WHEN
WAS THE LAST TIME YOU CHANGED THE OIL IN YOUR RENTAL CAR?
By Jim “Gymbeaux” Brown, December 24,
2025
NOTE: The title of this Nugget may be misleading as
to the content of the Nugget. This
Nugget is written primarily for every REALTOR and every person who ever thought
of owning a home and making the decision to rent/lease it out. If that is you, read on!
Fair question!
When WAS the last time YOU changed the oil in YOUR
rental car? I think it would be a safe
bet that the answer is NEVER! Prove
me wrong!
Why am I asking this question in
December of 2025? Glad you asked. The mortgage interest rates for homes have
just been reduced to slightly under 6% and that is a good thing but not enough
to make that much of a difference in the struggling housing market. The housing market is like the market for any
commodity; it boils down to supply and demand.
The construction of affordable homes has not met the demand and that
causes the price of existing homes to increase.
The flood of illegal immigrants into America also contributed to the scarcity
of available homes as well. The current
economic forces have been working against home ownership, which was in my
opinion, THE AMERICAN DREAM!
People would buy homes knowing that
it would most likely be the most expensive item they ever purchased in their
lifetimes. They also know that home
ownership is where they stood the greatest chance of INCREASING their NET
WORTH and ultimately providing a financial legacy and increased wealth for
their next of kin.
When wages become stagnant and the
price of homes increase, the sale of homes typically decreases. What does a homeowner do with their home when
they feel they must sell but because of market conditions, the home will not
sell for an amount of money they expected to receive? A lot of homeowners decide to put their home
on the RENTAL MARKET and choose to lease/rent their homes.
The problem with rental homes is
complicated if there is an existing mortgage on their home. Such homeowners usually NEED to set
the rental amount to ensure that the cost of the existing mortgage is
covered. If not, the homeowner eats the
difference between the rents received and the amount of the mortgage payment
that must be paid. That would not be a
good investment should that occur for you.
This brings this Nugget back to the question about changing oil in a
rental car.
A home that is not properly
maintained typically decreases in value due to delayed maintenance or no
maintenance at all. No one is expected
to change the oil in a rental car. The
car’s owner(s) expect the person that rents the car to at least protect it from
damage or misuse and certainly expects the renter not to use the vehicle while
committing a crime. There are or should
be rules and there are and should be expectations both from the homeowner and
the tenant(s). The problem for both
homeowner and tenant arises when the Rules & Expectations are only “assumed”
and not defined in writing. Most
rental/lease agreements are vague at best when it comes to such rules and
expectations.
As a REALTOR® managing
rental properties or as a homeowner, you must think beyond simply
renting/leasing the home. If a REALTOR®
or some form of PROPERTY MANAGER is involved, the homeowner will incur a
cost for this service. The cost
diminishes the financial return on the investment. Most homeowners will include the cost of
property management within the rental amount charged. There are also other mitigating charges to
the homeowner such as property taxes, homeowners’ insurance (which usually goes
up if the home is used as an income producing property), Homeowners Association
Fees if one is applicable, etc. Most
homeowners try to anticipate these “extra” fees/dues and include it in the
rental/lease agreement which locks the tenant into the terms ONLY for
the duration of the agreement. This
becomes problem number two for the homeowner.
If such fees/dues increase over time, the homeowner will attempt to
raise the rental amount to include the increases incurred. That is when a lot of tenants make the
decision to move out and the homeowner is left “holding the bag” on the
property.
Whether YOU are the Property
Manager or are the homeowner, you need if not must, set parameters for the
occupancy of your home. I would
encourage you to set the parameters in a set of expectations and/or rules that
all parties agree to BEFORE they begin their occupancy. These expectations/rules should be IN
WRITING and AGREED TO by all parties. Having said that, in my thirty-three years in
the real estate business, I have never seen such a document included on any
rental/lease agreement.
Step one is recognizing that the
status of your home has changed from a home to an investment property. As such, you must first be ensured that the
laws for the area where the home is situated permits the type of rental you are
creating, long term versus short term.
If permitted, the next step would be to notify your insurance carrier
that the home is now being leased/rented.
The cost of your homeowner’s premium may change because of it not being
your primary residence. You must
ascertain what liability you will incur should you need to make a claim against
your policy for something that occurred ON your property occupied by a tenant. You “should” also consider the potential increase
in insurance premiums in the rental amount that is applicable.
Very important understanding.
Properties that go with deferred or no maintenance typically begin to
decay and decline in market value. At
first the decline is slow and then as time goes on more rapidly. If you have ever lived next door to a rental
property, you already know exactly what I am describing. The grass needs cutting more frequently than
it is. Debris and vehicles both working
and non-working begin to collect in the driveway and even on the street. Put yourself in the mind-set of a home buyer
and look at your neighbor’s homes. If
you WERE a potential buyer, would you buy the home based upon your first
real look at the home having just parked in front of it before going
inside? Probably not! This brings us back to the title of this
Nugget, When Was The Last Time YOU Changed The Oil In A Rental Car?
What I am about to tell you is in
my opinion, a very sad situation.
Homeowners that place their properties on the rental/lease market
oftentimes rent/lease the property and then forget about it until the lease
must be renewed. Do they drive by to
observe the condition of the home they turned into an income producing property? Having seen many of these homes in my
lifetime, I seriously doubt it. If they
do and then choose NOT to take any action against the tenant for failing
to properly maintain the home, the decrease in property value is as much on the
homeowner as it is on the tenant!
As an example, we own our
home! We have made constant improvements
to the home that was originally built in the late 1970s. It has been updated throughout the home in
things that are obvious and other things that are NOT so obvious like
the Fortified Roof recently installed.
By all measures, the market value of our home “should” have increased. Now comes the HUGE BUT! Several of the homes in our immediate
neighborhood have become rental properties.
You can easily pick these homes out as compared to the homes occupied by
homeowners. The following are some
tell-all signs of the home being occupied by tenants:
- Grass
needs cutting
- Shrubbery
needs pruning
- Flower
gardens need weeding
- Toys
and other items scattered about in the yard
- Cars
up on jacks in the driveway
- Cars
that have not run in years sitting in the yard
- Home
in need of a painting or at the very least, a power washing
- Garbage
cans routinely left on the curb long after the trash has been picked up·
You get the picture. What is NOT so obvious would be the
condition of the inside of the home. If
someone fails to properly take care of the outside, you can pretty much be
guaranteed that the inside is not much better.
While I was in the military, I served one tour where I had the
collateral duty of being responsible for 72 units of housing for military
members. I have seen what the inside of
homes can look like both in a well-maintained status and in a not maintained at
all status. The differences were both
alarming and deeply concerning. Some
homes were left in move-in condition and others had to be cleaned and
re-painted before the next family could occupy them. That is more proof that if you DO NOT OWN
SOMETHING, IT IS FAR LESS LIKELY IT WILL BE PROPERLY MAINTAINED! “I don’t own it (rental car), therefore, why
should I pay to maintain it (oil change).”
I am not suggesting that you should change the oil in a rental car
unless it is a long-term lease, I am, however, suggesting that you should treat
the object that you lease as IF you own it. In the case of homes, properly maintaining
the home and its surroundings goes a long way to protecting property values within
the neighborhood.
Now comes the rub, sort of
speaking. Homeowners that place their
properties in the rental market seem to ONLY worry about the condition
at the time they later decide to put it on the market and then become shocked
that the property in its present condition has had its value diminished. They seem to care very little about the other
homeowners in the neighborhood by not demanding that the tenants properly
maintain the rental home. By the time
they finally come around to caring, the damage has been done and now the
homeowner has incurred the massive cost of rehabilitating the home to current
market/neighborhood minimums.
What is the solution? It is much easier than you might think. Simply put down items that the tenant MUST
do/perform to remain compliant with the terms of the rental/lease
agreement. Put these items in written
format and then get the tenant to agree to them BEFORE they take occupancy. What items should be considered?
- They agree that a credit check will
be run and who pays for it
- They agree that references will be
checked if provided
- Cutting of the grass
- Maintenance of the shrubbery/garden
areas
- Requirement to NOT parked
disabled vehicles in the driveway, street or yard
- If they own secondary vehicles such
as boats, travel trailers, trailers in general, that they are parked elsewhere
other than in the driveway, street or yard.
- That they are NOT permitted
to run a business out of the property where customers are expected to come to
the property. This creates needless
traffic in the neighborhood, may be against city regulations, subdivision
regulations and creates parking issues.
- Identify if pets are allowed and if
so, how many. Is there a professional
carpet cleaning service that the tenant is responsible for at the end of the
agreement, if so, how much will it cost (keeping in mind that such a cost will
probably increase over time)
- Replacement of air filters in the
heating and air conditioning system
- The importance of notifying the
homeowner of any situation that could adversely affect the property’s condition
and value
- Who EXACTLY will be
occupying the property, listed by name and age.
- How long VISITING guests may
reside in the property
- Specific definitions of when the
homeowner may have access to the interior of the property
- Restrictions on when, if, and how a
tenant may change the locks on the property
- What can a tenant do and not do to
modify the property with or without the owner’s permission
- Liability for damage to the property
due to the negligence of the tenant, this could become an insurance issue for the
homeowner and the insurance carrier
This all sounds restrictive; it is
more about simple common sense. In today’s
world, common sense should never be automatically assumed that all parties are
on the “same page.” Get the Rules &
Expectations in writing and get everyone to agree to the terms or don’t
rent/lease them the property! By
everyone, that would mean the adults residing in the property married or
not. This becomes a very serious
situation when one of the adults decides to move out leaving the responsibility
for the property entirely upon the shoulders of the remaining adult. Who is liable for any damages. What happens to any deposit that may be held
on the property?
Note to REALTORS® who want to be
property managers AND still list and sell property. I had a mentor once tell me that REALTORS®
should “pick a lane, then stay in your lane!”
Property management comes with a lot of legal issues. If you the REALTOR® are not adequately trained
or unwilling to pay the price to learn about property management issues, my
advice would be to stick with listing and selling and leave the property management
to people trained in the field. A lot of
real estate brokerages prohibit agents from engaging in property management
because of the legal ramifications.
Good
luck y’all!
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