All Forum Posts by: JD Martin

 I think you have a good plan there. If splitting the utilities is impractical/impossible, then it just becomes a fixed cost that you build into your rental pricing. Done right it can actually make you a little money. And yes, once you have difficult tenants it's generally fruitless to try to bring the relationship back around - better to just start over. 

American factories are already having difficulty filling jobs, and not because of trade policy.

By

Allysia Finley

President Trump proclaims his tariffs will bring manufacturing jobs back to the U.S. Good luck finding workers to fill them. A common lament among employers, especially manufacturers, is they can’t find reliable, conscientious workers who can pass a drug test. Single women might commiserate: A good worker, like a good man, can be hard to find these days.

Blame government, which showers benefits on able-bodied people who don’t work while at the same time subsidizing college degrees that don’t lead to productive employment. The result is millions of idle men and millions of unfilled jobs—what an economist would call a deadweight loss to society.

Forty percent of small business owners in March reported job openings they couldn’t fill, with larger shares in construction (56%), transportation (53%) and manufacturing (47%), according to last week’s National Federation of Independent Business survey. The Labor Department’s Job Openings and Labor Turnover Survey of businesses tells a similar story. There are twice as many job openings in manufacturing than in the mid-2000s as a share of employment. Save for during the pandemic, America’s worker shortage is the worst in 50 years.

Decades ago, productivity-enhancing technology and, yes, inexpensive imports caused men who worked on shop floors to lose their jobs and drop out of the workforce. But this generation is sailing into the sunset, and there are many fewer young Americans who want to work in factories.

The labor force participation rate among working-age men is now about five percentage points lower than in the early 1980s. As a result, there are about 3.5 million fewer men between the ages of 25 and 54 in the workforce, and 1.3 million between the ages of 25 and 34, than there would have been were it not for this decline.

Labor participation among working-age women, on the other hand, recently hit a record, in part because they are having fewer children (which is related to their difficulties in finding suitable mates). At the risk of stereotyping, women are more inclined toward “helping” professions—such as services—than those that require physical labor.

So where have all the good working men gone? Some are subsisting on government benefits or living off their parents. About 17% of working-age men are on Medicaid, 7.4% on food stamps and 6.3% on Social Security (many claiming disability payouts), according to the Census Bureau. Many spend their days playing videogames and day-trading.

Friends say they’ve seen young men on dating apps claim to be working as self-employed traders, financial bloggers and even a “retired financial engineer”—apparent euphemisms for “Robinhood bros” who speculate on stocks and share tips on Reddit. When stocks were booming, many didn’t have to work in the traditional sense. After last week’s plunge, they might.

Other missing men are taking longer to finish college or are pursuing graduate degrees. Only about 41% of men complete a bachelor’s degree in four years, and about a quarter take more than six. Many high-paying vocations don’t require college degrees, but government subsidies and public K-12 schools nonetheless steer high-school students to that track.

Federal student loans won’t pay for apprenticeships, but they will cover the cost (including living expenses) of worthless graduate degrees in community organizing, creative writing, tourism, dance and more. Rarely does one need an advanced degree to enter such fields, but colleges have convinced Americans they do as a means of raking in more federal dollars.

Many millennials and Gen Z “zoomers” struggle to find jobs in their chosen fields of study and don’t want to work in others—or in jobs they view as beneath them. So some simply don’t work.

Consider: The unemployment rate among recent college grads with a sociology degree is 6.7% and their median wage is $45,000, according to the New York Federal Reserve Bank. Sociology grads could earn twice as much working on an auto assembly line, which pays on average $100,000 a year. Good gig, but not many want it.

The reality is that masses of young people, who have been taught that capitalism is exploitative, don’t want to work in factories. They’d rather mooch off taxpayers or their parents.

Still, many men who don’t go to college also don’t want to work in factories or other blue-collar occupations, perhaps because they don’t believe there’s dignity in such jobs. Only 31% of blue-collar workers feel that their type of work is respected, according to a Pew Research Center survey last week.

Any wonder when politicians in both parties proclaim such workers are exploited? There’s dignity in any work, a message that deserves to be emphasized by the president. The decline in work among young men is a far bigger problem for the nation’s economic and cultural vitality than the decline in manufacturing jobs. It can’t and won’t be solved with tariffs.

 Do you remember the old way that took you through N Charleston to route you back onto 26 years ago before they built the sanitized direct route? I used to roll up the windows and lock the doors when I rode through there. And I grew up in a poor city. That was a real rough scary area.

 I still don't understand how you can reasonably expect tenants to put electricity (and water) in their name when other unrelated units are consuming that product. The utility bills become the responsibility of whoever has them in their name. If the next door neighbor runs up $1000 in electric costs air conditioning the outdoors, you have no way of proving or apportioning the costs, so the tenant is just expected to eat it. If S/he refuses, the electric can be turned off for everyone, and now they have the huge bill in their name for collections. That's unreasonable and if you went to court I expect the judge would consider it unreasonable as well. Just because you aren't sure how much to charge for utilities doesn't mean you get to just pawn it off on the tenant. That is part of running your business. You could have come pretty close to figuring out what the bills would be, added a little in for fudge factor and just put it in the rent. Now what you are doing is asking a tenant to help run your business. 

I wouldn't say anything to your tenant about playing fair. That's just not something business people say to vendors or clients or customers. Terminate them if you like based on the utility issue, but know that you are not usually permitted to benefit from illegal or unreasonable sections of a lease if they fight it in court.

So you're looking at either a $75k loss if you gamble the $19k, a $100k loss if you don't participate and are wiped out, or a $119k loss if you participate but are still wiped out. That's too big a gap for me; I'd have to just eat the current loss and move on. If you had better than house odds at being made whole, it might make sense but there's just no upside here. What a shame. I haven't reread the thread but I know I remember some people predicting the cap call on #1 would just be the beginning. 

Edit: I went back and read the whole thread, which is not the big thread that's been going for a while. Wow. It looks to me like, prompted or not, a lot of cheerleaders showed up to encourage the OP to dive on in, the water is fine. I'd be interested in seeing how many of those posters are still around these days.  

You will have nothing but trouble out of these people going forward. However, some of these issues are self-inflicted:

1. If you cannot split utilities then they should remain in your name and sub-bill the tenants. It's unreasonable for one tenant to have the usage and consumption of the other in their name, because electric goes with the person who has it in their name. Same with the water. 

2. Lawn care should just be built into the rent, period on a multi-unit.

Beyond that, allowing tenants to get away with unilaterally withholding any part of the rent is big trouble for your authority as the landlord. You should offer to release them from the lease, and if they choose to stay let them know that further lease violations will result in eviction proceedings. And as soon as their lease is up, get them gone and start over. 

Well, it depends how hard it is to get the tenants gone in that locale, how long it takes to turn a unit and how long you can afford to be without tenants. You'll have to start over with new tenants as my experience says you're never going to get these tenants up to anywhere near market rates. If the seller is willing to deliver empty, that's probably your best bet. This will be a hard sell, however, as lots of things could make the deal go south and the seller isn't going to want to be without the income if it does. So you'll probably have to get them gone yourself after closing, which is where you need to know how easy/hard it is to do so. 

 I tried linking Jerry but he has that crazy period in his name and it never will come up, just like yours used to do. 

Personally, I think your profit is too small based on your investment. You've got a 1.7% COC return and even worse based on appraised value. I think you've answered your own question - sell one of the units. That gets you 8.6% COC return.

I consider REITs closer to a form of bond investing. In theory, you own a limited piece of the trust, which is essentially the corporation, whose business is operating real estate for profit. As you are almost always a limited partner, you have essentially no control in the trust once you've invested your money. With stock investing, in theory one could obtain enough stock to take control of the company whereas in a REIT the controlling "stock" is pretty much always defined and held by the general partners. As a limited partner you are essentially a miniature bank, loaning money to the principal owners, for a defined rate of return, kind of like purchasing US Treasury notes. However, not only can the REIT default, leaving the LPs without value, they can also incur capital calls and other financial requirements that will force you to pay to play, ie to maintain your investment without dilution or wipeout.