Just noticed a story out of the city council meeting last night where the council has erased zoning restrictions on secondary suites designated for narrow properties. So what does that mean?
For some reason if doesn’t change anything for older districts that have the nice large lots (the example they use is Haysboro and University Heights) which are more suitable to add secondary suites. It does however affect areas where they cram homes in like Martindale, certain areas of Tuscany, McKenzie Towne, in all about 18% of Calgary homes.
These areas can now have legal basement suites. There are still certain rules to follow, but it cannot be denied due to zoning for these areas now which should take some pressure off landlords hoping to not get reported.
Just going to throw a few quick thoughts and items out.
Tony Robbins
Tonight (Tuesday July 27th) is the premier of Tony Robbins new TV series. I have long been a fan of his books and audio packages. If you are having some struggles in your life, want some positive reinforcement, or just want to see some stories to make you feel good, check it out tonight.
Been a busy week, Karen, the kids and I have been working on a vacant property in Forest Lawn. We are trying to teach the kids the value of working hard and getting paid for it, so our 10 year old learned to paint walls yesterday. She put in a solid two and a half hours and we will reward her for it.
It’s her lesson about life and earning money as she is constantly asking us how she can make money, now she knows and we are taking them back today to finish up!
Getting Things Done
I was up until 2:45 the other night, couldn’t sleep, so I went and worked on some of my web projects. It didn’t hit me until today that I keep falling into the same trap all small business owners have. I’m busy working in my business (as I prepare to go paint again at a rental property), rather than working ON my business.
Most of you aren’t aware I started another business up now as I need something to fill my time. I have done a ton of research on how to market websites, products and information on the internet over the last few years as I sat on the sidelines and waited for the Real Estate market to settle down. Now I am leveraging that knowledge to help small businesses and a few charities get some exposure on the internet.
With so many things on the go, it’s important to get things done! If you don’t get things done, you cannot move forward. This is why it’s so important to take some time to work on your business! Sometimes you just have to block off half an hour to review what needs to be done to get ahead. Anyway, I’m off to get things done now so I can come back and work on my business later!
For long distance landlords, property management is essential to their business model and having great property managers can often make the difference between a satisfying experience and a nightmare. Managing remotely can be done, but it can make life a bit more taxing.
For landlords with property nearby, it can be quite a dilemma whether to give up the additional cashflow that you receive for managing your own properties versus freeing up your time by not having to deal with tenants. What a conundrum!
Fortunately, I’ve just been approached by another individual who has recently written a great article covering the pros and cons of property managers. If you are currently exploring whether hiring a property manager is right for you, this may be quite helpful, so be sure to take a read through.
To add to this I would love to get some feedback from anyone who is currently using property managers on the positives and negatives that you could share with the other readers.
I’ve spent the last couple of weeks preparing another of our rental properties for sale and I was handed another reminder of why tenants are not a landlord’s friend. I don’t want this to be taken the wrong way, I am not saying you cannot be friendly and I am not saying you need to create a hostile environment, but you do need to remember a landlord/tenant relationship is a business arrangement.
The Tale of Two Tenants
So, in this property one of the tenants had been with us for almost three years. During this time we had some hiccups, they had fallen behind a few times, managed to catch up, fallen behind again due to the economy and both being laid off, and then eventually caught up again. I even took them to the RTDRS to protect myself, but recommended a Cinderella or Stay order so they could be put on a payment plan rather than a straight eviction which I could easily have obtained. According to any definition, I went above and beyond to help them.
These particular tenants had a couple of dogs as we allowed pets in this property. We had run into some issues during their stay as we had a yard service come through and cut the lawns on a weekly/biweekly basis as there would be evidence of the dogs on the lawn (I will let you figure that out). In these cases, the lawn folks would do the front and leave the back, pretty simple really.
Anyway, now they are gone, they found an incredible opportunity to move to an acreage for less rent and off they went. It was all pretty quick, they gave me about two weeks notice and they actually didn’t even catch up on the money they were behind until after they were out and it involved applying the security deposit to make it balance. For the record, this is not how a landlord should ever use the damage deposit, but this is an example of being too friendly with tenants and should be taken as a lesson.
So once they were gone, I do the tour (no exit walk through as per our systems, once again when you don’t follow your systems, you lose money!) and find the place is looking rough. No, it’s not vandalized; it just wasn’t kept up that well. There is the little stuff, like the dust on the fan blades in the living room that looks like feathers on the edges it’s so thick, the ripped and torn screens on the windows and the patio possibly from the dogs looking out. There are the dust bunnies that are lying in the corners, hanging from the ceiling and on every cold air intake and fan. The sign that it has been months or possibly even years since a good cleaning was done behind furniture and it has only become apparent once furniture was removed from the property.
Then there are slightly more annoying things, like the three kitchen knobs broken off or missing, the myriad of wall anchors and dents in the walls that need patching, the missing and removed closet doors. Finally, there is the badly worn hardwood floor that needs refinishing due to possibly a rocking chair with a nail or staple that dug into the floor damaging it quite severely along with a myriad of scratch marks throughout the floor from animals and moving furniture. Oh and I mustn’t forget the large burn mark on the deck railing (the deck needs to be replaced anyway, but still).
I’ve already spent about fifteen hours patching and painting walls, I’ve brought a contractor in to get the entire front deck replaced, new windows are on order and I am preparing to get the entire floor refinished and as I am doing all of this, I have plenty of time to reflect. Especially as I paint, and it hit me the one day, this is not how a friend would leave your place. At least a friend you want to keep.
Tenants as a generality are just renting space, they get to move on and leave the wealthy landlord (whether he is wealthy or just scraping by, he owns property so renters like to assume he is wealthy) with the place when they move on. I’m not saying all tenants are like this, but I am reminding you of why you need to treat it like a business, and as a counter point let’s look at tenant number two!
The Other Tenant
So now, I am onto the tenants in the lower suite of the same property. These folks moved to Alberta a year ago from Ontario and owned their own home, but weren’t going to purchase here yet until they determined it was where they wanted to be.
During the time they were with us, they never missed a payment or fell behind. They called us a couple of times when there were any property problems and updated us right away so we were able to send out the necessary repair people or take appropriate actions to remedy the problems before they became serious. When their lease was coming up, they gave us two months notice they were moving as their job was located in the deep South and the property was in the NW. The commute was killing them, although they loved the suite, so moving made perfect sense.
When I arrived to do the exit walk through, the place was virtually spotless, not a burnt out light in the place, and the battery was even working in the smoke detector (not so true upstairs as they had removed the battery there!). The only problem was a couple of large anchors in the wall in one room where they had attached part of a desk. In comparison to the upstairs unit that was insignificant!
Comparison Time, What Was The Difference?
So what was the difference, or differences? Well the lower tenants had owned their own home and I have to assume took more responsibility for their place. The upper tenants had become “friends” (not the type I invite over for dinner or call to chat with, but possibly more the type who take advantage of you once or twice before you push them away) and possibly felt I could take care of their mess.
They were done with the space and simply wanted away, so they left. With the damage deposit applied as rent, I had no payments from them at a minimum of a thousand dollars of cleanup, wall repairs and painting. It’s true that I would have painted anyway after having a tenant in for that long, but it’s the tenant’s responsibility to leave the property in the same shape as they originally occupied it.
The Lesson
You really have to focus on your business as a landlord. When you let relationships get in the way of business, it can cost you money. Sure times have been tough the last couple of years for people, but if you let your tenants get to close, times can be tough for you too as you take responsibility for their actions, or lack of actions. There has to be a line between helping people out and ensuring you and yours are taken care of. Sometimes it’s a fine line, other times it can be very definitive, it depends on your emotional makeup to a degree, but remembering this is a business can hopefully help you ensure you are standing on the correct side of the fine line! It comes down to this, tenants are not your friends, they are your business partner in a rental property and you need to treat them as this.
Have any of you tried to help someone who was a tenant? Or do you feel a tenant took excessive advantage of you? Share some of your stories here to help remind others of where that line is. I look forward to hearing from you.
I had hoped to have my eviction package all complete by now, but time has managed to get away from me and the project keeps expanding. Currently I am just finishing page four of the outline up, I already have about a dozen pages written and I have ideas for about a dozen more! My original deadline of December 31st is long past, but I will keep working away.
I was just checking some of the stats earlier today and I have had over 300 hits on the blog all directly related to evictions in Alberta. Obviously people are looking for information, I might as well be the one to supply it! If I have helped you previously with an eviction, or you have suggestions about what to include, I would love to hear from you so I can help guide the next person in a similar situation.
My goal is for the completed work to have the whole process covered from whether you need to provide a 14 day eviction notice to the final steps to regaining possession of your property from a tenant.
In previous articles, I have mentioned it is too early to jump into the US housing market unless you have a very long term plan. This latest article in Business Week seems to concur with my thoughts.
2009 was a record year for foreclosures in the US with an increase in the number of foreclosures of 21% versus 2008 and they believe 2010 will be worse. The majority of this is all related to the adjustable rate mortgages resetting to higher interest rates causing payments to increase on many properties by double or more.
With any equity in the property wiped out, it doesn’t make sense for many homeowners to continue to make payments on a house they owe $100,000 or more above its actual value. With the ability in the US for mortgage holders to just walk away from this loss without the lender being able to come after them, it is exactly what they are doing.
So what does this mean to potential buyers? Well, as more of these foreclosed properties hit the market it will continue to drag prices downward, or at the very least leave prices very flat until all the inventory burns through and demand ramps up. So while that four bedroom home just outside Phoenix with the pool sounds like a bargain now at $200,000, in six months it may be more of a bargain.
Great title, lousy article. At least that is how many of you will feel when you read this hoping to find an easy way to collect money from tenants you have evicted. Although some people have had success with collecting money from evicted tenants, unless the outstanding amount owed is over a couple thousand dollars you may be better off letting it go.
The time and energy you waste trying to collect could probably better serve you by spending extra time finding and screening for exceptional tenants to replace the less than stellar former inhabitants. For those of you looking to collect, though here is some information to help you with the process of either garnishing a former tenant’s wages, or potentially seizing tenant’s assets to pay outstanding deb.
If you are planning on doing this yourself, here is the link to the governments PDF on Getting and Collecting a Writ of Enforcement in Alberta. This 40 page document (yes 40 pages!!) walks you through the various forms and processes, but most importantly, it says this.
“Legal enforcement of a Judgment is often complex and difficult. Many aspects of creditor law and legal procedure have not been explained in this brochure. Court employees are not allowed to give you legal advice. Please consult a lawyer if you have any questions.”
They also include the phone number for the Lawyer Referral Service sponsored by the Law Society of Alberta which is 1-800-661-1095 or can be found at this link, Law Society of Alberta Lawyer Referral Service. You can receive up to half an hour free legal counsel by using this service. Once you have received some advice you can decide at that point whether to pay for additional advice or whether it may be worth it for you.
Due to the complexity, the other option is to have one of the collection/bailiff services do the process for you. Costs for this start at about $700 and can move upwards for additional services, so be sure you are receive a breakdown of what the potential charges will be prior to committing to anything.
Also, this is different from simply sending the tenant to a simple collection agency that attempts to collect outstanding money for a percentage of the debt. Companies like Foster and Co, Kurseshi and Company or Serv-it offer the full service of going through the courts and garnishing wages and can offload the time you would spend on the process.
If you have had experience collecting, or attempting to collect from former tenants, we would love to hear your thoughts on the process.
Wow, am I ever grateful it’s 2010. 2009 was a pretty brutal year economically, business wise and action wise for us. We still have a few headaches that have followed us over into 2010, but with some strong action and forward movement on our part, instead of waiting to see how it plays out this time, we should be on a much stronger footing for 2010.
What I have realized as I reviewed some of the mistakes and shortcomings of 2009 was how far we have actually come. Yes, we lost money in 2009 on Real Estate, in fact a considerable amount which pains me every time I reflect on it. However, Real Estate also put us in a position so we had money to lose. If we hadn’t have started purchasing properties back in 2003 I would probably still be working at my old job, making a comfortable living, but not very happy. This life is so much better!
Financially we are twenty years ahead of where we were back then, even after the slowdown. Lifestyle wise we have the ability to show up to our children’s recitals in the middle of the morning, pick up our children after school and make our work fit around our hours. Sure, I had flexibility at work due to a great boss and plenty of seniority, but nothing like this.
None of this would have happened originally though if we didn’t start crawling and make that initial purchase that started us moving forward. That initial purchase led to the next one and the one after that and so on. Much like a baby learning to crawl, there are struggles and surprises as you learn. Unlike a baby, these struggles and surprises can be bumps and bruises on your finances instead of your body.
Surprisingly many people who run into these setbacks in Real Estate tuck in their tails and become the loudest mouthpieces about how Real Estate can wipe you out and what a bad investment it can be. It’s amazing these people are able to walk. If they had the same mindset when they initially started crawling, they would have never left the safe spot they started at on the floor. Obviously, they didn’t stop trying to crawl though and managed to not only overcome crawling, but also learned to walk, talk and run.
So what changes our mindset as we grow older and potentially wiser? If we really had acquired wisdom as we aged, wouldn’t we realize we need to crawl before we walk or run in many of life’s adventures? Do we simply get too caught up in the fear of making mistakes that could cost us money or could damage our pride? Why do we lose the gusto to reach for that brass ring that appears to be just out of our reach?
As more people come to me for guidance and mentorship about Real Estate investing, I am seeing a colossal difference between the people worn out by day jobs and the people just entering the Real Estate business. The excitement they bring, the willingness to not only learn to crawl with their Real Estate investments, but the desire to learn to walk the talk to move forward can be an adrenaline rush to me. It reminds me of how when we initially started we ate, talked and dreamed of Real Estate almost 24 hours a day and how crawling eventually leads to walking and running. So remember, you gotta crawl before you start running!
I receive a considerable amount of emails and searches on our blog regarding evictions every week and quite often, it is the same or very similar questions. Here is a list of my top five eviction questions to help you out.
1) Alberta Eviction Question One – Can a tenant be evicted in the winter in Alberta?
a. It’s cold outside, the weather can be frightful, but yes if a tenant doesn’t pay their rent or causes a serious breach of the rental agreement they can be evicted. The tenant and the landlord have a contract that both sides have to uphold and is regulated under the Residential Tenancies Act of Alberta.
2) Alberta Eviction Question Two – Can a landlord cut-off utilities to make a tenant leave?
a. Absolutely not, if the landlord shuts off heat, water or any other utility that he is responsible for paying they can be fined and find themselves in a very bad spot. The secondary question that comes with this is no, you cannot take the front door away for repair either, nor can you change the locks on the tenant without going through the proper procedures.
3) Alberta Eviction Question Three – How expensive is it to evict a tenant?
a. If you go through the Residential Tenancy Dispute Resolution Service (RTDRS) there is a $75 filing fee to have a hearing. If the hearing officer decides in your favour, the tenant is responsible for paying you the $75. Unfortunately collecting the outstanding $75 can be much harder than winning the hearing. If you win the hearing and the tenant still does not vacate it can cost you another $400 to hire a bailiff and have the tenant removed.
b. There are also full service eviction companies that will charge you from $600 to $1,000 and up for the service and depending on how much additional work is required the fee will continue to increase.
4) Alberta Eviction Question Four – Do I need a bailiff to evict a tenant?
a. For most evictions, you can complete the entire process yourself through the RTDRS and may not require a bailiff. The only time during the eviction process that you absolutely require the bailiff is if the tenants receive an order from eviction and do not vacate the premises. At this point, you require a bailiff to serve the tenant(s) with the writ of possession which gives you your property back and allow you to legally change the locks and allow the police to charge the tenants with trespassing if they return.
5) Alberta Eviction Question Five – What is the fastest way to evict a tenant?
a. Each circumstance is different, but generally, the quickest method is to file immediately with the RTDRS and get a hearing date. This will be the quickest sure fire method to evict a tenant. You can provide a 14 day eviction notice to a tenant, and then if it appears they will not be vacating you can file at RTDRS, but it will add an additional week or more to the process.
b. In the case of a tenant causing serious damage to the property or threatening the landlord or other tenants, you can provide them with a 24 hour eviction notice. Once again, if they do not vacate you still have to file with the RTDRS and go through the process.
Hopefully these provide you with some answers that help you move forward, either as a landlord or as a tenant. As a bonus, here is one additional eviction question. Alberta Eviction Bonus Question – How long does an eviction take?
If you follow the systems we recommend (including properly screening tenants), a landlord can have their property back and the tenants evicted in approximately 15 days. Depending on the circumstances, the hearing officer may allow the tenant to stay on and make additional payments to catch up outstanding rent on a set schedule. If they miss any of the payments on this set schedule, you can take your property back within a few days.
If you are a landlord and found this site while you were searching for eviction help please take a minute to register so you can receive any further updates we have regarding evictions, landlording, and what is happening in the Alberta economy and Real Estate market. Click here to Register to receive updates.
I’m still working on a walkthrough to help landlords with evictions and updates on it will also be sent out as it nears completion. It will include hints and advice to help streamline the process and to make it most effective for landlords, so if you want to be in the loop be sure to register. Register to receive updates.
Finally if you have some eviction stories, insights or questions to leave me a comment and I will answer back as quickly as possible! HEre is some more additional eviction information for you;
So after all the drama, SWAT boy couldn’t attend his own eviction hearing. Guess when you are busy you have other priorities in life! Apparently he had to work, he even called into the hearing office today to tell them he couldn’t make it, but they felt it wasn’t enough notice to postpone.
It may have also had to do with the fact he wasn’t going to win. Due to the law, he needs one full business day to move out, so he is to be out by Monday November 16th at noon. Oh and I was awarded a judgment of $418.55, along with $25.71 per day from Saturday on until he is gone. I went directly to the courthouse and filed the eviction order right after the hearing so all the correct procedures are in place.
After that I showed up at the property at about 2:40 to check on things and make sure it looked fine, not expecting him to be there, after all he had to work. Even the other tenant informed me he was out, but I knocked anyway. Lo and behold out pops SWAT boy!
I handed him the eviction order and he grabbed it and walked past me and out to the front door where he proceeded to ring the bell a couple of times. Then exclaimed, “oh it does work, I couldn’t tell since you always just walk in”.
Now just so every landlord and tenant reading this is aware, a landlord cannot walk into a regular rental property unannounced. He needs to provide at least 24 hours notice. This however is not a regular rental property, it is a shared accommodation and the only portion the individual rents from me is the room, which I do not enter without providing notice. The common areas are the areas for everyone’s use, the kitchen, the bathrooms, the laundry room and the living room. I do not require notice to access these areas, he doesn’t seem to get that, but now it doesn’t really matter.
So that is the positive news, the reality is he may not leave Monday, and I doubt I will be able to collect any of the judgment monies, although I do have the option of garnishing his wages and attaching an outstanding amount on his credit history. I will see how Monday goes and weigh my options at that time. If he leaves great, if he doesn’t, then on to the next step a affidavit of default and a writ of possession.
This buys him another day or two, but the result ends up the same, although it becomes more fun for me if he does stay on, as I can have him charged with trespassing. And given the chance to make his life miserable, I am at the point I will be all over it!
So far, another successful eviction story, if you don’t count the time lost, the energy wasted or the negative attitude that this creates.
Do you realize the number one search string that brings people to this site is hinged around the word eviction? Ironically for the last three or four months my entire life has revolved around evicting problem tenants who believe they have the right to disrespect my properties, don’t find it necessary to live by societies, never mind my rules and who are trying to take advantage of my trying to initially help them.
Along the way, I have also run into a steady stream of other landlords and investors with similar problems. I haven’t been able to help all of them, but I have been able to help the majority ease their fears and concerns about the process. After some prompting over a bottle of wine (or more) about opportunities out there, a thought came into play.
I guess it’s finally time to take advantage of my experiences and turn them into a tool to help other landlords. I’m currently in the process of putting a package together that will walk people through the eviction process in Alberta, it will explain the steps, the costs, the potential pitfalls and your various options. Anyone out there interested in this? There will be a cost associated with it, but considering the costs that can run up with a bad tenant it will be very affordable.
I’ll potentially be looking for a couple of people to review it and I should have a draft available by the end of November. Let me know if you would like to be one of those people, if I get a flurry of people it will end up being a random draw of some type (with preference going to people with excellent grammar!). With any luck, it should be available for purchase and as a giveaway to lucky readers sometime in December, unless of course I get stuck in more evictions!
If you wish to be updated and you were brought here by the search engine, or have friends who don’t read this blog, but have eviction problems, simply register on the site and you will be notified when it is ready! Register by clicking here. If you can also take a minute and please answer the polls below it would be appreciated because they will help me with some questions I have!
The story of SWAT boy carrys on, and it just keeps getting better, fortunately I am trying to take the positive lessons from this. First I screwed up. Everyone take note, don’t fill out eviction forms when you are frustrated and in a rush. You make mistakes.
It’s embarrassing to mention, but I pulled some doosies on this one, I spelt the tenants name wrong, left out a letter in his name, and didn’t change the date on the form. Unfortunately the tenant noticed this. He had contacted Landlord and Tenant Services to find out his rights (or what responsibilities he could avoid more realistically), and I am not sure if they walked him through the eviction form or he discovered it himself. He contacted me Monday to inform me he was writing a letter of objection against the eviction and if I wanted him out I would have to take him to court. I was pretty upset, but he got me, my error.
Step two, I stopped by the house and picked up the objection letter Tuesday. I had to wake him as he was on the couch with a couple of empty beer cans visible (it was after 12, barely!), so much for the detox sticking. He was a bit off, so I can only assume there were more than two beers involved, he eventually told me the letter was on the table, nope not there, looked around confused and pointed to a side table and then walked over, grabbed it and gave me his hand written letter.
I grabbed it and started to walk away, no sense wasting my time there, I already had my plan in place. This irritated him to no
Little bit angry!
end. He started getting quite upset and asked why I wasn’t going to stay and read it. I told him it wasn’t necessary. Guess I hit the right button.
I quickly read through it and this is where he pointed out the name, the date and the address being wrong (the address was actually correct as I used the titled address, but he doesn’t need to know that). It also said that he wasn’t smoking it was someone else (did I mention ditch responsibility) and that I said it was ok to drink in the house. After reading it I simply said fine and started to walk away.
Once again the mood swing went out of control as he started to get mad and yelling at me about messing this affecting people’s lives. I just kept walking out and he then started to swear at and about me as I continued to leave. I’m a little confused, if I am the worst landlord ever and this is such a horrible place why is he fighting so hard to stay?
Anyway, according to Landlord and Tenant his letter of objection makes my eviction null and void which now means I can just go directly down to the Residential Tenancy Dispute Resolution Service and file for a court hearing for next week. I just finished my paperwork before starting this post. Twenty pages in total and three copies of it are required for filing.
This isn’t my biggest file I have taken in, but definitely interesting. I will keep you posted!
First off, thanks to everyone who emailed or commented on yesterday’s frustration post. We received plenty of incredibly positive replies and it has helped Karen and I create a much clearer picture of what we are currently doing, what we need to change and what we are hoping to accomplish.
A little more follow up on the aftermath of Tuesday’s events for you. I currently still have evictions in place for the central character from the drama and his “drinking/smoking partner”. I met with the second fellow’s support person, who works out of the CUP’s Outreach program downtown, at noon yesterday who very earnestly requested a second chance for the individual. I declined, citing complete frustration, lack of respect for my property and myself from this individual and just plain weariness of taking other people’s burdens on.
As we were talking, first individual appeared who created the event. He had apparently been released from the hospital early in the morning. His version of the story was he had been talking to one of the distress support lines and when they asked how he felt he said he felt like he should “stick a knife in his throat”. Apparently, this is what caused 30 police, police Tactical, police dogs, a lockdown of a city block and all the drama to take place.
Sometimes it just doesn't add up!
I’m pretty good at math, and this doesn’t add up, so I am probably missing a very important part of the equation here, unfortunately I will probably never have enough information to completely figure it out. That much police activity does not occur with a potential suicide, in fact showing up with assault rifles would probably be rather counteractive if a potential suicide was taking place.
I mentioned in the previous post the individual had previous encounters with the police and it turns out he has spent time in jail. I guess this raises the question, what exactly had he been in jail for and how might that endanger me in future encounters as I am pretty sure my tolerance level for bull has gone out the window.
It’s ironic that I have spent the last several years trying to create safe environments for people to live in and now I have created an environment where theoretically it’s not safe for me to visit. That is probably a bit excessive in reflection, as I am much larger than the other fellow is. It is however a reminder to myself that I’m entirely sure of the mindset and past history of the individuals who I have ended up with recently.
So the lessons I’ve learned and the confirmations from you the readers/posters/emailers out there confirm I need to worry less about others and a bit more about my property, my family and myself. As a side note, did you know if the SWAT team breaks a fence to arrange a proper line of site to cover an entrance way, the city will come fix it for you later? Look at all the thing sI have learned from this!
I know many of my readers are already investors, some who invest in their own properties and many who are even investors with us in our properties. So some of my thoughts coming up will be of interest or even concern for many of you.
It can be a scary ride
First off, we have to realize that the incredible years we had in Real Estate during the mid part of this decade were an aberration. Yearly increases in property values of 30-40% are not healthy, not common, and not easily replicable except when everything comes together perfectly as it did for several years in a row here in Alberta. I’m ecstatic that I was able to be heavily involved with various Real Estate investments during that time and I am excited that I was able to drag friends and family along with us for the ride.
Whenever a great ride like that comes along, there also has to be a slide back down the slope after the fact and that is what we have been going through for the last couple of years. The recession, world credit crisis, and general economic malaise have helped drag this out far longer than it should of, but that’s part of the cycle sometimes.
We’ve always been optimistic about Real Estate and honestly, we have had our concerns about the markets the last year. You can only get continually hammered by negative news before it starts to wear you down. During the last year plus, when the markets didn’t recover as we anticipated we were concerned, often times anxious and many times frustrated with how the Real Estate market was behaving.
We have to face it, our livelihood, our dreams and our plans all revolve around what happens with our Real Estate investments. To make the burden even more over bearing, we also have many investors who we have brought on board who are also having to deal with concerns about their investments with us. Values are down and they just aren’t rebounding as fast as we would hope. While we still have positive cashflow from properties and mortgages are getting paid down each month, appreciation is such a huge positive and it has been sorely lacking.
Fortunately, we have always taken a longer term outlook with our Real Estate investments and we all just have to realize we will all see our money start to grow yet again. It just won’t be at the crazy levels previously seen. Currently it is increasing at a snail’s pace, but considering the reverse trend we had been seeing, single digit yearly growth doesn’t seem that bad in the big picture. As always the great aspect of Real Estate is we have cash flow and mortgage paydown at the end of the day and a long term view.
That’s where we sit. The problem I see that will be occurring over the next couple of years (or even faster) is going to revolve around the problems the bigger players have created for us.
As Real Estate investments currently go, with smaller deals it revolves around Joint Venture agreements. This is what we deal with when bringing investors in on a single property. When you move up the chain of Real Estate investments, you start getting into Limited Partnerships, Syndications and the officious sounding Offering Memorandums. This is where significant problems have arisen over this last year.
In certain provinces there are regulations requiring a certain dollar amount of currently held investments and/or yearly earnings to even become involved with these type of offerings. Sort of a rich get richer scenario as it appears only the rich are allowed to play.
Of course, with Alberta being part of the wild west we have been outside of these
The Wild West
boundaries. Unfortunately though, with the recent goings on with companies like Concrete Equities, Shire Investments, Bridgecreek and who knows who else will be added to the list in the next six months, we have to expect this to change. This is part of my upcoming conspiracy theory!
As more details of investors getting bilked through ponzi schemes, Real Estate developers over estimating returns and numerous other problems, it will lead to the government jumping in with both feet to “help” out the investors. This will lead to nothing but additional regulations, lengthier more stringent requirements for individuals to invest in anything “off the grid” of bank stocks and mutual funds and more hoops for the little guy like ourselves.
At the same time, banks and investment advisors will be in an even more profitable situation as other investment options will dry up for the middle income families. On the other end of the spectrum, the parties that take advantage of the loop holes and work the system, and their will be plenty of loop holes initially, will not necessarily have the best intent of the investors in mind, but will most likely be concerned about getting as much investment capital as quickly as they can before that door becomes closed. This can make a very precarious situation for someone with smaller amounts of investment dollars.
So here is your warning, there will be change in the industry, in the opportunities and the way Real Estate investments will be allowed or structured. It most likely won’t be overnight, but it will take place in the near future. For small investors the ones who can adapt to the change and already have great systems in place it will be an easier transition. For investors who have been flying by the seat of their pants this will probably bring a quick demise to their careers.
Now is the opportunity for any landlords out there actively pursuing Joint Venture partners to ensure all their systems and procedures are documented and ready to go. This will help streamline any regulatory changes that do come about and also provide a place to start when moving forward. It may also be an opportune time to purchase additional properties prior to the rules of the game changing.
For potential investors, it will be even more important to do all of their due diligence and to be vocal if it appears they may be locked out of the opportunities afforded the bigger investors with larger pockets. Currently many financial advisors are changing their approaches with clients and coming up with creative ways to access more investment capital. By backing any regulations that block investment with smaller Real Estate investors it will just benefit them as alternatives get reduced.
Whatever your situation, watch for changes to come. Just be aware that not all the change will necessarily be benefiting the proper people, but perhaps protecting the financial industries instead. This is a great topic to get feedback from you on, so I would really appreciate any thoughts you may have on this. Feel free to comment ont his post, or email me directly at bill@housez.ca.
Just so you know, you the readers are my best source of topics and posts. So if you have a question about Real Estate, being a landlord or wondering what the hell I do, send me an email or post a comment. That is where today’s Landlord Tip came from.
A reader emailed me and asked if it was better to show his property before prospective tenants viewed other properties or after. The context was whether it’s better to be the 6:00 appointment after work or the 8:00 after they have viewed three or four other places.
I have two components to this answer. The first one is, I love to have tenants see my property and allow me to set the bar higher than the average rental property out there. Due to our standards we strive to have rental properties that are in the top 25% of the properties out there. If you are going to do something do it right. By being in the top 25% we know a) we stand out from the crowd, b) people automatically prefer our properties to 75% of the places out there and c) we can charge a premium for a better product!
By talking to prospective tenants you get a pretty good picture of what they have already seen (you are talking to your tenants about other places aren’t you?). Typically in our area if they have looked at three properties there are two they have deemed unsuitable already. 50% of the properties for rent these days are for rent because the tenants have more choices and are able to move out of places that landlords don’t maintain. So if 50% are essentially crap, I’m only competing with one other, so it’s perfect they see mine first.
The other component is, if they view mine last, they know what property they like best. I can control the situation better by getting the application filled out on the spot and pointing out the best features of my property to reinforce how great it is. If I was the first property they saw, they would either have had to fill out the application with you already, or taken it with them to fax back. This takes a bit of the control away from you if they have to fax it back, or you have to follow up with them to see what is going on. Plus it takes more time!
One other thought to throw in. If your property has huge windows, great views and really shines when the sun is out, make sure the sun is out when you show it. If that is the biggest selling point it doesn’t make sense to show the property at 8:00 when the sun is down.
If however the property may be a bit lower than your standards, by all means who it at night where the lighting is worse. Just remember you want to strive to be in the top tier to be really successful, this means great properties, not substandard.
I will ask this in a separate post, but did anyone listen to the audio stream on the previous post? Would love to get some feedback about it!
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