Best 2 Rental Strategies in this Economy with Help from Ashley Judd

Worried Charlotte landlords are asking, “How do we keep the rental cash flow coming in? My tenant’s lease expires in a few months and I don’t have the cash to spare for the mortgage payments if they leave. What to do?”

The answer lies in the timeless story of true love. Much like a tearful Val Kilmer in the movie, “Heat”, when his wife is about to leave him says, “I can’t let her go. My sun rises & sets with her, man…” Or Romeo and Juliet, who would not leave each other despite their disapproving families… This needs to be the relationship between you and your current tenant.

“What??” you are probably saying. “Val Kilmer was shedding tears because he was about to lose Ashley Judd, man; what guy wouldn’t be crying? And, didn’t Romeo and Juliet both die because they were too stubborn to go out and meet other singles?”

That non-withstanding, your Top 2 strategies to weather this rental storm:

1. Like Val Kilmer not allowing Ashley Judd to leave him, you must keep your tenant if they are paying somewhat regularly. If you let them go, you are looking at many costs (let’s see if I can list them alphabetically- fix-up, miscellaneous, mortgage, property management tenant procurement fees, utilities, vandalism). And from a revenue perspective, the rent you can now command will be 10-20% less.

However, if you keep your tenant, you can avoid these costs and keep the rental rate constant. The truth is, your flexibility at this point is limited- you need to get through 2009 and survive until the end of 2010; the improved economy should allow you to raise rents or sell your rental at that point. To be proactive, we contact our tenants 75+ days before the end of their lease and try to incent them to stay. This approach has put our lease renewal rate at 90%+ in 2009 thus far. As much as you do not want your tenants to move, they don’t really want to move either (it’s expensive!). Get them to stay! If they are planning on leaving, find out why and try to make it right.

2. The economy is against you; don’t let seasonality get you as well! If your tenant is going to leave no matter what you do, don’t leave yourself in a ditch. When writing leases, don’t have them end 7/31 (kids going back to school), 8/31 (kids), 11/30 (holidays); I know this is sometimes easier said than done. However, there is no rule that says leases have to be 1-year long; when not offer an 11-month lease or a 14-month lease to steer clear of bad rental months when few people move?

It’s time to play defensively and hunker down! Don’t let Ashley Judd walk out on you!

Brett Furniss is the President & Owner of BDF Realty, “Charlotte’s Most Innovative Property Management & Investment Company” (www.BDFRealty.com and www.RentToSell.com). You can follow his Twitter thoughts on the Charlotte real estate market by clicking on http://twitter.com/bdfrealty.  He is the author of the FREE E-Manual entitled “How to Rent-To-Sell Your Own Home” (http://www.renttosell.com/RTS-Book.html) which details how to get the most potential buyers to your home in this challenging real estate market.