Too Big of a Jump to NBA Competition (& Rent)?

What do former NBA players Jack Sikma, Devean George, Vern Mikkelsen, and Terry Porter have in common?

 

I’m a big basketball fan, but had only heard of 3 out of the 4.  And I had no idea what they had in common.

 

Answer: They all came to the NBA after playing at a Division 3 college.  That’s pretty hard to do.  It’s so hard, in fact, that they are the ONLY players to ever make it to the NBA from Division 3 schools.

 

Why is that?  The best high school basketball players have either gone directly into the NBA (ex: LeBron James) or gone via a Division 1 college (ex: Kemba Walker from the University of Connecticut).  The competition in Division 1 is fierce and players train year-round to compete.  And 99%+ of Division 1 players are not good enough to play in the NBA.

 

Division 3?  Though the players are very good if they are playing hoops in the park with you, most would probably have a hard time competing against a Division 1 player’s athleticism, size, and skill.  Those Division 1 guys are really good!  And multiply that by 100 for the guys who are good enough to play in the NBA.

 

So am I a Division 3 hater?  Not at all!  I can probably relate to them much more on the basketball court.  But when they have to try to play against NBA-caliber players, it’s just too much of a jump.  The NBA guys are stronger, faster, quicker, more accurate, have better basketball IQ, and jump a lot higher.  Most Division 3 players don’t stand a chance.  It’s like trying to compete against a perfect storm of genetics and work ethic.

 

I sometimes feel like I run into this situation with rental applications.

 

BDF Realty receives some applications from perfectly fine, average tenants.  They have decent credit scores, a few late payments from their prior landlord, and have some debt.  But we have to turn them down.  Why?

 

Because they are paying $900.00 in rent and want to rent a house that rents for $1,500.00.  With rising rents in Charlotte, this has become a more common situation.

 

We have to ask: if the tenant was late a few times at $900/month and apparently has consumer credit card debt that is being carried from month-to-month (aka living beyond their means), what is it going to look like when the rent jumps up to $1,500/month?  Where is that extra $600/month coming from?  It would require a lifestyle change that most people don’t want to and/or are unable to make.

 

It’s certainly not impossible.  But just like the aforementioned four Division 3 players being the only players to make the NBA, it is unlikely to work out.  The jump in rent is usually too great.

 

No one (tenant or landlord) wants a situation where it is a struggle to make ends meet.  Be cautious when accepting tenants who might not be equipped to make the big jump into the NBA.

 

Happy Landlording!

Fill Your Rental Home with Complainers?

As a property manager in Charlotte, we conduct a lot of rental house showings.  Typically afterwards, the tenant is either interested in the house and submits an application or is not interested and goes incommunicado with us.  Fair enough.

 

But sometimes we get an e-mail like below:

 

Hi BDF Realty,

 

I saw the rental house today and liked it.  However, I was wondering if the owner would be willing to address the following before I moved in (if I were to apply):

 

1. Clean the windows- interior & exterior
2. Replace the kitchen flooring (small rip in front of the stove)
3. Replace the light bulbs to LED
4. Replace 2 of the blinds that have cracks
5. Change the front lock because it sticks a bit
6. Paint the downstairs bedroom a neutral color (I prefer beige for my bedroom set)
7. Replace the vegetable drawer in the refrigerator (slight crack starting to form)

 

Etc., etc., etc… this list goes on for a page and a half filled with minor item after minor item.  It’s not exciting reading!  I don’t care to read anything that long unless it’s about one of my fantasy football players (7-3 this year so far- yeah!).

 

In my early, inexperienced years of being a property manager, I may have composed a letter back to them that would read something like this:

 

Dear Prospective Tenant,

 

Thank you for your (dis)interest in our rental property.  After a careful review of your requests, here is what we are willing to do in regards to each of them (answers correspond to the numbers in your email):

 

1. Nothing
2. Nothing
3. Nothing
4. Nothing
5. Nothing
6. Nothing
7. Nothing
8. – 93. Nothing

 

Thanks again for your (dis)interest!

 

Love-

BDF Realty

 

P.S. From my experience, courtship doesn’t work like this.  We have the property.  You don’t have the property and may want to live there.  You should be selling us on you, not asking us to do a lot of marginal stuff instead.  Just sayin’…

 

P.S.S. There’s this thing called “new construction” you may want to look into. 

 

However, this is almost always not the best tact to take.  Landlords actually should want these tenants.

 

What????  Repairs cost money!  Why spend it on non-operational stuff?

 

I’m not saying to offer to do everything.  But definitely offer to do some things.  Some people would call these prospective tenants “annoying” or “complainers”.  A different, nicer moniker would be to call them “meticulous”.

 

And in my experience, “meticulous” tenants keep and leave your place in great shape; dare I say in “meticulous” shape!  There are usually improvements made during their tenancy (that they pay for), rent is always on time (or early), and everything is in perfect order.  We really like these people after the first few months and then don’t want them to ever leave.

 

There is some pain on the front end.  However, once they get situated, the back end is awesome.  Bring those complainers on!

 

Happy Landlording!

Losing 20% of Your Clients and Finding Joy in Serving



“If anyone forces you to go one mile, go with them two miles.”

Jesus Christ (Matthew 5:41)

 

At the beginning of 2015, we (BDF Realty) lost almost 20% of our clients in a space of four months.  That’s substantial.   And fast!

 

It was for a variety of reasons: some owners wanted to sell their homes, some were unhappy, some wanted to move back into their rental houses, some were foreclosed on.  It wasn’t just one thing that we could try to correct.

 

I had just had my first child and was wondering what was going on.  I prayed to God repeatedly wondering why this was happening.  “What am I doing wrong?  What is the issue?  What are You trying to teach me through this?”

 

After about six weeks of praying with no answer, I ran into the Bible verse above.  “If anyone forces you to go one mile, go with them two miles.”  It stuck in my craw.

 

I thought about my recent interactions with clients.  They were asking me to do things that I didn’t want to do (probably out of laziness).  I made up excuses or came up with charges for doing the work, hoping the tasks would go away.

 

I came to the realization that not only was I not going 2 miles, I was a probably pulling up a little short on the first mile too.

 

So I brainstormed and came up with a list of approximately 15 things I remembered that I had avoided doing for clients.  Note: there was a reason I didn’t want to do these 15 things- they were a big pain(!) and were non-revenue producing.  That’s a hard combination to get motivated for.

 

Fortunately/Unfortunately, when you lose so many clients, you tend to have a lot more free time at work.  So I started working to complete the list.  It took me about 3 weeks, but it begrudgingly got done.  Then I contacted the clients and told them that I took care of their issues (at no charge).

 

Our clients were very grateful.  It felt sort of good; actually, it felt really good.  It was nice to feel appreciated.

 

Property management can be a thankless job.  Most of the communication is centered on people that are unhappy that something went wrong.

 

“My toilet is broken!”

“My AC has been out for 2 days and I have a baby!  Don’t you care?”

“Why is this repair so much??”

“Where is the rent?”

 

But there also is an unmistaken joy in serving, a blissfulness for going beyond what is asked for or expected.  This experience awakened me to make me a happier (and more effective) property manager.  Work was more fun!

 

As a postscript, we didn’t lose any more customers that year (thank God!).  But I don’t think we added many either.  And even at a reduced revenue rate, my new son did continue to eat (and hasn’t stopped…).

 

But a little over a year later, the phone started ringing a lot from prospective new clients.  I was grateful, but didn’t really know why it was happening.  After a few weeks, someone was about to list their rental property with us and asked for me to send him more information before he made a decision.  Then he called back and said, “Your reviews are great.  Don’t worry about it!  Just send me the contract.”

 

This happened before the business world was “review crazy”; honestly, I didn’t even know BDF Realty had on-line reviews at that point.  Apparently, the clients who I “begrudgingly” went back to do work for a year before wound up helping me out more than I ever did for them.

 

Especially in property management, I tell this story much more from a “find joy in serving” bend than a “method to recoup 20% of your clients who found pasture elsewhere.”  The second mile can be where the real rewards lie.

 

Happy Landlording!

 

Lavar Ball’s Bluster Won’t Sell Your Rental Home

“Ex-UCLA freshman LiAngelo Ball has no chance that he'll be drafted in June — and that was true before his shoplifting incident in China. ‘He's not on any of our scouting lists — even the extended lists,’ one GM told ESPN.”

Adrian Wojnarowski (ESPN Senior NBA Insider)

 

“Gelo is the best two-guard in the draft on the fact that he can shoot better than anybody in the draft.  He’s stronger than anybody in the draft.”

Lavar Ball (father of LiAngelo Ball prior to the NBA Draft where LiAngelo was bypassed by all 30 NBA teams in both rounds of the draft)

 

Sometimes fathers get carried away with how good their sons really are at sports.  And based on how outspoken Lavar Ball is, it is no surprise how bullish he was on his second son’s, LiAngelo’s, ability on the basketball court.

 

Many people dislike Lavar Ball because he is brash and speaks his mind.  He said he could beat potentially the greatest player in the history of the NBA, Michael Jordan, in a one-on-one game in his prime.  He is an unabashed, vocal supporter of himself and his sons.  And his sons definitely have basketball ability, though at differing degrees.

 

His first son, Lonzo Ball, was the second overall pick in the NBA Draft by the Los Angeles Lakers last year.  He proved to be the real deal.  He excelled in college for his one year at UCLA and had a promising rookie year in the NBA.  Some NBA scouts thought he was the best prospect coming into draft- an elite passer and competitor.

 

LiAngelo followed his older brother and also enrolled at UCLA on a basketball scholarship.  Unfortunately, he was arrested in China during a preseason trip with his UCLA teammates, and was suspended.  He later dropped out of school when the suspension did not go away.  He never played in a college game.

 

Lavar thought it was still a mistake that all the NBA teams passed on the chance to sign LiAngelo.  And he blasted them.  But the NBA scouts really have one job- to find the best players they can to help their organization win games.  And they unanimously agreed LiAngelo just wasn’t good enough.

 

Sometimes this type of scenario pervades rental home sales, especially rental homes that have been tenant-occupied for many years.  Landlords see other homes that sell near their rental homes and immediately slot theirs at the highest sales price.

 

Sometimes it’s justified.  However, often it is not.  The rental home is just sometimes not comparable.  Tenants have lived there and may not have taken care of the home.  The landlord might not have made any improvements to the home since it had become a rental and now it is dated with older parts (appliances, flooring, paint, etc.).  This is when the dearth of ongoing home investment can catch up.

 

And that’s fine.  I get it.  No one wants to spend money.  We hope that the house is good enough to sell “as is” too.

 

But buyers know what they like.  And when they enter a home that is priced at the top of the market and doesn’t compare to the updated and lovingly cared for homes also for sale, they will pass without making an offer.  And the home will sit on the market- unsigned like LiAngelo.

 

Despite Lavar’s bluster, the proof is in the pudding.  Is LiAngelo a good enough basketball player to compete and star in “The League”?  Is the rental home in good enough condition to catch buyers’ eyes and make them want to make the biggest investment in their lives for it?  Is there a “WOW” factor or is everything just plain?

 

We all want quick, high-priced sales.  But if the rental house can’t pass like Lonzo, it’s time to either lower price expectations (YMCA league?) or pay the money to make improvements to get to league standard. 

 

Can your rental home walk the talk?

 

Happy Landlording!

New York City Living & Landlording: Count the Cost

“Suppose one of you wants to build a tower.  Won’t you first sit down and count the cost to see if you have enough money to complete it?”

Jesus Christ (Luke 14:28)

 

Shortly after I graduated college, I moved to New York City (NYC- aka the “Big Apple”).   “If I could make it there, I could make it anywhere.”  Wow!  It was definitely an experience.

 

Honestly, I was a little scared.  All the television shows and movies that had criminals crushing the common folk were in NYC.  I grew up in NJ, but my parents really never took me into the big city so I wasn’t sure what to expect.   The mafia and gangs could just be waiting for fresh meat to show up so they could take my lunch money every day.  Who knew?

 

Fortunately, my physical safety was never really threatened.  My issues were more on the economic side.  I wasn’t making much money; I was in a sales job and wasn’t selling anything.  My manager nicknamed me “rowboat”… because I had no sales (get it?).  The lack of cash inflow was tough.

 

And the cash outflow required was excruciating.  It was the $3.50 for a small apple at the corner bodega.  Then buying a round of 5 drinks after work that ran $90.00 (without tip).  I used to joke that it cost me $20.00 to cross the street.  Geez, it was an expensive place to live!

 

Good deals were hard to come by.  And breakfast at the food cart on the corner of my street was one of them.  $2.00 got you a large coffee (with milk and sugar) and a huge cinnamon raisin bagel with butter.  It was my go-to meal every morning that I’d take on the subway into work.

 

One morning, there was a couple in front of me in line at the food cart.  I could make out parts of their conversation; it was apparent that they were visiting from the Midwest somewhere.  When the man was placing his order I could see him getting agitated.  Then he said something that I’ll never forget:

 

“$1.00 for a cup of coffee???  I’ve NEVER paid $1.00 for a cup of coffee in my life!”

 

That’s when I knew that he was going to absolutely hate this trip to the big city.  I almost felt obligated to get him in a cab (and pay for it) so he could immediately return back home.  If $1.00 for a cup of Joe was cause for righteous price indignation, he was due for a heart attack later that day. 

 

He did not count the cost of what visiting New York City was going to do to him.

 

Unfortunately, the same can be said of being a Charlotte landlord. 

 

The investment real estate gurus preach that you will be a millionaire through rental homes!  Buy as many properties as you can!  This is the way that you build residual income that will last a lifetime for you and your children’s children!

 

They just don’t tell you that it is a cash-poor business.  All of the above can be true, but the trick is the ability to stay solvent for year upon year as things break and wear out.  All the financial models go out the window when a messy eviction happens or your HVAC unit needs to be replaced (just happened to me this month- the dreaded $5K phone call…). 

 

Carpet will not last forever and will need to be replaced.  The entire house will need to be repainted at some point.  Appliances only last so long. The roof too…

 

Long term real estate investment can be a wonderful, profitable endeavor (you’ll love your net worth!), but don’t let anyone fool you- it can and will cost you money.  So before diving in too far, count the cost.  A few miserable days in NYC can be remedied with an early flight home to your 25 cent coffee vendor.  Several broken-down rental homes saddled with mortgages in a buyer’s market is a little tougher to navigate out of.

 

Happy Landlording!

$2.88M Baseball Cards & Rents: Prices Too High?

 

“’It’s no good, it’s no good!’ says the buyer- then he goes off and boasts about the purchase.” (Proverbs 20:14)

 

The ex-NFL football player, Evan Mathis, made headlines earlier this year when he sold his mint condition, 1952 Mickey Mantle baseball card for $2.88M.  $2.88M!  That’s $2,880,000.00 for a small piece of cardboard for those scoring at home.  It seems to be a lot of money for something that doesn’t love you back, you can’t live in or drive, and really shouldn’t eat.

 

When I collected baseball cards as a kid, I would have died to have a card like that.  I thought I was going to make it big with my 1986 Topps Dwight Gooden card (even though the 1984 was the one to have), 1986 Donruss Jose Canseco “Rated Rookie” card, and the 1988 Kevin Seitzer Fleer rookie card.  Alas, my dreams of million dollar baseball cards were undone by mass production, drugs, steroids, and fading play.  The value of even my best baseball cards for consistent players on the straight and narrow are worth very little now, even 30 years later.

 

But somehow Evan Mathis got someone to pay him $2.88M for one of his.  Wow!

 

As a Charlotte property manager, I’ve been seeing a real estate version of this play out in the past couple of years.  Rents have been going up steadily almost everywhere which has skewed the old values of what particular houses in different areas would rent for. 

 

For example, we had a rental house that rented in the $800 range in a non-desirable area last year.  A new owner took over the property, did some improvements, and wanted to rent it in the $1,300 range.

 

We talked about it and the conversation went something like this:

 

Owner: How about renting it at $1,350 a month?  As the expert, what do you think?

 

Me (expertly replying and wearing my glasses): The data I just pulled up would not support that price.  It looks like a much larger house rented for $1,150.  There has never been a house in that area that rented that high…

 

Owner: Hmmm… well list it at $1,350 anyway.

 

Me (expertly): Okay.

 

Ultimately, the house rented for $1,350 and was on the market less than a week.  So much for the “expert” opinion…

 

In hot markets, it’s really tough to gauge how much properties will actually rent for.  Beauty is in the eye of the beholder and it gets exacerbated by perceived scarcity. 

 

Years ago, I made the decision to adopt the rental pricing policy of “I recommend, but the owner can ultimately pick the listing price.”  I go off of data and will typically recommend what I feel the existing market pricing will allow.  However, that’s not always right.

 

Evan Mathis could have heard that expecting to get $3M for his 1952 piece of cardboard with Mickey Mantle’s photo on it was lunacy.  But someone, somewhere is bragging about buying it.  And he’s bragging as well! 

 

Happy Landlording!

Sorry, Draymond- Landlords are Looking for Cool Lovers, Not Fighters

“Blessed are the peacemakers, for they will be called sons of God.”

(Matthew 5:9)

 

Draymond Green is a great basketball player.  There is no denying that.  He is a vital cog to the Golden State Warriors and instrumental in them wining two of the last three NBA Championships. 

 

His professional accomplishments are many:

3-Time NBA All Star

2-Time NBA Champion

Defensive Player of the Year

All-NBA Team Member

USA Basketball Selection

 

But he also has this statistic line: 11, 13, 15, & 15.  Those are the number of technical fouls he has received in the past 4 years which puts him among the league leaders.  He‘s a fighter who is prone to argue with officials and other players, often to the detriment of his team.

 

With Draymond and his enormous talent, you take the good with the bad.  If he was an average player, he’d probably be out of the NBA for his conduct.  But that’s why his coach, Steve Kerr, gets paid $5M/year to channel his “passion” into the confines of a winning basketball team.

 

Property managers, most who are making well south of $5M/year, also need to make sure they have a “good team” of tenants in the properties they manage.  This starts with screening tenants and picking the ones who will pay their rent on time, maintain the property, and get along with their neighbors. 

 

To help determine this, one of the main screening criteria is culling information from past landlords.  We sometimes hear some version of this from prospective tenants:

 

“I gotta be honest- if you call my past landlord, Bernie, he’s not going to have nice things to say.  And there’s a simple explanation for that- Bernie is a complete jerk!  What a loser.  I was the best tenant he ever could hope to have- I mean I fixed the kitchen faucet without even asking for anything from him; of course, I got no love from him.  He was just impossible to deal with!”

 

So, I’m guessing, the tenant is hoping I’m hearing:

 

1. Bernie is not cool.  However, the prospective tenant is cool.  And it’s tough for cool people to get along with uncool people.  If I’m cool, I understand.  And I, of course, am really cool, so I understand.
2. The tenant can fix a faucet without us sending a plumber
3. I am a much better landlord and person than Bernie so I can be confided in
4. If the tenant fixes the faucet (or some other repair on his own), show him love.  It’s what cool people do and will make it possible for him to deal with me.

 

However, what I’m hearing:

 

“I didn’t get along with my past landlord.  I blame him for that and have no problem badmouthing him to strangers to further my own ends.”

 

By contrast, this is what a lot of prospective landlords say about tenants when we contact them:

 

“Jim and Jane are such a great couple!  They always paid their rent on time, took care of repairs on their own, and were such a pleasure to deal with.  I’m so sorry they are leaving!  Great tenants!”

 

Jim and Jane sound very cool to me.  They seem to value a peaceful relationship with their landlord.

 

Draymond Green is one of the fifteen most talented basketball players in the world so he can get away with not getting along, at least right now.  However, there are 60 people moving to Charlotte every day looking for rental homes, so they are not as rare.

 

At the end of the day, property managers are looking for cool lovers, not fighters, for their rental homes.  Settling for someone like Draymond is just not usually necessary.

 

Happy Landlording!

Landlords & Lease Renewals: Don’t be Like Spectrum!

First of all, this is not a blog of a Spectrum (formerly Time Warner Cable) hater.  I actually don’t have strong feelings either way about them.  I was a user of their internet and basic cable and was relatively happy.  The service worked decently and the price was reasonable.  I put my bill on auto-pay and lived my life.

 

Then about 6 months ago, I saw a change in my $20.00 basic cable bill (aka the cheapest plan where I get about 10 channels).  They started billing me $4.00/digital adapter (I have 2) for some cable boxes they made mandatory for me to use a year or two ago.  While $8.00 isn’t life-changing, I brushed up on my middle school math and computed it was a 40% increase.  That’s substantial in percentage terms.

 

Still, changing services is a pain.  I could eat a 40% increase ($8 is still $8, no matter how alarmingly you dress it up).  I was not pushing the panic button (thank you, hot Charlotte real estate market). 

 

But when that happened, I actually started looking at my Spectrum bill each month.  A few months later in the “Spectrum News” section on the front page of it (I didn’t previously know there was a “news” section I could be enjoying each month!), I see the following verbatim:

 

Your current promotion is ending, but your savings will continue.  As a valued customer, we have automatically extended your preferred rate.

 

(good so far…)

 

Important Billing Update:

Effective for your next billing statement, pricing will be adjusted for:

-          Starter TV Service from $20.00 to $23.89

-          Broadcast TV Surcharge from $7.50 to $8.85.  This reflects costs incurred from local Broadcast TV stations.

-          Digital Adapters from $4.00 to $4.99

 

Not good.

 

We’re up roughly another $4.00 on 10-channel TV, not to mention another $5.00 for internet service (not previously affected).  I don’t even need to do the percentage math anymore.  We’re above a 50% increase in less than 6 months on my lame cable TV plan.

 

Now, on general principle, I’m trying to leave Spectrum cable TV service due to a large increase which appears to be largely meritless.  So I fish out some $10-$20 antennas I bought from Amazon a year or two ago and see if I can make them work.  Viola!  They work like a charm after I put in a little more effort in this go-round.

 

I call Spectrum and cancel my starter cable TV service.  I won’t lie; it feels good.  Injustice was made right!  Then they tell me that my internet service is not only going up $5.00 next month, but because it’s not bundled with TV anymore, it is going up another $20.00.  Touché Spectrum!  I have to have internet service, so they may have won this battle.  But I am not a Spectrum cable TV customer any longer.

 

Unfortunately, now my resolve to rid myself of Spectrum in its entirety has built.  I wrack my brain for a solution.  Wait!  Who was digging up my front lawn 6 months ago to my son’s delight?  Google Fiber! They’re boasting $50/month internet service! So my dream of a “Spectrumless” home may become a reality next week.

 

But… my true thoughts on my mini-“SpectrumGate” are how sad and unnecessary it was.  I was fine being a Spectrum customer.  I paid my bill every month, they collected the money, and everyone was happy.  It just seemed to me that they got greedy were trying to stick it to me.

 

To be fair, I don’t know Spectrum’s economics.  They may be losing money on customers like me and it’s better for them to lose me than to keep me at a lower monthly fee.  Fair enough.  That’s business.

 

The purpose of this story is I see landlords use similar tactics on tenants during lease renewals.  The tenants pay their rent on time every month and take care of minor repairs on the rental home.  But when their lease is up, the landlords try to stick the tenants with a 10%+ increase and additional fees.  The tenants feel betrayed and don’t renew their leases on principle.  Both parties lose.

 

We’re in a rising real estate market, I get it.  But the grass isn’t always greener on the other side.  New tenants don’t always pay the rent on time and take care of the home.  Plus the fix-up and other vacancy costs could more than devour any surplus a higher rental rate from a new tenant might offer.

 

If you have good tenants and are making money, keep any rent increases between lease renewals within reason.  There is no reason to endanger the money flow.  Most tenants understand that landlord costs go up a little bit every year too.

 

However, if you are losing money and need to stop the bleeding, I get that too.  A rising market could finally bring a new tenant to get bring positive monthly cash flow back into play.  Business is business.

 

Happy Landlording!

Why You May Want to Reject Cam Newton as Your Next Rental Tenant

"I could be wrong on him (Lamar Jackson), and I hope I am. I hope he succeeds as a quarterback. But I also go back to, if he's going to miss, why is he going to miss. You don't make a living as a quarterback running in the National Football League," Polian said. "Cam [Newton] is the exception. You try to take exceptions and say they're the rule: they're not. Bill Parcells taught me that a long time ago. Parcells often said, if you have one or two exceptions on your team, you'll end up with a team full of exceptions. You can't make a living with those guys. You get one every now and then but it's hard to do it."

(Former Indianapolis Colts General Manager Bill Polian on ex-Louisville quarterback and current 2018 NFL draft prospect, Lamar Jackson)

 

Predicting the success rate of college football players coming into the National Football League is hard.  It’s so hard, in fact, that talent evaluators who do this for a living at the highest level are frequently wrong; and they don’t get fired because everyone expects them to be wrong!  The key in their profession is to be right more often than they are wrong, especially on the most important and expensive positions, like quarterback. 

 

Bill Polian, quoted above recently, is in the NFL Hall of Fame largely because he evaluated talent better than his peers.  He makes the point that Lamar Jackson is extremely talented; he won the Heisman Trophy 2 years ago as the best player in college football!  But much of his productivity was based on his electric running of the football.  His passing, however, is not overly accurate and great accuracy is typically what makes quarterbacks successful in the NFL.

 

Now the Carolina Panthers quarterback, Cam Newton, is an exception.  He is an awesome quarterback (2015 NFL MVP- go Panthers!) but is not an overly accurate passer.  But his ability to run is what gives him the edge over other more accurate quarterbacks. 

 

Polian just doesn’t believe that exceptions are a solid way to build a football team. 

 

I believe it is the same way with rental tenants.  We screen prospective tenants on credit scores, criminal background, income, and past landlord reports.  Sometimes tenants have some poor results in one or more of these areas.  This can be understandable; sometimes bad things happen to normally reliable people and an argument can be made that they shouldn’t be unacceptable to landlords based on an unfortunate life occurrence (job loss, illness, divorce, etc.).

 

However, should a prior eviction or bankruptcy be ignored?  How about bad credit or a non-positive landlord report?  Isn’t it possible that the prospective tenant is an exception and will actually be a great tenant going forward?

 

Yes, it is possible.  And we’ve had many tenants who fit this mold over the years.

 

But it is also true that the tenants we’ve had that had great credit scores and landlord reports almost always are great tenants for us.  And the ones that we’ve had issues with seem to have had some areas that they were less than stellar in when we’ve ran their applications.

 

Property management can be really easy when the houses are filled with great tenants who care for the homes and pay their rent on time.  Conversely, it can be really difficult when they don’t.

 

Cam Newton is an exception that worked out well for the Panthers (and hopefully Lamar Jackson will be one too in the NFL).  But counting on exceptions to work out well to fill the entire team is a tall bill (so says another Hall-of-Famer, Coach Bill Parcells).

 

Be careful on how many exceptions are approved as tenants in your rental homes.  Cam worked out well, but no one was positive he would when he first got drafted.  We all want to give exceptions the benefit of the doubt, but it is a far riskier play than sticking with safer, traditional candidates.

 

Happy Landlording!

Interview with the Rental Late Fee Police Commissioner

“The lease is the lease.  If you don’t like it, don’t sign it.”

(RLFP Commissioner Hank Smith)

 

Moderator: I have the privilege of being here today with Hank Smith, the longtime rental late fee police commissioner.  He and his team at the Rental Late Fee Police (RLFP) are in charge of enforcing late fees on monthly rental payments.  Most standard leases dictate that rent is due on the first of each month and is considered late if not received by the fifth of the month; the late fee amount is usually 5% of the total rent due.  The RLFP makes sure that this late fee is enforced.  As you can imagine, his job doesn’t help him win any popularity contests…

 

So… Mr. Smith, or Hank…

 

Hank: Please refer to me as Commissioner… it’s a title I’ve certainly earned.

 

Moderator: Of course, Commissioner.  My apologies…

 

Hank: I’m never short on getting apologies, especially on the 6^th of each month!

 

Moderator: OK… we’ll get right to it then.  Some people have called you and your policies “heartless” and “ruthless”.  How do you respond to that?

 

Hank: I have a heart and I don’t know any Ruth’s.  So, “no” and “yes” is how I’d respond to that.

 

Moderator: I think that they mean you are unfair and aren’t very nice about it.

 

Hank: Well, I’d certainly take issue with that!  The boys & gals at the RLFP are about as fair as it gets.  If your rent is paid by the 1^st, you’ll never hear a peep from us.  Even if you wait until the 5^th, there will be nary a word.  Now when the 6^th rolls around, that’s why we’re employed, my friend.  We are called to spring into action.  Nobody likes giving a quarter to the librarian either. 

 

Moderator: I think part of the discontentment stems from the lack of grace on being 1 or 2 days past due and still incurring the whole late fee.

 

Hank: That’s the most ridiculous thing I’ve ever heard!  1 or 2 days late?   1 or 2 days late is actually 6 or 7 days late!  How many days do you want?  10?  15?  How about 30 days?  Or how about just paying whenever you feel like it?  People like you are what is wrong with this country!

 

Moderator: Easy, Commissioner…  As I’m sure you can empathize, don’t shoot the messenger. 

 

Hank: Fair enough.  Sorry about that…  I get a little fired up sometimes.  But, I mean, we’re already giving you a grace period of 5 days past the real due date of the 1^st of the month; that’s 120 hours, 7,200 minutes, 432,000 seconds… No matter how you cut it, that’s a lot of grace!  You want more grace than that, then pray to Jesus- he’ll give you all you want!  But the RLFP will only give you 5 days- sorry.

 

Moderator: But sometimes the check gets lost in the mail and there are holidays to think of…

 

Hank: If you’re looking for me to defend the postal system, you’ll be waiting a long time.  But why even risk mailing a check?  There are so many other instant payment options out there- BillPay, direct debit, direct deposit, on-line payment, etc. I mean, if you’re hungry, you don’t need to wait for a chicken to show up on your front yard, just drive to Chick-Fil-A!

 

Moderator: Interesting analogy… But why do property managers and landlords want to get rich off of late fees?

 

Hank: Get rich?  Is that a joke?  Check out what kind of cars your property managers and the RLFP are driving versus what our other real estate brethren are driving (with no late fees, mind you).  You need a whole lotta late fees to add up to upgrade from a Corolla to a Mercedes.

 

Moderator: Then why charge late fees at all?

 

Hank: A. I don’t charge them- I’m just enforcing the lease.  B.  If there is no penalty for being late, then who knows when the cows will ever come home?  I mean, landlords need to make their mortgage payments at some point.  Very few of them are just stuffing the rent dollars into their pockets.

 

Moderator: Commissioner, thank you for your time.  Any last words for our audience?

 

Hank: Great!  I’m outta here… I can’t believe they make me do this PR stuff- what a load of hogwash… 

 

Moderator (interrupting): You’re still on the air, Hank…  Any last words?

 

Hank: Oh… Pay your rent on time & Happy Landlording!