| What is a Property Manager?A PEI property manager takes the landlord's place in the daily responsibilities of running a rental property. These include maintaining the building and grounds including handling repair issues with regard to tenant's space as well as common space, the cleaning of same, and the implementation of any improvements that the owner may wish to make. In addition, a PEI property manager may look after the financial side of property rental for the owner. This includes renting the your PEI property, including doing a financial check on prospective tenants, as well as paying expenses for trades and workers providing services to the rental property, real property taxes, insurance etc. In a situation where a property manager is handling all aspects of operating the rental property, the owner is simply providing the capital necessary to own the property and has nothing to do with day-to-day operations unless there is a major problem. Different jurisdictions have differing legal requirements to work as a property manager. Many provinces accept a real estate agent's license as sufficient to function as a property manager. Others, such as PEI, have no real legal definition and as such there is no requirement to be certified in any way. That is why it is important to have someone experienced working for you. Nicolle Morrison has 22 years experience in PEI real estate and is a landlord herself. She has the contacts and the savvy to know who should, and should not, rent your PEI property and she knows how to 'vet' potential clients to ensure that you rent only to well qualified tenants. If you are looking for a rental property she can (while wearing her realtor hat) put her experience to work, as she has for herself, finding you a property that will give a good return on investment and then she can just as easily (putting on her property manager hat) turn that potential into reality. Ultimately, the PEI property manager acts as the liaison between the owners and the tenants of a property. As such, their responsibilities are as great, if not greater, than that of an owner. Tenants generally expect all of the same things from a property manager that they would from an owner, and owners expect a great deal from a property manager as well. You can rely on Nicolle Morrison to ensure that all expectations are met!
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 4-plex priced at $165K, over $2000/m rents  4-plex priced at $199K, over $2000/m rents  6-plex priced at $259,900, almost $3000/m rents | |||||
Buying vs Renting
In Canada we tend to think of real estate and a home purchase as being the best of investments and we conversely tend to think of renting as throwing our money away. It is certainly true that rent, once paid, is gone and other than a place to live for a month, brings no other benefit. On the other hand paying into a mortgage increases your net worth by increasing equity, or the portion of the value of the property that you could lay claim to, if the property was sold.
Generally it is thought that the amount that you pay in rent is a key factor to determining, when compared with the cost of purchasing, the value of becoming a home owner versus renting. A factor of 0.6% is considered the break-even point in this determination. If you can rent a similar accomodation (a PEI home) for less than 0.6% per month of the purchase price of a home then it will be cheaper to rent. On PEI that means that since the lowest priced homes in Summerside's west end would cost $70,000, that if you can rent this home for $420 per month then there would be little or no difference between renting and buying in th e Summerside real estate market. It is unlikely that you would rent this type of PEI home for such a low amount. PEI provides quite a good return to its landlords and as such is not the best place to be a renter.
This is true with a few caveats. Here is a list of considerations to determine if home ownership is right for you at this time:
- Are you likely to stay in this home for at least 5 years. There are costs associated with buying and selling homes. If you are moving oftener than once in 5 years then any investment gains are being eaten up in costs. Of course there are markets that outperform these costs but that type of investment is highly speculative.
- Is your current employment stable? Every month you will have a mortgage payment to make as well as utilities. There are consequences to not being able to make these payments, however are they any more dire than not being able to pay your rent. People get caught up in a fear over "mortgage default" and foreclosure. You should remember that we all have to find payments for shelter every month if we expect to keep a roof over our heads and this applies to both mortgage and rent.
- Will I qualify for a mortgage? Generally you are expected to pay no more than 32% of your gross income in housing costs. In addition it is expected that no more than 40% of your gross income will be used for debt service which includes mortgage, car payments, credit cards and any other consumer loans that you may have. If you are out of line with these percentages then you will have trouble securing a mortgage through conventional means (banks).
As alluded to above, as an investment, PEI home ownership works best if you can stay in a home for 5 years or more. Generally, the longer the better, as you have had a chance to develop equity. When you first start making mortgage payments you are paying predominately interest. However, as you continue to pay each month this begins to shift and you pay more and more principle. This adds to your equity in the home, ie. the amount of money that you could recover after mortgage repayment if you sold. Of course if you are renting, your rent will increase at the rate of inflation and you will have developed no equity in the property. This means that PEI home ownership is an investment in something you need anyway - a roof and shelter - while renting is simple a cost necessitated by the same need.
You can check whether buying is the answer from a financial standpoint by going to the Industry Canada websitehere to use their rent vs. buy calculator.
We have talked about buying vs. renting a home on PEI from a strictly financial point of view. There are other emotional and practical issues as well. By purchasing our home on PEI we remove ourselves from any capricious behaviour on the part of landlords. While there are protections for tenants built into most provincial Residential Tenancy Acts, ultimately, the landlord owns where you live and can have you removed. Additionally before making ANY changes, improvements or using a PEI property for any additional purposes you MUST get approval from the landlord. Although municipalities and cities do have bylaws governing use of PEI property this is by no means as stringent as the rights a landlord has to impose either changes of his making or preventing you from making changes that would be desirable to you. So if you want to control your own environment, have a measure of control over your shelter and make money and have the pride of ownership while you do it, then buying and home ownership are right for you!
Contact Nicole Morrison today for more information on mortgage services and how she can help you buy your own PEI home!
Direct: (902) 888-7237
Email: nicolle@century21pei.com
Toll-Free: 1-888-701-0021
Side by Side Duplex in Summerside
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