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: Rent-To-Own- A Great Lead Generator for Traditional Brokerage!

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


My companies, BDF Realty, Inc. and Rent-To-Sell Realty, Inc., have been marketing lease options (rent-to-own and rent-to-sell) for years to help our clients meet their real estate and financial goals.


In August of 2009, I was asked by Realtor Magazine to participate in their “Putting Together Lease-To-Own Deals That Pay” (www.BDFRealty.com/FurnissRentToSellWebinar.wmv) webinar. During the webinar, the host asked the presenters what percentage of their company’s revenues came from lease options. The other presenter quickly answered, “100%.” I thought about it and said “15-20%”; afterwards, I felt like a fraud. Why was I asked to participate as a “lease option expert” when 80-85% of my company’s revenues derived from elsewhere?


At the time, I took this to mean the revenue directly attributed to transacting deals for rent-to-own tenant-buyers (who wanted, or had to, rent before buying) and rent-to-sell home owners (who wanted rent-to-own tenants to rent, then buy, their homes). As I thought about it over the next several months, I realized I had nothing to feel guilty about. This is perhaps better understood by looking at my real estate business history:


My Timeline:

2003-2004 I was an investor who bought and lease optioned out my own properties through BDF Realty

2005-8/07 BDF Realty became a rent-to-own company that marketed to lease option tenants. However, 95% of our revenue came from buyer agency commission. The lease option candidates, who thought they would have to rent before buying, qualified to buy immediately!

8/07–12/08 Rent-To-Own home buying waned with the complete uncertainty in the credit markets. Rent-To-Sell became a catalyst to build up our property management business from which we derived most of our revenue.

1/09–Present Property management continues to provide a large part of our revenue. The rent-to-sell program continues to differentiate our property management services, while providing sales listings as well. Rent-To-Own buyer agency (the main focus of this Guide) is now the fastest growing part of our business.


So, the moral is, rent-to-own and rent-to-sell are marketing differentiators for us, but we derive most of our revenue from the traditional sources (buyer agency commission, property management, and listing sales commission).


Bottom line, I believe lease options (rent-to-own and rent-to-sell) are a great way to supplement real estate income while being a tremendous lead source for traditional brokerage.



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: “Cash for Clunkers” Predicts a Cloudy 2010 Housing Market

 
“2010 home sales will pick up! It’s the last chance for Obama money!” (Optimistic Charlotte Realtor)




“The world is ruled by facts. People are ruled by ideas.” (Anonymous)



It might be too late to still be giving out 2009 “Best of” and “Worst of” awards, but please humor me.

“Can’t Believe You Still Have a Job” Award of 2009: Obama’s “Cash for Clunkers” sales forecasting team. As they projected a total 7-week program amount of $1B, they ran out of money before the first week was out and had to go begging Congress for $2B more.

If “prognosticatin’” is your game, and you’re off by that much, you probably need to find a new job- you just ain’t that good at it. I’m not even sure that you can qualify for horseshoes or hand grenades (where being close counts for something). However, the very next prediction you made after the sales results came in was probably spot on; you knew you were definitely getting fired. And you couldn’t argue.


But alas, you work for the federal government where the bar for dismissal is pretty high; you have to make more than a concerted effort to get a pink slip. Michael Brown, of FEMA-Katrina fame, almost made it through. Reality show wanna-be’s getting by Secret Service and hanging with the President at a private party, no problem for the security folks. So I wasn’t overly surprised when I didn’t hear anyone having to fall on the sword for the “Clunkers” miscalculation. Then I started thinking- maybe this wasn’t a mistake. And I’m not going all “government conspiracy X-Files” all of a sudden. Stay with me here.

When the news came out the “Clunkers” program was bankrupt after the first weekend, the response from the public not interested in buying a car was something to the effect of, “what a bunch of government idiots.” However, the response from the public in the market for a new car was to hop in their clunker and floor it (top speed: 35-40 mph) directly to a dealership.

My next award: “Best Public Relations Move in 2009”- won by the Clunkers forecasting team


They ensured the dealerships would be jumping for the life of the program because you never really knew when the clunkers cash well would finally run dry. Heck, it was almost over the first weekend! Human nature responds predictably to scarcity. All you have to do is check the food stores when there is even a slight threat of snow. No milk, bread, or batteries to be found. Did you ever think that it might be in Wonder Bread’s best interest to pay off some meteorologists?


What happened after 8/24/09 when Clunkers was over? Sales went down for the next four months. Edmunds.com forecasted that only 18% of the new car sales were actually new; this means that 82% would have happened anyway! They just happened faster because of the incentives.


Let’s fast forward to the $8K (or $6,500) tax credit that’s now set to expire on 4/30/10. It was first set to expire on 11/30/09 and some people (like me) were duped into thinking that it was going to be over. Everyone who was somewhat interested in buying a house rushed to their local Realtor. National home sales went up in November and December (due to the actual house closings going past the 11/30/09 deadline).

But, what happened in 1/10? Home sales were down considerably. The home buyers were just like the car buyers, rushing to get their sale in before the deadline. February’s numbers are not out yet, but if the Clunkers program is any indication of consumer behavior, the following will take place:

2/10- dead

3/10- dead

4/10- a little better

5/10- much better

6/10- big decline

7/10- awful

8/10- awful

9/10*- awful

10/10*- awful

11/10- possible slight uptick

12/10- dead
* Mix in some bad sales seasonality as the kids go back to school and families vacation at the end of the summer
Here’s hoping I’m wrong!

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. For a FREE subscription to “Charlotte Property Management Weekly” via RSS, click here. Or by e-mail, click here.