# Looking for info on property managers and owning long distance rentals.



## emperor (Jul 24, 2011)

Hello, I was wondering if anyone has any first hand experience or maybe some web links about property managers.

Most people suggest to buy property where you live but in my case its useless. I live in Red Deer and a house that costs you 150-200K you might rent for 800-1000 a month.

In some other cities I've looked at you can get a house for 30-40K and rent for 600-700.

In short I think in North America some properties are over price and some are under priced. I'd like to buy the under priced ones and hopefully they turn around in the future.

If anyone has experience with owning rental properties where they don't live let me know.


----------



## iherald (Apr 18, 2009)

There was a thread that I started about owning rental properties in the US. You should do a search for it, there were some interesting ideas in it.


----------



## emperor (Jul 24, 2011)

Thanks Iherald, I read your post but it's not exactly what I'm looking at doing. The fact that there hasn't been many responses must mean not many people rent long distance properties.

What I'm actually looking at is what could be the next boom towns in Northern Alberta, BC and Sask. There is some small towns with cheap properties that might have mines or refineries built in the near future.

I wonder if maybe houses arn't the best idea though, you could get half a duplex, town house, lots, land, or even comerical. I'm new to this so I'm just trying to get info from someone that might already be doing it.


----------



## Young&Ambitious (Aug 11, 2010)

I would recommend a condo/townhouse as there will be lots of eyes on your place persay to ensure that the tenants behave. Not that there aren't good tenants out there but as a just in case this is a good preventative measure and may help you sleep more soundly.

Ask a local realtor for a referral, I am sure they will have tons of information about local property managers and may even have a branch that offers that service. 

Goodluck


----------



## Freedom25 (Dec 3, 2011)

I rented my place long-distance, but I had lived there before moving.

If your property manager gets a good tenant, everything is fine. If your property manager doesn't, you are screwed, as your property manager will probably not do much about it. They make their money on the large number of rentals that go well, where they do nothing but collect the rent and their percentage. If your tenant turns out to be one who needs more interaction (like if they don't pay rent, or bother the neighbors, or paint your house a dark colour, or move in other adults, etc. etc.) the agency probably won't bother to take any action on it.

It's really hard to tell which agencies are good. I thought mine was good until tenant #2 moved in. Basically, the agency needed so much management from me when things went bad, that I might as well have managed it myself from afar.

I still made money renting it out, but even with a rental agency (that takes 10% of the rent) it was a lot of hassle.

Oh, and once you realize you have a bad agent (which you'll only notice once they get a bad tenant), you can't just switch to another. No other agent will want to take over your property with a high-maintenance tenant living there, they just want the easy properties where they can skim the profit. So you're stuck until you get rid of the tenant, and laws are stacked in favour of bad tenants.

It might still be worthwhile... but it won't be hassle-free, even if you hire an agency to rent it out for you.


----------



## Berubeland (Sep 6, 2009)

I agree with what Freedom said and I'm a property manager. The other side of the coin is that for $60 - $70 per month there is no budget for a lot of work when things go wrong. 

That's really the problem, property management does not pay very well. To put things into context here a tank of gas costs me $80. 

Not only that but we are not shareholders in your capital enterprise. If we do a fantastic job and get you $100 more for rent per month...we get at most $10 per month extra. Most of my contracts are for 5% so I get a whole $5 extra. That extra $100 is worth $20,000 extra on your building value at a cap rate of 5%. How much of that do I get for my troubles. $0 that's how much. 

When I worked on my own it's not such a big deal... an extra hour here or there is just my labour. I just hired another PM and I have to pay her $15/hr. It doesn't take long to be negative for a property annually. Just one quoting job can take 20 hours. The other day for one property I started with three pages of phone numbers, 3-5 call back, they do a site visit which we attend and then we wait for quotes and present them to the owners. Sometimes the owners don't approve it then we're back to the drawing board. 

To compare with a financial asset manager they get 1% of the entire value of the portfolio annually and they don't need cars, they don't deal with tenants or contractors. So if the house value was $500,000 per year they would get $5000 per year or $416 per month. Must be nice... 

I suspect that part of the problem with property management is that new owners are told that they should just get a property manager and invest. It's easy they are told. Just find a professional. I'm professional, I work 7 days a week, I'm on call 24 hours a day, but you don't own me for $100 per month to survive I manage currently over 200 units. 

The other problem is owner's expectations of what we as property management can do to change a tenant's behaviour or make them pay. We are not gods. What makes you think the deadbeat tenant you rented to is going to listen to me? Nope they aren't. The difference between me and the owners I deal with is I know the process, I do the process and then I go to sleep at night having learned long ago that there is not a thing I can do except wait it out. 

I also want to point out that in spite of the common sense that someone making $60-$100 per month is not able to provide a whole lot of services for you, no one wants to pay more or upgrade the service. I know this because I offer it. The entire system is based on perfect tenants being in your place. For the most part it works. 

We for the most part are not going to bug the tenants or harass them for putting in dark colours because our best chance to keep your property unscathed is to have amicable relationship with our tenants regardless of their quality. But let's say I take this on because my owner tells me to, the tenant tells me to go take a hike. I go to the owner and say hey I need $1000 large minimum to enforce your no dark colours paint rule at the Landlord & Tenant Board where you are virtually guaranteed to lose. 

I look like an idiot because the owner won't put his money where his mouth is, I've pissed off the tenant and done ziltch about it and I've created a situation where that tenant is psychologically ready to bully me because they won the last battle that I started. That's why you won't find many property managers willing to take this kind of stuff on. They won't tell you why, but that's why. 

Seriously I don't bother trying to enforce rules I can't enforce. No smoking, no pets, minor noise violations, people smoking pot. My hands are tied. One day I hope that the legislation gives us more recourse in Ontario. It's like if police officers gave out lollipops instead of speeding tickets...For the foreseeable future all I can do is use my best judgement to keep these people out of your property.


----------



## emperor (Jul 24, 2011)

Thank you for the replies, I'm nervous doing stuff like this, I don't have allot of money and it always seems I lose when I try doing something different.

From what I can see renting is hit or miss depending on who you have renting and how good the property is.

I'm wondering if renting in a small town is better since everyone knows everyone else and usually there is no "rough" areas of town. 

Are there any other suggestions you can make to lower my chance of this failing?

I've kind of been looking in Kitimat BC they might put a pipeline there from the oil sands. Sound like a decent idea?


----------



## Freedom25 (Dec 3, 2011)

If you don't have a lot of money, I think it's too risky. You'd need cash put aside to pay for repairs, cover vacancies, stuff like that. If you were buying the property for cash and you could find an area that's not in a bubble right now (not too many areas in Canada!), it might be worthwhile; it would definitely be a hassle.

In a small town where everyone knows each other, you'll be the absentee landlord, and they won't necessarily be looking after your place if they rent it, or keeping an eye on your tenants if they're the neighbor.

Small towns might also not have much in the way of property managers, and if they do, they'd probably be more loyal to your tenant than to you.

I think in certain times it is possible to make money in this situation. I made money renting mine, but it was mortgage-free when I did, and I lucked into the fact too that the market just kept climbing insanely for the 7 years it was rented out (and I thought it was already in a bubble when I rented it.). 

The economic conditions that made it work for me were just accidental, not any skill or knowledge on my part. I also was lucky that no major repairs came up in those 7 years, and because the place was paid for I earned money both from rent and from the housing bubble increasing it's value year after year.

Those times were just a fluke for me though, and the current climate is very different. The bubble like we are in now probably won't happen again in our lifetimes (sure hope not... it will probably not be pleasant when it deflates.)


----------



## Four Pillars (Apr 5, 2009)

emperor said:


> Hello, I was wondering if anyone has any first hand experience or maybe some web links about property managers.


Here's a pretty negative look at property managers:

http://www.moneysmartsblog.com/the-problem-with-property-management/


----------



## the-royal-mail (Dec 11, 2009)

emperor said:


> I'm nervous doing stuff like this, I don't have allot of money and it always seems I lose when I try doing something different.


I'm not sure I've ever heard this sort of thing from a successful property investor.


----------



## MoneyGal (Apr 24, 2009)

Four Pillars said:


> Here's a pretty negative look at property managers:
> 
> http://www.moneysmartsblog.com/the-problem-with-property-management/


That is a GREAT blog post.


----------



## marina628 (Dec 14, 2010)

I would recommend you wait and save more money ,Real estate is not going to change much in a year.I think if you are looking at long term and long distance you need to go to a tourist town ,Florida comes to mind except for fact you will have to pay income tax on any income if you go into a fully managed resort.My friends bought a $50,000 new townhouse and rent for $600 a week.Do you own or rent now?


----------



## emperor (Jul 24, 2011)

So Kitimat doesn't look like a good idea? It's a small town you can get a 3 bedroom condo for 30-60K It has very little industry there now that's why it's so cheap.

But they are thinking of pumping oil sands product there and I hear they might liquefy natural gas to ship out of their port also.

As for money I have enough to afford one of these places and any repairs but I would pretty much be tapped out after that, would have a 6 month emergency fund and that would be it.


----------



## Four Pillars (Apr 5, 2009)

emperor said:


> So Kitimat doesn't look like a good idea? It's a small town you can get a 3 bedroom condo for 30-60K It has very little industry there now that's why it's so cheap.
> 
> But they are thinking of pumping oil sands product there and I hear they might liquefy natural gas to ship out of their port also.
> 
> As for money I have enough to afford one of these places and any repairs but I would pretty much be tapped out after that, would have a 6 month emergency fund and that would be it.


This sounds like a high risk investment. If economic activity picks up for any length of time - you could probably triple your investment. If not - you will be stuck with a house you can't rent and will lose at least a bit of money if you sell.

I can't say if it will work out or not, but be aware of the risks.


----------



## kcowan (Jul 1, 2010)

Betting on a new pipeline is a high risk bet and deserves tremendous returns if it happens to be correct.


----------



## Young&Ambitious (Aug 11, 2010)

Kitimat = projects = lots of young construction types making mucho money with no where to spend it = issues (sorry for the stereotype). 

Young construction workers (generally speaking) are not the most responsible and not the best at taking care of a condo. They work in a dirty job and many are okay in living in a dirty place you know?

Again, sorry for all of the generalizations but I think this situation is more apparent in a northern industry town than a white collar populated area is all.


----------



## emperor (Jul 24, 2011)

I don't know what to do, real estate where I live is super expensive while rent is not. People don't think buying long distance properties is a good idea. Stock markets are like gambling.

I know they say inflation is around 2-3 % but I keep track of my bills and my inflation is around 10%.

Is the goal just to sit on money and hope the bottom falls out on real estate or the stock market?


----------



## Freedom25 (Dec 3, 2011)

emperor said:


> I don't know what to do, real estate where I live is super expensive while rent is not. People don't think buying long distance properties is a good idea. Stock markets are like gambling.
> 
> I know they say inflation is around 2-3 % but I keep track of my bills and my inflation is around 10%.
> 
> Is the goal just to sit on money and hope the bottom falls out on real estate or the stock market?


Unfortunately, these aren't great times for investment of any kind. Nothing is ever guaranteed, but usually some investments are a little more of a sure bet.

It's really not a good time to buy a housing unit and rent it out though. Too risky due to the bubble that affects most areas to some degree in Canada.

Once prices deflate (might take a few years) it will probably be worthwhile again. Rent control messes with things too- in the 7 years I was a landlord my house went up by around 50% in price, but the rent controls only allowed a tiny increase in that time. 

It's amazing anyone wants to be a landlord these days, but people still line up to do it. With certain economic conditions it's a great way to earn money (pre-bubble is perfect, but impossible to time), but not right now, not unless you bought your rental property before the bubble, and even then, it means parking your money in this overpriced asset which isn't producing in relation to what it is "worth" if you sold it.


----------



## w0nger (Mar 15, 2010)

if you're gambling on the kitimat pipeline creating a micro-economic advantage in that area... you might as well just buy some shares in ENB... it'd be safer with none of the hassle....


----------



## kcowan (Jul 1, 2010)

Or you could load up on Kinder Morgan who has an oil pipeline through the heart of the lower mainland to Coal Harbour (ISTR 300k barrels a day).
Expansion Plans


----------

