BDF Realty's Charlotte Property Management Monthly

Scratched-Up Rentals: Possible Win-Win for Tenants & Landlords?

2026-04-29T14:05:00.001-04:00

A few years back, my wife and I were fortunate enough to take a trip to Barbados. Due to the many things we wanted to see on the island, it made sense to get a rental car. When I Googled how American tourists fared driving there, the information that spit out was that driving was fine with two caveats: they drove on the left side of the road which made things trickier, and if we went off the highways, the local roads were narrow and could be challenging. We didn’t plan on going to any remote places, so I didn’t think much of the second issue.

However, when we got to the rental car agency and they went through the costs associated with bringing back a damaged car, I got a little nervous. I started moving past the shiny, newer convertibles and went to the shabby, scratched-up section of the lot. My eyes landed on a weathered, small model that had taken some rough driving in its day. I picked it out and we drove off.

On the next to last day of our trip, we took the car up to some tourist spot on the top of the island. While driving there, the sky began to darken and the winds started to pick up. When we got there, the tourist spot was closing due to the weather and we were thirty minutes away from our hotel. It turns out a hurricane was forming and power wound up going out across the whole island. Everyone was being let go from work and the roads quickly filled up with bumper-to-bumper traffic. This was not good for a tourist driver!

Google Maps was working and it started to give us off-the-beaten path directions to avoid the traffic. I dutifully followed them and we were now on the local narrow roads where locals were speeding home. My comfort level was now really low. Cars were speeding by us on the right side of the road and our clearance from them could be measured in inches. To create more space, I was hugging the left side of the road. Unfortunately, I got too close to a curb and resulting in some tire and wheel well damage. I was praying that we could just get back in the vicinity of the hotel and not be left in the middle of nowhere in a full-blown hurricane. Fortunately, the car was able to continue on. My prayer was answered and we were able to leave the car on the side of the road near the hotel.

When I called the rental car agency the next day, they were pretty busy and said they would pick the car up at some point. I was wondering what my deductible was and how much of this car I was going to wind up buying. But when I finally heard back from them, they said there was no issue- “No problemo! Things are good.”

I didn’t ask any questions, but I have to assume the car’s condition at pick-up left me a lot of room for damage.

I bring up this story because as Charlotte property managers we are tasked at fixing up homes prior to new tenants moving in. If tenants are asked if they want new carpet and painting prior to taking possession, probably most would immediately answer “Yes! Definitely!” But is that really what they should want? Sometimes it’s worth a discussion based on their future security deposit return.

New carpet and painting will undoubtedly look great! But it starts a new cycle on their useful life (we generally use a 7-year wear schedule). If a tenant moves out after one year, there is an expectation that the new paint and carpet would have incurred one year of normal wear and tear and be useable for another six years. Any wear and tear fix-up expenses outside of one year (a small amount of damage) would be deducted from the security deposit (or billed back if the wear and tear costs exceeded the security deposit). And costs for these items have really shot up in the last five years!

Recently, we had a rental home with a very worn wood floor that we hadn’t refinished for over a decade. It was scratched-up heavily in a few places. I asked the incoming tenants if they preferred that we refinish the floor or if they wanted the peace of mind that we would not be charging them for any new scratches on it. If we finished the floor (a costly repair) prior to them moving in, they would need to be very careful with it. They opted for peace of mind and some well-placed rugs.

Rental homes that are scratched-up can be used to create win-win scenarios for tenants and landlords alike. Not coming home to a hefty rental car repair bill saved having a shadow cast on a really nice vacation!

Happy Landlording!

5-Star Review Skepticism: Old-Fashioned Way Best to Find Good People?

2026-03-25T08:52:00.000-04:00

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!

Purpose of Upside-Down Nametags and Fewer Rental Home Photos

2026-02-25T09:11:00.003-05:00

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!

Trump Versus Institutional Homebuyers: Opportunity for “Landlords on Purpose”?

2026-01-29T16:28:00.002-05:00

“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!

A Pair Should Beat a Full House? Reassessing Security Deposit Wear Guidelines

2025-12-30T15:37:00.000-05:00

“Where there are no oxen, the manger is clean…”

(Proverbs 14:4)

I remember several years back we had a couple come in and apply to rent a home from us. They had eight children and seemed abnormally well-rested and together. I was an admirer of these parents who were gracefully taking care of business with almost three times the youth constituency I’m currently trying to navigate. Warriors!

This was going to be a full house! Fair housing laws prohibit any type of discrimination based on family size, so the sheer number of inhabitants wasn’t a factor on their application decision. But common sense dictated that a house with ten people was going to have more wear than a house with two. And wear on a house costs landlords money.

In rental home poker math, a pair should beat a full house. Less occupants means there is less potential for things to break and be worn down. Avoiding and accounting for wear has come more to the forefront as repair and renovation costs have skyrocketed post-COVID.

I started to think about the wear assumption while I was out in the field doing interior home inspections earlier this month. I hadn’t done this many personally since pre-COVID and things were different this time around! I visited around 25 rental homes during business hours and was shocked that 85% of the homes had people present. Schools were in session and it was not a holiday of any sort. I thought most people would be working outside of the home. This was not the case.

The last time I was out doing inspections, almost all of the homes were vacant when I stopped in; the process was sort of robotic and boring. This time it was nice to be able to see some of our tenants and talk. But it was unexpected. And it made me think of how much more foot traffic these houses take now than then.

Wear is probably less of a function of how many people are in a house, but how many hours people are in a house actively using it. So if ten people are living in a house but travel for work and school most of the week, there is not going to be much wear. But if these ten people never leave the house, the wear rate would be very high.

When calculating wear expenses for deduction from a tenant security deposit, property managers will use general guidelines for the life of new carpet or paint (typically 7-10 years); these guidelines have been around for a long time. But if adult tenants are not leaving their homes during work hours, should these numbers be adjusted downward (6-9 years)? Rental homes are incurring a higher rate of wear after COVID jolted the work system and it’s not cheap to renovate.

Wear rate will never be an exact science! I remember doing the walk-through after the aforementioned ten-person family vacated after several years of occupancy. The home looked better than it did when they moved in. Go figure.

But, generally-speaking, wear has increased in rental houses post-COVID. Smart landlords will reassess their security deposit deduction guidelines periodically as wear has become an even larger expense driver.

Happy Landlording!

A Thanksgiving Rental Home Vendor Question: “What Do You Even Do???”

2025-11-24T09:47:00.003-05:00

Property managers have a lot of things under their purview. Different types of things break or need to be serviced on a rental home. Most are handled by specialists in some regard who know how to work within the confines of what landlords require (no gold-plated toilets, please). And sometimes it can be tough to find specialists who are a good fit.

One of the vendors that has historically been a difficult find for BDF Realty is a good, reliable lawn company. When the service area is as large as the Charlotte-Metro area, it’s understandable that not every company works everywhere we have rental homes; it’s tough to justify driving 20 minutes to mow one stray lawn! Then properties are constantly in flux (vacant ones need to be mowed and rented ones don’t, and this changes constantly); this can be administratively difficult to keep straight as their weekly routes need to be constantly updated due to our needs. Not being able to work due to rainy days adds another wrinkle of difficulty to keeping yards look consistently good. Finding one, let alone several, companies that can accommodate us has been challenging. Then they need to be reasonably priced, reliable, friendly, have sound accounting to boot!

In my quest I stumbled on to a lawn company and met with the owner. He was a nice guy, easy to talk to. He ran a smaller shop and thought he could help us out. We started to send him our properties.

Shortly after, I noticed that I stopped hearing from him except when he acknowledged he received our house changes and sent us invoices. Occasionally, he would let me know he saw something askew at a house that we might want to check out. But for the most part, he went dark on BDF Realty.

But the yards were always mowed! We stopped getting calls from tenants and agents complaining about overgrown lawns that hadn’t been cut for weeks. The bills showed up on time and accurately. We weren’t paying for lawns that were still on the schedule when they had previously been taken off the master list. The landscaping part of the business seemed to be quietly humming along.

If I hadn’t been in the business of trying to find good lawn companies for so long, I might have thought something was wrong. “Why don’t I hear from this guy? Why do we pay him so much money? Should I be pitting another lawn company against him? What does he even do that’s so special?” But experience and age gave me appreciation on what a gift this peace of mind was. He really kept us clean from a lawn service perspective. I appreciated it!

From a Charlotte property management perspective, this is what we aim for. We want to be like our lawn service provider, keeping all of our clients clean. The question of “What do you even do?” is one I hope every client has. That usually means that the rent comes in every month, tenant leases are regularly extended, house turns are smooth, tenants are calm and satisfied, and the property management side of the business is quietly humming along. When it looks easy from the outside, it’s running as designed.

Speaking of… A special “Thanksgiving” shoutout to our vendors who do such tireless, great work every day for our tenants, clients, and us. I could ask the question, but I know what you do!

And a thank you, as always, to our clients- if it weren’t for you, there would be no BDF Realty.

Happy Thanksgiving & Happy Landlording!

Carolina Panthers Quarterbacks & Landlords: Can You Make Good Decisions Under Pressure?

2025-10-28T11:17:00.004-04:00

“Wisdom gives a man patience…”

Proverbs 19:11

I was watching the Carolina Panthers play the Buffalo Bills yesterday and it was not pretty for us Charlotte folk. The football game turned into an old-fashioned whooping, 40-9.

The Carolina Panthers quarterback, Andy Dalton, had a bad game. He was intercepted once, fumbled twice, and took seven sacks. One of the reasons for his poor play was that he held on to the ball for too long. The Buffalo’s pass rush was coming furiously each down and he needed to make a quick decision on where he was going to pass the ball. Instead, he was indecisive; he held on to it and his team suffered the consequences of all the lost yardage from the sacks he took.

However, the biggest detriment to the team were the turnovers he created. When Dalton tried to be decisive and go for the big play, he had an interception and two fumbles. Lost yardage from sacks is certainly bad, but turning the ball over to the other team is much more of a killer. A general truth in football is that the team that turns the ball over more usually loses. In fact, statistically, if a team turns it over 3 or more times, they win less than 10% of the time.

This reminded me of general truths that I’ve learned as a Charlotte property manager. They are “general truths” (and not “truths”) because they do not happen 100% of the time, but they definitely get my attention when I see them. For example, in my experience, it is common to receive below-average rental applications from prospective tenants who are:

Overly-complimentary of a rental house
Really nicely dressed and/or wearing a suit when we meet
In a big rush to get approved and move-in

The focus of this blog is on #3.

After BDF Realty gets a rental application, we communicate to the prospective tenants that we’ll try to have an answer on their approval in 2-3 business days. The actual length of time usually depends on things outside our control like when past landlords return our calls, how well the rental application is filled out, when we receive proof of income, and how busy we are. Most tenants understand that running rental applications takes a certain amount of time.

However, sometimes certain tenants begin a drip campaign of pressuring us for an early decision on Day 1. We’ll get e-mails about how they need an answer right away in order to give proper notice to their current landlord, how their last (approved) rental house had fallen through which put them in a bind, they’re approved for another house and are going to go with that one if we can’t give an answer soon, and they need a signed lease to immediately submit to school/aid/jobs/etc.. These jabs begin on Day 1 of submitting the application and start to crescendo on Day 2. Now we’re receiving phone calls and e-mails every hour or two wondering what the hold up is and when we can give them an answer.

At this point, we’re feeling like Andy Dalton. The prospective tenant pass rush is mounting and we are feeling the heat. The tenant is pushing us for a decision and our owner clients sure would like to have an approved tenant for their empty rental home. The only party that is holding things up is the property manager, us. Why are we taking so long?

Dalton drops back to pass and doesn’t see anyone open. Does he force it to a covered receiver and hope he can come up with the contested ball? Or wait a little longer to see if another receiver is able to run himself into enough open space so he can fire in a pass but risk taking the sack? Or does he throw the ball away to avoid a sack, interception, or fumble?

It can be a tough call. We all want to be the hero and make the big play!

I believe smart landlords need to hang tough. To extend the analogy, sacks (losing tenants who demand a quick answer before getting all the data back) and throwing the ball away (losing tenants who do not provide all the required applicant information) can be good plays to avoid turnovers (bad tenants). Turnovers lose games. Bad tenants are really costly: missed rents, home damages, attorney fees, sleepless nights, stress, and wasted energy. The cost of missing on a risky tenant in exchange for extra vacant days on the market pales in comparison.

Andy Dalton is successful if he can make quick decisions and avoid turnovers. Smart landlords want to avoid turnovers (bad tenants) as well, but can afford to be less quick to come to a decision. However, both need to make good decisions under pressure regardless!

Happy Landlording!

Rising Costs of Hershey Bars & Rental Homes: Is Your Lease Keeping Up?

2025-09-25T10:52:00.001-04:00

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!

The Bachelor & Long-Term First Leases: Too Much Too Fast?

2025-08-27T16:28:00.002-04:00

"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!

Blackjack & Making Lease Extension Offers: You Gotta Hit or Don’t Hit

2025-07-31T10:19:00.002-04:00

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!

Savannah Bananas Redux & Tenants: Getting Stuck Until the Game is Over

2025-06-26T09:02:00.004-04:00

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!

Pete Rose’s Reinstatement & Evictions: Worth Reaching for a Win-Win?

2025-05-30T12:18:00.001-04:00

“It depends upon what the meaning of ‘is’ is. If the- if he- if ‘is’ means is and never has been, that is not- that is one thing.”

President Bill Clinton pleading his case during the Monica Lewinski grand jury trial

Growing up, I remember having some of Pete Rose’s baseball cards in my collection; they were good ones! Not only was he the all-time hit leader in Major League Baseball (MLB) history, he was the consummate ballplayer. He was gritty, ran out every groundball, and earned the nickname “Charlie Hustle”; he was consistently lauded for “playing the game the right way”. During his 24-year career, he won three World Series and more regular season games (1,972) than any other professional player in any sport. He loved baseball and was considered a surefire Hall-of-Famer.

But off the field when his playing career was over, he did not always conduct himself the right way and broke a major, unforgiveable rule- gambling on baseball. With the integrity of the competitiveness of the sport at stake, gambling had always been banned by MLB. Outcomes of games would not be tainted by it. It was a simple, Draconian regulation: if you gambled on baseball while involved, you were banished.

Rose was accused of betting on his own baseball games while he was manager of Cincinnatti Reds. He denied the accusations. When concrete evidence was discovered showing his guilt, he continued to lie about it. The commissioner of baseball permanently banned Rose from the game of baseball (including the ability to be voted into the Hall of Fame) in 1989. Afterwards, he still showed no remorse for his actions, even after finally admitting to gambling on baseball in a book he wrote years later. A storied career ended in infamy.

Pete Rose died last year.

But last week, the newest commissioner of MLB, Rob Manfred, reinstated Pete Rose. This lifted his ban and made him posthumously eligible for Hall of Fame induction.

But he broke the unforgivable rule! How is reinstatement possible? Doesn’t this send a bad message to other MLB personnel? Or have times changed now that gambling is more mainstream? Baseball fans seem to have split feelings. But, regardless, Pete Rose not being in the Hall of Fame is a regrettable lose-lose for Rose and MLB.

The same line of questioning can be used in property management on eviction guidelines. Most residential leases have rent due on the 1^st of each month and allows for evictions to be promptly filed on the 2^nd if rent has not been received. But that doesn’t happen often. In fact, most evictions aren’t filed until the 16th at the earliest. Why?

It’s because it is in everyone’s best interest (tenant, owner, and property manager) for the tenant to pay. And giving the tenant additional time to the 16^th of the month usually allows a second paycheck to come in so the tenant square the balance. Once eviction is filed, attorney fees and court costs begin to accrue to the tenant which can make a perilous financial situation worse. If this happens, the tenant will probably never get caught up before the eviction is recorded, leading to the owner never receiving the rent, and leading to the tenant being forced out of the house. It creates a true lose-lose situation.

What about if the tenant gave a compelling case that full payment could be made if he was granted an extension past the 16^thof the month? This is where it gets sticky. All the letters sent and communications continually reinforce that the 16^th is it. There is no tomorrow. Full payment needs to be made by then or, unfortunately, eviction must be filed. Rarely can most tenants in a non-payment situation get caught up after being a full month behind anyway.

But does it need to be a hard and fast rule? Shouldn’t every effort to avoid lose-lose situations be exhausted? Is there a case to be made that sometimes the 16^th isn’t it?

I believe there is. Pushing the deadline is always by a case-by-case basis, and candidly, most situations don’t warrant it. But some do. Property managers should be always aiming to avoid lose-lose situations.

Doesn’t everyone believe that the all-time hit leader in MLB history should be enshrined in baseball’s Hall-of-Fame? Of course! Hits are one of the most important baseball metrics and he had 4,256 of them.

Yes, it might be sticky if he ever gets voted in and enshrined. Fans may revolt in anger. Players may look at this as a precedent that gambling is a forgivable sin now. No one knows if there will be future negative ramifications.

However, a tenant paying and Pete Rose in the Hall of Fame are ideal win-win scenarios. But getting there requires discernment because there is always a chance of getting burned. Smart landlords (and MLB commissioners) should tread carefully.

Happy Landlording!

Are Savannah Banana Tix & Great Rental Applicants Worth the Fuss?

2025-04-23T15:31:00.003-04:00

“The kingdom of heaven is like treasure hidden in a field. When a man found it, he hid it again, and then in his joy went and sold all he had and bought that field.”

(Matthew 13:44)

I was completely caught off-guard by the Savannah Bananas. More accurately, I didn’t understand the frenzy around their tickets.

It all started around 6 months ago when my wife casually asked me to enter the “Savannah Bananas Ticket Lottery”. I had no idea what she was talking about, but dutifully complied. I clicked on the website link and inputted my contact information. Done.

I ignored the marketing jargon at first:

“These aren’t your typical tickets”

“It’s the most fun you’ll ever have at a baseball game”

“You name it, we have it. Just be mentally prepared.”

From what I could ascertain, the Savannah Bananas were like the Harlem Globetrotters, except for baseball. Which is fine, but they didn’t look overly enticing to me.

However, the inputting of my information set off a 6-month e-mail marketing firework show about how wrong I was:

“You will only have one opportunity to buy tickets to the game of a lifetime- don’t miss out!”

“Confirm your contact information and double-check your log-in to make sure you can get into the website when ticket sales go live!!” (received 4 months prior to the actual lottery)

“Make sure your credit card information is preloaded so you don’t blow the chance of a lifetime!” (received 2 months before the lottery- I guess I need to make sure the card I put in there isn’t expired by then…)

Things got more intense as lottery day approached. “Reconfirm your log-in info!” “You’ll receive an e-mail 5 days from now that you will need to click on to keep in the lottery!” It seemed like these e-mails kept showing up requiring me to do
(and re-do) more work for the right to buy these tickets. Though annoying, on a certain level I was amazed at their potent marketing acumen that turned an apathetic ticket buyer into a pup willing to do whatever they asked.

The day approached and I was told I needed to be ready to buy them at exactly 12:30 PM on the day of my youngest son’s preschool picnic lunch. Of course, I succumbed and checked the time frequently during the event; I’d be ready to click on their website link at exactly the right time. When the time came, the link was slow to respond making me second-guess my log-in credentials (I know I should have reconfirmed them for the 5^th time like recommended- dumb!!). But it finally went through and my credit card information was true as well. Four Savannah Banana upper deck tickets were now mine! The website congratulated me and culminated their storyline with the fact that I was now one of the luckiest 150,000 people in the Charlotte-Metro area.

Hooray? Whew!

Besides the cathartic value of getting this experience off of my chest, it made me think of what else is worth the effort that it took to secure these Savannah Banana tickets.

From a residential property management perspective, great rental tenants is the first thing that came to mind. This is the #1 goal of being a successful landlord. Great tenants pay on time, take care of the property, and make working with them a pleasure (I’m picturing a few of them right now!). And they are a gift that keeps on giving. Once they are secured, the benefits accrue for a year and usually much longer!

So when we see great rental applications come through (high credit scores, low debt, glowing landlord references, etc.), the next step is to make sure they don’t get away. Calling them, texting them, e-mailing, following-up, having after-hour conversations if necessary. We need them. The biggest difference between a good and bad property manager is tenant quality.

We’ll find out if the Savannah Bananas experience was worth the fuss of securing these tickets when we attend the game on June 6^th. But smart landlords know that securing great rental tenants is always worth it!

Happy Landlording!

And the postscript courtesy Axios Charlotte:

Savannah Bananas tickets sold out in Charlotte in roughly five hours when they went on sale last week, a team spokesperson tells Axios.

Why it matters: Tickets sold for up to $65 originally, but resale prices start at $113 on StubHub, at $171 on Vivid Seats and $156 on SeatGeek.

Catch up quick: Ticket access was based on the Banana Ball Ticket Lottery, which closed last fall. If you were selected, you were assigned a time to have a chance to purchase tickets.

Before tickets went on sale, the Bananas added a second night to their World Tour stop at Bank of America Stadium to respond to "overwhelming demand," according to organizers.

My thought bubble: Even with the added night and assigned ticket purchase time, I still wasn't able to grab tickets. 😔

(Axios Charlotte By Laura Barrero · Apr 16, 2025)

Jayden Daniels Football Card Worth $1K? Simple Rental Home Pricing

2025-03-26T12:16:00.003-04:00

My 11-year old son has become very interested in football cards. He used to just like finding players on his favorite team (The Tampa Bay Buccaneers- ugh! If it wasn’t going to be the Carolina Panthers, could he not pick a team in another division???), but now he has expanded his interest in what the cards are “potentially” worth.

Now his old man had similar interests in his younger years, except mostly with baseball cards. I’d get the Beckett price guide and add up how much my cards were worth. And, of course, I dreamed of when I was much older and the rookie cards of players like Barry Bonds and Roger Clemens would be worth millions when they made the Hall of Fame (cough, cough).

My son excitedly pulled me aside one day and showed me a Jayden Daniels (rookie quarterback for the Washington Commanders) card he had just pulled from a new pack. On my wife’s phone, he had found a page that showed that the card’s value was around $1K- wow! Next to the value was an eBay button where one could post it for sale with the push of a button.

Our conversation:

Me: Very cool! Push the button and sell it for a $1K!

Son: Now way, Dad! That’s low. It will be worth much more later.

Me (thinking of the old baseball cards I had in our house with virtually no value): Are you sure? $1K of real money gives you a lot more options.

Son: Nope.

Me: What if Dad sweetens the pot and will give you another $100 on top of the $1K if you can really get close to $1K for it?

He still wasn’t going for it.

In my mind, I wanted to put this estimation of value to the test. Was there really someone willing to pay $1K for this new card? I was doubtful. What was the real market if he was bent on selling it? Ebay, in theory, pulled this valuation from past sales somewhere. I’m thinking that it was worth much less, like single digits. Unfortunately, short of listing his card for sale on the sly, I’ll never know for sure.

I find rental home pricing to be similar. Property managers dig up comparable sales, factor in the differentiating house features, look at the available competition that is renting in the area, and then formulate a price. This price is an educated guess and is compiled in order to get good tenants applying, in a relatively short amount of time, at the highest possible price.

But we don’t really know how many houses are truly on the market for rent. There are many rental websites. Recently, we thought we had priced a home for rent well, only to find that there were almost 10 others on the market in the neighborhood on another website we hadn’t seen- and they were all listed at the price we recommended! That type of similar inventory makes for a logjam.

So what’s the right price? Does it matter how many Jayden Daniels cards are on the market? How can one know how many houses and cards are for sale out there? And how much they sold for?

It does matter, but there is no real way to know everything going on. However, there is a way to know for sure whether a price is good or not. And it’s really simple.

Putting the home on the market for a reasonable amount of time is the surest way to find out. If the house is listed with decent exposure to the market and the valuation is right, it will rent. If Jayden Daniels’s rookie card was listed at $1K and it sold for $1K, the price was right (or too low). If it didn’t sell, the price was probably too high. Simple stuff.

The market sets the price. And the market is constantly changing. But it is pretty efficient. If it didn’t sell, the market declared that the price was too high at that time.

Will my son’s card sell for $1K? There’s only one way to know! I just need to convince him to list it and see.

Happy Landlording!

The “One Mistake” Case Against Rental Home Self-Management

2025-02-25T10:35:00.000-05:00

“You don’t know what you don’t know.”

Socrates

It has been a life-long learning process for appreciating professionals in my adult life. Most of the time, this teaching did not come easily to me.

From fixing cars and watching them break down at inopportune times. Feeling physically poorly for months until I went to a doctor who had me better in days. Using bug spray to get rid of termites only to see them come back with a hungry vengeance until a proper exterminator was employed.

To be fair, fixing things on my own outside of my sweet spots isn’t always a losing effort. I’m always proud of myself when I can pull off some repair successfully in my house or submit some legal paperwork without any help. Go me!

Likewise, in property management, there is some definite positive reinforcement for self-managing:

“The last tenant I placed paid on time and left my rental home spotless!”

“No one is going to love my property like I do.”

“I do a lot of the repairs myself and save money.”

“Property managers are expensive!”

“The house is right by my house.” (writer’s note: that’s a double-edged sword…)

It is estimated that around 50% of all rental properties are self-managed, so it is prevalent. But despite the “tenant domination” stories told by some landlords at parties, it is not all roses. There really are midnight calls for stopped up toilets, tenants not paying rent that need to be evicted, and disgusting houses dropped into a landlord’s lap when a tenant leaves in the middle of the night. There is actual effort and stress in managing rental properties; to do it well requires time, sweat, and educational investment. No one can say it isn’t doable, though.

The biggest driver for self-management is saving money. I get that! There is a certain joy when all the money generated from the rental home goes directly into the bank account without any property management fee deductions. Months (or years) that this happily goes on is certainly a case for self-management; it probably comes to a few thousand dollars in potential savings per rental house a year.

But where things sometimes go awry in this calculation is that there is the “One Mistake”; this one miscalculation erases all accrued property management savings. Whether it is a legal one where a security deposit dispensation is not sent out in 30 days and the tenant who destroyed the house has the legal right to get it all back. Or when needed (or, sometimes it turns out, unneeded) repairs are made and the time and monetary investment keep ballooning due to unfamiliarity. Or a trusted vendor was employed who actually shouldn’t have been trusted. Or a tenant court date that keeps being pushed farther out due to not sending out proper notices while, concurrently, no rent is being paid.

The one-offs of learning the property management business can erase all the realized monetary savings and just leave uncompensated time that could have been better spent. That can be frustrating! And that’s the tough case against self-management.

The problem with avoiding the costly “One Mistake” is that it could happen in so many different areas. And sometimes things turn into “Two Mistakes” or more…

Property managers aren’t full-proof, but experience does offer some benefit for steering clear of these costly errors.

Happy Landlording!

Is it OK to Visit My Rental Properties if I Have a Property Manager? I’m Sort of Curious To See Them…

2025-01-28T10:57:00.001-05:00

Answer: Yes! We live in the United State of America. If you’re the owner, you are always welcome to visit your properties. This right is usually written into the lease as well.

This is a very short answer (and makes for a very short blog)…

For a longer discussion… the question could be whether it is advantageous for owners to visit their properties if they have a property management company managing them already.

Let’s look at 3 scenarios of an owner rental home visit. Keep in mind (especially after COVID), at least one of the tenants will probably be home at some point during the home inspection:

Scenario #1 (Happy Time):

Owner knocks on the door. Tenant enthusiastically answers and there is a warm greeting. They tour the home together.

Owner: “My, you keep my home up beautifully! How did you get the cracks so clean between the countertop and backsplash?

Tenant: “Oh, it was a trick my mother taught me- gently scrub a paste of baking soda mixed with lemon juice in with a toothbrush.”

Owner: “Splendid! And thank you for always paying early!”

Tenant: “You’re welcome! Have you met my 4-year old daughter, Ivory? Honey, come say ‘hi’ to our landlord!”

Owner: “She’s so cute!”

Tenant: “Thank you! Can I get your number if I have an emergency and can’t get in touch with the management company? They’re sort of slow sometimes.”

Owner: “Sure!”

Upside: Owner has firsthand knowledge of the property and a budding friendship?

Downside: It might be necessary to evict the tenant and her young daughter. A personal connection makes this tougher. The tenant now has an influential third-party to go to when the property manager’s answers are not to the tenant’s liking (the old “Go to Mom when Dad says ‘no’” trick).

Scenario #2 (Unhappy Time):

Owner knocks on the door- no one answers. Owner keys into the property. Family is eating dinner. Tenant has been late on the rent. The home is really messy and not maintained. Owner speaks to the tenant. Tenant had a tough day at work and complains about repair issues with the house. An unhappy conversation ensues. No one is happy when the owner leaves.

Upside: Owner has firsthand knowledge of the property

Downside: The relationship with the tenant is potentially complicated. There are negative feelings on both sides that may lead to sub-optimal choices that erode the relationship further.

Scenario #3: (Normal Time):

Owner knocks on the door- no one answers. Owner keys in and no one is home. Owner walks through, inspects all the rooms, and takes a few notes. Owner is preparing to leave and the tenant arrives home with her daughter from basketball practice. Owner and tenant cordially greet each other and then each continue along with what they were doing. Owner leaves.

Upside: Owner has firsthand knowledge of the property

Downside: None

As a property manager, our goal is to maximize our owner client’s investment; a large part of that is creating a drama-less relationship where rent is paid, the home is maintained, and needed repairs are done. We want to create an environment where tenants want to extend their leases and have no landlord-related reasons on why they wouldn’t. They are free to enjoy their rental home and live their lives. If at some point we need to file for eviction, the decision is based more on a business case as opposed to any emotion either way.

It's a boringly successful relationship for all parties. Ran correctly, it’s a beautifully benign operation.

And it is entirely possible that an owner visit would not affect the tenant relationship at all!

But… going back to whether owner property visits are actually advantageous, we still don’t recommend them as the safest move seems to let things be. It doesn’t seem wise to add any potential disruption of this boring relationship when there is no tangible upside.

Owners are always welcome to visit their rental properties for any reason, including curiosity! There just seems little to be gained and much to be potentially lost. Why take an unnecessary risk?

Happy Landlording!

McAlister’s Deli “Service Fee” Strategy: Applicable to Rental Homes?

2025-01-07T09:31:00.000-05:00

The (FTC) complaint alleges that (a large property management company) advertised monthly rental rates that failed to include mandatory junk fees that could total more than $1,700 yearly… These undisclosed fees ranged from “services” such as “smart home” technology and “utility management,” to air filter delivery and internet packages. Renters could not opt out of paying these fees.

(www.FTC.gov)

Some friends and I meet for a Bible study on Monday nights at the local McAlister’s Deli. After buying my sandwich one night, I started to peruse my receipt after paying. I was trying to figure out why my regular sandwich cost so much and looked at the bottom of the receipt. I saw the tax amount (can’t dodge that!), but above it was an itemized “Service Fee”. And here I thought I had just picked the sandwich up at the counter…

I clicked on an icon next to the aforementioned “Service Fee” and it offered a fuller explanation. “This fee is used to help pay for the restaurant’s app and website.” Surely, companies can’t charge for that as a mandatory fee.

Wait- or can they?

I always thought companies were only allowed to upcharge under the condition that they added more value. If McAlister’s allowed me to add another slice of cheese to my sandwich, I’m fine with them charging me more. If I wanted a bigger drink than what is in their value meal, I’d expect to pay more. But ordering on their app or website? Isn’t maintaining the on-line ordering portals the cost of doing business in today’s environment? And isn’t it cheaper and easier for them if I use them?

The line on chargeable value has gotten blurred in rental real estate as well. As property management companies have piqued Wall Street’s interest of late, maximizing revenue is being stressed and companies are getting really “creative”. Now I’m all for “revenue enhancement” as making more money is generally good. However, fees should be generated by providing tenants voluntary options that could make their lives easier or give them greater flexibility; mandatory fees for unwanted or unwarranted services could easily cross a line (see the FTC blurb above detailing the “value-added services” that incurred a $48M fine).

We are starting to have tenants ask us things like, “Is the rent really $1,800/month or are there hidden fees that are not mentioned?”. Being that these questions are being asked at all means this practice is becoming prevalent; legislation and more enforcement is probably on the horizon.

Landlords and property managers all aim to maximize revenue for their real estate investments and rightly so. However, we need to be cautious and make sure a fair value proposition is made. If any fees are questionable and wouldn’t withstand scrutiny, they should be scrapped. Landlords should be on notice and make sure general business practices on add-on fees stay on the right side of the law. “Service Fees” for common technology usage may only work in the food industry.

Happy Landlording!

How Much Do You Know About Thanksgiving? And Your Rental Home?

2024-11-29T12:38:00.002-05:00

My 9-year old daughter, Emme, decided she wanted to have a family “Thanksgiving Trivia” game this year. She dutifully came up with some questions about the holiday that we’ve celebrated every year. Just through osmosis, I figured that the adults would know most of the answers. How hard could it be? I pictured Pilgrims eating turkey and corn with the natives while celebrating the bountiful harvest together with some boats in the background. That’s at least the sanitized version of events I thought we’d cover. And it would be multiple choice! How hard could it be?

Well, she didn’t take it easy on us. Some actual questions:

How many women were the first Thanksgiving? (5, 7, or 10?)
How long did the first Thanksgiving last? (3, 5, or 7 days?)
How long was the Mayflower’s voyage from England to America? (66, 77, or 81 days?)
How many countries celebrate Thanksgiving? (11, 16, or 20?)

As each person filled out their trivia sheets, it became apparent that we didn’t know Thanksgiving quite as well as we may have thought. Our ancestors would not have been very proud!

It made me think of how well we really know our rental homes. Sure, we may know how many bedrooms and bathrooms they have. The advanced landlords may know how many square feet and how large of a lot it has off of the top of their heads. But what about the aspects that would really make people interested in it?

One of the key aspects of marketing is differentiation. Why would a potential renter pick one 3 bedroom / 2 bathroom house with a .25 acre lot over another with the same features? Most of the rental homes in Charlotte were built in subdivisions that offer a large degree of uniformity. Why would one cookie-cutter home be more desirable than another cookie-cutter home?

Price and availability are certainly two differentiators. If one home is on the market for $2,000/month and one that is close to the same is $1,800/month, the $1,800/month house obviously presents better. Or if there is only one house available in a desired subdivision, that would also work well- one can only take what they can get!

But if there are five rental houses in a subdivision that are available and priced similarly, what would make one stand out?

As a Charlotte property manager, one of the questions we ask our new clients is what made them buy their house in the first place. What were the special characteristics that made them want their house over all the others that were available? Some have some great insights on why and that really helps in marketing; usually they had lived in it at some point. Others don’t know.

For those that don’t know, that’s okay. But as the people who are responsible for positioning their home in the marketplace, we need to come up with this differentiation. What’s special about this rental home that we want potential renters to focus on that other rental homes don’t have? “This home’s large, manicured backyard boasts a built-in, outdoor gas BBQ and covered back patio making it perfect for outdoor gatherings with friends!” is an example.

This also plays into what type of home renovations to do between renters. Do we want to focus repair dollars on the making the kitchen really nice so we can use something the effect of “Enjoy the smell of simmering cocoa on the new stainless steel stove while leaning against the new granite countertops in your spacious gourmet kitchen!” I remember picking a hotel to stay at in the mountains during one winter that highlighted the “recently renovated bathroom with heated bathroom floors” as its point of marketing emphasis. It sold me on an otherwise non-descript room.

To consistently succeed in a crowded rental market, smart landlords will know their rental home well enough so they can highlight point(s) of differentiation to entice prospective tenants. It’s tough to win the Thanksgiving trivia contest by only knowing the basics of the holiday!

By the way, the correct answers to the trivia questions above are respectively: 5, 3, 66, & 11.

I hope you had a great Thanksgiving & Happy Landlording!

High-Tech Taco Joints & Missing Landlord Reports: Do People Matter?

2024-10-30T12:47:00.001-04:00

I went to a newly-opened Mexican restaurant the other day to meet a friend for lunch. When we entered, I was expecting a nice hostess to say “hello”, take us to our table, and hand us some menus. Instead, we were greeted with some imposing automated ordering machines. I looked at my friend and asked him if he knew what to do. He shook his head “no” and then stepped forward to start pecking at the screen.

Meanwhile, a manager saw these inquisitive middle-aged men jabbing their fingers into the machine and saw that we may need assistance. She dutifully came over and began to give us a tutorial on how one would go about ordering. I told her we had never been there before and wanted to know what she would recommend. She looked at me quizzically and seemed to recommend that I get with the program and push the screen enough times properly to actually order something. Fair enough.

The prices seemed pretty high for standard taco fare (couldn’t I buy 3-4 large pizzas for this?), but we were past that point. The machine already had a nice tip in mind for me, automatically applied it to the bill, and was prompting me to just tap a credit card and get moving. As my card registered with a beep, I was prompted to enter my cell phone number. When I complied, a text message buzzed with the order number (telling me to pick up a table marker with the corresponding number), my receipt, and a link to sign-up for some restaurant points system.

The manager brought us our drinks and told us our food would be out shortly. One minute later, the tacos were on the table. We ate. The manager came back out and asked us how the food was. I told her it was fine. She then made a heartfelt plea for a 5-star Google review. I was non-committal, but she showed me how easy it was to access the review page by asking for my phone and pressing a card with a Google logo against it. Nothing happened. Once she discovered that I was an unenlightened Android phone user, she gave up and told me to visit their website when I had time.

For a tech person, this restaurant may have been nirvana. It took the people component largely out of the restaurant experience. For me, it was a sure sign of the downfall of western civilization. These types of restaurants are not my thing.

I guess I should have done my own investigation and saw what this new place was about before I went. It had a non-corporate name, but my friend told me they had locations all over the place in other states. He had asked around and done his homework!

To the real estate front… this situation made me think about how few landlord reports we get asked for nowadays when our tenants vacate. We used to regularly get other landlords contacting us to ask to see what type of tenants they were for us; there was an importance to it! Like homework, it wasn’t something that anyone really liked to do- it takes effort to pick up the phone, track down the past landlords, send the required information consent forms, get the questions answered, and look into housing gaps in a landlord history. But, to me, it might be the most valuable tool we have to assess incoming tenant quality and identify red flags. Past landlords will largely tell you how it is.

Like the restaurant business, property management has always been a people business. If tenant assessment is only done on a spreadsheet level, important (re: costly!) things can be missed. Asking around and digging in further than a credit score and criminal report can pay big dividends. Upfront effort can lead to the long-term benefits of finding a great tenant for a smooth tenancy.

High-tech taco joints and algorithm property management can sound good on paper. But smart landlords (and restaurant owners) know that old-fashioned, low-tech people interactions can prove to be the most vital component of repeat business and successful leases.

Happy Landlording!

Prince Rents Out an NBA Player’s Home: Worry or Opportunity?

2024-09-26T16:06:00.001-04:00

Being in the industry, high-end home rental stories are interesting to me. I read a good one from former NBA player, Carlos Boozer, who wrote about the time he rented out his house to the famous singer, Prince, of Purple Rain fame.

Boozer had recently bought an 18,000 square foot, 10 bedroom/13 bathroom house in Bel-Air, California. Apparently it had once been owned by the president of Interscope Records (this wasn’t Uncle Phil’s house…) and was pretty gaudy. But he wasn’t going to realistically live there any time soon; he played for the Utah Jazz so he had a house in Salt Lake City during the basketball season. It was going to sit vacant for a while.

His real estate agent got a call from a party inquiring about renting it. He wasn’t interested at all; he just paid to decorate it and hadn’t even lived there yet! But the interested party was adamant and then he threw out what he would pay- $75K/month for 8 months- that’s $500K+ in rent for less than a year. Boozer was sold. He flew out to meet the new tenant who happened to be Prince. Prince was convinced he needed to write his new album in this house because it inspired him. Boozer handed him the keys and went back to Utah.

A few months later, Boozer was back in the Los Angeles area on business and stopped by the house. His mouth dropped when he went inside. The entire house had been remodeled, repurposed, and redecorated. Purple was everywhere. The carpet was replaced with a different color. The couches were different. A bedroom was made into a hair salon (how did they run water into there???). The weight room was a dance club. It was crazy! There were a ridiculous amount of lease violations. He called the tenant immediately.

Prince would not take or return his calls. Boozer didn’t know what to do. All the advice he got was to file a lawsuit against Prince to protect himself. He had been ignored for two months and he could barely recognize his mansion anymore. His biggest fears had been realized; a great opportunity had turned into a nightmare.

As a Charlotte property manager, we get the opportunity to manage high-end rentals on occasion (though the numbers are much, much lower than Bel-Air!). One of our main jobs in these instances is to lower the owner’s risk as much as possible. That really boils down to two main things:

Screen the tenants thoroughly. A good tenant can leave the house looking better than when they took it over. A bad tenant can cause much more damage than the rent intake due to the sheer cost of a larger, more opulent residence.
Make sure the rent is high enough to exceed the risk. The good news for very high-end rentals is that there is a limited number of them on the market typically. This allows for a certain degree of pricing power. And there is only a certain subset of people who are willing or able to take on a large rental payment; if they like the rental home, the price is not usually the primary reason they would pass on it.

I’m not sure what I would have done in landlord Boozer’s shoes. I really hope we would be able to settle it outside of the courts like Boozer stated he wanted to do.

As a postscript, Prince eventually returned his calls. He was in Asia on his world tour and wasn’t getting messages. Prince assured him everything would look exactly the same when he got his house back; then he wired him another $500K to reassure him (that brought the total rent tally to $95K/month for the duration of his stay!).

As Boozer tells it:

Once Prince’s lease was up, CeCe (Boozer’s wife) and I flew to L.A. to survey the damage, like parents coming home from a weekend to find their kid has thrown an absolute rager. Pulling up, the gate symbols and the purple exterior carpeting were gone. Inside, harsh purple and black had faded back to the neutral palette CeCe had selected. The furniture and other decor were where we had left it. The discotheque was gone, as was the hair salon. My weights were where they were supposed to be. Everything was back in its place, down to the silverware. Prince kept his word.

All’s well that ends well? The worry is worth the opportunity? Granted, the risk versus reward is important to balance upfront, but most house stories do have happy endings if structured properly. Plus, you may get a cool story out of it!

To read the story in its entirety from Boozer’s book, click here.

Happy Landlording!

Bad Times to Buy Bank of America Stock and Charlotte Real Estate?

2024-08-28T10:27:00.004-04:00

“(Warren) Buffett famously bought $5 billion worth of BofA's (Bank of America’s) preferred stock and warrants in 2011 in the aftermath of the financial crisis, shoring up confidence in the embattled lender struggling with losses tied to subprime mortgages.”

7/30/24 CNBC.com article by Yun Li

“The Charlotte Regional Business Alliance reported about 113 people moved to the Charlotte metro every day between mid-2021 and mid-2022. That's more than 41,000 people moving to the region every year.”

CLT Today 3/11/24

I remember hearing many years ago that the longer you live, the more economic cycles you’ll see. The “Dot.com Bubble” (2011) and COVID (2020) are ones I remember readily. But from a severity perspective, ‘The Great Recession” (2008-2010) was the most memorable and crushing.

Living in Charlotte, Bank of America casts a big shadow as it houses our largest corporate headquarters. And it got hammered during the Great Recession. Warren Buffett, arguably the greatest stock investor in history, invested $5B in 2011 when it was trading in the $5/share range. The lowest it had dipped to was $3.14 in 2009 and it was teetering along for years as it hemorrhaged losses from its Countrywide Financial acquisition.

At the time of his investment, Buffet said,

“Bank of America is a strong, well-led company, and I called Brian (Moynihan) to tell him I wanted to invest in it,” Mr. Buffett said in a statement. “I am impressed with the profit-generating abilities of this franchise, and that they are acting aggressively to put their challenges behind them. Bank of America is focused on their customers and on serving them well. That’s what customers want, and that’s the company’s strategy.”

Today, Bank of America’s stock price is around $40/share and Buffett has been in the news lately for selling some of his shares for billions in profit.

That’s what all investors want- buy low and sell high! But Buffett’s big payday took a long time to come to fruition as the stock languished for years. It was unknown when Bank of America, and the economy in general, would come back. But Buffett believed in Bank of America’s fundamentals.

We’re starting to see a real estate slowdown in the Charlotte market. There was a time, no too long ago, when a house on the market for sale would get multiple offers. Now, things have slowed, houses are sitting a bit longer, and price increases have waned.

Are home prices too costly? Interest rates too high? Economy too risky? A combination of these and other factors? Are these buyers right? Is it a good time to sit on the sidelines?

Or… is this price stabilization a great opportunity for real estate investors?

It’s tough to know for sure.

There are facts, though, that are undeniable. People continue to move to Charlotte every day in droves and have been for years. Everyone moving here needs a place to live. Housing is a needed commodity.

As Buffet said about his investment in Bank of America during an uncertain time, he wanted to get involved based on the company and its direction. Charlotte has an average of 113 people moving here everyday in need of housing.

Is this a bad time to buy Charlotte real estate? Or is it a great time?

Happy Landlording!

What To Do When Elon Musk & Bill Gates Both Apply for Your Nice Rental House

2024-08-09T10:16:00.000-04:00

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!

No Hard Appointments: Can Property Management Be Easy?

2024-06-26T13:56:00.000-04:00

"If it is possible, as far as it depends on you, live at peace with everyone.”

Romans 12:18

I remember when I started my first “real” sales job. It was all about making quota, that is reaching (and hopefully exceeding) the required number of sales my company wanted me to achieve each month.

Now, for me, working in sales was hard. And doing sales in New York City was even harder. I would tirelessly cold call people on the phone, show up at business offices, blast faxes to lists of businesses, mail out postcards, and send out weekly e-mails to prospects- whew! All this effort was to generate the blessed “appointment”; a set time with a decision maker to sit down and offer my wares to a potential buyer. “Appointments set” was the goal that management had us chase because appointments were expected to inevitably generate sales.

Sales Manager: “Furniss- how many appointments did you set today?”

Sales Manager (regardless of the number I replied): “You (really stink)! I’d have gotten double that number in half the time. More calls!”

When I did finally get an appointment in my early tenure, it was even harder. I had to look some adult in the eye and try to solicit a need for my product. After listening to my spiel, they would then poke holes in my nascent presentation with “objections”. Objections were good I was told- it meant that they were paying attention and should be considered to be “masked buying signals”. Things that were considered bad were visible apathy, frequent phone checking, over-agreeability, and yawning.

However, I didn’t see it that way. Objections were bad for me; I had no idea what to say most of the time.

Decision Maker: “Your product is too expensive!”

Me: “Uh… yeah, I guess it does cost more than the other guys- you got me there. Do you mind if I circle back to you if we ever cut our price by 50%?”

I needed help, and fortunately, my sales manager was a self-professed sales closer. I wanted to see how someone of his ilk could set aside difficult objections to score big deals. So I asked him if I could accompany him to one of his harder sales appointments to see how it was done.

Sales Manager: I wish I could help you with that, Rowboat (a nickname for having no “sales”), but that is an impossibility with me.

Me: It’s impossible for you to take me on a sales call?

Sales Manager: No… I just can’t take you an any “hard” sales calls, Rook. They’re all easy.

At the time, I thought his response was a way to dodge being exposed as a sales pretender while still expanding his aura of cockiness.

However, after being there for a few years and looking back, he really didn’t have any hard appointments. As a sales manager, he had kept a decent amount of large, longtime clients that he brought lunch to and visited often. He knew the decision makers very well and brought a humble attitude (one he did not share with his underlings) of empathy and service. When opportunities for new sales came, his clients were bringing it to him, and not vice-versa. And as long as they stayed in their current roles, their existing business with him was never going to a competitor- they loved him.

As I got into property management in Charlotte, I began to realize how hard it could be. Our owner landlords had ideas on how things should go, our tenants had others, and the property management company sometimes had a completely different version. We could constantly be fighting with everyone and make every day a battle. Or we could try to facilitate an easier environment, a land of “no hard sales calls”.

Property management, like sales appointments, can be easy (or at least easier). But it does take a continued, humble effort of empathy and service to pull off.

Happy (Easy) Landlording!

Building God’s Temple & Lease Extensions: Are You Ready?

2024-05-23T07:33:00.003-04:00

“King David rose to his feet and said: “Listen to me, my fellow Israelites, my people. I had it in my heart to build a house as a place of rest for the ark of the covenant of the Lord, for the footstool of our God, and I made plans to build it. ³But God said to me, ‘You are not to build a house for my Name, because you are a warrior and have shed blood.’”

(1 Chronicles 28:2-3)

“If you fail to plan, you are planning to fail.”

Benjamin Franklin

King David loved God; they were tight. Towards the end of his life, he wanted to do something grand for God- so grand that he aspired to build the greatest temple in the world for Him! David shared this with Nathan, his resident spiritual advisor, and asked him to see if God would approve. Nathan inquired and relayed that God was not amenable to King David doing it; however, He told him that Solomon, his son and future successor, could build it.

King David did not use this as an excuse to sit on his hands. He asked God exactly what He wanted and proceeded to write down specific plans for Solomon to use. He not only detailed plans to build the temple and the surrounding buildings themselves, but for the all the items that would be kept in the temple. He mapped everything out precisely, even the weights of the lamps and tables and how the priests who would work there would contribute. All Solomon would need to do is dust off the plans and enact them when he was coronated. He would be ready to go!

For smart landlords, this is how lease extensions should be approached. When leases are expiring in the near future or tenants are proactively in contact about extending their leases, landlords should not be scrambling! A well-thought-out plan should be in place ready to be enacted.

As a Charlotte property manager, retaining good tenants is paramount. If we don’t hear from tenants prior to 80 days before their leases’ expiration, we start the “Lease Extension Plan”. This begins by running the nearby comparables to determine market price, checking their payment ledger to ascertain tenant quality, and making a recommendation to the owner on what we feel the lease extension price and terms should be.

Once we have finalized our lease extension offer, we e-mail it to the tenants somewhere between 60-75 days prior to lease expiration. This gives them plenty of time to ask any questions and make a decision. We also incentivize tenants to commit earlier as the proposed rental price is offered in tiers based on when they let us know their plans (example: “Let us know by 6/15, and the price will be $1,500.00/month… or if after 6/15, the price will be $1,600.00/month.”). We also offer options for month-to-month lease extensions (at a 10-20% premium to the existing rent based on current market conditions) and multi-year extensions (incentivized by allowing the rent to stay the same over the life of a longer lease term).

Other important factors we incorporate in the “Lease Extension Plan”:

The new lease is written on the latest version to make sure that the owner has the best legal protection incorporating any recent changes to landlord law
The tenant information is updated: Did anyone leave or is now joining the household? Did anyone get married/divorced? Name change(s)? New children? New pets to be accounted for?
Are there any issues that we want to address with the tenant (or vice-versa) before we reup with them for another year or more?

Though King David was disappointed he would not be the one to build the temple, he made sure approved plans were prepared and ready when Solomon got the green light. Smart landlords will follow his example! With increased repair costs on rental home turnovers, keeping tenants by signing lease extensions is becoming more and more important to achieve rental home ROI.

Happy Landlording!

Fix or Replace Broken Appliances? Factoring in Sunk Costs at Carowinds

2024-04-24T13:35:00.000-04:00

I remember several years ago my out-of-town, 6-year old niece was coming to visit. My wife wanted to make sure that she had a great time, so we were brainstorming a list of activities:

Bowling? No, that could be done anywhere.

Movies? Same thing.

Family board games? No, she might beat us…

Hiking? Not a bad plan, but…

How about going to Carowinds, the local amusement park? Yeah! It’s a bit pricey (around $50/person) but Carowinds is a legitimate, massive amusement park and would provide fun for the entire day. And this would make her trip memorable. It was decided!

The big day came and we excitedly ushered my niece to Carowinds. It went well at first; the first few rides were a blast! But then 30 minutes into our adventure, my niece says (something to the effect of), “Well, that was fun! Where are we going next?”

This was not a question I was expecting. Of course, the real answer was (something to the effect of), “There is no “next”. For 50 bucks a person, we are staying at the amusement park for the next nine hours. In addition, you are going to love every moment of it and be bragging for years about how visiting your Charlotte-based aunt and uncle was your childhood’s crowning experience.”

However, from a marriage perspective, I recognized that “my real answer” and “the real answer” given to my niece could possibly be different; I wasn’t sure what my wife’s appetite for niece appeasement was yet. And from an economic perspective, it was close to immaterial. The Carowinds tickets were a sunk cost regardless (we already bought the tickets). If we left the amusement park and went hiking (free), it was a wash.

To me, this story feeds into how we handle broken appliance repair calls from tenants in our Charlotte property management company. When we get these calls, we are left with the choice to either send an appliance repair person or just buy a new replacement appliance. What’s the best way to handle them? Sunk costs are part of the decision-making process.

The economic analysis on these starts with the appliance repair company. The way they bill is that it costs roughly $100 for them to show up at the house and diagnose the issue (this is the sunk cost- we bought it when we called them). If we choose to approve the quote for their recommended repair, the $100 is credited towards the repair. If we think that an appliance is too costly to repair, we can just thank them for the diagnosis, refuse the repair recommendation, and pay them their $100 service call fee.

Lower-end appliances in the Charlotte market usually cost somewhere between $500 - $1,000 when shipping, taxes, installation, and old appliance removal fees are factored in.

Some of these decisions are common sense. If a new stove costs $800 and an older stove is found to need $700 in repairs to fix, we’re going to replace the stove. However, for math purposes, the cost for a new stove is really $900 ($800 for a new stove + $100 appliance repair company diagnostic fee). Tacking on the sunk cost of the diagnostic fee will make replacing appliances cost more.

In turn, the math goes down when repairing appliances. If the same stove is found to need $250 worth of repairs, the real differential is $150 (the first $100 is a sunk cost). This usually makes repairing appliances a better proposition unless there are other mitigating reasons to replace them (beat-up looking, opportunity to homogenize mismatched colored appliances, etc.). $150 versus $800 makes taking the chance that the repair would keep the appliance operating for a while very appealing.

The harder decisions are when the cost of the repair is 50% of a new appliance. I tend to go towards the repair. It requires less money outlaid initially and I’ve found that older appliances seem to be built better than the newer, low-end ones. The only problem is when an older, repaired appliance breaks down near-term for a different reason and I’m left eating the loss on the larger sunk cost of the repair (and holding a bag of regret).

Smart landlords factor in sunk costs when in appliance “repair or replace” dilemmas. Smart uncles also factor them in to assuage anger when one is unexpectedly hiking Crowders Mountain after paying to ride the Fury 325.

Happy Landlording!