Furnished Rental Property – How To’s

With the Vancouver Olympics less than a year away, Dave and I started wondering if we should rent out our home in Burnaby to some Olympic visitors. As we started considering that as an option, it suddenly occurred to us that we didn’t have to wait until the Olympics to do short term furnished rentals. In fact, it might be a good idea to do a test run before we turned our home into a furnished rental for the Olympics.

Since neither of us have to be in an office everyday, and we don’t really HAVE to live where we are right now, we thought we’d just throw an ad on Craigslist offering our place as a short term furnished rental and see what happens.

At first… nothing did happen. But after 3 or 4 days I received an email from a woman whose home had sold in 3 days (when they were expecting it to take several months). They weren’t going to be moving for another 5 months!  She desperately needed a home for her and her family for the short term! We took an application, just like we would when we rent out any property, and checked their credit and their references.

I admit – knowing they’d be sitting on my couch in my living room, I was extra cautious. We  checked EVERY reference we were given, and every little detail. Everything looked great … and 20 days later we were packing up our personal belongings, putting them into storage and heading over to Salt Spring Island where my parents have a gorgeous oceanfront Bed and Breakfast.

The gorgeous view we enjoyed when staying on Salt Spring Island

We spent the next four months doing a bit of traveling, but mostly enjoying ourselves on Salt Spring Island. It was really liberating not having a bunch of stuff and not really having a home.

When we moved back in, the place was in pretty good shape, and the transition back was so easy because everything but our clothes and office materials were already there!

Doing a furnished rental is  definitely not the same as a regular rental property transaction though.

The general principals of attracting and screening good tenants are the same, but there’s definitely some things you should know if you’re interested in turning your home into a furnished rental or buying a property to become a furnished rental:

1. Furnished rental properties command a higher rental rate but they cost you more too … from what I’ve seen online the fully furnished rentals will go for 25% – 50% higher than market rent. That is a big advantage in a market like Vancouver where it’s very difficult to make a place cashflow with regular rent rates. BUT – furnished rentals have a lot more costs. Besides just the cost of furnishing the property (which you probably can expect to spend $10,000 doing), you are responsible for paying all the utilities, telephone, cable, internet, and if applicable security. Many rentals also come with regular cleaning services which is another expense. We charged 24% more than market rent for our property, but we pretty much broke even because of the added expenses. Of course, we used their rent to pay our mortgage for four months so that was nice! 🙂
2. Fully furnished means that someone only needs to arrive with their suitcase. You are providing everything someone would need to live in your home like:
   • dishes, cutlery and cookware,
   • appliances like blenders, coffee makers, food processors,
   • towels and bed linens,
   • cleaning supplies like brooms, vacuums, and shovels (if applicable),
   • amenities like television complete with cable and wireless internet are pretty standard. Basically if a hotel suite would have it, you should too!
3. Expect a variety of needs. The family that ended up living in our home brought in their own bunk beds for their kids, but they may have wanted these provided. There are places where you can rent furniture and you’d just have to find one nearby that provides the pieces you require. This could include a crib or high chair or additional desks for people who work at home.
4. It’s Not Your Home (Anymore). Once the new tenants move in, remember it’s not your home. If you were living there remove anything personal. The new occupants don’t really want to see the painting of your family on the wall, nor will you want anything to happen to your prized possessions. If you will be devastated if something is broken or damaged do not leave it in the home. And remember to expect some natural wear and tear! When we moved back in certain things weren’t in the same condition or they weren’t functioning like they were when we left. It’s too be expected, and if it wasn’t our home I don’t think it would have bothered us but because it is our home, it bothered us a little bit. We just couldn’t understand why they didn’t take a screwdriver to tighten this, or why they didn’t just go to the hardware store to buy a new washer for that. But, just because you’d do that to take care of your own home doesn’t mean they will!
5. Create a detailed checklist of what is in the property for the tenant walkthrough!  Go from room to room, ensuring you note the details like how many forks, saucers and plates you’re leaving behind. Record the number of towels, the big pieces of furniture and the paintings. If something is broken or stolen you will need a record of what was there in order to use their deposit to buy a replacement. You’ll want your tenant to sign off on this when they move in, and then you’ll want to do a detailed inventory of everything when they move out. This is big pain, and I admit I didn’t count the forks when I moved back in … but I did note a missing glass … which brings me to the next point …
6. If you’re creating a furnished rental, buy extra boxes of the breakable items. We now have 7 drinking glasses… thankfully we bought them at Ikea and not only are they cheap but we can replace the missing glass easily. Had we purchased a box of glasses on sale at Sears we would now be short a glass. So, if you are setting up a house to become a furnished rental buy an extra box of plates, an extra box of mugs and cups. If it can break easily, be prepared to replace it easily!! You want to have matching sets … and this will ensure you always do!

One successful rental does not make us furnished rental experts … but we wanted to share these lessons learned with you in case you’re considering turning your home into a furnished rental for the Vancouver Olympics or in case you think it’s a great way to make a property cash flow in the Greater Vancouver Area.

Real Estate Investing Newsletter and Starter Tips Guide

Parade of New Homes… Continued

In our last post, I shared some pictures of our visit to Intracorp’s Glenmore at Morgan Heights townhome development. In this post, I want to share with you pictures from my favourite home…and a few other random photos from the day.

As judged by me, and with no scientific reasons behind the award…

THE AWARD FOR BEST SHOW HOME goes to Wallmark Homes at Morgan Heights.

So, what makes this home so special? Well, as much as I loved the decor and functionality of the Intracorp’s townhomes, the Wallmark Home is pretty much a custom home. They build these houses FOR YOU! And, they had, hands down, THE best salesperson of all of the homes we visited that day (I think we went to a total of 8 different builders show centers). Brad was friendly and informative, and sold me on Wallmark! He clearly loves the product he’s selling. When he said they had great customer service, I believed him. They obviously spent quite a bit of time finding and training their salesperson.

He couldn’t sell me on living all the way out in Surrey, but he assured me that if we found a lot in our area, Wallmark would build on it.

So, what’s so great about Wallmark? Well… first of all… they had one of the ONLY bath tubs that I liked!

My FIRST requirement for any bathtub is that I can actually fit in it. CHECK - Wallmark, you had the best bath tub of the day!

Second, according to Brad, when you buy a Wallmark Home you will get your own interior design consultant and she will work with you every step of the way to ensure your home is built to suit you. She will walk you through the colour, the finishings and design of the home. And, this is done as part of their home cost!

Dave had no problem envisioning himself at the BBQ in the backyard

And the third reason I loved Wallmark was their attention and focus on a better and more sustainable living environment. The floors were made of bamboo. The carpets were made of recycled pop bottles. The cabinets are made of wood, not pressed wood, and do not have the toxic emissions that many cabinets have. The list was long of the things they have done to be more environmentally friendly and less toxic. Interestingly, Wallmark was the only builder that mentioned any environmental initiatives to us. A few had some signs up about the heating pumps and energy efficient features, but nobody talked about toxic air or environmental impact except Brad. It’s a big selling point for us.

Wallmark was beside a few homes that were clearly less prepared for the traffic from the Parade of Homes. Some of the sales people we met were clearly inconvenienced by our presence. One woman didn’t even make the effort to get up to greet us. Her email was much more pressing…she grunted a hello and let us wander through the home. Another was totally unaware of the Parade of Homes! Sure, her home was not in the Parade, but she was in a cluster of show homes with Wallmark, so you’d think she would have known! She tried to tell us the Parade was an old promotion… but we showed her the magazine that clearly indicated that it had begun on Saturday! OOPS! So, Brad was good, but his competitors helped him look even better!

Wine Cellar... can't recall which home this was in but it was fun!

Some of the themes for the rooms were over the top!

Dave's pick for exterior design goes to Vinterra

Vinterra was not part of the Parade of Homes, but when we drove by Dave was instantly intrigued by their style. We went in, and met the second best salesperson of the day. I didn’t catch her name, but she toured us around the homes they had open. She also took the time to explain the area to us, and what new stores and amenities were coming (including a lovely park where our dog Bram could play!).

I could write an entirely different post about how to sell to new home customer…some of these sites did a great job, but some of them did a very poor job. But, I can’t imagine a ton of people would be busting to read about that… so I think that is it for this year’s Parade of Homes.

There is still 4 days left in the Parade. I highly recommend you get out there and check it out… even if you aren’t shopping for a home right now! Details on the Parade of New Homes can be found here.

If you want to learn more about Wallmark check out their website at: http://www.wallmark.ca/index.htm or go and see their show home in Surrey at 2589 – 164 Street, South Surrey.

(And no, I am not making any money off of referals or from sending traffic there… it was just a quality home customized to your needs with respect shown to the environment! And one fantastic bath tub!! Who could ask for more?) 🙂

Parade of New Homes in Greater Vancouver

I’m not sure what you spent your Saturday doing, but I am pretty sure you didn’t do what we did!

We started the day off with a nice run around Rice Lake in North Vancouver, then we got ourselves cleaned up, hit Starbucks and drove out to Surrey to meet with Cindy Faulkner of Meridian Coastal Mortgages. We spent a few hours with her discussing:

• The changes to variable rate mortgages in Canada
• What impact the removal of $0 down mortgages and 40 year amortizations will have on her business and mortgages in general
• The financing options for a Canadian buying real estate in the U.S., and for Americans interested in buying a nice vacation rental in Canada
• And, our biggest market related questions.

The mortgage market has changed dramatically in less than a  few weeks so it was great to get our heads wrapped around what has happened.

It was a fantastic interview, and we will be posting the sound bites and sending some of the script out to our Rev N You with Real Estate readers this week.

If you are a Canadian, and you invest in residential real estate, you won’t want to miss this fantastic and timely market update on the changing mortgage market! Make sure you’re on the Rev N You with Real Estate Newsletter List!

After meeting with Cindy, we drove into South Surrey, and took in a ton of show homes, in the Greater Vancouver Home Builders Association’s Parade of New Homes.

It’s only on until October 26th, so get out there and check it out!! We had a blast. In fact, we had so much fun in each show home we didn’t get to see nearly as many homes as we wanted because we ran out of time. Check out some highlights from our home tours:

First Stop, Intracorp’s Townhomes in the Glenmore at Morgan Heights development.

These are townhomes priced very reasonably (ok, everything seems cheap in Surrey compared to what we paid for our place in Burnaby) starting at $329,000. Each townhome had a theme… one appealed to a family, another to a retired couple, and then there was even one that appealed directly to us:

Parade of New Homes: Intracorp Townhome

When you walked in the door, it had a great little gym off to the left. Dave and I both gave this balancing thing a try. Thankfully Dave took this photo at the EXACT second that I found my balance…right before I fell off!! 🙂

Intracorp Townhome: The garage of my dreams... place for kayaks and bikes

And the rest of the place was very comfortably decorated (with pictures of races everywhere… and they even had a dog bed and dog food out! Did they KNOW we were coming??).

Sellers beware! Dave snoops in EVERYTHING! Daves says "Look Julie they have protein powder and dog treats..."

Intracorp did a great job helping us envision ourselves living here. They were selling to US!

I am not kidding - Dave looks in EVERYTHING! Turns out this is a bed. Very cool use of space.

From there we moved on to the single family detached homes in Morgan Heights… but it’s sunny out here today, and that just isn’t common in October, so we’re going to hit the North Shore to ride for a few hours. I will post the rest of our parading around the new homes in Surrey later today or tomorrow night!!

Let us know if you check out the Parade of New Homes put on by the GVHBA! It’s really worth your time… they put so much effort into decorating and designing these show homes. Even if you aren’t shopping for a new place to live you can get great new ideas for your own home and just see what the latest trends are! Or, you can just check back here and see what other goodies we found in the homes!!

Thanks for stopping by!

Forget the market – Focus on the Deal!

What a week! After a weekend in Cumberland on Vancouver Island doing our last adventure race of the year, I had to jump on a plane and fly to Calgary for part of the week. When I finally got my weary body home, the last thing I felt like doing was getting up Saturday morning to go to a real estate conference… but I did.

Headlines in the Paper

The conference was the 2009 Real Estate Market Outlook put on by Ozzie Jurock. Now here’s the full confession… I have never been an Ozzie Jurock fan. I have recommended his book, Forget about Location, Location, Location but more because it’s from a Canadian perspective and made a few good points than because it was my favourite real estate book. I notice his column’s in the paper and have heard him on t.v. and the radio. But I didn’t really find him worthy of following. I can’t tell you exactly why, but I just felt that way. Maybe it’s my past experience with real estate gurus or just something he said once that I didn’t like. I don’t know. The point is, I’ve mostly ignored him. But, an e-mail I received about his outlook conference caught my eye and I signed Dave and I up.

So… Saturday morning we pulled out our umbrellas and braved the rain to trek to the Renaissance Hotel in downtown Vancouver to listen to what Ozzie and his experts have to say about the 2009 market. It kicked off at 9am, and I was definitely bored at first. Mike Wintemute of Re/Max Whistler had some interesting numbers on Pemberton, Squamish and Whistler, John Tansowny of The Corporate Coach was a great speaker, and Ralph Case of AMG Investments told a compelling story to make me want to invest in Pheonix, Arizona. But, for me, the great part of the event was when Ozzie took the stage.

He told a few jokes and then flashed headlines on the screen announcing great doom and gloom (markets crashing, real estate crashing), and then to our shock he would flash the date these actual headlines appeared in the paper… 1941. He’d repeat, and then it would be 1981, or 1991 or some other date in history. His point was that every few years something in the world happens that sends fear rippling around to everyone. And every few years, someone declares that “this time it’s worse than any other time”, and every time we pick up and carry on. We get through it. Ozzie said it doesn’t matter what the paper says:

You aren’t buying or selling a market, you are buying and selling a deal.

I could have run up to the podium and kissed him! He went on to say that he’s never had anybody tell him that they made a lousy deal but the market was good so they made a killing. He has heard a lot of people say they made a great deal in a lousy market. The market doesn’t matter – it’s all about the deal.

I’ve said this before too… I lost money on a condo in Toronto in the hottest condo market phase in history… and it was a good little unit to live in. It’s just as possible to lose money in an up market as it is to make money in a down one.

So, I signed up for Ozzie’s weekly newsletters. And in that package I also receive tickets to another one of his conferences…I think I am becoming an Ozzie Jurock fan. I’m definitely a big fan of his message:

Forget the Market – Focus on the Deal.

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To Anyone Excited by a Housing Market Crash…

HOME OWNERSHIP is NOT a RIGHT! And, a Housing Marketing Crash is not good for any of us. Even if you don’t own a home!!

Phew – it feels good to get that off my chest… you see, I recently read an article by Max Fawcett in the Vancouver Sun talking about the crash of the real estate market. The author was quite gleeful in the fact that finally he (and many others) may finally be able to afford something other than a 500 sq.ft. shoebox condo.

His idea was that Vancouver’s market had gone up for far too long, stating that “The past 15 years have witnessed the longest and largest real estate boom in two generations“. But if you look at the real stats from the Real Estate Board of Greater Vancouver , the average detached home, condo, or townhouse has in fact only really increased over the past 6 years which is a typical cycle in real estate.

This incline has been steep and very dramatic, but if you compare it to the mid 80’s to 1990, prices in that cycle almost TRIPLED!!! In this cycle, prices have basically doubled. Yes, doubling $400,000 is a lot more money than doubling or even tripling $120,000 as was the case in the mid-80’s. But, it’s all relative based on inflation and the value of our dollar.

Vancouver is NOT cheap. Vancouver’s Affordability Index is the worst in the Country at around 60-70% our income (this means that our housing costs – mortgage, property taxes, insurance, etc – make up close to two-thirds of our Gross Income – a stable, balanced market is often noted as around 50%) and our housing values have increased at a very quick pace, but I completely disagree with the attitude that it is “our right to own in Canada”.

Based on all the comments posted after the article, there appears to be a large number of Canadians that are happy about the fact that the market may crash. Why all the animosity? And since when is it our right to own a home? Sure, it’s the ideal, but certainly not a right. Just look to many of the other countries in the world, especially the old countries and cities like London, England, Dublin, Ireland, Berlin, Germany, Shanghai, etc. You just have to look at these countries to see how ridiculously expensive they are. Why should Vancouver be any different? It’s consistently ranked as one of the top places to live IN THE WORLD! (Source: CIBC World Markets Research Study: Consumer Watch Canada March 16, 2007)

If you can’t afford to buy in a city, but you really really feel the need to own, then maybe you have to make some concessions. Move further away from Vancouver, or even move to the interior or the island or try another province! Life is about choices. If your choice is to own your home, and you don’t have the means to do it in your chosen city, maybe its time to move elsewhere or come up with some creative ways of buying.

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