#248 Ex-NFL Star Stops an Eviction

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We also cover stories on NYC vs. Airbnb, a Berlin housing revolution, and a 40% tax deduction on rental property in St. Paul, and Inside the Rise and Fall of a Multimillion-Dollar Airbnb Scheme.



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Resources Mentioned in this Episode

Chad Johnson Pays Man’s Rent to Avoid Eviction
https://bleacherreport.com/articles/2822097-chad-johnson-pays-mans-rent-to-avoid-eviction-wants-to-play-landlord-in-fifa

Berlin to Stage a Housing Revolution?
https://www.citylab.com/equity/2019/02/berlin-germany-housing-rent-how-much-price-landlord-policies/582898/

St. Paul landlords can shave 40% off property taxes
https://www.twincities.com/2019/02/23/st-paul-landlords-can-shave-40-off-property-taxes-if-they-keep-rents-affordable/

Inside the Rise and Fall of a Multimillion-Dollar Airbnb Scheme
https://www.nytimes.com/2019/02/23/nyregion/airbnb-nyc-law.html

Show Transcription:

00:00 Hey everybody. Welcome back to another episode of rentprep for landlords. This is episode number 248. I am your host Eric Worral. And this week we’re going to be talking about some recent news stories that have popped up in the news from the last week. we got a funny story coming from a bleacher report and if you’re familiar with Chad Ochocinco Johnson, former Cincinnati Bengals, a funny story involving him and a tenant landlord scenario. we have a story coming from Germany, uh, some radical housing ideas to stage a housing revolution in Berlin. we’ll get to that later in the episode.more news coming from Saint Paul when there seems to be a lot of news coming from there out in Minnesota on how landlords can shave 40% off of property taxes. And then a really interesting story from the New York Times on the rise and fall of the multimillion dollar Airbnb scheme happening in New York City. We’re going to get back to all of that right after this

01:00 1,2,3,4 ya ya ya…. Welcome to the RentPrep for landlords podcast. And now your host, Steven White and Eric Worral.

01:08 So as usual you got just me Eric Worral your host here. Steve is working on some other projects here at rentprep and if you recall last week we have been given some updates on products that we’ve been working on here at rentprep. If you’re not familiar, we are a background check service located out in your Buffalo, New York. We service landlords all over the United States and one of the new products that we released, just within the last month is the ability to do a judgment and lien search on smart move for reports. We are a reseller of smart move, same price through us, same product except we can add judgment and lien searches. Those were stripped in 2017 from credit reports.

01:43 So that includes smart move reports since it’s owned by Trans Union. Well, as of this week, we are now offering our verification services that you can add to smart move reports. So what that does is you can call, you can have our screeners called the current and previous landlord to verify information provided than the rental application along with call their employer to verify employment salary history, and also full and part time status. And we ask a bunch of questions that are in house screeners, will annotate inside of your reports that you can read through. And that’s all available through us at rentprep.com and the cool part about those smart move reports as you can built the tenant directly for the, not only the report but also those add-ons that I mentioned earlier.

02:24 So with that out of the way, wanted to get into some of the recent news stories here.This first one, I’ll start with a fun one.This is from bleacher report.com. If you’re familiar, that’s a sports website, Kyle Newport wrote this on February 23rd, the title says, Chad Johnson pays man’s rent to avoid eviction. Watson played landlord in FIFA.So former Cincinnati Bengals will receive a chat. Chad Ochocinco Johnson makes no secret that he loves everyone. So when you see someone in need, he does what he can to help out. So on Friday, Johnson had tweeted out to his followers asking them how their day was going and one individual said facing eviction, but it’s Friday.So, and with little Emoji of like a guy just kind of saying what have you know kind of thing and Chad Johnson has screenshotted a paypal payment over to this guy.His name is Chris.He paid for the guys rent and he also said and proclaimed that he is the self proclaimed FIFA king and he’s willing to settle things with the landlord and unusual way. He said, tell your landlord next time we fall behind on rent to play me and FIFA for the balance 100%.

03:34 So, Chad Johnson, if you ever watched him, his 11 year career in the NFL, he’s an unusual guy. He made six pro bowls but kinda did some a lot of crazy things. Apparently he has a habit of giving very large tips, when he goes out to eat and the tips are based on stats that he has done throughout his career and it’s not just as NFL playing career, but also how he’s doing on FIFA. So a one image that I’m looking at here, and I’ll link to this bleacher report article in the show notes here for episode 248. Uh, he wrote on a $18 17 cent, whereas this add on love, it’s Applebee’s maybe.He left a $209 tip because he once had 209 yards in a game in 2007, which I find it hysterical that he writes this on the tip, that he had that many yards.

04:20 Then he takes a picture of it and tweets it to his followers and as well as things where it’s kind of funny because you’re like, what would an Egomaniac, but at the same time he’s making somebody’s Day, who cares? He’s given a huge tip, you know, he’d tipped on another one.It looks like he tipped 300 yards cause his best yardage game. And then this was my personal favorite. He put a hundred dollar tip and he said he scored a 100 goals and FIFA today. So he’s very proud of his FIFA prowess. If you’re not familiar with FIFA is a soccer game that you can play on Xbox, playstation. So there’s a fun story there. So if you have a tenant behind on rent, find Chad Ochocinco his a Twitter handle, is Otros Cinco and tweet at him and say, Hey, I’m really good at FIFA. Let’s do this. So that’d be pretty funny if you actually held up his end of the bargain on that and played somebody’s played some landlord for rent on FIFA.

05:17 So,next door here comes from citylab.com and the title is Berlin Builds an Arsenal of Ideas to Stage a Housing Revolution. I think my favorite part about this article that was written on February 21st, is the author’s name. His name is Feargus O’sullivan. I’m going to guess on how it’s said, but it’s fear Gus was his first name. So I’m just guessing there. But basically I thought this was worth sharing.Probably don’t have a lot of listeners out in Berlin area, but some interesting stuff going on out there as they’re trying to combat the growing housing crisis and the affordability crisis.

05:56 So it says here,

05:58 I read a little bit of this to you as Berliners grow increasingly frustrated with rising rents. There’s a question making the rounds and local politics that could seriously shake things up, should there be a limit to how much a housing landlord can own. So that’s why I’m sharing this story with you guys today.We hear a lot about, you know, rent control and stuff like that. But you know, I haven’t heard too many articles talking about how much actual real estate or landmark canal, so falling months of intense debate the German capital is considering whether landlords with more than 3000 units should be barred from operating in the city. So naturally opinion polls show majority of Berliners favor such a move and activists are about to start preparations for a referendum on the subject. The proposal is just one of several moves in a city that could be on the cusp of housing revolution. Over the past few months the German capital’s been trying out several plans to keep the housing affordable and affect these plans or transfer large sections of the city’s rental homes from private owners to public sector.

06:57 I did later in the article talk about how they’ve actually purchased the city and 2018 purchased some housing, I believe it was like about 300 units. so it’s interesting what’s going on over there. The one thing that comes to mind with this story from city lab is, I think of companies that get so large where they go public. And I think we’ve all heard this story before you know, a company is trying to build and build and one of the thing they have to do is a offer or an IPO initial public offering. They go public. But at the moment that happens, or if they have private investors, even, the company becomes a indebted to those investors or to their shareholders. And I think we’ve heard stories of companies that do this, but then when that happens, all of a sudden the product starts to be cheapened because their, every move that they’re making is no longer about making the product or the company the best it can be.

07:49 It’s about acquiescing to those shareholders and making sure that those shareholders are getting a return on their investment. Kind of sounds like that a little bit. In Germany, what they’re discussing is that these large large landlords for 300 plus properties, they’re not worried about the quality of life for the tenants are that the properties are in good working order. They’re worried about the return on their investment. I mean, they’re obviously, you know, the people who own these companies are probably never even visiting most of these apartments. Uh, so I get where they’re coming at from that, why they’re concerned with some of these mega landlords and why that they are not creating the best possible living situations and they are instead creating the most amount of profit state can. And the way you can do that as a landlord, unfortunately, is by creating and by not reinvesting in the property, raising rents and trying to squeeze every penny you can out of the property. I know that we probably have some listeners who are like, yeah, that’s what being a landlord is for, sign me up. But I personally think that that kind of is shirking some of the responsibility you have towards your tenants who are your clients to give them a great place to live as well. So would be interesting to see what happens out in Berlin, with this story and other instance of government kind of getting involved in trying to curb, rising rental prices.

09:05 Next story here comes from twin cities.com from Frederick Melo and the title here says Saint Paul, the landlords can shave 40% off property taxes if they keep rents affordable. So I thought this one was interesting because it’s not a little bit of a twist on traditional affordability. And we’re, you know, usually the government stepping in and whether it’s section 8 or program like that. In this particular case, it says that with rental vacancies being so low and rents being high in the city of Saint Paul, that they’re offering a property tax discounts. The landlords who keep at least 20% of their apartments affordable to low to moderate income households. So what this looks like in real rental terms is a two bedroom apartment rented out to a family of four for $1,273 per month may qualify for a 40% discount on property taxes.

09:58 It’s a very specific number. I don’t know where they come up with that, but with the goal of preserving existing non subsidized housing that happens to command below market rents. So the way this like, my work is, an example that was presented by the city was 120 unit apartment building. Mike currently paid 123,000 annual property taxes. So just over a thousand per unit. If the property owner agreed to keep 24 units affordable for 10 years, their taxes could drop by about $10,000 per year. So previously landlords interested in the states or D-tax classification could apply through the city on a case by case basis, said the planning and economic development spokesperson. So I just thought this one was interesting and it’s taking a different approach as far as, instead of doing a voucher program where the governments, essentially paying for a portion of the tenant’s rent, it’s paying the landlord on the back-end through reduced property taxes and giving them incentives to keep their rent controlled, as you know, an investor, that I think that sounds better than just the government stepping in and placing rent control and they’re giving you the option essentially saying, hey, if you want to crunch the numbers yourself, you can, you know, essentially rent controls some of your units, but we will hit you up in the back-end and give you a break on property taxes. So, something to consider, if you happen to be in Saint Paul, but also something to consider as a real estate investor and you never know one of these programs, you know, ends up working out well and it kind of spreads to other cities. So it will be interesting to see what happens with that.

11:31 Okay,The last story we have here for you today, this was in New York Times.This was by Luis Ferré-Sadurní hopefully I’m saying that right at Durney and it’d be my guess and the last name there, this was on February 23rd, I was when this was posted in New York Times. The the title of the article is inside the rise and fall of a multimillion dollar airbnb scheme. It says that multiple misleading identities, more than 100 hosts accounts in 18 corporations were created to run an illegal hotel business in Manhattan according to a lawsuit filed by the city.

12:08 To others this is really interesting because, Airbnb is definitely something a lot of landlords think about where they might be looking at a property that’s in a touristy spot or maybe it would fetch a pretty good price on airbnb. And do you want to, you know, switch up that, property from a rental property to a short term rental that you can host out on Airbnb to potentially make more money. But then of course it requires more of your time and management. So in this particular story though, it’s about these corporations that are trying to, kind of outsmart the city in some of the ways that they tax hotels. So I’ll read a little bit of it for you here. I said from the outside, there was nothing, especially notable about the small white building on the corner of a cobblestone street in Tribeca.

12:51 That was until recently, it was a crucial route location in a sprawling empire. Beautiful Loft Tribeca four bedroom two bath sleeps 10. Read the listing on Airbnb for one appartment there.Two of the three apartments in the building were popular with tourist, looking to stay in one of Manhattan’s most desirable neighborhoods at $600 a night each. They were a bargain for a large group, but they’re also illegal part of an elaborate real estate scheme to make millions by circumventing state and local laws in Airbnb’s own rules. The building on Greenwich Street was part of a larger enterprise that made more than 20 million in revenue by unlawfully renting 130 Manhattan apartments to almost 76,000 guests through airbnb. City officials said the plot was geared towards getting around city regulations that are intended to keep blocks of apartments from being turned into makeshift hotels that avoid lodging, taxes and oversight.

13:43 The crackdown in the empire last month was a milestone in the escalating battle between Airbnb in New York City. The company’s largest market in the country. AIRBNB condemn the exploitation of its platform, but that the scheme showed how the home sharing site has given opportunists and new kind of side hustle. So the story goes on a little bit further to kind of talk about how there’s been clashes with airbnb and various cities all over the world, including LA, Amsterdam, Paris, Vancouver, British Columbia. And now they’re actually seeing that, there’s a city in Spain called Palma de Mello. Melcor or Malakar, became the first city in Spain to ban airbnb. So basically what’s happening is, there’s, at least in New York City, there are neighborhoods that it’s impossible to put a hotel in.The city forbids it and now, instead, what’s happening is these, corporations are infiltrating, they’re getting these rental apartments and instead of running them out, they are turning them to airbnb.

14:41 They’re not paying the taxes that would normally be paid that a hotel would have to pay. And because of the fact that they’re short term rentals, they’re charging a good buck.They don’t care if there’s 10 people staying in a four bedroom apartment. Not unusual problem for New York City anyways. but they are getting around this and making a ton of money even with the airbnb costs. so it said that in all more than one airbnb host accounts and 18 corporations were created to run an illegal hotel business that stretched north from Tribeca to Soho, Grammercy, the upper east side and Harlem according to a lawsuit brought by the city. So this will be really interesting to see what happens with this. the story goes into further detail on how it all began in 2012 and if you’re interested, you can not find the link in the show notes.

15:28 And there’s a pretty interesting image as well where it just kind of showing the locations of these airbnbs and how much profit was being generated by them. And it’s a really, really interesting deep dive in, exposing airbnb and how it’s being used illegally in the city. As far as how it worked, it said the scheme required leasing scores of apartments. Some landlords claim they were deceived renting apartments to Mr Beckman and his partners without knowing the units would be used as hotel rooms. So I said, for example, Mr Beckman sign leases for two apartments and another East Harlem building in late 2017 according to a separate lawsuit. And it said a day after signing the lease, the apartments were on an airbnb under the host names Cedric and Tom and Lisa. So the rent for the apartment was $3,225 a month, but it was on Airbnb for $250 a night.

16:20 Hypothetically, Mr Beckman could cover a month’s rent by filling it with tourist for about two weeks. So, interesting thing to think about. I’m sure this is something that as a landlord you need to think about because even if you’re not in a touristy area of New York City with your rental properties, there’s always that possibility that you’re renting to somebody and then they’re immediately either renting it out at an airbnb completely or they’re renting out rooms and the apartment, on airbnb or craigslist or other areas to help subsidize their living. so it’s worth, jumping on these different platforms. you know, zooming in on your area, seeing if there’s anything available. And if you see photos that look pretty familiar, like your apartment that you’re renting out to somebody, you’re going to need to look into that and crack down on that even if it’s not available that day, maybe put in a couple of different dates, maybe further out to make sure that that apartment would show up if you’re searching for it. So again, really interesting article. Check that out in the show notes. We’ll link over to the article on New York Times by the author Lewis here, Lewis and yeah, go and check that out really interesting stuff if you had the time to read through the entire article. So that concludes this week’s episode of Rent-Prep for landlords. Again, you can check out the resources on episode number 248 and yeah, if you guys ever come across any recent news stories or anything that you want to discuss, feel free to reach out to us here. You can reach out to me via email, [email protected] and as always, you can connect with us in the Facebook group, rent-prep for landlords.

17:50 A lot of cool stuff going on there. we’ve changed the way that people can access that group.The way you can access to group now is if you have a rent-prep account, you share your email that uses the log in there. When you try to join the rent-prep for Atlanta. There’s Facebook group. The reason we did that is we have had concerns of people saying that there are renters in the group are people that shouldn’t be in the group. And when you sign up for a rent-prep account, it asks you for a lot of information, so that we’re doing this as a safety measure to try to keep renters out of the group and keep the discussion pro, or keep the discussion helpful for landlords and real estate investors and not about, you know, a renter dealing with a renter situation that they could find a different Facebook group that would be appropriate for. So, yeah, again, join that group. If you haven’t joined that yet, and until next week, guys, have a great week. Enjoy your weekends. If you’re listening to this before the weekend, and yeah, look forward to catching up with you next week. All right. Take care.