Purpose of Upside-Down Nametags and Fewer Rental Home Photos
Early in my business career, I attended a networking event at a local restaurant. I went to the sign-in table and was enthusiastically greeted by Susie. “Welcome! What’s your name?”
As Susie found my name on the sign-in sheet, she dutifully checked a box and pointed me to a nearby table with white sticker nametags and black Sharpie markers on top. “Write your name, your business name, and go meet some great people!” Then she quickly repeated the same spiel to the fellow behind me.
I did what I was told and uncomfortably started to mill around the room while simultaneously straining to read the other attendees’ nametags around me.
Me: “Hi, Jim. I’m Brett. What do you do for Hillman’s Autobody?”
Jim: “I fix cars. What does ‘BDF’ stand for? Oh, that’s really interesting…”
It was painful for me, as it was for Jim. As I moved on in the room, I saw a slightly overweight, middle-aged man standing by himself against a far wall with his nametag on upside-down. I went over to him and then unwittingly stepped into his trap.
“Excuse me… Joel?” I tried to awkwardly read his name by crooking my neck. “Your nametag is on upside-down. I just wanted you to know.”
“Oh, thanks! What a klutz I am, Brett!”, he appreciatingly said while reading my nametag. He then unstuck his nametag and put it on correctly.
“But do you know what else is klutzy? Not having life insurance, Brett! Let me tell you about it.”
And that was the opening that of his 10-minute monologue. He was very concerned that my grief-stricken family members would potentially being stuck paying for my funeral costs (thousands of dollars!) and what a stain that would be for my deceased self’s legacy.
When the conversation came to its merciful conclusion, I politely excused myself and headed to the exit. When I got to my car, I realized I had forgotten my coat and backtracked back to the restaurant. I retrieved my coat from its hook and was on my way out when I saw Joel standing by himself again… with his nametag on upside-down.
Wait a minute…
So I fell for Joel’s little ruse. I definitely felt duped. But, to Joel’s credit, he knew why he was there and what he was trying to do. Sales is a numbers game. His purpose was to talk to enough people and expect that one would be in the market for life insurance. The right conversation with the right person would lead to a sale.
In the rental home game, landlords are trying to find qualified tenants to apply for and rent their homes as quickly as possible. So, they set the bait in the form of on-line rental ads.
Prospective renters visit these on-line rental home websites with the purpose of finding the best home for their needs. To do so, they add some filters to the search criteria (cost, # of bedrooms, size, area, etc.), look through these narrowed down rental home listings, and then click through the details of specific homes to find a few finalists. Then they schedule times to see these top choices in person before applying for them.
In my mind, the purpose of rental ads is to be one of the homes that is visited in person, not just a home clicked on thousands of times. The more in person visits, the more chance that a home will be applied for and rented. Most people do not want to keep visiting rental homes without picking one. If a landlord can create intrigue with the promise of a renter finding their “diamond-in-the-rough” property, this intrigue can generate more visits.
So how does a landlord create intrigue? One way is to use fewer photos. As the saying goes, “you don’t know what you don’t know”. It may seem helpful to prospective renters to be able to narrow down properties by seeing 50 photos and a virtual tour, but landlords shouldn’t want their properties to be narrowed down and eliminated from consideration. If only 8-10 great photos are posted, it can create a taste of a property that can only be sated by a home visit. More photos can actually bring up more reasons to cross a rental home off a list, especially in light of hundreds of available homes to choose from.
The purpose of Joel’s upside-down nametag was to start conversations to ultimately generate life insurance sales. Smart landlords remember that the purpose of landlord rental ads is to generate home visits to induce rental applications.
Happy Landlording!
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Trump Versus Institutional Homebuyers: Opportunity for “Landlords on Purpose”?
“Every adversity, every failure, every heartbreak, carries with it the seed of an equal or greater benefit.”
(Napolean Hill)
In recent news, President Trump is working on banning institutional homebuyers (firms owning 1,000 or more residential homes) from buying more homes. These institutional buyers (IB’s), like Progress Residential, Invitation Homes, American Homes 4 Rent, and others, own about 3% of the homes in America.
The Trump administration rationale is that IB’s with unlimited checkbooks are outbidding families for the same homes which makes achieving the American dream of homeownership harder for regular citizens. IB’s are typically vultures in the market eagerly trying to buy affordable homes (around $200-400K in Charlotte), so there is truth in that. After they buy them, they usually fix them up (laminate wood flooring, new paint, new stainless-steel appliances, etc.) and make them higher-priced rental homes. Then instead of a family owning a home, the family is paying high rent to an IB.
The picture painted above of an IB is not a glamorous one! IB’s would tell the story a little differently than the Trump administration. They would say that they provide liquidity for the home sales market as a motivated buyer; this helps American families move on to buy other houses or cash out on their real estate investments. They would say they fix up houses that are in disrepair and introduce new, needed rental homes to the market for American families to live in. They are an instrumental partner in keeping American housing stock current and from neighborhoods incurring decay from dilapidated and abandoned homes.
As someone who regularly sells homes in this price range, I like dealing with the IB’s. They always pay cash, don’t quibble with repairs, and close on time. They are in the business of accumulating homes that fit their investment profile and they are good at it. The agents who work for them are cordial and non-emotional; they don’t hold a grudge when we reject their offer initially and they are still willing to make a deal months later if we call them out of the blue. Their offers are not usually outlandishly low; some are actually above what we expected to get from a non-IB buyer. They are a nice option for sellers to have!
In short, I think IB’s are both bad and good. But I don’t make the rules! I just try to work my best within them for our landlords, their rental homes, and the tenants.
If IB’s are banned, there will be fewer rental homes available. And in Charlotte at least, we need more rental homes for the influx of 157 people a day that are moving into our metro-area. Where will they come from? The Trump administration says they expect the void to be filled by Mom & Pop investors (aka you and me).
So here is the opportunity. I saw a statistic the other day that said that 51.5% of all US mortgages are below 4%. I also saw (and have experienced) that the home sales market has been relatively stagnant for the past 3 years. Many people believe the past low mortgage rates are causing the slow market. This has been labeled as the “lock-in effect” where sellers don’t want to lose their low interest rate to buy a house with a much higher interest rate. Their great past interest rate is “locking” them into their existing house. That makes sense to me.
Reviewing the information below:
IB’s being banned or curtailed would create fewer rental homes (less supply)
Strong rental home demand continues as experts say that not enough homes have been built and there is undersupply (strong demand)
Previously bought homes with sub-4% mortgages can cashflow better than buying investment homes now at higher interest rates (lower monthly cost)
Buying a new home in a buyer’s market is favorable (lower prices, more negotiation room, & less competition)
Real estate is considered a great investment that adds portfolio diversity while hedging against inflation
I would conclude (drumroll please), it might be a great time for smart investors to rent out their “locked-in” rate house and buy a new one to live in! There are families ready to rent them.
As opposed to an “Accidental Landlord” who is forced to turn a non-selling home into a rental, a “Landlord on Purpose” could be a profitable way to ride today’s market trends.
Happy Landlording!
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Rising Costs of Hershey Bars & Rental Homes: Is Your Lease Keeping Up?
I was in the Harris Teeter grocery store the other day and was waiting in line at the register. As I perused some magazine covers (Prince Henry is doing what??), my eyes wandered over to the candy bars ($3.99 for a king-size Hershey bar??). That price point stuck in my mind. Weren’t these things $1.50 – $2.00 a few years ago??
The first inclination I typically have when I’m personally shocked at the expense of something for sale is to point the finger at myself. “You’re getting old, my old boy. Hard candy doesn’t cost a nickel anymore and the days of .99 gas (while getting it pumped by someone else in NJ!) are long gone. Calm down, son… In the modern world, things just cost more. Relax.”
Once I was able to get my emotions in check, I Googled the question and was met with an AI response: “Candy bars are more expensive due to a surge in cocoa prices, driven by supply shortages from poor harvests and diseases in West Africa. This has led major manufacturers like Hershey to raise prices or reduce package sizes to reflect the high cost of the primary ingredient.”
Hmmm… Makes logical sense. Recent cocoa price surges due to issues in West Africa is the answer to my candy bar conundrum. This is why the Hershey king-size candy bars cost 50-75% more in Charlotte now than five years ago! Maybe… So if that logic holds, then things calming down in West Africa will make my Hershey’s bar go back to costing 2 bucks at some point?
I think the answers provided for some price increases are tough to comprehend or believe. Whether we buy the reasons or not, the price increases themselves are very real nonetheless. And experience shows that the prices rarely come down after the crises pass. Businesses and consumers typically just need to adjust to paying more.
This factors into rental homes.
As a Charlotte property manager, I remember meeting with a new owner client a decade or so ago and the topic of what to charge for rent came up:
Me: It’s a nice- looking home! I think we could get the top of the market price for it- probably around $1,350.00/month. Would that work?
Client: Well, I’d prefer not to charge that much. I own the house and my costs are relatively low. I think with taxes, insurance, and the HOA fee my all-in costs are $500.00/month (oh, the good old days of low costs…). And when repairs come up, I’d like to have some extra rent to cover them. I’d prefer to keep the monthly rent under $1K to keep it affordable for the tenant.
Me: Wow- sure!
I don’t hear anything like that much anymore. It’s tougher to find margin between the actual costs of owning a rental home and the rent. All the cost components of rental home ownership have shot up: mortgage (home values & interest rates), taxes, home insurance, HOA fees, & repairs. “Things just cost more” is the simple real estate explanation for Hershey’s “runaway cocoa prices”.
With higher monthly costs, leases need to keep up with market-rate rent increases to avoid consistent losses. This doesn’t even factor in inevitable, higher costs for a new HVAC or roof which (since COVID) usually cost upward of $8K for smaller homes. Unfortunately, these cost increases are probably not going away. This means that even leases with great, long-term tenants need to be scrutinized if they are kept at an artificially low rate.
Much like Hershey passing on their cost increases to consumers (to my chagrin!), landlords need to factor in their increased costs when setting their rental pricing. Smart landlords will keep close tabs on market rental rates and make adjustments at periods of vacancy or lease renewal.
Happy Landlording!
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The Bachelor & Long-Term First Leases: Too Much Too Fast?
Those who are serious in ridiculous matters will be ridiculous in serious matters.”
(Cato the Elder (Roman statesman))
“Wisdom gives a man patience…”
(Proverbs 19:11)
The Bachelor became an instant TV hit in 2002 when it first came on the air. What an interesting premise: a single man searching for the woman of his dreams to spend the rest of his life with- and having 25 attractive females to choose from in a captive audience! He gets to essentially speed date all of these women who are all in pursuit of him. And from these brief encounters, he is expected to make the decision to marry one of them.
This lifelong commitment is born out of 6 weeks of dating the supposed “Mrs. Right” while being filmed AND splitting time seeing 24 other women concurrently. It starts on a level playing field; everyone is complete strangers at the beginning of the show and are having their first conversations there. Common sense would dictate that it would be difficult for anyone to know anyone particularly well, let alone have enough to base a serious marriage proposal off of. It’s completely ridiculous, but an engagement is the goal of each season.
So how would it ever work? The Bachelor seems to be big on participants finding their long lost “soulmate”; if they found the right person, they would know they were meant for each other. The rest would fall into place.
But if that “soulmate” even exists, is she even there? And can you have two “soulmates” who are both there? The reality is that this arrangement of strangers trying to make this dating scenario a serious, constructive process leads to plenty of awkwardness. Below are some of the common, absurd conversation snippets heard in most seasons of The Bachelor, courtesy of AI:
[THE BACHELOR] (Eyes glistening)
This has been such an amazing journey. I’m just feeling so many different emotions right now.
[CONTESTANT #1] (Sobbing in confessional)
I just don’t know if he’s here for the right reasons. Like, I’m literally opening up my heart and he’s so connected to the other girls. It’s hard to watch.
[CONTESTANT #2] (Approaching the Bachelor)
Can I steal you for a second? I just… I need some clarity on our connection.
[THE BACHELOR] (Sighs dramatically)
Sure. I feel like we have such a strong foundation. But I also feel like I’m in a really tough spot.
[CONTESTANT #2] I just feel like you don’t see how much I’m falling for you.
[THE BACHELOR] I just need to know that you are fully in this. I’ve never felt like this before in my life.
[CONTESTANT #1] (Steals the Bachelor back)
I’m just so crazy about you.
[THE BACHELOR] Thank you for sharing that with me. That means so much.
In a way, it reminds me of long-term lease requests. As a Charlotte property manager, we are sometimes approached by new rental tenants who want to sign 5+ year leases or longer upon rental application approval.
At first glance, this looks like a great thing! The owner gets a long-term tenant. The tenant gets housing stability. A match made in Heaven!
But what if the tenant signs on and winds up hating the house? Or the tenant loves it, but winds up being a neighborhood nuisance and doesn’t maintain the property? That would be a problem for the owner.
Sometimes starting a long-term leasing relationship right away is too much, too fast. Neither party knows what to expect from each other. Both sides have not had time to assess the situation to see if it makes sense for both parties. Starting out on a 1-year lease is a good first step for most rental situations.
For entertainment purposes, The Bachelor tries to fast forward casual dating into marriage. In contrast, smart landlords are patient and not looking for high drama with their rental tenants. They tend to wait for the second lease (after an initial 1-year lease courtship) to determine if they really found their rental soulmate.
Happy Landlording!
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Blackjack & Making Lease Extension Offers: You Gotta Hit or Don’t Hit
Blackjack is a classic gambling game pitting card players versus a dealer. The goal is to have the card players’ hands total 21 or as close to 21 as possible, while not going over 21. As the game unfolds, if the card holders’ hands stay under 22, they will be compared to the dealer’s hand (if he stays under 22); whoever has the higher total wins the hand. It can be both exhilarating and frustrating!
The main conundrum for the card players is whether to request an additional card (“hit”) to pad their point totals. The upside is that the closer the players get to 21, the stronger their card hands become and the more likely they are to win. The downside is that if any of the players get over 21, they automatically “bust” (lose) and their bet for that card hand is immediately forfeited.
At casinos, it is not uncommon to hear players loudly talking about their decisions on hitting on their card hands:
“I knew I shouldn’t have hit. I would have won! Ugh!!”
“Yes! I got the King I needed to hit 21. Great hit!”
“No hit for me. Dealer is going to bust!!!”
Both hitting and staying put (taking no cards) can be the right strategy depending on how the cards land. But if a wrong decision is ultimately made, there is no way players can change their minds afterwards. Once players take a card (or don’t and “stay”), their decision is cast and they need to wait to see what happens. There are no “do-overs”.
As a Charlotte property manager, this reminded me of giving lease extension offers to existing tenants.
From a landlord perspective, landlords want to charge the highest rent possible and have the tenant re-sign their lease at that rate. From the tenant perspective, the tenant wants to stay and pay the least rent possible or move to another rental unit that serves their needs better (this could mean lower price, better or different location, different size unit, etc.). Both sides have some disparate interests that need to be rectified before a new lease extension can be signed.
But an initial offer to extend the lease (tendered usually by the landlord) must be made. And the question is what price should be asked for. There are usually no “do-overs”. The price offered is going to be what the tenant ultimately makes a decision off of. Whatever it is, it needs to be strong and not wishy-washy. Wishy-washy can create problems:
Landlord: Good morning, Mr. Tenant! Your lease is up at the end of next month and I wanted to see if you were looking to sign for another year.
Tenant: I was thinking about it. What are the terms?
Landlord: Well, I was going to raise the rent $200. How does that sound?
Tenant: Not that good. I thought I was overpaying now.
Landlord: How about no rent increase. Will that work?
Tenant: I’m not sure. I need to talk to my wife and think about it. We’re going in the right direction, though!
Landlord: How about $200 less than you are paying now. Would that work?
Tenant: Now you’re talking! That’s more in line with what I think this dump is worth. I’ll get back to you.
Landlord: How about $300 less?
This can create a slippery slide.
Much like Blackjack, landlords need to look at their situation and decide how much risk they want to take on with potentially losing the tenant they already have in place. Then they need to make the offer (hit) and wait to see what decision the tenant makes. Sometimes, the offer doesn’t matter because the tenant was going to vacate regardless. But often, the price is the motivating factor on whether the tenant decides to stay.
Smart landlords will think hard about how much they will raise the rent (hit) or whether they will offer it at the same rate (stay). There is no middle ground- you gotta hit or don’t hit! They know that once that card is played, there is little chance to do it over and take it back.
Happy Landlording!
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Savannah Bananas Redux & Tenants: Getting Stuck Until the Game is Over
Savannah Bananas Event Schedule:
- Early Merchandise Sales: 10:00 AM – 1:00 PM
- Pre-Game Party & Player Appearances: 2:00 PM
- “Before the Peel” Show: 3:00 PM
- Gates Open: 4:30 PM
- Show Starts: 6:30 PM
- First Pitch: 7:00 PM (ET)
As I had written a few months ago, my family had the “privilege” of buying tickets to the Savannah Bananas baseball game in Charlotte earlier this month. We had never been and the Charlotte community was whipped into a frenzy for this event at Bank of America Stadium. It was sold out for both nights in the 74,000-capacity stadium! Local social media was ablaze:
Were you one of the lucky ones who were able to buy tickets in the lottery that started 6 months prior???
Oh, you’ve never been?? It’s such an amazing experience! So funny! Fun for the whole family! Better get there early! The Pre-Game Party is not to be missed!
Now that my family had the “golden tickets”, logistics had to be sorted out. Real life things such as: how are we getting there (traffic will be a nightmare in Uptown), what time should we actually show up (2 PM is the start of the vaunted “Pre-Game Party”, but the game itself didn’t start until 7 PM), how long could the family with younger children last at this event (is 2 PM – 10 PM realistic?), and what and when were we eating?
Complicating the situation was a small disclosure at the bottom of the hype material:
The Pre-Game Plaza is a ticketed space, fans must have tickets to the game to access the Plaza. Re-entry after exiting the venue is prohibited.
I thought we had a chance of success if we could float in and out of the 5-hour pre-game activities. But reentry was apparently not an option. The “Pre-Game Plaza” was held on the closed down roads and area directly outside of Bank of America Stadium. We would have to go through security (bringing in no outside food and drink) and then stay on premises once admitted. Once we were in, we were in, until we were out for good.
After some serious thought, the executive decision was made that we would take the marketing at its word and get the fullest Savannah Bananas experience we could. We were going to go early by light rail and take it all in!
We made it to the stadium around 3 PM. Initially, there was much fanfare and excitement! Yellow everywhere, buzzing children, ear-to-ear smiles all around!
Then real life set in. It was really hot, the Pre-Game Plaza was mostly in the sun (unless you packed in where the stadium’s shadow offered some shade), the pre-game show on the stage was not visible for shorter folk (re: my kids), and it was not overly interesting to us. I looked at my watch showing 3:45 PM and wondered how we were going to make it until 6:30 PM. At least we were being paid to be there (wait a sec…).
It turns out the way one kills three disinterested hours in the hot sun is deflecting complaints and taking down multiple $15.00 drinks and burgers. With a captive audience (no pun intended), the only other choice was to leave and cut losses. In hindsight, I wish I had shown a little more discipline and did some research deeper than soaking in Savannah Banana marketing e-mails. Once we got there early and had our ticket scanned, we were stuck and needed to stick it out.
In a way (with my Charlotte property manager hat on), it reminded me of the importance of placing quality rental tenants.
Landlords have these nice houses that they spend a good amount of money preparing for tenants. Then the rental home goes on the market and prospective tenants fill out applications highlighting what good candidates they would be. If one cares to listen, tenants will tell you how they will pay on time and meticulously care for the home. And they proclaim they have the first month’s rent and security deposit in hand and are ready to move in ASAP once they get the go-ahead! Their marketing pitches can be very convincing as landlords have rental properties that are costing them money each vacant day.
But once the lease is signed and the tenants move in, there is “no reentry” until their tenancy is complete; once they are in, they are in. The landlord is stuck with them until lease expiration or they are forced out by eviction. The house could be taking heavy wear, misuse, and late/missing payments. For an investment in which the landlord should be making money, it can turn into one that is costs them even more. A rushed decision based on emotion and fear can turn out to be financially and mentally draining.
Much like prospective tenants, the Savannah Bananas proclaim they are the greatest show on Earth and will be one you never want to forget! But things do not always turn out as well as advertised. Smart landlords will make sure to do the requisite research and ensure it is a game with tenants they want to be stuck with!
Happy Landlording!
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What To Do When Elon Musk & Bill Gates Both Apply for Your Nice Rental House
In this month’s edition, we have a riveting property management fairy tale! Once upon a time in a nice, far-off place called “Charlotte, NC”, a nice landlord put a nice, vacant rental house on the market. Now the market was not too hot, not too cold, but just right…
The next day, a nice rental application was submitted for it. And the day after that, another nice rental application was submitted. The nice landlord dutifully ran the applications and found that both applicants looked to be fully qualified:
Tenant #1:
Elon Musk
802 credit score
Criminal record: 3 traffic tickets in last 3 years
Employed: CEO of X, SpaceX, & Tesla, Inc.
$221.4B net worth
Homeowner: no recent personal landlord history
No pets
Move-in date: 35 days from today
Length of lease desired: 2 years
Tenant #2:
William (“Bill”) Gates III
814 credit score
Criminal record: None
Employed: CEO of Bill & Melinda Gates Foundation
$127.3B net worth
Homeowner: no recent personal landlord history
Pets: 1 cat (10 pounds) & 1 border collie (60 pounds)- aware of non-refundable pet fees
Move-in date: immediate upon acceptance
Length of lease desired: 1 year
The nice landlord has a very nice problem! Two well-heeled applicants want his rental property. They have 800+ credit scores, no criminal background issues, plenty of income, and no landlord issues. That is great!
But outside of the nice fairy tale, is it really great? How would a regular landlord pick a winner and a loser? He may have to be not so nice?
The Musk application has many positive aspects with it having no pets and wanting to lock into the property longer with a 2-year lease request. But there is a 35-day wait for occupancy (each vacant day costs money!) and there is a criminal record (frequent speeding tickets can signal risky behavior).
On the other hand, Gates wants to move in right away (cha-ching!) and has a higher credit score than Musk. But he does have a lower net worth and who knows the damage the 2 pets could do to the house especially if he leaves after the initial lease ends.
So under normal circumstances and with no one else involved, both tenants would easily be approved for the property. But there is only one home. And they probably don’t want to share it. So what to do?
It’s a tough one and it happens every so often. Unfortunately, the non-approved person usually gets upset. But a decision has to be made.
I don’t think there is perfect methodology for this. Some landlords use tactics such as:
- First application in gets first dibs on the house: I like this one due to its simplicity and it seems to have the “get in line” logic that most adults can appreciate. Its major flaw is that a property manager really needs to pick the best available applicant for the owner client, regardless of who was first. If a marginal candidate applied first and then Bill Gates submitted an application, should I be married to the marginal candidate? I don’t think so.
- Make the applicants give their “highest & best” offer: The rent is listed at $2K/month. “How much rent are you willing to pay if we let you have the house- $2,500/month? Will you sign a 3-year lease? Move-in right away?” We’ve done this on occasion and it’s a lot of effort and most people don’t want to play (I’m not sure I would either). Due to the bad feelings it creates, I largely tend to shy away from doing this.
- Have some sort of points system based on all quantifiable application information. Add up the points and whoever has the highest score wins the house. This does not take into account any non-quantifiable information (or “soft skills” for lack of a better term) which tend to matter a lot with tenant relations.
Trying to make a choice between great tenants can be a good problem to have if handled properly (in and out of fantasyland). But I think I’d go with Musk application on this one. It’s very nice!
Happy Landlording!
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Crushed by Cumulativeness: Rent Increases and Why the NFL Player Didn’t Sign Your Kid’s Football
“What a jerk! All he has to do is just sign his stupid name to ONE football and it would mean the world to Little Johnny. But instead he needs to hurry to the locker room to recount his millions of dollars!”
(Reaction of many parents after their child’s autograph request is snubbed)
I was talking to a local college football player (a kicker, if you must know) about what he was doing after he graduated in May. He said he was starting to figure that out being that he finally had some time to think about it.
Some time? He’s in college! I was thinking of how wasting time was sort of what my friends and I did during our undergraduate tenures…
“You don’t have any time? How did you get so scheduled out?”
He pulled out his team-issued iPad. “Do you see this? I had to look at this every day for the last five years; it told me where I was supposed to be and what I was supposed to be doing every hour of every day… Now, honestly, I’m adjusting to doing life without it.”
Wow! That sounds pretty demanding for a college kicker at a small-time football school. If I were him, I think I would have opted for intramural soccer.
Now let’s think about NFL players. There are even more football activities than college. They are travelling for training camp and games. If they don’t do well, they can be cut at any time. If they want to get better, they need to take the time to practice, lift weights, and study the playbook and game tape on their own. Then they have family, faith, friends, financial, and other real-life commitments- and everyone likes them and wants to be near them because they are wealthy and famous. They are super busy!
And then there are constant, on-going demands for their time. Want to be on a weekly talk show (aka NY Jets quarterback, Aaron Rodgers)? Make sure you cut an hour or two of every week for that. Endorsements? Autograph shows? Dinner with your wife? Your kid’s basketball games? Team functions? Mailing back football cards kids send them to sign? Your college wanting you to come back to accept an award on an off-week during the season?
If it was signing one football, that would be one thing. But it is signing one football in addition to an overpacked schedule.
So how does football player busyness fit into rent increases in today’s world?
A landlord may be heard muttering, “If a tenant can’t come up with an extra 5-10% for rent every year, maybe they shouldn’t be in the property in the first place!”
If it was just $100.00/month extra for rent every year, that would be one thing. But rental increases are not happening in a vacuum. Tenants have been absorbing increased rents in addition to increased costs for almost everything else they consume. Food, gas, car prices, car insurance, plane fares, restaurants, NFL tickets (another 4% increase in ticket prices was just announced by the worst team in the league, Carolina Panthers), etc.. Netflix just went up by another $2.00/month, for goodness sakes! Like small papercuts that keep happening, the bloodletting becomes very real eventually.
Cumulativeness can be crushing!
Property managers and smart landlords need to balance potential rental increases with killing the golden goose. Good tenants are an asset that maintain the property and pay down the underlying debt. Dumping another increased expense on them can be detrimental to both parties, especially if the tenant moves and the property needs to be repaired and put on the market again.
Good news! The college and NFL players don’t hate your kid. If they had an iPad with lots of empty time slots and/or few other commitments, I’m sure they would happily sign footballs most every time! And if rental increases are measured, good tenants will be able to absorb them and continue to be a reliable monthly partner.
Happy Landlording!
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“100% Guarantee For Your Rental Home!” Delightful or Sour?
Tommy: Here’s how I see it. A guy puts a guarantee on the box ’cause he wants you to feel all warm and toasty inside.
Ted: Yeah, makes a man feel good.
Tommy: ‘Course it does. Ya think if you leave that box under your pillow at night, the Guarantee Fairy might come by and leave a quarter.
Ted: What’s your point?
Tommy Boy (1995)
My 9-year old son was eating frozen blueberries a few weeks ago and started to complain about them. “They’re so sour! Gross!”
I advised him, “Well, that’s too bad. You get some good ones, and you get some bad ones. It’s the way life goes…” Then I patted myself on the back for imparting some timeless, Forest Gump parenting advice.
Sometime later, he complained again- and then three or four other times after eating these blueberries. Finally, I grabbed the package off the table and saw it was the “Great Value” Wal-Mart brand. My eyes narrowed on the “Great Quality. Great Price. Guaranteed.” guarantee printed on the back. Verbatim, it read:
If for any reason you aren’t happy, we’ll replace it or return your money. Whichever you prefer. All of you need is the package. It’s that simple. Guaranteed.
Now was the time to teach my son about the advantage of paying attention and reading the fine print! “Son, we’re going to Wal-Mart and you’re going to take care of it.” “Dad, are you sure we can bring this package in and they’ll give us the money back? I’ve already eaten half of them…” “Yes, son. It’s that simple. Guaranteed!”
After my son negotiated that he could keep the $2.99 windfall and put it towards a pack of football cards, he signed on to this gambit. We drove over to Wal-Mart and, from a distance, I watched my son explain to the customer service person that the blueberries were sour and that he wanted a refund. After a minute or so, he walked away from the counter, defeated, and let me know that we could swap it out for another bag of (sour) blueberries; there was no option of getting football card money instead.
Now Dad was sure there was a misunderstanding! It’s guaranteed! It’s simple! And it’s a $2.99 charge to a multi-billion dollar conglomerate! Well, yours truly fared no better when I approached the customer service desk and was promptly (but nicely) shut down. If I didn’t have the receipt or credit card it was bought with, their hands were tied. There was nothing that could be done.
Undeterred, as my young kids trolled the Wal-Mart aisles unattended, I called the #800 number that was located under the guarantee. After a 14-minute phone call of providing serial numbers, date of purchase, and personal information, the customer service representative (who was also very nice) said that we would receive a $5.00 Wal-Mart gift card mailed to us within 2 weeks, but no cash. When we got home, I sent a message through the “Great Value Guarantee” website and they referred me to the in-store customer service desk for any refund requests. I wrote back saying that was where it all started! Then I never heard back. Ugh!
If for any reason you aren’t happy, we’ll replace it or return your money. Whichever you prefer. All of you need is the package. It’s that simple. Guaranteed.
The final scorecard read: (1) in-store visit, (1) 14-minute phone call, (1) web inquiry, & (1) 2-week wait for a $5.00 store credit. So, obviously, it’s not that simple. And it’s far from guaranteed. And we are talking about getting $2.99 back from Wal-Mart which they explicitly stated was a sure thing on the package itself.
Great story! But what’s your point? What does getting a cash refund for a sour bag of Great Value frozen blueberries have to do with property management?
A lot, actually. It’s about the danger of relying on corporate guarantees when picking vendors, especially in real estate. Whether it is for home warranty insurance against bigger ticket items breaking down (HVAC systems, roofing, appliances, etc.), costly property management occurrences (eviction, pet issues, etc.), or just getting money back from poor work (a flooring vendor recently), it is difficult to get companies to honor them. No company wants to pay (not even $2.99!) and there is always a reason why the guarantee doesn’t apply. It’s frustrating, (super) time-consuming, and borderline unethical at times.
But that doesn’t stop them from being ubiquitous:
- Home warranty companies: “If your HVAC system goes down and it can’t be fixed, we’ll buy you a new one! It’s so simple. Guaranteed!”
- Property management companies: “If there is an eviction or pet damage, we’ll cover the costs- It’s so simple! Guaranteed!”
- Wal-Mart: “If for any reason you aren’t happy, we’ll replace it or return your money. Whichever you prefer. All of you need is the package. It’s that simple. Guaranteed.”
Life is too short. The best bet is to pick a company that consistently offers quality blueberries instead of trying to be compensated on the backend when they are sour. Getting the $2.99 back is arduous at best, and unfortunately, usually fruitless. Be wary of upfront guarantees and concentrate more on established track records of excellence!
Happy Landlording!
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Ohio State Football Recruiting Similar to Great Tenant Selection?
“He has shown you, O mortal, what is good. And what does the LORD require of you? To act justly and to love mercy and to walk humbly with your God.”
(Micah 6:8)
“No Shoes, No Shirt, No Dice.”
Spicoli in Fast Times at Ridgemont High
Ohio State college football has been a dominant program for a long time. In the last 10 years, they have a record of 106 wins and 13 losses while winning 2 National Championships. This makes them one of the top programs in the country as they have set a standard of excellence few teams can match.
To have a perennially highly-successful football team, Ohio State has been able to get great players to come to their school; great players make great programs! But how does Ohio State determine what high school football players will actually become great college football players? What do players need to demonstrate?
Like every college football program, coaches will look at all the on-field performance measurables: how many yards, touchdowns, tackles, etc. each player had in high school. And then the physical measurables: how fast, big, agile, and strong each player is. And then there is mental aspect where players will take tests and answer questions showing off their “football IQ”.
These are all very important metrics and are heavily considered; the top recruits all grade very well on most or all of the criteria. But what gives players who measure out well in the criteria above the edge over one another? I remember reading something about that from former head coach Urban Meyer. He said that one of the most important things he looked at in recruiting was how the high school player played in the biggest games and versus nationally-ranked players in one-on-one match-ups; he was looking for what he considered true greatness. Did their performance ramp up to meet the challenge or was it pedestrian? Did most of the players noteworthy performances come against average teams or did their biggest, statistic-rich games come against the best players in the most high-profile games? Did they look forward to and excel in the most competitive situations and will their team to win? Coach Meyer believed that getting the types of players who had the ability to rachet their games up a notch was paramount to Ohio State winning national championships.
In property management, tenants are the big-time recruits! Landlords are looking for tenants who pay on time, maintain the rental homes well, and stay out of trouble. If landlords can secure great tenants, property management can be really easy! This is why great landlords spend considerable resources on tenant screening. We look at all the measurables of the “Big 4”:
- Employment & Income
- Past Landlord Reports
- Credit Check
- Criminal Background Check
Measurables tell most of the story and tenants who grade out highly in these areas can provide a solid program. But what about in situations when there are many tenants applying for one house? Who is the best one when all the measurables look good? Who is going to take care of the house? If some bad event happens, who is going to remain steady and still pay rent? Bottom line, how can great tenants be found?
These are tough questions. The right tenant roster can make or break a landlord. What to do?
I tend to pay extra attention to 2 things:
- Debt level (and the corresponding available credit): How extended is the tenant? Hard times: If there is a sudden job loss or car issue, can they absorb it?
- Past landlord reports: What did they think? Did they like the tenant or was the tenant difficult to deal with? How did the house look when they moved out? Would they rent to them again?
At the end of the day, Ohio State football and smart landlords are looking for great players. Great recruits win championships and profitably pay off rental houses. Pick wisely!
Happy Landlording!
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