Landlord’s who don’t treat their investment like a business are doomed to fail, I see it all the time, first time Landlord’s who purchased a property and are scrambling to sell a year later because the investment has become a true nightmare!
Owning Property and being a landlord is a business, a real business with real expenses and requires real strategic plans to keep in business. This isn’t a park your money, and let it payout, NO, NO, NO! This is a real business, with real work, and real risk.
Unfortunately, not a lot of new landlords understand the risk when they purchase an investment property, and without diligent planning, your investment property is going to be a major failure with a lot of stresses, few dollars in the bank, and probably one of your worst nightmares!
Whether this is your first property, only property or you have multiple buildings, you need to plan and allocate your money responsibly!
Here are 5 Tips to help you better manage your rental property, and avoid the common issues new landlords face:
#1: Don’t skip out on proper Tenant Screening & find the right Tenant!
There is no doubt that a good property to be functional requires good tenants, and a lot of new landlords don’t know how to properly screen tenants and pick one they feel is right. This is about the same as taking all the names, putting them in a hat, and choosing one out like a bingo ball and hoping you strike BINGO! No, it’s not a good idea, but new landlords do it all the time because proper screening costs money. Don’t skip out on the money to properly screen a tenant, purchase a good screening software like Tenant Cube to help manage your property: https://tenantcube.com/affiliate/jordan-nieuwhof?fbclid=IwAR3YCKF7cmLqY-TChduwWLOhBZjMf4Tp4vvIIWk1413WId7RyVxPn7tZD8M
Tenant Cube will help you manage your property, get the credit score, and ultimately allow you to choose better tenants so your property doesn’t become a nightmare with nightmare tenants. Does it cost money? Absolutely and that is the point of the article, professional services cost money, but save you time, and money in the future. Do not skip out on paying for proper tenant screening, it is part of the business, it is part of the venture. Allocate some of the rental monies to pay for things like Tenant Screening.
#2: Price your Rental Unit Correctly!
Unless you’re in a new building that isn’t under the strict guideline rental increase rules, you
will be capped at a maximum you can raise the rent each year for which is governed by the government. Therefore, it is important to price your unit according to rental market the first time; you generally do not have an opportunity to adjust the rent once the tenant is in the unit. https://www.ontario.ca/page/residential-rent-increases here is the link for current and past rental increase amounts.
To help you price your rental unit correctly, you should do a considerable amount of research on rental sites to see what comparable units are going for in your region and area. If you’re not confident on the price of your unit, spend the money and hire a Property Manager or Realtor to help you place tenants at the correct rates. Tenant Cube can help you do this https://tenantcube.com/affiliate/jordan-nieuwhof?fbclid=IwAR0X6jmXkMaMQX1MsEVkrnGvF4aNudKkmKCVfLEiVtG92aEmwBoJEeIkhi4
All too often, clients come to me because they have a tenant in the unit that is paying well below market value, and unfortunately, unless there are grounds to evict under the Residential Tenancies Act 2006, you cannot evict simply due to a tenant paying below average rent. Therefore, price your unit correctly from the onset of the tenancy.
#3: Understand what a Lease means!
Landlord’s tend to believe that a lease agreement means that the Tenant must leave after the Fixed-Term lease expires. If the Landlord does not wish to renew the lease, it does not mean that the Tenant must leave. A tenant being forced to leave after the termination of a lease is a misconception, a mistaken in belief of fact, and is simply not true. The Tenant has the right to security of tenancy which means that the Tenant may remain in the unit after the lease expires on a month-to-month basis and can only be evicted by the Landlord and Tenant Board under the strict rules of the Residential Tenancies Act 2006. What this means is that you could have a tenant for life unless the Board Orders an eviction, and the Tenant does not have to leave simply because the lease expires.
In addition, a Lease Agreement is not a dominating document and must be consistent with the Residential Tenancies Act. Therefore, just because your Lease agreement states no to something does not necessarily mean that the term in the lease is valid.
New Landlords must read the Residential Tenancies Act 2006 and come to understand what a Lease means. In Ontario, you must use the Ontario Standard Lease Form- https://www.forms.ssb.gov.on.ca/mbs/ssb/forms/ssbforms.nsf/FormDetail?OpenForm&ACT=RDR&TAB=PROFILE&SRCH&ENV=WWE&TIT=2229E&NO=047-2229E and all the additional terms you add, must be consistent with the Ontario Standard Lease and the Residential Tenancies Act 2006.
If you don’t understand the Terms inside the Ontario Standard Lease Agreement, do not blindly enter clauses, or guess, that is a bad idea. Instead, spend some money, and book a Coaching Session with a Paralegal, you can book with my link here:
https://www.legalenforcement.ca/. As a Professional Landlord, and to set yourself up for success, you should allocate a portion of your rental income each month to Professional Services like Legal Services and Coaching. In the long run, an investment in legal services, and professional services will help save you money, and have peace of mind in the future as you are taking proactive steps to prevent serious legal issues during the tenancy.
#4: Understand your Maintenance Obligations!
As a landlord, it is your property, your investment, and ultimately your home. This means, that you, as the Landlord are responsible for Maintenance Issues. Even if your Lease states that the Tenant is responsible for repairs up to a certain amount or replacing broken fixtures etc.… it will not hold up at the Tribunal. The Tenant is responsible for ordinary cleanliness and items that they break but are not responsible for normal wear and tear of the unit. The Residential Tenancy Act Part III – Responsibilities of the Landlord—outlines what the Landlord is responsible for.
Landlord’s responsibility to repair
20 (1) A landlord is responsible for providing and maintaining a residential complex, including the rental units in it, in a good state of repair and fit for habitation and for complying with health, safety, housing and maintenance standards. 2006, c. 17, s. 20 (1)
You should read this section of the Act and become very familiar with your maintenance obligations. Professional Landlords set aside a portion of the rental income every month to address maintenance issues when the Tenant makes a request.
Also understand what you must do and what you don’t have to do. Sometimes, tenants will take advantage of their landlord and seek things that aren’t maintenance issues at all like new cupboards, floors, paint, carpet etc. Just because items are old, does not mean they need to be replaced. You need to use your own judgment and read caselaw on what satisfies the Landlord and Tenant Board to meet your maintenance obligations.
To help manage maintenance requests and issues, I suggest using the software Tenant Cube, a management software that assists Landlords and Tenants keeping track of maintenance requests. I appreciate when my legal clients use Tenant Cube because the software helps build the evidence for any defenses to a Tenant’s T6 Application. You can check Tenant Cube out here: https://tenantcube.com/affiliate/jordan-nieuwhof?fbclid=IwAR0X6jmXkMaMQX1MsEVkrnGvF4aNudKkmKCVfLEiVtG92aEmwBoJEeIkhi4
If you’re unsure about maintenance, book a Coaching Session with me, and we will discuss all your rights, obligations, and liabilities about a property for maintenance issues especially when a Tenant is threatening you with a T2 or T6 Application: https://www.legalenforcement.ca/
#5: Seek Professional Advice!
You cannot run a professional business, own professional properties, and become a professional landlord without spending money on professional services and advice. Get a trusted Paralegal to rely on when facing issues at the Landlord and Tenant Board. Honestly, a Professional Paralegal and Paralegal Training and Coaching about Residential Properties will save you thousands of dollars in simple mistakes for the future.
I don’t know how many applications I see get dismissed because Landlord’s don’t know how to properly evict people, properly bring forth an application to the landlord and tenant board, or how to complete the forms to the expectations of the Adjudicators. Dismissed Applications, waiting to long before enforcing rent payments, not handling damages correctly, and other Major Tenant issues can cost you thousands of dollars and turn your investment into a nightmare-- hell hole.
You’re going to have to make a choice about whether you want a professional building and manage your investments as a true business professional or handle your rental unit like new landlord’s who often sell their units off because it became an awful situation.
With the right professional services may it be Legal, Accounting, Risk Management, Insurance etc. will help you ensure your rental unit is best managed, and your investment continues to grow.
Professionally Manage your money and Properties!
I don’t want to see any Landlord fail in this business, and there is no reason why any Landlord should fail, but if you’re not willing to treat your properties like a business with real risk, real expenses, and real problems, you are doomed to fail. Once again, this isn’t a risk free, or expense free business, you must properly allocate your funds and resources to ensure your investment is properly taken care of. Create a property budget for Mortgage, Repairs, Professional Fees, and Legal Fees, ensure you are not taking out too much of the rental incomes for personal expenditures!
This is your property, your investment, and your retirement, don’t loose it all to a nightmare, and instead become a professional business owner, with professional properties and, your investment will thank you.
The Landlord's Paralegal
Paralegal & Legal Coaching.
This is where serious Landlords come for professional help for serious issues regarding their Tenants.