Advice for the Small-Scale Landlord

Typically, landlords fall into two categories: large corporate landlords, and small business residential landlords. Many of you may find yourselves in the latter of the two groups; you own a small rental property with one or only a small handful of tenants, or perhaps you rent out a basement/room in your personal residential living space. For many Canadians, working as a small business residential landlord has proven to be an incredibly lucrative investment that helps them to cover the high cost of living in most of Canada’s major cities, pay down their mortgage, and build equity for their long-term goals. However, despite many ill-informed opinions, being a small business residential landlord can be a ton of work as well as a major cause of stress. Large corporate landlords may have a bigger task on their plates, but they also have way more help, resources, and less risk; large corporate landlords have what is called “economies of scale”, meaning they have hundreds of rental spaces in a building. Point being, if one or two tenants are persistently causing issues, or not paying rent, the potential loss is minimized by the volume of tenants they are dealing with. Financial hardship is not threatened in these cases. For the small business residential landlord, on the other hand, they may only have 1 or 2 tenants. If these tenants start to cause problems, or fail to pay their rent, the risk of financial and mental hardship drastically increases.

For many small business landlords, the LTB (Landlord and Tenant Board) is not viewed as their friend. They feel the board favors the tenants, which in turn makes the landlord feel as if they have no one in their corner if things go awry.  Granted, the landlord/tenant relationship is a very complicated beast, and the LTB doesn’t have an easy task on their hands. It’s important for small landlords to understand this, and to familiarize themselves with the rules and regulations. If you are honest with yourselves, many of you have likely opted to not even contact the board in cases of issues with your tenants. This is not recommended. Yes, you may be given answers that you don’t want to hear, but without speaking with the board, your hands are tied in any case. Remember, the LTB is meant to moderate these issues. You may feel that the board is not fully seeing your perspective, and you may be right, but there have been many cases where the landlord comes out on top. At very least, by contacting the board you are a.) showing your tenant that you mean business and will not sit back while they mess you around, and b.) you are helping the LTB to collect information and adjust their rules and regulations moving forward; change doesn’t happen without persistence. In fact, the Minister of Housing has recently acknowledged that the rules for landlords need to change, otherwise the entire industry will be negatively affected as home owners will simply stop seeing the value in investment properties. So contact the board when you have issues!

More importantly, understanding how the LTB works will give you a much stronger perspective related to minimizing your risk moving forward. Things like a thorough screening process, understanding the eviction process and boosting residence retention are crucial to your success. Finding the right tenants from the get-go will make your life infinitely easier as a small business landlord, and understanding how to keep those tenants will maintain that ease of process. With that said, professional tenants often fall through the cracks. After-all, they have earned the title of “professional tenant”. But what’s possibly even more important to keep in mind, is the fact that even good tenants can take advantage of the system. Most landlords and tenants are familiar with the “pro-tenant” stance that the LTB typically takes, and even otherwise great tenants can find ways to benefit from the system. It’s not uncommon for tenants to lie about having pets, or behave absent mindedly with their rental space seeing as, hey, it’s not their property after-all, they are just renting it: guests become full-time tenants, pet’s cause smells and stains, smoke smell lingers, and wear/tear starts to cause maintenance issues. These are problems even the best of tenants brings with them into a tenant/landlord relationship.

Being a small business residential landlord can be an incredible way to pay down a mortgage, build equity and secure future wealth. But understanding the landscape you are dealing with will be crucial to your success and happiness. If you feel the LTB just isn’t giving you the help you need, you can look elsewhere: most of the rental business in Canada is created by small business people, so your community is rich. For example, there are organizations like The Ontario Landlords Association who can help you along the way, and property management companies like CMG Toronto who can drastically minimize your risk and stress level.