As property management professionals we hear "It's just a rental", way too often. Whether it's a first time real estate investor that may not fully understand the landscape, or when it comes to repairs and maintenance of a rental investment property, this is a mindset that can be troublesome for the property owner, tenant and property manager.
Welcome to Canada's Property Management podcast, your number one resource for investing, managing, and maximizing the value of your real estate assets.
And now here's your hosts, Carla Browne and Adrian Schulz. Canada's rental property experts.
Adrian Schulz (00:19):
It's just a rental. Yeah, I've heard that excuse before. What about you Carla?
Carla Browne (00:26):
Way too often. Way too often.
Adrian Schulz (00:29):
So, unfortunately, I think I have made that comment in the past. So I'm now admitting my prior sins. And I think where this stems from is when you're a first time real estate investor, and repair and maintenance things arise many first time investors go, when things need to get done, "Oh, it's just a rental."
Adrian Schulz (00:58):
Carla. Why does it have to be thought of in a much different way?
Carla Browne (01:03):
Because we are not preserving anyone's real estate. As a property manager, we try to balance tenants' wants and needs, but the safety part of a tenant, and preserving the value of the property are two things that we take very seriously. So when an investor comes forward and makes a comment, "It's just a rental," and it's dealing with safety, I'm sorry it's not possible. And I can give an example that happened just last week on that.
Carla Browne (01:34):
And also, if it's something that's actually going to hinder the value of their property later on, why would they want that? Tenants are people right, and a lot of them are renting because they choose to rent. It's not because they have to. So if we treat it as just a rental, to me, that's like telling me, a dog owner, that it's just a dog. I don't know why that just popped into my head. But it's kind of the same thing. It's not a dog. That's like my family member.
Carla Browne (02:00):
So, an example that I can give you is that... And I understand it hurts when we have to make the calls to let them know that there's a cost involved, but things like mold pop up. Mold just doesn't go away with a coat of paint. It's like lipstick on a pig.
Adrian Schulz (02:16):
Yeah. However, a great handyman really knows how to work wonders with bleach and Javex.
Carla Browne (02:22):
Well, depending on the type of mold, right?
Adrian Schulz (02:25):
Yes, of course.
Carla Browne (02:25):
And that's sometimes where you need a little bit more expertise to do. But just putting a coat of paint on something so you can put it back up for rent, and then just cross your fingers that you're never going to have an issue again. So when someone says, "It's just a rental," we have to get that out of investors' heads. That maintenance is a day to day thing, or month to month thing. It's routine maintenance, preventative maintenance, all of these things that I preach all the time are really, really important. They're important to attract very quality tenants. They're important to preserving the property. And I think that if we can set those expectations out right away when we're talking to an investor that we can overcome some of the challenges.
Carla Browne (03:05):
If an investor says to me, "I've had this property for 10 years and I've never had to do anything." Okay, well, we're going to have to do some things.
Adrian Schulz (03:14):
Yeah. Deferred maintenance, no.
Carla Browne (03:15):
That's not a good thing. You don't live in a property and never do maintenance.
Carla Browne (03:19):
So, I think it's setting the expectations of what that really means. And that tenants have expectations as well. And if a tenant notices something that's in a property, such as mold, I'll use that example again, when they go to move out they don't want that to be held against them. So, they're going to report it. And they do expect that it's going to be corrected, and corrected properly because they don't want to be held responsible later on for something that wasn't really in their control to fix, if that makes sense.
Adrian Schulz (03:47):
It may be your angelic glow today, but you sort of are giving me the priestly vibe. So, I will admit something else to you. And this is probably about 10 years ago, we had a duplex that had a third door to the main floor unit. And, of course, you only need two, you need two entry/exit points. So, the third door was having draft issues. So our handyman said, "You've got two options, obviously. Replace the door, or board it up. Insulate it, dry wall it, close it up." And closing it up was the most cost effective solution at the time. And there was a bit of a, "It's just a rental. Why do we need the third door?"
Adrian Schulz (04:36):
You go forward a few years after and the way that the new tenants, at that time, wanted to use that specific rental they wanted that extra door to be able to let their puppy out into the backyard at a better location. Now here's the thing, the people with the puppy were willing to pay more rent because that third point of entry, that was already there, suited their needs. So, back then, the decision that was made was a cost effective one without thinking about the future amenity needs. And then, of course, when you do if ever go to sell that home, some of those extra features that people cut out because it's just a rental actually end up costing you not only in future cash flow but, of course, in future asset equity growth as well.
Adrian Schulz (05:29):
Forgive me, mother, I have sinned.
Carla Browne (05:32):
Well, it's true. I mean, it's even a simple thing, Adrian, like appliances. So, you have all stainless steel appliances in the property. And the fridge goes, and we get quotes on putting in a new fridge. And the investor comes back and says, "Well, I can get this white one from my friend and put it in." Well, would you want your kitchen to have a mismatch of appliances? I mean-
Adrian Schulz (05:57):
Carla Browne (05:57):
Tenants are real people. They are willing to pay to make this place their home. And if you want quality tenants, you need to make it. Now, I'm not saying like when something goes wrong, and you're redoing a bathroom, you need to fly in marble from Italy, and things like that-
Adrian Schulz (06:13):
If I'm the tenant, I do want the marble from Italy, just getting that out of the way.
Carla Browne (06:16):
Well, probably. I know you well enough, but you do have to make your renovations cost effective, which I think we look at that. We use preferred vendors. We look at different options for the investor. What's going to hold the most value? What makes the most sense? Those kinds of things. But I guess what I say to our investors is, they need to trust that we know what is gonna be best for them long-term for their property. And if this is just a really short-term game, we might not be the right property management company to help them because I pride myself that when an investor, or a tenant comes in that the property is incredibly rent ready. So, there's certain things you have to do in a property on an ongoing basis in order to make that happen.
Adrian Schulz (06:57):
I'm reminded of a granular detail. And that is when a property needs new flooring. And if you're going for sort of a carefree vinyl tile solution, that hard surface solution, it is such a minimal difference to go from a basic wear level to a commercial grade wear level on that vinyl tile, or luxury vinyl tile, LVT. And you get that back because it lasts longer, and it feels way better. So, if you're on the upper end of the rent scale, investing that extra couple hundred dollars on the suite to get the higher wear layer, again, it's meeting that tenant and prospective tenant expectation of quality. These people care. If they care, I care about paying my rent on time and on keeping the unit in good repair.
Adrian Schulz (07:49):
So, yeah, I think there's endless opportunities on how small changes in thinking can actually positively affect the unit that is a home. It is a piece of real estate. It is a long-term investment. Never treat it as just a rental.
Carla Browne (08:12):
Yeah, I'm going to add... Before we end this one, I just want to add to that because the other part of doing replacement every once in a while when it comes to things like flooring, doing some painting when it needs painting, instead of just treating it as it's just a rental is that if there is damage, and then now we're sitting in a situation where we're doing security deposit hold backs in most provinces, most of the regulators or acts have a depreciation schedule that they follow. So if that carpet has been in that property for 15 or 20 years, and the tenant totally happens to destroy it, you are not getting anything 'cause in the eyes of that hearing officer the carpet has depreciated past the lifespan of it. So, by doing these regular upgrades, you're gonna attract a higher quality of tenant. You're gonna be able to charge more for your property. And long-term, your gain and your return on that is going to be significantly higher. But it's a shift in mindset, like you said.
Adrian Schulz (09:07):
It's not just a rental. It's not just a rental it's real property management. It's a real home.
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