Real Estate is a proven means to financial freedom, but it’s not always about crunching numbers and balancing spreadsheets. Real Estate Coach, Terrie Schauer, joins Adam and Matt to turn our collective attention inwards with strategies for how to buy purposefully, manage effectively, and grow exponentially – both personally and profitably – through real estate investing. A Montreal Native and former Vancouver Transplant, Terrie provides useful tips for investors and property managers as well as her thoughts on the Montreal market and where she would buy today! Vive le immobilier!
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Terrie Schauer is a real estate coach, real estate investor and property manager that lives in Montreal. She started managing properties when she was 19 years old while attending University in Toronto and Vancouver. As a student, she started managing the student housing that she and others were living in. She realized she was good at property management and continued to pursue it. After University, she returned to Montreal where she became a real estate investor and opened a property management company. From being a student to owing her own business took about 10 years. She eventually developed and sold her business model for managing properties to others.
On what it means to be “good” at property management:
There are two sides to being a real estate investor: 1) Financial / Accounting 2) People skills needed to manage a property (human side). These are very different sets of skills and it is quite rare that people are very good at both from the start. People can normally determine their strengths and then take time to develop skills they are lacking. Don’t approach these things like they are innate talents – there are resources to help you improve these skills.
On the types of property management she was doing early on:
The market in Montreal has undergone a massive amount of change in the last 10 years. When Terrie started, it was tough to find good tenants and properties were pretty cheap. At that time, the name of the game was getting good tenants and upselling your rent. This was a time that students moving to Montreal for school was a good segment of the market to pursue.
Now, the rental market is much different, there are people lining up for every available unit and prices have increased. This has allowed Terrie to transition away from student housing because the general renting public is now the focus.
On the state of the Montreal market:
Montreal as a city has changed in the last 20 years. 20 years ago, Montreal had the last referendum which caused political instability and a dip in the Montreal economy. As the city moved on from that time, Montreal became specialized in Information Technology and Aerospace Technology which greatly improved the economy. In the last 5 years, Vancouver and Toronto have become very pricy and investors have started to move elsewhere. Many people are viewing Montreal is the next Canadian city for investment and Montreal is seeing more outside investment than in the past. Finally, Montreal is seeing a greater amount of immigration from France which has also improved the real estate market. These factors have pushed up the Montreal market.
On the differences in the Montreal real estate market versus the rest of Canada:
It is difficult to invest effectively in Montreal if you do not have a solution for the French / English language use. Most leases and contracts are in French, the rental board judges prefer to speak in French, and the tenancy laws in Quebec are different than the rest of Canada. If you are not from Quebec and you are not comfortable with French, this can create some challenges for you. The solution would be to work with a local property manager or a local real estate team. You need someone on the ground that is well versed in these aspects. These barriers to entry to an extent protect the market form outside investors and allow local investors more of a chance to benefit from real estate investment.
On her new book, “The Mindful Landlord”:
The book discusses the two major aspects to being a landlord and real estate investor: 1) Financial side 2) Human side. Most people have trouble with the human side of things: dealing with tenants, worrying about damage to the property, fielding calls at odd hours. If you can be patient with tenants and keep your eyes on the prize and try not to worry about small damage (look at it as the cost of doing business) this will give you mindfulness and allow you to thrive in the property management environment. Also, Terrie has learned that mindset is important – the more you are able to align your mental habits with what you want to achieve, the more seamlessly this is going to happen. This will allow you to succeed at a higher level than you would have without this alignment.
Communication is important. Terrie manages approximately 100 doors. She receives a large amount of phone calls regarding issues like leaky toilets, bed bugs, etc. You need to decide how you want to deal with this. Can people call you at anytime or do you want to have a 9am-5pm business line that people can call? If you spend time to think this through, it makes you mindful about the aspects of property management you need to address. If you don’t do this, you can easily burn yourself out. It is best to implement these types of things from day one and not when you have a large amount of people to manage.
On if people should be using a property manager or try to learn these skills themselves:
Everyone is different. If you feel it is something you can learn and you want to invest the time, it is possible. If this isn’t something you feel you can do, hire someone. Either way, Terrie would recommend people doing some property management themselves when they first start out. This will allow you to learn the ropes and allow you a greater understanding and offer you an education to manage your business and your property manager going forward. If you don’t understand property management from the outset, you can get taken for a ride by hiring the wrong property manager to manage your properties.
On the vetting process for getting tenants for a unit:
Generally, Terrie and her team try to get the largest pool of respondents to a rental advertisement as possible. This means getting professional photos and advertising consistently. The largest pool of tenants to choose from is preferable.
The vetting process consists of a telephone questionnaire for any respondents that will weed out people that will not qualify before they can see the unit. Tenants that pass the phone screening are asked to fill out a standard rental questionnaire which covers job, credit, any previous rental board decision, etc. The main piece of information for Terrie is the credit report. A credit reports is normally reflective of how people view their obligations. If someone has poor credit, they still may pay their rent on time, but it is normally a good indicator of how they will behave – will they take out the trash on time? How will they communicate with the property manager? In Terrie’s experience the credit report is a very good indicator of how the tenant will behave.
Terrie never goes by her gut. She has been wrong in the past and she finds that the hard numbers are the best to determine how the tenant will work out. The only time she might pay attention to something other than the hard numbers is if the applicant is difficult during the application process. A potential tenant could have amazing credit and check all the boxes, but if they are difficult during the application process, this is normally an indicator that they will be difficult as a tenant. If you don’t want to have a difficult person to manage, you may want to consider these behaviors.
On what Terrie looks for in an investment property in Montreal at this time:
If she was investing today in Montreal, she would be taking a hard look at the numbers to see if they make sense. Certain areas of Montreal, including downtown or anything on the metro grid is getting more and more difficult to cash flow. For this reason, Terrie would be looking to other neighbourhoods. Some examples would be: Lachine or LaSalle – areas that have been neglected by gentrification in the past. If you can invest in these areas before they become popular, this would be a great investment. Always pay attention to cash flow to make sure the numbers make sense.
Five-wire (Vancouver and Montreal):
1. Favourite neighbourhood in Vancouver: East Vancouver near the PNE
2. Favourite bar or restaurant in Vancouver: Laughing Bean on E. Hastings
3. First place she brings someone from out of town in Montreal: Old Port of Montreal
4. Advice to her 18-year-old self: Buy as many buildings as possible. Be more aggressive in real estate. When she looks back, she should have tried to worry less and just take action.
5. Something she’s bought for under $500 that’s had a positive impact on her life: The book Rich Dad, Poor Dad – it changed her life when she was young and put her on the path to real estate investing.
To find out more about Terrie at her website.
You can find her book on Amazon here.