The reality of managing a rental property in Edmonton.

Anybody who knows me knows that I’m obsessed with real estate. And one aspect that I especially love is how it can work for you as an investment. The benefits and advantages to owning rental real estate as an investment will keep me rambling for way too long, so I’ll leave that for another day.

What I want to talk about is the part that scares so many people away, managing the property. You’ve all heard from somebody somewhere that their uncle lost his shirt in real estate. I once heard on a podcast that there must be a huge closet somewhere with all of these uncles’ shirts - I got a good kick out of that. It is a common narrative, and if you mention rental real estate to people, many will shudder just at the thought. The problem is that the drama is what makes good news or an interesting story - a tenant didn’t pay for months, turned the place into a crack house, punched holes in every wall, etc. Now that's an attention grabbing story and that's why we hear about it all the time. However, that’s not the norm. If somebody has a rental that performs well, and consistently makes them income year after year, that's not exactly something you’d bust out at your next social event. It's boring when things go well, but that's exactly what we want.

If you own a rental property you can manage it yourself or hire a professional. Although I do have experience managing my own properties, I'm definitely not an expert on the subject. That is why I have brought in Garnet Coria from AG Property Services to help answer some questions for me. This is someone who has a wide array of experience in all things property management within Edmonton and the surrounding areas.

1. How long have you been in property management?

GC: I have been a partner with AG Property Services for 7 years, the company has been operating since 2010.

2. How many properties does your company currently manage?

GC: We have 500+ units under management.

3. Where does your company operate?

GC: Edmonton, Beaumont, Sherwood Park, St. Albert, Spruce Grove, and Fort Saskatchewan.

4. In our local market, what percentage of properties would you say have problem tenants, major issues, or need to have evictions?

GC: In our portfolio, we have under 1% of units that have late rent issues, or the eviction process needs to be started. However, many of these issues are a direct result of the type of property you have, and tenant profile in this area.

5. If you could give one tip to someone who wants to manage their own property, what would it be?

GC: Ensure you have a good team you can call on when issues arise (handyman, plumber, electrician, appliance tech).

6. If there is one major pitfall or thing to avoid when self managing a property, what would that be?

GC: Generally, tenants are good as long as you are quick to deal with issues when they arise. When landlords delay necessary repairs, or simply do a quick fix that ultimately does not work, tenants get frustrated. Some landlords try to save money by doing things themselves. Ultimately, this can cost you more money in the long run. If things aren't fixed properly, you'll end up having to hire a professional anyways. This has resulted in wasted time for the tenants, possibly time off work, time away from their family, or simply an inconvenience that could have been avoided. You are in the business of real estate, treat it like a business. Hiring professionals is simply a cost of doing business. The tenant's responsibilities are to report issues, and the landlord’s responsibilities are to properly address these issues. I have seen countless situations where we are hired by owners after there has been a break down of the owner-tenant relationship. This often occurs due to repairs being neglected, or a breakdown of the relationship due to communication. Properly addressing issues as they arise will show the tenants you are a professional when operating your business, and this will often result in higher retention of long term tenants, and reduce your costs of tenant turnover.

7. If someone would rather have a professional handle management, what should they look for in a management company?

GC: Find out how many doors they have under management, are the owners investors themselves? Call their office, does someone pick up the phone right away, or call you back within 24 hours? These would be good places to start.

8. What is the cost or fees associated with property management?

GC: Industry standard is 10% of gross rents. There are often advertisement and tenant placement fees (we charge $590 for placement, once a tenant is successfully placed). Many management companies out there want a fee up front once a contract is signed. We do not operate like this.

9. If someone does hire a professional property manager what can they expect?

GC: Good communication is expected, monthly financials for tax purposes, and repairs handled professionally.

10. What services do you provide? Where can people learn more about your company?

GC: We offer tenant placement only services for self managing landlords, as well as full management services for those who wish to be more hands off. All of our services are outlined on our website.

11. What are some things to consider when screening potential tenants?

GC: Before you even post your property for rent, you should have an idea of your ideal tenant profile. For example, a basement suite is typically an affordable option. Because they are cost effective they often attract young people, either still in school, or a young couple starting out trying to save. Knowing who you plan on attracting to the unit is important.

Checking their rental history, and speaking with current and past landlords is valuable. You want to know where they have lived the past 5 years. And if there is a pattern of them constantly moving every year or 2. Sometimes it is situational, where the property simply didn’t fit what they needed at that time in their life. But more often than not, this can be a sign of someone who is transient, or constantly has issues with landlords and this is why they are continously having to move. 

Look at income. On average, we don’t like rent to be above 30% to 40% of their income. And if it is, we have to consider their stage of life (student, or single income, etc..) If they are renting a basement suite, going to 50% of their income may be something to consider. However, it comes back to what stage of life they’re at. You may require a Co-signer. (often Mom or Dad). 

Even asking the question if they can get a Co-signer will shed some light on their situation, and how they are as a person. Are they reliable and responsible enough for someone else to be willing to sign with them? Dependent on their situation, source of income, and rental history, you may want to consider a Co-signer to limit your risk. 

12. Any final thoughts you’d like to pass along on the subject?

GC: One thing for landlords to consider is the type of property they have and the neighbourhood that it’s in. You can’t buy a property in a C neighbourhood and expect to get A+ tenants. If you’re looking to purchase a new property working with a real estate agent that understands the nuances of rental properties is important, but so is running the property past your property manager to know what you can expect for rents. Having an accurate idea of what you can actually rent the unit for can be the difference of cash flowing a couple hundred dollars a month, or having to pay out of your own pocket to keep the property afloat.

So there you have it. A huge thanks to Garnet for shedding some light on the situation and giving some expert advice.

I would like to highlight that less than 1% of their portfolio have any serious issues, that is incredible! And coming back to how everyone hears the negatives regarding real estate investing, that is obviously not the norm in reality. And there are also some great tips from Garnet in here to help ensure you find and retain quality tenants. And it is basic stuff. Have a solid property in a quality location, treat the tenants with respect, and keep the home in good working order.

If you’d like to learn more about Garnet and AG Property Services you can check them out at: www.agpropertyservices.ca