STRATA: Rental pool property

A rental pool in definition implies that all the expenses are applied to all the revenues of every unit in the pool.

Then the funds are distributed to the rental-pool investors based on the rental-pool agreements that are usually set by the size and number of bedrooms of a unit.

The other side of the rental pool is the management or operations agreement. While you may be in a pool that has a 50-to-70 per-cent occupancy rate, the management and booking commission rates may be so high and uncontrollable that you see little or no return.

Don't forget to review the table of costs and disbursements.

What kind of bills could you be potentially facing?

The contract expenses may include almost anything: Booking fees, advertising, management, accounting, security, maintenance and operations in addition to strata fees, insurance, computer upgrades and entertainment can all be added to the costs.

Before you enter into a rental pool or buy a rental-pool property, talk to your lawyer and review the contract closely. The financial reports shown to potential buyers are best-case scenario and may not reflect the contract. The details of the agreement are where you will earn or lose your money.

Strata business and rental business should be entirely accounted for separately -- unless it is the strata that owns and operates the rental-pool business. Even under those circumstances the strata business and the rental-pool business need to be accounted for separately.

(Source: Tony Gioventu/Vancouver Province)