All Forum Posts by: Gwen Fyfe

 Hey Brandon, I do a bunch of rentals in Bedford. I'd be careful about a flip here, personally. $55k is a nice price, but I'd feel a lot more confident if you were BRRRing. I like Bedford as a rental town but people aren't clamoring to move here, and there are a lot of SFHs on the market.

 Brian, I’m pretty sure you and I have had some of the same applicants!

Sure. There are areas around Cleveland that have comparatively high taxes. I have zero interest in living in Shaker Heights for that reason, for example. (Although there’s a chicken and egg question there - are the taxes high relative to the values or are the values going down because the taxes are so high?) But everything I’ve been discussing re: lead legislation and Isaac’s land bank properties has been about the actual city of Cleveland, not the various suburbs.

@Isaac S.

Out of interest, do you live in Cleveland or have investments here? From your profile, it doesn't look like you do.

Regarding your "food for thought":

First, there are a lot of properties available at absolute rock bottom prices here from tax liens. The city and county both have land banks. They do no repairs, but leave such a margin that if you're a decent flipper you'll be able to make a healthy profit. Even if you have to do lead work. That's how they're adding value. If you want the city/county to hand you a great flip property at a cheap price, and take care of some of the work on it for you first without increasing the price, I guess you'll have to go elsewhere.

Second, the city actually is offering a lot of tax benefits for big investors. Google Cleveland opportunity zones.

Third, this line actually cracked me up: "NO, but they continued to tax the asset and collect revenue." Isaac, I live in a house that is almost 4,000 square feet, sitting on a quarter acre, walking distance to nice bars and museums in the city of Cleveland. I'm even talking to the county land bank you're maligning about doubling the size of my lot for free through their homeowner side yard program. My property taxes this year? $642.62. 

That's for the year, not the month. Gosh, I feel the yoke of government oppression weighing heavily on me, don't you?

@Dan H. We're required to supply that brochure and form in Ohio too. As far as I can tell, most landlords don't do it. Every single time I place a tenant I have to explain what it is. I got curious so I brought the packet and form along to some political meetings and asked if anyone had ever seen one; nope.

So either most Cleveland landlords aren't doing that, or they're glossing over it during the signing and people don't remember it.

Well, lead poisoning is a problem all over the country. But yes, it's much worse in Cleveland, and yes, there is a reason.

On the pipes; Cleveland's water infrastructure is not made with lead. According to this report by the Center on Urban Policy and Community Development, and other reports like it, "the primary source of lead exposure comes from paint dust and chips in homes built prior to 1978, when lead was commonly added to paint."

So, why that's happening is a fair question with an unavoidably political answer. This is about class and race. 

The neighborhoods in Cleveland that are the most affected by lead poisoning today are the same neighborhoods that were redlined decades ago. These are neighborhoods where rich white people moved out when poor black people started to move in, around the 60s when not coincidentally, these neighborhoods had race riots. And many of the homes have had minimal updates since then. You get beautiful original wood interiors... and lead.

There are few homeowners, the homeowners who are there can't afford to make changes (we talk about the low interest city loans, but honestly, they're a pain in the butt to get.) The landlords who buy in these places, as you can tell from this thread, generally aren't interested in putting money into these properties. The few laws that are on the books to combat this stuff rarely get enforced in Cleveland, which was recently ranked the ninth most corrupt city in the nation. I think that was actually an improvement. I remember us being seventh before?

In 2003 the Ohio state legislature created a fund to combat lead poisoning... and never actually put any money into it! When the city of Cleveland has had access to money to combat lead poisoning, it hasn't used the funds. Most of the tenants I place, and other renters I ask, have never seen an EPA lead safe packet until I show them one. It's a farce.

If you want a reason to turn to the bottle, compare this map of lead poisoning in Cleveland to this map of redlining in Cleveland (read the whole report, it's fascinating/depressing) to this map of Cleveland neighborhood quality by our local broker Holton Wise.

We have a long way to go. 

@Bob Collett

I'm a landlord in Cleveland and Bedford, and I'm the former treasurer of the Cleveland DSA who are working on getting this legislation passed. I've researched this issue from both "sides". Let's go through your questions point by point, since you seem concerned that I may not know enough;

Why is it appropriate for the city to only require rental owners to test for a lead safe environment and not owner occupants. Did the city require you to hire a certified lead inspector to test the home you live in? 

It's appropriate because a homeowner is taking responsibility for their own family, while a landlord is taking responsibility for someone else's family. There is an elevated responsibility when you're taking control of someone else's safety. A taxi driver has to have more inspections of their vehicle than I do when I drive my car. Why? Because when I get into a taxi, I don't have control of my own safety any more. And when a tenant moves into one of my properties, they don't have control of their own safety any more. I have control of their safety.

Not to mention - Bob, I'm sure that if you saw your grandkids eating lead paint chips in your home you'd do something about it. You wouldn't need a law to enforce that. Homeowners in the poor Cleveland neighborhoods most affected by lead are not different from you in that way. But landlords in Cleveland, sadly, don't seem to care when it's other peoples' grandkids.

Characterizing a rental property as a “luxury” property is a stretch. The idea exists out there that all or most rental owners are wealthy and thus should bear the cost of 80 years of neglect by everyone else.

Luxury (noun): an inessential, desirable item which is expensive or difficult to obtain.

I know that not all landlords are rolling in money. (Hi, I'm a landlord who is not rolling in money.) But if you can't afford real estate, it's not like you can't afford to eat. No one is holding a gun to your head and forcing you to buy a rental. Not buying a rental doesn't mean that your children will starve. If you can't afford rentals, your rights are not being impinged on. If I sold my rentals tomorrow, I would still have clothing to wear and air to breathe. My family would still be safe and I would not be arrested. 

We're making a choice to buy something that is expensive, out of reach of many people, and not necessary. We're also making a choice to spend our money not on a sports car, or a vacation home, but on a luxury that comes with a large responsibility to ensure the safety of other people. (If you want a luxury purchase that makes money and comes with zero responsibility, go buy index funds.)

Regarding the issue of not being able to afford the expense, I have a few different thoughts.

• Sure, I would love to see the city or county offer low-interest loans to landlords to do lead remediation work or other repairs, like they do for homeowners. That would be great.
• But, there is already financing available out there for landlords to get work done. I got a $3,000 emergency roof repair done last week on 0% interest financing. If you're creative enough to finance a purchase, you should be creative enough to finance repairs.
• And, if you can't find a way to pay for needed repairs, you shouldn't be in the rental business. 

In any case, we are off track here because the point of my article is that investing in real estate is not a casual investment, and that investors need to understand that many cities are looking for investors to cure the failures of the city.

First; when you title a post "hostile rental owner environment" and then list incoming lead legislation as one of your points, people may engage with your point.

Second; the lead problem in Cleveland is not from city infrastructure. It's really not. Do your homework. :) This is not Flint Michigan, where the problem is the city water pipes. (Although we have more lead poisoning than Flint!) In Cleveland, lead poisoning is coming from lead paint in old homes and from lead in the soil at former factory sites.

If you can show that the lead in your property comes from a city water source, and the city is trying to make you pay for it, sue them. Go for it. I'll do whatever I can to help. I'll bring in my lawyer buddies. We would love to see more people holding the City of Cleveland accountable. 

Gwen, I once had the city of Euclid tell me that the property could not be rented until all cracks in the driveway (minor cracks) were sealed. It was February. Thus the house was to sit empty until Spring.Result: cracks filled in February, knowing that the material would not hold due to cold weather installation. 

On this, and Bedford POS - yes, I know that a number of the suburbs surrounding Cleveland have really onerous rules. Some of the stuff that has come up on my Bedford inspections are just ridiculous. (A three page report full of things like "dent in vinyl garage door surround"? Really?) It's like they're bitter about not doing POS inspections any more. And Bedford is trying to do trash restrictions modeled on Garfield Heights, which is also annoying. I've discussed it with my city council person.

So, sure. I agree with you. Some of this stuff is nuts.

Codes requiring landlords to avoid preventable and irreversible damage to poor children, not so crazy.

A city official in Garfield Height told me just yesterday, that if residents had it their way; all rental property would be banned! The fact is that some municipalities do not want investors. It’s as if they would prefer boarded up houses.

This is an interesting point that gets into personal politics more. (Whereas I think you and I agree that the lead paint issue is just common morality.) Honestly, I understand why some homeowners would prefer that there were no landlords in their towns. When landlords drive prices up, and folks who work hard can't afford to buy houses in their own neighborhoods, it's natural to wish the landlords would stop doing that. If there were just boarded up houses, at least prices would fall to where Joe Burger-Flipper can buy a home for his family. And maybe get some of those nice low interest home owner loans to fix it up. :)

This is the kind of stuff I love to discuss over beer. Obviously I'm a landlord even though I understand what the Garfield Heights residents are saying there. My ideal tenant is someone who's renting because they don't want the responsibility of home ownership, not because they can't afford home ownership - but it's not as if I screen for that.

So, I strive to provide clean and safe homes at affordable prices and not be a jerk to my tenants. Short of selling all our properties (which some of my friends on the left would certainly prefer to see, although I think it'd be counter productive right now)... I think that's all we can really do.

Bob, I have a few thoughts on this. 

First, yes, I own an older home in Cleveland - my own. Do you think I’m going to stand by and let my kids get lead poisoning? If I’m watching out for my own kids, why is it okay to endanger other people’s children?

The investor who has a $20k repair to make on a $40k home they bought a year ago is responsible for it because they bought a home for someone else to live in. No one NEEDS to buy rental real estate. This type of investment is a luxury, and it’s a luxury with obvious moral implications. If you buy a rental, you have a responsibility to make the tenants safe. You wouldn’t rent the home out with a gas leak, no smoke detectors, or a wiring issue. The only reason landlords are trying to convince themselves that lead is different is that the bill is higher. Which is reprehensible.

In Cleveland, my understanding (and yes, I’ve been keeping up with the reports on this issue) is that the vast majority of the problem is from lead paint in older homes and lead in the soil of former commercial properties. Not so much the city water infrastructure. If the city tries to fine you for something that’s in their control not yours, take them to court, great. If the city starts fining you for a safety issue they were ignoring before... well, the only reason it’s taken this long is city officials trying to please landlords, and frankly I don’t want this issue to be ignored in my name.

I hope the lead paint restrictions do pass. The rate at which children in Cleveland are being diagnosed with lead poisoning is shocking. I can’t imagine how I would feel if it happened to the children of one of my tenants.

humorless

/ˈ(h)yo͞omərləs/

adjective

1. lacking humor; not able to appreciate or express humor.

   "they are such a humorless bunch"

;)