Analyzing rental properties in New Brunswick,Canada

[Stephanie Blouin]

Hello,

I am using the bigger pockets rental calculator and I am missing some information to get a more accurate idea of the cash flow. I am looking at the New Brunswick market for duplexes.If anyone can help me answer the following questions I would appreciate. 

How can I find the property insurance cost? 
What's an average percentage cost for a local property manager?
What's an average cost for the electric, water, and garbage collections fees? (Moncton,NB)

Thank you,

Stephanie

[Trevor Gaal]

Hi @Stephanie Blouin,

All insurance has gone up quite a bit since last year, but you'll find that anything older than 1945 has gone up significantly. So as you're looking at properties be aware of their age, as it's now enough to kill certain deals if you have hard-line criteria that you stay above. As @Theresa Harris said, you'll need to get a quote on the particular property from your insurance broker. Rob Scott can help you in NB.

@Chris Baxter is on point with Ground Floor PM. Tony Leblanc has built out a one-stop shop for everything you'd ever need in terms of operating, managing and renovating a property. As Chris said, it's 5% of gross rents and a flat fee of $250/placement (this is typically a 1/2-month's rent, so very good rates from Tony). The other PM you should talk to is Jeff Murray with Canada Homes for Rent. Both excellent choices, so this gives you some options to compare. When calculating my PM budget I use 6% for NB as this will capture placement fees and HST. Don't just plug in 5% there.

Your other expense questions can vary widely depending on the type of building, heat source, number of units etc. Sometimes landlord pays heat, power, hot water, water, sometimes they don't. You need to figure out which ones the tenant pays for and which ones are included in the rent.

Here's some general guidelines that I use if these expenses are paid by the owner (all are per door/month):

Electricity: $40-45/door/month, unless electric baseboard heat then $150-180

Water: Approx $50-60. Unless you're in Saint John, NB then it's a flat rate of $120 unless you have a water meter, (you can only get a water meter on triplex or larger). Be aware that it's a flat rate whether you're using any water or not! So if you do a 6-month reno on a duplex you'll pay 6x2x120 = $1440 in water/sewer holding costs. Yikes!!

Garbage: You can call a couple bin companies, but it's often cheaper to have your PM quote you for the building. If you're looking at a duplex that will be covered by municipal pickup.

Lots of people don't budget properly for Cap Ex, pest control, snow removal, lawn/landscaping and cleaning. And I often see vacancy budgets lower than they should be. If you're trying to tighten everything down to make the numbers work you're probably going to be disappointed with your ROI or you'll be forced to come out of pocket when something unexpected comes up (or you'll be a landlord that gives terrible service because your margins are too tight).

I recently had a "toilet leak" on a Friday night... turns out it was a clogged main sewer line in a 4plex. I can't just shut off water to the entire building for the whole weekend to wait for regular plumbing rates on Monday morning. This type of service with a power scrub and scope is usually $350-400, but emergency, after-hour rates are double. One unexpected call like this can wipe out your cash flow for an entire year if you're into the wrong deal, and you don't have proper buffers budgeted in your numbers from the start.

Bottom line, run your numbers conservatively and get into the right deal. Quality over quantity.

I hope that helps.
Cheers,
Trevor :)