Thursday, July 28, 2016

Investing In Real Estate – Building The Right Team: Series Recap

As a real estate investor, you have a lot at stake. It's important to remember to treat your investing as a business. As the CEO of your investing business, it's important to run your business properly to ensure its success.

As any good CEO will do, you need to surround yourself with the right help. It's hard to do it properly all on your own. Focus on your strengths and outsource the rest to the proper professionals.   You might not need every one of the team members we discussed in our series, but they should all be considerations for the future.

Make sure to value your time as an investor. Why spend your time mowing the lawn of your property when it could be spent analyzing your next deal? If you're busy with your career or family life and don’t have the time to take care of everything yourself, it doesn’t mean you don’t have time for investing in real estate, it just means you need to outsource.

One of the main reasons people hold back from investing in real estate is the horror stories they have heard about problem tenants or problems with the property (ie. flooded basement). One of the great benefits of outsourcing to professionals is that it minimizes your mistakes and potential liability as an investor. You don’t have to learn the hard way.

Remember, the path to real estate investing success and future wealth is a marathon, not a sprint.  Surrounding yourself with the right people will help you keep a steady pace on your journey and not stumble along the way. Now get moving!

This wraps up our series on building the right team as a real estate investor. Hopefully it was insightful and made you think differently about your chances of becoming a real estate investor.  We’d love to hear from you!

Friday, July 22, 2016

Investing In Real Estate – Building The Right Team #8: General Maintenance Professionals

Just like at your principle residence, general maintenance items must be done to ensure the property is safe and well maintained. This is general labour type maintenance such as grass cutting, landscaping, snow removal & cleaning of common areas (if in a multi-unit building). Today we are going to elaborate on this subject and discuss a few items you should be aware of.

Can I do this general maintenance myself?

You certainly can get your hands dirty and tackle these items yourself, as long as you have the time and will be completing them on a timely basis. Saving money on these items will certainly increase your cash flow but make sure to put a value on your time. Don’t let the place go in between visits, as poor curb appeal or lack of general maintenance can be a large turn off for tenants and can negatively affect your occupancy rates and rental rates. Maybe you want to start with handling these items yourself when you are just getting started, but as you progress as an investor, and as your portfolio grows, it may be prudent to outsource some help.  

If I hire out my general maintenance, who should I hire?

Grass, landscaping and snow removal can usually be done by a local landscaping company. You can consider hiring your tenant or a tenant in your building to handle these items, but beware of the pitfalls. Especially with snow, if they don’t do their job in a timely manner, you could end up with someone falling and injuring themselves on your property and inheriting legal trouble. On the cleaning of common areas, it is common to see one of the on-site tenants handle the job. Usually the cleaning of the common areas, or handling of grass cutting or snow removal can be done with a reduction in the rent, just make sure it is stated in writing.

How much should I budget for maintenance on my property?

You should budget an ongoing expense for maintenance items regardless of if you do them yourself or contract them out. A good rule of thumb is to budget 5% of gross rent, or up to one month’s gross rent per year, towards repairs and maintenance. This amount will also include large repairs such as roof, furnace, etc. which will be amortized over their expected life to smooth out your repairs and maintenance budgeting year to year. You don’t want to overspend on these maintenance items so you should err on the cheaper side when allocating expense dollars to these items.

Make sure you budget for these maintenance items in your income property and ensure the work is done in a timely manner. You'll be thankful you did!

Readers, do you do your own maintenance on your income properties or do you outsource them?

Friday, July 15, 2016

Investing In Real Estate – Building The Right Team #7: Bookkeeper

No one will ever care as much about your investment property as you do. But what exactly should you care about most as an investor? The short answer is: how much money you’re making! The funny thing is a lot of investors don’t actually know how well their investment property is performing. Don’t be one of those people! Today we are going to talk about the next member of your team, which will help you with this problem…your bookkeeper.

Do I really need a bookkeeper?

Technically, you don’t need one. You can do the bookkeeping yourself if you work with a simple spreadsheet or an accounting software such as quickbooks or simply accounting. Just make sure you keep detailed records and ensure you input all the income, expenses, etc, properly and allocate it to the right property. When you start out, it's often a good idea to start doing your own books so you can learn. As your portfolio grows, you will want to consider delegating the task to a bookkeeper.

What will my bookkeeper do for me?

A bookkeeper will input all income and expenses into whatever accounting software you use. They will keep neat records so when tax time rolls around, you have everything handy. They will also run regular reports (ie. monthly, quarterly) so you can track the performance of your investments.

What else should I know about bookkeeping?

The biggest aspect of bookkeeping is measuring performance. If things are going well and as good or better than expected then you want to keep up the good work to make sure things don’t slip. If things aren’t performing so well, it allows you to look at where the numbers are going wrong and make some changes (ie. increase rents, renovate, implement energy efficiency updates). And if after doing all you can, and after continuing to monitor the performance, it doesn’t turn around, maybe it wasn’t a good investment and its time to sell and move on.

How much will my bookkeeper cost?

As in the rest of the your team members the cost will vary, but bookkeeping is a highly automated process so the rates in your area should be pretty standardized. Either a per hour amount or a monthly fee is most common. Also make sure to check the work to make sure they are doing a good job with minimal errors and making it worthwhile for you.

The bottomline is that understanding your investment properties performance is very important and not a task to be taken lightly. Consider hiring a bookkeeper to make sure this is taken care of properly.

Do you do your own bookkeeping or outsource it for a bookkeeper?

Friday, July 8, 2016


Tenants considering new premises are often overwhelmed by the complexity of the task. In addition, they most often continue to run their operation from their present location, while at the same time planning to move/relocate. Talk about a heavy workload!

As with everything in real estate, DON'T GO IT ALONE! Engage the services of a qualified commercial leasing specialist on Day One. Interview only qualified specialists in your market area and select the one who appears best suited to assist you in finding new premises.

Now that you have engaged your Tenant Representative, what are the key elements of your relocation plan that need to be determined? A typical list would be as follows:
  • Lease Commitment Period (5, 10-20 years)
  • Locational Parameters (based on your clientele and market priorities)
  • Premises Size & Design (sq. ft. range, ground floor/above ground, multi-unit/freestanding)
  • Interior Layout (floor plan requirements, staffing size, windows/exterior light)
  • Parking Needs (on site, street parking, municipal parking, no parking)
  • Signage (facia box, multi-tenant pylon sign, window signage, directory board)
  • Accessibility (key in most jurisdictions across North America)
  • Networks (fibre cable, high speed internet, satellite)
  • Landlord Incentives (rent free period, TI allowance, turn-key/build to suit)
  • Availability (to commence both the tenant's work and business operations)
  • Options to Expand/First Rights on Adjoining Space

Although not necessarily a conclusive list, this forms a solid basis for the objectives needed to secure new premises. As a tenant, you need to present your requirements in a very clear manner, based on your foreseeable needs. This is a vital part of the Tenant Playbook. It forms the basis of the properties which you consider. It will also ultimately form the basis in your decision making as you create a short list of viable property options and compare them.

Next up from the Tenant Playbook: the most effective approaches in negotiating with the Landlord. As always, we're just a click or call away from discussing the investment opportunities here in Windsor-Essex!

Thursday, July 7, 2016

Investing In Real Estate – Building The Right Team #6: Contractor/Handyman/Trades

Not very handy? Don’t feel bad…we aren’t either. But that shouldn’t discourage you from investing in real estate. By building a team that includes a contractor or handyman to handle your renovations and repairs, you won’t have to slave doing manual labor jobs that you either don’t have the time for or the skills to do properly. Today we are going to talk about how having the right guys for the job will help make your investment properties more successful in the long run. We are using the terms contractor/handyman/trades interchangeably, as who you need can vary depending on your situation.

Why Do I Need A Contractor/Handyman/Trades?

If you are truly good with your hands and know the ins and outs of construction, including trades, pulling permits, etc, then maybe you don’t need a good contractor. But for the rest of us, they are very important. They will carry out necessary renovations to your rental properties that will attract the right tenants for top rents and keep your real estate values high. Time is money in real estate investing. The longer a job takes the more potential vacancy you have and the larger the hit to your potential rent. You should also be doing routine maintenance to your property, so the improvements you have will last longer, ie. servicing of the mechanical.

What Should I Look For In A Contractor/Handyman/Trades?

You should look for an experienced contractor that can handle the type of jobs you need done for your properties. Check references and assess their work with due diligence. Having a contractor that has rentals or has a background in them is a bonus. They will understand where you are coming from when it comes to smartly investing in your properties. You are not making decisions the same way you would if you were renovating your own home.

What Else Will My Contractor/Handyman/Trades Do?

They will give you advice on general updates that need to be done. Sometimes things can wait another year or two. Sometimes, an item needing repair can be a money pit and a full replacement is better in the long run. They should also have good referrals for you. For example, if you were renovating a basement and had a leak in the foundation, they should be able to refer you to some potential specialists outside of their expertise.

How Much Will My Contractor/Handyman/Trades Cost?

As with most team members in our series, the costs will vary depending on the person and the job.  Make sure to get multiple, detailed quotes in writing so you fully understand what is included in the price. Also, you usually get what you pay for in construction, so choosing team members solely on who is the lowest price isn’t always the best idea. Sometimes they are the cheapest for a reason and getting the job done right can save you money in the long term.

So there you have it, real estate investors. Do you have a team of construction experts for your properties? How has your experience been in finding the right help?