My husband, Paulo Shikanai and I own and operate Regency Property Management and Real Estate in Regina; a full service and registered property management/real estate company AND we are real estate investors ourselves.  In fact, we are property managers BECAUSE we are real estate investors; not the other way around.  I’m not sure if anyone ever woke up one day and said, “Gee, I think I want to be a property manager when I grow up”, or at least it didn’t happen like that for us.  Property management is the ‘tricky part’ of real estate investing.  It can be as bad, or even worse than the rumors have it, or it can be completely controlled, functional and even fun,  but it certainly isn’t ALWAYS fun and it certainly isn’t a good fit for everyone!  

In 1986, I graduated with a B.Ed. and started teaching fresh out of university.  I taught at a high school for seven years but in 1993 I wanted more adventure in my life so I bought a one-way ticket  to Japan, where I met my Brazilian husband, Paulo who did not speak a word of English at the time.  My mother, Pat Abel has been a real estate agent in Regina since 1976 and had the good fortune to have a father tell her when she was embarking on her new career “Well, you can’t make any money SELLING real estate!  If you want to be rich, you have to OWN it!”  I never heard him say those words myself, but I can just imagine him barking out this great advice with strong conviction.  That thinking has changed everything for many members of our family.  In Japan, Paulo and I saved up about $20,000.00 every year and started buying single family homes in Regina.  In 1999 we moved back to Canada newly pregnant with our second baby.  The economic situation in Regina at that time was extremely bleak and there were no jobs for either of us.  So my mother suggested, “Regina needs a good cleaning company”.   It sounded like an awful idea to me, but there was no other option.  In 1999 we started a residential cleaning company and both Paulo and I set out cleaning rich people’s toilets at 9 months pregnant.   Talk about humiliating!   The cleaning business put a little food on our table, but the returns were minimal.  So there we were,  broke cleaners/small real estate investors.  A couple of  years later,  my mom suggested,  “Regina needs a good property manager”.   I quickly studied all of the Saskatchewan Real Estate Association courses in the span of about two years and in 2003 we started Regency Property Mgmt. and Real Estate, all the while trying to buy as much real estate as possible. It was a tough start, but we remained focused on our goal to be rich.  It doesn’t feel completely right for me to state this goal in black and white print, but it is what it is.  That was the goal and we only knew of one way to achieve it and since my grandfather had inadvertently stated how to achieve it, we completely believed.

We started Regency Property Management and Real Estate out of the back storage room of a little strip mall that we had purchased on a vendor take-back.  Ten years later we employ 25 full time employees and two real estate agents and we sprawl out over half of the main floor of that same mall.   We provide full property management services, real estate sales and purchases, property maintenance,  major rehab/renovations and pest control.  It’s not standard practice for property management companies to employ a  such large team of skilled labourers/maintenance people, but because of the lack of contractors in Regina in the past few years and because of the demand for major renovations to keep our’s and our owner’s properties appreciating, we have made a conscious effort to build a great maintenance/renovation team.  Over the past 5 years, Regency has sponsored several foreign workers through the LMO or SINP programs and currently we employ ten skilled new-to-Canada labourers.  The key to training and keeping these foreign workers is to overlook the language barrier in the first couple of years and get them trained in as many areas of possible such as:  flooring, construction, shingling, basement bracing, doing concrete, minor plumbing and electrical, painting, landscaping, etc..  A new service that Regency is now providing to our clients at a discounted rate and to the public at the industry-standard rate is extermination.  In recent years, all of North America is dealing with a much larger population of bedbugs which is costing landlords thousands of dollars being paid out to the major extermination companies, so Regency Property Management and Real Estate has just purchased a thermal bedbug-killing machine at a price tag of about $100,000.00.  My husband and I have also taken the pesticide course to be able to treat  with pesticide as well as heat.  We are constantly looking for ways to stop out-sourcing these big ticket items, and get some control over unexpected major expenses to ourselves and to our owners.   It’s these types of services that we  offer that set us apart from the property management competition.  

Because our property management/real estate  business is so intertwined with our own investments, it is difficult for me to discuss one without discussing the other.  Take note:  this is a sign of a good property manager.  You WANT your property manager to also be a real estate investor.  You want him/her to THINK like an owner and FEEL what an owner feels.   Property management should be so much more than just a business for a property manager.  They have to understand that the owner is entrusting them with a huge, valuable asset that is their future retirement. Regency currently manages about 1000 single and multi-family residential doors (200 of which we own as a family).  We do not manage condo associations nor commercial property.  We only specialize in single/multi-family residential on the property management side and all areas of real estate sales (which can include commercial and farm land.)   

One of the questions we are often asked by owners enquiring about our property management services is “What does the monthly management fee include?” which is a perfectly fair and normal question for people looking to hire a service, but the answer is endless and unlimited.   The short answer is “it includes everything you DON’T want to know about with respect to property management, but if you don’t know what you don’t know, you probably cannot appreciate what that means!”.  So we try to explain to the owner about the number of things that CAN GO WRONG (but probably won’t) if you hire a good property management company.  This becomes a tricky conversation for the property manager because we don’t want to scare the potential customer but if they don’t understand the risks or the potential problems, they are remaining naïve.  The good news is that these risks can be greatly reduced with good property management.  It is somewhat similar to buying insurance in that you pay for a service but hope you never have to use it.  Then it seems like a waste of money if you don’t actually have to use the property manager’s expertise.  But trust me on this one, the expertise involved in property management IS the reason you won’t notice you are getting your money’s worth.  A good property manager makes it seem seamless and effortless, but the truth is,  the alternative can look like this:  chaos, frustration, disgruntled tenants, vacancy, repeated repairs, law suits and the list goes on.

This is what you should expect from your property manager:

1. Your property manager must be “REGISTERED’ as opposed to ‘LICENSED’.  Many investors do not know the difference between these two terms.  When investors are calling around prospecting to hire a property management company the most commonly asked question is “Are you licenced?” in which case the property manager mostly likely can honestly answer ‘Yes’.  The owner then thinks that ‘Licensed’ is the same thing as being ‘Registered’ but in the Real Estate world it’s not!   ‘Registered’ means they are a registrant of their provincial Real Estate Commission, have taken the education, are governed under the Real Estate Act and they are insured for errors and omissions under a Real Estate Assurance Fund.  The owner’s money MUST be deposited into a company trust account and the company MUST file an annual financial report to the Commission that can be audited at any time.  The Real Estate Assurance Fund is designed to provide financial protection to the owner  should they suffer monetary loss due to fraud or misappropriation.   Also, if  an owner has a  complaint with the actions of a registrant, they can also file a complaint with the commission and the registrant can be held liable or can be fined under the Act.  A ‘licensed’ property manager, on the other hand, simply has a  business license to operate a business, has a GST number and pays taxes, like any other business in the country.  They have no education.  They do not report to a provincial commission, and they do not hold your rental income in a designated and insured trust account governed by the Real Estate Act.  The commission exists for the protection of the public and is very strict with its registered members, however there are many unregistered property management companies that the commission either cannot or does not force to cease to exist.   Basically, it’s a ‘buyer beware’ situation.  We have heard several stories over the years of owners who have hired private property managers who have ran off with the last month’s rent up to $10,000.00 and in one case, ran off with a truck and the tools the owner had purchased for the property manager to use.

2. Besides being registered with the Commission, a good property manager should carry extra liability insurance on themselves and on their staff.  The errors and omissions insurance described above does not cover errors that may occur in or at the property.    Here’s a couple of examples of mistakes we’ve heard about over the years:  There was a fire in an apartment suite and it was later discovered that there was no working smoke alarm in that unit.  Of course everyone involved was sued: the owner and the property manager.  This is not a good place for an owner to be in at the best of times,  but if the property manager did not have any liability insurance it’s an even worse place.  Another example:  The tenants unexpectedly moved out of a home in the middle of winter and disconnected the utilities. The property manager had forgotten to fax in the ‘Utility Transfer Agreements’ to the utility companies so the heat was turned off on the coldest day of the year.  The water pipes froze and there was a huge flood in the house with damages in the six figures.  Of course there was a law suit between the owner and the property manager and there was probably an insurance settlement in that case.  However, it is possible that the property manager or property management company does not carry enough or any liability insurance and may not own any real assets.  Property management is a service industry and doesn’t require a lot of start-up money or equipment to run, so although an owner may win a law suit against a property manager, if the company or the property manager owns nothing and has no liability insurance, there is nothing to win.  In ten years of Regency being a registered and licensed property manager,  we have NEVER been asked by a prospective client, not even once if we carry liability insurance.   I find that odd.  By the way, we do!  I have so much more to say about insurance, specifically owner’s building insurance with respect to property management, but I’ll leave that for an upcoming issue.

3. ‘Property Management’ should really be called ‘24/7 Property Problem Solving’.  The manager must be 100 % dedicated to resolving the little problems BEFORE they turn in to big issues.  Less drama is always better than more.  Therefore,  a good property manager MUST have a 24/7 answering service and must have someone immediately available for emergency situations.  In addition, a good property manager will have a list of reliable contractors and be on great terms with these contractors so that they will take calls in the middle of a freezing cold night  or on a national holiday to go deal with a problem and not charge top dollar.  If a property manager has to call a plumber or sewer technician out of the phone book at any other time other than Monday to Friday 9 – 5 pm.,   the bill is not going to be nice.  A good property manager has relationships with specialty contractors to protect the owner from this ‘overtime’ billing.

4. Most of the secret for success in good property management lies in finding and keeping great tenants.  It starts with a rigorous screening process and a detailed lease agreement that covers everything from the ridiculous to the obvious. Property managers have experience on their side in choosing good tenants as well as a whole host of other tricks of the trade.  It’s unfortunate to state this, but a property manager’s reputation can precede them and the ‘bad tenants’ avoid business-run property managers and target the more naïve inexperienced private owner.   The lease agreement should not be less than several pages long of detailed rules and regulations and it should be read out loud to the tenant and strictly enforced with NO EXCEPTIONS TO THE RULES!  (unless there is a darn good reason.)  Consistency and clarity of the rules is crucial.

5. Some more minor yet important qualities of a good property manager are:  They should  have a user-friendly, attractive website for effective advertising of your property.  They should employ long-term staff which means the staff cares about their job and are very experienced and knowlegable. They should always collect and send the owner’s money in a timely manner and supply consistent and accurate reporting of all income and happenings around the property.

Property management is an interesting job.  There is never a dull moment at our office, and we are still surprised after ten years of being in the business that we still haven’t seen it all!  It takes a team to effectively manage many properties, along with a good sense of humor and thick skin.  In a nut shell,  property management is  a tough business and fits well with this quote:  “If nobody hates you, you’re doing something wrong! (House).  I tend to agree to some degree,  but I would like to add to this,  “If everybody hates you , you’re also doing something wrong!”     It’s a fine line to walk on.

By Kathy Berner