Do You Want to Rent Your Charlotte Rental Home to Anthony?

Who needs a house out in Hackensack
Is that all you get with your money
It seems such a waste of time

If that's what it's all about
Mama if that's movin' up
Then I'm movin' out
I'm movin' out

“Movin’ Out (Anthony’s Song)” by Billy Joel

People move out and relocate for many reasons- a new job, real love (isn’t that sweet!), real love that really isn’t (not so sweet), the need for new scenery, the need to get out of town (Jack Bauer fleeing the US for the UK in Season 9 of 24), Anthony getting out of Mama’s house, etc…

And most of them, like Anthony, need to find a place to live.  So property managers get rental applications from out-of-town folk and need to screen them.  It seems like it would just be business as usual.  But there are more factors to consider.

We’ll start with the basics:

1.  Credit check: Anthony saves his pennies, so I’m optimistic.

2.  Criminal check: He seems frustrated, so we’ll have to see on this on.

The income check seems straightforward; people make what they make.  But figuring out how much free cash flow is available can be muddled if the prospective tenants have financial baggage where they are coming from.  For example, are they homeowners?  That’s another house payment they are responsible for, and one that could rival where available funds would go if things got tight (pay for the house they own or pay rent for the one they don’t?).  If they make enough to afford two house payments, that’s great.  But most people don’t and it adds a layer of risk.  Renting out or selling their out-of-town homes is an uncertain thing and can provide short and long term cash requirements.  However, Anthony lives with Mama, so he’s good there with no extra house payment.

The employment screening also adds a potential issue.  Unless the prospective tenant is in largely the same work position with the same boss at the same company, there is uncertainty on how things will pan out.  When a prospective tenant has been in a job for a year or two, it shows they can get along, handle the job, and fit into the corporate culture.  New jobs in new cities are a step into the unknown.  And that creates a greater amount of risk.  Is Anthony transferring to Charlotte with a position with the same grocer or does he hope to latch on with the local Harris Teeter?  This adds some uncertainty to his application.

A quick caveat: “Risky” doesn’t necessarily mean bad.  When I think of our best all-time tenants (sigh… love you guys!), many of them were relocators with the “issues” described above.  

So what to do about Anthony?  His credit score will be a big indicator.  If he is in the 700-800 range, this tells me he knows how to handle his finances well and can make things work through potential adversity.  If it’s in the 500’s, I’m more nervous.

And cash is king.  How much in liquid assets does Anthony have?  He can send bank/brokerage statements that can prove he has funds to fall back on or tide him over until he’s up and running in Charlotte.

Anthony may want to get out of the Tri-State area, shun Hackensack, and come to Charlotte, but smart landlords will want to check Anthony’s application closely.  He may still need to stay in Mama’s house for a little longer to save more money, line up a job in Charlotte, and pay his bills on time to improve his credit score.

Brett Furniss is the head property manager 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, Uptown condos, and town homes in the Charlotte-Metro Area.  Contact Us Today!

You Break It, You Bought It! Avoiding Rental Home Repair Costs

The dreaded scenario…

 

You enter the “4^th Century Priceless Vases” store with your 3-year old child sleeping in his stroller.  “While he’s sleeping I might as well find a birthday present for Uncle Milt,” you quietly say to yourself as you peruse the priceless artifacts (surprisingly all with prices on them…).  As you turn to the shop owner to ask if there is a chance that the price of the orange vase had mistakenly had too many zeroes added to it (a simple clerical issue could happen to anyone!), you hear a crash behind you.

 

Looking at the shards of glass on the floor and your giggling, (temporarily) smiling son, you realize this could be an expensive trip.  The shop owner, with arms crossed on his chest, points to the antique sign on the wall:

 

“You Break It, You Bought It!”

 

Ouch!  

 

A better scenario for everyone would be that “4^th Century Priceless Vases” decided years ago to elevate every shelf in the store to a minimum of 4 feet off the ground and added a feather-coated floor.  The most expensive vases were put behind locked glass and could only be accessed by store personnel.  This way they were able to decrease breakage and save money.

 

On a similar vein as a Charlotte property manager and fellow real estate investor, it pains me (sad, but true) when I get repair calls from tenants on things that could have been avoided.  By spending money on features (“being nice”), it winds up costing in service calls and replacements for years.

 

My 3 main culprits on optional home amenities that always seem to break:

 

1.  Icemakers on refrigerators (ugh!!)

2.  Washers & dryers

3.  Gas fireplaces

 

Most leases say that if something is working when a tenant moves in, it is the landlord’s responsibility to pay to keep it working (aka “promptly repair all appliances and facilities” under Landlord Responsibilities in the NC standard Realtor lease).  This costs money.

 

But what about if you took a page out of the “4^th Century Priceless Vase” store’s playbook and made breaking these things close to impossible?  Sounds good!  But how?

 

Don’t own them!  Nowhere in the lease does it say you have to have these things in your rental house.  So don’t!

 

I see no rent difference in Charlotte single family residences in whether you have these niceties or not.  So, I would highly recommend dealing with my main 3 culprits in the following manner:

 

1.  Icemaker on refrigerator: when you replace your refrigerator, get one without one!

 

2.  Washer & Dryer: sell them on Craig’s List the next time your house is vacant

 

3.  Gas fireplace: turn it off and let the tenant know it is not to be used.  If they insist, let them know they are responsible for its upkeep.

 

Some parts of maximizing rental home ROI is addition by subtraction.  It’s tough to break expensive vases when you can’t get to them, and you don’t need to perform maintenance on items that aren’t there.  When there is less to break, there is less to be bought!