Adam and Matt take a deep dive into the world of rentals with an in-depth conversation with returning guest and one of Vancouver’s busiest Property Managers, Klaus Rode.
Klaus has been with Century 21 for about three years, in the property management division. He started with four properties and personally handles 120 now. He is a managing broker and oversees property managers as well.
On the current rental market:
It’s still active. It slowed down for two-bedroom units but one-bedrooms and studios are still really hot. It’s still well below 1% vacancy.
On the Airbnb situation putting a glut of one-bedrooms on the market:
One-bedrooms have been absorbed, but the two-bedroom units are still there from Airbnb.
On the price point where getting a tenant is challenging:
$2,100/month or less for one-bedrooms is easy to get. At $2,250-2,300 it starts to slow. You can easily get $2,800-3,200 for two-bedrooms (at about 800-1000 sq. ft.), on average. The $4,500-5,000 luxury market is tricky.
On renting furnished or unfurnished:
Because of the Airbnb glut, by the time you work in expenses for utilities, etc., you are better off with unfurnished.
On stratas cracking down on Airbnb and 3-month or 6-month rental options:
There are some 3-month options, which is the best type of building to buy into as an investor. Some buildings have a one-year minimum which is pretty much impossible.
On where people are staying—for instance, the movie industry is hotter than it’s ever been:
You can get furnished one or two bedrooms for longer terms. The movie industry tends to book for 4-6 months, so they’re skirting the bylaws.
The biggest mistakes people make when renting out their place:
- Not vetting tenants properly and ending up with disaster tenants.
- Not writing up a lease.
- Not doing basic follow-up (e.g. employment, income, reason for moving, verifying with previous landlord they weren’t evicted).
Tips for people looking to rent out properties:
- Get an application form together.
- Verify the information you get.
- Run a credit report. A credit score gives a good indicator, but there are no details. Jobs and addresses should line up with what you’re told.
- Don’t rent to people you haven’t met – trust your gut. You need to verify them by meeting them and seeing ID. Google people, check Facebook.
Process to use Klaus’ property management services:
- They take as many photos as possible (minimum 24). Sometimes they’re professional, especially for high-end rentals.
- They advertise on Craigslist, PadMapper, Kijiji, or other local sites (e.g. Castanet in Kelowna); beware of scams.
- They set the price by researching what’s advertised on Craigslist, etc. If you don’t have enough inquiries within the first 2-3 days, the price is probably too high.
On what rental yields people are surprised by:
Pockets in New Westminster and Port Coquitlam. An average one-bedroom is $1,400-1,500 in Port Coquitlam. In Vancouver, the easiest rental area is Main Street; the Fraser Street area is the best value for investors.
On marketing strategy if he’s having trouble renting:
You can repost as a new listing on Craigslist under an account, so it wipes the slate clean every few days. On PadMapper it must be off the site for a few days, and then you can re-post.
On busy periods for rentals:
It used to slow down a bit in the winter, but this year at new years he had 12 move-outs and move-ins. July and August long weekends were busy. It’s pretty steady in Vancouver. Typically, December is the slowest.
On what time of month to rent:
If priced right you can rent it in the middle of the month. Advertise early, and showings can start say, on the fourth. If you don’t get anyone, you might get a bit more money for the first.
On how to show the property:
Higher-end properties are usually private showings; studios and one-bedrooms are open houses for about a half-hour to 45 minutes. (This is economical in terms of time, it’s not for purposes of creating a bidding war.)
Strategies for people renting a unit with a tenant where there are challenges—maybe they’re not the tidiest, the space shows small, etc.:
This is tricky—you can offer to have it cleaned and try to schedule all showings on that day. For smaller units, use a blow-up queen air mattress so people can see it fits in the space. Use masking tape on the floor to show what fits. Some level of staging may be required.
On contract, addendums, and fees:
The standard residential agreement is from the residential tenancy office and is free and available for everyone. There is a good guidebook for landlords’ and tenants’ rights and responsibilities. It’s good for landlords to see what they can and can’t ask and put into the addendum. He has a two-page addendum, which includes no smoking, subletting, and cleaning expectations.
The damage and pet deposit can be charged up front, but no other fees are allowed. The legal damage deposit in BC is a half-month’s rent; the pet deposit usually starts from $100-200 and can go up to an additional half-month’s rent.
On fixed term or month-month rental options:
You can still do fixed-term leases, the intent of which is when the owner knows they’re moving back into their suite. The lease expires and there is no financial penalty to the owner. With a month-to-month lease, the owner gives two months’ notice and pays one month’s rent to move back in. The fixed-term lease was introduced around the 1980s and BC’s current government has mentioned doing away with or clamping down on it, as landlords can make rents much higher each year (e.g. 10-20% rather than the 4% legal cap in month-to-month leases).
On legal options for landlords to break a lease:
If it’s fixed, you can’t break it—it must be month-to-month. Then, notice is required if you’re moving in yourself (must be family) or you renovate (at least 75% of the unit). If you sell the property, the lease gets transferred to new owner.
On giving yourself a leg-up when you’re a potential tenant for a unit:
Give your name and phone number. Show up on time. Be polite, answer application questions. Show common courtesy!
Luckily, he has none; he listens to his gut. But he took over a place for an owner, an older man who felt bad for tenants he tried to help. The tenants ended up trashing and destroying the place. Klaus guided him through dealing with it and took over as the manager.
His first choice in Canada to buy a rental property:
Klaus bought in Kelowna. The market seems great and he’s feeling confident. There is a low vacancy rate, the price point was attractive for the size, and it’s close to the university. Most owners there rent out from September to May or June, which he plans on doing too.
- Favorite area in Vancouver: Gastown
- Favorite restaurant or bar: Kissa Tanto
- Downtown penthouse or west-side mansion: downtown penthouse
- First place you bring someone from out of town: Whistler and the peak-to-peak gondola
- Hans and Franz or Dieter from the Sprockets: Dieter
To reach Klaus: