By Aaron Hoos
When Tyler Uzelman started investing in real estate, he says he “did it for the same reason everyone else does – financial independence.” Little did he know just how much he’d be able to accomplish, not just in his own portfolio, but also in his ability to help other real estate investors while growing an entirely separate business. His success story is not just one of real estate investing and financial independence but also of an area that many investors would not even consider doing for other investors - property management.
Early Investing Lessons
Tyler started investing with a couple of friends in 2003. They pooled their resources and skills and, as Tyler reports, “We quickly grew a nice size portfolio of properties.”
As with most other investors, these early attempts at investing were not without their challenges. He recalls being contacted by the Edmonton Tactical Unit for a key to one of his apartments because one of his tenants was harbouring a local robber and stolen goods. “They stormed our building,” Tyler says. Now he’s able to find humour in the situation but it was an early lesson in choosing good properties with good tenants. “Meth addicts and prostitutes and stolen vehicles,” he says, listing some of the traits of not-so-great tenants of a particularly challenging property.
Today, as a Platinum REIN Member, Tyler holds a variety of houses, condos, and ups-and-downs in his portfolio, and he particularly likes a very different kind of property and tenant compared to his earlier experiences: “I think the best properties I’ve ever owned have been nice houses, which are only a few years old, in the suburbs. They have low maintenance and fantastic tenant profiles,” he explains. “The tenant who can afford a $2000 a month rent isn't the kind to trash a house. They leave them clean and pay every month and there are fewer issues.”
In his investing, Tyler always strives to create scenarios where everyone benefits: “We’ve bought about 50 properties without ever going to a bank,” he says. “We try to create win-win situations with sellers. We would buy a property and then rent-to-own it, and then the tenants buy it – so it was win-win-win for everybody.”
Property Manager Problems
Just like every other real estate investor, Tyler and his friends were faced with the early choice of how they would manage their properties. Should they manage their properties themselves or should they hire a property management company?
They started researching different property management companies to find the right one. “Unlike a real estate agent or attorney, who you might use once during a deal, a property manager works with you on an ongoing basis and manages your asset for you,” Tyler explains. “It’s probably the most important relationship you have with regard to your real estate investment and this relationship will likely continue for years. Plus, a good property manager will have a wealth of knowledge in so many areas regarding investments and tenants.”
After reviewing one property management company after another, Tyler and his partners soon found that there were many companies out there but none that met their specific needs. “We couldn’t find a property management company that would manage the way we wanted our properties managed – with REIN principles” Tyler says.
One example where many property management companies fell short during his due diligence was in marketing. Often coming from a non-investor background, these property managers simply didn’t understand how to market effectively.
Faced with a choice of whether to work long-term with a property management company that didn’t meet their needs, or manage the properties themselves to the level they wanted them managed, Tyler and his friends chose to manage their properties themselves. It was a solution borne of necessity.
Then Something Interesting Happened…
Tyler and his friends continued growing their portfolio, refining the properties they invested in, developing their investing methodologies, and all the while, managing each property. Along the way, they also refined their property management methodologies too.
As they grew their self-managed portfolio, something interesting started to happen: they were approached by a REIN Member who needed help managing his property. It was a small request and simple enough to include in their regular routine while they managed their own properties, so they agreed and added that one property to their list of management tasks.
But it didn’t stop there. Soon, other REIN members started contacting Tyler as well to ask for help managing their properties. “One property became two, two became five and five became fifty in a very short period of time,” Tyler reports. “Each time we thought, ‘Sure, it’s only one more’.”
At this point, after taking on a few dozen extra properties to manage, it became clear that there was a real need. Without marketing and with business almost exclusively from REIN Members who needed help, Tyler and his friends were busier with their property management duties than they were with their own investment portfolio.
“We began to realize that there was a real need for property management,” Tyler reports. Tyler and his friends took action. A brokerage was formed and the necessary licenses acquired, and Libertas Property Management Inc. was born. Today, the company has staff that manages many properties throughout Edmonton, St. Albert, Sherwood Park and Camrose. They specialize in single family properties because, as Tyler says, “It allows us to focus. Single family residences have a very specific set of systems and we can build expertise in those systems.”
Building the Business
Actively investing in real estate, plus managing those investments, plus managing the investments of others can be a lot of work and is certainly not without a few growing pains – many of them are now humourous lessons learned. Tyler relates one funny story: “One staff member had just started working with us and he went to a showing of a newer house in a newer neighbourhood – the kind of neighbourhood where all the houses look alike. He pulled into the driveway and saw that the front door was open. Assuming the prospective tenants might have shown up early and the owner let them in, he rushed inside and met a family eating supper… and at that point he realized he was in the wrong house.”
These experiences helped to shape both his investment business and the property management business, and every lesson learned was applied back into each business. For example, “When we started investing, we started with the residential tenancy lease of Alberta which is 2 pages long. As we encountered different situations and learned along the way, we added to it. Today our tenancy agreement is 10 pages and covers all the contingencies we anticipate and have encountered,” Tyler explains.
Another way to help handle the growth in business – and in busyness – was the use of technology. “We just took over the management of some residential properties from a company that wanted to focus on commercial properties only. When we reviewed their notes, they had handwritten tenant ledgers going back a decade,” says Tyler. “There are many property management software options on the market and the good ones manage every detail of tenants and leases.” Tyler uses software that he swears by: “Without it, we'd be lost. The tenants have online portals, the owners have online portals. I can look up on my phone and see any of the properties we have.”
One of the best ways to build a business, Tyler realized, was to borrow a page from the playbook of one of his earliest employers. As a youth, Tyler’s first job was at McDonalds, which he describes as “a billion dollar company run by teenagers.” What’s their secret for having a 16 year old make a predictably delicious burger? Systems… systems for absolutely everything. Applying the same successful concept in the property management business made sense. “We have systems for everything,” Tyler says. For example, “Our checklist just for move-ins has our staff member completing 15 different points on the checklist before they even leave the office to begin the move-in process.”
Property Management Advice for Investors
Tyler’s entire investing and property management experience is largely influenced by the opportunity to help others – whether he’s looking for win-win scenarios in his deals or he’s agreeing to manage another property for an investor who needs help. He’s also generous with his advice for investors who are still trying to figure out the property management part of their business.
For those who choose to manage properties themselves, Tyler recommends some of the same lessons he learned along the way: use software and build systems.
And, for those who choose to hire a property management company to take care of their properties, Tyler advises that investors conduct thorough due diligence for this essential, ongoing relationship. “Interview a couple property managers and ask about what kind of systems they have in place and what kind of communication they do to keep you up to date. But the number one thing,” he recommends, “is find a property manager who has their own investments. They know the game. They know what it's all about.”
Once an investor finds a property manager, Tyler suggests: “Let them do their job. Trust the judgment and experience of the property manager.”
Focused On the Future
Along with his girlfriend, his three young teenagers, and his cocker spaniel, Tyler lives in St. Albert – the perfect location to take fishing trips, skiing trips, and camping trips. Keeping one of his “whys” in mind fuels Tyler’s desire to achieve financial independence and means that he now enjoys one to two trips a year up north to fish for big northern pike. In 2012, he won the Alberta Angler of the Year for catching a 47.5” pike.
This investor started as most investors do – reaching for financial independence. And along the way, almost by accident, he discovered an opportunity to help other investors do the same through property management. Today, for both the investing business and the property management business, Tyler’s focus is on making each part of the businesses better. “I really enjoy what I do,” he explains. “There are days that are tough, but have great senior staff who handle things extremely well. I mainly work on business systems and love it.”
Tyler Uzelman graduated from university in 1995 with a degree in economics, moved to Edmonton and became an investment advisor for eight years. He left the investment advisor profession to pursue real estate investment, becoming a platinum member with REIN over the next 5 years and procuring a decent portfolio of investment property which he self-managed. Currently, he is a Realtor and the Operations Manager with Libertas Property Management Inc., which specializes in single family property management. Contact Tyler at firstname.lastname@example.org.