Time to invest in a rental property?

Is it time to invest in a rental property? A single family home to rent out? A half or full duplex or perhaps a fourplex? Maybe a multi-family apartment building? Here’s what you do:

Step 1: Due Diligence
Step 2: Repeat Step 1

There’s an economic buzz in Grande Prairie. Several times daily my email and cell phone alert me to people that want or need a rental, urgently. Does that mean run out and invest in a rental? Well, thanks to the cycle of life, for every person wanting to enter the real estate investment arena, there is someone that would like to exit. It’s just that right now the vacancy rate for rentals in Grande Prairie, Alberta is plummeting.

So its natural to want to jump on a revenue property bandwagon. Sounds good to me but please first seek out someone with experience that owns a property – or several. Form your team (for example: You, Lawyer, REALTOR®, Mortgage Broker, Accountant).

Consider joining or speaking to members of R.E.I.N. http://www.reincanada.com/

Learn how to analyze properties. Three samples:

• Renters already in place: http://tinyurl.com/6lu6n5p

• Vacant plus new, popular Multiplex is easy walking distance: http://tinyurl.com/7qt99t7

• Roommate style house that can be vacant almost immediately: http://tinyurl.com/73dckzb

Everybody will have an opinion on the local market so again, seek out the voices of those that have invested in property already. They are not speculators or guessers. They are investors. They have broken trail for you and often are pleased to share their experiences and analysis techniques.

Don’t drive with me

No, I’m actually rather a very good driver. The back and forth commute between Sexsmith and Grande Prairie provides a never ending display, however, of awful drivers.

That is all beside the point as I really don’t think you should drive with me.

But John, as a REALTOR®, surely you would like to have your clients with you, (captive), as you tour around from home to home?

Nope.

Don’t get me wrong, I like the company, the conversation – but that’s just it – the conversation.

It really is better for Buying clients to drive in their own vehicle for a few but extremely critical reasons. That conversation mentioned above should be restricted to the clients so they can confer privately without me influencing their thoughts. And for rural properties this is really practical as Buyers need to pay attention to drive time rather than just ask me “how long does it take to get from the intersection of Webster Road and Range Road 64 to Grande Prairie?” Everybody has their own response to that question: “20 minutes, 15 minutes, half an hour, where’s Webster Road?”

There are several other Buying strategies but in terms of touring around, if clients prefer to be one big happy tour group, that’s fine on occasion but if they think strategically, they’ll agree that participating in a wee convoy results in them being better able to disqualify properties that they may have otherwise kept on their list.

Look at houses with one REALTOR® exclusively?

Sounds selfish of me. Well, I’ve been in business over twenty years and through making some mistakes here and some correct decisions there have learned a little about people. I have found that you really, genuinely must care! You can’t fake caring as it is reflected back through the lens of customer loyalty. A loyal client starts to work with you over a longer period of time and therefore they get to know the real you. So you might as well get your ‘real you’ in proper working order right out of the gate.

I believe in ‘consumer balance’. Meaning, there must be a palatable balance of choice for the buyer. If an office needs a copier, they better be able to choose beyond just Toshiba® because no one supplier can fill an entire product line with the best solution. In real estate, a consumer needs to have the option of working with a REALTOR® or doing business privately. There are pros and cons to each. If deciding to work with a REALTOR® to buy, why pick only one? Well, a relationship is forged. Accountability is created. Teamwork gets positive results. And perhaps most critical of all, pressure is removed as now houses are looked at in a systematic disqualification process until the right one is found rather than working under elements of pressure that are bred when just calling each name on the sign.

Debatable topic to be sure but I stand by the ‘exclusive working relationship’ strategy. When I was a Manager at a company for several years I learned that customers do not need a revolving door of managers. They need to know that same face will be there for them to line up in the cross-hairs or maybe to pass positive accolades along to. If that manager is still there over a long period of time, a signal of stability is broadcast about the company. If a Buyer is willing to work exclusively with a REALTOR® and put that working relationship in writing, a very solid team is established which dramatically increases the chances of the best property being found.

How to choose an acreage?

Acreages tend to cycle on and off the market. They tend to require a little more work than anticipated so its back to the city after a couple years.

However, some acreage homes (not always, but often in subdivisions) are of a higher end nature and yes, there is work outdoors, but generally just a really big lawn to mow. This higher end – or higher quality – house feature coupled with manageable yard work, may lend itself to people staying longer in their rural setting.

Now, zoning bylaws may be more restrictive in acreage subdivisions but if you are looking basically for a newer home outside of (but close to) the crowded city, a two to five acre property might be just the thing.

How to compare properties? First of all, ensure your REALTOR® has rural experience. When the discussion turns to ‘septic systems’ and ‘drilled wells’, those topics best not be foreign. After all, the house may be higher end, but it is still a country (non-municipal) setting. Has gas been run to the house or is it propane? The phone line has been installed, yes? Perhaps the water is on the municipal line or is it a well – or a cistern?

One way to compare houses is to look at the price per square foot. Looking at the sample table (by clicking on the ‘acreage square foot table’ link), you can see a summary of properties showing asking price, square feet, acres and age. And price per square foot.

acreage square foot table

Once you have looked at a few properties that meet your general criteria, and you are familiar with their respective primary features, comparing the cost per square foot can help you decide which property is the best value. Or, even before going to look, work with your REALTOR® to prepare a summary and use the price per square foot to guide you to determine which properties might be worth a look at in the first place.

In the table, when considering the $302 per square foot ’25 GoldenRod’ in concert with its location and features, it is positioned to be a must see acreage if being considered amongst other ‘for sale’ properties (click on the ‘acreages compared including using price per square foot’ link):

acreages compared including using price per square foot

There are other ways to compare properties but the above may help if you find yourself confused or having a hard time to sort your list of possibilities.

[the author has worked with Buyers locating the right acreages for them around Grande Prairie, Sexsmith, Beaverlodge, La Glace, Wembley - throughout the Peace Country of Alberta]

Choice is good, REALTOR®, no REALTOR®

A competition.

As a speed skating coach, I bring my skaters to it. Speed skaters tend to compete against themselves (to better their times) but certainly compete against others as well! There’s a reason they line up beside each other at the Start, they are competing.

As a REALTOR®, I face competition everyday. Amongst peers. From alternate industry choices that consumers have.

Wouldn’t have it any other way.

Recently at a Meet, a fan, watching one of the speed skating races, noted “What’s wrong with those skaters? They’re losing!”. A nearby onlooker, acquainted with the team, clarified by saying “Those skaters that you are referring to are in their first year of speed skating and they’re racing against athletes with three or four years under their belts. And they are not losing, they are placing middle of the pack, so they sure are competing!”. Once that was all put into context, the first spectator sat back and enjoyed the racing. Athletes enter competitions at various stages of ability, skill and preparedness.

REALTOR’s® are the same. We have various levels of ability, skill and preparedness. And the consumer has the opportunity to work with one of us or choose among other private options. I think that’s wonderful that the marketplace offers choice.

I am reminded of years ago when I helped manage a copier company. In our infancy we carried one line of copiers. We were reminded regularly by the area rep for that product that we’d best not bring in any other brand else face dire consequences. Oh we complied – for a while. We eventually learned that, as good as the line was, it had weaknesses in some of the models. We took the plunge, brought in another line, and braced ourselves for the consequences of ‘betraying’ the first supplier. Nothing happened. Unless you count our sales increasing and our customer service improving by now truly having a solid range of great copiers that met every consumer need. Between the two brands we pretty much had the right unit all the way down the line now. Our customers won!

Consumers must have a choice. Not so many choices that it becomes overwhelming, but enough to ensure the market serves them as best as possible. If you choose to work with me, I will invest my time consulting, negotiating and organizing the details of your transaction because you want to have a superb experience that causes you to want to introduce me to the people you care about most. The purpose of my business is referral which means I must bring the type of value that makes you feel comfortable introducing me to the people you know that need my help. After all, a referral is sending someone you care about to someone you trust.

Hello world! Speed Skating compares to Realty

I am a REALTOR® and a speed skating coach.

In a Meet, as the skaters blaze past, they will hear me yell “set it up!”. That is to say, set up their pass. If they intend to pass an opponent coming out of the turn, they had best position themselves to go a little wider heading into the turn to pick up the speed necessary for a successful pass and a greater chance at a better time – and maybe even a win.

In Real Estate, our Broker should, upon hearing that we are working with a buyer or seller, walk up to us, clamp their hands on our shoulders and shout “set it up!”. The referral that is. The time to ask for a referral is not after I hand my clients their keys because they are now focused on a sofa for the den. I will ask my client for a referral early in the working relationship because I am focused on providing them a second to none experience as I consult, negotiate and organize the details of their transaction.

And what better time to self-evaluate than early in my relationship with a client? Better to find out earlier than later that I’m ‘more talk than walk’ – and then have ample opportunity to course correct and provide service at a professional level which they deserve.

If that speed skater does not negotiate the turn properly at the high speed they skate at, they become what we call ‘a sponsor’ (sponsors logos are in the middle of the mats that ring the skating track). In other words, they go ‘splat into a mat’. Not getting a referral provides that same ‘splat’ feeling.

So do a phenomenal job for your client and “set it up!”.