So im a sophisticated investor! not to sure on this

[dwaynemason]

I have two properties in edmonton both 3 bed room townhouses for about two years . one property in the harrison crt area has be either vacant or had awful tenants put in by my now fired property manager. I believe i have a better one now. But its been over a month and still no renters, every time it goes vacant it seems to take 2 or three months to rent it again and to bad tenants. I live in vancouver which seems to make it difficult and allot more expensive to keep a handle on things. Seems like every little thing that needs to get done cost more money that eats into the barely cash flowing property. Rising condo fees, broken appliances,property management fees

my last tenant ran off and was quoted thousands to repair/ fix things so i had to go and do the repairs myself to avoid more loses.
My other property was self managed by the same tenant for years and is now moving out leaving me with anther place to clean up and no renter.
I am pretty new to this business but have run my own company for quite a few years now. I thought i was buying in what was supposed to be the best place in all of canada ,i did the due diligence the properties were cash flowing on paper but it seems the reality is a lot different. Sooo how do i keep these properties rented more than 75% of the time? How do i keep escalating costs in line to preserve cash flow? how do i keep a handle on whats happening to my investments from this distance? Because letting property management do it has been a disaster so far.
I know there is a lot of knowledge out there and there is a lot of successful investors could i get some help from some of you.
Im not feeling very sophisticated as of late.

 

[housedoc]

QUOTE (dwaynemason @ Dec 1 2009, 01:05 AM) the properties were cash flowing on paper but it seems the reality is a lot different.

So true.

Hopefully your new PM will do a better job.
Is the place a dump? Can you improve the property to boost rent? Rent furnished? Sell RTO? Move to Edmonton?

Sometimes you have to hang in. Others, you have to cut your losses.
Good luck.

 

[invst4profit]

Although the "system" looks good on paper and appears to be a easy way to make money with little actual hands on involvement this is not the case. What you have experienced is not uncommon in the business but seldom talked about.
Unfortunately bad management, bad tenants, bad luck and poor cash flow are all realities of the business which are often kept in the closet.

Hiring property managers to handle your investment of several hundred thousand dollars can work out if you know what you are doing but it just as often does not work out.
You have experienced the income investment world of the inexperienced. This tends to drive up expenses and drive investors out of the business.
Unfortunately regardless of the rating of any given area profit margins can be thin and for this reason I highly recommend novice investors buy close to home and self manage for a few years. Not only can this reduce expenses by giving you better control it also teaches you what to expect from and how to manage property managers in the future.
Investing from a distance can be more stressful, more expensive and therefor less profitable when the inevitable bumps in the road occur.
If you are still able to afford to stay in the business I would suggest you rethink your business approach and bring it home.

Arm chair investing is definitely not as easy as arm chair coaching as you now well know.

 

[REINteam]

Hi Dwayne,You mention one property in Harrison Crt, where in Edmonton is that property located? You did not mention much about the other property so would imply the other property was working until the current vacancy...Where is it located? Although you have hired a new property manager you make the statement “I believe I have a better one now”. What diligence did you do on the new property manager? How are you certain you did not hire the same problems with a different manager? You state that you keep getting bad tenants which can mean a couple of things:1. You’re in a questionable/fringe area and perhaps you ARE getting the best of the worst tenants
2. You have not clearly defined your expectations with you property manager.
3. There is not (for whatever reason) clear communication and understanding between you and your PM. Property management does not provide a reason for you to abdicate from your business. Your PM is part of your team and requires that you communicate and work with them. It is critical that you manage your managers.
Have you seen recent photos of your property? Is it a product that attracts the quality of tenant you are looking for?

"My other property was self managed by the same tenant for years and is now moving out leaving me with another place to clean up and no renter.
Are you saying your tenant was managing your property for years? How many years? Who was managing your tenant to make sure maintenance was done and who walked through the property for you? Unless the tenant trashed the property before they left, and once a year walk through would have shown what was coming when they left.
I am pretty new to this business but have run my own company for quite a few years now. I thought i was buying in what was supposed to be the best place in all of Canada, i did the due diligence the properties were cash flowing on paper but it seems the reality is a lot different."

Edmonton is absolutely a top city to invest in, but like any city not every neighbourhood is the best to invest in. Broken appliances problems, escalating condo fees, these are issues that are generally not surprising if you really did your due diligence. Appliances generally have a pretty long shelf life, but after 7 years for example you can certainly anticipate some appliance bills. Without knowing the building and its finish and without seeing the financial statements from the time when you bought the property it’s difficult to say for certain, however, I would be interested to know what were the increase in fees for?

"Sooo how do i keep these properties rented more than 75% of the time?"

Revisit the look of your property and the quality of tenant you are trying to attract. Have you got a below average property in a good part of town and your competition is eating your lunch or have you got a ok property in a questionable are of town and the area attracts transient tenants?

"How do I keep escalating costs in line to preserve cash flow?"

If for example you left your tenant to manage your property without an agreement for maintenance then are the cost really escalating or is lack of maintenance catching up to you?

"How do i keep a handle on what’s happening to my investments from this distance? Because letting property management do it has been a disaster so far."

I would suggest going to the thread on the forum that talks about property management there is a lot to learn by reading the various threads.

Also, when have your vacancies been showing up? Nov-Feb in Edmonton can be a tougher time to find tenants, I know it is a competitive market place right now, so if you don’t stand out you won’t be found. Plus, a number of landlords are offering incentives in Edmonton right now – make sure you know your competition or your PM does so you’re not completely off the mark.

In the end, a bad PM can drain you and your property very quickly...seems like it happened and it’s sad. Keep on top of the progress of you new PM, manage your manager, keep expectations in check, state them clearly now while the relationship is still new and jump in when you’re needed (ie, marketing).

 

[invst4profit]

Based on the advice you have received and the research information available on this site I believe you will find you have a lot of work to do in order to get your properties in line and keep them there. It is do able with an adjustment to your operating practices. I still believe to fully understand the business you should try your hand at self management while you are still a small time investor.
Sell your away properties and buy at home.

This is not the type of business to run on autopilot which is what happens when you rely on a property manager to manage your business for you without consistent involvement on your part as well. Its hard work at times when first starting and does take up more time than many novice investors expect.

Good Luck.

 

[Nir]

QUOTE (dwaynemason @ Dec 1 2009, 12:05 AM) I have two properties in edmonton both 3 bed room townhouses for about two years . one property in the harrison crt area has be either vacant or had awful tenants put in by my now fired property manager. I believe i have a better one now. But its been over a month and still no renters, every time it goes vacant it seems to take 2 or three months to rent it again and to bad tenants. I live in vancouver which seems to make it difficult and allot more expensive to keep a handle on things. Seems like every little thing that needs to get done cost more money that eats into the barely cash flowing property. Rising condo fees, broken appliances,property management fees

my last tenant ran off and was quoted thousands to repair/ fix things so i had to go and do the repairs myself to avoid more loses.
My other property was self managed by the same tenant for years and is now moving out leaving me with anther place to clean up and no renter.
I am pretty new to this business but have run my own company for quite a few years now. I thought i was buying in what was supposed to be the best place in all of canada ,i did the due diligence the properties were cash flowing on paper but it seems the reality is a lot different. Sooo how do i keep these properties rented more than 75% of the time? How do i keep escalating costs in line to preserve cash flow? how do i keep a handle on whats happening to my investments from this distance? Because letting property management do it has been a disaster so far.
I know there is a lot of knowledge out there and there is a lot of successful investors could i get some help from some of you.
Im not feeling very sophisticated as of late.

Hi,
I also started far from home BUT managed them myself first year and was lucky to be available full time for that!
I think Greg is right - the experience you shared is unfortunately very common. you are definitely not alone.
It sounds like mainly a relationship building issue(?) and not managing your properties yourself in say the first year(?)
Thoughts?
Good luck!

 

[gwasser]

QUOTE (investmart @ Dec 1 2009, 10:21 PM) Hi,
I also started far from home BUT managed them myself first year and was lucky to be available full time for that!
I think Greg is right - the experience you shared is unfortunately very common. you are definitely not alone.
It sounds like mainly a relationship building issue(?) and not managing your properties yourself in say the first year(?)
Thoughts?
Good luck!

Rental properties and their management are not easy at all. Especially for properties away from your home town I would only buy into condo complexes with a rental pool. This way, you can nearly treat it as a paper security. I still have to caution, because some rental pools function smoothly and others are nightmares. You should consider a larger pool (40 units and higher) with proven track record. Also consider sitting on the board of the condo corp and/or rental pool (but don`t chair it). This way you will be close enough to have a say in what happens and you learn about the property and its issues quickly.

I have done my own property management and both used small and large property management comapanies. I think overall the large ones work better because of there experience and with enough staff to keep management quality consistent. I had a small manager once, and he got into marital troubles which took more time than the property management - things quickly went from satisfactory to poor and worse. I ended up firing the manager and a severely damaged property. After repairs I sold the property because I just did not have the time to self-manage.

Hope this helps,

 

[Nir]

QUOTE (gwasser @ Dec 2 2009, 11:54 AM) I think overall the large ones work better because of there experience and with enough staff to keep management quality consistent.
Thanks Godfried.
Excellent point! Another reason to buy apartment buildings. Allows both hiring a large PM company and (this means) buying ANYWHERE!
(where meets cirterias of course)

 

[LeighF]

I have read alot of threads in this forum regarding investors managing their properties from far away and are very successful.
I myself, am not comfortable enough to do this.

I live in Fort McMurray and our investment properties are in Edmonton. That`s far enough for me. I would like to self manage our properties our selves, so we can get rid of the PM fees, but right now, its` working for us. My husband and I both work full time and would be very hard to manage the time to find good tenants (credit checks, back ground checks etc), ensure that our properties are cleaned for new tenants, taking care of little problems that come up from time to time. It would be hard for us to jump in our vehicle and run over to one of our properties to fix a leaking tap for instance when we live 500 km away.

Yes, my PM company takes their cut, but at the same time, they do alot for us. Do we have to keep them on their toes? Absolutely! Are they perfect? No. I am quite often questioning them on certain issues and in return they know that we expect to be kept informed and updated on anything that involves our properties.

Please send me a PM and I can give you my views on our property management company. Maybe you would like to give them a try. It may help you sleep better at night.

Take care....its a learning curve for all of us. Thank goodness for this forum and the advise from a host of very knowledgable people that are willing to help out.