Who CARES About Getting a Good Tenant?
“…what we do in life… echoes in eternity.”
(Maximus (Russell Crowe) in Gladiator)
It’s been an unsettling time to be in the rental home game for the past year and a half.
Many people (including tenants) lost their jobs or had their incomes affected negatively. This made many tenants late on rent and on the verge of eviction. To stop this, politicians signed the CARES Act (which included an eviction moratorium) which has made it hard (and in some cases, illegal) to evict non-paying tenants. Without rent, landlords are forced to make payments themselves which has put them in a cash-crunch. It’s been a tough season for all involved.
No one likes evictions. Tenants, landlords, politicians, property managers- it’s failure on some level. But in the world we live in, someone has to pay and be paid for services to continue; we don’t live in utopia. So as eviction court cases pile up at the court house (evictions can be filed, just not judged and acted upon) and rent balances swell, what can be done at this point?
The CARES Act also has provided states with billions of dollars in rental assistance. This means that tenants can apply and get free rent and utility money. We’ve had tenants get up to 6 months in funds that was sent to us directly to cover past due and future rents. All the tenants needed to do was to call 211 in the Charlotte-area to be directed to the best resource based on their situation. It seems relatively simple, though with most massive programs, there were hiccups. But we’ve seen it work.
However, we also have tenants who choose not to avail themselves of these programs for whatever reason. They might not trust the government, are confused by the information asked for, or just don’t want to do the legwork needed to secure the assistance. The situation can seem hopeless and they may feel they might as well ride the process out as the media and politicians give messages that evictions will be blocked indefinitely. They might as well save (or spend) their money now and worry about their housing situation later when they are forced to.
Landlords do not want to be in a position hoping that third parties will “do the right thing” someday, while they are left holding things together on the back end.
Going forward, that has placed a greater premium on tenant screening. The bar keeps moving as we’ve never experienced a pandemic before which had whole industries in the economy largely shut down. This has affected credit scores, bad debt, and recorded evictions from normally reliable people. So what we see on paper (through credit, criminal, income, and landlord screenings) might not be indicative of future performance.
The important thing to remember is that whoever is placed into a rental house now is with you for the foreseeable future. When the eviction moratorium is lifted, there is going to be a huge backlog of cases. Getting an eviction tried and acted upon may take a really long time. Securing the right tenants takes on an added degree of importance because they will be with you for a while.
I’d proceed with placing new tenants very methodically. It might not be a good time to cut corners (“Half the security deposit? Sure, we’ll take that.”) or roll the dice on ambiguous applications for a quick tenant placement. A bad decision can last a long time and be very costly in this environment.
It is imperative to really CARE about getting a good tenant presently. Get all the information, take your time, and make an educated determination. It’s more important now than ever- tenant decisions made today can reverberate for a long time.
Happy Landlording!
Learn More
You Want the Truth in a Hot Real Estate Market?
“It depends on what the meaning of the word ‘is’, is.”
Former President Bill Clinton
“What is truth?”
Pontius Pilate
I was talking to a client the other day when he mentioned buying a house to live in. He was currently renting and wanted to find a place he could settle and begin to grow roots with his growing family. He had owned houses before and was ready to get into the real estate ownership game again.
However, we discussed that buying a house in Charlotte (and probably across the country) is difficult now. If a home for sale is priced competitively, it usually has multiple offers as soon as it goes on the market. In addition, home prices have escalated. Even with low interest rates that would keep his payment down, he didn’t want to overpay as he was afraid it would take a long time to see any capital appreciation. It was a conundrum- Continue renting or buy?
There was another option he wanted to talk about. He had found a nice house that was in a great area that he thought was priced right. It had been languishing on the market for months and the only reason he could see that it hadn’t been snapped up was that it had a shared driveway. So his question was, “Do people really hate shared driveways that much?”
I didn’t know. At first take, sharing was good. Sharing is caring. How much time do we really spend in the driveway anyway? Surely not enough to be priced $75K below the other nearby houses and not be under contract, right? I never thought that much about sharing a driveway. It would be a nice opportunity to know the neighbor better; maybe share cars occasionally if his was parked in front of mine (especially if his was nicer!).
So what’s the true value of an independent driveway versus a shared one? I told him I didn’t think it should matter that much.
But… at the end of the day, it didn’t matter what I thought the truth was. The truth was the market. The truth was that in the midst of an extremely hot real estate market, this home with a shared driveway was not sold. And I wasn’t sure why this fact would change in a colder real estate market. Bell bottoms may come back into fashion, but I’m not sure about communal driveways on higher end homes.
One thing that I have to come to realize in real estate (and other goods) is that the market is rarely wrong. It happens sometimes and the people who bank on it can make a killing (see multi-billionaire hedge fund manager, David Tepper, the owner of the Carolina Panthers). But usually, the market is the economic truth- it’s efficient and self-corrects quickly.
I had read something a broker wrote (if I remembered where I’d read it, I’d give him the shout-out) about pricing homes that are $500K or less in this hot market. He said something to the effect that if the home was still on the market two weeks after it was listed for sale, the price needed to be reduced. I’d largely extend this to the rental market as well.
A rental home may look like it is worth $2,000/month, but if it is marketed properly and there are no showings or takers, it’s not worth $2,000/month. And let’s be clear, I’m not saying that, the market is.
It’s hard to tell what the truth is sometimes. But in real estate, the market is one of the biggest truth-tellers out there.
Happy Landlording!
Learn More
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!
Learn MoreThe Rental Bachelorette: What is She Looking For?
“I would just want someone who is genuine and makes me laugh and is my best friend and ultimately someone who is going to love me as much as I love them.”
Former Bachelorette JoJo Fletcher
JoJo apparently found that “someone” in the arms of NFL quarterback Aaron Rodger’s brother, Jordan, in the last season of the Bachelorette (so says the cover of a tabloid magazine next to Harris Teeter’s cash register). Good for her!
Many people have differing ideas on what women want from prospective male suitors. I’ve seen some lists as short as:
- Rich
- Good-looking
This list is written for the rich, good-looking guys typically by the less rich, less good-looking, jaded guys.
And there are some deeper lists written for the less affluent, average-looking guys (who might buy magazines with articles like this). This “Top Ten” list is courtesy of www.topyaps.com:
- Not being desperate or clingy
- Being a friend first
- Manners & hygiene
- Respecting her space
- Chivalry
- Sincerity & loyalty
- The ability to protect
- Sense of humor
- Intelligence
- Honesty
Wow! That’s a much tougher list to mull over. At first glance, it seems like I’ve blown it in the past by actually following items #1 and #4 by “not caring” and “being distant.” But I digress…
As a Charlotte property manager, this is a question we get often from potential tenants:
“Before I spend $75.00 on a non-refundable rental application, what are you looking for?”
The three things we are looking for in potential tenants for our properties:
- Pay rent on time: #1 criteria
- Maintain the property: change air filters, mow the lawn, make reasonable repairs on your own, etc.
- Get along with the neighbors (and property manager!)
If tenants can do these 3 things, we will like them a lot and the tenancy should go very smoothly.
Tenants do not need to be rich or good-looking, but we’re always impressed with chivalry and a sense of humor.
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 MoreWesley Snipes’ IRS Case for Rental Home Inspections
Wesley Snipes is a great actor. Watching him in White Men Can’t Jump, Major League, and other films is some good theater.
But Wesley got some bad advice at tax time in the late 90’s. His accountants told him there was a loophole that would allow him to avoid $7M in taxes; in fact, he didn’t even have to file tax returns. He thought that sounded pretty good. And besides, everybody knows the IRS isn’t really paying close attention with the sheer amount of returns they have to log every year.
Well, the IRS was paying attention. And they got Wesley’s attention with a 3-year prison sentence that ended in 2013.
It was sad for everyone: his many fans, his accountants (who received even stiffer jail sentences), the IRS who had to use limited resources to prosecute his case, and especially for Wesley (who had reputedly earned over $40M from 1999-2004).
There were a lot of questions in Wesley’s case, but one almost undeniable certainty- Wesley’s tax returns now are the most truthful and timely documents he files every year.
This logic spills over into residential property management and periodic home inspections. If landlords can show tenants that they are paying attention to what is going on in the house and whether maintenance is being done, they will undoubtedly get a better conditioned house when the tenant eventually vacates.
So, yes, this means going over to and inside the rental house. I’d highly recommend giving the tenant a week or so notice of when the home inspection is and letting them know what you are specifically planning on looking at (e-mailing them a list is helpful).
Q. What should a landlord include in their home inspections?
A. Anything they care about.
Some general things I care about:
- Do the keys still work?
- Is the lawn and landscaping being kept up?
- Are the air filters being changed?
- Are the fire and CO detectors still there on each level of the house and are they functional (aka is the tenant changing the batteries when they die?)
- Is the home clean?
- Does it smell like smoke?
- Is there evidence of a pet if there isn’t supposed to be one?
- Does anything look weird?
Feel free to add anything else of interest. I also think conducting the home inspections twice a year (roughly on month 3 and month 9 of the lease) works well. Paying attention is good, stalking is bad.
Wesley has some well-maintained tax returns now and periodic home inspections should lead to some well-maintained rental homes.
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 MoreSection 8 Program Worth Revisiting? A Definite Maybe
No one really liked Janie. And there were a lot of reasons why. For a teenager, she was pretty much a know-at-all. Stubbornly obnoxious. She would not let you get a word in edgewise. Always right. Rude. Cocky. Maladjusted. And that was just her award-losing personality. And physically? Her scrawny frame, big glasses, and overflowing braces (often full of food scraps) made her equally unappealing.
Now fast forward 5 years in the life of Janie. After years of dejection, she has softened a bit. Instead of looking completely past you before beginning her monologue on her life’s recent happenings, she’ll toss a few platitudes your way that make you feel a small connection. “How are you doing?” “How’s your brother? “You get that mole taken off your back yet?” She’ll still take the last doughnut off the plate in front of both of you, but now she’ll pause and feign a glance your way for approval. She still texts constantly when you talk, but now raises her head for momentary eye contact when you bring up your mother’s cancer treatments. And her scrawny body has filled out, she started wearing contact lenses, and has a nice straight smile now; some may say she isn’t bad to look at, relatively attractive even.
But Janie’s not for everyone. Maybe not for most people. But some people “get her” and even go out of their way to be around her. Some of your friends have even dated her.
Ever know anyone like that?
The Section 8 program is like Janie in a way. Several years ago, I wrote how we needed to get our landlords out of the Section 8 business because it was impossible to get a good ROI for our owner clients. As a Charlotte property manager, we couldn’t cost justify the lower rents, costly repair items, poor communication, and overall effort needed to recommend the program. And I still get a little queasy thinking about it.
As a footnote, we do have clients that have kept their homes in the Section 8 program. The owners allowed the tenants to keep renewing their leases (most at significantly below market rates) and the Section 8 tenants chose to do so. The advantages to our owners are continued rental payments and not having to fix-up their properties to get them market-ready for new tenants. The negatives are that as Charlotte rental rates have been going up 5-10% annually, Section 8 has capped their permitted rental increases (if approved) to 2% annually (in real numbers: $900 monthly rent = $18.00 rent increase- not much to get excited about). Section 8 also conducts annual inspections which almost always lead to an owner repair bill; some of the items would never have to be repaired if the house didn’t have to meet many government regulations (re: peeling paint on ceiling, etc.).
However, in the past 6 months, Section 8 has enacted 2 changes that I thought were very landlord friendly:
- Locking a tenant into a property if they have lived there for 18 months. The owner has the option of not renewing the lease, but the tenant does not have the option of moving if they want to stay in the Section 8 program.
- Changing house inspections from annually to biannually. So, now the repairs only have to be made every 2 years (which is a huge deal for landlords who have gone through the nightmare of rent abatement for multiple inspection failures).
This still doesn’t make Section 8 work for everyone, but it might start making sense for some people. And as responsible property managers, it is something we will need to consider recommending again for certain owners (risk averse) and certain properties (difficult to fill, long term investment holds, areas of historically low rent appreciation). While the private rental market might be compared to the stock market (higher yields, more volatility), the Section 8 market might now be compared to the bond market (lower yields, steadier income).
So… your best buddy saw Janie the other day and said she was looking good and they had a nice chat. He said she asked about you. Your stomach still churns when thinking about your past dealings with her, but since she’s interested, maybe she’s worth meeting up for coffee? Maybe she’s changed?
Anyway, it’s something to think about- a definite maybe. Happy landlording!
Brett Furniss is the head property manager 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, Uptown condos, and town homes in the Charlotte-Metro Area. Contact Us Today!
Learn MoreSatellite Dish Installation on Rental Homes: An Innocent Request?
There is a potential danger lurking in your rental home. It may seem innocuous, but it can bring lots of shady characters and dangerous ideas into your tenants’ lives. It never sleeps, relentlessly pushing its own agenda and standards on to its unsuspecting victims.
It’s satellite TV. And the same moral danger exists to all of us.
But, alas, we live in a democracy and can’t really control what people choose to watch.
However, I do want to talk about the hardware- satellite dishes. We get relatively innocent requests from tenants:
Tenant: Hey Brett, we mailed the rent check today.
Me: OK. Cool. Thanks!
Tenant: And there was something else. I’m really getting into FanDuel fantasy football and want to get the NFL package from my satellite provider, so I need you to sign a form that gives me permission to put a dish on the roof.
Me: OK. But I’m pretty sure there is already a dish up there.
Tenant: Yeah, but it’s not the right one. We need one from this other carrier.
Me: OK. But are they taking down the other dish and making sure that the one they are putting up is coming off too after you vacate?
Tenant: I don’t think so…
Me: OK. I’m pretty sure dishes aren’t like flowers; they don’t look that great and involve drilling into the roof and stuff. I’m not sure we really want to be collecting dishes up there?
Tenant: You’re saying “OK” a lot, but have not yet said “OK” to the dish…
Every landlord wants tenants to (legally) enjoy their rental homes. But what about these dish installation requests?
As Charlotte property managers, we typically recommend saying “OK”. But we also add the following caveats that need to be agreed to in writing:
- The tenants are responsible for any damage the dish causes
- The tenants are responsible for having the dish and all the wiring taken down when they vacate
We’ve taken over management of rental homes that have had 4(!) dishes installed on them. It’s not pretty.
So, we’re not trying to tell anyone what they can watch, but we are making sure the venue they are watching their NFL package in is protected.
And good luck in FanDuel! But please don’t bet the rent money on your line up, OK?
Brett Furniss is the head property manager 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, Uptown condos, and town homes in the Charlotte-Metro Area. Contact Us Today!
Learn MoreToo Much Sympathy Can Kill Your Rental Business
“Moderation in all things, especially moderation.”
Ralph Waldo Emerson
Over the years as a Charlotte property manager, I’ve gotten a lot of calls from landlords who tell some version of this story:
We had placed a family of tenants into our rental home and everything was going great! They paid on time for the first 8 months and were really a joy to interact with. I mean, Brett, when minor repairs were needed around the house, they took care of it at their own expense- they would just call and ask if it was okay with us if they made the repairs! They really were a beautiful family; you should just see their youngest daughter, Cybil- she reminded me of my granddaughter! But, I digress…
The problems started when they were late in July. Apparently there was some mix-up with accounting at their work and the paychecks weren’t cut correctly that month. I was okay with it (things happen); they wound up paying on the 15th that month and I didn’t charge them the late fee that I could have. They assured me this was a one-time thing and they wouldn’t be late again.
August 1st came and went and there was no rent. When I called to ask about it, I started getting voicemail. Two weeks went by and I was wondering if I needed to start thinking about evicting them, but then they returned my call. They said their car had broken down which left them without transportation to work, so they had to choose to pay for the car repair instead of rent (you can’t earn money to pay rent if you can’t get to work). They said that was also why they didn’t call me back immediately; they didn’t have the funds to pay their cell phone bills either. After apologizing profusely, they asked if they could wait until the 1st of September to pay. “Of course,” I said.
September 1st came and we got a check for about a quarter of the rent (for August). They said the rest would come from the paycheck on the 15th. When the 15th came, they called to explain that it was either paying back rent or paying the light bill, and the children couldn’t live without heat. And they also had to pay for Cybil’s dance recital which she had been looking forward to all year. “Our kids need to come first.” Then they told me what a great landlord I was and said they were so appreciative of my understanding.
Brett, this story goes on, but I’ll bottom line it for you. The tenants are 5 months behind and I am beside myself and out of patience. I wish they would just get caught up! Where do I go from here?
First of all, there is nothing wrong with being a nice, understanding person. We have enough jerks in the world. And what’s done is done; it’s a sunk cost and it’s time to deal with the facts on the ground.
If the tenants are 5 months behind, it’s time to evict. There is no way that they can get caught up at this point. Find an eviction attorney (ask a property manager for a recommendation if you need one) and get the ball rolling ASAP. In NC, you could be looking at 6-8 weeks if the tenants prolong the process (and possibly longer if they know how to play the game). You need to get your house back and stop the bleeding.
A caveat- I don’t ever want to evict anyone. It’s expensive, it’s time-consuming, and it is a lose-lose-lose proposition (owner/property manager/tenant). At lease signings, I communicate to tenants that if they are having payment issues (life happens), to contact me immediately so we can work something out. Whether that means a payment plan, negotiated vacancy, or something else, we need to talk it out and negotiate a workable plan. We’ve worked things with tenants in the past that has made the best out of a difficult situation. Everybody needs a place to live.
But we’ll never get to 5 months of non-payment. It just can’t happen. Sympathy, at that point, turns into taking advantage of home owners, which isn’t fair.
Though every tenancy situation is different, there are a few non-negotiable parameters:
- Non-payment can never get past 30 days. That’s 2 pay periods and past the point of return for most tenants.
- If a payment or negotiated vacancy plan is agreed upon, it is set in stone. If the plan is breached (for any reason), eviction must be filed.
- Don’t take it personally. Rental properties are a business and sometimes business stinks.
I am all for sympathy. But with rental homes, sympathy can kill your business if not used with moderation.
Brett Furniss is the head property manager 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, Uptown condos, and town homes in the Charlotte-Metro Area. Contact Us Today!
Learn MoreCharlotte Section 8 Leases: Should I Renew Them?
“Enjoy Free Rent!”
(Former advertisement to entice landlords to put their houses in the Charlotte Section 8 program)
Q: My Section 8 tenant’s lease is set to expire next month. Should I offer to renew it?
A: Maybe…
As a Charlotte-based property manager and real estate investor, I’m a huge proponent of renewing leases. I think it makes unbelievable financial sense; there is no missed rent from vacancies, no fix-up and holding costs, no management costs for landing new tenants, and it provides the ability to raise rents to stay around market rate. And it also saves everyone a lot of work. Whew!!
It really takes a lot of chronic tenant wrongs for me not to recommend renewing a lease. Besides situations where an owner wants to move into their property or sell it, I can count on one hand the number the tenants I’ve not recommended renewing. If a tenant wants to renew at market price, I’m asking where I should send the new lease. It’s typically a done deal.
So when I was asked the other day whether I’d recommend offering to renew a client’s Section 8 lease, my fingers naturally wandered to the “Y”, “E”, and “S” keys on my laptop. Then they stopped and I felt my stomach cramp up. Can I really recommend this for this property? The issues:
- The rent is not close to market rate even after filling out the moderately arduous Section 8 paperwork for an increase every year. The Section 8 paperwork says we can ask for a maximum 5% increase a year; we’ve only been getting approved at 2% increases ($800.00 rent turns into $816.00- woo-hoo!). And this is after increases were frozen a year or two ago, while private market rents (aka non-Section 8) have been going up by 10-20% for the past few years.
- Annual Section 8 inspections are a hassle and seem to always result in a “fail” for trivial issues. A true example of a recent “fail”: “paint is peeling on the ceiling.” In a non-Section 8 world, if peeling paint on a ceiling was bothering a tenant, they would be told they were free to grab the extra paint can in their garage and touch it up. In a Section 8 world, that is a “landlord responsibility” and a handyman must be sent out or rent payments will go into “abatement”. Abatement is a very bad place to be as no rent comes in and past payments are clawed back (which would never happen in the private sector).
Unfortunately, landlords and property managers have figured out that:
Less Money + More Expenses + Government Regulations/Paperwork = Bad Deal
It’s not just Charlotte. In Austin, Texas, there was a law made (that was later repealed) that required landlords to accept Section 8 tenants. A study the city commissioned said that 90% of Austin landlords would not accept Section 8. Due to the fact that most landlords are investing in real estate to maximize their financial return, this is not surprising.
So as property managers whose job it is to maximize our clients’ ROI, we stopped recommending Section 8 as a source of new tenants several years ago. As discussed, the financial numbers didn’t add up. However, we did allow Section 8 tenants who wanted to stay to continue to renew their leases if they chose to.
But should we continue to recommend allowing renewals? It really comes down to whether the owner wants to expend the funds to fix-up the property and take the hit of vacancy until a new, non-Section 8 tenant comes on board. Some, including me, have continued to renew the Section 8 leases until the tenant decided to not renew and vacate; and then, once vacant, go exclusively to the private market going forward. But if the rent differential continues to grow between Section 8 and market rate rent, the auto-renewal policy will need to be revisited if the Section 8 tenants still want to extend their leases.
It’s tough to disrupt rental continuity and I don’t usually recommend it, but it may ultimately pay to take a closer look at the numbers before rubber-stamping your Section 8 lease renewal!
Brett Furniss is the head property manager 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, Uptown condos, and town homes in the Charlotte-Metro Area. Contact Us Today!
Learn MoreYou Break It, You Bought It! Avoiding Rental Home Repair Costs
The dreaded scenario…
You enter the “4th Century Priceless Vases” store with your 3-year old child sleeping in his stroller. “While he’s sleeping I might as well find a birthday present for Uncle Milt,” you quietly say to yourself as you peruse the priceless artifacts (surprisingly all with prices on them…). As you turn to the shop owner to ask if there is a chance that the price of the orange vase had mistakenly had too many zeroes added to it (a simple clerical issue could happen to anyone!), you hear a crash behind you.
Looking at the shards of glass on the floor and your giggling, (temporarily) smiling son, you realize this could be an expensive trip. The shop owner, with arms crossed on his chest, points to the antique sign on the wall:
“You Break It, You Bought It!”
Ouch!
A better scenario for everyone would be that “4th Century Priceless Vases” decided years ago to elevate every shelf in the store to a minimum of 4 feet off the ground and added a feather-coated floor. The most expensive vases were put behind locked glass and could only be accessed by store personnel. This way they were able to decrease breakage and save money.
On a similar vein as a Charlotte property manager and fellow real estate investor, it pains me (sad, but true) when I get repair calls from tenants on things that could have been avoided. By spending money on features (“being nice”), it winds up costing in service calls and replacements for years.
My 3 main culprits on optional home amenities that always seem to break:
- Icemakers on refrigerators (ugh!!)
- Washers & dryers
- Gas fireplaces
Most leases say that if something is working when a tenant moves in, it is the landlord’s responsibility to pay to keep it working (aka “promptly repair all appliances and facilities” under Landlord Responsibilities in the NC standard Realtor lease). This costs money.
But what about if you took a page out of the “4th Century Priceless Vase” store’s playbook and made breaking these things close to impossible? Sounds good! But how?
Don’t own them! Nowhere in the lease does it say you have to have these things in your rental house. So don’t!
I see no rent difference in Charlotte single family residences in whether you have these niceties or not. So, I would highly recommend dealing with my main 3 culprits in the following manner:
- Icemaker on refrigerator: when you replace your refrigerator, get one without one!
- Washer & Dryer: sell them on Craig’s List the next time your house is vacant
- Gas fireplace: turn it off and let the tenant know it is not to be used. If they insist, let them know they are responsible for its upkeep.
Some parts of maximizing rental home ROI is addition by subtraction. It’s tough to break expensive vases when you can’t get to them, and you don’t need to perform maintenance on items that aren’t there. When there is less to break, there is less to be bought!
Brett Furniss is the head property manager 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, Uptown condos, and town homes in the Charlotte-Metro Area. Contact Us Today!
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