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A guide to rental investments, Victoria

“An investment condo can be a rewarding opportunity provided investors follow a basic rule that helps ensure the purchase is cash positive and not a drain on personal finances.”
[Read More by Marko Juras is a Realtor® with Fair Realty]

BUT! it all depends on your goals and strategy. If you just want to create a positive cash flow plus growing equity then investing in a 1 bedroom is probably the best way to go. Rule 101: rule: buy a small, lower priced unit in a quality concrete building within walking distance of downtown Victoria. If you select the right condo in the right location, current rental prices should cover all of your costs. The only downside is when there is a glut of one bedrooms on the market because everyone is following this trend. At that point, your prices will fall in order to compete or you will have lots of calendar gaps because a renter could not be found at the original price.

If your goal is to eventually retire or resell your property then 2 bedrooms is the best way to go. Other benefits of two bedrooms would be the fact that they are most in demand at all times of the year either for renters or buyers and there will be few calendar gaps if they are in the right location. Two bedrooms are still rather rare, especially furnished, so prices have stayed constant. The fact that your 2 bedroom is likely to be fully occupied all year will offset the gaps and revenue drop of a one bedroom when there is too much inventory,

The downside is that rental rates may (or may not) not cover all your costs. Again, your goals are what is most important in selecting the best type of condo for investment purposes.

Best Buildings

Best Buildings

REAL ESTATE INVESTING:

So you are ready to purchase an investment property for rental. You want to attract professionals and executives who will want temporary housing and perhaps keep it rented long term or during the months you won’t be using your property. Three words of advice; location, location, location.

Working professionals who arrive in Victoria tend to want to be downtown or near downtown. Rarely to they wish to be too far out for a variety of reasons. To assure you maximize rental revenue your location will be key. Everyone at some point, even locals, may want to stay downtown for a period of time whether a temporary relocation, Real Estate transition, insurance displacement, local reno project or other transitional situation downtown including James Bay, Vic West/Songhees, select parts of Fairfield and old town remain highly popular.

 

WHAT NOT TO DO

A bit of advice I give to all the prospective homeowners is do not buy into an old building (one more than 15 years old) there are some exceptions (Shoal Point/The Reef) but not many. Although some of these old buildings may have attractive suites they don’t have any modern building technologies or amenities. If they are really old they probably have a “dank smell” noticeable as you walk in the door and the lobby still looks like 1998. Most features and amenities are sorely dated and they will not be attractive to the executive set. Even if you refurbish everything in the suite itself, it is still “located” in an old building so don’t do it. The executive set likes shiny and new so purchase the newest property you can find in the desirable areas of the city.

HIGHLY RECOMMENDED BUILDINGS

Just about everything in the “Humboldt” valley. The Belvedere; The Aria; The Astoria; City Place – all allow monthly rentals, some with a 6 month minimums and are modern and well maintained. They are located in the higher value end of town and may have high prices attached to them but they rent easily.  One of the best buildings in the city is the SOVEREIGN at 608 Broughton, Well built with everything high quality, it employs state of the art building technologies and is in an amazing downtown location. The units are fairly spacious for the most part and are expensive. The resale value though endures and properties do not stay on the market very long. Lots of people wish to stay here.

OTHER BUILDINGS NOT TO BE OVERLOOKED

There are several other buildings that may provide significant value in relation to their acquisition cost. In no particular order the following are also very much worth looking into:

  • 60 Dallas Rd (town homes – some very well appointed)
  • Bayview One – 100 Saghalie Rd – well managed, very secure, lots of services, high end finishes
  • Promontory – 83 Saghalie Rd – a cousin to Bayview One – good building but no high end finishes
  • The Reef – an example of an older building that is the exception to the rule, ultra industrial modern design has endured, water views from most suits, building is always clean
  • The Hudson – 770 Fisgard – offers some very attractive units – building is well kept but not consistently, populated with lots of students during the school year, some suites may be noisy but still a good value for the cost
  • The Era on Yates – good location – well managed building – buy on a higher floor to circumvent noise from traffic
  • The Duet – 640 Michigan St – smallish units but near new- same builder as the Sovereign but not quite as high end – James Bay location
  • The Juliet – 760 Johnson St – smallish suites, near new, lower levels receive lots of street noise, ok location

LOWER COST UNITS – CAUTION

There are some lower cost buildings that may lure you into buying. Proceed with caution as these will not be first class buildings and may be located on a street with undesirable elements in play,.

  • The Wave – 845 Yates – older building, lots of street people nearby, some units will be noisy, cheap building materials, the gym is like working out in a sauna
  • The Metropolitan – 835 View St – older building, many suites will be dated, street people nearby
  • The Manhattan – on Yates – older building, many suites will be dated, good location though
  • Polo Pacific – 405 Quebec St – older building with dates suites and the “bones” of an older building (low ceilings), gorgeous landscaping but no amenities, good location but bad sound proofing.
  • Anything on Johnson in the downtown core due to the street people present and taking up housing along the block and visible drug taking activity

Get Luxury Prices

Get Luxury Prices

How to Spell Luxury

Add a level of elegance, charm or luxury to your furnished property with a few select details. Your executive guests will appreciate the styling and comfort efforts put into the property which translates into value and therefore the price you can charge. These add-ons need not be expensive notwithstanding the quality standard you are after and can really bring the property up a notch or two.

Instead of artwork (or too much of it) try gorgeous mirrors. Strategically placed, mirrors can provide a “soul” into the property enhancing the illusion of space and/or reflecting an inspiring view.

Add Some Bling

Add some “bling” to either a dining area (chandelier), bedroom or bath (ceiling light fixture) or new fixtures to replace boring ceiling pendants. The prefered spot is over the dining table but I have seen bathrooms and bedrooms come alive with this addition. The new fixture beautifully captures and reflects light, creating a perfect ambiance anywhere you put it. This blingy bright spot need not be an expensive crystal chandelier – a simpler style with a bit of bling will certainly do. The example shows a drum chandelier with shade.

Comfort is Luxury

Add a padded headboard to your bed set-up. This will be far more comfortable for your guests than trying to prop up pillows so one can sit in bed and read or watch TV.

Again, this need not be expensive. Something practical and colour coordinated with your existing scheme will work well and add that extra touch of luxury that beds without lack.

Adequate Lighting

Adequate lighting, especially in the living room will be a big bonus to your property. Unless your space is unusually large, ditch the old fashioned lamps on end tables that you may be using now, especially if your space is compact. A decent floor lamp, with arching tree-like branches or arms will provide everything the room will need while embracing modern trends.

These pieces come in usually 3 or 5 bulb configurations. For task lighting where you need sufficient light for reading, writing or working on your devices all bulbs can be on at once. Then, when more ambient lighting is needed, only one or two bulbs need be lit to provide that. These lamps do not take up much space and the arms or branches can be twisted and turned as needed to provide the best light, Highly recommended especially for small spaces.

Add a Pop of Colour

If you have chosen light or grey colours as part of your living room scheme try adding a pop of colour with select decorator cushions. Not too many, like one or two (matching) in total. Colour brings a little life into the picture and it shows your guests you have put some thought and care into enhancing their environment. If your colors are dark you might go for a contrasting balance when choosing your decorator cushions.

Do not buy faux fur/fur pillows – never! They may look cute at first, but over time they will start to look dirty as some are hard to clean plus the wear and tear will make they look ratty. They will remind people of a pet that is not cared for so I would avoid.

Want to know where to get such items at reasonable prices?

Stay Here

Stay Here!

We offer Luxury temporary residences for employee relocations, home insurance claims, business travel, and extended stays.

People are the heart of our business. Our properties are upscale, new or near new buildings and close to major business districts.

Great Accommodations in the Best Locations.

Our suites are spacious, comfortable, clean and furnished to provide all the amenities of home. We also provide complete guest services and regular housekeeping. Our properties are personally inspected and verified.

During your stay we immediately address guest requests or maintenance issues as required.

 

Why US?

Why US?

Why Us?

WHY CHOOSE US?

SPACE: Our suites are upwards of 500 sq ft larger than the average hotel room  providing more room to work and play.

PACK LESS, LIVE WELL: Open the doors to your accommodation and enjoy a fully furnished and well-equipped apartment in a great location. Your living, dining and sleeping space will be clean and comfortable and many apartments also feature a work space, furnished patio and more.

CLEANLINESS: . All our suites feature in-suite laundry and your suite is meticulously cleaned and sanitized before the start of occupancy. In addition we provide regular cleaning..

WIRED UP: Complimentary WIFI, premium cable, are included in the rent.

PET-FRIENDLY SUITES: Available upon request and availability

SAVINGS: With a fully equipped home, you’ll save valuable money while keeping your lifestyle on track

AMENITIES: Many of our suites also include access to fitness centres, swimming pools, saunas, bbq’s and meeting rooms.rooftop patios and more. We include at least one parking spot with each suite.

 

Extended Stays

Extended Stays

PRIVATE EXECUTIVE APARTMENTS

Private condos operating as long and short term executive apartments provide more space, privacy and convenience than most hotels and at a cost far less than $350/night. Locations of private executive suites are often in the downtown core as well as quiet residential areas so you get a wide range of locations.

As a cost-effective housing solution and hotel alternative, you can adequately entertain family and friends in a home away from home where you can cook, chill-out and relax.

Whether business or leisure, an extended stay is best enjoyed in a furnished executive apartment. Stay, Play, Work, Relax, our luxury units are spacious, elegant, cherry-picked and well appointed.

High speed WiFi is standard as well as premium cable, smart streaming and all appliances. We welcome you to give us a try. Check out our Listings and see if there is anything there that grabs your attention.

End of Love

End of Love

You’ve just bought an investment property and prepared it for rental. You’ve decided you will manage this property on your own, after all why pay someone else to do it when you can pocket all the money yourself?

It can’t be that hard even though you have other things vying for your time and attention. You can attend to this on your off hours. Advertising for tenants, screening tenants, collecting rents, making repairs and whatever else it takes you think you will have time to do it all.

Life will be easy street from now on right? The truth is, when we try to manage our rental properties ourselves we often come up against competing objectives.We want to increase the value of our property, we want a tenant to pay our mortgage, we want to be loved by the tenant and we want him or her to pay on time every time and we want him/her to take care of the property better than if it was their own. That is one tall order and you may get some of it some of the time but not all of it all of the time.

The competing objectives begin when you want to be liked by your tenant after all who doesn’t want to be “landlord of the year”? Your tenant on the other hand wants to pay the least possible, have you shoulder all the maintenance and repairs and even have the window washing included. You on the other hand want to charge as much as possible, expect the tenant to take care of the place as if it were his/her own and cut the grass.

Voila – the end of love.

Once you have signed the rental agreement with your tenant, your relationship with them will formally begin. When you are managing tenants, you will realize that not all renters are made equal.

Some tenants are a real pleasure to work with and the only time you need to see them is when you are collecting rent. They go the extra mile to maintain your property get along beautifully with the neighbours. On the other hand, some tenants can be living terrors who will require that firm hand under the velvet glove.

Property management can make or break you. This is what will really put you to the test. Unless you actually live within easy reach of your revenue properties, you’re going to be relying upon someone else to manage things. Even if you live close by professional services can market your property easier than you can especially if they have a formal web site and they would know the best price to ask for your rental. They can also be the “buffer” between you and the tenant so that sticky situations where you have to get firm with tenants can be smoothed over.

Property Management means: writing ads, handling inquiries, showing the property by appointment, collecting rent… it all spells personal involvement and free time encroachment. So, unless you know what you are doing, hire someone qualified who will also give you solid reliable service.

When hiring a professional to market or manage your place get references from their existing customers. Once you see that they enjoy a high occupancy rate you can then rest assured you are in good hands and if your place is priced well you should be able to keep it fully rented.

Pricing Strategies

Pricing Strategies

3 Pricing Strategies

Your pricing strategy will determine your annual return on your furnished rental. Mark it up too high and you may have to wait for a qualified renter. Basically, the higher the rent, the shorter the stay.

Three main strategies come to mind when discussing pricing of furnished housing.

1.  Quick Price: this price point refers to a slight mark-down from what the market will pay. The advantage is that the place will rent quickly and you as an owner or property agent will have several prospects who may want to rent it so you can be choosy. Often this strategy will provide the most consistent annual yield with little or no un-rented time and more often a long term lease.

2.  Market Price: this price point is what the market will commonly pay for a comparable property. The advantage is the property is not under or over priced and should rent within the first month after being showcased to the market.

3. Select Price: this price point is at the highest-end of the scale. There are many reasons why a homeowner may choose this strategy. If an owner has recently done a lot of upgrading, has high quality furnishings and amenities or the property is especially beautiful even waterfront the owner will feel the place is worth the higher price. The disadvantage here is that there will be fewer takers and the property is likely to sit for 60 days or more which is typical of luxury rentals. Any takers it does attract may want only a short-term rental – like summer holidays shrinking the annual return. Use this strategy only if you will not be adversely affected financially while the property sits waiting for a renter or if you plan on using the place yourself during the down time. High end properties do not attract as many prospects so you will not have the power of being too choosy.

The best strategy of course is “correct pricing” which the market will see as fair and full of value. While at first it may not be apparent what the correct price is – the market will soon tell you. If you have begun marketing your suite and there are only a few calls and lost of questions, your price may be high. If you have had 2-3 viewings and no one has decided to take it that is usually a red flag that your property is priced too high for what is offered.

A property that is offering good value and priced right rents after the first or second showing.

Investing in Real Estate: Break Even Point

Investing in Real Estate: Break Even Point

Determining Your BER

Breaking Even as opposed to “Breaking Bad” (a totally different topic) or determining your break even ratio (BER) is important when you are considering turning your Real Estate property into a rental.

A break even position occurs where a property eats up as much as it brings in ( debt service & expenses) and a negative cash flow occurs when rental properties don’t generate enough income to cover all expenses. This results in the owner having to “cash feed” the property to make up the difference. This is a problem real estate investors want to avoid under any circumstance however the market is the market and there is a cap on how much the public will pay. By knowing this, a strategic rental plan can offset losses in just about any market.

I guess the first thing your accountant or Real Estate agent will explain to you is how to find out “the break even point” for an income property.  This tells you what you need to be bringing in to make the property viable. Another measure is the BER, a ratio that shows what percentage of gross revenue is required to sustain the property. As you already know, to be profitable, an income property’s annual gross income must be greater than the cost of it’s annual debt service plus annual operating expenses.

For example a BER of 85 tells us that 85% of revenue is used to cover costs. The lower the BER – the better – as less money is needed to feed the “beast”. This indicator also tells us that the rental value could decrease by 15% before the property is simply breaking even.

BER = (Debt Service + Operating Expenses) / Gross Operating Income (rent)

 

 

Beside just operating expenses and debt servicing the BER is also affected by the property’s annual vacancy rate.   A good property manager can reduce vacancies by keeping rents at market value. This is key in aiming for profitability. Each month your rental sits vacant or underutilized represents an income drop and that means money from elsewhere will be needed to cover costs.

It it more prudent to rent a property at the market value rate for a longer term than leave it languish because the rent is too high. At that point the revenue is “0” and that is never good.

A client of mine has calculated an annual operating budget at $27,300. The market will pay up to $3500/month all in so annual gross revenue = $42,000. Using the above formula the BER for this property is 65. A pretty good number – 65% of gross rent is used to cover basic costs leaving a 35% return to the owner.  The market rental value would have to fall 35% for the property to break even. *The owner does carry a very low mortgage on the property which contributes to making this number possible. On average, homeowners of upper end properties see a BER of 75-85% Very Upscale properties worth over a million $ probably see a lower return only because the carrying costs are usually higher that what the rental market will bear.

ANNUAL VACANCY RATE: and how that affects the bottom line.

Let’s look at how vacancy rates affect the bottom line. In the above scenario (assuming a one year lease) if the $3500/month property rents within 30 days of being listed, the owner will realize $42,000/year in gross rents with a BER of 65%. If it sits on the market for 60 days the annual return drops to $35,000 with a BER of 78% and if it sits for 90 days on the market the gross annual income goes to $31,500 causing the BER to rise to 86%. If the owner still hasn’t rented the property within the first 4 months of listing he will likely be in a negative cash flow position.  The better strategy would be to have priced it correctly in the first place or failing that, correct the price long before reaching a negative cash flow.

 

 

60 Days or more is far too long for a property to sit on the market and there are only a couple of reason for that.

  • the market has contracted and with it demand
  • the property lacks the qualities the market is looking for
  • it is priced too high

On average a property correctly priced with all the desirable features in a growing market should rent within 30 days (or less) of marketing it to the public giving the owner the best BER possible.

The longer the property languishes on the market the less annual income it will produce leaving the owner carrying the costs in full for all the vacant months.

It is far more desirable to price correctly from the start or at the very least to begin correcting the rental rate to avoid further losses.

 

10 Upgrades that will Increase Your Rental Rate

10 Upgrades that will Increase Your Rental Rate

10 Upgrades that Will Increase Your Rental Value

So you have a rental property that you want to offer furnished and you want to be able to ask for top dollar and attract professional clientele?  Follow this guide to raise your property from simply “standard” to “deluxe” and better.

A few upgrades can work wonders especially for the working executive who is in town on a contract assignment. Unlike the leisure visitor who is in Victoria for the attractions, the working executive is more interested in “cocooning” and making the accommodations a real home with convenience and comfort.

  1. FAST WiFi: one of the most important utility required by executives and professionals. Make sure your WiFi connection is the fastest and strongest you can get. Tenants who have to video-conference with colleagues over the internet as a condition of their work contract will require high speed Wifi. Many tenants will also stream media from the TV or computer so a strong connection is crucial.
  2. Electronics package: Make your rental guests happy with a smart TV for streaming media. This will save on paying for premium TV channels as everyone likes to watch movies.
  3. An additional or all-in-one home theater sound bar featuring WiFi enabled blu-ray is a huge bonus.

4.A Custom Closet does a lot to make the property unique and practical. A built-in closet with extra shelves, drawers and organizers is absolutely fantastic and saves on having bulky bureau and dressers in the bedroom.

5. Good lighting and lots of it. Each room should have bright and direct lighting for tasks such as reading, working, sewing or anything where acute visibility is required as well a ambient lighting for overall illumination.

6. Storage – or at least a place to put suitcases out of the way. Your executive renter is here longer than the average holiday guest and an extra place to put personal items will enhance the value of your property.

7.Wine cooler: not necessary but a great addition for beverage storage if you have the space. Providing a wine rack either mounted, stand alone or even countertop is a nice touch.

8.Full size laundry appliances are a fantastic upgrade as laundry can be done faster and more efficient with fuller loads.

9. Bookcases: even one good book case can hold reading materials and help keep the place de-cluttered.

10. Beach towels, beach blanket, picnic essentials – very important if your property has a shared BBQ patio, pool or sauna but equally important so that your tenants don’t have to take your good towels to the pool deck or local beach.

These are some suggestions that will make your place really stand out for for which you can charge top dollar.