Swim with the sharks - or a tortoise?
One of my favorite books is called Swim With the Sharks Without Being Eaton Alive by Harvey McKay. I picked the book up in a store and remembered opening to one page where it said “second place in an interview is last place”. I loved it and bought the book.
It’s a book about how business is cut throat and how to survive in this world. Sharks are an agressive animal often on the attack and dominate the space they live in. The business world is often described as being full of competitive sharks. My experience is different.
What I found interesting in reading the book and subsequent books by Harvey McKay is that you don’t have to be loud, obnoxious and always on the attack like a shark to succeed in business and life. Some businesses try to be very aggressive like a shark and may have some success though over the long term struggle to keep that aggressive nature or spirit moving forward. I have worked in sales where it is all about making the sale, and we don’t care about the customer after the sale. I found this a hard environment to work in, It’s not my personality.
In 2020 when I started my own business I thought how am I going to grow the business that works for me. Am I going to run it like a shark or would another animal fit the business I want to build. Many years ago when visiting the San Diego Zoo I encountered tortoises. When we asked how old they were the reply was we are not sure, they are older than the Zoo which had been around for 100 years. The average life span of a shark is 20-30 years. Many tortoises can live up to 150 years. Sharks live a strong violent life compared to a tortoise. Tortoises have a shell and when life is attacking them they protect themselves with their shell. This reminds me of what Warrent Buffet looks for in investments. He looks for companies that have a “moat” around them. A moat, or maybe a shell, isn’t that the same thing?. Even in his 90’s Warren Buffet says he makes decisions for the long term.
When Cartref Properties started I decided I wanted it to be like a tortoise. What does that mean in business?. To grow methodically, building a shell around the business ensures it lasts a long time. Making decisions that are designed for the long term and not short term gain which may affect the long term health of the business. It takes time to build a business and they can collapse rather quickly when short term thinking is applied.
Long term thinking doesn’t mean buying all the new tools for the business, it means adjusting and adapting along the way to meet the needs of the growth occurring. Rapid growth has ruined many businesses before they reach their potential.
Cartref Properties is looking forward to serving your needs for rental property management in the lower mainland of BC for many years to come.
Need help managing your investment properties. Cartref Properties can assist you, call today to discuss your needs. You can find more information about us at: www.cartrefproperties.com
Is there a rental crisis?
We keep hearing the term we are in a rental crisis in Canada. First, what is a rental crisis?
I think what it means is that we don’t have enough housing or enough affordable housing for people to live in. Governments are saying we need to build more to meet the need to eliminate the rental crisis.
This confuses me a little. Even during covid when you looked at the number of properties for rent there were lots of properties for rent. Now that the economy has slowed, the number of rentals has exploded, so why do we need more? It is now taking at least three months to find a tenant in the best case scenarios for our clients. Tenants have the time to take a look for the right fit for them and to negotiate the rental rates. These factors are quickly reducing the rate of rental prices.
As the economy slows developers slow the amount of product they build which eventually will also catch up to the market and there will be a reduction of the amount of new product entering the market. If this is going to happen then why do we need more rental properties?
Maybe we don’t need more rental properties, maybe we have been building the wrong properties. For the past thirty years in Canada. The majority of properties built in the lower mainland of BC have been condos for ownership. The number of purpose built rentals has been far and few between. In other parts of the county like southern Ontario many properties being built are still single family homes.
In both of these markets we have missed what the needs of today are. Vancouver is a very transient market meaning people come here then move on elsewhere. This means we need more rental propeperties than owned properties. Ontario building mostly single family homes except in downtown Toronto is not understanding that the household has changed. Families are not as large as they were before and people are living on their own for longer which means the product needs to change to meet the demand of the current market. In both markets we are missing what the market needs and building what the seller wants to make and feels they can make the most profit selling.
In the Vancouver market developers have built many rental buildings in recent years, but are they meeting the market needs?. Many of the new rental buildings look very similar to new condo buildings with, in unit laundry, high end appliances, and many building amenities we find in condo buildings. All of these items increase the cost of maintaining the buildings, which makes it difficult to reduce the rental rates to meet the tenants demand to have lower rental prices. It is difficult to have quality and lower prices at the same time. In those scenarios something must give, if you want better quality it will cost more money. If you want something less expensive you must concede something of quality in exchange. That can be less features in the unit or less amenities in the building. In Ontario people are trying to find less expensive and the only way to do that is move further away to less expensive property, instead of a smaller property.
In both markets we have not built enough purpose built rental properties which leads to cases like covid where when the sales market takes off many investors take the opportunity to sell their property for a profit and this takes needed rental properties out of the market. Other government controlled factors affect the market including the amount of immigration entering the country, the people allowed to buy products like foriegn buyers and how houseing is used including short term rentals. When governments change the laws affecting these factors they eventually have effects on the rental market.
What a rental, and housing market needs is stability. The interesting thing is that all the issues that people complain about in today’s market have occurred before, and will happen again in the future.
Building more housing may not solve the “rental crisis” if we continue to build the wrong product for the market.
Need help managing your investment properties. Cartref Properties can assist you, call today to discuss your needs. You can find more information about us at: www.cartrefproperties.com
What price can I get for my rental property? Can I always be at the top of the market? No.
What price can I get for my rental property? Can you always be at the top of the market? No.
Clients are always asking, what price can I get for my rental property?.
The only true answer is “what the market will pay for it”.
With rental prices landlords are limited to what the current rental market conditions are and what the market will pay for your property. Every landlord want’s as much renta for their property as they can obtain. The problem with this scenario is it may not match what the current rental market conditions are. If a landlord wants to rent their unit for $2000 and renters are not willing to pay these prices the unit will sit vacant until either the landord adjusts their expectations or the market conditions change.
The rental market rates often take a long time to adjust either up or down. When there is a shortage of supply compared to demand the rates wil increase. When there is an abundance of supply compared to demand the prices will decrease. Covid created a market of less supply of product rapidly increasing rental rates. In the past two years due to manuy factors the supply has increased compared to the demand creating a decrease in rental rates.
A landlord and tenant relationship has a built in conflict for what the rent should be. Landlords want the highest payable rent and tenants want the lowest rent possible.
Both of these options are not possible at the same time. If the tenant rents a property and the economy causes rents to increase while the landlord is in a lease agreement which restricts their ability to raise the rent, the tenant would be in a market where they are paying below market rent. In this situation we see tenants stay in the properties they are renting as moving would cause an increase in their rent being paid. If the market declines after a tenant signs an agreement they may be in a situation where they are paying more than the current market rent. When the rental market rates decrease this will cause tenants to seek new places to live for various reasons. Tenants move to decrease their costs, improve the quality of property or change the location due to work or other reasons.
When rents are increasing landlords prefer tenants to vacate the property with the intention of re-renting the property at a higher rate. When rents are decreasing, landlords want the tenants to stay to prevent vacancies. Both parties have opposing veiw points to the benefits of their situation.
If the landlord is not able to have their property always rented for the maximum the market will pay for it, what can they do?.
What is the average length of tenancy? Rental properties have and always will be a transitional type of housing, meaning that most people renting stay for short periods of time in one location before moving. Cartref Properties tenancies have an average of 27.6 months per tenancy. This means that most people move somewhere between two and three years when renting a property.
Turnover offers the landlord the opportunity to re-rent the property at the higher rent when the rents are increasing or decreasing. When rent is decreasing sometimes this is a good time to take it off the market temporarily and renovate the property. During this time renovation costs generally are less expensive as it oftens coincides with a slower time in the economy. For these reasons turnover can be a good thing for landlords especially in BC where there are restrictions on the rent increase amounts permitted. When tenants stay in properties longer than three years you will find the rent is often lower than the current market rent. This creates the illusion landlords are losing money. When they rented the property it was acceptable though outside factors including taxes, utiliitites and other costs may have increased making it less profitable for the landlord.
When rents are increased it also makes it less affordable for tenants if they need to move. When rent are on a decline tenant willtake advantage of this opportunit to improve their financial situation. Often in times of rental rate decre3ases tenant will ask for the rent to be decreased and landlord will decline. Landlords only want to increase rents, not decrease them. It may be in the landlord’s best interest to consider a tenant’s request to reduce the rent. When rents are declining it means there is greater supply. This often leads to multiple months of vacancy only for the unit to be rented at the rate the current tenant requested. Isit better to have one two or five months of vacancy instead of a $200 rent reduction.
The rental rate is always what the market will pay.
Need help managing your investment properties. Cartref Properties can assist you, call today to discuss your needs. You can find more information about us at: www.cartrefproperties.com
Tenancy Law Changes coming
Over the past few years the BC government has implemented multiple changes to laws which affect the rental market. They are proposing multiple changes to BC tenancy laws in the near future.
One of the changes is the notice period required for landlords to provide a tenant when they want to re-occupy the unit for owner use. This would be required when a tenancy is on a month to month agreement. Previously the notice period for landlord use was two months. The government changed it, and increased the notice requirement to four months. They adjusted a portion of the notice period to three months which was only applied to purchasers of the property. This reduced the notice period to three months for people buying a tenanted property. For landlords wanting to move back into their own rented property it remained at four months notice.
This created some confusion in the market when providing notice to vacate a tenant.
The main reasoning behind reducing the notice to three months for new purchasers was banks don’t often provide more than three months for holding an interest rate for buyers searching for a new home, which was affecting the ability of purchasers to buy tenanted properties.
This week the government has announced it will change the legislation again, reducing the notice period for landlords from four months to three months, to align both of these notice periods. This means landlords and new buyers will both only need to provide the three month notice to move into the tenanted property.
They are also proposing changes to landlord requirements for tenants abandoned property. Currently when a tenant leaves property behind which was valued over $500 a landlord is required to hold these items for 60 days providing a tenant time to return and claim these items. The proposed changes are reducing the holding time from 60 days to 30 days and increasing the value amount from $500 to $1000.
One other change is they are planning to have the RTB publish monetary order decisions starting this summer. They are already publishing decisions of hearings held, I can only assume this is going to have more information and potentially details of the participants. This would be helpful to landlords if tenants have had issues with unpaid rent in the past. Another tool to verify a tenant’s suitability for renting a property.
All of these changes require the BC legislation to be changed so this will take some time before they are implemented.
https://news.gov.bc.ca/releases/2025HMA0027-000307
Need help managing your investment properties. Cartref Properties can assist you, call today to discuss your needs. You can find more information about us at: www.cartrefproperties.com
Is it hard to find housing in Vancouver?
Reading a recent article about the affordability of rental housing in Vancouver suggests renters are struggling to find housing in their budget. Why is this? Is this a new problem?
I moved to Vancouver in 1991 when I was 24 years old. The 1980s were a very slow economy in Canda and BC was no different coming out of a recession at that time.
I struggled to find employment and housing at that time that was “affordable”. Affordability in Vancouver housing has been a topic for the entire time living in the area.
I moved here with my sister and we first rented a basement unit in Richmond as that was what we could afford. We then moved to 4th Ave. in Vancouver renting a two bedroom apartment for $800 per month. That apartment like many rental properties in Vancouver did not have in suite laundry. It was in the building, and we had to pay to use the laundry. I moved from there to a bachelor apartment which was a 400 sq foot one room apartment, and I rented for $400 per month. I moved out of that unit when the landlord increased the rent to $475 per month which was a 16% increase in the rent. This was allowed as at tht time there were no restrictions on the limits for a rent increase. I moved in with a friend temporarily until my partner and I then rented a one bedroom unit together.
I finally bought my first home when I was 30 years old moving to Port Moody. Until I lived in five different properties in the Vancouver area, and none of them had laundry in the unit.
As property manager today I am surprised by young people’s expectations when trying to rent a property. Many advise they won’t rent a place without laundry in the unit, and don’t want gas appliances due to the environment. At the same time they complain about the cost of housing. I am confused by this disconnect. When you want more services there is a cost to those additional expectations.
The article also suggests that some people don’t want to share a space. The majority of the properties built in recent years have been two bedroom units meaning smaller units are not available. The reason for this is the public was advicing there was not enough spaces for families due to the lack of single famly homes not being built which increased condo to multiple bedroom units. Many people lived with friends and roommates in their youth. It is normal for that to happen.
I have heard many people leave to go live in our neighbour province of Alberta when the economy slows and for years have seen many return a year or two later. The rent cost might be less expensive, but they don’t account for all the other expenses to live. Alberta is colder than Vancouver meaning heating costs are higher, like Ontario it is vast and requires most people to own a car to perform any task which adds costs.
The Vancouver rental market is slowing down and will continue to slow over the next two years. This will be caused by a slow down in the development of new products. The higher interest rates followed by various government changes including Air BNB, and immigration changes for example. This is creating developers to slow down on new developments. We will see this change in about two years after all the current product being built is completed and there are no new products being started. This may surprise people, this isn’t the first time this has happened in Vancouver. I have seen multiple slow downs in the economy and each time developers stop building, decreasing the supply of the product.
At the moment the supply of rental prices is greater than the demand of tenants looking. This is putting pressure on the rental prices and rents are decreasing. We don’t expect a stop to this downard pressure for two or three years.
The article also mentions that young people are finding it harder to search for properties due to the large number of websites that have properties advertised for rent. The internet has made searching for a rental property easy. It has also helped grow the individual condo and housing rental market. Before the internet, finding a condo to rent would be very diffficult. The ad would need to be in the local newspaper and only printed a few times per week. Renting from an apartment building meant going to the neighbourhood and visiting the building to see if there were any units available. The process for renting has shortened dramatically.
Today renters can view the property online, the area of the property is located, apply and send payments for the property from your home without actually visiting the unit. It doesn’t get any easier than that.
Affordability has always been a concern and always will be. What one person considers affordable another doesn’t.
Need help managing your investment properties. Cartref Properties can assist you, call today to discuss your needs. You can find more information about us at: www.cartrefproperties.com