A Professional Landlord Story
I am respectfully petitioning for three college Prior Experimental Learning Assessment credits for my knowledge and experience in Property Management. In 1984 I held a position with Kraus Management Inc., (Exhibit 9) in which I had received formal property management training servicing rent controlled and cooperative apartments in Kew Gardens, NY. In 1984 I obtained a real estate license (exhibit 2) to begin a career in real estate sales with a personal goal of purchasing one property per year. I succeeded in this goal. The broker of the office as well as several investors and piers studied my innate control over tenants, property management and maintance thus the beginning of a business I formally started in April 1991 (exhibit 1) with an associate who was a new mom (Nina S.) who could not be out n the field farming and selling. The association began out of necessity with personal properties and pier owned properties. I formed “Beyond Management Associates” with the purpose of maintaining property, dealing effectively with tenants and the legal system.
I streamlined the business functions as such: Nina would handle the phones and office/internal daily activities and I was the outside force, sales, promotion, visiting properties, handling tenants and rent collection under my direction.
The main factor on starting Beyond Management was the legal aspect. Evictions were difficult, costly and time consuming. I owned seven properties in Queens. Nina owned a four family apartment building in Greenpoint, Brooklyn. I had business dealings Kew Gardens’ Landlord and Tenant Court several times a month. I was evicting a tenant when Judge Jaime Rinos began to recite that I was an educated white woman taking advantage of these poor black tenants and that I would never see another dime from them and they will live at my property for a “long time” without rent. I didn’t see this indignation coming. Nor was I addressed or asked who I was as I stood for several hours in front of his courtroom. The tenant had three cars, operated a day care facility from my home and held weekly yard/junk sales in my yard as well as collected government money and foster children. I confronted Judge Rinos in front of his courtroom, asking if he was a tenant or a landlord. He answered “tenant” then became even more outraged. To the right of me on the bleachers were six attorneys, behind me were a handful of tenants and landlords waiting for their five minutes of fame. I asked Judge Rios if he did not pay his rent would his credit be affected. He did not respond. I asked Judge Rinos if he had building repairs or carried “tenant” insurance. I handed him my mortgage book and asked Judge Rios was it fair to assume that I owned the home free and clear. I then told him I held a high school diploma and my sole income was from selling real estate with Century 21 Realty and owning a few “American dreams”. I handed Judge Rios five years of rental agreements and bookkeeping records from the same tenant. In those five years of tenancy there was never a rental increase; the rent was always $900. $900 per month was for a one family four bedroom with two baths and basement. Bookkeeping records show many months of late rent in which I did not impose late charges although it was in our contract. During one period of time, there were several partial payments lagging six months in term. I explained to him again that I never raised their rent and handed Judge Rinos photos of myself with the family at Christmas and other family functions. Judge Rinos got angrier as his stenographer rattled on the keypad and the attorneys sitting opposite me smiled and were quite amused. Judge Rinos exploded and demanded I leave “his” courtroom. In the lobby outside, was a table for “tenants rights” manned by a black man about 30 years of age in a wheelchair. I had stopped and spoke to him many times before and we knew each other by name—Eric and I had a pleasant rapport. Eric was not interested in his job, only a paycheck. One of the attorneys who had witnessed the event slipped his business card under my notebook and ask me to phone his office regarding the mistreatment I was dealt. He referred me to a group named “Rent Stabilization Association” (RSA) located in New York City. After a meeting with them, I volunteered every Thursday in the Queens Courthouse, Landlord and Tenant Part opposite Eric and the tenant advice table. I joined the RSA in a fight against unfair practices in the courtroom, adding my case to three dozen other cases. I was a notary and provided free service to those in the courthouse who needed notarization. After 30 plus notarizations the first week, I asked for a $1.00 fee for each notary and donated it to the RSA. Banks and insurance agents charged either $1 or $2. I was a bargain since they did not have to leave the building. I obtained the minutes and tape recording of my case with Judge Rinos. The first week I was at the courthouse readying myself for volunteer work, it was a cold snowy morning. I showed up early to set up my table and brochures preparing to give advice. Since I was in the hallway of this cold marble building I had to keep my coat on. This day I happen to be wearing a mink floor length coat and hat over a suit. In the past months of being in L&T (Landlord and Tenant Court) I was treated by the clerks and security guards as an attorney with the same privileges. No one questioned my dealings; I took the early roll calls and no line waiting privileges. Judge Rinos crossed the hallway and stopped to look at me. He was wearing his flamboyant robe atop his wide shouldered tailored suit and starred at me for a while, thinking of how he knew me. He strutted down to his courtroom and five minutes later returned to my table and asked how he knew me. I put out my hand to shake his then I introduced myself and my pending case with him. He cringed. then snarled and looked at me up and down then turned abruptly away. The next week, I sat across from him and six other judges with the RSA and wore my mink, paperwork in hand. Two weeks later, Judge Rinos transferred to Criminal Court across in the next building. Judge Rios was my inspiration for Beyond Management. My beliefs and values have always been black and white, the grey areas bother me and with Beyond Management and the RSA, I was going to keep whomever I touched with my practices honest and fair. I began to lay the foundation of our business with a brochure (exhibit 1). A baby under a palm tree staring into the readers eyes promising controlled tenant relations, timely rent collections and time to enjoy their own personal pursuits. Since Nina was a new mother, babies were always on her mind. Marketing 101 starts with babies, puppies or inviting scenery. All used in my brochure. I placed simple ads. Within two months, I had obtained 13 clients from volunteering one day a week at the Queens Courthouse. The business grew quickly. I allocated specific job tasks and Beyond Management Associates and was happily created on a shoestring. The first order of business was setting forms: leases, pre-screening tenant applications, maintenance forms, fee schedules, contracts—16 forms to start. Eviction proceedings have three forms. Each of these Blumberg forms is simple, but if you miss one dot or did not cross one “T” it was dismissed and you need to start all over. Pay $35 and wait 30 more days. These three simple forms were crucial and the judges took little empathy at mistakes. Anything that a judge could find to toss out a case in favor of the tenant was used. I have an innate sense of order and form creating. With 13 clients, money was not an object. I purchased a fax machine/copier, stationary and created the forms. Using the KISS program, I decided the first six months of profit will roll back into the business. Computers were not a must at that time. A computer would have made such great use of time and money. I had the brochure type set and reproduced. I used simple white envelopes with good looking peel and stick labels and purchased inexpensive white letterhead from Staples. The first shopping was under $100 for supplies. Our fee structure was simple: 10% of the gross rent collections, $100 per court appearance, $150 for mediation and 10% for general contractor fee. I extracted the fees out of the rent collections and mailed the balance on the 10th day of the month to the owner. My biggest hit was obtaining management of a 48 unit apartment building in the Bronx. Three owners purchased the building at $180,000. The rent roll was $22,000 per month at first, after seven months of my management practices, it went to $33,400 and in one year it was $48,000. By the eighteenth month it reached $53,000 and I was rewarded with a 10% sales commission at $875,000 at the buildings sale at 2.4 years later. 10% commission on this size sale was unheard of in the market during that time. My talents were challenged every day and I deserved that commission and was given “extra”.
The first order of business was to “meet and greet” everyone in the building. Most were collecting social services and spoke Spanish. I sorted through leases, legal papers, building violations and complaints. I did the footwork for Nina who was dealing with her newborn. Within two months, things were coming together, repairs made and a new superintendent was put into the building. The main fault of this building was an offsite super and poor paperwork habit of previous owners. The tenants were surprised to see a woman knocking on doors and straightening out problems. All were receptive and opened up to a lot of “personal” information. I wrote everything down in each folder. I had to learn how the “welfare” system worked. I applied for welfare in Queens, Brooklyn and Nassau Counties in order to obtain a good understanding of how the system worked then applied effectively to handle the tenants. I sat in these offices with paper and pen documenting and asking questions. I was denied any type of service and was humiliated at the Nassau County office when an elder woman pulled me aside and said I was young, beautiful and white and should get an older man to take care of me. I was asked repeatedly if I was pregnant. I watched 98% of these people walk out with $50 in food stamps and a Medicaid card for free services, getting into their cars and driving off. I fit most criteria for collecting social services but was scrutinized and discriminated against. I found this trial most enlightening. I walked out of these buildings well equipped to deal with the everyday tenant problems. It was sad to see the corruption and incompetence involved with this government agency. The clerical staff and the people on the floor and windows were once welfare recipients. The management sat behind glass partitions and watched, smoked and disappeared for long periods. I wrote of my experiences to three local congressmen, the Daily News and the head of Social Service. I did receive generic responses. The notes I had been keeping on each tenant had started to become vital. Most people had two or three “stories” and collecting government money unfairly. Most of the problem tenants were working or married/living with a significant other and paying cash above the rental guidelines. They asked for two leases in order to have a good apartment; one for welfare and the real one. They lied about the amount of children and amount of rent. These tenants were used to withholding rent for unfair reasons or just because they wanted to. One tenant complained about roaches and mice. There was a bimonthly exterminator in which we had proved in court that this elderly Spanish couple was retaliating against the owners by withholding rent because they wanted a three bedroom apartment to house their relatives. Larger apartments were given to families with children. Social Service did not provide higher rental income for seniors wanting large apartments. The exterminator under my direction took photos of the stove and trash to present in court. Although I had taken photos in the past, a third party photographer was more creditable in court. The stove was five months old and was encrusted with food and debris so thick, the gratings were not seen. Roaches were running all around the exterior, oil and food drippings on each side and the wall above. The garbage was piled next to the door in paper bags three and four at a time. I won in court and they were evicted. I lost three months rent. Who really won? The Super became my eyes and ears of this massive building. It was becoming dangerous for me to constantly carry cash and receipts. I applied for a gun permit and initiated a no cash collection policy. Check books were almost unheard of in this environment, money orders were the choice. I initiated a reward program for good paying tenants: if the rent was paid on the first day of the month, they got $10.00 off the rent, if they paid by the fifth, it was $5.00 (two packs of cigarettes). $50.00 was the penalty if it was collected on the sixth day and $100 on the tenth and automatic eviction proceeding began on the seventh. If rent was paid and accepted thereafter, they were charged the $100 plus court filing fees. It worked very well. I was in small claims court out of principle and the word spread throughout the building. I always won in small claims court and I retained 10% of each case. This is a fairer court. Show correct paperwork and fairness prevailed. The money order was left under the super’s door on the day it was purchased. The super was given a free three bedroom apartment on the second floor and use and the control of the basement. Luis (super) had cleaned out the basement well and turned one large room into a party room charging $70 per party in which I allowed him to keep. Another room was a woodworking shop. Luis made all the kitchen cabinets from ¾ finished plywood. They were varnished and all uniform in size. Inexpensive to replace if needed and much stronger that the cabinets in the local stores. Pergament Home Centers were the source for household items in this era. The cost effectiveness and strength of these cabinets was great.
As each apartment was renovated, I decided to separate the bathroom heat and hot water tank on each apartment’s electric. If the boilers should go down or some major catastrophe incurred, each apartment was not 100% out of commission. The cost savings for the separate heat and hot water was calculated to a favorable amount to the owners. The building was shaping up amidst a few hardened tenants. I sponsored a Christmas party and gave gifts to the children. I put up decorations and a tree in the entrance hallway. The first year, most of the decorations were stolen; the second and third year I used paper ornaments made by all the children in the building and held a contest. It was quite effective in building camaraderie. We repeated charity for all holidays.
I meet several other large building owners through RSA and learned about government rebates on windows, furnaces and repairs. This was the next phase of property management. The different agencies and all the forms were mounting. The games these agencies played. The incompetence and illegal activity was enormous. New windows and a two ton furnace was installed thus allowing me to increase the rent another 7%. The front door and hall doors were another 3%. I obtained a grant for two furnaces and initiated a back up system if one should go down. The out of pocket expense was minimal to the owners and the tax write-off was high. Not all was easy going everyday, but for the most part, I had the best building on the block and the longest waiting list. These practices were passed down to the smaller rental properties. The hardest hurdle to overcome was proposing to the owners that a fair rent or slightly lower rent was beneficial. It gave a larger source of tenants to choose from and the turnover became almost nil. Referrals were key to obtaining tenants. I initiated a “Surprise Home Visit” report. This report was prior to obtaining occupancy and became a major factor. If the prospective tenant lived poorly and unruly in their present apartment, they were not accepted to our building. I charged $25 per application and ran a credit report.
December 1999, an interesting proposition came referred to me. Firefighters Equipment of New York. This operation was based out of West Hempstead, Francis L. (Frank) was in financial difficulty. Frank repaired Firefighters equipment which stemmed from a local shoe repair business. There was a large need to repair heavy firefighting equipment. Frank purchased a building and poorly managed his small business. Frank was referred to me to help salvage what was left from the town and creditors. After I evaluated the inventory, appraised the building and consolidated debt figures, I pooled my contacts in the real estate field and pulled Frank out of foreclosure, by the threads of his coat. Then I located a rental property on Hempstead Turnpike in West Hempstead for lease and negotiated a fair lease at below market value in which the business still thrives well. Frank was obviously in financial straits and there was no money left for commission. I didn’t have the heart to take advantage of his situation as other Realtors had tried. Instead we went into a “future commission” contract of residual income for me at a half percent of the business for two years. It worked out very well and today, Frank and I still have a business agreement that has grown past his real estate needs.
The total experience taught me interviewing techniques, investigative work, hiring staff, evictions, and a new scale of maintenance and people skills. I became a general contractor (GC). I held a real estate license and rented apartments. I was almost a lawyer. I worked seven days a week, sometimes 15 hours a day. I accommodated every reasonable request, reduced crime and drug dealings in and around the building. The idea of people of different backgrounds, levels of education and simple daily decorum could be so vast, is mind boggling. I like people, challenges and new concepts. I conquered all of them successfully with knowledge I have used throughout my life. I learned and practiced the law, without a degree. I analyzed and patronized tenants, owners and judges. I “chameleoned” myself in too many situations. I kept my integrity as much as possible. I had one owner on Knickerbocker Avenue in Brooklyn. Two months after I had taken over this six unit building, I found out it was in foreclosure and the owner in bankruptcy. He wanted to use me to facilitate cheating these tenants out of money and security. I turned him into the IRS and explained to the tenants how to handle him and keep their money. I was praised by the tenants. I kept my integrity and made a good living. In 1997 obtained my Appraisal Certificate in order to expand Beyond Management to another level (Exhibit #3).
Over the years, I have worked continuously to increase my skills and knowledge in the area of Property Management. I belong to the Coalition of Landlords, Homeowners and Merchants, Inc., A legal not-for-profit corporation in Long Island. They resemble the Sarbanes Oxley watchdog group only in Long Island.
The Landlord Protection Agency would like to thank Diane Heinlein for sharing her story and valuable experiences with us. *The names in this article of real persons have been changed or abbreviated to protect the author and the LPA of any liability.
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