The hard way

Growing up in near Windsor, Ontario, in the 1990s, Mike Reimneitz had plenty to think about as a prospective investor: how a stagnant economy manifests itself in rental rates and tenant profiles, the pros and cons (and catastrophes) of providing student housing, the effects a supplemental income would have on his lifestyle. But Reimneitz’s perspective on real estate was largely shaped by his father’s experience as the owner of an eight-unit apartment building in Amherstberg.

“He was able to live off the income from the building,” Reimneitz says. “The fact that he was able to do that, just from one building, gave me the buzz to get started. Now he’s calling me and asking me for advice.”

As a 19-year-old tradesman living at home and saving most of his wages, Reimneitz was eager to land his first investment property. But his mom and dad had other ideas.

“My parents decided that if I had enough money to buy a house, I’d better go live in it myself,” he says.

It would be another three years before Reimneitz found his first property – a threebedroom bungalow in Windsor purchased for just over $130,000 – and started renting out his spare rooms to friends and family members for $450 each.

“It was definitely not a bad way to get started,” he says. “It felt good just to be able to make a little more income.” That extra income was just enough to help Reimneitz buy himself a membership to a local golf club – no small reward for a teenager nuts about the sport, but a far cry from what his 19-door portfolio is doing for him today.

Cornwall calling
In 2008, Reimneitz found himself living in Kingston, enrolled in the teacher’s college at Queen’s University and once again a renter. The experience opened his eyes to just how much money his landlord was making by renting to students on a per-room basis. Reimneitz had his sights set on the student market, but after graduating, selling his home in Windsor and not knowing where the next few years would take him, he chose to purchase his first pure investment property in Ottawa’s then up-and-coming Westboro neighbourhood.

While his foray into the Ottawa market was a lucrative one – he ended up selling his duplex there after three years for a $70,000 profit – Reimneitz’s hunger for cash flow took him back to Cornwall, where properties were cheaper and nearer to where he had taken up a full-time position teaching construction and woodworking. In 2011, he purchased a duplex in the city for $168,000. The basement unit, with its four bedrooms, was perfect for student tenants. The property cash-flowed nicely, but Reimneitz says the hassles of dealing with young tenants eventually eclipsed profit in terms of importance.

“Students are a lot harder on your buildings, and your turnover is a lot more,” he says. “Students slam things; there are parties – all the typical stuff students do. I didn’t want to deal with the complaints. The returns are great, but it’s also a lot more work. If the internet goes down or there’s a small problem, they’re going to be calling you for every little issue because they’re not adults yet and they don’t know how to care for a unit.”

Reimneitz still owns the duplex, but he stopped renting to students within the last year. “It still does well today,” he says, adding that investors looking for opportunities beyond Ontario’s Golden Horseshoe can still find what they’re looking for in Cornwall, where investor interest has been ramping up in light of Ottawa’s surging market.

“The rents are comparable to what Ottawa’s are, and the buildings are a lot cheaper, so the returns per month are a lot better,” he says.

 “You get a lot of investors from Montreal and Ottawa and quite a few from BC as well, so it’s pretty competitive now.”

Having proven his ability to service multiple tenants in a single building, Reimneitz turned his focus to small multifamily properties. All of his subsequent acquisitions have involved small multi-unit buildings of three to six dwellings that were poorly maintained and underperforming.

“A lot of people are afraid of those buildings,” he says. “They don’t want to get in because, just looking at the units, they look run-down. But those ones are nice because you can increase the cash flow significantly. When the tenant leaves, you can fix up the unit and bring the rent up to what it should be.”

DIY not?
As a teacher of other handymen, Reimneitz is blessed with an invaluable skill set that has made renos and repairs that much easier. But his portfolio, which now includes 19 units, requires a level of dedication most investors with a full-time job just can’t afford.

“It can be very rewarding,” he says, “but there’s also a lot of work involved. On TV they make it look pretty easy, but in reality it’s quite a bit of work in terms of staying on top of everything and making sure you’re able to rent out your units and attract the kind of tenant you want to attract.”

Exhausting as it is, following the DIY path has forced Reimneitz to more efficiently manage his properties. He’s a big fan of Buildium, an online platform that tracks properties and allows tenants to log in, check their standing and submit maintenance requests. (Buildium also includes expensetracking accounting software and allows an investor’s JV partners to log in as well.) He also cuts down on the time spent choosing materials by sticking to durable, cost-effective products like ceramic tile and laminate flooring and using them in multiple units.

Another major factor in keeping the machine running is Reimneitz’s ability to find the right tenants for his units. He says he learned a valuable lesson about landlord-ing from watching his father manage his building.

“I’ve seen some of the struggles he had, so I guess you could say I learned from his mistakes,” Reimneitz says. “He would rent to anybody and not do the proper checks. Some of the people he’d rent to wouldn’t pay him or would destroy the units. He had a lot of issues with some of the tenants.”

Reimneitz has largely avoided the same problems in his properties by sticking to a strict system of “calling the previous landlords, doing a proper credit check on them and calling their employer to make sure they’re good workers and telling the truth.” It’s a simple enough process, but one that a lot of investors don’t have – or don’t make – time for.

But a lack of time has yet to become an issue for Reimneitz; he’s simply enjoying himself too much. Just thinking about the amount of energy needed to work a fulltime teaching job while shovelling snow for his tenants, constantly sniffing out deals and meeting a steady stream of potential JV partners would be enough to put most people on a gurney, but that level of activity is why his buildings are all cash-flowing between $800 and $1,000 every month. “If you can do that,” he says, “it’s not hard to stay motivated.”

 

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