Real Estate Insider: January 2019 News Report

Welcome back to a brand new year, Real Estate Insiders! We thought this month would be a great time to cover a variety of topics including living life in a big city, creating wealth, performing background checks, and even why the numbers in your address could deter potential buyers!

Is the “American Dream” an outdated concept? Does yours involve a house with a yard and a white picket fence, or something more suited to your lifestyle? Read about why everyone might be a lot happier if they made their own definition of the American (or Canadian) Dream. >>

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Does your address contain the number 4 or 13? If so, that might be a deal breaker for some cultures. Read here how these numbers have caused headache in housing developments and how city planners and contractors are dealing with it. >>

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If you’re thinking of how to split your estate between your children, this article won't help you decide who is your favourite, but it will help with a few of the tax questions! >>

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Finding the right property manager is essential to creating and maintaining a good portfolio. If you decide to use a property manager, be sure to read this article to help find the right one for you! >>

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Are you thinking of buying your first home? Take it from someone who’s been there before! This article describes almost every cost you should prepare for when buying a home. >>

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Not every investment you make is going to be a winner, however a big part of investing is not making impulsive, emotional decisions! Read how this investor “lost” $130,000 on his rental property but managed to turn it around by keeping a level head and trusting the process. >>

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Don’t be blinded by the cap rate. Here’s a list of things to consider when evaluating cap rates or multiples on a property—and why these tools are simply a starting point. >>

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There are so many options when it comes to creating wealth for yourself, but the common strategy between them all is to diversify. This blogger decided she needed a way to diversify her portfolio and caught the real estate fever! Read here how she turned her love of HGTV into a very profitable investment strategy. >>

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Tenants can make or break an investment property, so we want to make sure you are doing everything you can to ensure you have the best tenant possible! Here’s a list of what you should do to complete a successful background check. >>

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For many people, living in the big city would be a dream come true, but is it really worth it? Read here how the high costs of living are pushing many young adults to pursue a larger life in smaller cities. >>

Investing in Real Estate – Building The Right Team #5: Property Manager

One of the first concerns we hear about when talking to new real estate investors goes something like this: “I heard real estate investing is a pain because I’ll be getting calls about clogged toilets at two in the morning from my tenants.” Is this something that has made you hesitant about investing in real estate? Today we are going to alleviate some of these concerns by talking about the next member of your team – the property manager.

What Will A Property Manager Do?

The property manager will be the main contact for the landlord in the day to day dealings of the property. They will collect rent, hand out any necessary notices to tenants, market vacant units, handle any complaints, deal with minor repairs and maintenance, etc.

What Should I Look For In A Property Manager?

Ideally your property manager should have lots of experience in handling similar types of rental properties to yours. They should have knowledge of the local rental market and tenant profiles. They should also know how to legally deal with problem tenants, including serving proper notices, keeping records of correspondence, and taking the proper steps up to possible hearings with Landlord Tenant Board. This last part is very important as not handling evictions and other tenant issues properly can get very expensive for the landlord. Make sure to interview them the same way anyone you would hire and get references. Sometimes it is prudent to manage a building yourself at the beginning so you understand the property, the tenants, etc. to get your feet wet and be able to properly manage your property manager.

How Will My Property Manager Help Me As A Real Estate Investor?

As a specialist in property management, your property manager should have the skills to ensure your investment property runs smoothly. Lots of real estate investors do not have the time or the desire to learn the management side of the business, so this frees up time for the investor to work on acquiring more properties, spend more time focusing on other employment or to spend free time with family or friends. And you won’t be getting any late night tenant complaint phone calls, so you can sleep easier!

How Much Will My Property Manager Cost?

Property management fees can vary as with any other professional services. On larger multi-unit buildings, we see fees such as a 5-8% of gross rent, one month’s rent per year or a $/per door per month. There can also be additional fees for renting/leasing of vacant units and you should inquire about that as they can add up. Usually there are also à la carte items available such as evicting tenants, going to landlord tenant hearings, etc. that they can provide for one-time fees. Get multiple quotes to understand the market prices in your area but be sure not to only focus on costs, make sure to also understand the service that comes with each. Also make sure to budget the costs of management into the financials of any investment properties you are looking at going forward.  Having your property properly managed is too important to cheap out on!

Get a good property manager on your side…you’ll be glad you did. Readers, do you manage your own investment properties?

Investing in Real Estate – Building The Right Team

After doing some research on different investing ideas, you’ve decided that real estate investing is right for you. No matter how big or small you intend for this investment venture to be, its important to be ready, willing and able to handle everything that comes your way. But how do we do that? By building the proper team of professionals around you to set yourself up for success.

But what type of professionals do you need? We've put together a list of such professionals. Not every one of them is necessary for every investor, but the list is a starting point to make sure your bases are covered.

Realtor

Now this is a pretty obvious one ☺. They’ll be able to help you out with understanding values, demographics, rents, etc. Working with a realtor who either owns rentals themselves or does a good amount of income properties is a huge bonus.

Lawyer

A good real estate lawyer is invaluable. They will make sure your interests are protected in whatever deals your are considering. Good legal advice can be expensive but can save you money in the long run.

Mortgage Broker-Professional

Assuming you will be mortgaging your properties, a good mortgage broker-professional is essential in getting your deals financed. They can give you advice so you can continue to accumulate properties and get the best terms possible.

Accountant

A good accountant is also invaluable. Understanding the best way to hold the real estate, claim expenses, amortize costs, etc. can save you tax dollars. They also have your back should CRA ever audit you.

Property Manager

Don’t have time or the ability to handle your rentals yourself? Finding a good property manager is must-have. They can collect rents, leasing, handle tenant calls and be the general go between the property and the owner. Fees generally range from 5% of rent to one month’s rent per year and up.  Make sure you factor this cost into your budget if you're planning to have the property managed.

Contractor/HandyMan

Not very handy? Then you’ll need to contract out any renovations or general upkeep. When you find good people who don’t cost an arm and a leg, it is important to keep them around and happy. They will make your life much easier in this business.

Bookkeeper

A good bookkeeper can keep track of all your income and expenses related to each property and make sure everything runs smoothly. They can also run regular reports so you understand your profits and can uncover trends (like increasing utility costs), so they can be addressed.

General Maintenance – Grass, Snow, Cleaning

A list of maintenance contacts can go a long way in efficiently operating your property and keeping it safe and attractive to tenants. Be sure to also add these costs to your budget.

This is far from an exhaustive list, but it gives you a general idea about who you should have on your speed dial as a real estate investor. How has your experience been in creating your team?