I don't know how to do clickable links in HTML, so I apologize in advance, but here are some houses in my immediate area (I know listed prices are not sold, but selling prices are at or just under listed prices versus the last few years which have been pure seller's markets)

We're on a corner lot and the referenced house in my OP is 2 houses behind me.

This listing is 2 streets over:
http://www.winnipegrealestatenews.ca/viewer.aspx?ID=2821039&type=residential,condominium,commercial,farms

This listing is next door to me on the right (has a double garage vs the income property, but needs updating - look at the icky kitchen!):
http://www.winnipegrealestatenews.ca/viewer.aspx?ID=2821039&type=residential,condominium,commercial,farms

This listing is 4 houses down from me on the right (total flip, and a bad one at that IMHO! They won't get asking.)
http://www.winnipegrealestatenews.ca/viewer.aspx?ID=2900247&type=residential,condominium,commercial,farms

Just wanted to show you what's on the market here so you can compare apples to apples. I really see value in this property since kitchen & baths have been done...flooring could use updates (vinyl that mimics hardwood) but is fine for a rental, and electrical, furnace, and partial roof needs update. But I see the potential.....I hope you do too?

Loralee - I'm in NS (not MAN) but some of your questions may confuse some of the people here as the great majority are in the U.S. where things are done differently in RE (such as needing a 'buyer's agent' - which I've never known to be a factor at all anywhere I've bought, incl'd T.O. and Mtl.). Have you really had a good inspector go over everything rather than just eyeballing it all? I think as far as things like rental profit margins and mgmt. co's go, you need to find out more locally rather than here - ask impartial people (mtge loan officers from RBC or CIBC, plus RE brokers re the mgmt co.) for answers because you don't want to be steered wrong. Good luck!

Hi Loralee,

There are worthy realtors who'll be around soon, so I'll leave the agent questions to them. In the meanwhile, as an investments lender as well as an income real estate portfolio owner myself, I'll cover the top 3 questions;

- Is it a good idea to incorporate a business for this activity to protect our personal assets in the event of any kind of tenant lawsuit?

It depends. There are costs to create and maintain a corporation, and its prudent to weigh out & compare these costs versus alternative protective means. For a first-time investor (especially if your vulnerable net worth is still modest,) a good umbrella insurance policy will often suffice just fine. Insurance does also have its limitations though (including not addressing tax planning or cashflow management and defense...) so as you grow your vulnerable net worth, the incremental costs of a business entity (corporations, trusts, limited partnerships, and the like) begin making more and more sense.

- If we subbed the management service to a professional management service, generally what kind of fee would we be looking at?

For individual single family home rentals, management fees are generally;
A) 1st month's rent from the new tenant, plus,
B) 10% of the ongoing gross rental revenues.

Usually this will get you the services of;
Marketing & screening for new tenants,
Collection, bookkeeping, and deposits to your account of monthly rents,
Periodic maintenance inspections,
Notification to you of physically viewable problems, late payments, defaults,
Management of service providers for repairs, or cleaning/turnovers between tenants.
(Of course, more or less may be offered in competitive environments.)

- What kind of rental profit % should there be after mortgage, taxes, insurance, repairs. (I would like to know so I can compare current rentals in the area to see if we could offer comparable in order to know if this is feasible.)

What kind of profit SHOULD there be??? Sweetheart, the answer is always; "AS MUCH AS YOU CAN POSSIBLY COLLECT!!!!" ;~)

In reality, in most North American real estate markets, the rental revenue markets have not increased enough in the past 10-15 years to keep up with the crazy property appreciation prices that were driven by the easy credit available. The collapse of the credit markets has BEGUN to reverse this (with property flat to dropping, but rents beginning to awaken & grow again,) however its still going to take a while to really make sense on an easy basis.

Most single family homes "bought at retail" cannot be fully supported by the local rental rates available, and most landlords of such homes need to accumulate a significant amount of equity in the home (or said inversely; need to reduce the loan balance to reduce the interest costs) enough so that the net real rental revenues are more than the out of pocket cash costs of ownership (i.e. "positive cashflows.")

Prudent investors, however, donot consider a property TRULY cashflow positive unless its rental revenues are more than not just the interest paid for the loans... but ALSO the interest NOT EARNED (or lost) from the cash value of the equity that is trapped in the real estate itself (since, if that real estate were sold, the equity value could be earning interest elsewhere... and thus is a real cost, albeit merely 'on the books.')

GENERALLY SPEAKING; anytime you can acquire a rental property in a market where the rents are climbing, and you can hope to have real rental revenues grow to be more than your total real costs of ownerhip (including equity value opportunity loss) within 2-3 years... you are doing very well.

Hope this is helpful.
Dave Donhoff
Leverage Planner

"What kind of rental profit % should there be after mortgage, taxes, insurance, repairs. (I would like to know so I can compare current rentals in the area to see if we could offer comparable in order to know if this is feasible.)"

It dies bit really work that way.

The local rental market sets what you can get, and that determines if you will have a positive cash flow (rent covers expenses).

You can control expenses by putting more money down to lower the mortgage payment, managing the property yourself instead of having an agent skim 10% right off the top, and doing repair work yourself.

I have an agent I occasionally use to find me tenants and run checks on them, but I do not pay for 'management.'

If something breaks I get the call and decide how it will be repaired.

The house I rent out in Hawaii is fairly high rent ($4900 mo), therefore the 10% prop mgmt fee is too much. Therefore I do it a bit differently, I bought a home warranty that will send contractors to the home to repair whatever is broken. This costs about $400 per year, way less than a prop mgmt co. I like to control the tenant selection process, it's pretty easy.

I am actually itchy to buy another rental as the prices are soooo low right now! Where I am in California, the home prices have been halved - looks like I can be positive right away.

Thanks everybody for taking the time to post some info for me. Unfortunately, this adorable home sold the very night I posted this so I didn't even get a chance to look at it. I know I shouldn't be disappointed (emotional response instead of a business response), but it was a darn good deal, and a really cute house. Listed Monday, sold Wednesday. Wow!

Back to the drawing board I guess!

so... celebrate that your instincts were good.