Late Rent & Library Books: What’s the Right Approach?
I remember approximately five years ago when the Charlotte Mecklenburg area libraries stopped charging late fees for overdue books.
My first thought was, “How will they ever get their books back on time?”
To be fair, they put some checks in place. If a book was two weeks overdue, no other books could be checked out on the account. If it was a month overdue, the cost of the book was charged to the account. But if the book was brought back within a year, the cost of the book was refunded to the account so there was no charge (it just created more work for the librarian!).
So if I checked out Calvin & Hobbes and got really into it, I’d have 364 days to get it back to the library without incurring any type of monetary penalty. That is really borrower friendly!
Local governments thought this “no late fee” policy for libraries wouldn’t materially affect their book returns as there was adoption throughout the country. And I don’t know of any libraries that stopped operating because of this policy change.
Would this policy work with rental payments? It would definitely be more tenant friendly!
As Charlotte property managers, we are not strangers to late rent payments. It is part of the rental home game. Rent is due on the 1st of each month and it is considered late if not received by the 5th of that month.
The biggest problem with late rent payments is that it slows the payment wagon. Rent money typically goes to the property manager who pays any vendor bills (if applicable) and then deducts their own fees (we need to eat too!). Then the money is sent to the owner.
The owner has mouths to feed as well. There are usually mortgages and other loans tied to the property that need to be paid. Then there is money that needs to go to property tax bills, home insurance, and sometimes an HOA. All these funds then feed other people and entities. The economy goes on. But it all starts with a single tenant making their rent payment!
So getting the rent on time is paramount for everyone downstream. If too many tenants decide to wait a year to pay their rent, the system crumbles. And for most landlords, if one tenant does not pay for months, it has a noticeable effect on their ability to pay others.
If this is the case, what should landlords do to facilitate on-time rental payments?
- Screen applicants well upfront: talk to past landlords (paying rent on-time is a habit!) and make sure the underlying tenant finances show they have that ability to afford their rental payments
- Send late letters and always charge late fees: there needs to be some sting. On-time rent is important!
- File for eviction after the 2nd payday: if there is no money then, it is really hard to catch up. Cutting losses on the earlier side will curtail longer term lateness.
I remember during COVID we allowed penalty-free late rental payments for months. The late rents shot up during that time, even with all the government money flowing in. With no penalty there was a relaxed effort, even for a few historically good payers.
Libraries have the luxury of being non-profit entities that have local government as a financial backstop to continue to operate. Smart landlords know they have a lot of mouths to feed (with no taxpayer back-up!) and need to be proactive to make sure tenants are doing their part.
Happy Landlording!
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Surprise Parties Should Be Fun & Managing Rental Home Expectations
“Frustration is a function of our expectations…”
(Stephen Covey)
You ever really look forward to seeing a movie?
Well, I have. And several years ago, I was looking forward to seeing a movie that opened right before my birthday.
I had a really long week, but just kept thinking of what it would be like for it to be Saturday and how I’d be feeling when I was watching this movie. I’d be sitting in the air-conditioned theater, legs kicked up, eating popcorn, and enjoying a few hours of restful entertainment. It was a dream in my mind to be sitting in that early showing. And being that it was going to be my birthday, there didn’t seem to be any obstacles to this unfolding like I had envisioned.
I had my birthday breakfast, my wife and kids left to run errands, and I was just killing time before the movie. Then I heard a knock on the door. It was my neighbor and he asked if I could help jump his wife’s car across the street at the recreation center.
I quickly glanced down at the time on my phone. I still had twenty minutes until I had to leave, so we hopped into my car and ran over to the recreation center. I parked next to his wife’s car and he said that we needed to talk to her inside first. I wasn’t sure why that was necessary, but I dutifully followed him. He went down a hallway and then opened up a door to a room that I hadn’t been in before.
“SURPRISE! Happy Birthday!”
I looked up and saw smiling friends and family all around this mysterious room filled with birthday streamers. My wife was beaming, looking at me expectantly. This should have been a really happy time, but my disappointed face said it all.
My perfect birthday plans had been foiled. I was crestfallen. This long-awaited movie wasn’t going to happen.
Expectations aren’t always rational, but they are very real. My wife worked so hard at putting it together and people took time out of their day to celebrate my birthday; I should have been extremely thankful and had a massively happy day. But my happiness was temporarily jolted. I did not get what I expected and was feeling sour.
As Charlotte property managers, listing vacant homes for rent is somewhat straightforward. We typically fix up and clean the homes before putting then on the market so everyone knows what to expect. Prospective tenants are walking into a home that largely looks like it will when they move-in. Rental home owners have already paid the fix-up costs. Tenants could move-in immediately after rental application acceptance. Everyone has relatively clear expectations on what is transpiring.
However, it’s not so clear when there are showings on an occupied rental home. Prospective tenants see a home that is being lived in and this creates many potential questions: Is this home being painted after the current tenants move out? Is the stained carpet being cleaned or replaced? Are there any upgrades being done prior to move-in? What items were brought by the tenant and will be removed, and what stays? When will it be ready for me to move into?
The rental home owner also has questions: Can we avoid a full paint job when the existing tenants vacate? Can the stained carpet stay? How much of the security deposit can we use? What are all these things going to cost?
The tenants and owners are asking the property manager for answers, but the property manager has questions too: What condition is the home going to be left in when the existing tenant leaves? Is the tenant going to paint before move-out? Are they any good at painting? Will the stains come out of the carpet? What will my final walk-through reveal about the house when everything is out?
Everyone has expectations. Generally-speaking, the incoming tenants expect a nice-looking house with everything working when they move into it. The exiting tenants expect to get most of their security deposit back. The owner expects not having to pay a lot to fix-up the property for incoming tenants. These don’t always gibe.
And when expectations are not met, people get upset. Even on their birthday!
Many property managers and landlords don’t market occupied homes until they are vacated, partly to avoid issues like this. It can seem like a great idea to get a jump on finding a tenant, but managing expectations while dealing with uncertainty can be challenging.
Smart landlords who do choose to go this route have conversations with all parties and try to set realistic expectations with all of them to avoid disappointing surprises. As I’ve been told, surprise parties are supposed to be fun!
Happy Landlording!
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5-Star Review Skepticism: Old-Fashioned Way Best to Find Good People?
My skepticism of customer reviews has been growing for some time. I think customer reviews started out well and became very useful to find good people, but have been spiraling down for years for a variety of reasons.
I believe the first reason lies in the sheer ubiquity of customer review requests. If I talk to any person on the phone, I’m getting some combination of e-mail, text, and personal plea for a 5-star review. And it is not just once in a while; it is becoming part of most business interactions. It’s a job put on me by companies and they make me feel guilty if I don’t comply, and comply positively. The volume of reviews has watered-down legitimate performance feedback.
Another reason is how the on-line review system has been gamed. Corporations hire “review help” companies to improve their on-line reviews. They send out surveys to every person that does business with the corporation and then turns the positive, 5-star reviews into “official”, posted reviews. The less positive reviews get scrapped. This has made reviews less and less reliable.
Many reviews border on fantasyland. The 1,000 positive reviews with one company with only a handful of negative reviews? How is that even possible? People tend to be negative! Everyone is so overwhelmingly overjoyed with an overwhelming number of companies? People don’t generally seem that effusively happy to me…
Or how about companies that arbitrate between two parties with competing interests? It would be like reviewing a judge (or a property manager with their landlord and tenant clients!). If a guilty verdict was given, the prosecutor would be giving the judge 5-stars and the defense would be giving the judge 1-star. That makes sense. Now is it possible that both parties think justice was done and might positively review the judge? Sure, it’s possible. But 1,000 times? No one is that good!
If there is one scoop of ice cream left and my oldest son and daughter both want it, how would I always get a great review from both of them? One is going to love me and the other is going to be upset. I figure to get 5 stars from my daughter and 1 star from my son (or vice-versa). Doesn’t that make sense?
So… if on-line reviews are trending to be less and less reliable, where do Charlotte landlords find good people to work on their homes? We are all in need of them!
In the old days, people in need of a service would ask a friend. “Who mows your lawn? Are you happy with them?” There are certain friends everyone has that they know are up-to-date on certain things. They tend to give out the 5-star referrals!
In property management, the same goes for finding excellent vendors and tenants. I’ve always had success when asking our favorite vendors if they could recommend good people in other industries. And when great tenants recommend their friends who are moving into town, I’m almost positive they will be good tenants too before even running their applications. Good, reliable people tend to congregate with people like themselves.
Are on-line reviews useless now? No, but I think they are getting there. I’d argue they need to be taken as a piece of information and handled with a healthy degree of skepticism. I think it is better to focus more on the comments than the star count.
Smart landlords realize that while newer search methods for good people can be moderately useful, old-fashioned methods can be more dependably 5-star worthy.
Happy Landlording!
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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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