I am in a unique position – as well as being the editor and content manager of Real Estate Weekly newspaper and REW.ca, I am also a newbie Vancouver real estate investor.
I am in the fortunate position of having a good down payment from inheritance. And of course, because of my job, I have great contacts to help me land the perfect rental unit and find a great tenant. Otherwise, I am subject to the same highs, lows and vagaries of the property-purchasing process as all our readers.
Here I chronicle my journey and share all the lessons I learn along the way. I promise not to hold anything back, although names will be changed for anonymity!
Last time, I wrote about closing my purchase and beginning the administrative side of becoming a real estate investor – there’s a lot to think about, and you have to treat it as a business. Since my last blog, I’ve put all my systems in place, including setting up a new bank account, strata fee payments and automated property tax payments. So hopefully I’m now set for a smooth-running rental unit.
I also met my in-situ tenant for the first time a few days ago, as I went round to the apartment to pick up my set of spare keys, give her the package of documentation that I had put together for her, and carry out an updated condition report, so that we’re both on the same page.
It was a good meeting, and my tenant Valerie is a lovely young woman. However, she was a little confused as she hadn’t been told by her previous landlords that the unit had actually been sold! So Valerie was somewhat unsure about exactly who I was, despite my introductory email the previous week – especially when I started talking to her about how she is going to pay me the rent. But we settled it quickly enough.
The condition inspection was also slightly awkward, as it’s tough to poke around someone’s home, making critical notes of stains and marks, when they are watching you and their pooch is sniffing at your ankles. The unit is in good shape – it’s a seven-year-old building, and Valerie keeps it pretty clean – but unfortunately the original condition report from when she moved in a year ago was not at all comprehensive. So there’s no way of knowing whether the stained grouting in the bathroom, for example, was indeed really like that when Valerie moved in (as she claims) or whether she hasn’t done a decent enough job of cleaning the tiling. Still, only small things, so I just made a note of them and will hope for the best. I used the form found on the BC Residential Tenancy web page, which has a number of essential forms for landlords and tenants, here.
We also agreed that, rather than having a subscription service to an automated rent payment system, we would try to make it work with Valerie just sending me online bank transfers each month. There’s no reminder or invoicing system in place, so I’m not sure it’ll work consistently, but it’s cheaper for me and she may be reliable. So it’s a trial run for a few months – and she sent me May’s rent a day early.
So it seems everything is in place – for now, at least. I’m fully aware that I purchased a very easy, turn-key property with a good tenant in situ, so I’ve had relatively few challenges to deal with. But there have been some acute lessons learned, no doubt.
So what would I do differently throughout the whole process?
- I would get less caught up in the buying frenzy – I’m now glad that some of my excessive over-asking offers failed. It’s never worth over-stretching yourself financially.
- I would be much more dispassionate about some of the properties – it’s easy to fall in love with a unit, even when you’re buying as an investor. You can start imagining yourself living there at some point, and begin choosing units based on your personal taste – which doesn’t mean they’re the right unit for a rental. One gorgeous loft that I really wanted would not have been a good investment, and I feel I dodged a bullet there.
- More than anything else, I would certainly be more careful about putting in an offer without a financing subject. If I was buying the same unit again, I’d talk to the mortgage broker as soon as I’d decided on the offer to put in, and I'd ask them to arrange a pre-appraisal on the unit by the mortgage lender, prior to the offer deadline (kind of like doing a pre-inspection). The $180-ish fee is nothing to pay for peace of mind and being sure you won’t lose your entire life savings by putting a deposit down on a home you can’t actually buy. Even if your offer is then unsuccessful, and you end up paying an appraisal fee on several properties, it’s not much extra cost in the big picture.
- I’d also arrange the administrative side of the rental business much earlier than I did, especially opening a separate bank account first and getting cheques for that account. It’s a little archaic, but you need void cheques when buying a home.
But on the whole, I think I did pretty well and I'm happy with my unit, so far. I’m hoping that it will now run smoothly and this is the last of these blogs – at least for a while. There may be an update at some point if the tenant moves out, and I share a process with you that I didn’t have to go through this time – finding and vetting a new tenant.
In the meantime, thanks for reading.