Landlords

Rental Outcomes: Don’t Bust The Guy Breaking Into Your Car?

It was a sunny Sunday afternoon and I was in my car with my kids to get some exercise in.  I wanted to shoot some hoops, so I convinced my kids they did too.  It was on.

We parked behind a local school and walked over to where the basketball court was on the other side of it; there was also a small playground 50 yards behind the court.  My son and I wanted to play basketball.  My daughter also initially wanted to play until she didn’t… then she wandered over to the playground.

It became a volley of walking from the basketball court to the playground and then back again.  “Dad!  Come see this!”  “Dad! Over here!”

On my sixth trip back to the playground, I realized that if I walked far enough into the playground, I could get the sight view past the school to see my car in the distance (which was completely obscured from the basketball court).  And I saw a strange man walking suspiciously around my car.  I say “suspiciously” because there were no other cars there.  What was he doing?  He was looking into my windows and did not know he was being watched.  How suspenseful!  And what to do?

I went through the options.  I could yell and let him know I saw him.  That would probably prevent any theft or damage to my car.  Yawn & boring.

Or I could go (undetected) back to the basketball courts, stash my kids in the bushes, and then sneak around to potentially catch the stranger breaking into my car.  Once he broke glass, I could ambush and subdue him; in a perfect world, I could handcuff him with the zip ties in the back of my car.  Then I could call 911 and the Charlotte Observer letting them know that a “local hero” had one criminal on ice waiting for them- no charge.

That would be awesome unless… the stranger was bigger than me, good at fighting, and also included kidnapping as part of his criminal repertoire.  Then he might drive away in my car with my kids, and leave me bleeding on the pavement.  That would be a major fail and one that would be difficult to explain to my wife.

Seriously, what outcome did I want?  Though the hero thing sounded pretty good, I needed to get real for a minute.  Despite the appeal of potentially getting a key to the city from Mayor Lyles, what was going to be the cost?  Realistically, if all went close to best-case scenario (which it rarely does), I’d have a busted car window (that I’d have to pay for and deal with), be waiting a while for the cops to show up (with my knee in a guy’s back who is probably cussing me out), and be babysitting two young children at the same time.  That did not seem like a great outcome, even with the best-case scenario.

To me, property management is about creating good outcomes for our clients; the best outcomes come from tenants who stick around a while and consistently:

1. Pay the rent
2. Maintain the property
3. Get along with their neighbors

We recently got a call from the HOA of one of our condo units where they accused our tenants of unkempt living, namely having a unit so disgusting that bugs where infiltrating the homes of neighboring tenants.  This was clearly a violation of #2 and #3 above.  This was not good, if it was true.  They wanted us to evict the tenants immediately (and if we didn’t, they were sending a Sheriff that night to do so).

Despite the sheer illegality and impracticality of such a threat (landlords wish it was this easy to evict bad tenants- “oh, just call the local Sheriff and have him go over the same day to remove them…”), what outcome did we really want?  Did we want to remove paying tenants who never had any prior issues?  Of course not.  We wanted the tenants to correct any cleanliness issues, if applicable, and then continue to stay and pay rent.

So we contacted the tenants and explained what the HOA alleged.  Then we let them know we’d be there for an inspection the next afternoon to ensure the HOA there was no issue.  The tenants understood and said there was no problem with that.

The next day, our inspection showed a very clean unit.  We thanked the tenants and reported the findings to the HOA.  There haven’t been any issues since.

The desired outcome was to keep the tenants, not to try to play “gotcha” to catch them violating the lease.  That would put ourselves in a position where we would need to make a decision that no one wanted to make- the costly removal of paying tenants.

Viewing issues from a desired outcome perspective, as opposed to the initial bravado impulse, can help make decision-making more clear.  It may be “boring”, but “boring” property management is typically the most effective and keeps the checks coming.

Postscript: So I yelled something at the guy at my car and he left.  My son hit some shots, my daughter hit the swings, and then we left (unscathed) in a non-damaged car.  Yawn…

Happy Landlording!

Property Management: Changes for the Better in 2021?

“Everything in moderation, including moderation.”

Oscar Wilde

“…The man who fears God will avoid all extremes.”

Ecclesiastes 7:18

Let me start off by saying I’m not a big clothes shopper.

I was minding my own business the other day at home and my phone buzzed.  I looked down at an alert from Amazon Photos with the “From 10 Years Ago” tag; it was a photo of my beautiful wife and I on a date at a Panthers game (awww…).

Two things struck me:

1. Look at that guy with his gorgeous, flowing mane of hair (what happened???)!
2. The UNC sweatshirt and wooly I was wearing looked eerily familiar… When I glanced in the mirror, I realized I was currently wearing the same exact outfit.  I tend to view these things from an optimist perspective (I still fit in my clothes- nice going!  Carolina blue really has always really accentuated my eyes…) as opposed to reality (Buy some new clothes, cheapskate!).

OK, sometimes things should be changed; buying some new attire from time to time never hurt anyone.

And sometimes not changing things can hurt people.  In 2020, COVID made changing certain in-person business practices necessary for safety reasons; this really accelerated the use of certain technologies in property management, especially self-showings, video virtual tours, and virtual lease signings.  These methods have been used and adopted by many in the industry to varying degrees:

1. Self-Showings: This is where a prospective tenant is able to access keys through a lockbox to show themselves a property without a company representative being present.

At first take, it seems risky to have strangers in a vacant home when they could just take desired pieces of the property with them when they leave.  But this trend has been building and is now commonplace.  I think a real estate agent provides limited value being on rental showings.  Renters don’t need to be sold into making a decision.  At the end of the day, they are taking time to look at rentals because they either want to or have to move; I don’t see a lot of rental home tire-kickers.  They want to like the property and get it done with, as opposed to new home buyers who sometimes look for perfect.

However, there obviously needs to be some controls in place (avoiding the “open-barn” theory).  It’s important to know who is going into the house and have some concrete, confirmed contact information that can be given to the police if something goes awry.  Done properly and moderately, self-showings are efficient and allow renters to view homes on their own schedule.  It can work really well.

2. Video Virtual Tours for Rentals: I’m still not on the bandwagon on this one.  I really want people to visit the rental in-person so they can make sure it is right for them.  If someone wants to buy a home from across the country sight unseen, that is fine with me (we live in America, right?); they can spend their money anyway they choose to.  But if they wind up disliking the home after purchase, they have no one to complain to.  With rentals, they can complain to their landlord for a year or more.  No thanks!

I want to provide enough information for people to decide if they want to see the property (pictures, accurate property information, price, etc.).  But I’m still not convinced that videos can replicate being there.  I also want to be cautious abut adding an expense to our owners to get a tenant we may wind up in a forced bad relationship with (“I don’t like the neighborhood”, “The building is too loud”, or “You purposely videoed away from the wall in the dining room to hide the scuff marks.”).

3. Virtual Lease Signings (E-signing Documents): I like this trend, to a point.  We’ve used it for a few years for lease extensions with existing tenants and paperwork for our owner clients who needed to add properties.  Since COVID, we have even started to e-sign the lease documents prior to meeting the tenants at the property to give them the keys as a precaution.

However, I think this trend has gone too far.  It seems like it is a ready excuse not to talk or meet.  I like to meet with the tenants and review the lease in-person.  There is value to attaching a person with a (masked) face.  If we’re going to the property to get our sign and lockbox anyway, why not (safely) say “hello”?

Anyway, in property management and in life, change isn’t always good or always bad- and it often does not need to be wholesale!  Treading moderately with new technologies can be the best path forward.

So I think that means I can still wear the sweatshirt and wooly as long as I mix in some new pieces of clothes occasionally, right?

Happy Landlording in 2021!

Renters: It’s Not You, It’s Me…

In the annals of relationship-ending conversations, there are many flavors:

Reflective: I think I may hate you

Cooperative: We just don’t complete each other

Corporate: We need to divest

Dramatic:  “This” (hands motioning in a circle around both parties) isn’t working for me!

Conditional: We need to either work harder at this or start seeing other people

Non-Committal: I’m not sure about us

Cold: You are altogether awful!  Leave me alone forever.

Soft Approach: It’s not you, it’s me!

When a relationship has to end, it’s hurtful, and usually to both parties.  People put themselves out there and are vulnerable.  It’s tough.  And there’s no good way to part ways, even when it has to be done.

In a less personable way, it’s the same situation between renters and property managers.

Renter: This rental house on-line looks enticing!

Property Manager: Come and see it in person!

(later)

PM: Did you like it?

Renter: It smells and is way over-priced!  If you think it is the “best house on the street”, you may be as dumb as you look.

PM: Fortunately, I’m not that dumb…  I’ll notate your response as “not interested at this time”.

But when the tenant response is favorable…

Renter: I love it!  I’ll fill out a rental application!

PM: Woo-hoo!

(later)

PM: Your results are in and things look really good.  But, unfortunately, you’re not approved.  Thanks for applying.

Renter (confused): What???

PM: We’ll, it’s not you, it’s me!

Renter: Seriously??

Sadly, yes.

The problem is that in Charlotte’s hot real estate market, property managers can get 10-15 different applications for certain homes (typically single family homes $1,300.00/month or less).  This makes it tough to pick a tenant.  Some of the applications have undisclosed evictions and can be weeded out quickly, but several of them are usually really good.  If we had five of the rental house, we could fill them all.  But we only have one.  And that creates unhappiness for the parties who are not approved for the house, even when they are very “dateable”.

It truly is me, not you.  It’s nice to be landlord in this Charlotte market from a vacancy perspective, but we can certainly understand the renter frustration of not getting a house with normally acceptable credentials.  It’s tough!

Happy Landlording!

Predicting Presidents & Charlotte Real Estate Prices

There are people who are very interested in politics, especially in the US presidential election every four years.  “It’s the most important election of our lifetime!  Think of the children!”  I don’t fall into this camp.  However, I do like to try to predict who will win.

That doesn’t mean I’m any good at it, unfortunately.

I try to use “common sense” on who will win- ha, ha!  Below are the actual winners from the past few elections and my rationale at the time for why there was no way they could win:

2008: Barack Obama.  I was wrong.  I didn’t see how a community organizer with no experience running anything could win.  Plus, he shared his middle name with a top, evil dictator.

2012: Barack Obama.  I was wrong again.  The economy was in shambles and the “Great Recession” was on his watch.  I wasn’t sure that President Obama could effectively keep blaming former President GW Bush for the poor economy his entire term.

2016: Donald Trump: Wrong on this one too.  Where do I start on how I didn’t think his election was possible?  I mean he didn’t even think he was going to win.

2020: ???  Pollsters say Joe Biden is close to a shoo-in.

Now let’s shift to Charlotte real estate.  When COVID-19 began to affect our lives in March 2020, people were understandably afraid.  Corporations began rapidly shedding jobs, the stock market tanked, and there was little optimism in the world.

We had just put up a home for sale for a client that month (who really needed to sell) and we were concerned that COVID-19 would adversely affect the market.  We lowered the price and worked quickly to get it under contract before things got worse.

However, the adverse effect on Charlotte housing prices never really happened; in fact, prices actually climbed and continue to climb.  We probably should have raised the price!

So why am I bringing up my poor predictive skills?

Sometimes it is more effective to forget the short-term noise of what is going on and stick to market fundamentals.  The market fundamentals for Charlotte are that 66 people on average are moving here every day and that number will probably increase as people flee big cities for more space.

There is also a housing shortage in Charlotte.  This has been exacerbated as people are “sheltering-in-place” and not putting their homes on the market.  The fundamental “supply vs. demand” rule takes effect and prices rise with scarcity.

Things can change quickly, but fundamentals and long term trends tend to move glacially or not at all.

And political incumbent candidates usually win…

Happy Landlording!

Lost in Translation: Landlords Are Not “Pants”

“OK… but do we rock?”

(Opus from “Bloom County” after reading his band’s confusing review in Rolling Stone)

I remember back when I was in college and I had the opportunity to be a student-athlete abroad in Merrie Olde England.  I thought the new scenery shouldn’t be that hard to figure out being they spoke English over there.  But I didn’t account for some of their slang that as a “Yankee” I wasn’t privy to.

I was on the American football team and we had a pretty mediocre record.  In our defense, we only had about 20 guys, so most of us were playing offense, defense, and special teams.  We had some good players so we were able to keep the score close for most games (and win some of them), but exhaustion would set in during the fourth quarter due to our lack of depth; this would sometimes doom us.

Very few fans (aka only our friends) showed up for these fake “football” games (aka not soccer).  So I really didn’t know if anyone cared or thought we were any good.  However, someone pointed out that an article had been written about the team, so I was anxious to read it (was I mentioned in it???).  I was in the computer lab later that day and found it.

Now, I’m not sure if the writer was trying to appear impartial, but I had a hard time figuring out what his take on us was.  And then I wasn’t sure if he even understood what he was watching, as he used some soccer references to describe the action.  He listed some good things about us and then list some bad things, and then vice-versa.  Finally, at the end of the article, he gave his summation.  “All in all, the Staffordshire Stallions are pants.”

“Pants”??  What the heck does that mean?  I was at a loss.  Do we rock?  That’s what I wanted to know.

So I nudged the guy beside me and asked him what “pants” meant.  He looked at me for a second, noticed my American baseball cap, and had pity.  He said, ‘It means rubbish, complete rubbish.”  Ouch.

For us to have a .500 record and beat some much bigger schools with 60+ players on their sidelines, I wasn’t sure how fair his assessment was.  Some of our 20 guys hadn’t really even played before and were pressed into action.  The article really could have been about how well we were doing despite the odds being stacked against us every game (and then how some “American saviors” were making their mark…).

I bring up this story because it reminds me of negative press landlords are taking for being against the eviction moratorium (not legally being allowed to file for eviction for non-payment) imposed now during COVID-19.  The plight of affected tenants has been well-documented and no one wants this economic devastation.  But to make landlords the villains is ridiculous.

I “know a friend” who manages a property where the tenant has not made a rental payment in 2020.  My friend’s client still needs to make a mortgage payment, insurance, and property taxes every month without any offsetting revenue coming in.  He provides a service where an agreement was made to pay him for it, and he is not getting it.  And he has nowhere to go for help.

I’m not sure if any of our property management clients are multi-millionaires who are immune if no rent comes in on their rental houses.  I get calls and e-mails from concerned owners when a tenant is late in paying or a repair seems on the high side.  Most need the rents to keep their real estate investments afloat.  I don’t know of any that are sitting on their yacht in the Mediterranean who rarely need to check a bank account!

Some of the criticism probably comes from people who just don’t understand the real estate investment game.  On the other hand, I also understand (during tough times especially) that eviction is dirty word and can appear heartless.

But this is a situation that has been lost in translation.  Landlords are not “pants” for wanting to receive their rental payments for providing houses for people to live in and making repairs to keep them functional.  It makes sense for them to have the option of legal recourse to go to if things are not working out.  They rock for trying to keep their obligations up-to-date during tough times.

In summation, the COVID-19 economic situation is “pants”, not landlords (or the 1998-1999 Staffordshire Stallions, for that matter).

Happy Landlording!