Following a successful dual-interview last season, Michael O’Rourke, a Worcester landlord and big-time renovator, was interviewed on his own, live, by the entertaining and knowledgeable Rich Merlino. Mike O'Rourke is an expert in tax abatements, receivership, and no-frills landlording.
At this meeting we also addressed early winter prep to help you save money because winter is impending, and savvy landlords have already ordered their ice melt.
Just for good measure, we also be gave a brief tour of some of the hidden features of MassLandlords.net. Members state-wide can access this powerful website to help run their business!
40 Years' Experience: Interview with Mike O'Rourke
40 Years’ Experience: Interview with Mike O’Rourke
Rich: Tell us a little bit about your business, how long have you been in business, how did you get started, how many units do you have, just kind of a quick overview for the folks that meet you for the first time?
Mike: In 1975, I started. I bought my first three-decker off Vernon Hill. As of today, I have over 60 buildings, over 200 units. Plus I have a rooming house now. I mean straight. I’ve done real estate. I’ve worked a fulltime job for many years for UMass Memorial, and I’ve retired from there. While I was doing real estate, I was the head of security, director of the Hahnemann Memorial Campuses.
Rich: All right, so 1975, you’re just kind of getting started in real estate, seeing if you like it, seeing if it’s your thing. We have a lot of experience here. Real quick, do you have a business philosophy and if so, what is it?
Mike: Basically, I try to stay ahead of the city if I can. One of the things, one of the men do every day is go around to all of my properties and just check for rubbish or stuff thrown around the outside. If the city goes by and sees nothing outside, they’ll just keep going. If they see bags of rubbish or debris around the outside or furniture, they’re going to stop and they’re going to start inquiring. Once they start inquiring, then they go start going into the house. If you keep your outside straightened out, basically you’re going to keep everybody away from you.
Rich: That’s a pro tip right there. You mentioned your new rooming house. Why don’t you tell us what it’s called, where it’s located, and what’s a brief history lesson of that building in particular?
Mike: Well, that building is called the Albion. It’s on Main Street. It’s across the street from the YMCA. It’s known for troublesome builder in the city. Five years ago, I was called to be a receiver, but in the plans of being a receiver, the gentleman that owned it hired me. We went to court and he talked to the judge and the judge says he could hire me and we wouldn’t put it into receivership.
I did it 5 years ago and I hired the vice squad. I had two men walking the foot beat in front of the building. I had them walking the hallways. I hired Enterprise Cleaning. I had them go up and down the hallways. All I wanted to do is smell bleach. I say, “When you guys are all done, go back up and start all over again.” We did that for about two weeks.
We then started going into some rooms and people would let us in. I heated up all the rooms for bed bugs. I brought in the dog. I heated up the rooms. I bought all new mattresses for the building, all new bedframes, and I got a mail license. Once I got a mail license, I turned the building back to them.
Now, I’m back to square one again. I need all new beds and they threw all the bedframes away, so I got to start with that. I started exterminating. Monday and Saturday, we’re going to do three more floors and Monday, we’re doing another floor and we’re done . I‘ve exterminated the whole building. I’ve put up a flag. It caught a lot of people’s eyes. I put a flag right over the front door. That caught a lot of eyes.
I’ve talked to a lot of neighbors. A lot of people are upset about the building that they want it closed down, but this building really is needed in the city because there’s a lot of people that are having hard luck. We just got to get them on schedules that pay it. The building needs a lot of cleaning. The units need to be cleaned, painted.
We have to do security there, and off and on, I’ll have two vice police officers at night walk the floors. They come in. They do four hours, and it makes a big improvement in the building. They start getting nervous when they se the guys walking around with the guns strapped in their thighs and they’re going up and down the corridors. The people that are troublemakers start hiding in their rooms.
I did this on one other receivership, and I had the people in the building come out to the edge of the driveway and look up and down the street before they went out in the street to see if they were out there packing the plain cars. It is effective specially if you got a house of drugs, prostitutes, people fighting, and people intoxicated.
Rich: Can anybody here Mike in the back?
Rich: Yes, okay. We got some yes’s and no’s. If you could hold the microphone a little bit closer. We left off at prostitutes.
Mike: Well, the vice squad, they walk around. The prostitutes that I have right now are not working the building or they’re not working—
Rich: When you say the prostitutes you have, they’re not on the payroll though like the vice squad and like the cleaning crew?
Mike: No, no.
Rich: All right.
Mike: But we’re working to see if they’ll either straighten up or we’re going to have to give them a 30-day notice to move out.
Rich: All right. This building has a long tradition of near duels and it sounds like you’re not letting that tradition continue?
Mike: Right. I’m going to straighten it out and get it back up running right.
Rich: Wow! Again!
Mike: Again [laughter].
Rich: Jeez! Let’s give that a round of applause.
Rich: That’s not easy work like I don’t want to do anyone of those things you just talked about for 10 minutes. Did you?
Rich: No! I mean that there’s somebody in the city who’s willing to through the work and has the knowledge and the experience to do it makes a real big difference for all of us. You mentioned one of the things you do every day is you go around and you check the properties. Start from the beginning. What does a typical day for Mike O’Rourke look like? Like you get up, you pee. Start from there.
Mike: I go to the office. I see the emails. I go out. If I’m out 4:30, 5:00 o'clock, I could just grab a coffee and I could take a tour around and just check the properties myself just to make sure. Sometimes, I just ride around and just see from the road, I can tell if the hallway lights are out or something. Then I make a list and send one of my guys out to take care of that. I meet my men at the garage at 7:00 and I send them off whatever problems we have.
One of the things they did this year is that they’re getting all the calls coming to me, I put them to an answering service, and then they text me the messages. I also get them back on the computer. If I miss a message on my text, my secretary picks it up and then she calls me to make sure I saw it.
I have one, sometimes two gentlemen go out and they go around to all my properties with rake shovels and barrels, and they pick up all the trash. Even on trash day, we go by. If the bag is broken, we pick it up; if the black bag is out there, we pick it up. We try to avoid the $25 ticket is number one, but we avoid the city when they’re driving around, the nuisance truck driving around. If they stop and they start walking around the house, then if there’s somebody outside, someone comes over and talks to them, next thing you know they’re in your house and then they start on the right.
Basically, that’s one thing that I’ve done for a long time. I’ve tried to train the people to use the yellow bags, but that’s not working. If you leave the trash there for one day, the next day, you will have five bags. We kind of pick it up everyday just to make sure it looks clean. I don’t want ride by and see trash around the front of my house. A lot of times, I’m driving in a pickup, and if it is, I’ll stop and throw it to the back of the truck. If I got the car, it’s going to stay there. That’s one.
Then I send out the guys to do whatever complaints I got out. If we’re doing over a building, we go there. Then we wait until they wake up and after lunch, we go out to the apartments and then do any calls we got. Then of course, we do the service calls at night if we get any texts or anything for emergencies that can’t wait.
Rich: You get up early. You hit the pavement, and you start inspecting your properties every day?
Rich: All right, when is naptime like when somebody is telling me about how they became successful, I’m hoping to hear you don’t want to rush out of bed. It always sounds like there is actual work and schedules and discipline and doing the right things over and over again, so everyday is trash day at your properties?
Rich: Got you! Okay, that’s huge. In what ways have you adapted your business practices and your habits over the course of time like what are some other things that have kind of evolved at how you do things?
Mike: Well, one week, I might say take all these houses and check the stairways to make sure all rubbish is taken out of the stairways, make sure that the smoke detectors and heat detectors are hanging. They’re up in place, they’re hanging, or they’re not beeping. That’s the big thing, the beeping. Then if they start beeping and they’re beeping in the middle of the night, they take a golf club to them and they just stop them from beeping.
Rich: Do you rent to a lot of golfers, Mike?
Mike: Yes [laughter]. Or the baseball bat, whichever one they have on hand.
Rich: Okay, so speaking of which, when you’re doing these patrols in maybe some rougher areas, do you prefer the traditional wooden baseball bats to carry with you, or do you use an aluminum bat like you seem like a wooden bat kind of guy?
Mike: Well, I don’t carry of any bat because I may use it [laughter].
Rich: Good lord [laughter]! You mentioned getting a secretary.
Mike: Yes, I have a secretary in the office.
Rich: Okay, and you mentioned having an answering service.
Rich: I imagine that those definitely help save you time and energy and they help make sure nothing falls through the cracks, right?
Rich: What are some other things like that that maybe as we grow, we can do more of things like that?
Mike: Well, with the secretary, I started out specially when I got the Albion, I got to check court actions and just and look and see if there’s any of my properties in the court action, but of course the Albion is in the court action because that’s what I really got to focus on to make sure I stop the problems over there. She Does all my bill pay and security deposit pay and getting my deposits ready. Then I go out and I’ll do the deposits as the day goes on.
Rich: All right, so this would be a good spot. We might have just covered a lot of stuff about the daily routines and properties. Does anybody have any questions right now they want to jump in and ask Mike about any of that stuff? All right, we have a couple of them. Do I have the mike? All right. Doug is going to bring it around.
Male Audience 1: I got a couple of questions. First of all, how much is per rented? What percentage of rent is in the Albion right now? How many of those people do you have action would break down?
Mike: None right now because all the court actions now that they had, I got to start over because I’m a new corporation. If you asked me Friday, I had 30 people that I am ready to give 30-day notices to. They’re kind of getting the word that there’s a new sheriff in town.
Male Audience 1: How much is rented? What’s the percentage is rented? How much is rented?
Mike: Right now, probably I say 70 percent rented and probably about 20 percent not paying, so we are on shaky ground right there right off the bat, but we’ll keep going.
Female Audience 1: How much is the rent in dollars?
Mike: Five hundred dollars to $600 a month.
Doug: [unintelligible 0:13:24]
Male Audience 2: In terms of drugs, exactly what’s the process with drugs if you have either a tenant you know is using drugs or a tenant that you know is dealing drugs, or even a property adjacent to you where you know there’s drug dealing and drug using? How is the liability spread out exactly? What do you do there?
Mike: If it’s across from me or around me and I know it, I notify the vice squad. If it’s in my property, I hire the vice squad and I have them work the night shift and we watch them. If we get them, once they’re arrested on your property for drugs, I call the sergeant or whoever is in charge and I ask them to get me a letter from the chief, saying we arrested so and so. If we get that letter and we arrested so and so, we can have that tenant into court within a week. For these tenants, the judge wants to move them on.
Male Audience 2: That will be a 7-day. Exactly what is the process, sir?
Mike: Well, I get the lawyer. He sends them a notice to appear in court. It’s seven days, but it all depends on when that Thursday falls. By doing it on Tuesday, I kind of get to wait until the following Thursday, but it’s a fast-track to get these people out. If I have to, I get vice squad to come back another night just to grab them again; I don’t mind.
Doug: A question here, Bill.
Bill: You mentioned that you have a system setup where you go by the houses and you have a certain period of time between checking the smokes and the CO2s. What about just checking the apartments in general for problems, for issues like leaky faucets, things like that?
Mike: Basically, I don’t get around as much as I’d like to into the apartments but we do collect the rents face to face. I don't have them mail it to me. We go to every tenant.
Mike: Even as of today, my mother helps me. She’s a great help to me. She’s 87 years old and she’s still gong out there, hustling to get the rents.
Bill: What if the tenant does damage to the property. How do you collect that? [unintelligible 0:15:55] a tenant do a lot of damage.
Mike: Some damage is just as easy as to give them the security and I just go and fix it. I got to paint the unit anyway. I got to patch the holes where they have all their pictures. I got to replace the cupboards. I buy them from Home Depot especially, so if a tenant leaves, I tear the cupboard right out. If the hardwood floor is good, I clean it up, I varnish it, and that lasts for two or three tenants. I put VCT tiles in the kitchens and we have a buffing machine. We go in, strip them, wax them, and then the next time, we change the tenant, we do the same thing again.
Bill: I have a new system where I think it’s better than the VCT tiles if you want to talk after the meeting.
Mike: All right.
Doug: Question? Yes? I’ll slide through here in the middle. Here you go.
Dick: Mike, I think one thing you should mention is the fact that what you’re just explaining, there are a lot of people in here who don't have the ability or a waxing machine to take care of waxing their floors and the ability to do the repairs. I know you do work for me every year, and I assume you still do property management. Is that correct?
Dick: Well, I have to recommend Mike as a property manager. Obviously, you’ve heard that what he does is a lot of work for himself. I can’t believe he can go out and do other people’s work, but if you need a property manager to help you get something going or getting straightened out, I definitely recommend Mike.
Mike: Thank you.
Doug: Thanks, Dick. You want to do more questions? Do we have more questions? Yes, I’m sure. Sophie.
Sophie: How expensive is the vice squad?
Mike: Roughly $50 an hour, 4 hours, so it’s $100 an hour, two men. They’re not going to come. One man is not going to come. You’ve got to have two.
Doug: Other questions, Peter?
Rich: That’s $50 per man, though. Is that right?
Peter: Mike, I was just concerned about when you’re cleaning up the Albion or any house like that, (a) what’s it going to cost, and (b) what was your incentive?
Mike: I enjoy buying real estate and this is really a job, and I am going to straighten it out.
Peter: You were right about tenants.
Mike: I did it five years ago. It’s a little bit worse now, but a lot of stuff I did five years ago is all gone, again so now I got to start over.
Peter: Besides paying the policemen, what else did you pay for to get it up--I understand the get up and running. That’s not the issue.
Mike: Well, I got to do the exterminating. I got to do new beds. I had an electrician in there for a few days. I had a plumber in there for a few days. They did the own wiring and their own plumbing and I had it all straightened out. I pulled the permits and everything we do with the city.
Peter: How many rooms is it?
Doug: How may rooms?
Mike: Sixty-eight right today.
Dough: Sixty-eight. Sandra?
Sandra: Mike, are you putting in surveillance cameras specially in the Albion? Is that something that you’re considering doing?
Mike: I don't know. We had them, and they broke them and we operated surveillance cameras in. Also on the cameras reporting in, we’re going to have the camera, but on the other side of the hallway, we’re going to put up a wireless fire alarm that’s a camera and we’re going to watch the other camera because the people that are going in, they’re putting their hand over it and breaking the wire, so we want to catch the person that’s breaking the cameras.
Doug: Nobody tell anybody what was at the Albion.
Doug: Other question?
Rich: I’ll make sure I don’t bring it up at my next Albion hangout meeting.
Doug: Well, it sounds like a good deal to me, $500 a month. I might move in, Mike. Rich?
Rich: I was tempted to ask why would they get rid of the bedframes, but there’s no good answer, is there?
Mike: No. I went out yesterday and I had to buy 40 [unintelligible 0:20:25]. How can somebody walk out the door with [unintelligible 0:20:28]? You got to seeing this. Forty [unintelligible 0:20:36] just disappeared. Now we had to put in 40 yesterday, so we got to have a main and then bigger windows than a regular house, so a $20 screen that we got the one they had made, now it’s cost me $35 to $40 for the screen. I paid $800 to have my screens done and have them ready yesterday for an inspection.
Rich: Oh, my lord! All right, so let’s talk about saving money for a second because since I brought up the ice melt, like last year I bought 1 pallet of rock salt and one pallet of calcium chloride, but you have an idea.
Mike: I buy the calcium chloride. I buy one kind, and I buy four pallets, four at Home Depot. I call them and I tell them and then I call Lowe’s, and I call different few people, even Barrows. Barrows will compete. Then if you want to go back to Home Depot to get your 10 percent off the lower price and didn’t get your discounts and stuff, Home Depot will beat them all, but sometimes if 10 people got together here, you could buy four or five pallets, and it’s going to be well under $20, but you got to figure out how you’re going to get them home and how you’re going to deal with it.
I often thought of buying a trailer truck and just sell them right off the trailer truck. It’s a hot item right now. If you buy them now, as the winter goes on, if it’s very slippery and stuff, you’re not going to have it. I use it on some of my jobs that I snow plow for the calcium. It’s safe and it’s good on the concrete, too. The city sidewalk, sometimes I have a 1-ton dump. I just put a couple of scoops of sand-salt mix, and I do the city sidewalks with that.
The new law with definitely the first snowflake, you’re responsible. You got to make sure your walks are salted. If they slip and fall, they are going to sue you. They’re going to try anyway. Some of the things in the winter now, I got my guys going, if there’s icicles on the house, I want them knocked out. I don’t even want 2 feet of them because some of them walking in, a kid playing, they’re going to get hurt, so we do that.
Today, one guy called me. He said he picked up the rubbish and some lady just backed up her car up to one of our dumpsters and fell the dumpster. I said just get the license plate. Get that and then we’ll track it down. Then we open up the bags. If I can find your name in there, I can take it to the city and they’ll send you out a paper to go to court, and then I will just have to go in and say I found this paper in my dumpster and they get fined.
Sometimes, the city will just send you a fine. You don’t pay it, you got to go to court. Again, the tenants get papers and tickets. Really, there’s no obligation for them to pay them because there’s no penalty if they don’t pay them. Rubbish, there is a penalty if you dump illegal rubbish.
Rich: All right. Anybody remember Alice’s Restaurant by Arlo Guthrie?
Audience: [unintelligible 0:23:56] me.
Rich: Yes, a couple of people. I cannot tell a lie. I put that envelope under that two tons of garbage. You know what I’m talking about, right?
Rich: Okay, as you’re cleaning up these properties, you have to pick new people to move in, right?
Rich: What tenant screening techniques have you come across that might be useful? Do you use something like a Ouija board. What does this look like for you?
Mike: Basically, I’m running now more so on a query check because people, they don't have credit, but if you’ve been arrested for prostitution, you’ve been arrested for anything, if you’ve been arrested for drugs, I don’t need you. Tenants are bad enough right now. I take a lot of people to court, probably 15 people a month that I’m taking. You count the constable. You count the lawyer because I’m a corporation, and the court fees, the judge wasn’t far off a few months ago and she was here and she said you are hitting $78,000 because they don’t want the furniture, but they’re making you get the sheriff and get the moving truck.
If you can buy them out, buy them out. Give them a couple of hundred. Even if you give them $1,000 on top of your loss, you’re going to be ahead of the game. I—
Rich: It pains me emotionally to hear you say that. I understand the math, though.
Mike: Yes. I’ve given people up to $2,500 just to get out.
Mike: But you see all the furniture they got in the house, they don’t want it, but they just want to put you through the misery to move it out, so you go out. You give them money to meet you outside the door, cash for keys. You got to call it cash for keys so that the judge doesn’t like you to say you gave them money. It’s cash for keys and they go out the door.
Rich: Oh, boy! All right, what are some things you can do short of hiring police details that will encourage or foster good tenant behavior?
Mike: They got to talk to me [laughter]. I do go around especially if I know there’s trouble with some people or whatever, they call me. Tenants sometimes will call and leave word that there is a problem. Some of them will say these people are throwing the rubbish off the third-floor porch, right down in the yard. They just changed oil in their car and they just let the oil run down the driveway.
Well, first of all, my guys would go at your throat if they see that because they got to clean it up, so they do make comments to other people, but then they tell me that I can pay them a visit, and most likely we’ll end up in [crosstalk 0:26:48].
Rich: You’ll pay them a visit. You sound like Dirty Harry. That’s awesome [laughter]. People are just launching the trash out the third-floor window?
Mike: Yes. The trash is a big issue. It’s left in the hallways. I even went as far as I used to buy recyclable bags, and I had a guy go around with my guy in the day the city trash come down Harlow Street or Lincoln Street, my guys will be out there 6 o'clock in the morning, bagging their trash, putting them in yellow bags, and just leaving it out for the city. It does save us money because we don’t have to rent to the dump, but it balances out the time I got to pay, the bags I got to buy. I go into a store, I buy seven cases of yellow bags at a time. sometimes if the tenant is halfway decent and I can convince them into them, I give them a couple of yellow bags if they a lot in their back porch.
The big thing is I need that rubbish off the back porch. If I get the yellow bags and they put it out; if not, even if they brought the bags down, we’ll pick them up. We’ll ask them. We don’t pay them, but we’ll ask them. We can take pictures and we could take them to court on 30 days, but I’d be in court all the time. I’d be spending my whole Thursday in court.
Rich: Jeez! Remind me never to go to Mike O’Rourke’s house trick or treating. Here you go, kids! Have some yellow trash bags!
Rich: Throwing stuff out the window reminded me of something. This has nothing to do with anything, but we’ll tell you anyway. Every so often, I think I’m a genius about something. I did not want to drag my Christmas tree through my entire apartment. I live on the first floor and get the needles everywhere. Has anybody else experienced this? Does the tinsel ever go away?
Okay, it never goes away, so I was like here’s what I’m going to do. This was March by the way, so the Christmas tree was completely like it was a fire hazard. I was like, all I have to do is put this thing trunk first out the window and then I can just go outside and drag the other feet through the sidewalk? That’s what I did.
I went and had lunch, so there was a break in my plan. I went outside and somebody had stolen my Christmas tree in March. There was snow all over the ground and I was looking around for it to see where it went and there was a trail. It was so windy, the thing blew like a tumbleweed. It went up to the neighbor’s stairs up to their front door. I can only imagine what these people thought when they opened up their front door in March and there was a Christmas tree right there [laughter].
There was no way. I guess the wind blew it there. Why would anybody even have a tree in March? They would have thought that somebody deliberately dragged it there and put it there, but I didn’t, but these people were jerks, so I just left it there.
Rich: If the SWAT team was there like every other week, I wasn’t going and walking down their property. Forget out it! Anyway, moving on, what’s communication like with your residents? I talked a little bit earlier about talking to people when it’s subzero and trying to communicate with them about what to do with that. Kind of building on that, you have over 200 apartments. you have a lot of human beings to communicate with. Aside from being there in person, how else do you effectively do all that?
Mike: Well, some of the things I did is I talked to the gas company and I got landlord gas meters. I have a gas heater in the sala that I can set for 40 degrees, and it goes on anytime the sala goes below 40, and it’s very reasonable. That’s one of the items. If I need a fast fix, I throw up electric heater and I wire it in, and that keeps ice from freezing. The gas way in the best and I can directly vent them right outside.
The other thing we do is we know a couple of places that may freeze, so we go around and pay them a visit. One of my guys will go and pay them a visit. They leave the water to drip. We show them how to leave the water drip, and sometimes they do and sometimes they don’t. But as long as we got the heat in the sala, we’re pretty good.
In the past years, I’ve had probably one freeze up, and that’s pretty good. The batteries went dead and the thermostat in my heater went off, but I was able to start the heater up again and we thawed them out and we didn’t really need to get a plumber.
Rich: Nice! I love lucky breaks like that, no pun intended. Yes, the other thing you tell them to do, the tenants, when it’s really the coldest is to open up the cabinets.
Mike: Open the cabinet doors—
Rich: So the heat gets in.
Mike: Leave the cabinets so the heat goes into the cabinets, bottom cabinet, kitchen cabinets. Make sure the bottom door stays open specially if you have the gas stove and gas stoves. There’s still some around. Now the new law about parlor heaters is that you have to have a sheet metal plate underneath the parlor heaters. If your parlor heater goes off and you call the gas company now, they’re enforcing, but you have to have a sheet metal plate underneath the heater and you have to have an L bracket to screw that heater down to the floor, so no one can tip it over.
Rich: Right! When you communicate with your tenants, you’re sending your guys over there to knock on the door. Is that right?
Rich: Okay, face to face.
Mike: If we can’t get them, we leave a note on the door, just telling them. We give them a call again. We try to call them. Some of them don’t answer the phone; they don’t answer their door. Some places today I was in, I just walked right in and announced myself, and they’re sitting inside, just ignoring, the toilet is leaking or running all over the floor. They call me, but they don’t want to let us in, so we just walk right in.
What I’m doing is setting up my apartments to have a master system, and I have master keys for a good amount of home now that I just carry one key and I can to any apartment I want. If I have to get in an emergency, we just go in and we announce ourselves and we go.
Rich: Nice! I suspected that that was going to be your communication method because when I asked you, we were talking about the fuel assistance lady, remember?
Rich: When I asked you, you said you were going to get her number, were you going to go through your cellphone contacts and find her number? No. Were you going to go through your property management software database for all the people you do business with and find them there? No. What did you tell me you were going to do to get their number?
Mike: I’m going to give you a business card.
Rich: No. You said you live on the same street as she does.
Rich: And you’re going to go, knock on her door.
Mike: Right. She’s down the street from us, off [unintelligible 0:33:48] Street. She wants to come and she wants to talk to everybody because a lot of these tenants didn’t get fuel assistance. If you got one or two people on fuel assistance in a building, the fuel assistance people will come out. They will put plastic over the windows. They will change the showerhead. I don’t really get into that to try water and change the showerhead because the next day, they’re going to take the showerhead out and they’re going to put the same old one back, or they’re going to get another one because the one that saves the water is hard to get wet under.
Rich: All right, so I imagine it’s been enough minutes and somebody probably has a question for Mike. We just went over a lot more great stuff. Doug has the microphone.
Doug: Let me start first back here. We have Greg.
Greg: Hi, Mike! By the way, I’d like to just say, Rich, you do a fantastic job. The humor really kicks up a notch, so thank you. Mike, I got a couple of questions. First thing is you’ve been in Worcester since 1975 and probably before that. You’re dealing with the heart and soul of Worcester. I’d like to hear your opinion about the direction that you see Worcester is going over the past few years and what you see going forward as it relates to a good place to invest your money in real estate.
Mike: Well, first of all, I’ve done receiverships in a lot of the towns around and I’ve done some up in Fitchburg and stuff. There’s a lot of tougher towns in Worcester and some of the rental towns, the rent is not as good as Worcester. The other reason I stay in Worcester, I know everybody. I know the inspectors.
Rich: Because you go up and knock on their doors.
Mike: Right! I know the inspectors. The inspectors may call me up and say, “Hey, Mike, there’s a bag of garbage in front of this house.” Or, “Mike this lady called me and she wants me to come over and check her apartment for something.” I get the heads-up. I get four guys over before the inspector comes and we take care of the problem.
Greg: In your opinion, is the City of Worcester on the right track?
Mike: It is on the right track. I’d like to see more happen on Main Street. I think we’re spending a lot of money down on the Shrewsbury area and stuff. We have to concern ourselves with filling some of the storefronts on Main Street.
The other thing is with Worcester, I find if you’re not into drugs and if you’re not into gangs, they’re not going to bother you. I mean go on around being a landlord, go into on somebody’s houses, they could bother you. they know what you’re there for. They know they’re going to have $1,000 or something in your pocket; you might have more. Then you just got to be cautious yourself of where you’re coming and going.
Greg: Okay, so all these people you’re throwing out at the Albion and everywhere else and everyone else is tossing out here and there, where are these people going?
Rich: I was wondering that.
Mike: Sad to say, I really don’t mind where they’re going as long as they get out of my building. I’d rather have an empty apartment than you living there free.
Doug: There are 70,000 small property owners in Massachusetts. MassLandlords is only 1,200. It’s not going to go to MassLandlords member. Sandra?
Sandra: Just a couple of things. If you’ve been watching the real estate lately in terms of three families because that’s what I do. We have a couple of other realtors in the room, the prices are going up considerably and are the rents. If you look even on Trulia, or on Craigslist, or any of those sites, MLS, anything like that, you will begin to see that the rents have increased dramatically.
When was the last time you’ve heard of $1,400 for a three bedroom? I’m seeing them on Belmont Street, Belmont Street. I manage a lot of properties in that area, so I would tell you quite honestly that Worcester is very definitely—we have several realtors here. Am I right about that? Absolutely!
Sandra: You are seeing way more of the increase in those properties.
One other thing that I wanted to say because Mike, those of us who don't have four guys going around, communicating with our tenants, one of the things that we found helpful with our office is that we do robocalls. We literally have set up all of our tenants on a system that if we need to get out messages to everybody, we just simply plug it right into the computer, send out especially now that winter is coming, some of the things that Mike said is really important about keeping the water flowing and the doors open and stuff like that.
If you send them the reminder even if it’s on a robocall or a blast email, it reminds them to do these kinds of things, and you don't have to be on the phone like I used to do, thank God for my staff, but I used to have to be on the phone calling everybody, “Don’t forget to do XYZ.” I don't have to do it anymore. There’s enough software out there that it makes it a lot easier for landlords to notify their tenants to do the right thing.
Male Audience 2: Who do you use and what do they cost?
Sandra: Gosh! Ask my assistant. She’ll tell you. Call my office tomorrow; she’ll give you. Thank God for my assistant because if I had to tell you those things, I’d be out of business.
Rich: There are actually a lot of them that you can use to do stuff like that. One is RoboTalker. There’s another one that’s like Ezy Text. The open rate of emails is like 30 percent or 40 percent, or something. Doug, is that about right?
Doug: After about 4 days.
Rich: Yes, okay. So the open rate of text messages is like 98 percent.
Doug: After about 4 seconds.
Rich: Yes, exactly. Blast texts, if it’s a short enough message, can be really useful. We do both. All of those robocall things also do blast texts, as far as I know, and they’re really cheap. I think it’s like half a cent to send a text message. I mean how many apartments do you really have? I mean even if you send out 200 of them, you’re not spending that much money to get? How much time does that take?
Mike: It is cheaper than a plumber.
Rich: Amen, brother!
Doug: Any other questions or comments? Yes, Bill.
Bill: On robo-texting, can people see other people’s numbers, telephone numbers?
Rich: That’s a great question. No! It’s not like when you’re text 10 people from your iPhone and somebody replies and the other nine people are like, “Oh! What the hell is this guy doing? I don’t want to be involved in this conversation for the next two days.” Does anybody experience this? Yes! So, no, that’s a great question. It doesn’t work that way.
Phil: Thank you.
Male Audience 3: Yes, thanks. Having been a landlord for so long, how many times have you been sued by tenants?
Mike: Three or four.
Male Audience 3: Four. Did you prevail in every case? Did you win?
Mike: You never win, but—
Male Audience 3: I’d like to hear about some of that downside—
Rich: Say that again.
Male Audience 3: [laughter] I’d be curious to hear about many of those cases, what happened. Also, it sounds like you take a very strong position with the tenants. Have any of them tried to us that against you in court, claiming things like self-up eviction or intimidation?
Male Audience 3: Okay.
Mike: A lot of them, so I got to be the nice guy when I go to court.
Male Audience 3: Because I’m always trying to figure out how—
Mike: Times I’d be sitting there and I’d go on and I get a punch in the side of my leg from Jonathan Finkelstein, saying, “Just keep quiet. They’re going to go.” But the slip and falls, that’s the major one. One of them, I had the guy told me that the roof fell on his head. Judge Martin was the judge at that time, so I had to go into court, and the guy defended himself, so I got up in the stand, and he said, “The roof fell on my head.”
I said, “At no time did the roof ever fall on your head.”
He said about three or four times, and every time I said it did not fall in your head and he was starting to get mad, madder, and madder.
By the end, Judge Martin says to the defendant. He says, “Mr. O’Rourke is playing with your mind.” Then, Judge Martin leaned over and asked, “What happened?”
I said, “The suspended ceiling, which was fiberglass, fell down and there was a hole in the roof and we did fix it. We put a new tile up and it’s all done.” That gentleman tried to sue us.
But the question he was asking, I was answering, and I’m just showing what kind of guy he is, so he was getting madder and madder and jumping up and down, and I was just playing games with him.
Rich: I mean, a drop ceiling is like sponge material. This guy is all sore like sponge debris fell on his head.
Mike: Well, they saw the dollar sign.
Rich: All right.
Doug: A question out here.
Female Audience 2: Actually, I don't have a question. I have information. You mentioned tenant on heating assistance and that’s a great deal for any landlord. It happened with me about 3 years ago. I had a tenant who is on heating assistance. I got my whole first floor of my building completely insulated—because it’s an old house with no insulation—completely insulated. I got the bulkhead cellar door. There was no cellar door. It was just the bulkhead. They built the door for the bulkhead. They insulated pipes. They insulated the floor above the cross-base that I have. They did all of this. It was like $7,000; did not cost me a penny.
Mike: The only thing with that is if you have knob-and-tube wiring, they will not cover it.
Female Audience 2: That is—
Mike: Then you have to get an electrician to change the knob-and-tube wiring out before they will do their part.
Rich: Which might mean gutting the apartment, I mean getting rid of that stuff is not easy.
Mike: Well, they’re not going to knock up the walls. If they’re just going to do the solid floor or something, you can insulate. Just do the solid floor. Up the walls, you can take your chances. I mean, I don’t recommend it, but they’re not going to see the knob-and-tube inside the blaster, but that’s if they got to come in from the outside or the inside, and they got to blow it into the walls.
Update in the electro, that’s a big item because a lot of these old houses still don’t have grounds and plugs, so you need a two-prong plug. I know like if you go and change the plug, you put the three-prong in. If you have Section 8 and they go around and check there’s no ground, they’re going to make you either change it, put a GFI in there, or put a two-pronged plug, then you can buy the three-pronged adaptor to go into it.
Rich: All right. I hope somebody is taking notes for me. I can’t really write when I’m up here. There’s been a lot of great stuff, and you guys have had awesome questions like one after another. Before we move on, does anybody else have anything they want to ask right now? Okay.
This is great because for those of you who might not have been here, we had this February. We had Mike and Russ Haims, some of you guys here for that? A lot of folks, so that went so well, we did a follow with both of them. We did Russ and also Mike. Mike, you were recently quoted as saying that Russ Haims resorts to witchcraft in his business.
Mike: Russ is a good landlord and he has a different clientele than what I have. Russ deals with students and he deals with their parents, so if they damage his apartments, he goes after their parents. If he has to put them out, he goes after their parents. He doesn’t have to deal with the tenant.
Now his tenants are all students. Now, our tenants, most of us have three-deckers, whatever. We don't have students. We have people that are on welfare. We have people that are paying cash. We have people that go CMHA and get their rents, and after two years or sometimes after a year that they’re with you, they don’t sign up their papers or something, and you’re stuck with them. Then you got to evict them.
What money you think you made, you didn’t make nothing because by the time you get them out and they get their legal aid, now when you go to court, the sign is up in the window, free legal aid, just ask at the desk, and they get a free lawyer.
Rich: And that’s how you know this is a diplomatic guy. He didn’t say anything about witchcraft. I completely made that up, and he turned it into just a nice commentary. Nice job, Mike [laughter]. You were talking about the fuel assistance, and a couple of other things. One thing that I’ve gotten the habit of doing, I don't know—I think we talked about this.
As soon as I find out someone is on food stamps or they have some kind of aid, I actually give them the national grid form. It’s actually part of our move-in packet where they save 25 percent off of their electricity. It amazing that nobody knows this, so if they spend less money on bills, that’s more money for what?
Rich: Rent, yes! Everybody knew the answer to that one. It’s amazing to me like we give this to people all the time, and they’re like, “Oh, wow! I’ve been on food stamps for 5 years. I’ve never heard this before.” Yes, anything we can do to save them money ultimately is a win-win.
Mike: I buy some lights at Rexel up off East Mountain Street, kind of behind Price Chopper. What I do is I go in, and I get those LEDs. They’re probably about 8 inches, but they’re real light. You don’t have to worry about them for 5 years. I buy like 300 at a time. I buy a pallet, $5 a light. Home Depot is $12. Sometimes, I might have to buy a little bit bigger if the room is bigger, but basically this light goes in all the apartments.
A while ago, I got lights from National Grid. They’re big heavy globes. They put them in, they thought it was the best thing going. Well, they never chained them to the ceilings, or anything. Now they’re pulling the ceilings down when people play with them. The tenants are not going to buy that $15 lightbulb. So it’s just easy for me to throw their light out, put this $5 light in. It looks good, It’s a plastic lens. If it falls, it’s not going to hurt you. I buy them in Rexel.
Also, you could call National Grid as long as you have a landlord account. Sometimes, they have programs that will go over. They will come in and change some lights in your apartment. They might change the lights in the hallways.
The thing is you got to watch what you get from National Grid. They have a contractor that comes in and does it and legally, you should be chaining them up or whatever, that doesn’t happen. Then you have a guy that has to go back later and rechain them, or fix them, or figure out they’re too heavy, I got to pay $15 to replace your lightbulb, so I have 300 lights, and we two a couple of boxes in the truck every week and we run into them. If we have a lightbulb out in the hallway, we just change the light right then and there.
Some of them, if you have a porcelain light there, this light that I get from LED, all I have to do is twist it and it goes right into the socket and put the cover on and it works right on the led. The other ones, I can wire this to the light, too.
Rich: That’s great, all right. Mike, what’s one thing that separates successful landlords from those that seem to experience nothing but the headaches?
Mike: Well, a lot of people have asked me why I bought the Albion. I really bought it for fun.
Mike: And if you saw the article today, a lot of people like to go to Foxwoods, they like to go golfing, do other things. I like to buy real estate. I do a lot for the city. A lot of times, I get called out in the middle of the night from the city that somebody didn’t fix the hot water heater, or there is no hot water and the landlord won’t respond. The city calls me and we respond. We go out. We do it. If a circuit breaker popped, and nobody would go out and fix the circuit breaker, the city calls me. I bill the city; the city pays me and the city puts a lien on your property.
Rich: All right, so you don’t want the city to do that.
Rich: So you bought the Albion for fun like a project?
Mike: Yes. It has something to do.
Rich: All right. Something to do. Landlords have a habit disorder. If you ever talk to people who invested in other areas of real estate or maybe do other things, it’s like, “Why on earth would you want to do that?” If you want to know the reason, Peter is a psychologist. If anybody has to be analyzed like maybe you do, he can probably help you out with that [laughter].
No, but that’s awesome though because you have the system down, you know exactly what to do, and no matter how big of a job it is, you know you can handle it and you’re going to get it done.
Mike: I have 200 units right now. I don’t need anything else I’m happy, but this is something I’ve always wanted to unload some of the three-deckers and get a bigger building. This is not the type of bigger building that I want, but I know I can straighten it out. The last time I straightened it out, I got a lot of free press out of it, and then people are calling me from all over, how do you do this and how did I do that. That’s basically one of the reasons.
I went around even against my best judgment or where my attorney said, “Don’t talk to nobody.” I went out and met all these people that were supposed to go to the licensing board screaming and yelling, I went out. They all knew me, but I went out and told them I bought it.
I went to the Main South neighborhood watch meeting the other night. I went there. I met some of the other people there. I met some of the people in coffee shops. I asked the city manager, “Call these people in. Put them here at the table with us and I will talk to them.” He called four or five of them in, they showed up, we had a conversation. One person, we had a phone conversation because she couldn’t come. After we were done, some of them were congratulating me. There’s one or two that were still against me, but they’ll come around.
Rich: But they have to respect that you’re willing to stand your ground and try to show them why your intentions are good, and why this is the right thing to do.
Mike: I think the building has been so bad so long, I think they don’t think it can be fixed.
Rich: They’ve given up, yes.
Mike: Right, and they don’t want it in their neighborhood. I don’t want it on Blue Bell Road either, but it’s on Main South. It’s been there for a long time. We got to straighten it out. The people that are there, the only other place they’re going to go is under the bridge and camp out for the winter because we don't have a PIP shelter anymore and the place up in Queen Street is full, so there’s no place for these tenants or people to go. They don't have a lot of money.
Rich: Got you! It sounds like you’re pretty fearless with any size problem. Is there anything that worries you? Is there anything that really just kind of makes you nervous about when it comes up?
Mike: No, the beginning of the week.
Rich: The beginning of every week?
Mike: No, the beginning of this week, I had some restless nights, thinking what my next step was going to be. I didn’t want to go and just go in and just show the muscle right off the bat. The first thing I did, I put a flat over the top of the building. Why did I do that? I don't know, but I put over the top of the building last Thursday.
When I went to the meeting, I put a neighborhood group, they said what’s your plans. I said the first thing is I put a flag right over the front door. Nobody even saw it coming down Main Street. That means to tell me they don’t even look at the building, and they all ran to the window to look out. “You did put a flag over the door.” Something like that, why I did it, I have no idea, but I thought it was going to catch somebody’s eye. It fooled me; it didn’t catch somebody’s eye.
Rich: But you didn’t specify what kind of flag it was. This is like a Captain Crunch flag. This is like what is the flag?
Mike: [laughter] No, it was the United States flag.
Rich: It’s an American flag.
Mike: Yes, American flag.
Rich: Good move. All right, I thought you will hold me in suspense there. I’m not so sure what it was.
Rich: All right, so you were worried about this particular project, but is there anything else that would normally keep you up at night other than this is all work? I mean it’s a family shop.
Mike: No, I sleep very well.
Rich: [laughter] All right. Aside from visiting your properties, is there a second most common activity that you do like what’s the rest of your day look like? Where do you spend most of your time on?
Mike: Right now, the last few days, court, talking to lawyers, going to the Albion, talking to lawyers, go back to the Albion. I spent a lot of time in the Albion within the last couple of weeks and there are people, they see my truck. It has a logo on it; my car doesn’t have it, but I stand out in front of the building if I’m there, and I’d lean right on the parking meter, and I conduct my building right on the sidewalk. If you were riding by, you will see. I got a few toots. The police officers put the lights on when they’re going by. I want the neighborhood to know I’m there.
I went over to the school, the school is across the street. I gave them my card. I went over last Saturday. There were some of my tenants sitting on the school’s side stairs, and I went over and I say, “You guys live across the street. Stay across the street. Don’t be coming over here.”
They said, “The last management told us to come over here.”
I say, “Well, the new management says to stay over to our side.” I put a rail up in the middle of the stairs. They had one there five years ago. I put that railing up the stairs and the left side is for them to sit; the right side is for us to walk and we have a railing on both sides.
I got rid of the dumpsters. The dumpsters were just a nightmare to me. If the dumpster guy wouldn’t show up or it snowed and it’s all over the ground. I got rid of all the dumpsters. I put trash barrels in every floor. Then I got a chain and I chained the cover to the trash barrel. I don’t care if they never use that cover, but if the board of health comes by, they say, “You need a trash barrel and a cover?”
It’s right there. the cover will fit on the top, but if it’s not on, they’re not going to cite me. It’s there. Then we have a bag. We take the bag out. We bring it down. On a Sunday, we got to take an extra bags, so we do a bag on Sunday morning, then we move it down to the first floor and we put in another barrel until Monday morning.
We threw a lot of beds. I mean if they’re bad, I got to go out and buy all new bed, but right now, I’m trying to put Band-Aids on. It’s just kind of buy a cheap bed right now for the time being until I get some bids out for beds.
Rich: Wow! There is just so much in there; not just the specifics of the information but the level of commitment and involvement and just when you pay somebody a visit, that means something.
Mike: Well, a lot of people, they deal with my mother during the day. Then when we take them to court, they say, “What are you doing here?” I say, “I’m here to throw you out.” Like one lady, every year she don’t pay the rent for 2 or 3 months. It’s come to a point now, you could tell me my mother died or my brother died, someone died in my family, I can’t believe you anymore because everybody’s dying in everybody’s family.
Rich: Yes! She’d probably run out of family members by now.
Mike: Anyway, I told her yesterday, “You owe me $3,000. You either give me the $3,000 before I go to court or when I go to court, I’m putting you out.”
“I can get RAFTs. I can get all this.”
I said, “I don’t want your RAFT. I want you out.” I said, “Every year, you’re doing this to me; every year someone is dying.” I say, “I’m sorry for your deaths, but I got to run a business here.”
I had a lawyer one time, somebody might know him, Peter [unintelligible 0:59:45]. He was a very good lawyer, and he’s no longer a lawyer now. I used to take cases to him and he would say to me, “You know, you’re keeping me busy.” He stood up one day and pointed his finger right at me and he said, “This is the only free advice you’ll only ever going to get from me: you treat this like a business or get out of it right now.”
I always remember that and I always say that and he’s true with what he’s saying. You got to treat this like a business. I mean I got friends and sometimes I’ve been in another friend in. The friend stiffs me, and then now I got to go and evict him and now they’re mad at me.
Rich: You got to go, pay them a visit.
Mike: But you know something, I don’t care if you’re mad at me because when this is over, I’m not going to be your friend anyway. I’m not going to talk to you.
Mike: So you’re gone. I want my money.
Rich: All right! We probably have time for like 83 more questions. Does anybody have some more questions for Mike?
Doug: Right here. Andy?
Andy: Yes. How many people are working for you?
Mike: I have four people that work for me and one gentleman works half a day. I get four people working for me, and we got one person who works part-time. He works at the school department in the afternoons. I get electricians and plumbers that are subcontractors, and I got two subcontractors I can call in whenever I want.
What I am looking to do is I need to get a licensed plumber, and I need to start them at one end of the city and let them go to every one of my apartments. If a hot water heater breaks here and there, pull them off to do that. When he’s all done at the other end of the city, go back and start inside. I think I can pay his salary and save money by having one plumber on my payroll.
Rich: Maybe you could send some of the prostitutes to vocational school and kind of kill two birds with one stone.
Andy: And the second question. On three-deckers, how do you deal with gas and gas stoves, second floor or third floor?
Mike: I have a gentleman. He lives at Great Brook Valley. He used to work for Diamond and different companies around the city. He fixes them. Of course, it’s cash. Basically, he’s the only guy that I pay cash out of my whole company. Everybody has workman’s comp liability, but he’s the only guy that can fix them.
If they can’t be fixed, you got to get rid of them. You got to put a gas stove in, put a parlor heater right beside it, and that parlor heater needs a sheet metal plate under it. All the stoves got to be screwed down to the floor. You got to plug the hole going into the chimney. A lot of the newer buildings I’m doing over now, I’m putting wall-hung units in, direct venting them right through the building. You got a $1,600 rebate and you also in some of the companies like DH Adams right now, they give you a $300 credit card for buying the unit from Boss.
Rich: So many gold, gold nuggets in this. This is awesome.
Male Audience 4: Congratulations!
Mike: Thank you
Male Audience 4: Many of us aren’t as large as you are and we can’t have three or four—no, no. I didn’t mean that [laughter]. My question is how do we find good people to do work? I had a plumber re-shafted me. You get these guys snow removal or whatever that happens to be, and if you’re too small, I have three, or four, or five units, how do you go about finding good people?
Mike: Well, first of all, if you find them, hold onto them. I have a plumber that works for me. I talked to him the other day about the Albion. He says, “You know, I’m too busy to go over there.” Nothing against him, but I had to bring in another plumber online and now I got two plumbers.
One of them is Rotex, a little bit more expensive, but a few months ago, I called them in the middle of the night, I needed a drain snaked. The city called me, the snake drain and they came right out and did it for me. Last month, I was in Ireland. A sewer line backed up. They snaked the line. They said it was crushed. They came in the next day, dug it up, and fixed it for me. I’m in Ireland; I’m doing the transaction. Then I’m looking to be paid right then and there. I have an account with mostly all of my people, and if I’m away, they will do it. If my nephew calls them, whoever calls them, they will show up.
Rich: Real quick, Mike. If people have questions for you after the meeting, are you going to be hanging around for a couple of minutes?
Mike: I’ll stick around a while.
Rich: Okay, and if people put something up on the message board like if they thought of it, like if they woke up in a cold sweat at 3 o'clock this morning and say, “I really wish I asked Mike O’Rourke this question!”
Mike: Call in [laughter].
Rich: Call in, okay. Yes, the answering service will dictate it to you, right? Perfect! Yes, because we are coming up on the close of the meeting, I think we only have time for one more question, Doug?
Doug: You had a couple. Is there anyone who hasn’t had a chance to ask a question?
Carol: I do.
Doug: Okay, Carol.
Carol: Thank you. Insurance.
Doug: Insurance. Interesting, go ahead.
Carol: What do you about your insurance policies on your Albion and all your other multi-families?
Mike: First of all, some of my insurance, on my three-deckers, I’m self-insured. I have my insurance with JJM Insurance, John Marshall and Mike Marshall, they own the company. They’re on Channel Street. I’ve had them for a long time. They take very good care of me.
I called them one day last week. I said, “I need this insured today. I got them some information, and by the end of the day, they had it insured.” They matched the same price the other landlord had, so it wasn’t like I was trying to match anything. I was just trying to just get insurance, so they came back with the same price the other people had, but they got it for me the same day.
Being self-insured, if my building burns down, I really don't go after rent laws or any of that stuff. I maybe get $140,000. That’s it, but over the years, I’ve made money. the other thing with that is if someone trips and falls, that’s one of my main things I want covered. If someone is suing me, I want that covered. Those are the things.
If I got a water leaking, it comes from the top floor down to the first, I’m not calling them. I got a $5,00 deductible. I got $10,000 deductible on the Albion. I don’t call for those little things. I just go in, let’s fix it and get it over with. One time, I had a water line break, 2-inch waterpipe, flooded four apartments. I called them. they were there, and I got my insurance and I got my money.
Rich: Cleaning up the city, hanging the Stars and Stripes on his building, setting an example for all of us, let’s thank Mike O’Rourke.
Mike: Thank you!
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