By By Rolf van Driesum – Team Powerhouse Realty

Five tips for success with PG rental investments

Jun 14, 2019 | 8:33 AM

Back in 2002, myself and a business partner began to purchase a wide assortment of rental properties in a down market. That experience taught me a good number of lessons that I would like to share for those considering a foray into the rental business. Here are my top five tips for a successful career in rentals.

First, consider working with a trusted partner. When you work with a partner you share the risks and the rewards. Consider a partner who has a different skill set. In our partnership arrangement, my partner brought strengths of keeping the paperwork straight, managing accounts, selecting tenants. My strength was polishing and maintaining the properties.

Second, give careful consideration to the length of time you intend to be in the rental market, and then select the right properties to purchase accordingly. Rentals can be a trying business. Most would say they intend to be in the rental market for the longer term. The key then is to purchase quality properties. Therefore, I recommend you purchase properties where tenants are going to give you the least aggravation and potentially the most satisfaction. I think there is an inverse ratio of the cheaper the rental property the greater the aggravation. The greater the quality the greater the enjoyment of ownership.

Should I be entering the market today, likely the property I would be most inclined to purchase is a single family home, in good repair in a good neighbourhood. I would not purchase a house with a basement suite. If market rent was $1750, I would charge $1650. My thinking is that with this strategy you would find great longer term renters. The absence of a basement suite while providing less income would ensure you are avoiding conflicts over noise, parking, laundry which as a landlord you would be drawn into. What’s the old saying; happy tenant, happy landlord.

Another type of rental investment I would consider is a four plex which has been designed and built as a four plex. There is a real efficiency as a landlord to only have to focus on one property rather than four. Again, I would stress the importance of a quality, specifically designed building in a good area. I would not consider a duplex in a lesser area which a four plex has been forced into. One will be frustrated by this venture.

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I would also look at mobiles on land as a potential investment opportunity. My strategy would be to deregister the mobile, sell it and rent the land to the mobile owner. This is trouble free property ownership.

It is virtually impossible for the tenant to damage the land, and they cannot move the mobile until all rents have been paid. My expectation is that the tenant would pay down the land, which would also be appreciating at about five percent per year. An excellent investment.

My third tip is to be very patient and discretionary in selecting tenants. Not infrequently, inexperienced landlords can rush to fill vacant properties, and that is a mistake. Take your time. If you have quality properties, there are lots of good tenants. If you poorly select clients, I can guarantee you, your career as a landlord will be short.

My fourth tip is not to try maximize the income return on your property. Be patient, as market trends are your friend. Take the long term view. You will be amazed with the progress you are making. My expectation when purchasing a quality rental property that in the first five years I would have a 25-year mortgage term, the property is in nice repair, I am charging a reasonable rent and the property is carrying itself. At the end of the first five-year term I would expect to shorten the mortgage term to 15 years, and then after ten years of ownership one would have a five-year term remaining. Should you wish to acquire a second property there should be the potential to integrate the two.

My fifth tip is to consult with an accountant prior to making your first purchase. They will give you wise advise as to how to best structure this business.

These are my five top tips. I wish someone would have shared them with me prior to my start in the rental business. Done right, with patience as the cornerstone, this can be a very successful business.