There’s a cliche in the real estate business that you make your money when you buy. It sounds all fancy and sexy to say things like:
I bought a place 25% under value.
I never pay more than 75cents on the dollar.
For the rest of us in the real world, buying is only the start of a long, complex and often stressful road. Guys like Russell Westcott and Don Campbell will tell you to stop grinding down sellers, buy in the right areas and pay what something’s worth. Good property management, effective leverage and economic fundamentals will make you more money than you can shake a stick at.
Good Property Management is the new Black
The most often cited cause of stress, foreclosure or gross stupidity is failure to manage a property and tenants well. Failing to buy well only results in loss of a deal or tighter cashflow. Failing to manage well results in total loss of equity, damage to your property, lawsuits, negative cashflow, midnight moves, visits to the Residential Tenancy Dispute Resolution Board and swift consumption of your reserve fund.
Managed right you’ll have steady cashflow, reliable and respectful tenants, preventive maintenance done right and a fantastic asset for your exit strategy.
The Best Advice Around
I went shopping for condos last month in North Edmonton and stopped at a complex called Castlewood (circa 109st and 165ave, Google Map and Streetview). They’re two story complexes that are listed and seem to be 3-bedrooms. My Realtor is also very experienced property manager (he only does real estate sales now) and knew that the window in the third bedroom wouldn’t meet the safety standards. We automatically walked out of the complex because I won’t waste my time on units that don’t conform. I don’t want the risk.
Not two weeks later I saw this post on myREINspace. Here’s the important parts of the post:
We have three three-bedroom townhouses in a complex of 80 units. The owners of the Condominium received a letter stating that one of the bedrooms is not to be used for sleeping purposes. It is not safe because the window in that room is 9 feet from the ground and cannot be reached and opened from the inside without the use of tools or special knowledge.
We have contacted AHS for clarifications and for solutions that we could apply in our units immediately, since our tenants have been using that room as a bedroom. All our suggestions such as pocket door, or emergency ladder were declined….
Our plan is to work with a lawyer to file an appeal and at the same time work with the Condo Board to find a common solution. The Condo Board has not been very pro-active in this regard and transferred the problem to the owners, since “all owner occupied premises are strongly discouraged from utilizing the affected room for the purposes of sleeping.” However, the officer from [Alberta Health Services] left very clear that if they have an inspection and somebody is using that room for sleeping purposes in a rental unit, the owner and the Board will have to respond. It is a huge liability.
I don’t know if it’s the same complex, but there’s at least three others I’m familiar with that have the same problem.
And that one move earned Brent every penny of his commission.