Brett Furniss

"What do I look like to you? A moron? Don't answer that... But seriously, my real estate investment properties are illiquid and have declined in value. You still say I should double down?" (Charlotte Real Estate Investor)

"Buy straw hats in the winter..." (Russell Sage, Wall Street Financier)

Buying (and selling) at the right time is the heart of many popular Wall Street mantras on how to become wealthy:

• Buy low, sell high
• Buy when you see blood in the streets
• Buy when everyone else is selling. And vice-versa.

Of course, dummy! Everyone knows that. That's not the hard part; the hard part is to know when that low time to buy is. If we only knew that, then this life would be so much easier. But is it really that difficult?

The people who have made great wealth in this country are like poker players. Poker is a game of waiting and then seizing the right opportunities when they present themselves. And when the opportunities come, good poker players bet heavily on them. It's not complete luck; they know that certain hands have greater odds of winning.

Let's look at 2 examples of billionaires "playing poker":

1. Michael Bloomberg (Billionaire and current Mayor of New York City): After 9/11, the stock market tanked as investor fears abounded. I remember seeing the front page of the New York Post in the fall of 2001 where Mike urged his constituents to buy stocks after the Dow dropped below 7,000; he certainly was! He basically said that people ask him for investment advice all the time (because he's a billionaire) and that was the best advice he could give them.

2. Warren Buffett (needs no introduction): Buffett experts will tell you that if took away Warren's 20 biggest investment deals, his overall returns would be flat! He started his investment company in 1956; that's a big deal every 3 years on average. That shows he does not have supernatural ability to pick stocks right all the time; rather he took really big bets (and was right) on a few great opportunities.

So how do you identify a great opportunity to invest in? Bloomberg will tell you that when the stock market is heavily discounted due to temporary events, you buy. The American stock market will recover, it always does. Buffett will tell you that if you see a good company's stock trading at a steep discount, you buy. Good companies work through tough times and reward shareholders.

Can you think of anything else that is heavily discounted due to temporary events? Yes, this is when we get to the topic of real estate- good guess! The temporary events are the mortgage meltdown, banks not lending, and the rising unemployment rate. A lot of people need to sell and are ready to let great real estate go at bargain basement prices.

As Will Rogers famously said, "Buy land, they ain't making any more of it." So, if the stock market always will come back, it makes sense that real estate should rebound even more convincingly. Companies can always issue more stock, but great pieces of real estate can't be replicated. And at these prices during the holidays, Wal-Mart has got nothing on the Multiple Listing Service this year!

So are you urging your clients to buy investment real estate? Are you buying any yourself? Buffett waits years so he can cherry pick an opportunity like this. Do you really think that the real estate market will continue to stay down?

It's time to "Invest in Real Estate with the Stars" instead of waiting to buy it from the "Stars" when they sell!

Brett Furniss is the President & Owner of BDF Realty, "Charlotte's Most Innovative Property Management & Investment Company" (www.BDFRealty.com and www.RentToSell.com). You can follow his Twitter thoughts on the Charlotte real estate market by clicking on http://twitter.com/bdfrealty. He is the author of the FREE E-Manual entitled "How to Rent-To-Sell Your Own Home" (http://www.renttosell.com/RTS-Book.html) which details how to get the most potential buyers to your home in this challenging real estate market.

"I don't like the prior bankruptcy on this prospective tenant, but they make great income. The other tenant has a 430 credit score, but has perfect landlord history. Should I accept either into the property?" (Charlotte Property Manager)

"If you can't be with the one you love, love the one you're with." (Crosby Stills Nash & Young)

One of the main things I learned during my MBA classes was that business, like life, is all about tradeoffs. Examples of this are rife everywhere:

• If you want increased national security, you have to give up some individual freedoms
• If you want a guy with a great personality, you probably have to give something up on looks (and vice-versa)
• In Season 7 of 24, Jack Bauer must make the decision to rescue now-fugitive Tony Almeida from FBI custody or let the bad guys kill his daughter at the airport
• If education is going to be our national priority than we must give less resources towards health care and building roads
• Another piece of chocolate cake or look good with your shirt off?

How does this look with property management? Well there are perfect tenants out there, but most are like us, blemished in some way or another. With the poor and worsening economy, using old standards of tenant selection (600+ credit scores, no criminal background, rent less than 25% of gross monthly income, good landlord history, gainfully employed) are sure to keep most of your houses vacant (not good!). However, the last thing you want to do is put in a tenant who is not going to pay and then rip up your house (not good either!). So this is where tradeoffs come in. What should they be?

The first thing is setting priorities. What are the most indicative signs that someone will be a good or a bad renter? What should we care about the most? In my experience, the order should look like this:

1. Employment: It's tough to pay rent with no money coming in (duh!) and finding a job quickly is proving to be difficult in this economy. Hint: If unemployed, ask the tenant for 4-6 months of rent upfront.
2. Landlord history: Some people always pay their rent before anything else. However, it's important to make sure you are actually talking to the past landlords and not the tenant's friends. Hint: Ask the "past landlords" how much rent they charged. Friends usually don't know this and their guesses are way off.
3. Rent they paid at their last house: I like this one. If all things are equal (same job, family, etc.) and what they paid their last landlord is near what they are supposed to pay you, it's a good sign. Be wary of big jumps ($700/month rent to $1,200, for example).
4. Credit: Everyone always has this at the top of their list, but I don't see this as that important. If they have 700+ scores, approve them. If their scores are bad (sub 550), find out why and have an open mind. You can get some great tenants this way; if you're still too scared to move forward, ask for an additional month of security deposit.
5. Income: The numbers need to make sense. If the make $3K/month, have a car payment of $1K, and are supposed to pay you $2K/month for rent, they can only go hungry for so long.
6. Criminal background: This is usually much ado about nothing. Just watch out for violent felons who could potentially ruin your week.

Now is the time for tradeoffs. If #1, #3 and #6 are good, #2 and #4 are awful, and #5 is marginal, what do you do? Panic? How would your profile look on these 6 criteria? Look at the entire picture of the prospective tenant and make an educated decision with the data provided. Do you need to wait until you find Mr. and Mrs. Right who score "superlative" on all six criteria?

Of course not! Stop worrying and eat a little chocolate cake. You can still have a great beach body without the well-defined abdominals. Or a great tenant without the perfect qualifications!

Brett Furniss is the President & Owner of BDF Realty, "Charlotte's Most Innovative Property Management & Investment Company" (www.BDFRealty.com and www.RentToSell.com). You can follow his Twitter thoughts on the Charlotte real estate market by clicking on http://twitter.com/bdfrealty. He is the author of the FREE E-Manual entitled "How to Rent-To-Sell Your Own Home" (http://www.renttosell.com/RTS-Book.html) which details how to get the most potential buyers to your home in this challenging real estate market.

"Yes, I would like some cheese with this whine. Thanks." (Brett Furniss, Charlotte Property Manager and author of Charlotte Property Management Weekly)

"President Obama has declared the swine flu outbreak a national emergency..." (Charlotte Observer, 10/25/09)

Swine flu is now officially both a national emergency and a pandemic! I'm not entirely sure what that means, but it sounds pretty bad and pretty official. I imagine the only party happy about this is the pigs, who take an undeserved public relations hit, but see the demand for its flesh fall among the cautious populous (making its mortality rates decline significantly). If only the scheming cows from the Chick Filet commercials had thought of this, they could have saved themselves millions in dollars of advertising (with better results!).

Fortunately, I have not been personally infected by swine flu (yet...). I have been affected, though. I've seen this new, safer way to catch your sneeze by depositing this spittle storm into your own shirt! Yes, the one you are wearing. I've seen some guys on the street do it recently and I still can't stomach the idea of my shirt doubling as a tissue. This is healthier? What is the point of tissues then? That is the next superfluous budget item to go, I'm sure. I'm thankful I haven't seen any females do this. Apparently they believe in Fernando Lamas's (Billy Crystal's Saturday Night Live character) mantra, "It's better to look good than to feel good." But, I digress.

However, I have been affected by the "home sales swine flu" that has infected the Charlotte rental market. "What the heck does that mean?" you may ask. "And why do you keep italicizing so much in this article?" Well, let me explain. Being that few people can sell their homes, home sellers are flooding the rental market with their houses. This is creating supply and demand issues that are making it difficult for property managers to fill properties quickly and efficiently (sniff, sniff). Unfortunately, it has become painfully obvious Charlotte is infected. I've heard from other real estate professionals in other cities that they are observing the same thing.

So what about your market? If it has been infected by the HS H1N1, the following five symptoms should have started to appear:

1. Rentals are on the market for a much longer time (duration)
2. Monthly rental prices have fallen and continue to drop significantly
3. There are a lot more rental homes on the market! (number)
4. Realtors who never worked on rentals before are now listing several
5. Tenants are consistently trying to negotiate down already depressed monthly rents

As your real estate doctor, I can tell you that if your market is showing these symptoms, it is infected. The only known 100% cure for HS H1N1 is a mixture of "Excess Cash" and "Time." If you wait long enough with this mixture, it will go away on its own. You should check with your local economist to get a general range on how much "Time" it will take to subside. And always double your initial estimate on how much "Excess Cash" will be required.

If you are not lucky enough to have a healthy amount of "Excess Cash" and "Time", the following steps can be taken to slow the effects of HS H1N1 until it subsides:

1. Lock your existing tenants into 1 to 2-year leases ASAP at current rental rates
2. Lower the rental rates on your vacant homes by 10%
3. Increase marketing expenditures on vacancies while advertising the lower rate
4. Do NOT work with tenants who are more than 30 days behind. You must evict and get someone else in your rental!

Trust your doctor. Follow these simple steps to survive the outbreak in your market!

Brett Furniss is the President & Owner of BDF Realty, "Charlotte's Most Innovative Property Management & Investment Company" (www.BDFRealty.com and www.RentToSell.com). You can follow his Twitter thoughts on the Charlotte real estate market by clicking on http://twitter.com/bdfrealty. He is the author of the FREE E-Manual entitled "How to Rent-To-Sell Your Own Home" (http://www.renttosell.com/RTS-Book.html) which details how to get the most potential buyers to your home in this challenging real estate market.

"I messed up. I placed a tenant into an owner's home and they wound up tearing it up and not paying rent. There is no way they will ever hire me again..." (Charlotte Property Manager)

"It was crazy, you see. I took off and then two hours later, I landed in Charlotte. I guess technically you could say that I did my job. But the guy who crashed into the river, no, he's the hero. It's weird, right?" (Bitter Captain Roger Baines, played by Jason Sudeikis- Saturday Night Live Weekend Update Thursday- 10/2/09)

Captain Chesley "Sully" Sullenberger came to fame as the pilot who flew the 1/15/09 US Airways Flight 1549 from New York to Charlotte. Most people remember the story; it became national news for weeks because the plane went down in the Hudson River minutes after takeoff. You would figure that if you were on that flight, you'd be really upset! You paid money to be in Charlotte in roughly two hours, but instead, you were heavily delayed, drenched, your luggage was ruined, and your life flashed before your eyes. All meetings you had that day had to be cancelled. Your plans were shot. Your life was endangered. You could have been thinking about who you could sue. You would certainly never fly US Air again!

You'd appreciate Captain Baines "good pilot" joke later in the SNL skit:

Q: What did the good pilot do when he saw the flock of geese?

A: He avoided them and continued on to Charlotte where he landed seven minutes early

However, Sully became a national hero. What??? Though he saved the lives of his passengers, he still did land in a river which has to be viewed as a failure. Was he a seasoned public relations professional who spun the story well afterwards? Hardly. Sully comes across as a soft-spoken guy. His "speech" to the passengers before the crash was a brief and hardly eloquent, "Brace for impact." Inexplicably, it didn't matter. The passengers loved him. They were thankful and effusive in praise. No one said they wouldn't fly with him again; in fact, most would rather have him captain their flights in the future. Many Americans said the same thing. How could this have been?

The simplest answer is that most people know that things go wrong. It's inevitable. Sully could do little after he hit the flock of geese that caused the engines to fail. As Charles Swindoll said, "Life is 10% of what happens to you and 90% of how you react to it." Sully calmly put the plane down and salvaged what he could out of a tough situation. His passengers knew he was in control and would work to ensure their safety.

In property management, picking tenants who will always pay and treat a rental home with respect is an inexact science. You try to mitigate risk by performing credit and criminal background checks, verifying income and employment, and calling past landlords. You collect security deposits and drive by houses to see if they look okay. At the end of the day, however, you don't live with them and can't force people to fulfill their obligations. It's tough.

But when bad things happen (and they will at some point), it can be a positive as well. It creates an opportunity to show your clients that you care, it allows you to learn more about them personally, and lets you demonstrate you have a plan to correct things. Most of our clients receive their monthly rent (directly deposited into their account) and we rarely get an opportunity to talk to them outside of our initial meeting. But when issues arise, we get to build a bond with them while working to get their properties back on track.

Paradoxically, the clients whose homes we have had an issue with tend to be life-long customers, while those who receive their rent smoothly every month are the ones I worry about losing. Relationships require give-and-take and often form out of adversity; without this, you can become a faceless entity that has no emotional connection.

Out of a disaster, Sully built a bond in one day with his passengers that few, if any, pilots will ever have with theirs, even their frequent flyers. Think about it. Who was the pilot of your last flight? Of your last ten?

So don't cringe when something goes wrong. It will give you an opportunity to get some of that lasting "Sully Love."

Brett Furniss is the President & Owner of BDF Realty, "Charlotte's Most Innovative Property Management & Investment Company" (www.BDFRealty.com and www.RentToSell.com). You can follow his Twitter thoughts on the Charlotte real estate market by clicking on http://twitter.com/bdfrealty. He is the author of the FREE E-Manual entitled "How to Rent-To-Sell Your Own Home" (http://www.renttosell.com/RTS-Book.html) which details how to get the most potential buyers to your home in this challenging real estate market.

"Too big to fail." (President Obama)

"...(Then US Treasury Secretary Alexander) Hamilton regarded the national debt as ‘a national blessing,' for it permitted the clustering of resources into the hands of a small group of enterprising men who would invest and not just spend it." (Founding Brothers by Joseph J. Ellis)

It's no news that President Obama has faced a huge challenge to revive the US economy, precipitated by the banking crisis of the past two years. He's had to answer a lot of tough questions that have affected millions of Americans. What courses of action will save and create the most jobs? Should he have bailed out failing companies like Citigroup, Chrysler, AIG, and others? What about residents who were losing their homes? Do they get modified loans or do they go into foreclosure? Some companies were "too big to fail," while some "Main Street" residents had the required qualifications to get bailed out too. It all really boiled down to one question: how should government capital best be allocated to serve the common good now and in the future?

US Treasure Secretary, Alexander Hamilton, had a similar dilemma in 1790 after the Revolutionary War. The US government was broke and its debt was at a startling $71M. It couldn't meet its obligations without borrowing (sound familiar?); it couldn't even compensate its own troops with cash. The soldiers were issued war bonds as payment for military service, and there was little hope the government would be able to pay those back. Speculators began to buy the war bonds at five to ten cents on the dollar hoping for a (very profitable) miracle. Meanwhile the government was worried about utilizing its meager finances to stay solvent.

The popular plan was to just default on the war bonds. The US government didn't have the money anyway! Then the issue of fairness came up. "Why would we fund the bonds when the money is not going to go to the soldiers that it was intended for?" Essentially, the heated discussion that ensued was one that still stirs debate today; should the government endorse any plans that just make "the rich get richer," while doing nothing directly for the common citizen?

However, Hamilton felt paying the war bonds was a great opportunity! The fact that the speculators were getting the money was a great allocation of capital. They were the entrepreneurs of this start-up nation, the risk-takers. They would be the ones starting businesses, hiring people, and building the economy from the ground-up. With their intellects and hearts, Hamilton felt America could achieve greatness. Funding the speculators was the best investment this country could make.

Obama's capital allocation plan has been about saving huge corporations and struggling homeowners. The entrepreneurs and small business owners in the middle have been frozen out. Could the projected "jobless recovery" be a product of this? The SBA's oft-cited statistic is that American small business creates 90% of the country's jobs. Is an "entrepreneur-less recovery" even possible?

When I talk to my friends that are small business owners here in Charlotte, we are hamstrung. The government programs for small business are a joke; many banks don't participate in SBA loans, or if they do, force us to qualify at heightened requirements that we can't reach. Meanwhile, banks of all sizes (TARP and non-TARP recipients alike), are still cutting our credit lines. I'm not saying we are all going out of business (because that's not true), but I am saying that our impact on this economic recovery will be minimal at best. We are being forced to hunker down, and have been doing so for the past two years.

And, yes, Hamilton got funding for the war bonds to pass Congress and our nation went from near-bankruptcy to a world power through the past two hundred years. If Obama wants the US to stay there, he'll have to find a way to involve us entrepreneurs as well.

Brett Furniss is the President & Owner of BDF Realty, "Charlotte's Most Innovative Property Management & Investment Company" (www.BDFRealty.com and www.RentToSell.com). You can follow his Twitter thoughts on the Charlotte real estate market by clicking on http://twitter.com/bdfrealty. He is the author of the FREE E-Manual entitled "How to Rent-To-Sell Your Own Home" (http://www.renttosell.com/RTS-Book.html) which details how to get the most potential buyers to your home in this challenging real estate market.