“No person shall use or permit to be used any dwelling unit for a period of less than one month unless such unit forms part of a hotel or is used for bed and breakfast accommodation.”

And since the units we rent are full size suites (legally called a dwelling) and not a hotel or a room in a bed and breakfast we have to comply with this by-law.

Vancouver By-Laws:http://vancouver.ca/commsvcs/bylaws/zoning/sec10.pdf

By hiring Bruce Ward Realty Ltd. to be your manager, the day to day work of renting, marketing, cleaning, maintaining and servicing your tenants is taken care of. Bruce Ward Realty takes care of everything except your ownership costs, including setting up your small business and handling all the paper work. You merely sit back and enjoy your investment.

2. Where do the rental customers come from?
Bruce Ward Realty markets fully furnished suites worldwide. This involves daily advertising in The Vancouver Sun, full Internet service with complete pictures of your suite, monthly updating of the top search engines to insure that our customers can find us easily, a toll free number throughout North America, plus full cooperation with the real estate community and travel industry.

These costs and services are paid by a commission structure that amounts to 16% to 25% of all rents received. This includes any travel agent’s commissions as well as any wholesaler’s fees. Our high occupancy offers you maximum returns; plus it offers you or your friends a chance to use your own suite at any time with proper notice.

3. Why choose personal ownership through Bruce Ward Realty?
Experience is one of the main reasons for our success, both in sales and rentals. Our management experience took us through training from a commerce degree, hotel management schools, hotel management and real estate sales. In 1989 we started selling condominiums in the West End and Downtown area of Vancouver where year after year we were consistently in the top 1 to 5 % of all real estate sales teams. In 1995 we formed our own company to fill the niche market for looking after investors with hands on service.

4. Why is Vancouver an excellent location for revenue condominium ownership?
Vancouver’s geographic location at the edge of the Pacific Rim and minutes from the US border make local short term rentals very high demand items. Add to this the high cost of hotels, the best winter climate in Canada, the largest cruise ship activity in western North America, the large number of English as a Second Language (ESL) schools, the film industry, and the fast growing high-tech sector and you can see why we are currently running 95% occupancy year round.

5. What are my responsibilities as a personal owner?
You are responsible for ownership costs, such as mortgage payments, monthly maintenance, utilities, depreciation, insurance and taxes. Bruce Ward Realty takes care of everything else while you sit back and enjoy your investment!

6. What do I pay for insurance?
We offer a special bulk rate insurance that covers $10,000 on fixtures, equipment (appliances) & Owners Improvements, $45,000 Rental Income Loss, $25,000 Special Loss Assessments Property, $5,000,000 Commercial General Liability, $1,000,000 Special Loss Assessment Liability, $10,000 Owner’s Contents (furnishings). All of this is available to you with a $500.00 deductible and this package costs you only $280.00 to $320.00 per year!

7. Will I have full disclosure about the management of my revenue condominium?
Full Disclosure has always been the policy at Bruce Ward Realty. We keep our owners completely informed on the everyday details of the business. We provide you with copies of all rental documents and repair receipts when you need them. Then you can see exactly how much money we have collected and the occupancy rate of your unit. This is not a rental pool situation.

8. Will I receive monthly statements?
Monthly statements are sent to you except when there is no expense or revenue activity on your suite. Statements are completed in the middle of the month following the month of the last transaction. All funds received up to the 10th of the month are disbursed by the 15th of the month. Because our months are reckoned as a 30 day stay, they quite often do not fall at the end of a calendar month. Thus a check coming in on December 16th will not be paid out until January 15th.

Each monthly statement includes a “year to date” portion at the bottom that summarizes all your accrued revenues and expenses as the year progresses. The December statement serves two functions because it accounts for December and also summarizes the entire year for you and your tax accountant. This statement is sent to you before the end of January each year.

9. What guarantees can you make?
Guarantees are not expressed or implied; however, we will show you successes from our previous years of experience. We provide testimonials from our customers that will give you a good insight into the ability of our program to achieve the goals we all have – make money, have fun, save taxes, build up our net worth…all with a minimum of risk.

10. What are the risks?
Risks are always present in any investment. So we must not only look at the good side but ask ourselves “what if?” and examine a worst-case scenario. The worst case is that the revenue stops…you own your own suite and you may have to make the payments. The property is an asset owned solely by you and it can be liquidated.

However, since you will have made every effort to succeed in making it a business, any loss incurred may be a tax-deductible expense. Expenses such as mortgage interest, depreciation, maintenance, management fees and taxes may be eligible as deductions. It is always good to have your own personal tax advisor outline the extent of these tax savings and advise you if you qualify.

11. Is revenue condominium ownership right for everybody?
Revenue condominium ownership is definitely not right for everybody! If you are going to stay awake at night worrying about who is sleeping in your bed and spilling wine on your carpets, or worrying if your condo will be occupied next month, then this type of investment is not for you.

However, if you can find comfort in the fact that someone else is making your mortgage payment and that if something does goes wrong, Bruce Ward Realty will look after it, clean it, maintain it, rent it out and take care of any tenant problems, then this is for you!

12. Why doesn’t everybody do this?
Not everyone can qualify for the financing needed to purchase an investment property and not everyone can afford the down payment and monthly payment should the suite be unoccupied. The personal ownership plan merely provides you with the most practical way to build up investment in real estate.

13. Will I be locked in?
Your only obligation to us is to honor any lodging reservations that we have made on your suite. If the rental customers can be accommodated in another unit, then you can cancel your agreement with us anytime, as long as you provide 90 days notice. There are no mandatory fees or penalties to ever worry about. It would be nice if all business ventures were this easy to get in and out of.

14. When will I be able to use my condo suite?
Your suite is never restricted except on short notice when we have already committed your unit to a rental customer and there are no other alternatives available. We should point out that the federal government requires that at least 90% of the lodging time is made available to produce revenue before allowing a tax write off. So, if you plan to use your suite more than 30 days a year, you should prorate your tax deduction accordingly.

15. What if my friends and relative want to use my condo suite?
No problem – just ask them to call us and we will take care of everything. If you phone us ahead of time and tell us what discount and/or amount of time you are allowing your friends, we will then give them the same service as a normal rental customer. They will receive all the service and benefits of our contracts and facilities, ensuring that you are protected if any problems do occur. Your friends can remain friends and you do not have to lose all the revenue or control. Your account will be charged a management fee for this service based on the normal rental rate.

16. What suites are the best for this program?
Answer these two questions first: 1.Is my personal comfort the most important requirement, or is spending the least amount of money to earn the most dollars the most important? 2. Can I compromise?

If personal comfort is more important, then you will choose well by this rule of thumb: bigger is better. If budget is more important, then the smaller units save on the initial outlay and the rental demand is always very strong. Large units do not earn as much per dollar spent. So this fact may steer some buyers toward a more middle of the road approach. If you look at the whole fleet, you will see that demand exists for all the suites we rent. Perhaps you should discuss this in more detail with your sales representative to decide which suite is best for you.

17. A statement rather than a question: It seems too good to be true!
This is one of the statements we hear most often but as soon as you check us, and our program, out thoroughly, you will agree that it does just what we claim it does. This program can provide you with the ownership of a luxury condominium with a substantial portion of the cost being paid for by our tenants.

Plus, the expenses spent to obtain this revenue may qualify for some tax deductions. Compare this to the people who just purchase a suite for all cash and only use it several times a year. Our real estate management service is one of the world’s best-kept secrets because we do not advertise it. Our customers come from our tenants, word of mouth, other real estate agents or direct referral from our owners. As quiet as this program is, you were probably not aware that in many industries around the world, this is one of the most successful methods of building wealth. Did you know airline companies, government companies, trucking companies, machinery companies, hotels, resorts and many more companies all use this method of building resources by sharing the benefits?

Financial considerations in foreign investing
The financial consideration includes the down payment, income, and tax implications.  It is recommended that any investor should consult an accountant to review their specific tax implications, and be pre-approved by a lending institution to see exactly how much money they qualify for and what the monthly payments would be.

The basic financial implications are summed up as follows:
The foreign investor will have to put a minimum of 35% down on the purchase of a property.  The exception would be a down payment of a pre-sale, in which case the developer sets the initial deposit which usually ranges anywhere from 10% - 25%.  However, at completion of the project when the mortgage is put in place, the same rule would apply and the investor would have to top off the deposit to the 35% mark as outlined by the lending institution.

If the property is used as a revenue property, the foreign investor is subject to a 25% withholding tax on the passive income earned on rental income.  This amount can be reduced to a lower amount under the provisions of a bilateral tax treaty between Canada and the country of residence of the foreign investor.  Final adjustments and claims can be made when the annual tax return is submitted, and the investor has a chance to reduce the taxable amount and possibly receive a refund.

Lastly, at the time of sale, the property would also be subject to capital gains tax, that is, 50% of the increase would be added to the income and taxed accordingly. The tax rate is determined by tax bracket that the investor is in.  A good guideline for any of these tax implications can be provided by an accountant.

Property considerations in foreign investing
There are two main property considerations that are interconnected. First, the type and location, and second the use of the property.  If you plan to invest in a sheer investment property and plan to let it out unfurnished, you have a wider area of selection to choose from.  If the property is to be used as a furnished rental, with possibility for personal use throughout the year, the selection is slimmer.  At first glance this may not make sense, however, when looking at the overall picture, it should be kept in mind, while in a perfect rental market every suite is equally desirable, in a soft market, the location and type of suite very much comes into play.  This is especially true in furnished rentals, where the majority of the clientele prefer to stay close to the urban centre and work.

It is also important to research the type of suite that is most desirable in the rental market.  This may also vary between the furnished and unfurnished rental markets, as there may be a larger demand for studio and one bedroom suites in the furnished market, and two bedroom suites in the unfurnished market.  It should, however, also be kept in mind that the demand for specific types of suites is subject to change, and only serves as a guideline since the future demand may not be easy to predict.

Management considerations in foreign investing
The property consideration ties into the management consideration.  While it may seem to be simple to manage a residence from out of town, it does get very complicated if a problem arises in the building, or with the tenant.  In furnished rentals, this is amplified by the simple fact that there is greater turnover in tenants, and the suite has to be cleaned and maintained for the next tenant.

A local management company will provide all the necessary services for the property, plus additional services that may not immediately come to mind.  First, the management company will screen clients, take care of the day to day operation, respond to emergency calls, collect and submit the withholding tax to the government, actively deal with the building strata managers and keep the owner up to date on important changes in rules, changes to the building, and even be in a position to vote at council meetings on behalf of the owner.

In furnished rentals, the management company will also be responsible for the ongoing marketing of the suite, and even be able to ‘book’ the suite for the personal use of the owner.  It is easy to see that the right management company can be worth its weight in gold for the investor.

Real estate agent considerations in foreign investing
Lastly, the agent consideration is perhaps the most important one right from the onset of the search.  While there is no one way to choose an agent, they should be knowledgeable in all aspects of investment properties and pull the above three considerations together for the investor.

A good place to start would be www.realtylink.org where the user can find a realtor by using area/specialty search function.  Failing that, the buyer could check out listings on www.mls.ca and just contact a realtor that has a listing that they are interested in.
Another approach to choosing a real estate agent could be to use a search engine and find a real estate brokerage that handles both sales and property management. Lastly, the buyer could enquire if a relative or acquaintance has used a specific realtor before, and has a good recommendation.

Once in contact with an agent, the investor should have a few questions ready, such as those that relate to the type of experience the realtor may have in investment properties, or which area they specialize in.  It should not be a requirement for them to work for a company that handles property management; however, they should be able to point the investor in the right direction of a licensed management company that will take over once the purchase has been completed.

Serving the foreign investor is not an easy task for the unseasoned agent, as selecting the wrong building may decrease the ‘rentability’ of the suite. The purchase price is also not to be overlooked.  Along with mortgage payments, there are property taxes and strata maintenance fees.  The agent should be able to give realistic estimates on the costs, minus the potential income, to see how the cash flow might be affected.  This then leads into the exact use of the property for the investor, and how the revenue could be maximized.  The agent should not only be able to give realistic estimates on rental income, but also be able to suggest the best locations for maximum return on investment (ROI), analyze the specific needs for the investor and be the guide to a sound investment choice that will suit the client.

The investor should be looking for a good ‘fit’, that is, someone that they connect with on a personal level that they can trust, and who understands their needs. Ideally the investor should walk away from the experience knowing that a good team is in place to take care of the property and the client.

Strata Property Act (SPA), Section 135

(1) The strata corporation must not

(a) impose a fine against a person,

(b) require a person to pay the costs of remedying a contravention, or

(c) deny a person the use of a recreational facility for a contravention of a bylaw or rule unless the strata corporation has

(d) received a complaint about the contravention,

(e) given the owner or tenant the particulars of the complaint, in writing, and a reasonable opportunity to answer the complaint, including a hearing if requested by the owner or tenant, and

(f) if the person is a tenant, given notice of the complaint to the person’s landlord and to the owner.

(2) The strata corporation must, as soon as feasible, give notice in writing of a decision on a matter referred to in subsection (1) (a), (b) or (c) to the persons referred to in subsection (1) (e) and (f). Once a strata corporation has complied with this section in respect of a contravention of a bylaw or rule, it may impose a fine or other penalty for a continuing contravention of that bylaw or rule without further compliance with this section.

A complaint must precede the levy of a fine

The strata council may be aware of a violation of a regulation or bylaw either by noticing the contravention or having it brought to their attention. However, according to Section 135 (1d) of the SPA, a complaint about the violation must be received by the strata council. The complaint doesn’t have to be received in any particular medium of communication. By being aware of their property, the strata council can often ‘be on top of’ any suspected contraventions.

Strata must give written notice of the complaint

The owner or tenant to whom the complaint is directed must receive prompt written notice about the complaint from the strata council. Not only that, but as Section 135 (1e) of the SPA states, the owner or tenant must be given enough time to address the complaint before the strata council can begin to impose any fines. The required process may take a lot of time before any fines can be collected, but if this process isn’t followed to the letter, the strata council may lose out on any fines that owners would otherwise have to pay.

The trick to running 95% occupancy year-round in fully furnished privately owned condos: Actually, there are no tricks to this business. We start off by doing whatever is best for our principal. It’s not the tenant – it’s the owner of the unit.

Here are five effective strategies, not tricks, to help increase the unit owner’s return on investment (ROI):

1. Competitive pricing

We are constantly monitoring the pricing of our units to ensure we are always competitively priced in the marketplace. By only blocking suites 21 days in advance of arrival date, plus giving our top 20 Corporate Companies right of first referral, we have managed to run full most of the time. There is no advantage to getting $1000.00 above market value if the suite sits unoccupied a month before, or after, a reservation has blocked a specific unit six months in advance.

2. Minimal downtime

Our downtime usually only occurs when we have to block each unit for five days between stays to have it cleaned, do small repairs and get it back into inventory as soon as possible.

Most of our Business Tenants are not sure how long they will require the accommodation for, so we usually contact them before booking the suite for a new tenant. This helps ensure they still plan to leave on the date we have them down to go. Moving a tenant to another suite in the middle of a stay is costly, doubles the workload and makes for unhappy tenants.

3. Efficient tenant screening and follow through

Our tenants are screened as much as possible with careful attention paid to passports and photo Id. We discourage more than two people in any of our units. Children, pets and smokers can be extremely hard on our units and thus, many of our units are not suitable for everyone.

4. Efficient communication about regulations and services

The most difficult part of the job is keeping the Strata Corporations, Building Managers, Tenants and Staff informed about smoke detector inspections, dryer vent cleanings, Internet connections and cable and telephone problems. Add to this the problems you have from some guests who want hotel-type services that we cannot provide, and, needless to say, we are always on the run.

5. Profitable inventory restrictions

At present, we are restricting all new inventory to newer buildings. They are the most popular with all of our tenants. We anticipate a growth of 35% over the next 12 months and hopefully an increase in the return to our owners by at least 10%.