MAGNUM's Blog

Rent Ready VS Sale Ready

  Friday May 31, 2013 by Peter

Recently we have been working with a lot our long term owners on preparing their properties for sale.  I keep having the same conversation over and over so I thought it might be time to blog about it.

 

My owners are shocked to hear that their realtor is telling them that before selling they need to replace carpet, appliances and paint the whole place.  This is usually when I get an upset owner yelling at me that I didn’t take care of his/her property.

 

For every owner I tell them the same thing, there is a difference between rent ready and sale ready.  When I rent a property, a small burn mark on the carpet, some nicks on the lino, marks on the walls, older appliances, older cabinets are completely okay for renting the unit to the next tenant.  Buyers would not put up with most of this.  They want new carpet and lino, newer appliances and cabinets or at least a price reduction for compensation.

 

Some owners ask why I haven't upgraded these items over time, I explain that I could have and it would have made my life easier to rent the units but that would have either been a cash call from them or no owner payments for a couple of months depending on the costs.   They quickly see why I didn't.

 

This is a rule applies to major of rental properties but not all.  On higher end houses those tenants want near perfect places, similar to a buyer and in turn they also keep the properties the same.

 

For the shorter term owners that need to hold their home for a couple of years while they work out of country or until the market improves, I always tell my owners that we will charge the renter for any damages but wear and tear is not chargable.  Expect that you may need to paint the high traffic areas.

 

By the time I explain all of this most owners are happy and ask me to coordinate the needed upgrades to sell their place for top dollar.

Vacancies Updated Automatically

  Thursday May 2, 2013 by Peter

 

Back in November 2011, we switched account software from Yardi Genesis to Rent Manager.  Rent Manager had many features we were very excited about but too many to implement immediately.  The features around the website especially the web portal was especially exciting.  We implemented the web portal within months of moving to Rent Manager, it was a common request from our owners and I think it is the feature we get the most comments on.  If you are one of our owners and want access contact us and we will send you your password.

 

We recently implemented another web feature, online rental vacancies.  The vacancy list now pulls the list of available properties directly from Rent Manager.  In the past we had a separate spreadsheet that would update the website and at times it was forgotten about especially if when we had lots of turn around that month.  With the new system as soon as we receive notice from a tenant, the website updates itself.

 

Have a look for yourself. http://www.magnumpm.ca/forrent/

 

There are still more features in Rent Manager that we are learning to use and will be implementing in the future.  Stay tuned.

 

Owners stay over 10 years

  Wednesday March 20, 2013 by Peter

I am very proud of my team(current and past) and everything they do for our owners.  They truly try to do the best job for our owners they possible can and I think the owners can see that.  It really shows when I see that on average our owners stay with us for over 10 years and 17% of our owners have been with Magnum for over 25 years.  That is the same year that Calgary hosted the Winter Olympics.

 

How many companies are you still doing business with for over 25 years?  Let alone how many businesses are still in business after 25 years?

 

Thank you for the  support.

Tenants Stay With us For Over Three Years

  Wednesday March 13, 2013 by Peter

 

A potential client contacted us and asked a variety of questions most of which are pretty standard but she asked one question we haven't heard before.  How long do the tenants rent from you?  We knew we had some really long term tenants but what was the average, no one knew.

 

With the help of our property management software we were able to pull data from 2006 to current.  Province wide including past and current tenants lease with us for 2.5 years.  If you look at just current tenants that lease with us, that average does up to 3.4 years.

 

We also did the calculation by city

 

City Past/Current Current
Fort McMurray 1.0 1.3
Edmonton 3.2 4.6
Red Deer 2.3 3.8
Calgary 1.8 1.8
Province Wide 2.5 3.4

*All numbers are in years

 

The Importance of Market Rent

  Thursday March 7, 2013 by Peter

 

When should you lower your rent and get the property rented and when should you hold out and get the better rent.

 

To answer this question, I have put together a simple example that is loosely based on a unit that we currently manage.  The owner came to us wanting his unit rented immediately as he hasn’t been able to rent his unit on his own and the bills were growing.  He wanted $2500 per month to cover his mortgage, taxes and condo fees.  Until the unit is rented the owner was also paying the electrical bill.

 

With the right rent, we were sure we could rent the property in a month.   After some analysis we calculated the maximum rent for a comparable property in the area was $2300 and average rent was $2100.

 

After explaining how we got our rent amounts, the owner was firm on his rent of $2500.  Magnum has a policy to allow owners to select their own rent amount; all we do is recommend an amount.  I explained to the owner about what it really costs for every month of missed rents.  Here is how I explained it to the owner.

 

If we assume that we can rent the property for $2500, and the tenant signed a 12 month lease, if it takes one extra month to rent the property at $2500, you are $100 ahead compared to lowering the rents to $2300 and renting it in the first month.  This is good news.

 

$2300 x 13 months =       $29,900

$2500 x 12 months =       $30,000

Ahead                   $100

 

For a two month delay in renting, you are $2,200 less.

 

$2300 x 14 months =       $32,200

$2500 x 12 months =       $30,000

Behind                  -$2,200

 

For a three month delay in renting, you are $4,500 less.

 

$2300 x 15 months =       $34,500

$2500 x 12 months =       $30,000

Behind                  -$4,500

 

After missing three months you are even better off lowering your rent to $2,100.

 

$2100 x 15 months =       $31,500

$2500 x 12 months =       $30,000

Behind                  -$1,500

 

I haven’t taken in to account any vacancy costs like utilities and any property inspections required to keep the property insurance valid (most insurance requires inspection every 1 to 2 weeks, some policies are every 3 days).

Since most tenants with reasonable rent do stay longer than 12 months (Magnum averages over 3 ½ years) the owner is better off to get the tenant in on the first month, sign a 12 month term lease and increase the rent for the second year to $2400 or $2500 depending on what the market can handle.

 

After hearing all of this the owner agreed to lower the rent to the $2300 per month.  As with all good stories loosely based on the facts, this story ends with the property renting the first month and the owner being very happy with our services.

 

If you would like us to complete a rental analysis on your property please contact us.

 

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Phone: 403-294-0411
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