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FROM THE PRESIDENT - Patty Hofer
The last of winter has given us perfect weather, we are not using heat or air conditioning. And at the price of gasoline lately I may also stop driving.
Don Robertson, Section 8 Administrator from the Housing Authority was our speaker in January. He has written a manual in English, rather than legalese, for Section 8. Anyone interested in receiving the manual, attending Section 8 orientation, or asking specific questions may telephone Mr. Robertson at (314) 531-4770.
We will have two speakers in March. Evonne Mikitin from Credit Verification Services will talk about her business which does both tenant and employee screening. So many people simply do not know how one goes about finding a screening service. This is a good opportunity to hear how much information a screening service can provide to help you choose the best qualified tenant for your property. Anyone who does not use a professional screening service is literally gambling with his investment. The wrong tenant can cost thousands of dollars.
Our second guest speaker will be Gregory Brough, an attorney who will discuss limited liability corporations. We have an article on LLCs in the newsletter so you can come prepared to ask questions.
The 2nd annual Landlord's Conference will be held at St Louis Community College at Forest Park on Saturday, March 25th. If you have not received your registration form please telephone (314) 622-4628 to have one sent to you. The fee is $17 which includes Continental breakfast, lunch and a wealth of information. People who want to pay by credit card may register by telephone, (314) 644-9175 or fax (314) 644-9918. The conference starts at 8:30 am.
C/HH will have an information table at the conference. We need members to help staff it during the breakfast hour. Please volunteer to help. Call me (314) 352-9140 or let me know at the meeting.
We also need members to help staff our information table at the Better City Living Fair from 10 am to 4 pm on Saturday, March 18th at Carpenters Hall, 1401 Hampton Avenue. The fair is for refugees and immigrants. Interpreters will be provided. It would be nice to have a list of properties for rent by our members.
Many landlords are quite happy with non-native residents. One of our members said, "They pay in cash, on time, what's not to like?" Another property manager related that language is sometimes a bit of a problem, but the tenants very creatively brought her a picture of a mouse to relay their complaint. So, she showed them a picture of a cat.
I am kidding, the landlord did the right thing and sent an exterminator to the building. Telephone me (314) 352-9140 to volunteer and to list your units.
Rick Kuelker (314) 752-0375 or kelknstl@earthlink.net has information about a two family on Keokuk that may be purchased for the amount the owner owes on it. Call or email him for details.
One of my neighbors in the Michigan/Fillmore area is also selling a two family flat in good condition. I do not know which realtor will be listing it, but I will get a name if anyone is interested.
The Holly Hills Improvement Association is planning a house tour, tentatively scheduled for Sunday, October 1. If anyone wants to be on the planning/work committee, they welcome your participation.
John Korst is making arrangements for us to talk about our landlord association on several radio shows. We will be asking for your help in this area too. We are trying to promote interest in landlord organizations because educated, professional landlords benefit both themselves and the community as a whole. Please encourage any property owners you know to join. We also need more advertisers in the newsletter, as John claims to have more info available than we have room to print.
It’s CENSUS TIME! There is an insert from the Census Bureau in the mailed copies of this newsletter. Please feel free to make copies and distribute to your tenants. An accurate census is important to getting proper services and representation for our city. Please participate and encourage your tenants as well.
I hope to see as many of you as possible at the March meeting.

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BEST REAL ESTATE INVENTION OF THE DECADE: THE LLC - Wm. Bronchick, J.D.
As of April 1, 1997, all fifty states have adopted the Limited Liability Company or "LLC." The LLC is relatively new to the U.S., and most states have adopted LLC laws only within the past few years. Essentially, the LLC is a cross between a corporation and a partnership, with all of the bells and whistles of both.
The IRS Has Cleared the Way Most conservative attorneys and CPAs (including myself) shied away from LLCs because it was not clear how the IRS would classify such an entity. However, the new IRS rulings make it clear that an LLC will be treated as a partnership, so long as it has at least two members. A single-member LLC will be "disregarded" for tax purposes. This means a single member LLC is still valid under state law (and thus affords lawsuit protection), but no additional tax reporting is necessary at the federal level.
Lawsuit Protection The LLC, like a corporation, provides "lawsuit protection" for its owners. The owners (called "members") of an LLC are not personally liable for debts or liabilities of the company. Thus, an LLC which holds real estate will protect its owners from personal liability for lawsuits. In addition, a foreclosure against the company will not create personal liability for the members (unless, of course, the members signed personally on the loan).
Favorable Tax Treatment Like a partnership, the LLC provides "pass-through" tax treatment. This means that the company is not taxed on its profits; all profits of the company "pass-through" to its members. A regular corporation (called a "C" corporation) is taxed at the corporate level. The shareholders are taxed again on the income they receive from the company.
Asset Protection For many years, the "Family" Limited Partnership was the preferred vehicle for estate planning and creditor protection. The popularity of the FLP was that a creditor could not take partnership property or attach a partner's interest. This limited remedy would force a creditor to settle with a partner for pennies on the dollar.
The problem with limited partnerships for holding real estate is that the general partner has personal liability. This problem was often solved by using a general partner which is a corporation. This, of course, creates added expense and paperwork. An LLC afford its members the same creditor protection as a limited partnership, but no member has personal liability.
Another interesting feature of an LLC is that the IRS does not consider a single member LLC to exist for tax purposes. Thus, the single member still has lawsuit protection in state court, but the member continues to report his rental income and expenses on schedule "e" of his personal income tax return.
An example of this simple, yet effective protection is shown below:
Rental House Duplex Apt Bldg | | | LLC #1 LLC #2 LLC #3 | | | LARRY LANDLORD, SOLE MEMBER OF EACH LLC

In this scenario, Larry Landlord does not need to file separate tax returns for each of his three LLCs. However, if a tenant in his apartment building is injured, he will not be personally liable, nor will he risk losing his other rentals in a lawsuit.
As you can see, the LLC can provide excellent protection for landlords, with little paperwork hassle.
Estate Planning Features The LLC can provide a vehicle for passing wealth to younger family members without having to re-title the real estate. Once real estate is transferred into an LLC, the members' interest is converted to personal property, which is represented by their LLC "shares." These shares can be transferred incrementally to children as tax-free gifts ($10,000 worth per year). The process for transferring LLC shares is very simple compared to filing a new deed each year. The parents can still retain control of the property during their lifetime by acting as "managers" for the company.

As you can see from this brief discussion, LLCs can play an important role in your overall asset protection, estate planning and tax strategies.

About the Author . . . William Bronchick, J.D. is an author and attorney who regularly presents workshops and do-it-yourself seminars at real estate and landlord associations around the country. He is the president and confounder of the Colorado Association of Real Estate Investors. Bill specializes in all forms of asset protection and is the author of several great home study courses.

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INSPECTOR’S TOP TEN PROBLEMS IDENTIFIED
Know how extensive repairs will be before you take them on.
1. The house has poor drainage. This is the most common problem found by home inspectors. To improve drainage, you may have to install a new system of roof gutters and downspouts or have the lot re-graded to better channel water away from the house.
2. The house has faulty wiring. An insufficient or out-of-date electrical system is a common problem, especially in older homes. This is a potentially hazardous defect and not to be taken lightly. You may have to replace the entire electrical system, or at least part of it, to bring this home up to code or to make it safe.
3. The roof leaks. If the roof has water damage, it may be caused by old or damaged shingles, or improper flashing. It's cheap and relatively easy to repair shingles and small amounts of flashing, but if the roof is old, you face a much larger expense to replace the whole thing.
4. The house has an unsafe heating system. An older heating system or one that has been poorly maintained can be a serious health and safety hazard. You may have to repair or replace the old furnace. This is a major expense, but new furnaces are more energy-efficient, which will probably save you money down the line. If your heating system is anything but electrical, install carbon monoxide detectors in a couple of locations in the house.
5. The whole house has been poorly maintained. Examples of poor maintenance include cracked or peeling paint, crumbling masonry, broken fixtures or shoddy wiring or plumbing. You can easily repaint a wall, replace a fixture or repair a brick wall, but makeshift electrical or plumbing situations are serious and potentially dangerous problems. Replace any such wires or pipes.
6. The house has minor structural damage. Minor structural damage means the house is not likely to fall down, but you should deal with the problem before it becomes more serious. Such damage is usually caused by water seepage into the foundation, floor joists, rafters or window and door headers. First you need to fix the cause of the problem (a leaky roof, for example), then repair or replace any damaged pieces. The more extensive the damage, the more expensive it will be to repair.
7. The house has plumbing problems. The most common plumbing defects include old or incompatible piping materials and faulty fixtures or waste lines. These may require simple repairs, such as replacing a fixture, or more expensive measures, such as replacing the plumbing itself.
8. The house's exterior lets in water and air around windows and doors. This usually does not indicate a structural problem, rather poor caulking and weather stripping that require relatively simple and inexpensive repairs.
9. The house is inadequately ventilated. Poor ventilation can result in too much moisture that wreaks havoc on interior walls and structural elements. It can also cause allergic reactions. Install ventilation fans in every bathroom or regularly open windows in your home. To repair damage caused by poor ventilation, you may only have to replace drywall and other inexpensive pieces. If you have to replace a structural element, it will be more expensive.
10. The house has an environmental hazard. Environmental problems are a new and growing area of home defects. They include lead-based paint (common in homes built before 1978), asbestos, formaldehyde, contaminated drinking water, radon and leaking underground oil tanks. You usually need to arrange a special inspection to determine environmental problems, and they're usually expensive to fix. For example, it costs $1,000 to install a radon-ventilation system, and about $6,000 to remove a leaking oil tank.

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RESIDENT SELECTION CRITERIA - 21 POINT SCORING SYSTEM - Karen Gee

This 21 point checklist (scoring system) is used to help determine if rental applicants are qualified.

1. _____ ON TIME FOR APPOINTMENT

2. _____ BROUGHT NECESSARY ITEMS: Picture ID, application information, references, application fee, holding deposit...

3. _____ FILLED OUT APPLICATION COMPLETELY AND TRUTHFULLY

4. _____ ABLE TO VERIFY ALL OF THE NECESSARY INFORMATION

5. _____ ABLE TO PAY FULL AMOUNT OF RENT AND DEPOSIT

6. _____ SUFFICIENT MONTHLY INCOME OF 3 TIMES THE RENTAL AMOUNT

7. _____ VERIFIABLE INCOME OR EMPLOYMENT

8. _____ STABLE INCOME OR EMPLOYMENT FOR A MINIMUM OF _____ MONTHS

9. _____ FINANCIAL OBLIGATION OF NO MORE THAN _____% OF INCOME

10. _____ SATISFACTORY CREDIT HISTORY (NO BANKRUPTCY)

11. _____ PROVIDED CREDIT REFERENCES

12. _____ AT CURRENT ADDRESS FOR A MINIMUM OF ______ MONTHS

13. _____ GAVE PROPER NOTICE TO CURRENT LANDLORD

14. _____ GAVE PROPER NOTICE TO PREVIOUS LANDLORD

15. _____ NO PRIOR EVICTIONS

16. _____ NO PROBLEMS WITH PREVIOUS LANDLORDS

17. _____ DEPOSIT FULLY RETURNED (NONE WITHHELD FOR DAMAGES)

18. _____ NO COMPLAINTS OR POLICE REPORTS REGARDING DISTURBING THE PEACE, ETC.

19. _____ NO SIGNIFICANT VIOLATIONS OF A PREVIOUS RENTAL AGREEMENT

20. _____ NO PETS OR IS WILLING TO SIGN A PET AGREEMENT AND MEETS ADDITIONAL PET CRITERIA

21. _____ NON-SMOKERS

NUMBER OF POSITIVE (YES) RESPONSES TO ABOVE CRITERIA SELECTION ________

ABOVE INFORMATION VERIFIED BY: ________________________________

DATE: ____________________________

ACTION TAKEN: ACCEPTED ________ DECLINED _________

The above criteria is what I check when determining if a prospective resident is qualified to rent. You can modify this list to your liking. I screen callers over the phone. I have a written information sheet so I tell everyone the same thing. After I read it to them I ask them if they have any questions. I give them a description of the rental available and what my requirements are, what I accept and don't accept. I tell them (the list) of criteria I will be checking for, how much the credit check is and how much $$ they need to move in. I will not give the address out unless I have a phone number, name (verified - usually they have left a message on the machine) and appointment made to show property. I've been a Landlord for only 4 years and have not had any serious problems to date. I've only had one couple habitually late on the rent and they are living somewhere else now. Hope this list will be of help to you.

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APARTMENT SECURITY REMINDER - Chris E. McGoey
I just finished inspecting a one-bedroom apartment unit, for a friend, on a twenty-year old upscale property in Phoenix. This property is managed by one of the largest property managers in the country. I was surprised by what I found.
Because of the premium rent, I expected to find the property in compliance with all the minimum recommended security features. I expected the property to have been certified by the Crime Free Multi-Housing Program. I was wrong.
On my recommendation, the new resident selected a highly visible second floor unit, in view of the office, because it would be inherently safer for a single woman living alone. I inspected the door locks and found only one in place. It was a tired-looking and worn deadbolt lock that had been switched from another unit. I thought a new resident surely deserves a newly keyed lock, especially if it’s the only one on the door? To make matters worse, the old lock had paint splashed on it making it easily distinguishable to the former users. No one could say for certain how many times this lock had been rotated between units and how many keys were out there.
Upon examining the lock strike plate, I found two half-inch wood screws holding the strike plate onto a frail-looking piece of dried-out door jamb. It would only take one firm kick to gain access into the unit and to my friend. I examined the accessible sliding glass windows and doors and found them with the usual aluminum latching hardware. All these glass sliders were missing secondary track-blocking devices and anti-lift measures. I feel these devices are necessary on all accessible sliding windows because of the potential for the latches to fail and not withstand minimal prying or lifting force.
I was concerned how these security measures were somehow overlooked when inspected at turnover by maintenance workers and by the leasing consultants. I learned that instead of a detailed walk-through with the leasing consultant, my friend was simply handed a form to fill out and return only if she noticed anything that was damaged. How many new residents would know to check the door locks, strike plates, and window security? Does this practice sound familiar to you?
Imagine how you would feel, if someone who you cared about was brutally attacked inside their apartment unit. Imagine how you would feel if you learned that the assailant gained entry by either using an old key or by easily kicking the door open. Wouldn’t you be upset? Wouldn’t you what the apartment property manager punished for not acting responsibly? This is precisely why lawsuits are filed.
Starting today, take a look at all your apartment units to see if they comply with these basic security rules:

1. Always re-key or replace deadbolt locks at resident turnover
2. Always use 3" wood screws for strike plates on wooden door jambs
3. Always use secondary blocking devices for sliding doors and windows
4. Always use anti-lift devices on sliding doors and windows
5. Always replace window screens if missing or damaged.
6. Always use 180-degree peepholes on entry doors
7. Always participate in and document a new resident walk-through
8. Always respond quickly to resident lock-repair requests

Chris E. McGoey is the Crime Doctor™, an expert in the fields of security, loss prevention, and crime prevention. More security tips can be found at: www.crimedoctor.com

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HOW TO AVOID AND DEAL WITH FAIR HOUSING COMPLAINTS - Robert Cain
In spite of our best efforts, sometimes someone thinks we might have possibly meant something else when we spoke to them and that offended them. Besides, there are scam artists out there who are trying to make a quick buck off landlords by claiming the landlord said something that the landlord did not say.
Here are six ways to keep yourself out of trouble, and/or protect yourself if you have a complaint filed against you.
1. Make sure you everything you do is documented. Everything -- from ads to notices to tenants to conversations with tenants and applicants.
2. Make notes of every phone conversation you have, both from prospective tenants and current tenants. These would include both tenants from protected classes and not from protected classes. Put a date and time at the top of every note. The notes would tend to show that you are treating all people equally.
3. Write out scripts for interviews with prospective tenants. Write answers to questions you are most likely to be asked. Do not improvise. You might want to have your attorney look at the script and the answers or even other landlords at an apartment or landlord association meeting.
4. Create clear-cut rules, in writing, for all tenants. Write out clear-cut requirements, and date them, which must be met by all people applying to rent from you. Then follow those rules.
5. Read everything you receive from a tenant applying to rent from you, especially if you are going to reject that tenant. There is little worse (and more embarassing) than saying you rejected a tenant on the basis of a credit report when you have not read it.
6. If you have a complaint filed against you:

* Call your lawyer immediately.

* DO NOT ANSWER ANY QUESTIONS from HUD, Legal Aid, Fair Housing enforcers or attorneys. These people are not there to "help you," "get to the bottom of the problem," or "get your side of it." They are representing the tenant and trying to trip you up. Many Fair Housing enforcement agencies depend on fines from landlords and other businesses for operating expenses. How unbiased do you think they will be with you? Make them call your attorney. If they persist in calling you after you have told them to leave you alone, ask your lawyer what to do.

* Keep thorough notes of everything that happens, including dates and times.

* Send letters confirming conversations.

The Northwest Landlord and the Rental Property Reporter

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LEAD INFORMATION - Don Schmidt
The Missouri Department of Health, Office of Lead Licensing and Accreditation has developed an informational packet addressing the issue of lead based paint in residential rental properties built prior to 1978. This packet is to provide rental property owners with the guidance they need to keep their rental properties free of lead bearing substance hazards.
Lead bearing substances are most commonly found in dwellings built prior to 1978. Typically, the older the dwelling is, the more likely it is to contain lead bearing substances. However, just because lead bearing substances exist in a dwelling does not mean the substances are hazardous or need to be completely removed. Lead based paint, for example, can remain relatively hazard free if it is properly maintained. Lead based paint is hazardous when the paint deteriorates and lead dust and debris accumulates on surfaces adjacent to the deterioration and spreads throughout the dwelling. Recognizing and eliminating lead hazards as they appear will reduce the amount of the lead-contaminated dust and debris available for ingestion.
The packets will be available to all our members at the March meeting. In this packet you will find guidance on how to keep your rental properties lead-safe by maintaining the lead-bearing substances that are present. By taking a proactive approach to controlling lead-bearing substance hazards, you will prevent childhood lead poisoning and eliminate the need for costly lead abatement.

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NEXT MEETING

Place: Southern Commercial Bank - 5515 S. Grand [ map ]
Date: Monday, May 15, 2000
Time: 6:30pm - 9:00pm

AGENDA TOPICS

6:30 - 7:00 Social
7:00 - 7:05 Welcome
7:05 - 7:15 Business Update/Aldermanic Report
7:15 - 8:00 guest speaker(s)
8:00 - 8:30 Jim Magnus
8:30 - 8:55 Discussion of Members Concerns
8:55 - 9:00 Raffle

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