Monthly Archives: July 2012

Differences between Apartment & Commercial Leases

Renting a storefront like this will probably be quite different from renting an apartment or a house.

I'm not really sure how people learn about renting out apartments, but by the time they hit the market for the first time they generally have a basic idea of the premise. You pay someone money and exchange you get to live in their building. They handle the maintenance (for the most part) and you leave their building in decent condition when you depart. Easy enough. There are some variances from area to area in terms of what utilities are customarily included and how large/small/old/new the buildings are. Even so, a relative newcomer to apartment hunting can figure it out despite language barriers and regional variances.

I've been working on leasing out a retail storefront in Irving Park lately, and have realized that with commercial spaces the learning curve is far more complex - possibly because business owners come in with preconceived notions based on how the rental housing market works. However, once you switch over to renting out commercial property the whole thing goes out the window. America in all of its messed up glory offers an entire menu of options, arrangements, terms and add-ons for business owners. Meanwhile I'd like to take today to explain a bit about the differences between renting an apartment and renting a storefront, office or other commercial property. If you're out to start your own business or purchase a mixed use building (maybe with my help?) you can use this as a bit of a guide. If you're working for a company that leases their space, maybe this will give you an idea of why your boss keeps stressing out about the rent. (more…)

Stat check: Real Estate & The Sex Offense Registries

Megan's Law means sex offender registry information is available to the public, but is anyone using it?

Do Sex Offenders Affect Home Values?

I may get in a lot of trouble for this entry. Gonna do it anyway. This has become crimes & misdemeanors week here at StrawStickStone so I might as well finish in the same vein.

So most of us know that there are websites that US Residents can use to look up whether or not a registered sex offender is living in the immediate vicinity. California's "Megan's Law" and similar legislation in the other 49 states require the information to be freely available to the public. The registries are maintained by the FBI, Department of Justice and local police forces. They're pretty darn accurate.

Here's one.

Here's another.

If you're in Illinois, here's a third.

When the laws were first enacted, there was some pushback from homeowners who feared that publication of registered sex offenders' addresses would have a severely negative effect on home values. I've been wondering for years if this has actually been the case. (more…)

When your apartment is a crime scene

I don't recommend reading this article while eating. We're getting a little gross today.

Crimes and situations requiring the presence of the police unfortunately happen quite often in apartment buildings. As the density of people living together increases, so do the odds that one of them is doing something illegal. As we discussed on Monday, sometimes all the background checking in the world can't clue you in to a tenant's mental illness, deranged behavior or upcoming nervous breakdown.

We've spoken before about how landlords can prepare for worst case scenarios but we haven't discussed what really happens when the first responders have to step in and take over. Unfortunately I've had to deal with many situations of this nature - I've dealt with stalkers, domestic violence, parking lot hit & runs, drug busts, marijuana gardens, suicides, gas leaks, hoarders, fires, break-ins and death from natural causes. (This would be one of the reasons I left property management in favor of brokerage.) If your apartment becomes a crime scene, here's what to expect, what to do, and what to avoid.


Sometimes You Can’t Tell

A great investment! Instant cash flow! Buy it today! (Strong constitution required.)

Paris is for ... Landlords?

1690 Paris Street is a 129 unit apartment complex on 111,115 square feet of land. It has 11 buildings containing roughly 12 units each. It has a sweet 3.9% vacancy rate, convenient location, and the units have, according to the sales flyer I have here, been maintained well over the years by a "hands on" owner.

It was listed on the market for two months the autumn of 2010 for $6.4 million. They tried again in early 2011 at the same price. It nets about $519k per year for an 8.06% CAP rate. I can't tell if it changed hands or not.

It's also probably it's current owner's worst nightmare come true.

1690 Paris Street, Aurora, Colorado. Home of James Holmes, who filled his apartment with so many booby traps and explosives that it took the bomb squad two days to clear it out with robots. An apartment building full of medical students who all made it their first choice in a rental search at some point over the past few years, thinking "I want to call this place home." Now it's a poster child for "worst case investment property scenario" making landlords across the country reach for the Xanax and hope that nobody in their buildings has done the same thing. (more…)

Weekend Links: Chicago Neighborhood Research Special

I tend to do a lot of research as you might have noticed. As I'm in the process of making a "welcome to the neighborhood" letter for a couple of renter clients who signed leases this week I figured I'd share with you some of the sites I use to put these letters together.


  • Cook County Property Info - a trove of info on property owner names, addresses, and tax/mortgage payment history.
  • CityNews Chicago. Unfortunately not updated anymore. Still has valid property construction dates for buildings built before 2002, and also useful for finding address ranges on large buildings.
  • Building code violation database. Landlords are supposed to disclose any violations from the past 12 months when you sign or renew a lease. They almost never do. Check it out for yourself.
  • Bedbug Registry. Yeah, that exists.


Politicians & People in your Neighborhood

  • Police District lookup. It's always good to know which police district & beat you live in. Sometimes calling the district directly will yield more answers than you can get from calling 911 or 311. CAPS meetings are scheduled by beat and are a great way to learn about safety concerns in your immediate area.
  • Ward/alderman lookup. The ward office will be your source for parking permits, street cleaning schedules, block party permits, trash pickup, and far more. Your alderman is also your neighborhood's representative to city council. It's worth knowing who they are and what they stand for.
  • Find elected officials (federal and state).

Transit & Parking


  • Building code violation database. Landlords are supposed to disclose any violations from the past 12 months when you sign or renew a lease. They almost never do. Check it out for yourself.

Why Credit Scores are False Prophets for Tenant Reliability

A credit score, according to the Fair Isaac Corporation, is calculated based on a weighted average as indicated below.


This may come as a shock to landlords. See, landlords generally look at credit scores in hopes that it will give them an easy, quantifiable way of comparing one tenant's reliability against another, without dipping into criteria that could put the landlord at risk of a fair housing suit. Unfortunately it doesn't work that way.

Credit scores are a pay to play racket. They get higher only if you borrow and pay back assorted lenders repeatedly. In the modern economy it's just shy of entrapment. The best tenant is one who doesn't engage in risky borrowing beyond their means, and is likely to have a very thin credit history. Saying that you want only tenants with high credit scores in your apartment is like saying you only want high rolling gamblers handling your stock portfolio.

Looking at that chart above, and bearing in mind that the average tenant is younger, less experienced and less wealthy than a homeowner, a large portion of the chart can be ruled out while the info that the landlord really wants is only counting towards a third of the score. (more…)

Confronting our Agoraphobia, Part IV: The Active Shopper’s Guidebook

(This is the fourth and final part of a series that started with Part I: Carefully Taught, Part II: The Bad Guys are Winning, and Part III: The Long Road Back.)

Let's Get Ready to Rumble! (Or at least have a polite chat.)

If you've been following the Agoraphobia series you may be ready to start shopping actively. However, if you're the average American shopper you're going to be pushing back against a lot of training and momentum trying to convince you that negotiation is difficult, scary, futile, or a waste of time.

It isn't.

Negotiation is, at worst, a conversation with a stranger. But the American consumer has been treated for 150 years like a submissive partner in an abusive relationship. As is the case in many of these situations, learning to speak up for yourself can be difficult at first. So let's assemble a guidebook to help you get started.

Level One Negotiation - learning to talk & think for yourself:

  • For level one, level two, and level three we're talking only about goods, not services. This is about items that you can take home from the store with you.
  • From this point forward, every time you go to the store you will ask the clerks about the products you are purchasing. It doesn't have to be about price. It can be about quality, color, country of origin... just get used to having the conversation. Get to know them. Be friendly and polite.
  • Never enter a shop without a shopping list. Never purchase anything that isn't on the list. Never make the list less than 30 minutes before you enter the store.
  • I've got about 7 local grocers so I can go a bit overboard on this. I cap myself at 3 stores max when comparing grocery circulars.

    If you must pick something up that isn't on your list, shop slowly. Carry it around with you in the store for at least half an hour before making the purchase.

  • Choose your favorite direct-to-vendor shopping site - Ebay, Etsy, or Craigslist. Find something you've been meaning to buy anyhow. Choose a handful of sellers and send them each some questions about the product you intend to purchase before you buy it.
  • Go to the farmer's market closest to you and have a chat with the vendors. Ask at least 3 questions of a vendor before you buy something. And please, do buy something.
  • Pick up grocery circulars from the 3 closest shops. Figure out the least expensive combination of goods, and then compare with how much you'd pay by purchasing everything in your usual store. You don't have to actually do the shopping in split locations. Just do the math. We're practicing here. (PS, if you're in Chicago and only shop at national chain grocers I am sad for you. Check out Tony's, Food4less, Cermak Market, Harvestime, Morse Fresh Market, Mayfair Market Place, Butera and Stanley's for some great alternatives.)

Once you've been at level one for at least 3 months, you're ready to move on to level two.


Confronting our Agoraphobia, Part III: The Long Road Back

(This is part 3 of a series that started with Confronting Agoraphobia, Part I: Carefully Taught and Confronting our Agoraphobia Part II: The Bad Guys are Winning.)

Where We've Been

Over the past two entries in this series we've reviewed how bargaining has gone from common to rare, and how shopping in America has become a passive experience. We've discussed how the evolution of marketing and discounting have consolidated the power of pricing entirely in the hands of the manufacturers. We've discussed the potential gain from choosing to haggle - a peak negotiator saved $2500 in a year. That means an average negotiator could save about $1500. What we haven't discussed is how to work our way back to an even distribution of power.

Let me expand on that number a bit. $1500 saved per person, per year. 206 million adults in the United States, give or take a hundred thousand or so.[1]Wolfram alpha: What is the adult population of North America, July 2012. Roughly 10% of them are incarcerated.[2]NY Times: Adam Liptak, "1 in 100 U.S. Adults Behind Bars, New Study Says," Feb 2008. If the rest of them saved $1500 per year, that would total $278.2 Billion saved. Annually. (That's about 2x the annual revenue of Wal-Mart as reported to the NYSE,[3]Ycharts: Wal-Mart Stores Revenue (WMT) as of July, 2012 or, sadly, just 1.7% of the national debt at this moment.[4]US National Debt Clock, July 2012)

Let's have one more quote to get things moving forward:

"A recent Consumer Reports survey showed only 28 percent of Americans haggle over prices. A separate report from market research firm BIGresearch found 45.1 percent of adults haggle for things other than cars and homes.

However, the Consumer Reports survey found that consumers who haggle succeed as often as 83 percent of the time in landing a better bargain."

-- Yuki Noguchi, "Haggling picks up steam during recession,", August 2009.




1 Wolfram alpha: What is the adult population of North America, July 2012.
2 NY Times: Adam Liptak, "1 in 100 U.S. Adults Behind Bars, New Study Says," Feb 2008.
3 Ycharts: Wal-Mart Stores Revenue (WMT) as of July, 2012
4 US National Debt Clock, July 2012

Weekend Links for July 14, 2012

  • Learning to love a new neighborhood. The rising rent rates in Chicago mean that many 2012 tenants will need to find apartments outside of their comfort zone. ChicagoNow blogger Lainie Peterson gives us her account of learning to love her new neighborhood, Old Irving Park.
  • Another new Credit Score - for mortgages only. CoreLogic has partnered with FICO to create a special credit scoring model designed to assess how well you'd do paying a mortgage specifically. Weak payers have been scoring better than usual on this model, leading some to worry that it will open the door to home loans for too many subprime buyers again. More info on the score tells us that it folds in rent payments, payday loan payments and other non-traditional loans to assemble a more comprehensive picture. However, available data depends on the sources making it available. While upscale landlords may have the werewithal to submit data on their wealthy tenants, it's the poorer tenants who really need the boost that this score could bring. Low-rent landlords are not likely to surrender their payment info gladly, especially if the income numbers don't match what they send to the IRS.
  • The Phantom Fourth Credit Bureau. Like the Fifth Beatle and the Seventh member of Monty Python, there have been any number of claimants among lesser-known risk analysis companies of being the fourth credit bureau on par with Equifax, TransUnion and Experian. Check out these articles on Innovis, CoreLogic, and a shady network of other providers of personal payment histories. (The photo gallery on the last one has a misleading cover image as it's an older article, but the data within the slideshow is pertinent.)
  • Eviction of the week. A Dayton, OH property manager is under investigation for stealing upwards of $10,000 from her employer. Residents of her former properties are now faced with proving that they paid their rent or getting evicted. The thieving manager remains at large until the cops figure out exactly how much she stole.
  • CHA's Empty buildings getting emptier. Last week I linked you to the scoop on the Chicago Housing Authority's high vacancy rate in their subsidized low-income housing projects. The nadir for occupancy was the Lathrop Homes, at 80% vacant. Now Lathrop residents are protesting the CHA's decision to remove the remaining residents to complete their modernization on the complex.
    They may not be allowed back in when it's finished, but would instead have to go to the end of the lengthy waitlist.

  • A great companion article to the ongoing bargaining series. Derek Thompson of the Atlantic discusses the 11 Ways that Consumers are Hopeless at Math. Basically, we are unable to judge value accurately, so we will settle for judging it precisely ... against the options presented to us.
  • Where not to get a cheap apartment. Curbed Chicago has released a "heatmap" of the most popular and trendy downtown Chicago high rise apartments. I've spoken with managers in many of these buildings over the past few months. Most of them are booked until October. It's currently July. Protip: to help out your fellow Chicagoans instead of faceless corporate property management, make note of the addresses, and then look into renting a condo on the same block.


Brief Hiatus…

StrawStickStone is on hiatus today. I'm dealing with a full client load right now and need to give them my full attention. Additionally, the next article is in process but taking a lot more research than I'd expected.

We'll be back tomorrow for the weekend links and then resume on Monday with part 3 of Confronting our Agoraphobia.

In the meantime, if you feel so inclined, why not browse through some of our greatest hits and share a few with your friends?

Practicality includes knowing when you've hit your limit.