All Forum Posts by: Michael Smythe

@V.G Jason my manager has over 30 years in rentals. He's the first to admit he doesn't know everything, but he does know a lot.

I like his approach to real estate.

He's stayed local and in residential SFR and small MFR, but has diversified with Class A, B & C properties.

What do you think of that?

@Marcelo Murai how are you going to screen agents to make sure you're dealing with one that has the actual investing experience, and can document it, that you'll need to succeed?

@Paul Pompeo OOS investing is not for the faint of heart or for those that don't ask a LOT of questions. 

Well, actually, many jump in without asking a lot of questions, but they get screwed by crooked/ignorant agents, contractors, etc.

Many here will recommend starting out by finding a good agent.

We emphatically DISAGREE!

Approaching it logically, an agent is a transaction-based relationship. They sell you a property and their done. If they do a bad job and sell you a property that doesn't perform, they already got their commission, so what recourse do you have against them?

On top of that, +95% of agents only know how to do owner-occupied transactions. So, how do you expect their inexperience to impact your chances of them finding you a long-time performing rental?

So, who has their interests most aligned with an investor?

A great PMC (Property Management Company).

Whatever rental you buy, they have to deal with it every day. 

The challenge is that probably about 50% of PMCs are NOT the best. A percentage are just crooks, another percentage incompetent, some new & ignorant, etc.

The best way to screen PMCs is to ask a LOT of questions about how they perform their services. What specific steps do they take and what do they communicate to the owner?

Given your time constraints, you'll want to spend a lot of upfront time figuring this all out, to avoid even more time spent in the future trying to fix a mess if you choose the wrong people to deal with:)

PM us if you'd like to discuss more about doing this the right way.

@Henry Hsieh not sure what you're referencing with your numbers, but we agree that newer investors should DIY manage their first 1-2 properties to understand the management process.

After that, their time is better spent on other aspects of investing, so they should hire a PMC.

Don't fall for online reviews! 

Many PMC's buy these - which you can ID by looking at the names of the posters. Many have foreign names.

An investor should ask a PMC a LOT of questions to understand HOW they will execute their services.

@Jay Samudio great advice from @Melanie P.

Also, in our 24 years of experience, a tenant that has to get emergency relief typically ends up behind on rent again very soon.

Be sure the tenant cooperates with providing documentation explaining why they fell behind and that the problem is highly unlikely to repeat.

If they won't cooperate and state, "none of your business', then what does that tell you?

@Brenda Garcia appear you may be responding like their intimidation tactics are working:(

You do need to know the laws better than the tenants!

Would have asked them for proof of their smoking claims, as not worth responding to otherwise.

Regarding fights, they need to call the police.

You are NOT a babysitter or mediator.

If something is not worth them calling the police over, a landlord does not get involved. It is a no-win situation for the landlord.

DOM for rentals is up over 30% since 2022

@Shelley Peever what advice has your PMC given you?

In Ontario, can you require tenants to have Renters Insurance and add you as additionally insured? This would cover your biggest risk, which is liability lawsuit if someone is injured on the trampoline.

Regarding the shed, was it installed in compliance with all local municipality statutes? If not, tenants have to remove or be ticketed. If they did, require them to leave it when they move and hopefully it adds value to your property.

@Susan Owen not sure why you can't do a cashout refi?

What is the property worth? 

You should be able to get a loan for 70-75% of the value.

When did you hire the PMC?

We recommend removing mechanicals until tenant MoveIn. Can be a challenge when heat is needed for contractors, but the right ones bring portable propane heaters.

What specific repairs have you had done to the property?
On old houses, we always recommend upgrading plumbing (#1 on the list as can cause most damage) electrical and heat systems (if needed). 

Regarding what to do, what were your expectations when you bought this property? Obviously, you knew it needed work. Did you have a professional inspection done and have you really gone over it to project what other repairs may be needed in the future? Roof, windows, doors, furnace, hot water heater, concrete, etc.

What research did you do on the neighborhood and probably tenant pool? What credit scores do you expect your tenants to have given the location?

We've seen many investors buy Class C properties solely due to the low entry point, but then expect Class A property results. NOT GOING TO HAPPEN!

At best you may get luck and get a Class B tenant.

So, perhaps your expectations will never be met, thus you should sell and invest in Class A or B rentals.

Otherwise, real estate is a long-term game and hold your course.

@Henry Hsieh typical penny-wise, dollar-foolish approach.

Investors make more money finding deals than they do pinching pennies doing DIY management.

Or, is your time not worth much?