Real Estate

Long distance rental property

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  • Apr 24th, 2020 11:18 am
[OP]
Jr. Member
Jan 22, 2015
149 posts
22 upvotes
Toronto

Long distance rental property

Folks,

1) Is 2 hours a good distance if you are managing your rental property on your own?

2) how far are your rental properties that you managing on your own?
18 replies
Deal Fanatic
User avatar
Sep 8, 2007
9198 posts
10691 upvotes
Way Out of GTA
1) no, not really

2) within 30 mins or less
Deal Addict
Jul 29, 2006
4148 posts
983 upvotes
depends - are your cash flows that much better 2 hours than closer?

if yes then go for it as long as you build systems in place to minimize the amount of effort you need to put in.
[OP]
Jr. Member
Jan 22, 2015
149 posts
22 upvotes
Toronto
Yes this property will be a decent cash flow.

Problem is if i have propert management company manage this property they will eat up 10% of gross plus i guess they make money on labor too if any repairs arise e.g water leak, faucet repair etc ?
Banned
User avatar
Jul 17, 2008
11042 posts
3864 upvotes
hammadarif wrote: Yes this property will be a decent cash flow.

Problem is if i have propert management company manage this property they will eat up 10% of gross plus i guess they make money on labor too if any repairs arise e.g water leak, faucet repair etc ?
I think they just get the 10%, they wouldn't be getting any kickbacks from maintenance, you don't have to use their recommended companies if you feel they might get kickbacks.
Member
Feb 15, 2018
441 posts
527 upvotes
Edmonton
Please do not do it. I have a rental property 2 hours from my principal residence. Thankfully, I have other businesses in that area too so I end up coming frequently and then schedule any maintenance work around those visits.

One of the best ways to make money as a small time landlord would be to significantly cut on maintenance and management expenses. Do as much of your own repairs as you can. Only bring in the pros when you are way out of your depth. One day when I happened to be coming to the town where my rental was located, I got a call from the tenant telling me that the furnace had stopped working. Upon inspection, I figured it was just a dirty flame sensor. I cleaned it up and we were back in business. This would have been a 2 hour call for a plumber/gas fitter. If I wasn't already coming to town, I would have had no choice but to call a plumber as I could not let the tenant freeze. Trust me, all these small maintenance things do add up.

Whatever cash flow gains you make will be eroded by maintenance costs and management fees. Plumbers and electricians do not come cheap. I will only own rental properties in the town that I live in. That way, I could easily drive over if the tenant called me even at 10:00Pm.
Edmonton area Realtor
Deal Addict
Nov 13, 2013
3052 posts
1738 upvotes
Ottawa
Agree generally it will increase your costs. His depends somewhat on the type of property. I lived across the country when I rented out a new condo. Didn’t have a single maintenance call in two years. Conversely a nearly new semi-detached seems like it had something every month. Condos do have some advantages.

However there are benefits to having a investment property outside your home town. Someone from Calgary would be glad to have something in Kelowna with current situation. Some other one industry towns would have similar issue including capitals that might see rough markets if cuts come. Toronto an exception to the latter and probably large and diverse enough that the only hedge worthwhile would be outtside the country. Still if you work in finance there is a tendency to get a downtown rental you rent to that market. I’d suggest somewhere else would be better. Of course in current market all boats are falling.
Deal Addict
Jul 29, 2006
4148 posts
983 upvotes
like I mentioned above, put systems in place so that if any issues come up then tenant will call x person to come and fix the issue and they'll bill you for the work.
[OP]
Jr. Member
Jan 22, 2015
149 posts
22 upvotes
Toronto
I thought since normally all decent postive cash flow are at least an hour + drive from Toronto, if property is generating a decent cash flow it would be a good idea to drive your self once every couple of months for 2 hours, fix it yourself and save money rather have someone else do it for you?

Sorry i am kinda new to this....
Member
Jun 10, 2008
493 posts
363 upvotes
Halton Hills
I bought a place 2.5 hours away. It's been almost 2 years without a serious call. I am lucky to have amazing tenants who take good care of the place. I've only been there 3 times. Once to look at houses, once for home inspection/ meet potential tenants, and once to meet and greet my tenant. Although I've had excellent luck, I wouldn't recommend doing it unless you're planning to buy a few properties. Then it would worth it to have a property manager.
Deal Addict
User avatar
Dec 13, 2016
4096 posts
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I am managing my property from 13,623 KM with no agent whatsoever and have been doing this for 5 years.

No problems ever.
Sr. Member
Jun 19, 2007
836 posts
808 upvotes
Halifax
canuckstorm wrote:
One of the best ways to make money as a small time landlord would be to significantly cut on maintenance and management expenses. Do as much of your own repairs as you can.
Another good way to make money investing in real estate, is to sign up for a delivery job that has a route near your places. That way when you're checking up on the place, or collecting rent, you can make a few deliveries and earn some money to make your RE numbers look better.

In case my point was missed, it's that if you can only turn a profit by doing all the maintenance and management expenses yourself, then you haven't really bought yourself an investment, as much as a RE maintenance job. If you invest in a starbucks, you're generally not slinging coffees. If you want to do it yourself great, but when running numbers you evaluate it as a completely hands off venture.

It's like if I, who has no experience in running a restaurant wanted to buy one, and the owner said he grosses like 10%. But then failed to mention that he works 12 hr days for free as a cook, son washes dishes, daughter is the waitress, and mom does that books, none of whom draw a salary.
Member
Feb 15, 2018
441 posts
527 upvotes
Edmonton
seadog83 wrote: Another good way to make money investing in real estate, is to sign up for a delivery job that has a route near your places. That way when you're checking up on the place, or collecting rent, you can make a few deliveries and earn some money to make your RE numbers look better.

In case my point was missed, it's that if you can only turn a profit by doing all the maintenance and management expenses yourself, then you haven't really bought yourself an investment, as much as a RE maintenance job. If you invest in a starbucks, you're generally not slinging coffees. If you want to do it yourself great, but when running numbers you evaluate it as a completely hands off venture.

It's like if I, who has no experience in running a restaurant wanted to buy one, and the owner said he grosses like 10%. But then failed to mention that he works 12 hr days for free as a cook, son washes dishes, daughter is the waitress, and mom does that books, none of whom draw a salary.
Great point but my strategy is to scale up my real estate potfolio to a point where I hire my own management team. But to get there I first have to sacrifice my time. Standard when building any business - owner works hard at first as they grow their business. My wife employs a dozen people and no longer deals with the day to day operations. However, when she started she had to do all the work assisted by 2 part time workers and did not even draw a wage for the first 6 months.

If you missed my point, I said "small time landlord".
Edmonton area Realtor
Deal Addict
Jul 29, 2006
4148 posts
983 upvotes
seadog83 wrote: Another good way to make money investing in real estate, is to sign up for a delivery job that has a route near your places. That way when you're checking up on the place, or collecting rent, you can make a few deliveries and earn some money to make your RE numbers look better.

In case my point was missed, it's that if you can only turn a profit by doing all the maintenance and management expenses yourself, then you haven't really bought yourself an investment, as much as a RE maintenance job. If you invest in a starbucks, you're generally not slinging coffees. If you want to do it yourself great, but when running numbers you evaluate it as a completely hands off venture.

It's like if I, who has no experience in running a restaurant wanted to buy one, and the owner said he grosses like 10%. But then failed to mention that he works 12 hr days for free as a cook, son washes dishes, daughter is the waitress, and mom does that books, none of whom draw a salary.
I agree but that's why he should have maintenance & repairs built into his cash flow calculation so that when they do come up, he still knows he's still cash flowing and not banking on no repairs to be cash flow positive.
Deal Guru
Feb 9, 2009
12335 posts
11165 upvotes
Im actually looking to the ottawa area in invest and live in milton, on. Just feels like a stable place to invest as govt workforce continues to grow and prices there still seem decent on a cap rate basis.

But i venture I need a few properties to make it work to hire a prop management team as I wouldnt have time to drive 4 hours to ottawa to fix anything.
[OP]
Jr. Member
Jan 22, 2015
149 posts
22 upvotes
Toronto
The problem is that these management companies charge 10% plus if you are not hands on, labour rips off your profits. So i was thinking doesn't this make sense that once in a month if any issue arise, i drive for 2 hours, fiz it and come back and save the cost or will it be too much?


Secondly, would you buy all your rentals properties in one city or scattering them to different cities makes more sense?
Deal Addict
Jun 7, 2017
1043 posts
831 upvotes
BC
You can't do your own maintenance effectively from 2 hrs away. As a side note, do you have any maintenance skills? If not, this makes the 2 hrs away part a moot point.

Perhaps the low volume landlords here can comment on the effect of property management on profitability.
Deal Addict
User avatar
Jun 6, 2007
1082 posts
139 upvotes
Toronto
When you have to do a few drives out for the most menial problems, only then will you realize how much 2 hrs is.
My principle for now is to invest in properties i can get to within 30mins from downtown. (40mins max with traffic)
When my portfolio grows to a point where i begin acquire buildings with more than 6 units, only then will i consider investing outside of that radius. And a property mgt will be a no brainer regardless of distance because the numbers for that investment MUST be able to accommodate a property mgt wherever it is.
Stumbled upon RFD by mistake, best mistake of my internet life i must say...... :D
Member
Feb 15, 2018
441 posts
527 upvotes
Edmonton
There are a number of variables to consider when it comes to maintenance for a landlord:

1) The age and the state of the property
This one can be a blessing or curse depending on how you look at it. An older building in bad shape will obviously require more maintenance but can also be purchased cheap. For those handy folks like us used to fixer uppers - not a biggie

2) The skills of the landlord
How skilled are you at renovations? You should be comfortable with basics in the following areas: Plumbing, electrical, drywall, framing, appliances. Maybe basic is a bit of an understatement. Take plumbing for example - you should be able to sweat copper pipes, change/install plumbing fixtures like faucets/sinks/toilets, compression fittings, know how to ignite a pilot light in heating systems. You also need the mechanical aptitude to be able to read on stuff you do not know and follow youtube video instructions

3) Tools
You need the right tools to do the job. Some basic tools you will need are:
Saws - Table Saw, Mitre Saw, Jig Saw
Plumbing tools - wrenches, pipe cutters, drain snakes, soldering equipment, socket sets
Electrical - Multimeter, wire strippers, circuit testers, screw drivers
Air Tools - Compressor, brad nailer
Drill

These are just the basic tools. There are a lot of bonus tools that could help make your job easier. Another tool that can be a game changer is a pick up truck. Thankfully, I live in Alberta where everyone owns at least a half tonne pickup. Very handy fro hauling lumber and plywood from home depot. Also good for hauling junk to the dump after a clean up job.

4) Network of trusted trades people
This is a major game changer. Trades people can be notorious for taking advantage of a property owner's ignorance. You need trusted trades people who will honestly fix just what needs to be fixed as efficiently as possible. Building these networks is not always easy. In fact, it is easier to build them before you even become a landlord - as a homeowner. My electrician is the son of a workmate and I knew him years ago as an apprentice and I would give him some side gigs for pocket money. Now he is a master electrician. I once serve on the board of directors for a construction company and I got to know one of the plumbers and he would not dare rip me off as I was his boss' boss.

If you do not have such networks, then you have to be quite knowledgeable to the point where when you call in a trades person you will at least have an idea of what the problem is. For example my basement bedrooms lost heat and it was because the zone valve for that area had died out. I called a plumber and told him I need him to come and replace my zone valve and even took a picture of it. When he came in that is all he did and just billed me for the time and the supplies - no BS stories. In other words, if you are not a handyman, the landlord gig might be a tough go for you.

Property Management
As for property management, that is the easier part. You just need to be able to read and understand the landlord tenant act and city bylaws to ensure you are always operating within the law. The other part of property management is showing rentals to prospective tenants, signing leases, doing background checks on prospective tenants, advertising rental units, collecting rents. Not a difficult job at all, you just have to be very organized. There is property management software and spreadsheets you can use to help with this organization. Not rocket science at all.
Edmonton area Realtor

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