Check twice
My sister recently purchased a revenue property in Abbotsford. It’s a well-kept apartment in a convenient part of town. She was very excited about buying her first rental property. And she had good reason to be excited. Becoming a landlord for the first time is a big step.
The interesting thing about this apartment is that the property management company also manages all the rentals. On one hand, there’s less hassle involved because the property manager collects the rent and basically takes care of any problems in the building. This is a great feature if you’re a hands-off kind of investor - someone who simply wants a rent cheque deposited into their account every month.
The downside of this arrangement is that you may not be included in any part of managing your unit - that includes deciding whether or not you want to replace certain things like appliances and such. Since they are the ones to collect the rent, they have first dibs on the money, which means that they take off strata fees, managment fees and any other miscellaneous expenses charged to the unit BEFORE you get any money. As a land lord, you don’t know what expenses you’re paying for your unit until it’s too late. That happened to my sister.
Everything was going fine until this month when she received her monthly statement. She noticed that she was billed $160 for repairs that she did not authorize. These repairs included replacing the blinds, fixing a closet door, and repairs in the kitchen. The only “legitimate” expense that she could see was fixing the toilet. She called the property manager to find out exactly what repairs were done (since they were very vaguely recorded) and he promised to get back to her after he had looked at his invoices.
Fortunately, my sister is very meticulous with her financial affairs. She’s the type of person to review her Visa statement line by line to ensure that she is not charged for something she didn’t buy. Investors need to have this level of diligence about their properties. Nobody else will do it for you.
In my sister’s case, these expenses could very well be valid. The problem is that she was never given an opportunity to delay certain expenses (if they weren’t necessary) or even authorize certain things, such as replacing the blinds, should be done. It’s a frustrating situation for any land lord. If you’re in a similar situation, the only solution to this situation is to have a discussion with the property manager to clarify their authority over the unit. For instance, set a limit of say $50 - $100 for unauthorized unit expenses. Any repairs over that amount requires a phone call and authorization from you to give them the go-ahead. And be sure to review your statements carefully every month. Look into every expense you are charged for, even if it’s a miscellaneous $20 charge every month. Over time, every dollar adds up!