Author: Cheryl Johnson (page 2 of 2)

by Cheryl Johnson

Real Estate Broker, Investor

Author website

Marketeers and salespeople often use the phrase “think outside the box”.  And when the phrase is used in that way, I usually think of clever, creative marketing and promotional stuff.

People involved in the day to day operation of rental properties, tend to think in more practical and pragmatic terms.  Heaters need to be fixed, sewer drains need to be unclogged.  Drain augers exist in a world that is somehow outside of any box/unbox metaphor.

However, one of the finest real world examples of thinking outside the box I have ever experienced, came from a low budget contractor during a kitchen renovation.

The tenants had left the property, a single family home, in sorrowful condition.  The kitchen had to be gutted.

Our low budget contractor had managed to salvage a rather nice granite countertop from somewhere else.  No, I didn’t ask where.  I’m not sure I wanted to know the details.

One little problem though, the countertop was just about three inches too long to fit in our subject property’s kitchen.  And the contractor did not have any tool that could be trusted to safely and cleanly make a straight cut in the granite to lob off those excess inches.

The solution?  The kitchen wall at the side, abutting the short side of the countertop — He cut a slot in the drywall, to allow those extra three inches of countertop to just simply slide into the wall.  Then he patched up the slot, sealed the wall and caulked it.  Done!

My marketing friends will probably find a slogan here “Don’t Cut The Granite, When You Can Cut The Wall!”  And that’s great, take from it what you will. 

I personally learned a subtle little lesson about making things work.  A true moment of epiphany, if you will.  And if I could create a new topic category here on BHB, I would create one titled:  “Epiphany”.

by Cheryl Johnson

Real Estate Broker, Investor

Author website

It starts out as a lovely, sunny, holiday weekend in Southern California. Most of your tenants at the Palm Grove apartments are enjoying a day off, and having a barbecue in the parking lot.

Missy from unit C goes back into her apartment to get a few more cold ones out of the frig, comes out her front door carrying the six pack, somehow trips on the step, falls and fractures her ankle. The other tenants call 911 and Missy is rushed to the hospital.

As a responsible property owner, you will of course immediately report this to your insurance carrier, as soon as you learn of it. Your insurance carrier investigates, and offers Missy a settlement. But Missy’s no fool. She sees the physical injury attorneys that advertise on daytime TV. She rejects the amount offered by your insurance carrier, finds a PI attorney, and files suit.

Being served can ruin your whole day. But as soon as your heart rate returns to normal, you turn the summons over to your insurance carrier. (Note to property owners: While there are lots of ways to cut costs, skimping on liability insurance is never a good place to do it). But even though your insurance carrier provides your defense, you must still participate in the process.

And one of the first events in that process will be answering interrogatories, a formal set of written questions that one party in a lawsuit asks an opposing party. If you are new to litigation, the questions asked in the interrogatories will seem bizarre, obscure and strangely repetitive. You visualise the lawyers pouring over law books and carefully, meticulously crafting each question for maximum effect.

For example: Every set of PI interrogatories I’ve ever seen has contained a question about Sweep Records. Sweep Records? The local supermarket keeps records of how often the parking lot is professionally swept. The owner of a small four-plex probably doesn’t.

Here’s what you need to know: Those questions are canned. Attorneys have been seen in online law forums posting questions about where to obtain interrogatories for their particular case. Attorneys also purchase them on CD from Read more

by Cheryl Johnson

Real Estate Broker, Investor

Author website

I notice my sidebar title is “Investor”.  OK, I can run with that.  But please don’t expect fun and easy tips on how to get rich quick.  I haven’t quite mastered that yet. 

However, as the owner, operator and manager of a few residential rental units within the City of Los Angeles,  I can speak with a little authority on understanding and coping with rent control regulations.

Like any bureaucracy, Los Angeles Housing Dept is alphabet soup of departments, divisions, and special programs.

The acronym that most strikes fear into the heart of Los Angeles property owners is REAP: Rent Escrow Account Program.    Which basically means that if the City determines your property is “unsafe” or “untenantable”, the city collects your rent and places your money in a city escrow account, after first reducing the amount due based on a sliding scale of whether the conditions are “nuisance” or “hazardous”.   You don’t have access to the money.   Administration fees are charged, the City pockets any interest earned.  

But then, the City makes the needed repairs with the money, right?  Hmm, no, not automatically.  The tenants or the property owner must petition for a release of escrowed funds, with the burden on the property owner to show “financial hardship preventing payment of such services beyond a mere negative cash flow for the property.”

“Mere”?

Back in 2001, city controller Laura Chick admitted that the REAP program was “broken“.  To me “broken” implies something that no longer works, but did in fact work at some point in time. 

Speaking as a pragmatist, REAP never worked.  It takes money to make repairs.  Reducing a property owner’s cash flow reduces his or her ability to make the needed repairs.

What would work?  Speaking again as a pragmatist, make low-cost/no-cost funds available to rental property owners for the sole purpose of repairing their properties.