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Wednesday, March 29, 2017

Trump’s Cabinet Means You Should Invest in Charlotte Real Estate




The stock market will always go up eventually.  Historically, it keeps happening.  Most wealthy people (aka the people who make the rules- check out Trump’s cabinet of billionaires) have much of their wealth tied up in corporate ownership (stocks).   It’s almost a sure thing.  If the stock market crashed and stayed down permanently, our country would be in mayhem.  And the dollars under the pillow and gold bars stashed in the attic wouldn’t mean much.  Food would be the main currency.

So why do investors get fearful when the stock market goes down?  It will go back up, right?

After 9/11, the stock market tanked.  Billionaire New York City Mayor, Mike Bloomberg, had a message for his constituents.  He essentially said,” People always ask me for investment advice so they can become billionaires.  I don’t often offer it, but today is different.  Take all of your available money and buy stocks now.”

The Dow dropped to under 9,000 in 2001, and almost to 7,000 in 2002.  It is now over 20,000.  Too many powerful forces have a vested interest in the stock market doing well for it to flounder long.

Charlotte’s population is forecasted to go up 50% in the next 10 years.  All of those people need a place to live.  Statistically, 2/3 will buy and 1/3 will rent.  Housing demand will continue to drive rents and prices higher.

So, investing in real estate in Charlotte is a slam dunk?  As much as investing in the stock market is, especially with a Trump administration.

So that leads to 2 questions:

  1. When is a good time to buy in Charlotte?
For long-term holds, anytime really should be fine.  The best time to buy is when the market gets hammered (see 2008-2012 when we didn’t get many buying inquiries, but many of our clients were looking to unload their homes and became reluctant landlords).  For short-term holds and flips, this might not be a great time as competition is fierce for good properties; it’s clearly a seller’s market now.  But financing is easy and historically cheap right now.

  1. Where should I buy in Charlotte?
Once again, for long-term holds, anywhere within city limits will work; really the surrounding counties seem pretty good too.  When I was a newbie investor 10-15 years ago, my first two purchases were in areas that were considered “war zones”.  I bought them very cheaply ($27K & $39K) and now they are considered to be in “hot areas”.  Note: I wouldn’t recommend this, especially for newer investors.  The fix-up and tenant issues were challenging and I wished I didn’t own them for years due to the headaches.  But there are plenty of Charlotte houses that are in better areas that will make coveted rentals for years and years.  I’d recommend buying houses that are more expensive (the market is pretty good at pricing houses based on risk).  The homes I bought over $100K were much easier and safer investments that have also appreciated.

Much like investing in the stock market as a whole, Charlotte real estate is a great long-term hold that doesn’t require a large amount of analysis.  And Trump’s cabinet members (and President Trump himself) own a lot of real estate too… 


Happy Investing & Landlording!

Tuesday, January 31, 2017

Rudy is a Great Movie, Just Not a Great Rental Application




Rudy Ruettiger (aka “Rudy”) was the subject of a great movie in 1993 about his improbable story of getting into Notre Dame and then playing on their football team.  It’s a true testament to the human spirit as he played high school football (not recruited), went to the Navy for two years, worked at a power plant for two years, and then after not getting into Notre Dame for low grades, went to Holy Cross College for two years before being admitted to Notre Dame on his 4th try!  Whew!

Then he walked on to the football team and made it(!), got beat up on the scout team every day at practice, and then got on to the field his last game and picked up a sack.  What a story!

Of course Hollywood embellished the story a little bit as Joe Montana, a freshman quarterback at Notre Dame at the time, said in an interview.  No players were taking off their jerseys demanding that Rudy get in the game, it was typical for seniors to get into the last home game, and the players carrying Rudy off the field in triumph were just playing around.  And Rudy’s legendary work ethic?  “He worked his butt off to get to where he was and do the things he did.  But not any harder than anyone else,” Montana said.

The truth is that Rudy should have never gotten into Notre Dame due to his bad grades (4 tries!  Where did he get the money to pay the college application fees?  Does “no” ever mean “no”?  Did he finally get an admission officer who was napping?).  He never should have been on Notre Dame’s football team (He was 6 years older than everybody else.  He was 5-foot 6 inches tall and 165 pounds!  He’s lucky he didn’t get killed in practice.).  “Rudy” should have never happened and a movie was made about him because somehow it did.

As a Charlotte property manager, we sometimes get rental applications that I feel might have been inspired by Rudy.  And I’m not saying that to be mean.  I really feel that if we approved some of the applications we received, we’d essentially be ruining the applicants’ lives.  For example:

We had a rental house on the market for $1,400.00/month.  We received an application where the prospective tenants had several credit cards almost maxed out, they had been late 8 of the past 12 months on rent, and the rent they were currently paying was $1,000/month on a smaller house.  How was adding $400.00 in additional rent (not to mention higher utility costs for a bigger house) a responsible move for anyone- landlord or tenant?  It would just have made life much harder for everyone.

Even as romanticized as Rudy was, the chances are no one would have wanted Rudy’s life prior to running through the tunnel and getting into his one Notre Dame game.  He was studying all the time to pass classes that were too difficult for him, while walking around with a beat-up body from banging into guys that were too big and strong for him to compete against.

Rudy may have learned character, perseverance, and many other worthwhile traits (while being the subject of a great movie!), but it was a hard journey.  He was able to walk away with a Notre Dame degree, a great memory, and a lucrative speaking career after the movie came out.  But I’m not sure there are any rewards for taking on more housing payment than one can afford.  It’s stressful, and hurts families and relationships.  Usually, it leads to evicted tenants and fired property managers.

We all want to root for the underdog, but Rudy is best seen in the theaters and not experienced in real life.  Denying unworthy applications can sometimes be a great act of kindness.


Happy (& Responsible) Landlording!

Thursday, January 5, 2017

The Rental Bachelorette: What is She Looking For?





"I would just want someone who is genuine and makes me laugh and is my best friend and ultimately someone who is going to love me as much as I love them.”
Former Bachelorette JoJo Fletcher

JoJo apparently found that “someone” in the arms of NFL quarterback Aaron Rodger’s brother, Jordan, in the last season of the Bachelorette (so says the cover of a tabloid magazine next to Harris Teeter’s cash register).  Good for her!

Many people have differing ideas on what women want from prospective male suitors.  I’ve seen some lists as short as:

  1. Rich
  2. Good-looking

This list is written for the rich, good-looking guys typically by the less rich, less good-looking, jaded guys.

And there are some deeper lists written for the less affluent, average-looking guys (who might buy magazines with articles like this).  This “Top Ten” list is courtesy of www.topyaps.com:

  1. Not being desperate or clingy
  2. Being a friend first
  3. Manners & hygiene
  4. Respecting her space
  5. Chivalry
  6. Sincerity & loyalty
  7. The ability to protect
  8. Sense of humor
  9. Intelligence
  10. Honesty

Wow!  That’s a much tougher list to mull over.  At first glance, it seems like I’ve blown it in the past by actually following items #1 and #4 by “not caring” and “being distant.”   But I digress…

As a Charlotte property manager, this is a question we get often from potential tenants:

“Before I spend $75.00 on a non-refundable rental application, what are you looking for?”

The three things we are looking for in potential tenants for our properties:

  1. Pay rent on time: #1 criteria
  2. Maintain the property: change air filters, mow the lawn, make reasonable repairs on your own, etc.
  3. Get along with the neighbors (and property manager!)

If tenants can do these 3 things, we will like them a lot and the tenancy should go very smoothly.

Tenants do not need to be rich or good-looking, but we’re always impressed with chivalry and a sense of humor.

Happy Landlording!


Brett Furniss is a property manager at BDF Realty (Charlotte Residential Property Management), the trusted real estate advisor for Charlotte landlords & Home of $100 Flat Fee Property Management.   BDF Realty utilizes their innovative Pod System for exceptional customer service in residential property management, home repairs, and home sales for single-family homes, Uptown condos, and town homes in the Charlotte-Metro Area.  Contact Us Today!

Friday, December 9, 2016

Cash Bloodletting from Rental Home Subletting




A house on my street is a rental home.  The owner had a long term tenant who always paid on time and was an agreeable guy.  It seemed like a good situation.

However, every few months I would see moving trucks parked in front.  I wondered if the tenant was moving out, but sure enough, days later I would still see his human size dog running out his front door (as I would shield my 2-year old son from his “affections”).  The tenant hadn’t gone anywhere.

So what was going on? 

The tenant was a serial subletter.  He would rent out rooms to strangers.  It seemed like a good way to make extra cash being that he travelled a lot for work and lived alone (besides the aforementioned gigantic dog). 

But something went really wrong recently.  The tenant didn’t click with the newest subletter and they got in a physical altercation due to undone housework.  His dog attacked the subletter (poor guy!) protecting his owner and the subletter needed an ambulance.

An ambulance, several police officers and animal control showed up at the house and the subletter wound up getting a restraining order against the tenant.  Now the tenant was not allowed to go to his rental home.  I had a new neighbor, and not one who was actually on a lease.  However, due to the legal system, he had rights to the house and the tenant was essentially homeless because of the restraining order. 

It was a mess for the owner.  The subletter had to be evicted (which took a month or two) and it left the owner out thousands of dollars. 

So, is subletting evil?

Generally-speaking, yes, I wouldn’t recommend it.  However, if done properly, it can work well to keep a house occupied.

The two ways to avoid subletting bloodletting:

  1. Be involved.  If a tenant wants a subletter (and this is applicable for any new home occupant), a rental application needs to be run.  Owners need to know exactly who is going to be living in their rental home.
  2. The new occupant needs to be on a lease and the security deposit situation needs to be addressed (who has rights to it now?).

As a landlord, it’s easier to just let tenants do their thing as long as rent is coming in (like in this instance where it happened for years without incident), however it can come back to bite (pun intended).
As a Charlotte property manager for many years, we’ve picked up many good tenants from allowing tenants to add additional occupants to their lease.  However, we’ve never budged on the two criteria above.

Don’t let subletting turn into a mess.  Control the situation, run a rental application, and (if approved) get them on a lease!

Happy Landlording!


Brett Furniss is a property manager at BDF Realty (Charlotte Residential Property Management), the trusted real estate advisor for Charlotte landlords & Home of $100 Flat Fee Property Management.   BDF Realty utilizes their innovative Pod System for exceptional customer service in residential property management, home repairs, and home sales for single-family homes, Uptown condos, and town homes in the Charlotte-Metro Area.  Contact Us Today!

Thursday, October 20, 2016

Love, Kindness & Gratitude: Setting the Tone in Property Management





Beloved, let us love one another, for love is from God, and whoever loves has been born of God and knows God. Anyone who does not love does not know God, because God is love."  I John 4:7-8

Man, it’s nice when people are nice.

 

We have a tenant, Monica, who just goes out of her way to be easy to work with.  If we need her to do something for us, she does it.  There is no complaining, back biting, or procrastination.  Communication with her is a joy.  And she is soooo nice and gracious.  When we perform repairs (aka our job), she is so gracious and thankful.  Her rent is always on time.  She and her family go out of their way to perform maintenance to the house.  And at the end of her positive and funny e-mails, she always includes the Bible verse above.

 

We have another client, Mike, who goes out of his way to compliment us for working on his home; once again, for just doing our job.  Small things don’t escape his notice.  His level of graciousness is astounding.  Truthfully, we should be thanking Mike much more than he thanks us.  We made a good amount of money working for Mike: we helped him buy houses, repair them, manage them, and finally, sell them.  These are all things we collect fees for.  But he would let us know how much he appreciated our efforts, even if the work was imperfect at times.

 

I think back to how our relationships started.  It would be easy to say that they were “good folks” and that they get along with everyone (they probably do!).  But why? 

 

They set a positive tone with us early.  Early conversations were easy, paperwork was complete and accurate, and meetings were punctual.  They were easy going about details as we got to know each other.  They got the things they needed from us, but their requests were made in a graceful and kind manner. 

 

Property management can be a difficult business.  At the face of it, a property manager is the middle man between two parties with divergent interests, the owners and tenants.  Both would prefer that the other party pay for anything that breaks.  The owners want the rules of the lease followed precisely to protect their investments, while the tenants want to use the house as they see fit.   The property manager is hired by owners and is tasked with protecting their investments, but can’t get it done well without tenant involvement and buy-in.  It’s a balancing act that produces many colorful (and costly) stories of when the relationship breaks down.

 

But Monica and Mike also show that it can be a rewarding business with warm relationships. 

 

As the property manager, our job is to always set the tone early with kindness, love, and gratitude.  The tenants need to feel this from us, their point of contact, from the moment of their first inquiry.  Even if we wind up having to reject a tenant application, we can do it kindly.  But if we wait for the clients to set the tone, it might not happen.  And it needs to.

 

So set the tone early!  This will allow landlords to reap the benefits of a mutually fulfilling partnership and make property management a joy.

 

Thank you to our clients (Monica, Mike & many others) who make coming to work a pleasure.

 

Happy Landlording!

 

Brett Furniss is a property manager at BDF Realty (Charlotte Residential Property Management), the trusted real estate advisor for Charlotte landlords & Home of $100 Flat Fee Property Management.   BDF Realty utilizes their innovative Pod System for exceptional customer service in residential property management, home repairs, and home sales for single-family homes, Uptown condos, and town homes in the Charlotte-Metro Area.  Contact Us Today!


Friday, September 16, 2016

Being a Duke Hoops Recruit & Landlording: YDKWYDK




As much as I hate to admit it (being a UNC guy), Duke University is a worthy rival on the basketball court.  A big part of that is their ability to recruit great high school players.  They go after the best of them and have been very successful in landing them in Durham.  Many of them were so good that they only played one year at Duke and then left early to play in the NBA for millions of dollars. 

But, for others, it didn’t work out that way.

Point guard Derryck Thornton was one of those Duke recruits.  He was an esteemed 5-star recruit who was finishing his junior year of high school in 2015.  Duke was thin at point guard for the upcoming season and they convinced Thornton to “reclassify”; this allowed him to graduate early from high school and join the Blue Devils for the 2015 season. 

It was a great honor.  The defending national champions needed him to come early and play.  He was only 17 years old!  So he said “yes”, enrolled at Duke early, and was starting at point guard.  It seemed like he had the world at his fingertips!

But, YDKWYDK (You Don’t Know What You Don’t Know).  A year later (when he originally should have been starting school at Duke), Thornton was transferring out to play basketball for the USC Trojans.  It was allegedly a combination of factors he could not have seen coming: his freshman year didn’t go as well as they had hoped, certain Duke players inexplicably didn’t go pro (that would have made more playing time available to him), and other more heralded recruits joined the 2016 team.  He went from being really needed to being really expendable.  So he was gone.

YDKWYDK.  By definition, it’s hard to protect yourself against the unknown.  This is especially true in property management when there are so many variables; renters (people) are complicated and they are all so different!  It’s best to have someone who might know what you don’t know because they’ve been there before.  Experience counts! 

I know I’m biased towards using a property manager, but I understand the self-management side of it as well; I’m all for saving money!   It’s cheaper if I fix the sink, as opposed to my plumber, but what about if I miss something and it causes a leak behind my wall?  Then I’ve got a bigger, much costlier problem.  YDKWYDK

And if property management is merely a hobby, it’s really tough to know what decisions can be costly down the road:

“My friend/co-worker wants to rent the property.  He seems like a good guy.  Should I rent it to him?”

“Should I allow any pets in my rental home?  If so, which ones are okay?”

“Is it important to do credit checks?  If their score is low/high, is that an instant denial/approval?”

“Do I need to do home inspections?  If so, what am I checking for?”

If Thornton had been told in 2015 that he would be transferring to another college after his freshman year at Duke, he probably would have had a good laugh.  But it happened.  The same can be said of many decisions being made today by landlords who dabble in property management; the unforeseen long-term costs of seemingly innocuous choices might make the expense of having a property manager seem very reasonable!


YDKWYDK.  Happy Landlording!

Brett Furniss is a property manager at BDF Realty (Charlotte Residential Property Management), the trusted real estate advisor for Charlotte landlords & Home of $100 Flat Fee Property Management.   BDF Realty utilizes their innovative Pod System for exceptional customer service in residential property management, home repairs, and home sales for single-family homes, Uptown condos, and town homes in the Charlotte-Metro Area.  Contact Us Today!

Tuesday, August 30, 2016

Wesley Snipes’ IRS Case for Rental Home Inspections




Wesley Snipes is a great actor.  Watching him in White Men Can’t Jump, Major League, and other films is some good theater. 


But Wesley got some bad advice at tax time in the late 90’s.  His accountants told him there was a loophole that would allow him to avoid $7M in taxes; in fact, he didn’t even have to file tax returns.  He thought that sounded pretty good.  And besides, everybody knows the IRS isn’t really paying close attention with the sheer amount of returns they have to log every year. 
 

Well, the IRS was paying attention.  And they got Wesley’s attention with a 3-year prison sentence that ended in 2013.
 

It was sad for everyone: his many fans, his accountants (who received even stiffer jail sentences), the IRS who had to use limited resources to prosecute his case, and especially for Wesley (who had reputedly earned over $40M from 1999-2004).

 
There were a lot of questions in Wesley’s case, but one almost undeniable certainty- Wesley’s tax returns now are the most truthful and timely documents he files every year. 

 
This logic spills over into residential property management and periodic home inspections.  If landlords can show tenants that they are paying attention to what is going on in the house and whether maintenance is being done, they will undoubtedly get a better conditioned house when the tenant eventually vacates.


So, yes, this means going over to and inside the rental house.  I’d highly recommend giving the tenant a week or so notice of when the home inspection is and letting them know what you are specifically planning on looking at (e-mailing them a list is helpful).
 

  1. What should a landlord include in their home inspections? 

  1. Anything they care about. 
 
Some general things I care about:
 

  1. Do the keys still work?
  2. Is the lawn and landscaping being kept up?
  3. Are the air filters being changed?
  4. Are the fire and CO detectors still there on each level of the house and are they functional (aka is the tenant changing the batteries when they die?)
  5. Is the home clean?
  6. Does it smell like smoke?
  7. Is there evidence of a pet if there isn’t supposed to be one?
  8. Does anything look weird?

Feel free to add anything else of interest.  I also think conducting the home inspections twice a year (roughly on month 3 and month 9 of the lease) works well.  Paying attention is good, stalking is bad.

 
Wesley has some well-maintained tax returns now and periodic home inspections should lead to some well-maintained rental homes.

 
Happy Landlording!


Brett Furniss is a property manager at BDF Realty (Charlotte Residential Property Management), the trusted real estate advisor for Charlotte landlords & Home of $100 Flat Fee Property Management.   BDF Realty utilizes their innovative Pod System for exceptional customer service in residential property management, home repairs, and home sales for single-family homes, Uptown condos, and town homes in the Charlotte-Metro Area.  Contact Us Today!