Hello FNM Community;
It is a HUGE honor to introduce you to Gillian Irving, a specialist in student rentals in Ontario. When I was introduced to Gillian through Julie Broad and I spoke to her on the phone, I recalled how knowledgeable she was about real estate, how open and honest she was about it. Plus I learned so much just talking to her, I knew I had to interview her.
Gillian is truly a modern day renaissance women – mother of 4 kids, coach, full-time real estate investor, speaker and regular contributor to Canadian Real Estate Wealth magazine. She also launched a real estate investment education meetup group called ‘MORE – Mothers of Real Estate, whose mission is to educate, connect and help mothers, and women in general become capable, confident real estate investors — while balancing kids, careers, family and finances.
In this interview, you will learn:
- Student rental real estate investment strategy – pros and cons
- Screening rules for choosing real estate investments
- Her tips for dealing with student tenants
- 39 web resources for real estate investors
- And much more!
Interview with Gilllian Irving
1.When did you start investing in real estate? What motivated to jump into it?
I think like a lot of people, I was really hit by the economic downturn in 2009. I remember watching my savings and my kids RESPs get obliterated, and I felt so powerless to control any of it. I just kept thinking that some nameless and faceless CEO was in charge of my financial future and it made me feel very uncomfortable. I know most people worry about their financial futures and I’m not really any different, except that one of my children has a serious disability that might really affect his ability to support himself financially when he is older. I don’t want my other kids to have to be responsible for caring for him financially, so my husband and I change how we looked at our finances and real estate emerged as a great option. In a nutshell, NEED was my motivation.
2. How did you get started in real estate investing? Why do you choose it over other investment strategies?
I actually call myself an “accidental investor” because I first got started, by luck I guess. I went for a run one day in 2009 and ran past a beautiful duplex in a really desirable part of Toronto. Remember this was a time when everyone was afraid and holding on to their wallets with a vice grip! But I had a strong feeling about the house and location and I got home from my run and told my husband that we were buying a duplex. I still laugh when I think of his face… like what happened?? …you went running for 45 minutes!!! All I really knew from my somewhat limited reading at the time was that you just wanted to buy a house where your rental income exceeded your expenses. My intuition about that house, proved to be spot-on.
I like real estate over other investments because there are multiple ways to make money: There is mortgage pay down, cash flow as well as appreciation (which is calculated on the value of the home NOT the value of your down payment, so you get the added benefit of leverage, which is really great). I also like the element of control – you are the CEO of the house and can manage it how you see fit.
3. Why do you choose student rental investing, what are the pros and cons?
This is my favourite question because there are so many reasons why student rentals are such a great investment.
Here are my top three PROs:
- CASH FLOW because you rent by the room, not by the house. For example, we have a house in a college town that is across the street from a mid-size college. If we rented this particular house to a single family, we could probably get about $1600 per month. But because we rent out each of the 6 rooms to individual students at $450-$500 a piece, we collect $2900 month. All that extra rental income translates directly into improved cash flow at the end of every month.
- RENT SECURITY. I am sure some of your readers are thinking this must be typo. How can anyone possibly have improved rental security with a bunch of irresponsible, beer-guzzling kids? Nowadays parents can and DO co-sign lease agreements, so in the unfortunate event that your student-tenant drinks away their rent money one month, you call up their mom and dad and ask them to pay instead. So, in effect, you have two people who would potentially pay you each month, which is a security mechanism that just isn’t available in many other strategies.
- VACANY SECURITY. If you own a single family home and it isn’t rented, you get nothing in terms of income, yet you remain 100% responsible for all the expenses. That kind of worry keeps me up at night. In student rentals, however, you could have partial vacancy which isn’t ideal but even having 3 students in a 6 bedroom house would cover your all-important mortgage payment.
Here are the CONs:
- Keeping up with MAINTENANCE is a con – you don’t have to pay for damages (because those are paid for by the tenants using a very strong student-rental specific lease), but your homes do tend to have more wear and tear with all those bodies living together. So it is critical to stay on top of your maintenance if you want your property to command the best rents and attract the best tenants. The good news is you can afford to pay for the ongoing maintenance with all your juicy cash flow!
- FINANCING hurdles with student rentals. Not all lenders want student rentals in their portfolios and some actively avoid them, so unless you are using a lender with a defined student rental program (like RBC, for example), you might find it a bit harder to either secure financing when you are buying or to get out quickly when you want to sell.
- Student rentals often require a heftier down payment than a single-family home. You should plan on paying a down payment somewhere between 25% and 30% if you purchase a pre-existing student rental.
4.What are your screening rules or rules of thumb for choosing a property?
I use my “A PLUS” model for buying student rentals
A – Attractive to students in terms of location/proximity to the school as well as attractive in terms of amenities provided (like parking, AC, internet, laundry etc).
P – Positive Cash Flow – All our houses must have generous positive cash flow as this is what insulated me as an investor against dips in the Real Estate Market.
L– Local economy – Ensuring that the city/town in which we invest have sound economics.
U – Under average price – whenever possible, we seek to buy homes that are under market price so we can do the necessary upgrades ourselves and force appreciation.
S – Safe and Superior – We don’t cut corners on safety and our houses look and feel superior to the completion.
5. Have you ever faced some scary situations from you students as a landlord? Could you share that story with us and how you were able to overcome it?
Nothing scary, just bothersome!
I had tenants that decided it would be a great idea to heat the indoor garage with space heaters so they could have a beer-pong tournament during the coldest winter in recent memory. I got nailed with a $900 electrical bill and was not impressed. Now all my leases have a utilities cap on them, meaning anything above a certain threshold is paid by my tenants.
This story is a good reminder that leases should be considered fluid documents that you are always refining to ensure that you don’t make the same mistake more than once.
6. What are your tips and words of wisdom for managing/overseeing multiple businesses, family, life and real estate portfolio?
I have lots of tips but the main one is to DELEGATE whenever it makes sense to free up your time to do what really matters. It took me some searching, but I have a couple of great property management companies for my student rentals and my job is strictly to manage the manager. That’s it. I don’t embroil myself in the day-to -ay issues of garbage, mess and clogged toilets. I let my PMs do their jobs and handle those sorts of issues. My job, as CEO is to clearly communicate my expectations and ensure that they are following up on them. This frees up lots of time for me to be around for my kids and husband – my main priority and goal.
7. What blogs and sources do you follow that you would recommend to readers who want to ramp up in the real estate investing world?
I wrote a really detailed guest-article for my coach/mentor Julie Broad about the 39 Best Web Resources for Real Estate Investors. Here is the link.
8. Everyone likes multiple streams of income. Can you share what your investment portfolio looks like?
My portfolio is currently divided between real estate and my business (Sky Zone Trampoline Park, Whitby) that I co-own with my sister. Within my real estate portfolio I am mindful about diversifying though. I have several “active” investments (my student rentals and duplex) that are spread out across 3 locations (Toronto, Hamilton and St Catharine’s), that I own personally and with JV partners and I also have several “passive” real estate investments – where I do nothing but deposit the cheques (I love those investments!). For example, I invest quite heavily in a company that I found that specializes in 2nd mortgages with my RRSP and TFSA (because they consistently have had 12% returns over the past 3 years) and I also invest in a company that partners with the largest developers in Ontario to split profits on real estate manufacturing with returns in the 20% + range. I don’t have anything in the stock market these days but this strategy is not for everyone. Each investor absolutely must get their own financial advice and do what is right for them and their own risk tolerance levels.
9. What is your next adventure?
I am very excited to say that since starting MORE’s (Mothers of Real Estate), founded by myself, Rachel Oliver and Monika Jazyk, we realized that together we have a huge wealth of knowledge in the real estate space as each of has a different strategy and we are excited to start educating people about it. We are 3 successful women (and happen to be the mothers to 10 children between us) as well as having full-time real estate investment careers. We are set to launch an on demand online course as an official licensee of Julie Broad’s course on real estate investing basics.
Gillian is also set to launch an on demand online course as an official licensee of Julie Broad’s course on real estate investing basics.
This is what Julie Broad has to say about MORE as the licensee of her course.
“The two most important things to me in a licensee are that they are dedicated to helping other investors and that they have the expertise to do that. Alone, each of these ladies could be a great real estate coach and trainer. Together, their combined dedication, expertise and experience are almost impossible to find anywhere else.”
Gillian Irving likes to say she was an “accidental investor”, when buying a duplex in downtown Toronto in 2009 with little planning or preparation. Luck was on her side though, and she was able to ride the value up and refinance to get capital to keep growing. At that point, she wasn’t going rely on luck and an “H&P” (hope & pray) strategy if she wanted to leave her job and provide long-term financial security for her disabled son and three other children. Gillian became a serious student of real estate investing and combined what she learned with her professional skills as a market research analyst to purchase a sizeable portfolio in Southern Ontario. Today, Gillian is a full time investor, and entrepreneur, focused on student rental investing (www.investinstudentrentals.com) with joint venture partners and is one of the founding partners of MORE (www. Mothersofrealestate.com). She is also the co-owner of Sky Zone Whitby, a 34,000 square foot indoor trampoline park.
Now, back to you! What do you think of student rentals? Do you have any and if so, share your experience in the comments below. And if you found value in this interview, please pass it along to your friends and family. Let me know how I can best support you in your journey through comments or direct emails here. I’m here to empower, guide and encourage you to reach your financial nirvana.