All Forum Posts by: Matt Geerts

Could everyone please stop referring to "Canada real estate". We have  thousands of cities and towns spanning a land mass significantly greater than US. There are MANY different markets here. I am two hours from the centre of Toronto and houses cost a tiny fraction what they would there.

Maybe I should start a proper turnkey org just to prove a point.

Jonas, two question:

Can you comment on the status of OLA? I tried in vein for over a year to talk to someone there and I see their forums are locked down. Are they defunct? 

Why haven't you come out to the Biggerpockets meetups I host every month?

My area would absolutely support it. Plenty of houses that will cash flow double digits off the hop without reno, plenty of Toronto buyers paying for investment properties with single digit returns site unseen. Supply and demand both covered.

Thanks for the feedback, Joel! Can you make any comments about strategy for discovering a need? Or strategy for courting potential tenants? What information would a potential tenant need to be convinced this is the place for them?

Oh and "Well, I have two dogs but they are just the most wonderful well behaved special snowflakes. They never cause trouble" directly translates to "I have a german shepherd and a bulldog and they will F up your floors and chew the door frames". Don't accept people's BS stories. 

Bearing in mind that Ontario LTB wants landlords to slip up so they can make a spectacle of slapping them around, take the following advice with a HUGE warning that you must not violate any human rights, discriminate, etc. 

I don't have a huge amount of experience, but before I even owned a rental I read a LOT about how horrible it can be to get a bad tenant in Ontario and I read about a lot of ways to make sure you reduce your odds of getting one. With all that research I developed a plan:

5 steps:

1 - Write your ad:  "Credit check required, landlord and professional references required, no pets, no smoking, no exceptions" - this will self-eliminate most of the weak ones.

2 - The phone call: Ask open-ended questions and stay dead silent until they are done talking. People love to say too much if you'd just let them. Ask them things like "Tell me why you'd like to move to this area", "Tell me why you're moving out of your current place", "Tell me about your current landlord" (this is a fun one), "What can I expect to see when I pull a full credit report?". "Do you have pets?" and "Do you smoke" are not open-ended, but they will allow you to catch the ones that ignored the "no exeptions" in the ad. "Yes, I smoke but I smoke outside always" is 100% of the time a lie; they smoke inside when it suits them.

3 - The showing: Reiterate the whole open-ended questions game. Also, and I am not joking, sniff them. Literally, discretely, sniff them. You'll catch their lies about smoking and pets, and you'll quickly get to know how clean they'll keep your place - dirty smelly people don't keep clean houses. Give them an application or let them fill one out right there, but absolutely demand that it is complete.

4 - Credit check and references: Do the check. Call ALL of the references. Call the employer, talk to two people. Discriminate hard (but never say you did) against low credit scores. If they can't pay a phone bill without fail, they can't pay a rent bill without fail.

5 - The drop-in: This is my favorite part! You go to near their current residence and call them up. You say "I am nearby and I have the lease for you to sign, and I'll pick up first and last checks". You can choose if you'd like to imply that not letting you come by will hurt their chances. When you get there, observe how they live. Again, sniff. This will tell you a HUGE amount about the type of people you are dealing with.

It is 1000% more important that you get a GOOD tenant than you get ANY tenant. A vacant rental unit costs you money, but one occupied by a bad tenant costs you a LOT of money. The chronic bad tenants know how to play the system, and when they see that you have your defenses up they will move on to an easier sucker. 

So... where's "a small town in Ontario"?

TL;DR - Commercial newbie needs to know how to effectively lease up a few shops in a tiny town. 

I have found myself suddenly to be a commercial property owner. Besides some residential units, my new building has 3 commercial spaces. The building is a Main St. address on a great corner of a tiny rural town. A classic "small town Main St", exactly how you'd picture it. The three commercial spaces face the Main st and the entrances to the residential are off the side street.

I am not concerned with filling up the residential spaces. 

Can anybody recommend a strategy for leasing up the commercial spaces? Here is my strategy so far:

SWOT analysis

Strength - traffic traffic and more traffic:

1. Main st of a small town that is in between where people work and where people live. More cars pass through here each day than the population of the town, I think. 

2. The side street that I am on the corner of has the only liquor store in town a couple hundred yards up. 

3. I am located right between the Tim Hortons (coffee shop/Canadian icon) and the major grocers.

4. I am right next door to a national bank, one of only two in the town.

5. Across the street from the very busy clothing store.

Weakness - Small town, small population. 

1. The population is very small. The entire county is only 5300 people, so I'm guessing 2000 in this town. However, the county only has other small towns, so all of the farmers and people from other towns are used to travelling for shopping.

2. Low income town. 

Opportunity - There are definitely gaps in available stores/services

1. Aside from an abundance of pizza, lawyers, mortgages and insurance, there is no more than 1 of anything and 0 of many necessities. Examples include a sports store (in a hockey/baseball town), a gym, a deli and a dozen others. 

2. It sounds like every business that closes up shop in this town is not from failing, but rather from the owner retiring. This is leaving clear gaps.

3. I have a plan to discover the town's real needs - see below.

Threats - Not much

1. The very popular clothing store is closing after 100 years of business because the owners are retiring. They may sell the building vacant, but they have offered the potential buyer complete training in their suppliers and methods of running the shop so it may stay the same.

3. There is one other building with two storefronts that are vacant. This is not listed on MLS "for lease", the price is not aggressive and there is no apparent marketing effort besides a sign in the window.

So far my tactic has been to discover the town's needs. I have walked the main street and made a map of every business in the downtown and I will produce a cross reference of "business type" to identify what is over/under-served. I have also chatted with a few locals and another business owner. I am going to post a survey on the town's communal Facebook group to ask "When you go to another town to buy something, what are you going to buy?". I am also meeting with the Director of Economic Development, Mayor, Deputy Mayor and CAO of the town next week to discuss a "Resident Needs Survey" they recently completed for the county - hopefully it is town-specific. 

Once I have a list of the needs, I will glue my phone to my ear and call every single business owner in those categories within 50 miles and try to sell them on the idea of leasing my space.

As far as the building is concerned, 2 out of 3 com units are tenant-ready, 600sqft each. The larger unit is 1300-ish square feet and needs very minor fix-up (bathroom and a very minor leak in a 2-year old warrantied flat roof). The larger residential unit just needs a carpet clean, possibly a quick paint, possibly some new windows (would improve the look of the front of the building) and a new tile shower surround. The other units require from a little to a lot of work. I should be able to break-even on the building with any 2 of 7 units rented. It also has a detached 2-bay garage that I could rent out.

I have set myself a timeline of one month to find one commercial tenant, then I will turn over my efforts to a leasing agent who can show me a more aggressive plan than my own (hanging a sign in the window and posting on MLS is not an aggressive plan).

Let me know what you think of what I'm doing and PLEASE tell me where I can improve!

Thanks!

@Account Closed

Given that 5k rehab was required and your buyer is getting a huge spread - why did you decide to wholesale this property instead of simply finding money to close on it, fixing it and either selling it at 150k or renting it out? I'm also a little shocked that your investment club contacts wouldn't give you a 5k assignment and you had to look elsewhere! It strikes me that with a 5k rehab and a 150k sales, you could have found a buyer (outside the bottom feeders at the club) who'd pay you 15-20k spread (I am not a wholesaler, so this is just conjecture).

Did you consider various exit strategies, or was getting it done clean and easy the goal?

Thanks for the report-out! Don't forget to set some of that money aside for taxes on your reportable income.

Great job, Blake! If it is personal then feel free to decline, but the group would love to hear how it all went and that would help you to build credibility and get some good constructive pointers, too.