The art of effective property management requires the right approach to tenant prospecting. When you have multiple units to deal with finding the right tenant willing to pay the right price can get very time consuming. Having a system down whereby you match high quality tenants with the right apartment rent pays off its time spent in gold. This article will discuss the methods to take when finding high quality tenants;

1. Unit Preparation
   The unit that you are rented must be read and cleaned, one cannot demand market rent if the unit is sub-par and needs work. By investing in a fresh coat of paint and a day’s worth of cleaning helps showcase your unit much better.
2. Market Research
   This is one of the most crucial steps in deciding the tenants to target, be clear on whom you are targeting before you set out to put the unit on the market. The main areas to focus are families, students, professionals, and the “average joe/jane”.  Each target has its pros and cons and each target his its price points.
   If you are targeting a family then it would be safe to assume that the prospect tenants would stay longer and be less concerned about a meticulously clean unit.  Also the rent for families cannot be as high as students or professional renters because it is more difficult for them to find roommates. A family also is more likely to damage the unit due to children and they might be louder due to the children.
   When targeting young professionals or students you are sacrificing long-term tenants with a relatively shorter term lease agreement. If targeting professionals or students you can demand higher rent because there is an implicit understanding with this target area that they are paying on a per room basis. This mean that if you have a three bedroom apartment available for rent and are demanding 1500, each person will pay $500 for their portion of the rent.  Renting to young professionals or students does mean greater cash flow in the short-run but a higher turn-over rate.
   Most rental properties rent to the average Jane or Joe because they do not qualify in neither category and tend to make up the bulk of the rental market. These individuals are working class people just looking for a place to stay. They are in-between both the family and the students in terms of rental income and unit turn-over.
3. Screening Procedures
   By doing your due diligence will avoid a disaster situation where you have tenants who damage the property, break the law, or cause a disturbance to others in the property. Most important improper screening might mean a landlord will spend months cleaning up the financial mess of unpaid rent and chasing after the tenant in court. This can be avoided through proper screening through the following methods, phone screening, credit check, rental history, and employment verification.
   Through the phone conversation you gather information on the prospects personality, marital situation, if they have children, if there are others living there, etc. This will help better profile the new prospect and assist in your due diligence process.
   The credit check is also important because it will show you how responsible the individual is in fulfilling financial obligations. A rental agreement is a one year commitment so if the new prospect has a good history of always paying on time then you will have no problems for the year(s) to come.
   Seeing the new prospect’s rental history also provides a greater in-depth view why they left their previous property and if they paid the rent on-time.
   The last piece of the puzzle is the employment verification, this is important even more important if your property demands a high market rent. The person’s employment income dictates whether or not the individual can afford to pay the rent. This rule is not always relevant if you are targeting students because in many situations the students are taking student loans and have their parents supporting them.
4. 4. Signing the rental agreement

So after the dust settles and you find the right tenant, it is now time to craft the tenant agreement. This agreement should include what is included and what is not included, as well as all the rules and obligations of the tenants as well as landlords. It will protect both parties and ensure clear communication for the roles and responsibilities of the rental property.
Once everything is signed and confirmed it’s now time to give the new tenants the keys and verbally educate them on your expectations of the property.

At AEI we help landlords keep a happy “hands-off” approach to finding tenants for the properties. As the premier leader in the Ottawa property management industry we help landlords through our unique system. This system ensures that our clients have their properties rented to high quality tenants through our extensive marketing, screening, and maintenance schedule.  Visit our website today at www.rent4you.ca and see what we can do for you!

This article will discuss the topic of financing commercial investments in Ottawa. Please be aware that
 financing regulations change and this information is current as of today and subject to change based on 
new mortgage lending laws of the future. We have many clients who come to us interested in
 their dream commercial property. This can be a large multi-unit in Ottawa’s downtown or an office plaza 
for their thriving business. Whatever the situation, financing is a critical element of the equation to making the transaction happen. Many believe that the 
commercial lending system is similar to the residential system – relatively straightforward with little or no money down if required as an option. The truth is that when you enter the Ottawa commercial real estate realm you enter
 a world of tighter requirements for approval. No longer is your income relevant but rather it is all about the
 property, your credit score, and your experience.

 Many investors ask us, “At what point does a property get classified as commercial?” and the answer 
is that anything over 4 units is classified as commercial even if you are living in it. This means that you
 cannot finance any property over 4 units as if you were buying a residential property. Which also means 
a standard 5-20 % down payment does not apply. A typical commercial down payment can range from 20-30% down
depending on your financial strength. This can be a major obstacle for investors looking to tap into the 
Ottawa commercial real estate market. The property also dictates the market that one can purchase
 for, meaning that banks send sophisticated analysts to appraise the property and use that number to 
factor in the financing.

The Property:

Whether you make very little personally or a six figure salary – when it comes to commercial financing this 
is irrelevant. Commercial real estate tends to be more expensive. Banks cannot rely on the personal income of the prospective lender as few people earn enough to cover the loan on a multi-million dollar
 investment. Thus banks use more in depth methods to qualify the investor and gauge their risk. The first consideration is always the individual. Secondly,  the bank will take the property and analyze its condition, cash flow, cap 
rate, and run the numbers before it even considers financing for it. One must always be aware that the 
property is the main focus in commercial real estate and the numbers have to match in order for banks
 to approve. The operational efficiency of your unit and it’s earning potential are important elements if you’re an investor who plans on refinancing your existing property portfolio for the acquisition of further real estate. We touch on this at the pre-purchase phase when considering buying a property Literally keeping your house in order is always wise, especially, if you’re considering growing your portfolio and looking at larger commercial real estate.

Your Credit Score:

This goes without saying -  if you have bad credit history then the banks will simply not lend to you. We use a general rule of thumb that you must have a minimum of 640 as your FICO score in
order to qualify. Anything under this number will prove difficult when attempting to borrow. Your credit score will also 
dictate what interest rate you get. Higher scores receive better interest rates and borrowers have options if you’re considered credit worthy. Lower credit scores receive less competitive rates, and in some cases, higher interest rates than standard.

Your Experience:

Banks are in the business of lending to qualified investors; this means if a person comes forth with a large sum of cash and wants to buy a 55 unit building, they do not just give the money away. If the candidate does not have the previous experience in the commercial real estate sphere then banks will be reluctant to loan the money. Experience counts. It’s comparable to the loan on a start up business. The lender is seeking as much of an assurance of successful repayment of the loan with interest as possible. The belief is that if a new person with no experience purchases the large commercial real estate then there is a higher chance that they will fail when compared to an investor with many commercial units and lots of experience. We advise our new investors to consider larger properties at the beginning of their investment careers in an effort to enhance experience and portfolio value.

Combined – All these factors come together to create the commercial mortgage and we work
 very carefully to provide investors a big picture perspective prior to engagement so that our clients know 
what they are getting into. Unlike many commercial real estate brokerages, we provide full service that
 includes financing. This means the real estate agent knows at what phase the mortgage process is in and 
therefore can act accordingly without the back and forth of an external mortgage agent. Furthermore 
because we are a licensed mortgage firm we can get you the best rate, make it easy, and we work hard
 to ensure you are approved. The commercial real estate mortgage process can take months; therefore
 one small mistake can kill the deal. This is why it is critical to have an in-house team working together seamlessly through all of the stages of the property purchase process to
 ensure that nothing falls through and that you get that dream commercial property you’ve always considered.

Visit us today or join our investor database, www.synercapital.ca

Congratulations! Your dream of owning an income property has been realized. You may have saved enough money to establish a down payment on a new rental property, or you have may decided to throw your hat into the income property realm by refinancing your own home. Real estate is one of the best investments you can make. Once the excitement of owning a new income property has worn off, one of the things you’ll assess almost right away is the kind of tenants you have. The majority of tenants are low maintenance, but inevitably, as a landlord, you will run into difficult tenants. Your initial response to a difficult situation with one of your tenants might be to throw your arms up in the air in frustration, as the situations can lead to tension and difficulty, however, you can prepare yourself for the inevitable and learn to deal with these situations with a few key tips and perspectives.

Most difficult situations with tenants revolve around the non payment of rent. This is the greatest issue you will have to deal with. If you have a lease with a tenant, it is clearly articulated that you’ve agreed to rent the unit out to said individual for an agreed upon sum of money. For many property owners, they rely on that cash flow to pay the mortgage. The delay, absence, or habitual issue related to this is stressful and maddening. If this is happening, you have a difficult tenant. We recommend a few things to avoid and deal with these occurences:

• Qualify your tenants: Whether you are interviewing new potential tenants, or getting to know the tenants who are living in the building you’ve purchased, always attempt to get a sense of whether you think an individual is reliable. You may be surprised by how many landlords don’t bother to ask for references from potential rental candidates. If you call a reference, and find out that the individual you are considering renting to was habitually late with rent, you’ve learned a key piece of information that will likely emerge in your relationship with them. Proper qualification of tenants is key to running as smooth an operation as possible, and avoiding difficult situations. When meeting new tenants, have an open ear to some of the problems they may have faced with the previous owner, with their units, or maybe even with some of the other tenants. Learn special needs, sensitivities, or even the history of some of the situations in the building prior to your ownership.
• Have A Proactive and Responsive Attitude: Most tenants will tell you, an unresponsive owner is the main ingredient in what can be a resentful relationship between landlord and leasee. Imagine if you were paying someone rent, and they were constantly unavailable or nowhere to be found when it came to addressing a problem that you considered fundamental in your home. As an owner, you have an obligation to be attuned to the needs, within reason, of your tenants. Things happen when you are a property owner, and most tenants will understand that. If you show a keen interest in working with those who rent from you, and are committed to finding a solution, you’ll find your tenants will be appreciative. It is after all, their home.
• Learn The Landlord and Tenants Act: Visit the Landlord and Tenant Board, or the equivalent entity or body in your municipality or province. Know your rights, learn and understand the rights of your tenants, and learn the protocols and processes that are associated with incidents and situations – including the non payment of rent and rental deliquency. Follow the rules.
• Set expectations: Talk with your tenants and set expectations. If you have expectations with respect to when rent is due, and how it is to arrive to you, ensure that it is clear verbally and through the lease. Create an environment where confusion is reduced and consistency is present.

You can also deal with a professional property management company as well. Our sister company, AEI specializes in property management in Ottawa and the national capital region. We’d love to hear comments from exisiting landlords and income property owners, what your experiences may have been, and of course from new landlords as well. Contact us or let us know what you think.

2300 square feet of office space in central and convenient location on Bank Street. Just a few blocks south of Riverside on the west side of Bank Street. 2300 square feet is available on the ground floor and is already subdivided into 7 offices + 1 large common room and 2 bathrooms. There are several smaller spaces available on other floors, ranging from 100 square feet to 600 square feet. Indoor and outdoor parking available.

The Emergency Call

Imagine getting a call at 11:30 pm from one of your tenants 30 minutes away in a panic because one of the plumbing pipes burst and there is water everywhere. As you get out of your bed and drive towards the investment property you start thinking about how wonderful this idea seemed at first and the dreams of cashflow you once had. After arriving at the unit you realize that the flooding has seeped to the other units and now you have to fix it. 

This is a nightmare situation that many landlords face and may turn them off completely from real estate investment. Many purchase a property without realizing how much work goes into managing a property effectively. One of the most important aspects of property management would have to be the emergency response and resolution. As we all know there is no property that is perfect and never has any issues – from gas leaks to sewage backups there are so many surprises that arise from owning a multi-unit property in Ottawa. The older the property the more likely it will experience some sort of problem and the more units you have, the more items of operation that you must take into consideration.

Many new landlords don’t realize this important component of being a property owner. Effective management is key. In order to keep tenants and avoid the stress of dealing with emergencies on your own, a property management company is a sound investment. Most investors are not contractors, nor landscapers/construction workers, cleaners, leasing agents, or any of the many specializations required to effectively manage a unit. The time wasted and spent on micro managing your tenant issues is almost always more expensive than dealing with an organization that is adept at these things while simultaneously looking after your interests as the landlord. Many believe it is expensive but with costs as low as 5% of gross rent it is a small price to pay to have a team of professionals dealing with whatever arises. 

We deal with many former landlords who swear never to touch a building again because of past negative experiences with bad tenants, nightmare situations, etc. Our sister company – AEI – has been servicing the Ottawa area since 1998 and prides itself on providing exceptional value similar to larger property management companies but custom tailored to small and medium properties.

Professional management companies have many superintendants on call, they have reliable emergency plumbers, and many other specialized and experienced professionals to call upon for whatever situation that should arise. Rather than re-invent the wheel a smart investor pays a small percentage from profits to have it professionally managed thus not having to deal with the midnight emergency. With that fee many property management companies will include bookkeeping, accounting, forms/documents, advice, and many other critical value-added services to ensure your property is professional.

Contact AEI for more information on how we can help you manage your real estate investment.