Author Brendan O'Brien
This was the second year in a row that I braved the Black Friday/Midnight Madness sales at my local retailers.…
A couple of years ago, I was talking to a customer for my property management software who was based in Ulan Bator, Mongolia. “Mongolia!” I said. “Holy cow! Why are you investing out there?”
My customer wasn’t from Mongolia, and he wasn’t particularly concerned with the fascinating and exotic nature of the country, although he appreciated it. (Mongolia once controlled almost all of Asia, and was ruled by colorful figures such as Genghis Kahn.) No, he was in Mongolia to make a profit.
I thought of my Mongolia friend the other day when I saw another real estate pundit talking up the virtues of Cyprus and Spain. Does it really make sense to invest overseas? Does it make more sense now than a few years back?
Researching the Washington, DC real estate market, I came upon some facts that shocked me. I started looking at federal government employment, knowing that the government is the biggest employer in the Washington Metropolitan Statistical Area (MSA).
In fact, the federal government is the biggest employer in the country, with about 1.8 million civilian employees. While times get tougher for those of us who don’t work for the government, life for those in government continues to be pretty peachy. In fact, things have gotten a lot better over the last ten years.
The growing discrepancy between the government economy and the “real” economy is causing many problems, but one is a growing disconnect between the government mindset and the private industry mindset.
A while back, I mentioned my project installing a bathroom ceiling fan as an example of something automated systems wouldn’t help with – a dirty, uncomfortable job I had to do myself.
That doesn’t mean the job had to be nearly as difficult as it was. I could have saved a huge amount of time if I had taken some steps to learn the building beforehand.
A Hugely Annoying Day
Like most bathroom ceiling fans, the Broan 678 actually attaches to ceiling joists. This means that to install it, you really want to work from above. It’s pretty darned difficult in a building like mine because there is no easy access to the attic. I knew of three possibilities:
Last year I had a gas bill for $1400. That was almost one-third of my entire rent for that property for the month. This year, however, I could get bills that are even higher. Meteorologists are predicting the coldest and snowiest winter for the Northeast in years.
In this property, I currently pay for heat (natural gas) and water/sewer. The water/sewer bills aren’t actually that high around here, although they are the lion’s share of utility costs for many property owners in Western states. Regardless of location, however, utility costs are killing landlords. They are rising much faster than inflation. Rents, on the other hand, are rising much more slowly than inflation, if at all.
I took a test once where I had to score 100% to pass. This was to become a licensed EMT, and there was a good reason for the 100% standard. Since I was being measured on my knowledge of lifesaving emergency medical care, they wanted to be sure I knew every subject on the syllabus perfectly.
There’s also a 100% test for entrepreneurship, and it has three subjects. If you pass, you have a chance of success. If you don’t, you don’t. The subjects aren’t hard, but you need to have perfect scores. The scores have to be perfect because the real test is much harder than this one.
Now, don’t panic! You can still be successful without passing all three subjects. However, you should never try to become your own boss in a for-a for-profit enterprise. Find another course in life.
The Entrepreneurship Test
Rising utility costs are one of the many challenges we multifamily landlords have been facing in this “perfect storm” economic climate. Landlords who traditionally paid for utilities are searching for ways to transfer those costs to tenants.
If your utility costs are worse in the winter, as they are here in New Hampshire, now is the time to look into a submetering or RUBS (ratio utility billing services) system. Of course, any benefits from transferring utility costs will begin as soon as you implement the system.