What is the Key to Marriage & Great Property Management?

I was in a marriage communication class this past Sunday at my church.  And the leader began the class by loudly exhorting:

Who wants to have a GREAT marriage???

Everyone enthusiastically cheered and nodded assent.  I quietly commented to my wife that a great marriage did, in fact, seem better than the alternative.

As I felt a sharp elbow in my rib cage, the class leader seized the building momentum with a slide showing a breakdown of a person’s average communication:

7% Verbal                  

55% Non-verbal (ex. aforementioned elbow to ribcage)

38% (the dreaded and infamous) Tone

So, how does this marriage advice fit into performing great property management?  The keys is effective communication via verbal, non-verbal, and tone to your tenants.

To break it down:

A.  Verbal: Present the important points of the lease to the tenant in person.  For me, the Big 3 items to communicate are:

1.  Pay rent on time and in full every month

2.  Maintain the property (cleaning, changing air filters, etc.)

3.  Get along with your neighbors

B.  Non-verbal: Make sure all important points are fully written out.  The writing should be clear and concise; it should include a good lease and other things you care about (lawn care, handling repairs, etc.).  If there is confusion with a tenant about anything in writing, re-write it so it doesn’t confuse the next tenants.  Each cumulative year in the property management business should see a corresponding decrease of tenant/property manager misunderstandings (lack of properly communicated expectations is the root cause of most disputes).

C.  Tone (wasn’t this the subject of a Seinfeld episode?):  Be nice.  At the end of the day, it is a people business.  As the Bible says, “If you live by the sword, you’ll die by the sword.”  Though there are many advantages to taking the emotion out of the business and using a Draconian decision tree approach to management (ex: if they don’t pay by the 16^th, we file for eviction every time), I personally feel that’s a poor methodology (both operationally and from a ROI standpoint).  Emotion matters.  Parents being able to provide a home for their families matter.  Most people don’t take being removed from their homes through court order lightly; they just need some occasional compassion to get through rough patches.  Be nice, to a point. 

By using a confluence of verbal, non-verbal, and tone communication, you can manage your property well and have a great marriage to boot!

Brett Furniss is the President & Owner of 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, condos, and town homes in the Charlotte-Metro Area.  Contact Us Today!

Should I Sell My Rental Home?

From the mail bag… (aka a question I may have made up to write about)

 

 Q: I have a few occupied rental homes and wonder if I should sell one of them now that the market seems to be improving.  What are your thoughts?

 

A.  Oh, this is a surprising question from left field!  And a great one!  Kudos to you, mighty thinker!

 

It is a tough decision on whether to unload a rental property.  If you decide it may be time to do so, the first thing is to establish whether you can by asking 4 questions:

 

1.  What is the realistic value of my property?  Have your trusted real estate advisor run sales comparables and put your home’s value at the low end of the range for estimating purposes.

 

2.  How much will it cost to get my property in sales shape?  In my opinion, there is a difference between getting a home in rental shape and sales shape.  With a rental, you may get away with steam cleaning the carpet and touching-up the paint; with sales, there is a lower threshold for cosmetic issues which may mean replacing the carpet and repainting the house. 

 

3.  Do I have the money to cover the mortgage and utilities while the rental home potentially sits vacant for months?  Generally-speaking, showing a home effectively with tenants in it is tough.    

 

4.  Do you have the money to pay the selling costs (Realtor fees, closing costs, less than full market offer, etc.)?

 

So, the math looks like:

 

Answer #1 – Answers #2, 3, and 4 = $$ (hopefully a BIG, positive number)

 

Then the question is: Is $$ above worth selling the property for?

 

If so, do it. If not, continue to hold the rental until the market and your mortgage balance improves further.

 

However, there is a scenario that skews the math and lets you skip cost items #2 (home cosmetic fix-up) and #3 (home vacancy costs), and eliminate or reduce #4 (selling costs in terms of Realtor fees)…

 

Q.  OK, I’ll bite.  What is the scenario?

 

A.  When the tenants in your rental home want to buy it for themselves.

 

This is the #1 question to ask if you think you may want to sell your rental homes.  ALWAYS ask the tenants first.  If they do want to buy it, get them in touch with a mortgage broker and see if they qualify. 

 

If they qualify, this is a win-win exit strategy.  The tenants get to start building equity in a home that they already love.  And you, the owner, get to avoid much of the costs and uncertainty of selling your rental home.

 

And what if the tenants proactively ask you if you are willing to sell your rental home to them when you’re not quite sure you are ready?  You want to think REALLY long and hard about it.  These opportunities don’t come up that often and you need to make sure that it is something you really don’t want to do.

 

Cash is king and the purpose of investments is to make money.  Two well-worn adages come to mind:

 

A bird in the hand is worth two in the bush.

 

AND

 

Buy low, sell high!

 

Happy investing!

 

Brett Furniss is the President & Owner of 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, condos, and town homes in the Charlotte-Metro Area.  Contact Us Today!