BDF Realty Tag

March Madness: How to Pick a Great Bracket & Great Rental Tenants

Everybody loves March Madness.  Even property managers!  Chances are the only repair calls will go to the cable television companies if their television screens start to flicker.

But now the hard part starts; trying to predict who will win each game of the NCAA tournament.  Picking a perfect bracket is tough; no one did it last year after millions of entries.  The odds are seriously stacked against getting them all right.  And, inexplicably, it’s even tougher if you’re a serious college basketball fan!  The men’s college basketball fanatics, who watch all the games year round and know that Duke should absolutely kill Mercer, wind up picking the wrong team to win.  Meanwhile, the clueless non-fans who turn on Mercer Street to go to work everyday and choose Mercer to win, wind up getting the pick right.  Go figure!

To make good picks, fans rely on statistics and past performance versus other opponents.  And then they look at other, intangible signs.  Are their players healthy?  Are they experienced or are the teams filled with unproven freshmen who might wilt in the big game?  How did they do against big teams during the year?  How about fast teams that like to run?  How well are they playing now?

Much like fans, property managers are tasked to pick the best tenants when they get many applications for the same rental property.  Some, like Kentucky this year, seem to fall in the “no-brainer” category.  Great credit scores, great landlord history, make plenty of money to afford the rent, and stay away from trouble with the law.  They don’t seem to have any weaknesses and look to be a shoo-in for application approval.

But what about if Kentucky’s starting center gets hurt and can’t play?  Or in the rental game, you read about a company starting layoffs in the department where your “no-brainer” tenant has worked for the last 10 years.  Is that a cause for concern?  Yes, but how much so?

That’s a judgment call.  Kentucky has enough other talent to steamroll most teams on most nights even without their center.  And the prospective tenant could be just fine as she has plenty of cash reserves and a robust Rolodex where she could get hired anywhere in town with a quick phone call.  Or she might be in real trouble as she was living paycheck-to-paycheck and hasn’t updated her resume since college.

The other prospective tenants aren’t as polished (lower credit scores and income), but have dual incomes in disparate industries.  Would they be better bets?  How does a property manager know who to give the approval to?

There is no right answer.  Much like picking a bracket, some of it comes down to raw data and past landlord performance.  But some of it comes down to the experience of selecting tenants for many years.  I wish I had it down to a perfect science and could put it in a training manual (that I could sell for millions of dollars…).  But no matter how good a property manager is, no one can get them right all the time.  As my 3^rd grade teacher said emphatically, “that’s why pencils have erasers!”

So, what to do?  The right answer is closer to reviewing the raw data thoroughly and then looking for other signs.  Do they have a pattern of paying people on time?  Did their past landlords have good things to say?  Do they make enough money to afford the property with some excess funds still available if their car breaks down or they face unemployment?  Have they recently attempted to hurt anyone seriously (I’m half-kidding on this one)?

As for other signs… how did they sound on the phone?  Did they get the application materials back to us in a timely manner?  Are they pleasant to talk to?  Were they forthcoming and truthful with everything asked in their application?  Did they return our calls in a timely fashion?  Were they evasive in any way?  There’s a certain feel involved.

The other signs are tough to quantify.  But that is when picking good tenants turns from a science into an art form.  And that’s when the experienced know in their gut that Lehigh has a chance to take down Duke, even though they are a huge underdog.  And that North Carolina, despite an up-and-down season, seems to be peaking and can take it all this year.

Picking tenants and the NCAA brackets isn’t as easy as picking all the favorites.  Experience counts.

Good luck with both and enjoy the tournament!

Brett Furniss is the President & Owner of 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, condos, and town homes in the Charlotte-Metro Area.  Contact Us Today!

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Tenants Love Rental Showings?

Continuing with the theme from our last blog, below is another letter (this time from a tenant) entitled, “I’m Lonely, Please Send More Visitors.”

Dear BDF Realty,

 

I was disappointed to give my 30-day notice to vacate the other day.  You guys are the greatest property managers (BDF side note: Wow!  Thanks!) and it will be depressing to leave the rental home.  I mean really depressing.

 

But much to my joy and amazement, I started getting calls from your showing service saying that people wanted to come to MY house to see it!  Here I am, bored at home with no reason to get out of the house, and I start getting call after call with people who want to set appointments to come over!

 

I mean here was my typical schedule before I gave my notice to vacate:

8 AM – 8 PM: bored at home-nothing to do

8 PM – 10 PM: “Arrow” comes on TV, followed by “The Flash” (Wednesday’s only)

 

BUT…after giving my notice:

7:40 AM: need to clean home before a Realtor showing

8 AM: leave home while Realtor shows property

8:15 AM: return home

8:45 AM: leave home for showing

9:00 AM: return

11:30 AM: leave home

11:45 AM: return

 

And that’s just the first morning!  I can’t wait to see how many people wind up stopping in when all is said and done.  I feel like the President! 

 

Thanks again!

Lonely

Okay, I’ve yet to get a letter like this and never expect to.  Tenants dislike rental showings for good reason.  Who wants strangers trudging through their homes?  Then having the expectation to keep the home clean while packing up boxes to move?  And then being asked to leave the home during the showings (that they are paying to live in, nonetheless!)?  I wouldn’t!

So why would tenants be asked to do this?

For several reasons:

1. Usually it is a condition of occupancy that they sign on for in a proper lease

2. It allows other renters to find a home for their families too. The tenants were probably looking at some inhabited rentals during their rental home search.  This could be viewed as renter common courtesy.

3. Being a team player for the owner with a slight mix of sympathy/empathy. Vacancy costs money.  The less time the rental home sits vacant, the less financial and emotional strain on the owner.  Maybe they are renting out their house in another state and can empathize?

Of course, to make it work for everyone, there are common courtesies that should be exercised.  A 24-hour notice should be honored.  If there are guests visiting or a child is sick, there should be leniency in allowing the tenant to cancel showings.  And I believe in giving the tenant final approval on scheduling showings; “It’s not a good day” is a valid excuse on occasion, though this shouldn’t be abused.  And no one should EVER just show up on the doorstep expecting to get in.

We’re all people and no one really likes allowing strangers into their home.  However, if done respectfully, all parties (tenants, owners, and property managers) should be able to live with them.

Most tenants won’t “feel like the President” when dealing with multiple showings at their house, but even President Obama has to deal with things he’d rather not sometimes.  It’s a necessary evil in the rental game.

Brett Furniss is the President & Owner of 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, condos, and town homes in the Charlotte-Metro Area.  Contact Us Today!

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Tenants with Pets: 5 Steps to Protect Your Rental Home

As a property management company in Charlotte, we sometimes get the most touching letters from owner clients.  I’d like to share one of them entitled, “Pets in My Home Please!”

Dear BDF Realty,

 

Thank you for agreeing to manage our property; we’ve worked really hard to make sure our property is upgraded and clean for the new renter.  The new paint and carpet really makes it show well!  We know you’ll do a great job with it (BDF side note: thanks!).

 

We do have one small request.  We are huuuuuge pet lovers.  Could you make sure that you rent to a family that has as many pets as possible?  The bigger the animals, the better!  It wouldn’t seem right to have a nice, big house without housing as many of God’s creatures as possible.  We’d consider reducing the rent for tenants who can prove they have a large and varied brood of animals.  Thanks!

 

Regards,

Pet Lover

 

P.S. Not to be too picky, but we’d also like to give preferential treatment to those prospective tenants who have unneutered pets.  The thought of them giving birth to a litter in our rental home just sends shivers of joy down my spine! 

 

P.S.S.  Think Noah’s Ark on land!

OK, this letter isn’t real.  I’ve never had any owner clients who said they liked the idea of having pets in their rental homes.  But if that’s the case, then why do almost all of them wind up accepting pets?

It’s simply because most tenants (easily over 50% in my experience) have pets.  And most pets do not damage homes.

Let’s take a moment to acknowledge our fears with the following scenario.  A nefarious and unkempt tenant has been breeding an even more nefarious and unkempt dog, with the scary moniker of “Gargoyle” (Gargoyle is a great student who has far exceeded his master’s nefariousness and unkemptness).  They move into your rental home.  Unfortunately, Gargoyle sometimes doesn’t allow himself to be walked and winds up doing his business in the house.  Gargoyle is also crazily aggressive and enjoys chewing on all door beams and scratches the paint off the walls.  After a year of making your home his lair, Gargoyle and the tenant move out to destroy another rental home…

What happens?  After move-out, you (or your property manager) does a walk-through.  The damage is clearly above normal wear and tear.  Some walls need to be repainted, the carpet either needs to be professionally steam-cleaned or replaced, and some door beams need to be replaced.  All of this is taken out the security deposit.  In worst case scenarios, the damage is above the security deposit, and the tenant is sent a bill for the balance.  And when you have a tenant who is known for his nefariousity, he may not pay it.  Then court action to collect the balance would be necessary.  It’s not ideal, but not catastrophic.

Fortunately, this is very rare.  99% of the time, if there are any pet issues, they can be taken care of with carpet steam cleaning and a professional cleaning, which usually need to be done after a tenant moves out anyway.

But how do you protect yourself from a Gargoyle experience?  Try these five tactics:

1. Collect a high pet fee upfront for the right to have a pet on the property

2. Collect additional security deposit monies

3. Screen the tenant thoroughly upfront. What kind of pet do they have?  How big?  Is it an aggressive breed?  What did their past landlords say about them after they moved out?  Was the property left in good shape or was it torn up?

4. Put a clause in the lease that if any pet issues arise, the tenant can be asked to remove it within 48 hours

5. Inspect the property early in the tenancy to see if the pet is doing any damage

For the most part, pet owners are responsible and will not adversely affect the rental home.  Tenants have friends and family over to the house (like you) and would be embarrassed if their house was unsightly and reeked of pet.

Don’t let visions of Gargoyle mess with your head!  Take the aforementioned steps to protect yourself and your pet issues should be minimal.

Brett Furniss is the President & Owner of 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, condos, and town homes in the Charlotte-Metro Area.  Contact Us Today!

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Renting My Home Out? What To Do, What Stays, What Goes, & the Lawn

As a property management company in Charlotte, we’ve fielded many different questions from homeowners who are contemplating renting their homes out to the public for the first time.  Below are a few popular questions from them in our proverbial mailbag:

1. What should I do to get my house ready for the rental market?

Make it look good.

Okay, that was the succinct answer for our busy clients; but it’s accurate.  I visited a property recently that had sat on the rental market for months.  When approaching the property, the lawn was not mowed, half the front shrubs were trimmed (and half were not), and a window was broken.  Really, the sale was lost before any prospective tenants even set foot into the home.

So, make the house look good.  But don’t go for broke doing it.  Touch-up paint, normal yard maintenance, carpet steam cleaning, and a professional cleaning should be almost all that is needed in most cases.

 

2. I’m moving out of my house and want to leave some things behind. Do I need to worry about the incoming tenant messing with my stuff?

Yes.

And I don’t mean to make tenants out to be bad people here.  Chances are, 99.99% of tenants don’t care what is in the boxes in your attic and will never check.  But Murphy’s Law dictates that the owners who decide to leave their original Picasso in the garage storage closet will find it missing when their tenants move out.  Or the tenant’s kid’s name scrawled in crayon all over the canvas.

So, the rule of thumb is, if you care about something, don’t leave it in the house.  Somehow, someway, it will be taken or defiled and you’ll kick yourself.  If you don’t really care about the stuff, you can leave things (within reason) in the attic or another inconspicuous storage area.  After all, it’s still your house.

3. I LOVE my lawn. I work on it all the time and my neighbors fawn over how GREAT my landscaping is.  The Charlotte Observer takes pictures of my house because their gardening reporter says my lawn “gives him hope in a dark world.”  But, alas, I need to move out of town.  If I leave detailed instructions, will the tenant take care of the lawn like I ask?

No.

And, please, sell the house instead so you (and the gardening reporter) are not rudely confronted with what a disinterested tenant will allow your meticulously manicured lawn to morph into.

However, if selling is not in the cards, then the advice to keep your sanity:

1. Set very low expectations for your lawn’s upkeep (aka the lawn will be mowed approximately every 2 weeks- that’s it. And the gentle, mineral water feedings are over; pray for rain.)  Unfortunately, there’s really not much a property management company can legally do if the lawn is kept at city code and doesn’t violate any HOA covenants.  As a landscaping aficionado like you knows, we’re talking bare bones upkeep.

OR

1. Start a landscape contract for a gardener to visit your home every 10 days and keep it to your specifications. You can try to include this (lawn care included!) as a selling feature in the rental ad (and increase the rent accordingly); however, it is typically tough to sell the value of included lawn care because few people read the rental ad copy in its entirety and then go a step farther to do the actual math to see if it’s a good financial deal versus other slightly less expensive rentals.  You’ll probably take a small financial loss versus not offering lawn care, but will gain valuable piece of mind that your lawn is not suffering a slow, gruesome death.

And that’s all from the mailbag this time.  Good luck!

Brett Furniss is the President & Owner of 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, condos, and town homes in the Charlotte-Metro Area.  Contact Us Today!

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Should I Sell My Rental Home?

From the mail bag… (aka a question I may have made up to write about)

Q: I have a few occupied rental homes and wonder if I should sell one of them now that the market seems to be improving.  What are your thoughts?

1. Oh, this is a surprising question from left field! And a great one!  Kudos to you, mighty thinker!

It is a tough decision on whether to unload a rental property.  If you decide it may be time to do so, the first thing is to establish whether you can by asking 4 questions:

1. What is the realistic value of my property? Have your trusted real estate advisor run sales comparables and put your home’s value at the low end of the range for estimating purposes.

2. How much will it cost to get my property in sales shape? In my opinion, there is a difference between getting a home in rental shape and sales shape.  With a rental, you may get away with steam cleaning the carpet and touching-up the paint; with sales, there is a lower threshold for cosmetic issues which may mean replacing the carpet and repainting the house.

3. Do I have the money to cover the mortgage and utilities while the rental home potentially sits vacant for months? Generally-speaking, showing a home effectively with tenants in it is tough.

4. Do you have the money to pay the selling costs (Realtor fees, closing costs, less than full market offer, etc.)?

So, the math looks like:

Answer #1 – Answers #2, 3, and 4 = $$ (hopefully a BIG, positive number)

Then the question is: Is $$ above worth selling the property for?

If so, do it. If not, continue to hold the rental until the market and your mortgage balance improves further.

However, there is a scenario that skews the math and lets you skip cost items #2 (home cosmetic fix-up) and #3 (home vacancy costs), and eliminate or reduce #4 (selling costs in terms of Realtor fees)…

1. OK, I’ll bite. What is the scenario?

1. When the tenants in your rental home want to buy it for themselves.

This is the #1 question to ask if you think you may want to sell your rental homes.  ALWAYS ask the tenants first.  If they do want to buy it, get them in touch with a mortgage broker and see if they qualify.

If they qualify, this is a win-win exit strategy.  The tenants get to start building equity in a home that they already love.  And you, the owner, get to avoid much of the costs and uncertainty of selling your rental home.

And what if the tenants proactively ask you if you are willing to sell your rental home to them when you’re not quite sure you are ready?  You want to think REALLY long and hard about it.  These opportunities don’t come up that often and you need to make sure that it is something you really don’t want to do.

Cash is king and the purpose of investments is to make money.  Two well-worn adages come to mind:

A bird in the hand is worth two in the bush.

AND

Buy low, sell high!

Happy investing!

Brett Furniss is the President & Owner of 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, condos, and town homes in the Charlotte-Metro Area.  Contact Us Today!

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3 “Insider Tips” When Buying Your First Rental Home

I got a call from a friend of mine from college, “Rich”, a few weeks ago.  After the prerequisite ribbing was completed (Do you have any hair left?  Is your Linked-In profile photo from your high school yearbook?  Are you still awful at basketball?), Rich got down to business:

“I’m thinking of buying my first rental home for investment.  Got any advice?”

Me:  “Ummm… have you looked at the blog I’ve been writing for the past 5 years entitled ‘Charlotte Property Management?’  It seems like all I do is spout out advice on this stuff.”

Rich: “Sure… I read it all the time, sometimes to my kids at night.  I meant any other advice for the special people in your life.” (wink, wink)

Me: “Oh, the “insider tips”?  Of course!  It will cost you, though!

I suppose “insider tips” means the advice from people that have been burned (or are getting singed monthly) on investing errors.  They now know better.

My top 3 insider tips for first time investors:

1. Don’t buy in low-priced areas (aka places where you are buying the house for under $75K in Charlotte).

Common retort: “But I can get the house for $15K.  There is a tenant paying $400/month.  And I could buy 10 of them just like this one.  The cash flow would be insane!”

My response: Can you stomach getting calls that say any of the following:

1. I just saw someone get shot in my driveway!
2. The air conditioning unit got stolen again. Should we order you another?
3. I think my flooring is caving in.

Sadly, I’ve gotten these calls.  I (and my checkbook) didn’t enjoy taking them.

2. Hire a great property manager. I know I’m biased, so I won’t expound on this.  Suffice to say, you don’t know what you don’t know.  And you may enjoy cost savings from not paying a property manager for years; then you make one mistake that wipes out all of the savings and you wonder why you were taking tenant clogged toilet calls at midnight for no long term financial benefit.

And my top tip…

3. Don’t get a mortgage; wait until you have the funds and then pay for the house with cash. Or at least pay more than 50% with cash.

It’s a drain on cash flow when you need everything to go right to make money every month (or to break even).  Because things break (sometimes major things), tenants don’t always pay (but you better pay your bank!), and you will find yourself losing money.  Yes, your accountant will tell you that it’s great for your taxes, but it stinks in real life.  The purpose of investments is to make money.  Locking into an investment that consistently saps your cash flow is no fun.

Example: $1,000 rent – $850 mortgage payment – $100 property management fees – $250 HVAC repair = $200 loss (bad feeling)

Or

$1,000 rent – $0 mortgage payment (you paid with cash!) – $100 property management fees – $250 HVAC repair = $650 gain (good feeling!)

So, Rich, my insider advice in a nutshell is… Set yourself up in a wise, peaceful manner so you can enjoy and make money on your real estate investments!  Be disciplined now so your assets don’t become financial and emotional liabilities…  And don’t crack on my hoops game!

Brett Furniss is the President & Owner of 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, condos, and town homes in the Charlotte-Metro Area.  Contact Us Today!

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Security Deposit Dispersion: Should You Treat Long-Term and Short-Term Tenants Differently?

 

 

Scenario #1: Melissa has been in your rental home almost as long as you’ve owned it.  And it’s been a good ride!  It started out as a standard tenant-landlord relationship with formal calls for repairs and rent checks sent solitarily in the envelope.  But over the years, Melissa (now “Mel”) has really grown on you and vice-versa.

 

It started when she had some tough financial times and asked for you to allow some late payments.  You assented and wound up having some deep conversations after the initial rental payment was discussed.  A few years later, the water pipe blew and ruined many of her things.  You promised to make it right; Mel paid her rent diligently and never complained about all the workmen coming in and out of the house for a few weeks.  She really could have!

 

Over the years, Mel started sending some pictures of her kids having major life events in with her rent check every few months.  Oh, how you looked forward to seeing what had become of her family.  You were so proud of them!  But now, with Michael, Jr. graduating at the end of the summer, Mel has told you that she needs to downsize.  And that means she’s moving out.

 

Mel has been a tenant for 12 years.  And you have to admit that your stomach has been in knots since that phone call.  On one level, you knew this day was inevitable.  On another, it’s almost like losing a family member.

 

Scenario #2:  Wally moved into your Uptown Charlotte rental condo right after his internship at Goldman Sachs ended in Manhattan so he could take a job with Bank of America.  You knew Wally would never be Mel.  This condo was clearly a stepping stone for him to get used to the area and figure out where he wanted to live in Charlotte (or elsewhere in the world).

 

Wally was very cordial and business-like when you met him to sign the 1-year lease.  “You’ll probably never hear from me!” he joked.  And he was right.  He set up his on-line bill pay and his rent checks showed up on time every month (sans any other correspondence).  And, expectedly, about 40 days prior to his lease expiration, you got an e-mail from him giving you his 30-day notice to let you know he was moving out.

 

Two of your tenants are leaving and you’ll have to do two walk-throughs so you can disburse the security deposits.  Personal feelings aside, do you treat these 2 tenants differently from each other?

 

 

Tenants should be charged for any damages beyond normal wear and tear.  The amount of normal wear and tear for someone who lived in a rental unit for 1-year versus 12 years is substantial.

 

Fix-up expectations for a 12-year rental:

1. Probable repainting of entire home
2. Probable carpet replacement
3. Professional cleaning
4. Replacing miscellaneous worn out items throughout house

 

Likely charge to tenant: $0.00

 

If a tenant lives in your property for 12 years, that’s a lot of normal wear and tear.  It would be difficult to justify charging them anything (short of them detonating a bomb in your home prior to move-out).

 

Fix-up expectations for 1-year rental:

1. Minor touch-up paint
2. Carpet steam-cleaning (hopefully already performed by tenant prior to move-out)
3. Professional cleaning
4. Any damages beyond light wear and tear

 

Likely charge to tenant: That depends typically on how dinged up the walls and flooring are and if there are any major items of damage.  Tolerance for rental unit abuse is low.

 

Sorry, Wally, but you need to be really careful to keep things nice if you’re only sticking around a year.  But, Mel, you don’t need to worry so much and thanks for staying so long (I’ll miss you!); just because you moved away doesn’t mean you can’t keep in touch!

 

Brett Furniss is the President & Owner of 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 (including Rent-To-Sell) for single-family homes, condos, and town homes in the Charlotte-Metro Area.  Contact Us Today!

 

 

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How Much Should I Fix Up My Rental Home for the Next Tenant?

 

 

 

 

 

The perfect scenario:

 

You are lounging on a sunny, deserted beach with your loving wife by your side.  You have a cold drink in your hand as you marvel at the solitude and beauty of your surroundings.  The only sounds you hear are the waves gently crashing in front of you and the occasional fluttering of a seagull’s wings.  The sun subtly warms your skin before a timely breeze arrives to refresh you.  You grasp your wife’s hand as she lovingly reciprocates.  And you just filled your last rental property with a tenant.  Life is perfect.

 

But, wait… is that your cell phone ringing in your beach bag?  Who could be calling you?  As you reach for the phone, your wife aggressively removes her hand from yours.  “You better not answer that!  We haven’t been away together since Eli was born and I’m not going to have our vacation ruined by work calls!”  As your eyes refocus to the numbers on the phone, you realize it is the new tenant.  “I’ve got to get this,” you mutter as your wife disgustedly begins to turn her beach chair away from you.  You feign an enthusiastic greeting of “Hey Herb, what’s up?  How’s the place?” as your eyes plead forgiveness to your now emotionally-estranged wife.

 

Herb begins his 10-minute rant, “This place is a dump!  The whole house is filthy!  The cabinets and appliances are especially gross and the entire trim needs to be repainted.  The landscaping has been completely neglected and the yard is mostly weeds.  My wife and I have spent our first 48 hours here on our hands and knees scrubbing and aren’t even close to being done!  The air conditioning doesn’t even blow cold air.   How could anyone live in this place??”

 

“Multiple tenants have managed to survive the experience in past 12 years I’ve rented it out,” you want to retort and then think better of it.  You turn your head to see your wife disgustedly heading back towards the resort while pounding feverishly on her iPhone, undoubtedly spewing Facebook hate (Subject: You).

 

Herb is irate and you hear his wife trying to get into the action in the background.  Once Herb says his piece, you tell him you’re very sorry, you’ll have someone over to look at the air conditioning, and will send the cleaners back (“No need!  If they think the condition they left it in was clean, I don’t care to entertain their second act!”).

 

So this is bad.  You thought you had the rental home in good shape and the tenants are ripping it apart.  You look up at the resort and see your wife talking to the pool boy as she uncharacteristically is downing cocktails at 9 AM.  This was supposed to be a relaxing, loving vacation and things are going very wrong.

 

What could have been done to avoid this tenant situation?  Honestly, nothing.  No matter how clean a house is left, some tenants will say it is filthy.  Cleanliness is subjective.

 

There is a relatively predictable spectrum of responses from tenants after they move-in:

 

1. 10% will be happy with whatever condition the home is in when they move-in
2. 10% will be unhappy with whatever condition the home is in when they move-in
3. 80% will be happy if the home is reasonably clean and touched-up when they move-in

 

So if things are reasonably clean, all major systems are working, and the house has been touched up, 90% of tenants will be happy.  And everyone likes happy tenants.

 

And what about the unhappy 10%?  It’s not a desirable situation, but there is a silver lining.  You will take heat on the front end from them; that is for sure.  And you won’t like it.  But there are 2 positive takeaways:

 

1. There was nothing you could have done to avoid their unhappiness.  If you fixed your home up to such a pristine condition, it would crush the ROI on your investment property.  And if you are going to pay to fix it up that much, do it only once and sell it for top dollar.  Don’t do it every year.  The objective (I’m told) is to make money on investments.

 

2. When the initially unhappy tenants vacate, they will probably leave your home in move-in condition for the next tenant!  This allows you to take the pain now to experience joy later.

 

So, to sum it up:

 

1.  Fix-up your home in a reasonable manner between tenants.  This means all systems working, touch-up paint (don’t repaint the house), steam cleaned carpet (don’t replace the flooring), and professional cleaning.

2.  Hire a property manager so you don’t have to answer the phone on vacation.
3.  Go get your wife!

 

Brett Furniss is the President & Owner of 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 (including Rent-To-Sell) for single-family homes, condos, and town homes in the Charlotte-Metro Area.  Contact Us Today!

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#1 Way Landlords Can Increase Their Rental Home ROI: 4 Tips

 

 

Landlords always want to know how to make a better return (ROI) on their rental homes:

 

Can we raise the rents?

 

Can the pet fee be an annual expense?

 

Can we charge for air usage within the confines of the home?  (OK, I haven’t really heard the last question… yet)

 

As a Charlotte property manager who has been in the business for a while, there is one clear cut winner on how to maximize rental home ROI.  And this earth-shattering, nugget of wisdom is…

 

Keep your tenants.

 

That’s it.  If they stay and sign long term leases, landlords avoid a litany of costs: vacancy, fix-up, utilities, lawn care, potential vandalism, property management tenant procurement and marketing fees, potential non-paying tenant moving in… and that’s just off the top of my head.

 

Wise landlords want to do everything they can to keep their tenants.

 

Here are 4 tips to keep them:

 

1. Think about not raising the rent.  I’ve heard of some landlords who do not raise the rent EVER for as long as their tenants stay!  That seems extreme to me, but I can see the rationale.

 

2. If #1 (no rental increases EVER) doesn’t work for you, cap the annual rental rate increases at 5%.  Or offer to raise the rent 5% on a 1-year lease while simultaneously offering to extend the lease at a lesser rental rate for a multi-year lease.  (Incentives really work!- part 1)

 

3. Pay your property manager for extending your tenant’s lease.  This will align their interest with yours.  We have a client who proactively offers us $400.00 to extend his tenants’ leases.  I think he has a great understanding of where his ROI comes from.  (Incentives really work!- part 2)

 

4. (Most important) Execute the normal blocking & tackling of property management.  In other words, do what you’re supposed to do.  Make needed repairs in a timely fashion, don’t be a jerk, and set proper expectations and meet them.  Remember: Moving is a pain; don’t make your tenants feel they need to because their rental situation is unbearable.

 

There are many other tips on how to keep rental tenants (give them rental anniversary gifts, free months of rent for renewing, etc.).  However, it is not disputed that tenant retention is the #1 component of achieving a good ROI.  As the old song goes, “It’s cheaper to keep her!”

 

Brett Furniss is the President & Owner of 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 (including Rent-To-Sell) for single-family homes, condos, and town homes in the Charlotte-Metro Area.  Contact Us Today!

Learn More