Charlotte Property Management Weekly: The Top 3 Reasons Why Good Property Managers Matter More Now (Reason #3)

3. The skills needed for selling a home have (and will continue) to trend to more of a solution-based, “cash now, sell later” approach; outright sales are becoming scarcer as there are less qualified buyers available in the market


Consumers are having a more difficult time selling their homes. More people want to sell, but the weak market is not allowing them to at retail prices. 50% of all sales in 2010 have been either short sales or foreclosures. Now that the Obama tax-credit has gone away, first-time home buyers will become an even smaller percentage of buyers; the trend that will continue is discounted home sale prices.


So what does this mean to real estate brokerage? It means that the promise of “list, market, wait, and hope” (then repeat) formula will continue to be a less effective one. Consumers are going to want more. They are going to ask questions like:

1. Why will your listing strategy work?

2. The definition of “insanity” is to do the same things and expect different results. What are you going to do differently?

3. I don’t want to ruin my credit through a short sale and want to stop hemorrhaging cash from an empty home. What else have you got?


This is where having a good rent-to-own or creative financing plan is place is paramount. And this is where a good property manager becomes even more important. Banks have made it clear that they consider most consumers “too risky” to extend credit (and this is before upcoming extensive Congressional regulation!). As the FHA (the savior of the market for the past few years) keeps losing billions of dollars, they are going to tighten standards as well. Uh oh!


But people need to do something now! As the oft-repeated Wall Street mantra says, “The market can remain irrational longer than you can remain solvent.” Where can sellers go to find a solution to ensure cash-flow on their vacant properties with the hope of selling them?


Property managers have been executing solutions in the rental and rent-to-own arena for years! While some real estate agents have seen the trend and have educated themselves in this arena, a good property manager has been analyzing credit and creating solutions for homeowners since they’ve been in business. They know how to screen tenants and have the infrastructure in place to ensure cash flow to home owners during tough real estate markets; and this market, unfortunately, is not close to returning to good and “normal”.


In short, having experience in creating “cash now, sell later” solutions for cash-strapped homeowners is becoming more valuable. And this is why a good property manager is more important then ever!

Brett Furniss is the President & Owner of BDF Realty (“Charlotte’s Most Innovative Property Management & Investment Company”), and Rent-To-Sell Realty (“When You Need a New Solution to Sell Your Home”) which specialize in rent-to-own (lease options) and rent-to-sell homes. You can contact him directly at Brett@BDFRealty.com.

Charlotte Property Management Weekly: The Top 3 Reasons Why Good Property Managers Matter More Now (Reason #2)

2. Tenant selection is getting harder

I remember when we first starting offering property management services, there was a large property management company in Charlotte that had very simple tenant screening criteria:


1. Their income must be 4X rent at minimum

2. They must have good landlord history

3. They have 600+ credit scores


I thought, “Wow! They must have some pretty good tenants if they keep those standards. If they can deliver a tenant within a reasonable time frame, it would definitely be worth using them!”


Now, flash-forward to today. If they are using these criteria to find tenants, good luck! People that pass these criteria are usually called “buyers”, not “renters”. There are certainly some renters of this caliber, but they are becoming a smaller percentage of the rental tenant pool by the day. I imagine this company had to lower their standards so the majority of their rental inventory didn’t sit vacant.


Should they have lowered their standards? What? Wouldn’t that make their eviction and non-payment rate skyrocket?


Not necessarily. Traditionally, this could be considered a “lowering” of standards; however, in today’s market, I would argue that it is understanding, collecting, and interpreting tenant data better. Tenant selection has become more of an art and less of a science.


And this makes it much harder! For example:

A. Does a bankruptcy, eviction or foreclosure mean an automatic application rejection?

B. What ratio of income to rent is appropriate? Does this change for each individual?

C. How much should job history be considered? Should we be looking at it on a company or industry basis?

D. If both tenants work for the same company (and both incomes are necessary for them to be eligible for the home), should the risk model change?


For the past few years (and continuing now), credit scores, housing, and employment have been on the rocks for many consumers. Does this make them all bad renters? How do you tell?


You hire a good property manager and let them worry about it! In today’s uncertain environment, they are much more important today than ever!


Brett Furniss is the President & Owner of BDF Realty (“Charlotte’s Most Innovative Property Management & Investment Company”), and Rent-To-Sell Realty (“When You Need a New Solution to Sell Your Home”) which specialize in rent-to-own (lease options) and rent-to-sell homes. For a FREE look into his new book, A Real Estate Agent’s Complete Guide to Representing Rent-To-Own (Lease Option) Tenants: Delight Clients, Fill Vacant Homes, and Earn $2,250 Upfront* (*Minimum!) go to www.RentToOwnAgentGuide.com.

Charlotte Property Management Weekly: The Top 3 Reasons Why Good Property Managers Matter More Now (Reason #1)

1. If this economy has taught us anything, it is cash is always king and real estate is an investment. The ONLY decision criteria for hiring a prospective property manager should be their ability to maximize the cash flow of your investments. Period.


A friend of mine works for a utility company. The were recently faced with a question on whether they should spend the money to increase their customer service grade from 74% to 77%; they had calculated almost exactly what it would cost to do so. His co-workers were fighting to spend the money. Isn’t great customer service what business is all about?


But, where was the ROI (Return on Investment)? His co-workers didn’t see that spending the money wouldn’t bring in any additional revenue (people didn’t have a choice but to use the utility company). The real question that should have been asked was:


How much will our cash flow improve if we drop our customer service level from 74% to 71%?


This is the type of property manager I want working on my properties. The answer isn’t always to:


A. Put perfect looking homes on the market (though it helps…)

B. Make costly repairs

C. Wait to get upper rental rates

D. Wait for perfect tenants

E. Evict late payers


The answer IS to make the most money on your investments. This is a result of 3 things:


A. Maximizing revenues

B. Reducing expenses (yes, this includes the holding time when properties are empty)

C. Sometimes taking on a manageable level of tenant-risk (letting some tenants be late, etc.)


Cookie-cutter approaches don’t cut it anymore (no pun intended). Just take a look at the drop in retirement portfolio values of the average American, and then look at the hedge fund manager who MADE $4B last year (yes, that’s “B”, as in billion). The stunning thing is that both were investing in the financial markets…


Good property managers maximize the amount of investment dollars paid to you. They use strategic approaches for each individual property (and, yes, the approaches are sometimes unconventional). But they never waver in having you spend less and make more. Period.


Brett Furniss is the President & Owner of BDF Realty (“Charlotte’s Most Innovative Property Management & Investment Company”), and Rent-To-Sell Realty (“When You Need a New Solution to Sell Your Home”) which specialize in rent-to-own (lease options) and rent-to-sell homes. For a FREE look into his new book, A Real Estate Agent’s Complete Guide to Representing Rent-To-Own (Lease Option) Tenants: Delight Clients, Fill Vacant Homes, and Earn $2,250 Upfront* (*Minimum!) go to www.RentToOwnAgentGuide.com. You can contact him directly at Brett@BDFRealty.com.

Charlotte Property Management Weekly: Top 6 Miscellaneous Tips for Rent-To-Own Deals

The following is an excerpt (3 of 3) from A Real Estate Agent’s Complete Guide to Representing Rent-To-Own (Lease Option) Tenants by Brett Furniss (2010)


1. Option money (written in the contract as such and paid to the owner) should be used as down payment funds (remember to both source and document!). Monthly rent credits can be used to pay closing costs or reduce the purchase price of the home.


2. What about a security deposit? Typically, there isn’t one for several reasons. The first is that tenants only have so much money to put down (option fee, first month’s rent, moving expenses, etc.). The second is that the tenant should be treating the home well (and not destroying it), being that they entered into a contract to potentially buy it.


3. What about insurance? For the rent-to-own buyer, I always recommend renter’s insurance. It’s cheap (around $100 a year) and you’re really glad you have it when something goes wrong. For the seller, they just need to call their insurance provider and switch from a “homeowners” to a “landlord” policy. Typically, there is no price difference.


4. What about inspections? The blanket, conservative answer is to get them done prior to move-in and then the house sells “as-is” at closing. However, being that the tenant will be living in the home for a year or two and the owner is paying for any repairs above $500, you can look at this at a case-by-case basis. Broken things will be found out quickly while living there.


5. What about the much publicized “higher rental rates” you hear about that rent-to-own arrangements command? I don’t see evidence of this. Does this ever happen? Sure. Does it happen often in competitive markets? No. As an example, try to list your rental home for $200 above market rate as a “rent-to-own” and see what your response rate is. There are plenty of rent-to-own opportunities at market rate rent (or below).


6. What about paying for an appraisal prior to move-in? I think this is a waste of money. You can just use comps, negotiate the price, and then wait. When the tenant goes to buy the home, the bank will send an appraiser.

Brett Furniss is the President & Owner of BDF Realty (“Charlotte’s Most Innovative Property Management & Investment Company”), and Rent-To-Sell Realty (“When You Need a New Solution to Sell Your Home”) which specialize in rent-to-own (lease options) and rent-to-sell homes. For a FREE look into his new book, A Real Estate Agent’s Complete Guide to Representing Rent-To-Own (Lease Option) Tenants: Delight Clients, Fill Vacant Homes, and Earn $2,250 Upfront* (*Minimum!) go to www.RentToOwnAgentGuide.com. You can contact him directly at Brett@BDFRealty.com.

Charlotte Property Management Weekly: Signs of the Times: Layaway and Rent-To-Own Are Back!

The following is an excerpt (2 of 3) from A Real Estate Agent’s Complete Guide to Representing Rent-To-Own (Lease Option) Tenants by Brett Furniss (2010)



A market has been defined as “a place where willing buyers and sellers meet.” You go to a department store. You want to buy (you want some new jeans!) and the store owner wants to sell you his goods (this is how he makes a living!). So you try on the designer jeans (they look good!) and go to the register to pay.


The clerk rings up what you have and asks for payment. You either pull out cash or a credit card. The clerk accepts payment and you are on your way, free to unveil your stylish ensemble to the adoring public. Everyone is happy!


But what happens when you go to the register and you don’t:

• Have any cash?

• Own any credit cards (that work)?


You’re out of luck and not looking your best. If this happens to the department store too many times, he’s out of business. And if this continually happens to department stores, the retail industry is in trouble.

"If you owe the bank $100, that's your problem. If you owe the bank $100 million, that's the bank's problem."  (J. Paul Getty)

This can easily be reworded to fit today’s real estate market:

“If you can’t get financing to buy a house, that’s your problem. If millions of people can’t get financed, that’s the home seller’s (and their real estate agent’s!) problem.” (Brett Furniss)

Fact: Buyers want to buy homes and sellers want to sell their homes

Fiction: It is impossible to make a living doing this in today’s market


Q: If it is possible, what is keeping it from happening? What’s missing?

A: The money in hand!

Q. This sounds like the department store example. What’s different?

A. It’s not that different. I’m glad you asked!


Now that consumers don’t have cash, department stores have been forced to dust off their layaway programs to stay in business.


Rent-to-own (lease option) deals structured properly are exactly the same. It allows your clients to build up their down payments and credit scores over time until they can buy.


And best yet, you will be able to make a minimum of $2,250 upfront (and 3% on the backend), doing exactly what the customers (buyer and seller) want! This will keep more real estate agents in business.

Brett Furniss is the President & Owner of BDF Realty (“Charlotte’s Most Innovative Property Management & Investment Company”), and Rent-To-Sell Realty (“When You Need a New Solution to Sell Your Home”) which specialize in rent-to-own (lease options) and rent-to-sell homes. For a FREE look into his new book, A Real Estate Agent’s Complete Guide to Representing Rent-To-Own (Lease Option) Tenants: Delight Clients, Fill Vacant Homes, and Earn $2,250 Upfront* (*Minimum!) go to www.RentToOwnAgentGuide.com. You can contact him directly at Brett@BDFRealty.com.