Channel seven stopped by last night and told me that section 8 got an emergency funding from HUD and there were not cuts. This is obviously good news for landlords.
I am not sure if it will mean all that much to us. Most of what we have been renting in the last few months has been market tenants very little has been section 8. This is not a choice. There are just more market tenants out there looking for housing
By now most of you have heard OHA is cutting about 10% of its tenants off the program, which means by the end of September I expect a 400 tenant in the metro to have to work out deals with their landlords to stay on as market tenants or move. I have been getting lots of calls from our business partners about what this means to our business.
Here are my thoughts.
1. Since they are not only cutting vouchers they are reducing the amount of moving they allow we will see a lot less people with vouchers wanting to rent our properties. This means, do not count on finding section 8 tenants to fill your vacancies
2. There will more pressure on these tenants to find other sources of income to pay for the rent. I expect a fair number of them will want to come up with some way to stay in there unit.
3. Renting to section 8 tenants will not even been considered when buying new investment homes.
4. This is the most important. Therereally no way to know what will happen. the most important thing that we need to look at is how this effects real estate investors overall turn over. If this move by section 8 cuts turn over it will be a good thing. Only time will tell
We do business in seven different cities. The two that we have the most involvement with is the City of Des Moines and the City of Omaha. and hands down the city of Omaha is pro business.
Some things you may not know
City of Omaha Mill levy 2.06 approx
city of Des Moines Mill levy 4.4 approx
City of Omaha has no rental property annual inspections
City of Des Moines has a fee of $135 every three years for every unit. This is on houses, there is a follow up fee if they find items that need repaired
Time to get a building permit on a 100,000 sq ft storage building
in Omaha 3 months
in Des Moines 18 months
This is the one subject that comes up over and over again with my clients. I was asked the other day what the number one reasons partnerships are not good. Simply it is because at some point you will have to split up. And how you go about that has the potential to be very painful. The reason is that the way you feel about one another and the deal today will not be the same way you feel when you want to part ways.
I cannot stress enough the importance of keeping things is your business as simple as possible. Remembers all things in your business should be set up so a non skilled person can do them. This kind of ties into the waste post I just had. We used to have this very complex way to figure the maintenance peoples bonuses. We changed this so we can figure bonus in just few minutes for over 30 people. Another thing you can do in your business is just have one supplier. A friend of mine owns a convenience store in South Dakota and he told me that one of the things he does not like about that business is there are dozens of suppliers. This is just one more example of keeping things in your business simple. There are countless more
I hear all the time, what do you think the rent I can get out of my house or apartment? Daily, I have to remind investors “Your mortgage payment does not set the rent the market does. The berst way to set your rent is to study the market If you want to study the market here are some great places to look at
landmarkomaha.com
omaharearentals.com
craigslist.org
Renters look for things in the following order
Area first
Amenities second and price third.
So make sure you are comparing your property based on these things
Now the important thing to do is actually call some of the people that advertise on the list and ask them if the places are still available and what kind of activity they are getting. You will be very surprised most landlords are very receptive to these kinds of calls. This is not the case in all business. But I find a lot of camaraderie among residential property owners and managers
We just got word from OHA, that they would not be giving any more move packets until the end of the year. We are trying to figure out what this means. We are not sure this is just on initials or transfers, one thing is for sure landlord will not be renting much on section 8 in the next 6 months
I think a lot our waste in our business. A buddy of mine Owns a pizza business and he is always figuring out new ways to illuminate waste. I have been thinking about waste when it comes to the government and large companies. Just think how small companies try to illuminate waste? who does this at large companies? Who does this in the government? Who does this in your company? How much waste is there in the state of California and its multibillion dollar short budget short fall. The biggest wastes of time are work processes that do not any value to the customer. I encourage all of you to figure out a way you are doing something and change in, in an effort to illuminate waste.
I was in Colorado over the 4th of July and one of the guys walking in the Parade in Breckenridge had a sign that he was holding that quoted Thomas Jefferson
” A government that is big enough to provide everything we need is powerful enough to take every thing we have.”
In light of the fact that the City of Omaha needs to cut spending by $11 million. I think all government needs to think like business owners. What is the least amount of people I will need to provide the same level of service to our customers? I read someplace that a business needs to get 8% more productive each year just to keep up with competition. Is your business run this way?
Here is a great index that compares home prices to the median household income. I think this is a great graph that shows that the real estate market has a ways to fall before prices level out. The other alternative is that the medium income goes up considerably.
