“Owning Up”: Confessions of a Real Estate Investor
Long Distance Property Management
My dream retirement takes me to Australia and beyond each winter. I do not have a property manager to look after the properties in my absence, I do it on my own. The question you may ask is, “How can that be done?”
It starts by selecting responsible tenants at the beginning. I look for tenants who will respect the peace and privacy of others, have the means to pay the rental amount, have online banking and are committed to staying for a year minimum.
The second piece is to find responsible people to help you. I have an excellent maintenance contractor – Chris L. – I can call upon for repairs. He also acts as a property manager for other investors.
The four major concerns –
- Collecting rent
- Dealing with repairs and maintenance
- Problem Tenants
All rents are received by interac e-transfers. In this way I know who has paid, when they paid and how much they paid. This is one item found in the Addendum to the Residential Tenancy Agreement (RTA) – cash and cheques are not accepted at any time.
Rents are due on the first day of each month. I usually give people a bit of a grace period, two days. If I have not received the rent by the third day of the month, I contact them with a friendly reminder. Only one tenant needs reminding on a semi-regular basis, the rest all pay by the first including two that always pay early. A reminder is usually enough to get payment forwarded.
Only once in the six years of travel have I needed to take drastic action – issuing a Notice to End Residential Tenancy (NERT). My maintenance contractor, Chris L. acted as my agent. I completed the form online and sent it as .pdf file which he printed and then delivered to the tenant. This occurred on the ninth of the month and they were able to forward the rent money on the tenth.
Dealing with Repairs and Maintenance
I do my best to minimize repairs and maintenance during the winter months, especially during my time away. I take a proactive approach; I try to anticipate issues before they arise and take corrective action.
As an example, I inspected all the units in August. During this time, I noticed that several of the boards on the front steps were starting to rot out. I contacted my maintenance contractor and instructed him to replace those boards and any others that I may have missed.
As mentioned earlier, I have an excellent maintenance contractor. He is experienced in all types of repairs and he has an electrical ticket. He is bonded and insured so the tenants know him and trust him to enter their units. He has a master key and a contact list so he can call the tenants directly and let himself in when required.
I communicate with my tenants that I may be unavailable during December, January and March. In my email, I provide them with maintenance contractor’s name and his phone number in case of an emergency. They are told that no discretionary work will be done, but anything to do with electrical, heating, plumbing, and water will be addressed immediately.
I have had one issue dealing with a faulty furnace; the pilot would not stay on, and this was beyond Chris L’s skill set. Using skype, I called a Prince George Plumbing and Heating company to fix it. It cost a bit more, the bill was $400 but well worth it to keep my tenants warm during a cold spell.
These are the most problematic issues while I am away. I am content to leave a place empty for one month, but not two. Last year, I had one tenant give notice just after I left. He was leaving as of December 31. If I did not take action while in Australia, the unit would sit empty for January, February and March – far too long.
I started by placing an ad on kijiji – this has been my most successful site. I posted some photos but kept the location private in the beginning. In the ad, I list the main features – three bedrooms, three levels,etc… and I ask that prospects contact me with a brief description of their situation and to provide a contact number.
The responses are quite telling. Some will respond with the comment, “Interested” while others respond with their life history. Those who respond with a short message are rarely selected as tenants. They often have something in their past they are trying to hide. I do not remove them immediately but I do insist on a phone interview before allowing a viewing.
I have preferred profiles of tenants that I accept and conversely, profiles of tenants that I will deny. So during the phone start, I start with open ended questions – “Tell me about your situation; are you living alone or with others? Are you working? Do you have pets?” Depending on their response, I will follow up with more specific questions such as; “How old are your children?” or “How long have you been working there?” I also for references. In this way I can get a better picture of how they would be as tenants.
If prospects pass this point, I further research them. I call their references, I google their names and see if they come up in the news – it’s surprising how many appear before the courts. I also check out facebook pages. Some people have no filters about what they they post – drunken parties, etc… I use all this information to create a profile of the prospect.
Finally, I get a shortlist of two to four prospects that I invite to view the available unit. I arrange for Chris L. to open the doors for the shortlisted candidates. Once they have viewed the property, I talk with Chris L. to get his impressions.
I rate the prospects from first to last and then offer the property to number one. If they decline, I call number two and so on. For those not offered, I call them and tell I will keep their contact information for a couple more months in case the existing deal falls through or another unit comes available.
Careful screening at the beginning leads to very few tenant problems. I stress that the most important rule, after paying your rent on time, is to respect the peace and privacy of your neighbours. I have had few complaints about noise or parties, but my most frequent complaints are regarding unauthorized house guests.
Because my townhouse style units have a full basement that is mostly finished, tenants will allow others to stay with them and allow them to sleep in the basement. Included in my addendum are two clauses – “No sleeping is permitted in the basement. It is illegal and unsafe to do so.” And, “Tenants are responsible for the behaviour of their guests and for any damages they may cause.”
I can’t do a whole lot while I am away, but I will phone them if I learn of these unauthorized guests. As long as there is not a persistent problem with noise with these units, I will allow the situation to hang on until I get back to deal with it personally.
The one incident occurred when a tenant brought a girlfriend home. There was a dispute that got out of hand and a neighbouring tenant called me that night. I told her to call 9-1-1 to report the domestic incident. From previous experience, police won’t respond to me calling from Kamloops, it was more important for the neighbour to call so there would be a police visit.
In closing, property management from afar starts at the beginning; choose the correct tenant right away – this will eliminate 98% of all tenant problems. And second, be proactive with maintenance and have a reliable maintenance contractor available for those emergent situations.