Lavar Ball’s Bluster Won’t Sell Your Rental Home
“Ex-UCLA freshman LiAngelo Ball has no chance that he’ll be drafted in June — and that was true before his shoplifting incident in China. ‘He’s not on any of our scouting lists — even the extended lists,’ one GM told ESPN.”
Adrian Wojnarowski (ESPN Senior NBA Insider)
“Gelo is the best two-guard in the draft on the fact that he can shoot better than anybody in the draft. He’s stronger than anybody in the draft.”
Lavar Ball (father of LiAngelo Ball prior to the NBA Draft where LiAngelo was bypassed by all 30 NBA teams in both rounds of the draft)
Sometimes fathers get carried away with how good their sons really are at sports. And based on how outspoken Lavar Ball is, it is no surprise how bullish he was on his second son’s, LiAngelo’s, ability on the basketball court.
Many people dislike Lavar Ball because he is brash and speaks his mind. He said he could beat potentially the greatest player in the history of the NBA, Michael Jordan, in a one-on-one game in his prime. He is an unabashed, vocal supporter of himself and his sons. And his sons definitely have basketball ability, though at differing degrees.
His first son, Lonzo Ball, was the second overall pick in the NBA Draft by the Los Angeles Lakers last year. He proved to be the real deal. He excelled in college for his one year at UCLA and had a promising rookie year in the NBA. Some NBA scouts thought he was the best prospect coming into draft- an elite passer and competitor.
LiAngelo followed his older brother and also enrolled at UCLA on a basketball scholarship. Unfortunately, he was arrested in China during a preseason trip with his UCLA teammates, and was suspended. He later dropped out of school when the suspension did not go away. He never played in a college game.
Lavar thought it was still a mistake that all the NBA teams passed on the chance to sign LiAngelo. And he blasted them. But the NBA scouts really have one job- to find the best players they can to help their organization win games. And they unanimously agreed LiAngelo just wasn’t good enough.
Sometimes this type of scenario pervades rental home sales, especially rental homes that have been tenant-occupied for many years. Landlords see other homes that sell near their rental homes and immediately slot theirs at the highest sales price.
Sometimes it’s justified. However, often it is not. The rental home is just sometimes not comparable. Tenants have lived there and may not have taken care of the home. The landlord might not have made any improvements to the home since it had become a rental and now it is dated with older parts (appliances, flooring, paint, etc.). This is when the dearth of ongoing home investment can catch up.
And that’s fine. I get it. No one wants to spend money. We hope that the house is good enough to sell “as is” too.
But buyers know what they like. And when they enter a home that is priced at the top of the market and doesn’t compare to the updated and lovingly cared for homes also for sale, they will pass without making an offer. And the home will sit on the market- unsigned like LiAngelo.
Despite Lavar’s bluster, the proof is in the pudding. Is LiAngelo a good enough basketball player to compete and star in “The League”? Is the rental home in good enough condition to catch buyers’ eyes and make them want to make the biggest investment in their lives for it? Is there a “WOW” factor or is everything just plain?
We all want quick, high-priced sales. But if the rental house can’t pass like Lonzo, it’s time to either lower price expectations (YMCA league?) or pay the money to make improvements to get to league standard.
Can your rental home walk the talk?
Happy Landlording!
Learn MoreNew York City Living & Landlording: Count the Cost
“Suppose one of you wants to build a tower. Won’t you first sit down and count the cost to see if you have enough money to complete it?”
Jesus Christ (Luke 14:28)
Shortly after I graduated college, I moved to New York City (NYC- aka the “Big Apple”). “If I could make it there, I could make it anywhere.” Wow! It was definitely an experience.
Honestly, I was a little scared. All the television shows and movies that had criminals crushing the common folk were in NYC. I grew up in NJ, but my parents really never took me into the big city so I wasn’t sure what to expect. The mafia and gangs could just be waiting for fresh meat to show up so they could take my lunch money every day. Who knew?
Fortunately, my physical safety was never really threatened. My issues were more on the economic side. I wasn’t making much money; I was in a sales job and wasn’t selling anything. My manager nicknamed me “rowboat”… because I had no sales (get it?). The lack of cash inflow was tough.
And the cash outflow required was excruciating. It was the $3.50 for a small apple at the corner bodega. Then buying a round of 5 drinks after work that ran $90.00 (without tip). I used to joke that it cost me $20.00 to cross the street. Geez, it was an expensive place to live!
Good deals were hard to come by. And breakfast at the food cart on the corner of my street was one of them. $2.00 got you a large coffee (with milk and sugar) and a huge cinnamon raisin bagel with butter. It was my go-to meal every morning that I’d take on the subway into work.
One morning, there was a couple in front of me in line at the food cart. I could make out parts of their conversation; it was apparent that they were visiting from the Midwest somewhere. When the man was placing his order I could see him getting agitated. Then he said something that I’ll never forget:
“$1.00 for a cup of coffee??? I’ve NEVER paid $1.00 for a cup of coffee in my life!”
That’s when I knew that he was going to absolutely hate this trip to the big city. I almost felt obligated to get him in a cab (and pay for it) so he could immediately return back home. If $1.00 for a cup of Joe was cause for righteous price indignation, he was due for a heart attack later that day.
He did not count the cost of what visiting New York City was going to do to him.
Unfortunately, the same can be said of being a Charlotte landlord.
The investment real estate gurus preach that you will be a millionaire through rental homes! Buy as many properties as you can! This is the way that you build residual income that will last a lifetime for you and your children’s children!
They just don’t tell you that it is a cash-poor business. All of the above can be true, but the trick is the ability to stay solvent for year upon year as things break and wear out. All the financial models go out the window when a messy eviction happens or your HVAC unit needs to be replaced (just happened to me this month- the dreaded $5K phone call…).
Carpet will not last forever and will need to be replaced. The entire house will need to be repainted at some point. Appliances only last so long. The roof too…
Long term real estate investment can be a wonderful, profitable endeavor (you’ll love your net worth!), but don’t let anyone fool you- it can and will cost you money. So before diving in too far, count the cost. A few miserable days in NYC can be remedied with an early flight home to your 25 cent coffee vendor. Several broken-down rental homes saddled with mortgages in a buyer’s market is a little tougher to navigate out of.
Happy Landlording!
Learn More$2.88M Baseball Cards & Rents: Prices Too High?
“’It’s no good, it’s no good!’ says the buyer- then he goes off and boasts about the purchase.” (Proverbs 20:14)
The ex-NFL football player, Evan Mathis, made headlines earlier this year when he sold his mint condition, 1952 Mickey Mantle baseball card for $2.88M. $2.88M! That’s $2,880,000.00 for a small piece of cardboard for those scoring at home. It seems to be a lot of money for something that doesn’t love you back, you can’t live in or drive, and really shouldn’t eat.
When I collected baseball cards as a kid, I would have died to have a card like that. I thought I was going to make it big with my 1986 Topps Dwight Gooden card (even though the 1984 was the one to have), 1986 Donruss Jose Canseco “Rated Rookie” card, and the 1988 Kevin Seitzer Fleer rookie card. Alas, my dreams of million dollar baseball cards were undone by mass production, drugs, steroids, and fading play. The value of even my best baseball cards for consistent players on the straight and narrow are worth very little now, even 30 years later.
But somehow Evan Mathis got someone to pay him $2.88M for one of his. Wow!
As a Charlotte property manager, I’ve been seeing a real estate version of this play out in the past couple of years. Rents have been going up steadily almost everywhere which has skewed the old values of what particular houses in different areas would rent for.
For example, we had a rental house that rented in the $800 range in a non-desirable area last year. A new owner took over the property, did some improvements, and wanted to rent it in the $1,300 range.
We talked about it and the conversation went something like this:
Owner: How about renting it at $1,350 a month? As the expert, what do you think?
Me (expertly replying and wearing my glasses): The data I just pulled up would not support that price. It looks like a much larger house rented for $1,150. There has never been a house in that area that rented that high…
Owner: Hmmm… well list it at $1,350 anyway.
Me (expertly): Okay.
Ultimately, the house rented for $1,350 and was on the market less than a week. So much for the “expert” opinion…
In hot markets, it’s really tough to gauge how much properties will actually rent for. Beauty is in the eye of the beholder and it gets exacerbated by perceived scarcity.
Years ago, I made the decision to adopt the rental pricing policy of “I recommend, but the owner can ultimately pick the listing price.” I go off of data and will typically recommend what I feel the existing market pricing will allow. However, that’s not always right.
Evan Mathis could have heard that expecting to get $3M for his 1952 piece of cardboard with Mickey Mantle’s photo on it was lunacy. But someone, somewhere is bragging about buying it. And he’s bragging as well!
Happy Landlording!
Learn MoreSorry, Draymond- Landlords are Looking for Cool Lovers, Not Fighters
“Blessed are the peacemakers, for they will be called sons of God.”
(Matthew 5:9)
Draymond Green is a great basketball player. There is no denying that. He is a vital cog to the Golden State Warriors and instrumental in them wining two of the last three NBA Championships.
His professional accomplishments are many:
3-Time NBA All Star
2-Time NBA Champion
Defensive Player of the Year
All-NBA Team Member
USA Basketball Selection
But he also has this statistic line: 11, 13, 15, & 15. Those are the number of technical fouls he has received in the past 4 years which puts him among the league leaders. He‘s a fighter who is prone to argue with officials and other players, often to the detriment of his team.
With Draymond and his enormous talent, you take the good with the bad. If he was an average player, he’d probably be out of the NBA for his conduct. But that’s why his coach, Steve Kerr, gets paid $5M/year to channel his “passion” into the confines of a winning basketball team.
Property managers, most who are making well south of $5M/year, also need to make sure they have a “good team” of tenants in the properties they manage. This starts with screening tenants and picking the ones who will pay their rent on time, maintain the property, and get along with their neighbors.
To help determine this, one of the main screening criteria is culling information from past landlords. We sometimes hear some version of this from prospective tenants:
“I gotta be honest- if you call my past landlord, Bernie, he’s not going to have nice things to say. And there’s a simple explanation for that- Bernie is a complete jerk! What a loser. I was the best tenant he ever could hope to have- I mean I fixed the kitchen faucet without even asking for anything from him; of course, I got no love from him. He was just impossible to deal with!”
So, I’m guessing, the tenant is hoping I’m hearing:
- Bernie is not cool. However, the prospective tenant is cool. And it’s tough for cool people to get along with uncool people. If I’m cool, I understand. And I, of course, am really cool, so I understand.
- The tenant can fix a faucet without us sending a plumber
- I am a much better landlord and person than Bernie so I can be confided in
- If the tenant fixes the faucet (or some other repair on his own), show him love. It’s what cool people do and will make it possible for him to deal with me.
However, what I’m hearing:
“I didn’t get along with my past landlord. I blame him for that and have no problem badmouthing him to strangers to further my own ends.”
By contrast, this is what a lot of prospective landlords say about tenants when we contact them:
“Jim and Jane are such a great couple! They always paid their rent on time, took care of repairs on their own, and were such a pleasure to deal with. I’m so sorry they are leaving! Great tenants!”
Jim and Jane sound very cool to me. They seem to value a peaceful relationship with their landlord.
Draymond Green is one of the fifteen most talented basketball players in the world so he can get away with not getting along, at least right now. However, there are 60 people moving to Charlotte every day looking for rental homes, so they are not as rare.
At the end of the day, property managers are looking for cool lovers, not fighters, for their rental homes. Settling for someone like Draymond is just not usually necessary.
Happy Landlording!
Learn MoreLandlords & Lease Renewals: Don’t be Like Spectrum!
First of all, this is not a blog of a Spectrum (formerly Time Warner Cable) hater. I actually don’t have strong feelings either way about them. I was a user of their internet and basic cable and was relatively happy. The service worked decently and the price was reasonable. I put my bill on auto-pay and lived my life.
Then about 6 months ago, I saw a change in my $20.00 basic cable bill (aka the cheapest plan where I get about 10 channels). They started billing me $4.00/digital adapter (I have 2) for some cable boxes they made mandatory for me to use a year or two ago. While $8.00 isn’t life-changing, I brushed up on my middle school math and computed it was a 40% increase. That’s substantial in percentage terms.
Still, changing services is a pain. I could eat a 40% increase ($8 is still $8, no matter how alarmingly you dress it up). I was not pushing the panic button (thank you, hot Charlotte real estate market).
But when that happened, I actually started looking at my Spectrum bill each month. A few months later in the “Spectrum News” section on the front page of it (I didn’t previously know there was a “news” section I could be enjoying each month!), I see the following verbatim:
Your current promotion is ending, but your savings will continue. As a valued customer, we have automatically extended your preferred rate.
(good so far…)
Important Billing Update:
Effective for your next billing statement, pricing will be adjusted for:
- Starter TV Service from $20.00 to $23.89
- Broadcast TV Surcharge from $7.50 to $8.85. This reflects costs incurred from local Broadcast TV stations.
- Digital Adapters from $4.00 to $4.99
Not good.
We’re up roughly another $4.00 on 10-channel TV, not to mention another $5.00 for internet service (not previously affected). I don’t even need to do the percentage math anymore. We’re above a 50% increase in less than 6 months on my lame cable TV plan.
Now, on general principle, I’m trying to leave Spectrum cable TV service due to a large increase which appears to be largely meritless. So I fish out some $10-$20 antennas I bought from Amazon a year or two ago and see if I can make them work. Viola! They work like a charm after I put in a little more effort in this go-round.
I call Spectrum and cancel my starter cable TV service. I won’t lie; it feels good. Injustice was made right! Then they tell me that my internet service is not only going up $5.00 next month, but because it’s not bundled with TV anymore, it is going up another $20.00. Touché Spectrum! I have to have internet service, so they may have won this battle. But I am not a Spectrum cable TV customer any longer.
Unfortunately, now my resolve to rid myself of Spectrum in its entirety has built. I wrack my brain for a solution. Wait! Who was digging up my front lawn 6 months ago to my son’s delight? Google Fiber! They’re boasting $50/month internet service! So my dream of a “Spectrumless” home may become a reality next week.
But… my true thoughts on my mini-“SpectrumGate” are how sad and unnecessary it was. I was fine being a Spectrum customer. I paid my bill every month, they collected the money, and everyone was happy. It just seemed to me that they got greedy were trying to stick it to me.
To be fair, I don’t know Spectrum’s economics. They may be losing money on customers like me and it’s better for them to lose me than to keep me at a lower monthly fee. Fair enough. That’s business.
The purpose of this story is I see landlords use similar tactics on tenants during lease renewals. The tenants pay their rent on time every month and take care of minor repairs on the rental home. But when their lease is up, the landlords try to stick the tenants with a 10%+ increase and additional fees. The tenants feel betrayed and don’t renew their leases on principle. Both parties lose.
We’re in a rising real estate market, I get it. But the grass isn’t always greener on the other side. New tenants don’t always pay the rent on time and take care of the home. Plus the fix-up and other vacancy costs could more than devour any surplus a higher rental rate from a new tenant might offer.
If you have good tenants and are making money, keep any rent increases between lease renewals within reason. There is no reason to endanger the money flow. Most tenants understand that landlord costs go up a little bit every year too.
However, if you are losing money and need to stop the bleeding, I get that too. A rising market could finally bring a new tenant to get bring positive monthly cash flow back into play. Business is business.
Happy Landlording!
Learn MoreWhy You May Want to Reject Cam Newton as Your Next Rental Tenant
“I could be wrong on him (Lamar Jackson), and I hope I am. I hope he succeeds as a quarterback. But I also go back to, if he’s going to miss, why is he going to miss. You don’t make a living as a quarterback running in the National Football League,” Polian said. “Cam [Newton] is the exception. You try to take exceptions and say they’re the rule: they’re not. Bill Parcells taught me that a long time ago. Parcells often said, if you have one or two exceptions on your team, you’ll end up with a team full of exceptions. You can’t make a living with those guys. You get one every now and then but it’s hard to do it.”
(Former Indianapolis Colts General Manager Bill Polian on ex-Louisville quarterback and current 2018 NFL draft prospect, Lamar Jackson)
Predicting the success rate of college football players coming into the National Football League is hard. It’s so hard, in fact, that talent evaluators who do this for a living at the highest level are frequently wrong; and they don’t get fired because everyone expects them to be wrong! The key in their profession is to be right more often than they are wrong, especially on the most important and expensive positions, like quarterback.
Bill Polian, quoted above recently, is in the NFL Hall of Fame largely because he evaluated talent better than his peers. He makes the point that Lamar Jackson is extremely talented; he won the Heisman Trophy 2 years ago as the best player in college football! But much of his productivity was based on his electric running of the football. His passing, however, is not overly accurate and great accuracy is typically what makes quarterbacks successful in the NFL.
Now the Carolina Panthers quarterback, Cam Newton, is an exception. He is an awesome quarterback (2015 NFL MVP- go Panthers!) but is not an overly accurate passer. But his ability to run is what gives him the edge over other more accurate quarterbacks.
Polian just doesn’t believe that exceptions are a solid way to build a football team.
I believe it is the same way with rental tenants. We screen prospective tenants on credit scores, criminal background, income, and past landlord reports. Sometimes tenants have some poor results in one or more of these areas. This can be understandable; sometimes bad things happen to normally reliable people and an argument can be made that they shouldn’t be unacceptable to landlords based on an unfortunate life occurrence (job loss, illness, divorce, etc.).
However, should a prior eviction or bankruptcy be ignored? How about bad credit or a non-positive landlord report? Isn’t it possible that the prospective tenant is an exception and will actually be a great tenant going forward?
Yes, it is possible. And we’ve had many tenants who fit this mold over the years.
But it is also true that the tenants we’ve had that had great credit scores and landlord reports almost always are great tenants for us. And the ones that we’ve had issues with seem to have had some areas that they were less than stellar in when we’ve ran their applications.
Property management can be really easy when the houses are filled with great tenants who care for the homes and pay their rent on time. Conversely, it can be really difficult when they don’t.
Cam Newton is an exception that worked out well for the Panthers (and hopefully Lamar Jackson will be one too in the NFL). But counting on exceptions to work out well to fill the entire team is a tall bill (so says another Hall-of-Famer, Coach Bill Parcells).
Be careful on how many exceptions are approved as tenants in your rental homes. Cam worked out well, but no one was positive he would when he first got drafted. We all want to give exceptions the benefit of the doubt, but it is a far riskier play than sticking with safer, traditional candidates.
Happy Landlording!
Learn MoreLike Dr. Bull, Sometimes the Best Property Management Looks Bad
I occasionally watch the television show, Bull. Dr. Bull, played by Michael Weatherly (formerly the affable “Tony” from NCIS until he left to get his own show), is a “jury consultant” who helps his criminally-charged clients pick a jury who will be sensitive to their plights and vote “not guilty” when the time comes. He and his talented team of specialists measure jurists’ reactions during the trial and change defense strategy based on their body language and other factors.
Of course, like most TV shows, things always go from bad to worse in the first 45 minutes of the show. “The client didn’t tell them he was romantically involved with the deceased!” or “Not only was she the CEO of the pharmaceutical company who would benefit the most from the stolen formula of the new cancer drug, she also happened to be the hired dog walker of the pup who had to have its irritated stomach operated on in which the stolen cancer pills were discovered!” (OK- that storyline hasn’t made the show yet…) But Dr. Bull and his team are inevitably able to pull the strings in the last moment to get the favorable outcome we all hoped for, no matter the odds. Bravo, Dr. Bull and associates!
But real life isn’t always so neat and uplifting. I remember in 2008-2012 we had clients asking us to sell their homes that were saddled with loans that were 25% more than the market value of their houses. So, much like Dr. Bull making magic for his clients… no, we actually couldn’t find anyone to buy them.
But that’s just the part when things go from bad to worse- it’s like TV, right? So we thought like Dr. Bull and came up with the silver bullet to just rent the unsellable houses out in the meantime. Yeah! That will work…. But the market rents (and our fee for management included) left the rental homes negative cash-flowing a few hundred dollars a month for our clients…
Well, this is the season cliff hanger, right? Where things go from bad – to worse – to much worse – before the glorious ending? This is how excitement builds, right?
So our next Dr. Bull-like epiphany is to hold the property for years while it negative cash flows. So, not only are these clients losing a few hundred dollars a month, there are also losses due to repairs, maintenance, and vacancies. And this goes on for years…
OK, this sounds like a downer, a depressing TV show that needs to be cancelled!
But, the funny thing is, I always felt like our best work happened back in those years when it could be argued that the results were the worst. We were able to fund stable tenants in a tough job market and economy to keep income flowing in. But it didn’t look pretty.
I haven’t seen any episodes of Bull where the good doctor gets a slam-shut life sentence case knocked down to only 20 years in prison for his client. Or a 20-year sentence knocked down to 5 years. That doesn’t sell. But, if he wasn’t a fictional character, it might be some of the case work that he was most proud of. There’s maybe some skill in taking really bad situations and turning them around slightly to make them better, albeit still imperfect.
It’s been on my mind as we’ve had some of the aforementioned underwater homes from almost a decade ago sell in the past few months. These long term clients who mucked through some tough market times with us walked out of their closings with $50K-$75K checks in hand. Not too shabby!
So maybe there is a future Bull storyline here after all?
Happy Landlording!
Learn More
Good or Bad Home Warranty Company: Who’s Taking the Call?
“My mom always said life was like a box of chocolates. You never know what you’re gonna get.”
Forrest Gump
I like to play basketball at the local recreation center. I often wind up with “Jim” on my team which I’m ambivalent about (and don’t ask Jim what he thinks about having me on his team…). What I mean is that some days, having Jim on my team is a pleasure. He’s a virtual scoring machine; he just doesn’t miss any shots! I feed him the ball and just watch him go to work. We’ll call that “Good Jim”.
But then there is “Bad Jim”. I’m not sure if he has a split personality, or if he and his wife have an “on again/off again” relationship, or what, but other days he just doesn’t have it. He is disinterested, doesn’t play any defense, passes up easy shots, and turns the ball over constantly. Frankly, it’s disheartening. I feel like we are destined to lose when Bad Jim is on my team.
Do you want to know what reminds me of Jim? Home warranty companies. Some of our Charlotte property management clients utilize them to handle their repairs.
For the uninitiated, home warranty companies charge owners an annual fee (usually around $500) to handle any repairs. So when tenants have an issue, we (or the tenants) call the home warranty company, pay a service call fee (usually $50 -$100), and they will send vendors to fix any major component or appliance issue in the home (including, if necessary, the replacement of them) that are due to normal wear and tear. It doesn’t sound like a bad deal, especially for an older home.
But, like Jim, there is “Good Home Warranty Company” and “Bad Home Warranty Company”.
When Good Home Warranty Company is on, the vendor they put us in touch with gets back to us right away, schedules with the tenant, and takes care of the issue. It can be a good experience (though it makes it difficult to establish any type of service record with a particular company as their vendors change often).
But when Bad Home Warranty Company shows up, it makes it really tough on the property management company and the tenants. We recently had a refrigerator that took around 35 days to get fixed from the initial call(!) and an air conditioning issue that took a week to resolve (a long time to put up with excessive heat in the South during the summer!). The problem is that the home warranty companies have a vendor list and they send you one that you have to work with (and some are not so reputable). Sometimes these vendors call you back right away and other times they wait for days. As a property manager, it’s tough to push vendors you don’t know and have no prior relationship with.
Fortunately, 95%+ of our clients do not use home warranties. It allows us to use our own vendors who we have worked with for years; we use them because all of them care whether our tenants have to spend the night without air conditioning or don’t have a working stove to cook with. I think it’s important to have strong teammates who you know consistently have your customers’ best interests at heart.
Jim is a nice guy, but just not someone I like to have on my basketball squad because he’s too erratic; I never know if Good Jim or Bad Jim is going to show up at the gym. I feel the same about using a home warranty company. Not knowing whether Good Home Warranty Company or Bad Home Warranty Company is taking the call makes either of them difficult to rely on.
Happy Landlording!
Learn MoreGolden State Warriors’s Recipe for Property Management Excellence
The Golden State Warriors won the NBA Championship! They displayed a level of dominance that the league had never seen in its history by winning 16 out of 17 games in the playoffs. And in the only game the Warriors lost, the Cleveland Cavaliers had to set several offensive records to beat them.
How did they do it?
The easy answer is the players. They certainly have great ones- Charlotte’s own Steph Curry, Kevin Durant, Klay Thompson, Draymond Green, etc. With that amount of talent, it could be argued that they could win by managing themselves. From a property management perspective, if you have great tenants who pay rent on-time without being asked and do their own repairs, it makes the job much easier!
But there is something to be said about the ownership group and management (including coaches) that make for a winning organization. It is truly a top-to-bottom effort to become a champion. Ownership and management need to be supportive of each other and have a common vision.
Owners Supporting Management
The majority owners, Joseph Lacob and Peter Guber, treat their employees and players well. When their head coach, Steve Kerr, had back problems the last 2 years (which caused him to miss half of last season and most of the playoffs this year) ownership showed unwavering support. They put no timelines on his return; they just wanted him to come back when he was ready. There was no coaching change controversy. They believed Coach Kerr was the right man for the job and he’s brought them 2 NBA Championships in the last 3 years.
Property management can be viewed the same way. Property managers work for home owners. And sometimes property managers make mistakes. We recently had a longer term tenant who we believe started running an illegal business out of the rental home; we don’t know why and exactly how it started. However, instead of getting angry and blaming us, the owner offered support as we worked to get the tenant out of the home as quickly as possible. We do our best, but will inevitably fail at some aspect of management. Having ownership support gives us the ability to do what needs to be done to right the ship and get back to a profitable equilibrium.
Owners Making Strategic Investments (aka Spending Money)
When the Warriors fell short in the NBA Finals last year, management felt they needed to improve the team; that meant spending and reallocating money on other players. With complete ownership buy-in, management went and signed Kevin Durant to a $54M guaranteed 2-year contract in the offseason. They were willing to spend money to potentially get better. There was no guarantee that Durant would mesh with the existing players (who had already won a championship 2 years prior without him). But they spent the money anyway. And Durant wound up winning the NBA Finals MVP!
Property management is no different. No one likes to spend money; I certainly don’t enjoy spending money on my personal rentals. But strategic investments are necessary to maintain and improve rental properties to keep them competitive against other rentals. When property managers make recommendations to spend owner funds, it is difficult to win when there is constant owner pushback. I guarantee Golden State ownership had financial questions about investing in Kevin Durant, and that is understandable! But no organizations can succeed in the long haul by practicing persistent parsimony (how’s that for alliteration!). And, really, it is much easier to not recommend needed maintenance and upgrades. The Warriors only missed winning the NBA Championship last year by losing Game 7 (so close- and they were even up 3-1 before eventually losing)- but everyone in San Francisco is ecstatic now that the organization didn’t rest on its laurels and aggressively pursued Durant.
The Golden State Warriors and successful property managers share a common recipe for consistent excellence- owners and management working together to make smart decisions for the long haul.
Happy Landlording!
Brett Furniss is a property manager at BDF Realty (Charlotte Residential Property Management), the trusted real estate advisor for Charlotte landlords & Home of $100 Flat Fee Property Management. BDF Realty utilizes their innovative Pod System for exceptional customer service in residential property management, home repairs, and home sales for single-family homes, Uptown condos, and town homes in the Charlotte-Metro Area. Contact Us Today!
Learn MoreTrump’s Cabinet Means You Should Invest in Charlotte Real Estate
The stock market will always go up eventually. Historically, it keeps happening. Most wealthy people (aka the people who make the rules- check out Trump’s cabinet of billionaires) have much of their wealth tied up in corporate ownership (stocks). It’s almost a sure thing. If the stock market crashed and stayed down permanently, our country would be in mayhem. And the dollars under the pillow and gold bars stashed in the attic wouldn’t mean much. Food would be the main currency.
So why do investors get fearful when the stock market goes down? It will go back up, right?
After 9/11, the stock market tanked. Billionaire New York City Mayor, Mike Bloomberg, had a message for his constituents. He essentially said,” People always ask me for investment advice so they can become billionaires. I don’t often offer it, but today is different. Take all of your available money and buy stocks now.”
The Dow dropped to under 9,000 in 2001, and almost to 7,000 in 2002. It is now over 20,000. Too many powerful forces have a vested interest in the stock market doing well for it to flounder long.
Charlotte’s population is forecasted to go up 50% in the next 10 years. All of those people need a place to live. Statistically, 2/3 will buy and 1/3 will rent. Housing demand will continue to drive rents and prices higher.
So, investing in real estate in Charlotte is a slam dunk? As much as investing in the stock market is, especially with a Trump administration.
So that leads to 2 questions:
- When is a good time to buy in Charlotte?
For long-term holds, anytime really should be fine. The best time to buy is when the market gets hammered (see 2008-2012 when we didn’t get many buying inquiries, but many of our clients were looking to unload their homes and became reluctant landlords). For short-term holds and flips, this might not be a great time as competition is fierce for good properties; it’s clearly a seller’s market now. But financing is easy and historically cheap right now.
- Where should I buy in Charlotte?
Once again, for long-term holds, anywhere within city limits will work; really the surrounding counties seem pretty good too. When I was a newbie investor 10-15 years ago, my first two purchases were in areas that were considered “war zones”. I bought them very cheaply ($27K & $39K) and now they are considered to be in “hot areas”. Note: I wouldn’t recommend this, especially for newer investors. The fix-up and tenant issues were challenging and I wished I didn’t own them for years due to the headaches. But there are plenty of Charlotte houses that are in better areas that will make coveted rentals for years and years. I’d recommend buying houses that are more expensive (the market is pretty good at pricing houses based on risk). The homes I bought over $100K were much easier and safer investments that have also appreciated.
Much like investing in the stock market as a whole, Charlotte real estate is a great long-term hold that doesn’t require a large amount of analysis. And Trump’s cabinet members (and President Trump himself) own a lot of real estate too…
Happy Investing & Landlording!
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