Property managers in Toronto

[Newbie]

Hi Everyone!

I`m currently on the hunt for my first investment property. I went to see a house yesterday, with about 5 rooms on the first and second floor, and a basement apartment. The agent said that each room is typically rented out individually, and that the owner managed the property himself previously. If I were to purchase this property, I would want to hire a property manager. The agent mentioned that property management would cost approximately $1500 a month, meaning that I would end up with negative cash flow.

My question is, does it really cost $1500 manage a house? I was under the impression that it`s approximately $100 per room, so the house would require approximatley $600 for property management. In addition, would property managers manage rooms in a house, and count each room as a separate unit of management, or they would count it as managing the house as a whole unit?

Any insight and recommendations of property managers would be great!

Agnes

 

[Marina]

QUOTE (Newbie @ May 8 2009, 02:30 PM) Hi Everyone!

I`m currently on the hunt for my first investment property. I went to see a house yesterday, with about 5 rooms on the first and second floor, and a basement apartment. The agent said that each room is typically rented out individually, and that the owner managed the property himself previously. If I were to purchase this property, I would want to hire a property manager. The agent mentioned that property management would cost approximately $1500 a month, meaning that I would end up with negative cash flow.

My question is, does it really cost $1500 manage a house? I was under the impression that it`s approximately $100 per room, so the house would require approximatley $600 for property management. In addition, would property managers manage rooms in a house, and count each room as a separate unit of management, or they would count it as managing the house as a whole unit?

Any insight and recommendations of property managers would be great!

Agnes

Hello Agnes,

I have a property rented by the room as well as with a suite. I`m assuming that you`re furnishing the property as well. My property is in a mid size town in Alberta so it may be different that Toronto but it is difficult to have all the rooms rented all the time. I would say each of the rooms is treated as an individual rental unit and would have the management fees associated with that. Each unit needs to be advertised, have tenants screened and leases etc set up. Another consideration in a shared home is the personalities of the tenants - they need to generally fit well together. Another thing to consider is the cleaning of common areas, will you hire a maid service or how will you delegate the tenants to take care of the common areas. I have a maid service, this works well but remember the cleaning fee is the same regardless of the number of tenants so it really affects your cash flow if all your rooms are not full. Lastly, shared housing only suits a certain demographic - you will not be getting executive tenants. I`m not sure if this helps but I do know that it is alot of work to manage a suited shared home.

Regards,
Marina

 

[housingrental]

Agnes - Proceed with caution. This type of property can be very difficult to manage and the tenant profile it can attract is less than ideal. This is not the ideal first investment property. You will also want a property manager with experience in renting rooming houses - this is a different business then renting houses. Your planning should factor in high vacancy, uncollected rent, high repairs, high insurance, possibly high financing costs, and most importantly you should expect a premium return for the stress of owning a property like this.

 

[InvestagainInc]

QUOTE (housingrental @ May 9 2009, 01:37 PM) Agnes - Proceed with caution. This type of property can be very difficult to manage and the tenant profile it can attract is less than ideal. This is not the ideal first investment property. You will also want a property manager with experience in renting rooming houses - this is a different business then renting houses. Your planning should factor in high vacancy, uncollected rent, high repairs, high insurance, possibly high financing costs, and most importantly you should expect a premium return for the stress of owning a property like this.

I agree with Adam. My company manages properties within the Golden Horsehoe and rooming houses definately wil cost more to manage than single units. You essentially treat every room as one unit, and it requires lots of work as you need ot rent each one out, collect rent, maintain each room and the property. It may be more cost effective for you to manage yourself since it will require a lot of work to maintain.

 

[Newbie]

QUOTE (Marina @ May 9 2009, 07:13 AM) Hello Agnes,

I have a property rented by the room as well as with a suite. I`m assuming that you`re furnishing the property as well. My property is in a mid size town in Alberta so it may be different that Toronto but it is difficult to have all the rooms rented all the time. I would say each of the rooms is treated as an individual rental unit and would have the management fees associated with that. Each unit needs to be advertised, have tenants screened and leases etc set up. Another consideration in a shared home is the personalities of the tenants - they need to generally fit well together. Another thing to consider is the cleaning of common areas, will you hire a maid service or how will you delegate the tenants to take care of the common areas. I have a maid service, this works well but remember the cleaning fee is the same regardless of the number of tenants so it really affects your cash flow if all your rooms are not full. Lastly, shared housing only suits a certain demographic - you will not be getting executive tenants. I`m not sure if this helps but I do know that it is alot of work to manage a suited shared home.

Regards,
Marina

That is true. When I visited the property, I did notice that the tenants were definitely not "executives". The owner wanted to sell it because he had had enough with running around at night to fix tenant problems.
Thanks for all the replies everyone! So I will stick to one tenant per unit....

 

[BrianPersaud]

QUOTE (Newbie @ May 20 2009, 12:05 PM) That is true. When I visited the property, I did notice that the tenants were definitely not "executives". The owner wanted to sell it because he had had enough with running around at night to fix tenant problems.
Thanks for all the replies everyone! So I will stick to one tenant per unit....

Rooming houses are not fun. It`s the convenience store of real estate investing. Your buying a job.

 

[JoefromTO]

Your signature says Newbie...so I assume your very new to this business. In my opinion, rooming houses are the worst kind of properties to own and manage...the return should be hire, but its really not worth it.