Can My Llc Protect Me Personally from Taxes the Llc Owes by cuh17588


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									                                   Jackson Area Landlords Association
 Volume 15/Number 2                                                                                                February, 2009

              The National Association of Realtors reports that home prices dropped a record 12.4% in the final
                                       quarter of 2008 (the biggest decline in 30 years)
                           By Les Christie, staff writer/Submitted by Gae Winn

NEW YORK ( -- Home prices fell 12.4% during the fourth quarter of 2008, the largest year-over-year decline since
the National Association of Realtors began keeping comprehensive records in 1979. The median price for a U.S. home sold during
the fourth quarter of 2008 fell to $180,100, down from $205,700 during the last quarter of 2007. Prices fell by a record 9.5% in
2008, to $197,100, compared to $217,900 in 2007. In comparison, median home prices dipped a mere 1.6% between 2006 and 2007.
Distressed properties, foreclosures and short sales have flooded the market, accounting for 45% of all deals. That has driven sales
volume up in Nevada, California and other states hit hard by foreclosures, but these heavily discounted homes have also pushed me-
dian prices down. "People are responding to discounted prices and are slowly absorbing the excess inventory," said NAR President
Charles McMillan. "Buyers clearly see value in today's pricing." Pain is widespread. The vast majority of metropolitan areas, 134
out of 153, recorded price declines compared with the last quarter of 2007. "Home markets are weak just about everywhere," said
Pat Newport, an analyst with HIS Global Insight, "but in a few states, distressed sales are driving transactions." In Cape Coral-Ft.
Myers, Fla., which has the third highest rate of foreclosure filings in the nation, prices fell a devastating 50.8% for the year, to
$110,900 from $225,300. That was the most precipitous plunge for any metro area. In Saginaw, Mich., prices fell 41.4%; River-
side-San Bernardino, Calif., prices dropped 40.8%; and San Jose, Calif., prices declined 37.7%. The high number of distressed sales
pushed prices down for several reasons, according to Lawrence Yun, chief economist for NAR. For one thing, many sales were in
low- and moderate-income housing developments where buyers during the boom years financed their purchases using sub-prime
mortgages. In higher-end areas, fewer exotic mortgages were used. "Take Orange County, Calif.," said Yun. "It's the lower priced
areas there where homes are selling. The high priced areas along the coast are not." As a result, the median home sales price for the
area skews lower. And the high number of foreclosures means banks are willing to slash prices deeply to move inventory. Many of
the properties they've obtained through repossessions now sit vacant, soaking up lender money for maintenance, heating, property
taxes and insurance. The banks willingly take lower prices to end those cash outlays, which brings down prices even for normal sell-
ers. Then there's also what Yun calls a "frozen" jumbo-mortgage lending market, which has also slowed sales of higher priced homes
and reduced median prices. The good news is that bargain prices are bringing many new buyers into the market. "Many are first-time
homebuyers who were priced out of the market during the boom," Yun said.

  The National Association of Realtors is hoping a piece of the stimulus bill before Congress will build on that momentum and pro-
vide an extra incentive for buyers. " Assuming housing provisions in the economic stimulus package are quickly enacted and provide
                                                                                               Home Prices Plunge…..Continued on Page 4

 IMPORTANT REMINDER:                         INSIDE THIS ISSUE                                  ATTENTION!!!
      Please pay your                                                        Page 2
                                          Calendar Of Events                                  THE NEXT GENERAL
 membership and credit
                                          President’s Message                Page 2        MEETING WILL BE HELD on
    reporting dues in a
                                          Personal Opinions                  Page 3         MONDAY, FEBRUARY 23,
      timely manner.
  JALA depends on your                    Seeking Information                Page 4           2009, AT THE STEAK’S
 dues to pay its monthly                  Teaser for March GM                Page 4        EATERY IN VANDERCOOK
 expenses, so please pay                  LBP Installment                    Page 4        lake. THE MEETING WILL
on time, just as you would                Housing Stats                      Page 6          BEGIN AT 5:30 P.M. FOR
expect your tenants to do!                JALA Q and A                       Page 8          DINNER; THE SPEAKER
                                          Haunting Questions                 Page 8              WILL BEGIN AT
     We look forward                      Replacement Reserves               Page 9         APPROXIMATELY 6:30 P.M.
       to receiving                                                                           **Please have your meal ordered
  former members back!!                                                                               by 5:30 P.M.**
Page 2                                                                                                            February, 2009

                                                      JALA OFFICE
         GAE WINN                                        HOURS
    Here comes spring with all its hope-
  fulness! Even though we all know it                       Monday                                 CALENDAR OF
  generally snows in April, we are still             9:00 a.m. to 5:00 p.m.                          EVENTS
  excited about even two days of 50-60
  degree weather. I personally found
  that I could bear the cold returning
  after the thaw had come, and the fact              9:00 a.m. to 2:00 p.m.                       Monday, February 23, 2009
                                                                                                    JALA General Meeting
  that it is now daylight until at least
                                                                                                      Time: 5:30 p.m.
  6:30 PM. Of course, now we can see                        Friday                                     Steak’s Eatery
  all the junk that has been hiding under            9:00 a.m. to 2:00 p.m.
  the once beautiful snow (beautiful, but
                                                                                                  Monday, March 9, 2009
  only until we had to pay in backaches
                                                                                              JALA Board of Directors Meeting
  or money.) But our hope still runs
  high that new tenants will, like spring    Welcome New Members:                                      Time: 6:00 p.m.
                                                                                             Abbey Villas Apts. Community Room
  flowers, appear and actually pay rent
  and in this era have a job. Wow, now       We are saddened to announce that long-time
                                             JALA member, Barbara Hubbard, passed                   Monday, March 23, 2009
  that is a hopeful thought! Yes, it has
                                                                                                     JALA General Meeting
  been hard and it does not look like we     away at home on January 28, 2009. A
                                                                                                       Time: 5:30 p.m.
  are anywhere near a turnaround just        memorial service was held on February 4,
                                                                                                        Steak’s Eatery
  yet. But with a little warmth, hope        2009 at Nichols-Arthur Funeral Home.
  shows its face and somehow there is a      Barb came into the office often and was
  moment’s respite from the stress and       always cheery and friendly. We will miss her
  concern for the future or the past.        a great deal!                                              JALA BOARD OF
    The general meeting speaker for                                                                     DIRECTORS/2009
  February will be talking on the issue
  of money recovery from deadbeats we             If you have questions about               President                   Gae Winn, 784-8833
  rarely can collect from. So, drag out       landlording, you may call one of the          Vice-President          Charles Drake, 768-0579
  your old files and take a good, hard            property managers/landlords               Secretary              Phillip Fracker, 787-9241
                                                                                            Treasurer              Robert Tulloch, 596-2592
  look at who owes you money, and                     we list for assistance.
                                                                                            Board Member           Mike Finnegan, 529-4289
  come with armed with questions. Yes,        Please refer to Page 3 for the names          Board Member         Mak Krzeczkowski, 734-214-2676
  hopeful….that’s where we are.                 and numbers of these members.               Board Member                Fred Riley, 524-6781
                                                                                            Board Member         Beverley Roberts, 787-2000
    One more item: If your email ad-
  dress is NOT updated with us, please             FOR YOUR                                 Board Member
                                                                                            Board Member
                                                                                                                   Laura Schlecte, 780-3800
                                                                                                                  Terri Zdanowitz, 782-4663
  call the JALA office with your new                                                        Office Manager        Charyl Wozniak, 782-4384
  information. We are using e-mail               INFORMATION:                               Newsletter Editor
                                                                                                                 Beverley Roberts, 787-6540
                                                                                                                      Bob Tulloch, 596-2592
  more then ever to cut our costs.                                                          Legal Affairs             Bob Tulloch, 596-2592
    Thank you!
                                                  Editorials and/or                                    JALA Legal Counsel
                                              articles in this newsletter                                Adam E. Howard
   ANNOUNCEMENTS                                are the opinion of the                                    (517) 788-9055
                                                                                                          404 S. Jackson St.
     JALA Web Site:                               author and do not                                          PO Box 4292
                                                                                                          Jackson, MI 49204
                                               necessarily reflect the                               policies or positions
                                                                                                     STATE LEGISLATORS
        Credit Reports are available
   through the JALA Office or directly                of JALA.                               Rep. Marty Griffin..…….....(517) 373-1795
   using software for the members that                                                                      PO Box 30014
   have met the current criteria set forth                                                               Lansing, MI 48909
     by All advertisements in this
 NOTE:TransUnion, LLC and JALA.                                                               Rep. Mike Simpson ...........(517) 373-1775
 Newsletter are paid for by advertisers.                                                                    PO Box 30014
   A credit report guarantee the
 JARPOA does not is your first line of                                                                    Lansing, MI 48909
     defense! Arm yourself wisely!!
 products or services advertised.
February, 2009                                                                                                                       Page 3
                                               Dear Sirs:                                               BRACE YOURSELVES
                                                   In response to the Governor Granholm              At the end of this month, the last two
  If you need advice regarding some of
                                                 State of the State Address of February 3,        renters who are employed will leave my
your rental properties, please feel free to
contact the following property managers          2009. In her State of the State Address for      units. The remaining renters are all on
for assistance:                                  2009, Governor Granholm advanced a               some kind of assistance. It used to be that
                                                 proposal that 45% of the power used in           most, if not all, worked and just a few were
        Gae Winn from Winn Property              Michigan (currently generated using fossil       living with the help of some agency of the
         Management, (517) 784-8833              fuels) be instead generated by green re-         government.
                                                 newable energy by the year 2020; specifi-           I just read in the Jackson Citizen Patriot
                                                 cally generated by solar and wind genera-        that Jackson County will have to make up
     Terri Zdanowitz from All-Pro Realty         tion installed in/on their homes by Michi-
          And Property Management,                                                                $800,000-plus to the Jackson County em-
                                                 gan entrepreneurs who would sell their           ployee’s retirement system because of
                (517) 782-4663
                                                 excess capacity back to the utility compa-       short falls due to the market losses, and the
   For technical assistance, contact Mr. T at nies. As a green, tree-hugging entrepre-            fact that governmental employees gener-
 (517) 596-2592 or email contact@jala-           neur, I am deeply interested in this pro-        ally belong to defined benefit retirement                                          gram to reduce greenhouse emissions and          plans. That is, no matter how bad things
                                                 increase green jobs in Michigan.                 get, governmental employees are guaran-
                                                   To this end, I would like to find out how      teed a healthy retirement no matter what
 PERSONAL OPINIONS….. to get support and funding to install a wind                                the effect on tax payers. You long term
                                                 turbine generator in the back yard of my         small investors who were relying on sell-
  Responses to personal opinions are wel- property at 616 Lansing Ave. in Jackson. I              ing your properties for supporting your
  comed, and should be sent to the office. would like to know which state department              retirement are in for a sad shock. You
     All submissions may not be printed.         can help me in sizing the turbine/generator      people, who worked and saved all your life
                                                 so that I can supply the residence at that       to be able to retire with even a modest life
       HURRICANE KATRINA                         address with ample power and at the same         style, will have your dreams smashed on
                                                 time generate excess that I may sell back.       the altar of big government.
                REVISITED                        I would also need help in determining the          If you can’t get enough money from your
                                                 size of the interface structure to house all     rentals to pay the taxes to support unlim-
   Thinking back to Hurricane Katrina and the phase locking equipment/conversion                  ited government, your property will be
all those folks on their roofs and in the        equipment that is needed to synchronize          seized and sold to some bottom feeder for
stadium, I wondered at the time why they my generator into the grid. Further, I will              back taxes. The needs of government are
would just sit there waiting for help that       need help with the process for filing an         superior to the needs of the producers of
should have been provided by the city and environmental impact statement for my                   wealth. The purpose of our system seems
state. Why didn’t they take action them-         wind turbine/generator taking full account       to be to feed the government and only then
selves? Then, I remembered the daily             of potential bird kills and ice throw protec-    are we allowed to pursue life, liberty, and
drives past the houses I owned in the            tion for the neighborhood. Also of interest      the pursuit of happiness.
“hood”, and how I stopped and picked up would be the need to conduct a public
all the trash strewn across the yards only to hearing and notification of neighbors po-                             Submitted by Robert Tulloch
have a new layer of trash to pick up two         tentially affected by my wind turbine/           ___________________________________________
days later. The occupants and all their          generator installation. I would request
little rug rats would sit on the porch and       that the State of Michigan provide me with
watch me pick up all their trash while of- a list of installation contractors pre-                           HEARTBREAK
fering no help whatsoever. I guess that          qualified to install the wind turbine/
came with FIA paying their rent and utili- generator on my property as suggested by                 I know it is unhealthy to take things too
ties. So, in thinking back to Katrina, I be- Governor Granholm. Lastly, I am request-             personally, but I am indeed heartbroken. I
lieve I knew why.                                ing the City of Jackson Building Depart-         drove by a rental that I previously owned
                                                 ment to provide guidance in obtaining the        on the south-side of Jackson about a month
                  Submitted by Robert F. Tulloch necessary building permits to allow the          ago in the freezing cold weather of winter
                                                 installation within the city of my wind tur-     and saw a small sign on the front door. It
 ___________________________________________ bine/generator.                                      read that the property was unfit for habita-
                                                                                                  tion due to no heat. I looked around and
  RENEWABLE ENERGY IN                            Given the enthusiastic reception to the          the gas meter was locked off and icicles
                                               Governor’s suggestion in the State of the          hung out from below the lowest row of
  THE STATE OF MICHIGAN                                                                           shingles indicating ruptured pipes and fro-
                                               State Address, I am sure that state and lo-
                                               cal authorities are all geared up for this         zen flooding. I had owned this rental for
  The following letter was sent to the City    initiative (45% by 2020?) Yes, We
of Jackson Building Department, and the        Can!!!!                                            Heartbreak…..Continued on Page 7
state representative for Jackson on Febru-           Submitted by Robert F. Tulloch, Munith, MI
ary 4, 2009:
Page 4                                                                                                              February, 2009
Home Prices Plunge…..Continued from Page 1
                                               COLLECTIONS CORNER                            this issue in a unit (read free government
                                                                                             money at this point), I felt (and still do)
enough encouragement for homebuyers,                                                         that their approach has been geared to ten-
we could see a quick lift in home sales for     This article will be the first of a continu- ants instead of landlords. Yes folks, they
the critical spring home-buying season,"      ing series being submitted by Sheila           have come to talk to us at our general
said Yun.                                     Plentz, President of SP Recovery Ser-          meeting, but they are not sales people.
                                              vices, Corp., in order to enlighten our        They are nice, well-meaning COJ employ-
  On Thursday, it appeared that the final     members with tips on collecting monies         ees that really feel we should just jump on-
iteration of the homebuyer's tax credit,      still owed from past, current, and/or future board. They don’t understand the landlord
which had very different provisions in the tenants.                                          perspective on government or spending
House and Senate versions of the stimulus                                                    money, thus this article.
package, was shaping up to be closer to the Copies of Driver License or Id’s: This is Next, there was a series of inspections
House bill, according to Yun. That means an awesome source of information to                 and bids handled by the COJ. A decision
a credit of $7,500, perhaps $8,000, or 10% have copies of for your file, as it states        by the unit’s owner was made to include
of home price for first-time homebuyers.      the full legal name and any and all ad-        all three units in this endeavor. Then, the
This windfall will not have to be repaid by dresses (remember to copy the back if            day came that they had a low bid and that
homebuyers and can be taken off 2008          there was address change.) Now, you            everything would be covered by the gov-
taxes.                                        have a picture of the person to be used        ernment grant. Yes, you out there with the
                                              in numerous situations. For exam-              multi-units; $8,000/unit is what the gov-
  NAR estimates that could draw in an         ple: If you have to go to court and need ernment will give you. Yes, I said GIVE.
additional half million buyers this year. "It to hire a process server for personal          This owner has had two doors replaced,
could help reduce the high inventory of       service, many times the debtor will lie        paint encapsulated, windows soil covered,
homes for sale," said Yun, "and get hous- about their identity and say that they             and exterior trim covered with vinyl sid-
ing markets moving again. It's hard to get are not the person that the server is try- ing. We expect a drop in heating bills due
the economy back to growth until that hap- ing to serve. But, if the process server          to new windows, and we can now say this
pened.                                        has a picture of the debtor, there is no
__________________________________ doubt about the identity of the person                                         LBP…..Continued on Page 8
                                              that is being served, and in the end you

    SEEKING INFORMATION                       will be saving money.

  One of our members is seeking to have       __________________________________
the following question answered. If you
                                                LEAD BASED PAINT: LAST
have an answer to the question, or if you
have some suggestions, please either call           INSTALLMENT?                               ►Full PARTS Line
the office at (517) 782-4384 or email the
office at regarding the
                                                             By Gae Winn                           Complete Systems
question:                                    Well, here we are at the end of this pro-
                                           ject which started over four months ago.
                                                                                                   Boilers & Parts
  What are some tax benefits of having For those of you that have just tuned in to                 Sheet Metal Shop
an LLC, or multiple LLC’s? An exam- this saga, here is a quick update: We first
ple: An LLC for cleaning services, an      learned that one of our tenant’s children               Capacitors-Grills
                                           (two years old) had tested positive for lead
LLC for lawn maintenance/snow re-
moval, unit maintenance, etc.              in her blood around the end of Sept., 2008.                Thermostats
                                           When we called the City of Jackson (COJ),                  (Mechanical & Programmable)

__________________________________ we found out that the unit had already been
                                           tested by an organization that the city hires
                                                                                                   Motors & Blowers
                                           to do this type of testing. No, they didn’t
   TEASER FOR THE MARCH call us, but they had received permission
                                                                                                   A/C Systems-Coils
   23RD GENERAL MEETING from the tenant to do the evaluation. This,                                Filters-All Sizes
                                           needless to say, was rather irritating since I
  JALA will be having Dann Burger          have NEVER given the COJ any cause to                   Furnaces-Controls
(President of Energy 21 USA, LLC) as       question my cooperation. When I asked
our guest at the March 23, 2009 general    about this issue, I was told “we do it” be-        HVAC WHOLESALE PARTS, LLC
meeting. Mr. Burger will be filling us in  cause other landlords have refused us ac-            1330 S. Elm Street, Jackson, Michigan 49203
on ways to manage the high prices of en-   cess AND because we can. Not an auspi-
ergy sources. If you want to learn to save cious start, right?
money in the future, then you will want to   The COJ met with me and even though
                                                                                                   (517)-  788-9160
attend this important general meeting.     they feel they have done tons to inform the              M-F, 9:00 AM-6:00 PM,
                                           public about available grants for resolving                9:00 AM -Noon Sat.
February, 2009                                                                                                     Page 5

  The next few                                                                     Winn Brokerage and
  pages reflect                                                                    Management, LLC
                                                                                  12 Years In The Jackson Area
   our JALA                                         •   Management - Tenant Screening - Legal Services
  advertisers.                                          • Maintenance - Repairs - Code Inspections

                                                 Office (517) 784-8833          Complete           511 Wildwood Ave.
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patronize these
great businesses
 and be sure to
ask about JALA

               1612 E. Michigan                                                 
              Jackson, MI 49202
               Phone: 782-6823
                  Store Hours:
        Mon & Fri: 8 AM - 7 PM
    Tues, Wed, Thu, Sat: 8 - 5:30 PM
          Sunday: 10 AM - 2 PM
   •5 gal. pail paint • white and premixed
       colors • plumbing , heating and
           electrical supplies • pipe
  threading •glass, plexiglass, and screen
     sold, installed • screen and window
   repair • carpet shampoo rental • key
        rekeying and master keying •
    Commercial discount terms available
Page 6                                                                    February, 2009
  Low mortgage rates and affordable prices in
January, 2009 have kept homes selling in Jack-
son County with only 5% fewer homes sold
compared to January, 2008 based on data from
the Jackson Multiple Listing Service. Based on
the number of properties listed for sale in Jack-
son County, residential homes have a saturation
point of 15.77 months down from 16.10 months
in December, 2008. Driving the housing mar-
ket right now are foreclosed properties. In
Jackson County, foreclosed properties make up
17.1% of the properties currently for sale. In
2008, 59.7% of the homes sold were foreclo-
sures. For January, 2009, 93 homes sold in
Jackson County; 75.3 of these were foreclo-
sures. The stats show that there was an overall
depreciation of 50.77% from January, 2008 to
January, 2009. Although this may sound devas-
tating, this coupled with low interest rates
means it is a perfect time to buy. If you (or
someone you know) is a first-time home buyer,
the current version of the stimulus package is
including an $8,000 tax credit that does not
have to be paid back provided you live there for
three years.

                     Submitted by Jacqueline Austin,
                       Prudential Premier Properties

                                                           STEAK’S EATERY
                                                           Vandercook Lake
                                                             “The Great Steak Place”
                                                              EXCELLENT FOOD

                                                       The next general meeting will be
                                                       held on Monday, February 23,
                                                       2009. The speaker will be Sheila
                                                       Plentz, President, from SP Recov-
                                                       ery Collection Agency in Brooklyn,
                                                       Michigan. Sheila will be giving a
                                                       presentation then will take ques-
                                                       tions from the membership.

                                                                   US 127 North-Jackson

                                                        Oak Lane


                                                        M-50 (McDevitt)
                                                                                EXIT M-50
                                                        Steak’s Eatery
                                                        4243 Oak Lane        US 127 South
February, 2009                                                                                                       Page 7
Heartbreak…..Continued From Page 3

  Of course, it had its ups and downs,                                           Reynolds Management, Inc.
and finally I got tired of picking up                                            Rental of Homes - Apartments - Businesses
trash that was strewn all over the yard                                          40 years of experience; “Let us take the
every day, and replacing doors kicked                                           headaches out of owning rental property!”
in by boyfriends that were kicked out,
                                                                                    Jay Horsfall, Owner/Judy
so I sold it.
                                                              Reynolds, Certified Property Manager—Institute of
                                                                          Real Estate Management
  I don’t know what happened, but the
sign was put up after the tenant called         Office (517) 787-1889         Around-The-Clock     2427 Spring Arbor Rd.
inspection and said that the landlord           M - F 8:30 a.m. - 5:00 p.m.       Service            Jackson, MI 49203
had the heat shut off. Since these units
were separately metered and the tenant
was always responsible for heat, I sus-
pect the tenant didn’t pay and Consum-
ers Energy (in their effort to uplift
Jackson), shut off the heat and damag-
ing the property which I so lovingly

  I don’t know if the landlord had filed
one of those cards with Consumers
Energy that allows them to notify him/
her when a shutoff is pending, but I
know for a fact it does not work all the
time. Maybe if the landlord had joined
JALA, he would have known about the
shut-off notice warning that is avail-

  So here we have a rental property
probably severely damaged and per-
haps even flooded/frozen in the base-
ment, and I am sure it’s not covered for
this kind of event. Repairable? Sure it
is, if the landlord has lots of money to
throw around. I suspect that thanks to
Consumers Energy, this property will
be abandoned, foreclosed on, and sold
for a few thousand dollars to some bot-
tom feeder who will throw very little
money into it since he can afford to
after picking it up so cheap. From
there on, it is all downhill.

  Gee thanks, Consumers Energy.
Maybe next time we’ll find an elderly,
deceased United States Veteran who
survived Normandy, but froze to death
on the battle-field of social responsibil-
ity right here in good ole’ Jackson,
                  Submitted by Robert Tulloch
Page 8                                                                                                                  February, 2009
LPB…..Continued from Page 4                  starting the court process generally does.                QUESTIONS THAT WILL
                                             It’s a business; it’s not personal. Even if                   HAUNT YOU
unit is lead-free and safe for young chil-   the tenant is totally abusive, get them to
dren, not to mention that we can no longer court and let them abuse the judge. Be
be held responsible for any children that                                                         1.   How important does a person have to
                                             sure to remember your pictures showing                    be before they are considered assassi-
show high lead levels in the units. Of       the condition of the unit before move-in
course, the COJ has not issued final clear- and you are good to go. One might even                     nated instead of just murdered?
ance.                                                                                             2.   Why does a round pizza come in a
                                             take pictures of the move-in and have the                 square box?
  To reiterate, the government has $8,000 tenant in the pictures.
per unit available as a direct grant (do not                                                      3.   Once you’re in Heaven, do you get
have to pay it back.) If the bids for re-                                                              stuck wearing the clothes you were
                                             Q: Does JALA have a list of recom-                        buried in for an eternity?
quired work go over that, there is an addi- mended contractors (electrical, plumbing,
tional $7,000 available in monies (no-                                                            4.   Why are you “in” a movie, but “on”
                                             sewer cleaning, snow removal, lawn cut-                   TV?
interest loan per unit.) This does not have ting, remodeling, and so on?) I have seen
to be paid back for five years or until the                                                       5.   Why do people pay to go up tall
                                             some of the ads in the newsletter. D.B.                   buildings, and then put money in bin-
unit is sold. The requirement after this is
all done is that you be willing to take low A: No, JALA has not yet constructed a list                 oculars to look at things on the
income people on as tenants (but you are like this as of yet. I do feel that the sug-                  ground?
not required to do this.)                    gestion has real merit. We will request              6.   How is it that we put man on the
  Now, onto the issue of housing tenants     that the JALA Board of Directors review                   moon before we figured out it would
while the unit is being rehabbed. The        the suggestion. Thank you for the great                   be a good idea to put wheels on lug-
grant provides money for them to be          idea.                                                     gage?
housed in a local motel with a stipend for                                                        7.   If Wile E. Coyote had enough money
food. Or, if the tenant has a place to stay,                                                           to buy all that ACME crap shown in
                                             Disclaimer: Answers in the ALL the JALA Mem-
the grant provides a money reimbursement ber’s Question and Answer Columns are not de-                 every cartoon, why didn’t he just buy
and food allowance. This allows the land- signed to provide legal council. Answers are pro-            dinner?
lord to collect the rent for the month and   vided by active JALA Board members who have          8.   Do the alphabet song and twinkle,
helps the tenant as well.                    had a long time in the field and considerable ex-         twinkle little star have the same tune?
                                             perience. We encourage members to do further
  Apparently, we are not done yet; tenant research on any question they may have by con-          9.   Why did you just try singing the two
complaints are surfacing right and left.                                                               songs above?
                                             tacting our legal council for their free consulta-
So, stay tuned for more (and hopefully)      tion.
                                                                                                                   Submitted by Charyl Wozniak
the final resolutions to the LBP saga.

Q: If a tenant is late on their payment, can
I call them/visit them to inform them that
I will start the legal process of a judgment
to come and claim any of their property to
sell for their late rent? I am sure you have
been asked this process before; is this the
fastest way to get paid? L.A.

A: Well sure, you can call or go over and
say whatever you like, but we prefer to
start with the tenant way before it becomes
“not paying time.” We would like to see
you take time to do a full-on explanation
when you are signing the lease with a ten-
ant. That helps to lower the hostile cli-
mate that comes about when the rent falls
into arrears. It is your property, and you
can go there to speak to your tenant.
However, remember that they do have
rights of privacy (even if they are NOT
paying), and full-on threats and descrip-
tions of taking property don’t go a long
way toward engendering full cooperation;
February, 2009                                                                                             Page 9

                              Submitted by Robert Tulloch; Taken From

   When purchasing a property, it is very important to consider reserves in calculating the cash flow. It is so
easy to overlook the long-term effect of replacement reserves when you are eager to add new properties to your
portfolio in this current market. The reserve issue is exacerbated by the higher-than-normal losses expected
from higher vacancy rates and evictions. That great deal may not be so great after all. Replacement reserves are
a way of accounting for the fact that parts of the building are deteriorating each year, and will eventually have to
be replaced. A roof, for instance, has a lifespan of about 20 years and costs about $3,000 to replace. Most in-
vestors look at the replacement of the roof as a once every 20-year expense that reduces the cash flow for that
year only by $3,000 to $6,000, instead of 20 years at $150 a year. Because the usefulness of the roof declines
each year, money should be set aside each year. A smart investor actually sets aside cash each year from the
property income so that the money to replace the roof is available when the roof needs to be replaced. Other-
wise, the investor must come out of pocket that year to make the repair. Remember, this property may only pro-
duce $900 a year positive cash flow, and the roof costs $3,000 to replace! Here's the kicker about replacement
reserves: There are many items in a rental unit that depreciate from year-to-year. Here's a potential list. Life
spans may vary because appliances in one type of unit may be used more than in another differently sized unit
and therefore will last for a shorter period of time. So, the cash flow with the refrigerator, stove, dishwasher,
five rooms of carpet, central air, gas forced air furnace, asphalt shingle roof, and water heater now has to be re-
duced by at least $1,000 per year, or a potentially negative cash flow. Needless to say, any negative cash flow is
not good. Even if you buy used refrigerators, ovens, and air conditioners, you'll still probably only break even,
which will only get worse with a long vacancy period, an eviction, tenant damage, an increase in property taxes,
or any one of dozens of other things that can happen with a rental. In fact, the only thing that generally redeems
a rental for which the buyer has overpaid is the tax benefits. But remember, the depreciation the IRS allows on
your rental is subject to "recapture" (that is paid back when you sell):
Page 10                                                                                                                   February, 2009
JALA Newsletter/                                                                                                  Presorted
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Jackson Area Landlords Association                                                                                             Jackson, MI
511 Wildwood Ave., Suite #2                                                                                                  Permit No. 337
Jackson, Michigan 49201
(517) 782-4384/E-Mail:
February, 2009 Issue

                                                                             ADDRESS SERVICE REQUESTED

               OFFICE HOURS
  Monday: 9:00 a.m. to 5:00 p.m.
  Wednesday: 9:00 a.m. to 2:00 p.m.
  Friday: 9:00 a.m. to 2:00 p.m.

                                                                                                                     $100 CASH
                                   MEETING LOCATION                                                                    Pot of Gold
                                 The next general meeting will be held                                                  Winner:
                                     Monday, February 23, 2009                                                    (Must Be Present To Win)
                                   Time: 5:30 menu/6:30 speaker
                                            Steak’s Eatery
                                                                                                                      Bob Stevens
                  The speaker for the February General Meeting will be Sheila,
                   from SP Recovery in Brooklyn, Michigan. SP Recovery is a
                 collection agency in the area. Sheila will be talking to us about                                  50/50 Winner:
                    collecting money from tenants and will be happy to answer
                                  questions from the members.
                                                                                                                    Chris Cook ($14)
                        ORDERS WILL BE TAKEN AFTER 5:30 PM. THIS WILL

      “This publication is designed to provide accurate and authoritative information in regard to the
      subject matter covered. It is distributed with the understanding that the publisher is not engaged in
      rendering legal, accounting or other professional service. If legal advice is required, the services of a
      competent professional person should be sought.” From a Declaration of principles jointly adopted
      by a Committee of the American Bar Association and a Committee of Publishers and Associations.

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