Pennsauken Township in South Jersey gave a rather revolutionary presentation to our local SJREIA recently and I am hoping, maybe naively, that other townships will see the light and change their policy for their own good. That is up to each township.
What was so revolutionary?
They decided that the code enforcement officials will focus on compliance with safety, health and environmental ordinances and won’t hit investors (flippers and landlords) and other homeowners with code violations for ridiculous stuff on the books such as the color of a mailbox.
Why is this important?
Because the townships are competing with each other for our investor dollars, expertise and time, whether they realize it or not.
Let’s face it, who solves the problem of vacant and blighted properties? Investors do! The township doesn’t.
Managed properly, the township doesn’t have to invest anything except cooperation to get us investors to invest millions of dollars of our own money (or other people’s money), thousands of hours and unmatched expertise to beautify THEIR towns!
Investors are the best solution to the vacant and blighted property problem. The majority of rehabbers are mom and pop investors who do a limited number of deals per year but we still bring $100K+ to each house renovation, we bring our own equipment (or the equipment of the contractors WE pay), we invest our valuable time and effort and then we pay taxes to the municipality, often when taxes were not being paid by the previous homeowner.
Municipalities have other reasons to attract investors, especially the BEST investors.
Benefits brought by the BEST investors:
We renovate to much higher quality than owner occupants. Investors like me live by the guideline to “provide best house at the price point." That also raises the value of the neighboring properties as well as the quality of the tenants and buyers.
We file for all permits…much more than owner occupants.
We comply with code. We are not afraid to invest in highly qualified licensed contractors vs questionable DYI homeowners. We actually cooperate with code officials.
We maintain houses in good to excellent condition as landlords, more than average owner occupants.
We diligently screen residents for responsible citizenry.
Pennsauken Township figured this out. Many other townships have not.
I will not mention specific names in this article, but there are a few townships in our area in which I will never invest unless they change their attitude toward investors and bring proof that they have changed to be somewhat reasonable.
In one case, I did a major renovation on a $170k single family home in 2012 that was an eye sore to the subdivision, a stinky mess inside, it had an underground oil tank and a pool that was a haven to mosquitos and other wildlife.
Knowing this would be a significant rehab, I went to the township construction department a week before I closed on the house, with a list of a dozen compliance questions about the renovations I planned, especially the oil tank, the pool, fencing, extensive drywall replacement , plumbing and electrical, including what permits they required. For example, some townships require a permit for a water heater, others don’t. Some townships require a permit to replace 25% of the drywall in a room, others don’t. In theory, the code comes from the state, but different townships have different ways they implement and enforce code.
On the day of purchase, I went straight from settlement to the township with the permit package, signed and sealed permit applications for electrical, plumbing, building and fire and zoning application to remove the pool (yes, zoning needs to approve the removal of a pool in this township!). I brought a copy of the deed and HUD-1 (this was before TRID) to prove that I own the property.