of attempting to protect the homes of 50 low income, primarily minority tenants, should lose their jobs.

The 50 unit building remained closed for a couple of months. It is no surprise that the building ended in foreclosure and sold at a distressed price due to this.

The owner's use of a single property LLCs, in this case, was an advantage to the city. Because the owner had his properties in separate LLCs, this allowed only this one building to be foreclosed upon, instead of all 13.

It is a lending industry practice in larger real estate deals to require single asset entities to separate liability from one project and others with a similar ownership interest.

It would actually be in Milwaukee's best interest if every investment property was in a properly segregated LLC. That way a failure at one property would not have a domino effect and bring down perhaps dozens or more other properties that are under similar ownership.

Then Journal and Mayor call for Herrick, the owner to lose his job. What advantage does the city receive in this? If he loses his job, his remaining properties will likely fall into financial problems as well, resulting in more boarded buildings, displaced tenants, and distressed sales.

Similarly, what did the city gain by the public attack on NBA basketball star Devin Harris? While it may have been expedient in causing the payment of some fines and taxes, overall it sent a clear warning to others with capital “Do not invest in Milwaukee. If you fail, you will be ridiculed and perhaps lose your career." Similar results could have been obtained with a private conversation with Harris, thereby not discouraging outside investment

By Tim Ballering

AASEW Meeting: Learn the Ins & Outs of Low Income Tax Credit Financing on July 15th.

You look at conversions such as the knitting factory being turned into loft apartments on the near Southside and you wonder ‘How could they afford to do this, in this market?’

The answer is Low Income Tax Credit Financing. A brief overview is you design a project, go to the state (WHEDA) and apply for tax credits. If all goes well and you are approved, you receive federal income tax credits. There is a formula based on the amount you spend, the number of units that are reserved for occupants below the county median income and a bunch of other factors.

These credits will be far in excess of what a normal investor/developer can personally use. So they “syndicate” the tax credits to an investment group. The investors get income tax saving in exchange for the money you need to put the project together.

It is a very competitive application process. It is a very intense process. It is a fairly expensive process. If you are looking for an easy dollar, you are looking the wrong way. I speak from the experience of having tried and failed at obtaining tax credit financing to create accessible infill housing on the near north and near south sides of Milwaukee a bit over a decade ago.

But if you can break into this market you can do well, while doing good.

So it was a decade ago and I haven’t tried since, so why bring it up today? The July Apartment Association meeting features Keith Broadnax of Great Lakes Capital Fund, one of the tax credit financing investment groups. Years later I still find this was an intriguing opportunity.

- Tim Ballering, AASEW Board member & Owner of Affordable Rentals

You do not want to miss this meeting!

When: Monday, July 15, 2013 at 7:00 p.m.

Where: The Best Western, 1005 S. Moorland Road, Brookfield 53005

Who: Keith Broadnax of the Cap Fund

Cost: Free for current AASEW members, $25 for guests and expired members.

AASEW Meeting: Financing Real Estate In Today's Market ---- May 20, 2013

Please join me at the AASEW's next monthly membership meeting where we will discuss Financing Real Estate in Today's Market.

When: Monday May 20th, 2013 at 7:00 p.m.

Where: The Best Western, 1005 S. Moorland Road, Brookfield 53005

Who: Panel of local lending experts. Details below.

Cost: This meeting is free for current AASEW members, $25 for guests or expired members

Good deals are more abundant today than ever in the past. But we all know low prices at the same time as low interest will not last forever. The deal killer for most is funding those great projects you find. Come to this meeting and get a pulse on the current lending environment from big bank lending to smaller community banks. From hard money lending to the credit union perspective, our panel discussion is sure to have something for you! And speaking of perspective, some of our experts are landlords too!

Knowledge is power! The AASEW is proud to present yet another forum on information you need to succeed in today's economy.

Monday, May 20th at 7 PM is just Around the corner! See you then!"

Our panelists will include:

Rob Seetan - Brewery Credit Union

Rob has lived and worked in Milwaukee for 15 years. His first job in the mortgage industry with Pinnacle Bancorp (no longer exists) as an Account Executive. He started loan originating in Milwaukee 2000. He joined Brewery Credit Union in 2009 and holds the position of originator, underwriter and administrator for Brewery Credit Union founded as Brewery Workers Credit Union in 1934. Brewery CU maintains about 15% of its portfolio with small investment properties (no commercial lending). The majority of their investment units are within the City of Milwaukee. Brewery Credit Union was granted special privileges by US Treasury Dept. through our Community Development Financial Institution (CDFI) designation.

Luke Hagel - Commerce State Bank

Luke has been working in the banking industry for about 9.5 years. He began my career with Wisconsin Business Development as a credit analyst in 2003. While at the WBD he learned a lot about SBA lending, specifically relating to the SBA 504 and 7a programs. Hejoined Commerce State Bank in January of 2008 and has worked as part of the commercial lending team there since that time. Luke grew his own portfolio which is currently about $50MM in loans comprised mostly of C&I loans (Real estate, LOC's, equipment, etc.). Luke assists in nearly all SBA lending done at the bank. Luke graduated magna cum laude from Ripon College with a B.A. in Business Management in 2003 where he also served as a Student Mentor, Resident Assistant (R.A.) and member of both the college Baseball and Football teams. Luke also graduated magna cum laude from UW-Milwaukee with a Masters of Business Admin in 2006. He currently resides in West Bend with his wife and 3 kids.

Chris Wilz - Senior Lender US Bank

Chris is Vice President & Relationship Manager for US Bank, Business Banking division. He has over 11 years of experience with commercial lending and in the financial services industry. He earned his bachelor's degree from the University of Wisconsin - Madison Business School majoring in Finance, Investments & Banking. Chris works with commercial real estate investors and business owners to provide financing for real estate loans, equipment loans or leases, and lines of credit, in addition to the full breath of banking products and services the bank has to offer. For three consecutive years, Chris has received an Annual Pinnacle award for being one of the top producers at US Bank.

Scott Lurie - F Street Investments, Jomela Properties

Scott, a local Milwaukee businessman earned his B.A. in Finance from The George Washington University. After college, Scott spent 2 years in the M&A industry serving as an analyst for Kaulkin Ginsberg Company. After moving back to the Midwest, Scott worked for his family heading a division of Lurie Glass. In August of 2004, Scott let his entrepreneurial spirit get the better of him and began investing in real estate. After purchasing a Homevestors of America franchise, Scott got involved in real estate acquisitions, financing, and property management. His relationship with Homevestors ended in February 2009. Scott continues to be involved in real estate and finance. To date, Scott has bought and sold over 125 houses in addition to building a rental portfolio of 1400 units which are self managed. In addition to the multiple real estate acquisitions Scott has been involved in, he also specializes in "hard money" financing. With over $12 Millions in deals financed to date Scott gets it done! Scott's interest outside of the office are his family, golf, tennis, and travel.

AASEW's Next Meeting: How To Buy Rental Property In The New Economy Featuring Joe Dahl - Monday, August 20th

I hope that you all can make it to the next AASEW membership meeting on Monday, August 20th, 2012 starting at 7 PM. Joe Dahl, a young and dynamic local landlord and property manager (and the newest member of the AASEW Board of Directors) will discuss how to successfully invest in real estate in this new economy.

Joe has successfully bought rental property using his own money, bank money, and the city's money under the Neighborhood Stabilization Program. Joe will discuss all of these options and explain how he has been able to successfully own and manage rentals in Milwaukee. Many of Joe's rental properties are located in the Lindsey Heights area of Milwaukee. Lindsey Heights is one of two target areas currently required by the City of Milwaukee's Residential Rental Inspection "pilot" Program requiring landlords to voluntarily submit their rental properties to city inspection and requires them to obtain "landlord licences" in order to continue to rent out their properties. I look forward to hearing Joe's experience with this controversial city program.

Joe's story of investing in local real estate while at the same time assisting in the preservation of Milwaukee's neighborhoods has been covered in local media outlets as well as National Public Radio.

Please join us for Joe's presentation, along with free food and my "educational moment" (a teaser for the AASEW's upcoming Landlord Boot Camp) at 7 pm at the Best Western Midway Hotel which is located at 1005 S. Moorland road in Brookfield. Attendance is free to AASEW members and $25 to any non-member who has previously attended a meeting. Come early and enjoy the free food and network with other landlords and vendors that cater to landlords!!

Don't Miss AASEW's Next Meeting Featuring Steve Smullin on Real Estate Trading

Come join us at the next AASEW monthly membership meeting next week.

When: Monday May 21st at 7 PM

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

Who: Steven J. Smullin - Real Estate Problem Solving Since 1988.

Topic: Real Estate Trading - It's All About the Benes . . . That's the Benefits, not the Benjamins.

Cost: Free to current AASEW members, $25 to others.

Note: Starting at our May meeting we will be introducing a landlord/tenant law education component to each of our meetings that will last approximately 10-15 minutes. In anticipation of the next Landlord Boot Camp in October, Attorney Tristan Pettit will be taking a single issue from his Landlord Boot Camp materials and teaching it at each meeting. This month Tristan will talk about LATE FEES.

About our Speaker:

Steve is a commercial investment real estate broker, counselor, exchangor, investor, educator, and long time practitioner using creative solutions to real estate related problems. Steve has closed transactions involving the FDIC, RTC, US Marshall, US Bankruptcy Court, Banks and numerous others since the mid 1980's … following hundreds of cases, attending dozens of sheriff and judicial sales and assisting clients in the acquisition and disposition of properties.

Steve is a member of the National, Illinois and Chicago Associations of Realtors and a Charter Member of the Northern Illinois Commercial Association of Realtors where he has served on the Board of Directors. He adheres strictly to the Code of Ethics of these organizations and applies their principles in everyday life. In addition he has served on the Board of Directors of the Chicago Area Real Estate Exchangors in numerous capacities including serving as President.

Steve routinely studies formulas, exchanging, financial analysis, and property management and has studied creative real estate techniques and strategies with

some of the most brilliant minds throughout the country. He is a long time member of the Chicago Creative Investors Association and active participant at the National Council of Exchangors, The Society of Exchange Counselors and numerous other marketing and educational organizations.

Steve has presented programs and workshops for Chicago Creative Investors Association, Lake County Property Investors Association, West Suburban Landlords Association, Milwaukee Real Estate Investors Association, and for the ValueHoundAcademy.

Steve's presentations and workshops have included:

Formulas, Brainstorming & Problem Solving - The days of throwing money at real estate are over. It’s no longer possible to solve today's problems with yesterday's solutions. Identify the real problem, use effective ideation and brainstorming to identify possible solutions and then, take appropriate action.

Assessing the Situation - The facts and information needed for a successful and profitable deal. Income and Expense analysis; The Documents and Information YOU NEED to evaluate the offering; The Documents YOU NEED to Close the Deal; Sources and Resources.

Real Estate, It's About The Benes … That's The Benefits! Not The Benjamins - The Pros and Cons of Cash and Alternative Currencies; How Benefits oriented real estate transactions create a WIN for all involved.

How To Get What You Want … When You Can't Sell What You've Got - Create benefits oriented real estate transactions that provide WINNING solutions for all involved. "Selling the Sizzle" and "Buying the Benefits"; Takers vs. Buyers; The Benefits of Barter; "Packaging" a Property for Disposition.

It should be a great meeting. Hope to see all of you there.

T

AASEW Offers Realtors & Brokers The Perfect Closing Gift for Their Clients - A Reduced Rate AASEW Membership

For those Realtors and Brokers out there, the AASEW has a perfect closing gift for you to give your clients who just purchased a rental property.

Realtors and/or Brokers can purchase an AASEW membership for only $29 through the end of the 2011 membership year for their clients. Your client will appreciate receiving such a gift as it will put them in touch with other landlords and educational opportunities.

The AASEW offers its members educational seminars, legislative activity, fun filled-events, mentoring, vendor discounts, and much more. Membership also includes a monthly newsletter and monthly meetings. Being a member is the perfect way to stay in touch with what is going on in the world of rental property.

Click here to see a copy of the promotional PDF.

Please contact Paulette at 414-276-7378 or paulette@apartmentassoc.org for any questions.

New Report States What Landlords Already Know - That Milwaukee's Regulations Hurt Businesses

This past weekend I read a very interesting report which was drafted by the Institute for Justice as part of its City Study Series entitled Unhappy Days for Milwaukee Entrepeneurs: Brew City Regulations Make It Hard For Businesses To Achieve the High Life.

The report is 40 pages long (excluding footnotes) but I encourage everyone to read it. The report touches on the following issues:

- How the city rigidly restricts the ability of entrepeneurs to operate businesses from their homes

- How the city abuses the custom of aldermanic privilege in order to deny businesses licenses and permits thus preventing businesses from opening and operating

- How the city imposes restrictions on food-related businesses that make it next to impossible to get a business started

- How the city overburdens successful businesses with so many rules and fees that many businesspersons are contemplating moving out of the city

- How the city arbitrarily enforces building codes and historic preservation provisions making it too costly to rehabilitate old buildings

- How the city severely limits a businesses ability to place signage on its storefront

- How the city requires an expensive license in order to go out of business.

While landlording is not specifically discussed in the report several of the topics addressed clearly affect landlords. One that comes to mind is the arbitrary enforcement of certain building code provisions - what landlord has not dealt with that? Additionally I believe many landlords would agree that the city overburdens them with so many rules and fees that many are contemplating leaving the city. I know of several landlords that have sold off all of their Milwaukee rental properties and now only own and manage rental units outside of the city. I know of even more landlords that would love to do that very same thing if only they wouldn't lose their shirt (and their pants, belt, socks and underwear) by selling their rentals in this poor climate.

Landlording is one of the most regulated areas that I am aware of, if you don't believe me just take a look at this memo that was published by the AASEW board of directors on the topic.

The city's new Residential Rental Inspection ordinance is another example of the city making it difficult for landlords to survive.

The Journal Sentinel's Patrick McIlheran wrote about how difficult the environment in Milwaukee is for landlords not too long ago, which I blogged about.

According to the Institute for Justice's report, landlords are not the only businesses that Milwaukee is making life, success, and survival, difficult for.

Proposed Bill To Require Landlords To Disclose If Their Rental Property Was A "Meth Lab"

On March 26, 2010, Senators Lena Taylor and Spencer Coggs along with Senator Lehman sponsored 2009 Senate Bill 650. SB 650 will affect both landlords and sellers of real estate in which the drug methamphetamine has been manufactured.

The bill requires both owners wishing to sell and landlords wishing to rent property that was used as a "meth lab" in the past to disclose in writing this fact to potential renters and purchasors.

If methamphetamine was manufactured on the property the seller of the property must disclose this in the real estate condition report. If a landlord is renting a property that was previously used as a "meth lab" then the landlord must disclose this in writing to any potential renters.

The production of "crystal meth" has become an increasing problem, one that does not just affect city properties. In fact more and more meth labs are being discovered in rural areas where the illegal activity is far less likely to be noticed.

Studies have shown that the hazardous chemicals that are used to make meth and the chemicals which are a produced during the manufacture of the drug can seep into floors, ceilings, walls, duct work etc. and can remain for years. I believe that this discovery is the prime impetus for the creation of this bill.

While I think this is a good bill, it goes without saying that any landlord or seller of real estate in which meth has been manufactured will have a very difficult time renting or selling this property if the bill is passed. As a result it is more important than ever for landlords to visit and inspect their rental properties. To be a good landlord you need to know what is going on in your units. Wisconsin law allows landlords to make periodic inspections of their rental property with at least 12 hours notice (ATCP 134.09 (2). Landlords should take advantage of this opportunity to inspect their rental units ---- especially if they suspect illegal activity.

AASEW Trader's Corner To Be Held Prior to Monthly Meeting on Monday, March 15th

Are you thinking about buying or selling or trading? Or, maybe you're just wondering where the RE market is currently at. Or, maybe you know a non-member (future member?) who is. No matter, because all are welcome to join us at the new AASEW Traders' Corner.

If that isn't enough, check this out. The Traders' Corner is also a great place to find a buyer for that truck you no longer need or someone selling their over-supply of rehab materials. Whatever it is that you are looking to find or trying to sell that is related to our business, this is the place to be.

If all of that still isn't enough, consider the networking possibilities.

When? Monday, March 15th, 6:30 - 7:00 PM

(One half hour before the AASEW General Meeting)

Where? Best Western Motel, 1005 S. Moorland Rd.

(I-94 to Exit 301A, then south 1/4 mile)

We look forward to seeing you there.

Is This The End of Seller Financing For Rental Properties?

I have received this same information from my contacts at the Apartment Association of Southeastern Wisconsin, Inc. (AASEW) and Milwaukee Real Estate Investors Networking Group (RING). If you would ever like to be able to obtain seller financing for your next rental property or if you would like to be the seller that finances the sale of your rental property to some young landlord in the future then you must act now.

TODAY - Feb. 16th - IS THE LAST DAY TO SEND COMMENTS!

DEADLINE FOR COMMENTS HAS BEEN EXTENDED TO MARCH 5th

___________________________________________________

I received this Info from 4 different REIA's - Deadline 2/16 to respond DEADLINE FOR COMMENTS HAS BEEN EXTENDED TO MARCH 5th

HUD Issues Problematic Rules Interpreting SAFE Mortgage Licensing ACT

HUD has proposed to eliminate ALL seller financing unless the seller lives in the home or becomes a licensed mortgage originator.

The proposed HUD Rules interpreting the federal SAFE mortgage act can be viewed at www.regulations.gov.

Use the search parameter "HUD" and the keyword "safe".

Please review and comment regarding the impact of this broad interpretation of the law. "In addition to establishing HUD's responsibilities under the SAFE Act, through this rule, HUD proposes to clarify or interpret certain statutory provisions that pertain to the scope of the SAFE Act licensing requirements, and other requirements that pertain to the implementation, oversight, and enforcement responsibilities of the States. HUD solicits comment on the proposed clarifications and on the regulations proposed to be codified."

History:

As you may recall, we lobbied hard last year to maintain the right for individuals to make up to five seller financed transactions per year before being subject to mortgage originator licensing, etc... However, that law was passed subject to the Department of Housing and Urban Development's (HUD) approval of the law as "compliant" with the intention of the federal law. If any state does not have a compliant law, the SAFE act allows HUD to implement licensing for the state. HUD has since issued proposed rules.

In a nutshell, seller financing would no longer be allowed for non-owner occupied homes.

How YOU can help:

We learned about the publishing of the rules very late in the process... and the deadline for comment is upon us on February 16. However, we desperately need for thousands of REIA members across the country to go on record with HUD on this issue. We will be working to try to affect this law in other legislative ways, but cannot hope to gain traction unless our members have clearly communicated that they are opposed to this portion of the rules. This is your chance to be counted on this issue.

PLEASE SUBMIT YOUR COMMENTS TO HUD! We have less than one week to flood this system with comments.

Follow these simple steps:

1. Logon to www.regulations.gov. You will see two white boxes for searching

2. On the left box labeled "Document Type", pull the menu down and select "proposed rules"

3. On the right box labeled "Enter keyword or ID", enter "safe mortgage". Then, press search

4. Locate the blue search result "FR-5271-P-01 Safe Mortgage Licensing Act: HUD Responsibilities Under ...." To read the rules, click on this title. You will be taken to another page. You will see "views". You can click on PDF file or another symbol which will show you the rule document online.

5. On the right of the screen, click on "submit comment"

6. Complete the form providing required information and your comments and then submit

What do you say?

Say what you feel, but say it politely! The message should include that you would like the definitions in the proposed rules to be changed so that private individuals can originate and service loans on properties they personally own.

Some ideas from others:

• Bank loans are not available on some types of properties

• The tight lending climate has made bank financing "out of reach" for many

• Seller financing is an "age old" tradition based on private property rights

• These rules would prohibit even partial seller financing - i.e. a "seller second"

• According to HUD's "Residential Finance Survey" in 2001, roughly 40% of all non-farm residential properties in the US are owned free and clear

• An estimated 6 million Americans own a property other than their own primary residence

• An estimated 4.5% of Americans own three or more properties, many purchased solely as investment properties

• 40% of non-owner occupied residences are mobile homes which are more difficult to sell with bank financing

• Approximately 5% of homes in US are for sale or for lease... seller financing may be key to liquidating this inventory

Post comments to: http://bit.ly/b0NyKx

DEADLINE FOR COMMENTS HAS BEEN EXTENDED TO MARCH 5th

Compliments of BILL Kiefer

ACT TODAY !!!!!!!!!!!!!!!!!

AASEW's Traders' Corner To Be Introduced on Feb. 15th, Prior to Monthly Membership Meeting.

The AASEW is constantly striving to make our monthly membership meetings more interactive, informative, and fun for our members. Toward that end, we have formed a committee comprised of 3 board members (Alan Rusk, Kim Queen & John Coons) to explore and suggest ideas to improve the AASEW's monthly meetings. Our attendence has been up over the past year and we want to maintain (and even increase) this trend.

The first of the ideas to be implemented will be the Traders' Corner. The Traders' Corner will meet from 6:30 pm - 7 pm on Monday, February 15, 2010 (and will continue to meet 1/2 hour before the start of the AASEW's regular monthly meetings) at the Best Wester Hotel located at 1005 S. Moorland Road in Brookfield.

The goal of the Corner is to allow for members to meet and discuss their real estate "deals." If you have a rental property that you are looking to sell or if you would like to purchase additional rental properties - the Traders' Corner is where you want to be. Come and tell us about how you found your most recent "deal" and how you analyzed it and determined that it was something that you should go forward with.

The meeting will be very informal and we will let those in attendence dictate what we talk about. Ideally we hope this new event will allow members to meet and interact with one another more and allow for all of us to learn from one another. Our members possess a wealth of real estate knowledge and experience and that is something that the AASEW is hoping will be shared.

City of Milwaukee's Rental Rehab Program Offers Investors Funds to Rehabilitate Foreclosed Properties

In an effort to rid itself of the many abandoned and foreclosed properties throughout the city, Milwaukee's Neighborhood Stabilization Program (NSP) Rental Rehab Program will provide investors and landlords with financial assistance to rehabilitate foreclosed homes.

According to the flyer that I was given, responsible investor owners and landlords who purchase foreclosed homes in the city of Milwaukee may be eligible for forgivable loans of up to $17,500 per unit (or $35,00 for a duplex) to assist them with repairs to the property. The funds are made available on a matching funds basis.

The city will be holding an informational seminar on Wednesday, January 27, 2010 from 3:30 - 4:30 pm at the Department of City Development located at 809 N. Broadway in the 1st floor boardroom.

The seminar will provide attendees with additional details as to the program requirements and rehabilitation specifications.

It is requested that all attendees pre-register by sending an email to NSPinfo@Milwaukee.gov.

Additional information on the program can be found at the www.MilwaukeeHousingHelp.org

LLC's - PART 1: Why You Should Consider Using Them To Hold Your Rental Property

The AASEW's October monthly membership meeting focused on the issue of LLC's and why you should consider using this business entity to hold your rental properties. Attorney Lydia Chartre of Petrie and Stocking S.C. spoke to the membership about several issues related to LLC's including:

- Why create an LLC?

- Steps to create an LLC

- Information that an attorney will need to assist you in creating an LLC

This meeting had the largest turnout of any AASEW membership meeting in the last 2 years -- we had more than 70 people. Both prior to the meeting and afterwords I received several telephone calls from people that wanted to attend the meeting but were unable to do so. Because of this I have decided to post Atty. Chartre's outline that was distributed to everyone in attendance at the meeting. While you missed a great presentation from my law partner, Lydia, at least you will have the "nuts and bolts" of her presentation.

You can find Lydia's outline here.

In the near future I will provide you with a copy of the outline that I distributed to the attendees at the October AASEW meeting on the topic of what formalities your LLC must follow in order to avoid having the "corporate veil" of the LLC pierced and possibly becoming personally liable for the debts or actions of the LLC.

"Landlords Feel The Loathing" - Accurate Article On Landlords' Plight Published in Milwaukee Journal-Sentinel Today

Several weeks ago I received a telephone call from Journal Sentinel reporter Patrick McIlheran. Mr. McIlheran told me that someone had referred him to my blog and after reading some of the posts that he wanted to speak with me as he was in the process of putting together a piece about how the state and the city seem to make the business of landlording more and more difficult. I was more than happy to assist Mr. McIlheran as this topic comes up regularly during my interactions with clients, and at the the Apartment Association of Southeastern Wisconsin meeting. Truth be told, most business - not just rental property owners - wonder why the city makes doing business here so difficult and unappealing.

After speaking with Mr. McIlheran, I referred him to a colleague of mine, Tim Ballering, owner of Affordable Rental Associates, LLC and past president of the AASEW. Tim owns and manages hundreds of units in Milwaukee and has been a landlord almost as long as I have been alive (just kidding Tim ; ). It goes without saying that Tim could give Mr. McIlheran some necessary background and perspective that I could not.

Mr. McIlheran's piece entitled "Landlords Feel The Loating" was published in today's paper. You can also read it online at JSOnline.

It is a very good article. Please be sure to take the time to read the article and to email or call Mr. McIlheran and thank him for taking the time to present an accurate story on landlord's present plight. In light of the soon to be proposed Milwaukee ordinance that will require landlords to submit to mandatory inspections of the interior of their rental units, Ms. McIlheran's article could not be more timely.

AASEW MEETING ON HOW TO BUY FORECLOSED PROPERTIES - MAY 18th

Anyone interested in purchasing foreclosed properties will not want to miss the Apartment Association of Southeastern Wisconsin's upcoming monthly meeting on Monday, May 18, 2009 at 7 pm at the Best Western Midway Hotel located at 1005 S. Moorland Rd. in Brookfield.

Attorney James Mulligan, an expert in the area of foreclosures, will be the key note speaker and will discuss how to purchase foreclosed properties as well as provide us with some common pitfalls to avoid. Also on hand will be Jason Fernhaber and Brian Meidam, rental property investors and current AASEW members. Both Jason and Brian have obtained many of their rental properties through the foreclosure process and will be there to answer any nuts and bolts questions that you may have on the process.