Renting out a condo unit in Toronto, or any other city for that matter, can be an incredibly lucrative endeavor. Whether you’re using it as a side income, or if you’re main goal is simply to have someone else pay down the mortgage while you wait for the property to build up equity, the chances are you’ll come out on top at the end of the day. With that said, it’s not a cake walk. There are a few things you should know prior to jumping into this venture.
If you need help with property management, tenant management services, or looking into a property investment – contact CMG Toronto today. The best property management company in Toronto.
For starters, you’ll need to familiarize yourself with the Residential Tenancy Act (RTA) as well as the Condominium Act. You have specific responsibilities under both pieces of legislation as a landlord and owner of a condominium. The RTA outlines the laws related to most landlord and tenant situations; you’ll want to be aware of the rules and guidelines set forth in the act that apply to both your tenant as well as yourself. The Condominium Act outlines additional rules that apply to the rental of condominiums, as there are corporation guidelines that must be adhered to. Here are a few examples:
You Must Keep your Condominium Corporation Informed
Once you’ve found a tenant, the corporation needs to be made aware. You’ll need to inform the corporation of your intent to rent out the unit by giving a written notice within 20 days of the tenancy starting. The notice must include your tenant’s full legal name(s), your full legal name, your current residing address, and the amount that you will be charging the tenant monthly. The same rule applies once you are ready to stop the tenancy; you’ll need to provide notice to the corporation within 20 days of the tenancy ending.
Don’t Forget About your Condo Fees
Condos come with condominium contribution fees, most commonly known simply as Condo Fees. When writing up your lease, it should clearly state whether or not the tenant is responsible for paying the condo fees. Failing to pay your condo fees will land you in hot water, so you’ll want to factor this in when writing up the agreement and deciding on the monthly amount to charge. If you are renting out your unit, and the condo fees go unpaid, the corporation can enforce the tenant’s rental charges to be paid to the corporation instead of you, to cover the lost fees.
Be Aware of the Condo Bylaws
A responsible tenant will be aware of the condo bylaws, and they will make sure that the tenant is also aware. The bylaws should be outlined in the lease agreement, and your tenant should also be given access to a copy of the bylaws.
The Condominium Corporation Can Ask for a Security Deposit
The mortgage may be yours, but the building itself is the corporations. In anticipation of potential damages that your tenant may cause to the common grounds, your corporation may ask you for a security deposit to cover them. The maximum deposit they can ask for is the equivalent of one month’s rent.
How Long Should the Lease Agreement Tie Down the Tenant?
Leases are typically based on a 12 month commitment. You can request first and last month’s rent up front. Once the 12 months are up, the agreement is typically moved to a “month to month” basis. Once the tenant is month to month, they are required to provide you with 60 days’ notice if they intend to move out.
What About Pets?
You are perfectly within your rights to place a “no pets” clause on your agreement. With that said, it’s not enforceable by law. You can choose not to rent to a tenant who has pets, but if that tenant lies on the application, and you find out later that they have pets, you are not legally entitled to evict. For better or for worse, you’re stuck.
For a complete list of details, you should review both acts with a fine tuned comb. These are of course just a handful of key points, while there are far too many guidelines to cover in one post. Learning all of these rules and regulations can be a massive headache. If you have the time and commitment to learn on your own, great! You’re a gem. Typically, working with a real estate professional is your best bet. A professional can make sure all guidelines are adhered to, draft up legal documents, post your listings on MLS, and determine the right price point for your property. What’s more is that they can drastically minimize the risk of you ending up with a tenant from hell by going through a vigorous screening process. CMG is here to help make your rental process easy and lucrative.
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How to Boost Residence Retention
Finding the right tenant,or tenants, can be difficult. Let’s face it; renting out a space in the GTA is process and a half. With all of the horror stories related to “professional tenants” who don’t pay rent, trash your space and give you nothing but headache, it can be an incredible relief to find a good tenant who pays on time, and respects you and your rental space. That’s why it’s so important to hang on to those tenants when you find them. Of course, there are always extenuating circumstances that will make losing a good tenant unavoidable i.e. they are ready to buy a home, they must relocate for work etc. But the last thing you want is to lose a great tenant to another landlord. Moreover, an empty unit is as good as throwing your money down the drain. So here are some tips and tricks for boosting residence retention.
Be Responsive and Communicate
If your tenant takes the time to reach out to you, they expect a response. Ignoring them is a sure fire way to lose the tenant once the lease agreement is up. A tenant needs a landlord who will respond to their service requests and questions timely and efficiently. In the rare case that you are unable to help the tenant with their request, or unable to answer their question, it’s still imperative that you respond and explain why you can’t help. This will at very least show the tenant that you hear them, and you want to make sure they are happy.
Be Proactive with Service
It’s the landlord’s responsibility to make sure the unit is livable and functioning. There are routine maintenance tasks that must be handled on a regular basis in order to fulfill this requirement. By scheduling this routine maintenance, you: a.) show the client that you want them to be comfortable and safe, and b.) prevent a buildup of problems. By showing your tenant that their safety and comfort is paramount, you are securing a healthy landlord/tenant relationship.
Keep Residents Informed
Whether you rent out one room or an entire building, you need to keep the residents informed of what is being done in or around the property. People don’t like surprises that interrupt their routine. If a tenant comes home to find their parking space filled, or unreachable, they will be upset. Wouldn’t you? So if construction is scheduled, make sure the tenant knows. If the fire department is coming in to check the fire alarms, make sure the tenant knows. If the parking lot is having maintenance done…you see where I’m going with this.
Incentivize Renewals
Maybe your tenant/tenants just need an incentive to stay? Consider apartment upgrades and perks. Maybe your tenant really needs a new TV. $500 out of your pocket to buy them a new TV can be considered an investment. After all, losing this great tenant and ending up with a not so great tenant can end up costing you a hefty amount more, to put it lightly.
Make Submitting a Request Effortless
Embrace new technology and make the process of submitting a request a breeze. Text messages, website contact, phone calls, as well as traditional face to face requests should all be part of your system. Young millennials will want to simply send a text and have the request handled. Older crowds may want to do things the old fashioned way and give you a call, or stop by your management office to submit their request. By providing options, you satisfy both crowds. Moreover, develop a system that keeps your tenants up to date with where their service request falls in the cue: send text updates, phone calls and visits depending on the tenant’s preference.
Try to Build a Sense of Community
This should be the case regardless of the size of inhabitants in your rental space/spaces. People are social creatures, and we like to be part of a community. Communities help each other and provide a stable foundation for families and single people alike. A true sense of community will be something that your tenant or tenants don’t want to leave. Consider hosting meet and greets, holiday parties, BBQ’s, introduce your tenants to the maintenance staff, and most importantly, show an interest in your tenant’s personal life/lives. This will go a long way in keeping your space occupied with good tenants.
Condos for the Investor
Investors flock by the hordes whenever a new preconstruction development is announced. And in a city like Toronto, new developments are popping up everywhere. But how do you know which building and unit to invest in? With so many options, making a decision can be daunting. But if you plan to make money off of this project, you need to make smart choices. Plenty of investors end up in the hole…at the same time; plenty of investors come out on top. So what separates them?
Condos Often Suck
You have to think for a second about the condo market, pre-construction, and how it all works. Pre-condo developments are built with the investor in mind; they aren’t built with the home buyer in mind. Investors buy pre-construction condos based on plans and plans alone. And the majority of investors don’t think to involve themselves in the plans, or ask for changes and unique alterations. Developers can essentially build whatever they want, and trust me; they don’t always have a “comfortable living space” in mind. Developers are working under deadlines, with limited resources, and tight budgets. They are trying to develop the property as quickly as they can in order to fill investor orders. So really, they could give a hoot about the living space itself. Developers can change plans on a whim, add whatever they want, remove whatever they want, and the investor sits there and watches it all unfold; as the investor, you don’t care. You only care about how much money you make, and you don’t plan to live in the space. You’re likely planning to rent the space out for a period of time and then sell it, or you’re thinking to sell as soon as the building is registered, as the price points will typically increase once the building is registered. As a result of these factors, there are a wealth of horrendously awful layouts, substandard common areas, unfinished buildings and more.
So the Developer is Marketing to the Investorwho just wants to make money. But as the investor, you really should be thinking about these factors. This is where investors end up with a bad investment. A unit that was developed for the investor, not for the buyer, will not have the features, layout and livability that a buyer is looking for. Now, you’re likely looking for a tenant right off the bat in any case. Great; tenants are less picky than buyers and may just be willing to rent your space. But what about when you’re ready to really cash in on your investment and actually sell the unit? Who wants to buy a tiny, unlivable unit in a horribly managed building? Good luck finding a buyer.
Condos All Look the Same as a result of these factors as well. Builders are trying to get the project done. They aren’t thinking about the desirability of the units, and they aren’t thinking about resale value. What happens to the unit once it’s sold to the investor doesn’t matter to the builder. They’ve already made their money. So the builders have no issues pumping out unit after unit based on similar, if not the exact same, layout and floor plans. The builder doesn’t care if there are massive stone pillars in the middle of the living room, preventing you from fitting a full sized couch in the unit. They don’t care if the “den” is nothing more than a walk in closet. They don’t care if 3 bedrooms are squeezed into a 900 square foot space. They care about fulfilling their orders.
So the Big Take Home Here is This:As an investor, you should be heavily researching the builder before anything. Does this builder have a good track record? Is there a good management team on board with this project, with an equally impressive track record? Are there strong plans for common areas and parking etc.? Once you’ve decided that the project has a good team backing it, you need to be heavily involved in the floor plans. Request tweaks, additions and changes. Set your unit apart from the other units in the building. Make sure the unit has enough space to comfortably live; if it’s a 3 bedroom space, make sure 3 people can actually live in the space without wanting to kill each other. Ask for upgrades in the kitchen and bathroom, and make sure there are no obstructions or ugly cosmetic features that need changing. These details will make all the difference when it comes time to sell and cash in on your investment. You wouldn’t buy a new car without test driving it first, right? So why would you buy a new condo without knowing exactly what it is you’re getting
What’s the Deal with Tenants and Pets?
One of the most misunderstood aspects of the tenant/landlord relationship is the question of whether or not pets can be permitted in the unit. It can be surprisingly difficult to find definitive information on pet policy online or elsewhere. Everyone seems to have their own idea of what is permitted and what isn’t. Landlords will typically say pets are not permitted and lease agreements typically have a “no pets” clause. But is that clause enforceable? As a landlord, you need to know what you can and can’t enforce. If you don’t mind whether or not your tenant has a pet living in your rental unit, than you can disregard this post; good for you! That’s not to say that landlords should all allow pets. It is completely understandable why a landlord would want a “no pets” clause to be enforced. So for the rest of us, let’s look at the specifics. If you need help with managing tenants, or need a property management service, contact us.
Apartments, Single-Family Houses, Duplex/Townhouse
Most rental units fall into one of these three categories. Apartments can be small apartments, medium sized apartments, or large apartments, single-family houses can mean you are renting out the entire house or you are simply renting out a room or portion of the house, and duplex/townhouse is unique in the sense that a townhome is typically a single-family residence that is built into a row of homes, and a duplex is a property that holds two separate single-family residences. Most landlords will have a property that meets one of the descriptive criteria outlined above, and for you landlords I have some bad news: A no pet’s clause is completely unenforceable. With that said, according to the Landlord and Tenant Board website, landlords are within their rights to refuse rental of their unit to someone with a pet. Therein lays the importance of the screening process, as a proper screening process will give you the opportunity to ask the tenant whether or not they have a pet, and allow you to exercise your right to refuse signing a lease agreement with them. With that said if the tenant is crafty and manages to fool you into believing that they are “pet free” when in actuality they are not, your hands are tied. Once the lease agreement is signed, you are stuck; you cannot evict a tenant for having a pet. Even in the case that you included a “no pets” clause in the lease agreement, it doesn’t matter; the clause is void.
Condos
Condos, on the other hand, are a little different. In the condo world, everything is circumstantial. Some buildings allow pets, some buildings do not, and you as a landlord who owns a condo unit in the building have no say in the matter. Every condominium listing has a “Pets Perm” code which indicates whether or not the building allows pets. As you can guess, “Y” means that pets are permitted, “N” means that they are not permitted, and “Restrict” means that some pets may be permitted, but it is based on restrictions. If a building operates under the “restrict” policy, that can mean many things. Most buildings have a restriction on the number of pets a tenant can keep, but the restrictions may be more specifics: some buildings have a weight limit when it comes to dogs, some buildings allow cats but not dogs, and some buildings will restrict certain breeds of dog and allow other breeds. What’s important to note, is that condo pet policy can change in a building over time. So it’s very important to keep up to date with the rules of your specific building. In a case where a building initially allowed pets but recently made a switch to “N” or “Restrict”, potential tenants may question you when they see dogs or other pets in the building. You’ll have to be aware of the buildings history, and explain to the tenant that these pets were “grandfathered in” prior to the no pet’s clause being implemented. Again, every building is different and some buildings may have pet rules that are manipulated or “worked around”, whereas other buildings may be very strict with a “no exceptions” stand point.
If you need help with property management, tenant management services, or looking into a property investment – contact CMG Toronto today. The best property management company in Toronto.
Keeping up to date with all of the current rules and regulations as set forth by the Landlord and Tenant board is extremely important. If you own a condo unit, you also need to be up to date with the buildings rules and regulations. Doing so will allow you to fully understand what you can and cannot implement, and what kind of “work arounds” may exist. If you have any questions, please do not hesitate to contact my team of professionals.
Technicalities Related to the Form N5
In a previous post, we covered evicting the dreaded tenant from hell. Yes, we’ve all heard of the tenant from hell. They persistently pay rent late, or not at all, they partake in illegal activities, they cause damage to your property. But what about a tenant who pays their rent regularly and on time, is generally caring of your property…but is loud, disruptive and partakes in generally “anti-social” behavior? Are you able to evict in this case? The short answer is “yes”, but the long answer is “not very easily”. Let’s take a look at why.
Landlords and tenants are bound under the rules outlined in the Ontario Residentail Tenancies Act (RTA).Under the act, you are able to terminate a tenancy for substantial interference with “reasonable enjoyment of the premises by the landlord or another tenant”. This would cover noise, constant shouting, loud music or TVs, loud pets, stinky pets, name calling, offensive conduct, and countless other behaviors that may substantially interfere with the “reasonable enjoyment of the premises by other tenants or the landlord”. The RTA labels behaviors such as this a substantial leg to stand on for terminating the tenancy. If the landlord wishes to exercise his or her rights to evict due to any of these reasons, they will need to serve the tenant a Notice of Termination in Form N5. The N5 form can be filled out or downloaded here.
The form is a mere 3 pages long, with a few boxes to tick off, as well as a tiny box in which you are to describe the details of the allegations. At first glance, it seems very simple, and it gives the impression that not much is needed. Therein lays the issue, as the form actually contains a handful of specifics that can cause your application to be immediately dismissed. You need to get it right the first time to avoid a drawn out eviction process; getting it “wrong” the first time would result in you having to start the process all over again, from scratch.
The most important aspect to get right is on page 2 under the section entitled “Details About the Reasons for this Notice”. The key to getting this right is to address the legal requirements of the “details” that you intent to provide. These legal requirements are the cause of many N5 forms being immediately dismissed; when this happens, you lose the $170 application fee along with the time and effort you’ve put into the process. At this stage, you’ll have to start over.
The RTA says that the “details” section of the N5 shall “set out the grounds for termination”. This is incredibly vague, and as a result, the Ontario Divisional Court has explained what the “details” must contain in order for the N5 form to be valid. The decision of the court is responsible for countless N5 dismissals. In that tiny 6 grid box on page two of the N5 form, you are to describethe who, what, where, why, when and how of the case. Ok, so what does that mean? To understand, you must first understand how an N5 Notice of Termination works. First of all, an N5 is a voidable notice. This means that a tenant can “void” the notice upon receiving it, simply by changing their behavior or paying for the damage caused. Consequently, the Court has stated that a landlord must provide “clear and unequivocal details about the alleged misbehavior”. Therein lies the who, what, where, why, when and how. The Court deems this as necessary for the tenant to have a complete opportunity to understand the behaviors that they are expected to stop or change in order to void the N5. If the allegations are vague, the tenant can’t reasonably know what is expected of them, and won’t be able to exercise their legal right to void the N5. Therefore, the Court has held that knowing exactly what conduct is being viewed as misbehavior is a mandatory aspect of the N5. Accordingly, a vague details section will void your form. At this stage, your application to the Ontario Landlord and Tenant Board will be immediately dismissed, and you’ll be hard pressed to get an order against the tenant.
Understanding this section of the N5 is an absolutely crucial aspect of the eviction process in relation to the aforementioned issues. Landlords would be wise to hire a professional management company, like CMG Toronto as to avoid making common mistakes that will result in a long and frustrating eviction process. We are the top Toronto property management company.
Hiring the Right Legal Aid at the Right Time
Buying a new home, or selling your home for that matter, can be an extremely stressful task. Knowing how and what to negotiate, handling any surprises brought on by the other party, preparing and reviewing legal documents, understanding how to interpret those documents; it’s a lot to take on. Typically, this is why hiring a real estate professional to help with the process makes so much sense. But you may also want to consider bringing legal aid on board early in the process. Frequently, Canadian Home buyers wait until a deal is done to bring in legal aid; they will typically sign on the dotted line first before taking the agreement to a lawyer who then registers the deed, does a title search, and handles the transfer of funds. We all know that legal aid is required for this process, but we usually ignore bringing on the aid until the very last minute, as we all want to keep our legal fees at a minimum. With that said, hiring the right legal aid early in the home-buying process can actually save you time, risk and money.
Buying or selling a home is possibly the largest transaction you will ever make. A good lawyer or paralegal can ensure that the transaction is done right, and that all of your legal rights and protections as a buyer or a seller are adhered to. Having legal aid early in the process can make a world of difference at the end of the day. People can be sneaky, don’t ever forget that. If the other party has a lawyer right from the start, their lawyer may include fine print or tricky wording that can put you in a bind once the documents are signed. If you are armed with your own legal aid, they will have the knowledge required to thoroughly comb through the agreement and pin point any clauses or wording that would put you in a bad situation.
On this note, a lawyer can also re-word and adjust aspects of the agreement in your favor. For example, a standard wording in a purchase agreement would be “conditional on financing”. However, a better wording would be “the offer is conditional on the purchaser receiving the financing he/she desires”. This will give you the option to opt out if the bank isn’t able to offer you fair financing rates. Otherwise, you may be forced into an agreement at a financing rate that you are not comfortable with.
If you plan on investing in a pre-construction development condominium, then the right legal aid will be especially important. These types of purchases can be very lucrative, but are typically riddled with fine print, added charges and catches that the average home buyer won’t notice. Agreements related to pre-condo development can often run 30-50 pages in length, and can also present some very tricky wording. For example, builders will often offer incentive to invest in their projects. One such incentive may be the builder offering to waive maintenance fees for a certain amount of time. However, the agreement itself will actually offer a rebate that would equate to what the builder thinks will be the amount that you would have paid in maintenance. What’s more is that buyers may also be surprised when their final purchase price equates to a much larger amount then they had initially thought. Builders can add on charges related to warranty protection, occupancy delays, property taxes, landscaping, development charges, and a whole lot more. A good legal aid can work around this by requesting to cap the closing costs, giving you a much more accurate idea of the final number.
Some real estate companies will offer you an experienced real estate lawyer at no extra cost, provided you close the deal with them. If this isn’t being offered, then you’d be wise to seek the help yourself. Your real estate professional will likely be able to recommend you a suitable lawyer in any case. It is generally recommended that whoever you hire should spend 90% of their time working within Real Estate. The last thing you want is to hire a “jack of all trades” who may miss important points throughout the legal proceedings. A lawyer who spends the majority of their time working in Real Estate related matters will be able to handle your needs with ease. Pricing can range greatly, but choosing the “cheapest” option won’t necessarily be your best move. This s a complicated transaction and skimping out on your legal aid may cost you more than hiring the right help from the start.
If you have any questions or concerns, please reach out to CMG Toronto for the best that the city has to offer.
Landlords Beware of “Tenant Friendly” Board
A few weeks ago we looked at the subject of evicting a dreaded Tenant From Hell. It’s unfortunate, but many landlords find themselves in the horrible predicament of signing a deal with a tenant who at first seems like a model example, but later turns out to be a nightmare. Many landlords have understandably labeled these individuals as “professional tenants”. But do people like this really exist? Are they really that bad? Or are the landlords simply looking at the situations through a distorted lens? While the landlord/tenant relationship is very complex, and points can be argued on either side of the fence, it is true that these “professional tenants” exist…and they milk their landlords and milk the system for all it’s worth. How about an example? Funny you should ask.
Just this past September there was an article published on CBC News that highlighted precisely such a case. Robin Ennis, a Toronto landlord claimed she had been conned by a “professional tenant” who had been living in her high end Yorkville home since July of this year, and hasn’t paid a cent in rent. The story reads like a landlord horror novel, and is unfortunately 100% real. The tenant in question is a 62 year old man named James Regan. And James has a very thorough understanding of the Landlord and Tenant Boards rules and regulations. The matter is currently in the process of being heard by the board, but this is 4 months into the rental agreement, and Robin hasn’t seen a single penny of rent. James on the other hand, is not attending his first rodeo; he had a similar dispute at the board earlier this year relating to another property that he was occupying. The board ordered his eviction, but only after months of unpaid rent: “Regan appealed that eviction and lost in Ontario Superior Court, a process that took eight months, during which he lived rent-free in the condo near Old Mill Road and Bloor Street West.”.
Even at the time of eviction (a second eviction that finally was enforced on June 29th2016), he never paid any of the money he owed. Rent was $3200 a month, and James had compiled a whopping $25, 000 in back rent that court documents show he never paid. James was too busy setting his sights on his next victim; Robin.
Robin met with James on June 30th 2016, the very next day after his eviction. Robin has a second-floor apartment in her home on Avenue Road, and James showed up well dressed, well groomed and polite. Now, Robin may have jumped the gun a little, or perhaps she was simply fooled by James’ façade. Robin and James signed an agreement prior to Robin doing her due diligence. She had intended to, but she took James’ word as he promised to pay first and last month’s rent, provide proof of insurance, as well as credit and criminal background checks. Robin’s mistake was not requesting these documents prior to signing the agreement.
The very next day, Friday July 1st, James showed up unannounced with the perfect story to get the key. He claimed that he had valuable art that was in urgent need of storage. Robin’s second mistake was entrusting James, who she hardly knew, and providing the keys. Needless to say, James never gave them back. By July 2nd, he had already completed his move into the apartment. Robin, at this point, confronted James for the first and last month’s rent, at which point James reportedly showed his true colors.
It wasn’t until Sept 8th that Robin had finally received her first hearing by the board. However, the matter had to be pushed back as James claimed he never received the proper documentation in the mail; he knew very well how to play the system by claiming he was never served with the notice of the hearing. The next hearing is in November, 5 months after James initially moved into the apartment.
Once the case is finally heard, the first step is often for the board to order payment of rent, but tenants typically default. Months can pass before the board finally orders an eviction notice, which can also be immediately appealed. Tenants cannot legally be evicted until an appeal in the decision is made. By the time all is said and done, it can be 8-9 months into the agreement with thousands upon thousands of dollars in unpaid rent that may or may not ever be paid.
To read the entire story, click here.
So there you have it. Professional tenants exist, and they will make your landlord experience a living hell. Your best bet is to follow a rigid screening process with zero room for exceptions. Better yet, work with a professional management company, like CMG Toronto, who are privy to these types of tenants, and understand the importance of the screening process.
What Should you Know About Renting your Condo in Toronto
Renting out a condo unit in Toronto, or any other city for that matter, can be an incredibly lucrative endeavor. Whether you’re using it as a side income, or if you’re main goal is simply to have someone else pay down the mortgage while you wait for the property to build up equity, the chances are you’ll come out on top at the end of the day. With that said, it’s not a cake walk. There are a few things you should know prior to jumping into this venture.
If you need help with property management, tenant management services, or looking into a property investment – contact CMG Toronto today. The best property management company in Toronto.
For starters, you’ll need to familiarize yourself with the Residential Tenancy Act (RTA) as well as the Condominium Act. You have specific responsibilities under both pieces of legislation as a landlord and owner of a condominium. The RTA outlines the laws related to most landlord and tenant situations; you’ll want to be aware of the rules and guidelines set forth in the act that apply to both your tenant as well as yourself. The Condominium Act outlines additional rules that apply to the rental of condominiums, as there are corporation guidelines that must be adhered to. Here are a few examples:
You Must Keep your Condominium Corporation Informed
Once you’ve found a tenant, the corporation needs to be made aware. You’ll need to inform the corporation of your intent to rent out the unit by giving a written notice within 20 days of the tenancy starting. The notice must include your tenant’s full legal name(s), your full legal name, your current residing address, and the amount that you will be charging the tenant monthly. The same rule applies once you are ready to stop the tenancy; you’ll need to provide notice to the corporation within 20 days of the tenancy ending.
Don’t Forget About your Condo Fees
Condos come with condominium contribution fees, most commonly known simply as Condo Fees. When writing up your lease, it should clearly state whether or not the tenant is responsible for paying the condo fees. Failing to pay your condo fees will land you in hot water, so you’ll want to factor this in when writing up the agreement and deciding on the monthly amount to charge. If you are renting out your unit, and the condo fees go unpaid, the corporation can enforce the tenant’s rental charges to be paid to the corporation instead of you, to cover the lost fees.
Be Aware of the Condo Bylaws
A responsible tenant will be aware of the condo bylaws, and they will make sure that the tenant is also aware. The bylaws should be outlined in the lease agreement, and your tenant should also be given access to a copy of the bylaws.
The Condominium Corporation Can Ask for a Security Deposit
The mortgage may be yours, but the building itself is the corporations. In anticipation of potential damages that your tenant may cause to the common grounds, your corporation may ask you for a security deposit to cover them. The maximum deposit they can ask for is the equivalent of one month’s rent.
How Long Should the Lease Agreement Tie Down the Tenant?
Leases are typically based on a 12 month commitment. You can request first and last month’s rent up front. Once the 12 months are up, the agreement is typically moved to a “month to month” basis. Once the tenant is month to month, they are required to provide you with 60 days’ notice if they intend to move out.
What About Pets?
You are perfectly within your rights to place a “no pets” clause on your agreement. With that said, it’s not enforceable by law. You can choose not to rent to a tenant who has pets, but if that tenant lies on the application, and you find out later that they have pets, you are not legally entitled to evict. For better or for worse, you’re stuck.
For a complete list of details, you should review both acts with a fine tuned comb. These are of course just a handful of key points, while there are far too many guidelines to cover in one post. Learning all of these rules and regulations can be a massive headache. If you have the time and commitment to learn on your own, great! You’re a gem. Typically, working with a real estate professional is your best bet. A professional can make sure all guidelines are adhered to, draft up legal documents, post your listings on MLS, and determine the right price point for your property. What’s more is that they can drastically minimize the risk of you ending up with a tenant from hell by going through a vigorous screening process. CMG is here to help make your rental process easy and lucrative.
So You Want to Buy Pre-Construction?
If you’re in the market for a pre-construction condo purchase, you’ll want to make sure you do your research first. Pre-condo purchases can be hit or miss, and it’s very important to cross your T’s and dot your I’s throughout the process. A well thought out and properly executed purchase, can be a very lucrative endeavor. On the flip side, there are plenty of horror stories related to pre-construction purchases. So what are the ins and outs? What do you need to know? Here are some points to be aware of when considering such a purchase:
If you need help with property management, tenant management services, or looking into a property investment – contact CMG Toronto today. The best property management company in Toronto.
Positives:
Let’s start with the good stuff. There is a reason why investors swarm by the dozens when a new project development is announced. Pre-construction units typically come at much lower prices VS standard re-sale units. This is largely due to the risks associated with buying pre-condo, which we’ll touch on in the “Negatives” section of this post. But the thing to remember is that buying pre condo will cost you much less than a general re-sale unit, and the best part: once the unit is registered and available for resale, it will likely have seen a massive increase in equity. This is why so many investors partake in pre-construction purchases. Many of them intend to sell the property as soon as it’s registered. Others intend to rent out the unit while sitting on the equity and making a monthly income. But this is also a nice option for a first time home buyer, as the prospect of a large increase in equity over a short period of time can be very enticing.
You’ll also be given a cooling off period that will allow you to reassess your purchase, and get your finances in order; you have 10 days after giving the initial down payment to reconsider your offer. This can be a big positive for those of us who make impulsive decisions.
Another positive is the fact that you’ll be the first one to inhabit the unit. This is a brand new unit, so you don’t have to worry about wear and tear that goes unnoticed in the screening process. You are the first owner, meaning all new appliances and designs. What’s more is that you may be given the opportunity to customize certain aspects of the unit, differentiating it from the other units in the building. In turn, this will aid your resale value when you’re ready to sell.
Negatives:
Ok, on to the bad. The biggest issue with pre-construction: time delays! If you need a place to live now, you can forget pre-construction. Time delays are a common occurrence, and can last anywhere from 6 months to a few years. More importantly, sometimes a project is called off all together. This is rare, but it is a risk associated with pre-condo.
On the subject of down payment, you will require a full 20%. Now, this can actually be viewed as a positive or a negative; on the down side, a resale unit can have you paying as little as 5% up front; on the positive side, a bigger down payment means a smaller mortgage which ultimately saves you interest charges, gives you a smaller monthly fee to maintain, and it also allows you to avoid the CMHC Fees associated with deposits that are less than 20%. Moreover, the 20% down payment is typically broken into smaller incremental payments, which gives you more time to source the entire 20%. These incremental payments are referred to as a deposit structure. You will generally be paying something like 3-5K up front, with the balance of the initial 5% in 30 days, another 5% in 90 days, another 5% in 180 days and the final 5% at occupancy (the day you move in).
Lastly, the big negative tied into pre-condo is something often referred to as Phantom Rent. There is a period of time in which you can officially move into the unit, however the building itself is not yet registered, and as a result, you do not yet own the unit. This is referred to as Interim Occupancy. Interim occupancy can last as short as a few months, or as long as a few years, and you are required by law to pay the occupancy fees. These fees are calculated to be more or less what your mortgage payments will be once the unit is officially yours, but the issue is this: those occupancy fees do not go towards your mortgage. Hence the term “Phantom Rent”.
So, pre-condo purchases can be a very smart investment. With that said, do yourself a favor and work with a professional when considering such a purchase. Be aware of the good, the bad and the ugly. CMG Toronto can help!
Do I Need Landlord Insurance?
The short answer is yes! Of course you need landlord insurance. But the long answer is a little more complicated. Landlords operate at different levels; some rent out an entire space, some are simply subletting a room, some rent out year around, and some rent out for only a certain number of weeks in the year. If you fall into the latter category and only rent out a room for a few weeks in the year, than you should be fine to disregard landlord insurance; you’ll very likely be covered through your homeowners insurance. However, if you rent out on more than just an occasional basis, then you’d be making a big mistake by neglecting to invest in landlord insurance.
Why isn’t my Homeowners Insurance enough?
The homeowners’ insurance company does not take rented space into account when they issue your policy. So under the circumstance that you need to make a claim due to your tenant’s neglect of the property, it may not be covered. If you are simply subletting a room, however, you do have an option to endorse your homeowner’s policy with “unit rented to others” coverage. This would be in replacement of buying a separate landlord policy. But if you are renting out an entire space, this won’t suffice.
When do I need a separate Landlord Insurance Policy?
In short: if you don’t live in the same space as your tenant, you’ll want a separate policy. Renting out an entire condo? Get a policy. Renting out an entire house? Get a policy. Renting out an apartment space? You guessed it: get a policy! You should know that you are not legally obligated to own a policy, the way you are car insurance for example, but failing to purchase one is a risky move. You run the risk of financial loss due to fire damage, flood damage, severe weather damages and more. For example, let’s say a fire breaks loose on your rental property due to a strike of lightening. The situation may be an extremely rare occurrence, but on the off chance that it happens, you may be faced with damage exceeding $100 000 that you will now have to cover out of your own pocket. This is just one, farfetched scenario, but there are countless instances in which a good landlord insurance policy can cover your rear end. A good policy will give you peace of mind knowing that your rental unit is covered on the off chance that it becomes uninhabitable due to circumstances beyond your control.
There are many different types of important coverage that you can request in your policy. The exact coverage would depend on the insurance company that you are dealing with, and the options that they present. Some important options to include are as follows:
Property Damage:If your property endures damage due to storm, fire, theft, vandalism or tenant damage (always remember to screen your tenants) this will cover you. The important aspect to cover here is to ensure that you are covered for the entire cost of your property in the rare event of a total loss.
Liability Insurance: Equally as important as property damage coverage, liability insurance will protect you against liability claims and lawsuits. Renting out a space can be very risky without this coverage, as any tenant or visitor who injures themselves in your property can hold you accountable. Bodily injury claims on your property will ding you with a ton of legal costs i.e. funeral costs, medical payments, settlement costs etc.and this coverage will help with many of those costs. Moreover, this coverage will protect you if you are found to be responsible for any damage to the tenants’ property.
Loss of Income: Finally, you’ll want to make sure that loss of income coverage is included. If your property becomes uninhabitable due to a covered loss i.e. fire, this coverage will reimburse you for all of the “lost rent” you’ve incurred while the unit is being repaired to livable standards.
In addition, you can buy “optional coverage” that extends beyond what we’ve covered here. What you wish to add, is entirely up to you. Some popular add ons are employer liability insurance, landlord contents insurance, and rent guarantee insurance.
If you need help with property management, tenant management services, or looking into a property investment – contact CMG Toronto today. The best property management company in Toronto.
What’s the Bottom Line?
Landlord insurance doesn’t have to be costly. There are policies that run for as little as $500 a year, or less. To protect your biggest investment, that’s money well spent. Working with a property management company will ensure that you have the best options, and are given the best policy. CMG is one of the most trusted names in Toronto. If you have questions or concerns, reach out today and let our team of professionals guide you through the process.
How to Properly Screen a Potential Tenant
We all know that potential tenants can be crafty. Any landlord who’s been in the game for long enough has likely experienced this first hand. If you’re a new landlord, you’ve probably heard the horror stories of fully suited tenants who speak well and present themselves professionally who actually turn out to be complete and utter nightmares. Of course by the time you figure this out, it’s too late;the tenant is already living in your space and giving you trouble. So how do you minimize the risk of choosing a bad tenant? How do you tell when someone is simply putting on a show? Understanding the importance of the screening process can give you a significant advantage over a crafty Tenant from Hell.
Important Processes:
First and foremost, you should start by having every potential tenant fill out an application form. There are many sample forms available online, like this one. Alternatively, you can request a sample rental application from your local real estate association, or create your own personalized application using a Microsoft Office template. The application should cover financial information, employment information and personal information. Be sure the application states that a full criminal background check and credit check will be required, and that the tenant is authorizing a check into his or her financial, employment and personal history.
Next, you’ll want to go ahead and run acredit check. You can request it directly from the tenant, asking them to cover the cost, or you can incur the cost yourself; your call. It’s not mandatory that the potential tenant complies, but remember that you are the one in power. If they put up a stink, they are likely trying to hide their bad credit score.
Once the credit check clears out, it’s time for the Background check. Companies like Sterling Talent Solutions are able to offer an employee background check for a fee, and companies like Screening Works are able to offer online tenant screening, background checks and Criminal Reports. Typically, all you’ll need is the tenant’s Social Security number.
Ok, so the credit check and background check look clean. Now what? Now it’s time for you to contact the tenant’s previous landlords as well as their employer. Past landlords will be able to give you insights into whether or not the tenant was timely with their monthly payments and respectful of the property. Contacting the employer will give you peace of mind knowing that the tenant has a steady and reliable source of income.
So the previous landlord gave a glowing testimonial, and the employer has verified that the tenant has steady, reliable work. Great! You’re almost at the finish line. With that said, don’t assumeall is well. Now comes the really important part: Interview the Tenant. Interviewing the tenant will give you insights into the tenants personality, and will allow you to pinpoint any potential deal breakers that the screening process may have missed. Here are some crucial questions to ask:
Following these steps will limit the likelihood of you ending up with a bad tenant. Use your instincts when screening, and if you start to get a bad feeling, don’t be afraid to walk away. There are plenty of potential tenants out there! Ideally, you should hire a management company like CMG Toronto to handle these processes for you. Let the professionals do what they do best!