Potential eviction law reform coming to Missouri

*NOTE - This article was originally written in May of 2007 for the newsletter.

In the landlord world, eviction is a four-letter word. The process is so despised because current Missouri eviction law clearly favors the tenant. Even the deadbeat ones. There are so many problems with current laws that finding
a starting point for reform has been a little tricky. Despite this hurdle, the wheels are finally in motion heading in the direction of change.

Over the last few years, one of the biggest issues landlords have faced is what to do with a tenant’s personal belongings during an eviction. Current laws are unclear about this situation and that has worried many a landlord. That’s where the new Landlord-Tenant Liability law comes into play.

The bill (HB 504), as summarized on the Missouri House of Representatives website, “exempts landlords from liability for any damage to personal property resulting from the enforcement of a judgment granting possession of the property.Landlords are given the absolute right to dispose of the personal property in any manner they consider reasonable.”

This bill has just made it out of committee in the State House. It passed unanimously, but a greater battle still looms ahead. The bill still needs to pass the muster of the entire body of the State House and Senate. No date has been set for further debate, but the House website lists the “proposed effective date” for the bill as 08/28/2007. This would indicate that movement on the subject can be expected in the near future.

This bill would do a lot to even the playing field between landlords and tenants in St. Louis and the entire state of Missouri. Ensuring it’s passage should be a high priority on any investor’s checklist. You can help improve the bill’s chances by contacting your State Senator and Congressman and voicing your support. There are various interest groups pushing to kill the bill or add crippling amendments and your letters can make a big impact.

Lookup your representatives here:
www.senate.mo.gov/llokup/leg_lookup.aspx

For more information on the bill or to checkup on its status visit:
www.house.mop.gov/bills071/bills/hb504.htm

*UPDATE - This bill ended up failing to pass during the last session. Not do to lack of support, but due to lack of time. It has been picked up again for the current session and already has traction. So its still vital that everyone throw their support behind this one. Check back soon for and update on the status and more information.

When it comes to quality rental units, the little things count

*NOTE - This article was originally written in May of 2007 for the newsletter.

Working with investment real estate offers me an opportunity to talk shop with all kinds of landlords and view all types of apartments, across St. Louis. One thing that always astounds me, is the lack of quality rental units in town. There seems to be a perception that there is no market for quality apartments. In my experience, that simply isn’t true. Putting those careful touches on your units can go a long way.

As an example, I’d like to use a couple of 4-families I own together with my own family in the Shaw Neighborhood. All the units in these buildings were totally rehabbed in the early 90’s. When we bought them last year, the floors had been upgraded to hardwood and some of the kitchens had been redone. At the time, all the occupied units were filled with Section 8 tenants paying rents from $650 to $685. All in all, the buildings were in pretty good shape.

Many landlords would have just left things as they were and continued to run the building in its purchased state. However, we decided that we wanted to run these buildings at their full potential. Nine months later we are feeling the effects of this decision. Even though we have lost many a weekend due to our labors at the property, we couldn’t be happier with the results.

We haven’t had to do anything major in any of our units, but each time we have a new vacancy it takes weeks to get these properties running at our quality level. Those nicks in the walls and paint splatters take time to fix. That horrible, uncaulked, quarter-round trim takes time to replace. Broken closet door hardware has also been a consistent problem. A kitchen has needed to be redone here and there.

The key is treating quality units as if they are going to be sold as condos. The little things that many landlords skip over for sake of time have to be addressed. You also need to get creative with the painting. White, beige and light yellow don’t make for the most attractive setting. In our latest unit, we took this concept to a new level. Bright green, orange, and multiple shades of blue were the colors of choice. The paint costs the same as the more traditional colors, but the effect on the appeal of the unit can’t be easily measured.

This extra effort has made it much easier to find new tenants and push rents. There has been so much interest that we are already pre-leasing units, which will not be ready for almost two months. Our initial rental efforts were going for $725 per unit. The most recently completed units are reaching as high as $760 a month in rent. This high level of interest not only puts more money in our pockets, it also allows us to be more choosy of the tenants we allow into the building.

Of the eight units in these two 4-families, we still have three more to bring to our level of finish. Additionally, we are also finally getting the chance to address some the exterior issues that were untouchable during the winter. When we’re finished, we’ll have a couple of buildings that will require little to no attention to keep up, and eventually fetch a hefty price at resale. Taking that extra time to make sure you dot every “I” and cross every “t” can pay off. The next time you have a vacancy, don’t just patch and re-rent, bring it up to the level it should be.

Cinco de Mayo along the burgeoning Cherokee Commerical District

*NOTE - This article was originally written in May of 2007 for the newsletter.

Cherokee Avenue is one of those streets that has held onto the title “up and coming” for some time now. Whether deserving of this label in the past or not, the street is slowly coming into it’s own. It has gradually found it’s own identity as a haven for Mexican-Americans and artists alike.

The 2007 Cinco de Mayo celebration held along Cherokee, just to the west of Jefferson is a perfect example of how far the area has come. The crowds during the festival could just as easily been ripped straight from the playbook of the Soulard Mardi Gras celebration, albeit on a much smaller scale. The fact that so many people showed up in this humble little corner of South City is an example of why the area isn’t so humble anymore.

Attendance figures for the event were not available as of writing this article, but the streets were full all day long. The main draw seemed to be the margaritas, authentic Mexican cuisine and artisan displays. Each year seems to bring bigger crowds and more interest in the area. As people flock to the festivities they witness the potential neighborhood possesses.

A drive through the area still shows that there is a significant undeveloped segment of the neighborhood, but the energy for improvement is there. Best of all, prices are still within reason, making the district an intriguing development target. As a commercial sector, Cherokee east of Jefferson, has already made tremendous strides and has found it’s own niche has continued to improve the residential community around it has improved as well. A similar fate might well await the improving Benton Park West portion of the Cherokee District.

There are lot of opportunities in the area and with the promising price-to-rent ratio found in the area, those opportunities could be good ones. In ten years, this area could be the “New Soulard.” Mark your calendars, that day will be here before you know it.

Tower Grove Park: Mission completed for St. Louis landmark

*NOTE - This article was originally written in May of 2007 for the newsletter.

Who would have guessed that it would have taken almost twenty years and $18 million to get to this point? In the late 1980’s Tower Grove Park was not a place to take the kids for an afternoon picnic or ballgame. Today, it is a proud member of our local collection of urban parks.

According to the South City Journal, the final piece in the creation of this renaissance is about to be put into place thanks to a $250,000 grant from Emerson and $100,000 in pledges from Anheuser-Busch Foundation.

This $350,000 will be used to completely recreate three out of the four lily ponds in the park. These ponds are located on the north side of the park near the Tower Grove Avenue entrance. Seen as the last remaining project needed to be done in the park, residents and park maintenance staff should be proud of the transformation they have witnessed and been a part of.

Now that the park is in great shape, more and more community and sports activities can be seen within the park’s borders. One good example is the Tower Grove Farmers Market (www.tgmarket.org). Last year’s market was such a success that vendors and volunteers are going for another round. The market will be open every Saturday from May 12 through October 27, 8:30am until 12:30pm. This is just one of the many examples of the progress the park has made.

So the next time you are in South City looking for something to do, stop by the park. You just might be surprised what you find. For a list of available activities and amenities visit the park’s website at www.towergrovepark.org.

St. Louis Multi-family Window Replacement Program

NOTE - This article was originally written in March of 2007 for the newsletter.

Lead can not only be hazardous to your health, it can also be hazardous to your investment. Lead abatement can be expensive and time consuming, hitting you where it hurts: The bottom line. Federal and State assistance has been available for years, but the method of disbursement has been inconvenient and, oftentimes, punitive.

Realizing that they have a major problem on their hands, and a glut of unused money to correct the problem, the City of St. Louis Building Division has created a new window replacement program for multi-family units. Mayor Francis Slay laid the groundwork for the program with his Comprehensive Action Plan for the Eradication of Childhood Lead Poisoning.

The Multi-Family Window Replacement Program is designed to help eliminate lead hazards in multi-family rental units, which are being marketed to low and middle-income families. Under the program, multi-family buildings with lead-painted, wooden windows can qualify for a $200 per window reimbursement credit for replacing their old windows with new double hung windows. The City of St. Louis will reimburse the owner for up to 10 windows per unit, for a potential total of $2000 per unit.

Vacant units, which an owner wishes to seek the credit, will be inspected by the City’s Building Division. This inspection, normally costing as much as $400, is offered free of charge. If lead is detected around the windows, the owner will then replace the problem windows. Anyone can install the windows, as long as they take the free 1-day class in Lead Safe Work Practices through the City.

After the windows have been installed the City’s Lead Inspector will return to perform a lead clearance test. If the unit does not pass the test, the owner will be instructed on what other steps need to be taken to complete the lead abatement. When clearance is granted, the owner will submit copies of their receipts and the City of St. Louis will reimburse the owner under the previously described criteria.

This program, if used properly, could be of huge benefit for investment property owners. With potentially $8000 in window credits per four-family, this one is really worth a look.

However, before taking the leap, be aware that there are some restrictions to the program. Most notably, rents for one-bedroom units in the program cannot exceed $526 a month and two-bedrooms cannot exceed $654 a month.

For more information on the program and it’s limitations call Jerry Wessells. He can be reached at 314.641.8677. Mr. Wessells can help answer any questions you might have. You can also download the paperwork to getting started in the program HERE.

Escape from St. Louis… I mean, New York.

*NOTE - This article was originally written in March of 2007 for the newsletter.

Hollywood seems quite fond of remaking classic, and not so classic, films. When I heard that “300” star Gerard Butler was going to star (allegedly) in a remake of the cult classic, Escape from New York (1981), I just couldn’t pass up on the opportunity to share my thoughts.

For those unfamiliar, the original movie was a John Carpenter film starring Kurt Russell as felon Snake Plisskeen. In a post-apocalyptic future (1997 in the film), New York had become a maximum security prison and it looks a little worse for wear. When an airplane carrying the President of the United States crashes on the island, Snake is charged with rescuing him in exchange for his freedom.

You are probably wondering how this is relevant to the St. Louis real estate market. After all, I’m not a film critic. The reason it is relevant is because the movie was filmed in St. Louis. For most films this would be considered an honor, but for this particular film it was anything but. St. Louis was chosen as the filming location, not for its scenic skyline or spacious urban park, but for its barren and desolate landscape. This was an era prior to the loft conversions of Washington and Locust; prior to the building of the Edward Jones dome; even prior to the renovation of the Fox Theatre and Union Station. A careful viewing of the film reveals these structures for the dilapidated structures they once were.

We might still have our fair share of problems in St. Louis, but we sure have come a long way in 26 years. We might move slow in some regards, but you can’t argue that we haven’t made any progress.

In determining a filming location for this remake, scouts visiting St. Louis would be met with an entirely different landscape than during the filming of the original. What was once a dangerous eyesore has become a desirable residential and commercial area.

So the next time you feel frustrated with the City for its poor schools or its blighted areas, pop in a copy of Escape from New York. It’ll put a smile on your face.

St. Louis City Inspections: So what exactly is a violation?

*NOTE - This article was originally written in March of 2007 for the newsletter. It was written with the help of, then intern, Will Roestel.

Being new to the investment world, I don’t know a whole lot about the inspection process. In an attempt to learn more, as well as see what resources are currently available on the subject, I assumed the role of a prospective rental property buyer and paid a visit to the St. Louis City Inspections Department in City Hall, Room 407.

Upon my arrival, the receptionist politely asked if she could help. I told her that I found several rental properties I was interested in purchasing, but wanted to get a general idea of the codes and regulations inspectors would be looking at so that I might identify problems and calculate their costs. I explained that I was trying to minimize my headaches, by being proactive about addressing violations.

She asked if I had the exact addresses so she could look to see if there were any current violations. I told her that while it might give me part of what I was looking for, I really needed a resource that would allow me to cover all my bases, not just for specific properties.

She appeared baffled. The widely distributed Landlord handbook, InfoRent, was out of stock, but they had a brochure that might be of some help in my quest for knowledge. It was a Missouri Landlord-Tenant Law booklet. Not exactly what I had hoped for. Asking if there was any other office I might visit with helpful information, I was told to try “next door” in Room 406, the Housing Conservancy Office, or at 418, the Neighborhood Stabilization Team. She also stated that if I had specific questions I could make an appointment to talk to one of the inspectors. I noted that if I couldn’t even get guidelines for inspection expectations, it surely would be difficult to ask pointed questions.

Next door at the Conservancy I waited at the front of an entry area unfolding into a large office area. After a few moments of staring at the housing and community preservation brochure, a woman leaned backed from her desk and asked if she could help. Repeating my previous request, I was quickly informed that the brochure I was holding was all the available literature they had. So it was across the beautiful atrium to room 418, and the Neighborhood Stabilization Team office.

This group’s mission is to: “To empower constituents to sustain a quality environment within their neighborhood through assistance, education, intervention and organization.” Sounded like a place that may provide some much needed assistance in proper property management. Unfortunately, all the young receptionist could provide was a typical 8.5” x 11” piece of paper with the general concepts surrounding the Team and its officers. She told me, as I had been told before, to look at the InfoRent booklet, but she added that it was available online.

She pointed to a link listed at the bottom of the page. I skimmed the document, and noted the bulleted item outlining “problems” the Team addresses listed “physical violation of health, safety, and/or property maintenance codes.” This seemed as good a lead as any, and I asked if they had any documentation on the codes/regulations that governed these problem issues. I was told that all their information could be found on the website, and was given a brief tutorial on how to find their page through the City’s homepage.

I thanked her for her time and left City Hall after almost an hour of searching with only a Landlord-Tenant law booklet, an outline of the responsibilities of a Neighborhood Stabilization Officer and a Housing Conservation brochure to show for my time.

The latter came closest to answering my query with a small section at the bottom of its interior middle tri-fold. It read:

“More commonly cited items include:

• Smoke Detectors
• Overcrowding
• Unsanitary Conditions
• Doors and Locks
• Falling or Cracked Plaster
• Defective Electrical or Plumbing Systems”

That’s all well and good, but what specs need to be followed when addressing these issues? How can I be expected to fix something if nobody can tell me what I need to fix?

The City’s inspection process seems to reward neither initiative nor forward thinking. The overworked inspectors, and the property owners that deal with them, would both greatly benefit from a readily accessible and comprehensive information source outlining the responsibilities and expectations of each, and from one to the other. Not so dissimilar from the Landlord-Tenant guide I received in their department, just a bit more on target.

Bohemian Hill: Tear out the old to make way for the new in this St. Louis neighborhood?

*NOTE - This article was originally written in March of 2007 for the newsletter.

Residents of the small South City community of Bohemian Hill, nestled between the Lafayette Square and Soulard neighborhoods across from City Hospital, might soon be counting down the days to their neighborhood’s destruction. The open nature and prime location of the neighborhood have made it a tempting target for development for years.

Finally, it seems like the tiny neighborhood’s time has come. Developer, Gilded Age and Koman Properties have begun plans to develop 10 acres in the area. The project is set to bring a full-service grocer and Walgreens to the neighborhood, as well as other retail space. The only trouble is, when it’s completed, most of the current residents won’t be around to see it.

Conceptual plans, as well as a subsidy request are expected to be unveiled later this month. Initial information suggests that the development will be constructed in two phases. The first phase, dubbed Georgian Square, will total $30 million on 6 acres. The phase will feature the grocer and Walgreens stores, 12 and 15 retail stores and a large parking lot. Completion is set for mid-2008.. The site, currently vacant, is under contract from the city. Opponents of the project cite the suburban-styling of this phase should be retooled to better reflect the urban landscape (You can judge for yourself in the picture upper right).

The 4 acre second phase calls for additional retail and office space, as well as condos at a total price of $50 million. The city is negotiating with property owners to purchase this property, which includes nearly two dozen buildings. This is the main source of contention in the project.

Allegations have been made that property owners were threatened with eminent domain, that no public input has been sought in the site design, and some of the properties in jeopardy are new rehabs. These issues have lead to picketing by citizen groups supporting property rights and public input. The city claims no eminent domain has been used, though it hasn’t been ruled out.

The new retail and grocer will be targeted to residents of The Georgian and will draw customers from the ever increasing residential population downtown and from neighboring Soulard, Benton Park and Lafayette Square. “It’s kind of a no-man’s-land between these historic neighborhoods,” said Gilded Age principal Trace Shaughnessy. “As people are moving in and we’re selling to a more discerning buyer, they’re looking for things like a grocery store.” Chris Goodson of Gilded age agrees that the project is a positive for the area. “Momentum is building in pockets in the city. That’s how you build a great City — you take the momentum and build on it.”

*UPDATE - This battle over eminent domain has since been settled. No land will be forcibly take for phase II. Additionally, more detailed plans have also been revealed for the site. The images above are from those plans. If you want to see more about Koman’s development, you can view their official PDF breakdown: http://komanproperties.com/05162007/Georgian%20Square.pdf

SkyHouse: Filling in the Downtown St. Louis skyline

*NOTE - This article was originally written in March of 2007 for the newsletter.

Some development projects are in the public eye for years before ground is broken. But every once in a while, a new project gets off the ground, seemingly, overnight. Such is the case with Metropolitan Development Enterprises’ new SkyHouse project.

This 22-story, 166-unit condominium tower at 14th Street and Washington Avenue is set to get underway this summer carrying a projected construction cost of $67 million. The tower will occupy the former location of Ehrlich’s Dry Cleaners and an adjacent parking lot.

Chicago-based Metropolitan unveiled the project plans at a Tax Increment Finance Commission meeting Feb. 22. They are seeking $12 million dollars in TIF monies to get the project off the ground.

Plans call for 13,000 square feet of retail space, several hundred parking spots, and a rooftop recreational area which will include a pool and a fitness center. Each condo unit will feature floor-to-ceiling windows and balconies with prices starting in the mid $200’s. One, two and three-bedroom units will be available, ranging in size from 850 to 2,230 square feet. The top three floors will feature 12 penthouse units. Sales are set to begin this May.

“We looked at what was missing, and we want to go after that niche,” Metropolitan’s Director of Marketing Nellie Donovan said. “That space is underutilized, and with this project we can enhance the neighborhood. We want to be part of the Washington Avenue corridor.”

Metropolitan will be teaming with local development group RileyWaldrop LLC in a joint venture on the project. RileyWaldrop is a loft-conversion veteran of sorts; having developed the 14-unit Barton Street Lofts at 2401 S. 12th Street among other projects.

With the dwindling availability of former warehousing space for conversion, infill developments such as this one, have been a long time coming. If developers continue to receive positive public response, expect to see more projects such as this very soon.

*UPDATE - Presales are still in progress and groundbreaking has yet to start. The site seems prepped, but rumor has it that the developer needs to reach 40% in their presales before they start. They were at 25% in October so, hopefully, they will reach that level soon.

Landlord vs. Slumlord: What’s the difference?

*NOTE - This article was originally written in February of 2007 for the newsletter.

According to Webster’s Dictionary, a landlord is “the owner of property that is leased or rented to another.” As any longtime rental property owner can testify, being a landlord isn’t always a popular job. Tenants and neighborhood residents alike, often treat them with disdain.

However, all landlords are not created equal. Whether local resident or cross-county investor, quality landlords can do a lot of good in a neighborhood. Quality investment in the neighborhood works to the benefit of all.

But there is a seamy side to the landlord coin: the slumlord. Webster’s defines a slumlord as “a landlord who receives unusually large profits from substandard properties.” The actions of this unfortunate minority have done much to damage the image of quality landlords.
Rather than dissect the technical definitions of the terms landlord and slumlord, let’s look at reality. In the real world, even the best of us will have properties that are not in the best of condition. That is the nature of the business. It can sometimes take years to get a property in proper running order.

A lack of high-quality units and tenants does not make one a slumlord. A slumlord can even own high quality units and get high rents. There is one key ingredient to being a slumlord: not caring.

A slumlord acts as a parasite; sucking out every cent they can from their properties and tenants. Repairs are only addressed when absolutely necessary. The only thing they care about is keeping the profits coming. The long-term viability of the property, effect on the neighborhood and safety of their tenants is not even a consideration. Keeping the rent coming in is the only important thing.

A landlord shares, more of a symbiotic relationship with other parties. Profits are obviously a concern, but maintaining a quality product remains a vital necessity. They recognize that keeping high quality buildings attracts higher rents, tenant stability and political support. Tenants are happy because they live in a nice building run by a person that actually seems to care. The city and neighborhood are happy because the building benefits the neighborhood. The landlord is happy because they have an easy to run, quality investment, with little to trouble them. Everyone benefits.

Unfortunately, the distinctions between landlord and slumlord are not obvious to the masses. This generalization may prove difficult to impossible to remedy. The best that can be done to demonstrate that all landlords don’t deserve such a poor label is to lead by example. Keep those around you happy and you will able to laugh all the way to the bank and still sleep at night.

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