Tag Archives: tenants

Naborly protects landlords’ investments

As every landlord surely knows, running a credit check during the tenant selection process is paramount. However, not every landlord realizes what to do with the information the credit check reveals.

“Every independent landlord knows that to screen a tenant, you have to look at their credit, but a lot of them have no idea how credit relates to a tenant’s ability to pay rent on time,” said Jerome Werniuk, director of sales at Naborly Inc., which runs free credit and background checks. “Ninety-five percent of landlords have tenants show up with their own credit file, meaning they go to Credit Karma or Equifax, but when we hear professional tenant stories, these people come with doctored credit checks.

Doctoring a credit check is as easy as finding a template online and filling it in as one wishes. It’s what Werniuk describes as a huge problem within the industry.
While savvy landlords realize they can obtain credit checks from Equifax or TransUnion, many still don’t know, nor have time, to mine the information therein to decipher a tenant’s capacity for prompt rent payments.

“To get a credit file from either of the credit bureaus, they have to pay for it and a set-up fee for the individual’s report, but there’s a heavy credentialing process to pull somebody’s file,” said Werniuk. “Even when the landlord gets a credit file, they don’t know how to read it. They don’t know exactly what an R9 is or how someone paying a cell phone bill on time impacts their ability to pay rent. So credit is not necessarily a good tool for independent landlords.”

Naborly builds a different type of credit report using critical criteria like contemporary cost of living and verifiable income to determine a potential tenant’s ability to pay rent. It has proven so popular that, when it launched in February 2018, Naborly screened 100 people a week. Now, it screens at least that many people in a day.

“The biggest feedback we’ve received from landlords is our tool is amazing at assessing risk so that they can properly evaluate whether or not to accept the rental application,” said Werniuk. However, there remain risks that are extremely difficult to predict. Landlords have said that many of their previous evictions  were due to circumstances that changed after the tenant moved in, like job loss or some other unforeseen, and expensive, event in their lives. Nobody can predict those things.”

The average cost of eviction in Ontario is $9,000, and that could cripple an investment. In response, Naborly has rolled out Rent Guarantee, which doesn’t just risk assess but also protects the landlord for the full term of the lease. In effect, Naborly cats as the tenant’s co-signor, which shields the landlord’s investment.

“It’s based on the Naborly report and the risk score we give, which directly correlates to a tenant defaulting on rent,” said Werniuk. “We give a quote for how much rent guarantee will cost. They can have Naborly become a guarantor on the lease, meaning if the tenant ever defaults then Naborly steps in and covers the rent for up to six months. Our primary customer for Rent Guarantee is the landlord who only owns one or two units because if they don’t collect rent for two or three months, they’ll have issues paying their mortgages and they could lose the property.”

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Most landlords plan to ban cannabis use in rental units: Survey

marijuana

Ahead of legalization, most property owners believe cannabis use will decrease the value of their residential assets

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The majority of landlords polled in a new survey have responded negatively to cannabis use in rental units, going so far as to offer lower rent to tenants who agree to not smoking in units.
The survey conducted by real estate website Zoocasa was conducting in anticipation of cannabis legalization, coming into effect across Canada tomorrow (October 17).
A whopping 88 per cent of landlords say they plan to prohibit smoking in their buildings, with 65 per cent willing to consider lowering rent for tenants who don’t smoke cannabis inside their suites. Sixty-four per cent of Canadians agree that building management or strata councils should have the right to ban cannabis use.
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Tenants seem to be on the same page – with only 35 per cent of respondents who identify as renters affirming their right to smoke cannabis inside their homes.
Stigma towards cannabis use remains high among homeowners and buyers, despite impending legalization; sixty-four per cent of property owners still believe smoking inside of homes with decrease the property’s value. Fifty-seven percent believe growing cannabis inside a home for personal use would decrease its resale value. Prospective buyers agree, with 52 per cent saying they’d be less likely to purchase a home if they knew marijuana had been cultivated there.
Cannabis retailers are also seen as less-than-desirable neighbors, with only 31 per cent of Canadians comfortable living near one. Fifty per cent of Generation Xers (those born between 1961 and 1981) believe a dispensary in the neighbourhood would devalue their home.
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Zoocasa conducted the online survey of more than 1,300 Canadians from Sept. 27 to Oct. 3.
Source: Western Investor- Tanya Commisso October 16, 2018
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How to keep your income property from taking over your life

How to keep your income property from taking over your life

For Terri Ronci, renting out her in-demand Toronto condo meant having the financial freedom to seek out a career change.

After years in advertising she wanted to go back to school to pursue other interests and return to her hometown of Montreal.

“I had a really great conversation with my dad who (said), imagine if you could rent that place for more than you’d have to pay out, it might give you that cushion and (be) a retirement nest egg,” she said.

“If you sell it, that money is available now, but in the long term, think about the steady income that this investment will bring in, along with the fact the selling price will go up. It’s the best way to maximize the return on your investment.”

Ronci, 40, decided to rent – and the decision paid off. She was able to cover her mortgage and expenses with the rent she got off her condo, and have enough money leftover to pursue the lifestyle changes she was after.

In Ronci’s case, having a well-situated apartment and trustworthy property managers made renting her condo on the side a lucrative and stress-free process.

But while an income property can be rewarding, would-be landlords need to think about what they’re buying and the kind of return they’ll get for their efforts, said Milton, Ont-based realtor Andrew Roach.

“When I talk to my investment clients, we sit down and we say, what are you willing to invest … and we’re not talking just about money,” said Roach, 38, who owns multiple properties on his own or through side ventures.

“When buying a property people are investing more than just their hard-earned money. They’re also investing their time and energy.”

A property manager and the careful screening of your tenants will go a long way toward safeguarding your free time, but it’s often the finances that can trip people up the most.

““You have to make sure the income being produced, the cash flow, can support the debt, said Brenda Burjaw, director of commercial services at Meridian Credit Union Limited.

Whether you’re renting out one condo to supplement your income or a slate of properties, she adds, the money side is the same.

You have to do your due diligence up front to make sure the property will give you the return you want, you should be clear on your risk tolerance (since that will guide your strategy) and you need to carefully budget to make sure you can cover off the operating cost of running the unit – both in terms of capital needs for big expenses and to service the debt outstanding on your mortgage.

Operating costs are the part of the equation that you can have some level of control over by budgeting for repairs and maintenance, said Burjaw.

“You need to be mindful of always having some sort of a reserve set aside for when you have to re-lease the unit – paint it, replace an appliance, fix a window,” she said.

“Each year a prudent property owner should look and budget what the coming year operating costs are going to look like, and find efficiencies where possible.”

A condo is a good option for anyone who is low risk or doesn’t want to spend much time worrying about their side property because condo fees take care of a lot of the maintenance. If your tenant agrees, you can also automate payments and appointment bookings by signing up with a company like Get Digs, which lets renters pay with their credit cards and make sure landlords get the rent on time.

That will keep you from having to chase tenants for their rent, since legislation brought in in places like Ontario means you’re no longer allowed to ask tenants for post-dated cheques to cover their rent for the year ahead.

Property managers can help ease the burden, for a fee, and so can having a go-to list of people to call in an emergency to replace a window or fix a leaky toilet.

If you choose to outsource that work, you’ll need to factor property management fees into your budget and consider how that will impact your cash flow.

You should also be thinking about whether your tenant will pay the hydro bills and whether you can charge extra for amenities like parking.

When you’re estimating your costs and possible return, it’s also important to be conservative, said Pauline Lierman, director of market research with Urbanation Inc., a firm that tracks the rental condo and new purpose build market in Toronto.

“You have to look at what the balance sheet of the condo is, what the maintenance fees are,” she said.

“Be aware of what the type of unit you have in your building is renting (at), be aware of who else around you may be adding new units going forward.”

But while careful math and planning is needed to make sure a rental side hustle pays off, for landlords like Ronci, the result is worth it.

“If you’re wanting to make a change in your life, an investment like this can give you the break or pause you need to breathe.”

Source: Financial Pipeline – ROMINA MAURINO
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Would legal cannabis become a rental property nightmare?

Would legal cannabis become a rental property nightmare?

Canadians will soon be able to add marijuana to their collection of household herbs, and that’s creating a nightmare for the country’s landlords.

With Prime Minister Justin Trudeau set to legalize recreational weed in July, apartment owners are concerned about safety and potential damage to their buildings if tenants grow plants and smoke up in their units. Landlords are lobbying provincial governments for legislation that would ban marijuana use in rental units or allow them to add restrictions to lease agreements.

“We’re hammering away at this pretty tirelessly,” according to David Hutniak, chief executive officer of Landlord BC, a housing-industry group in the province of British Columbia.

“Can you imagine you’re living in a 100-unit apartment, and in theory, there could be 100 grow-ops in that thing? I mean, that’s ridiculous,” Hutniak told Bloomberg.

Cannabis stocks have jumped and businesses are primed to cash in on Canada’s long-awaited pot party. Yet federal regulations on recreational use of the drug in the country, where medical marijuana has been legal since 2001, are still being worked out. Proposals include allowing people to smoke in private residences and to grow as many as four plants per rental unit. Provinces have the right to set rules in their own jurisdictions, including age limits for possession of weed and whether landlords can restrict use on their properties.

Read more: Legal marijuana shops could boost nearby property values – study

One reason landlords don’t want tenants lighting up is that many rental buildings are fairly old, so “smoke and smells are easily transmitted through hallways between units” and can disturb others who don’t want to partake, Canadian Federation of Apartment Associations president John Dickie explained.

Growing pot requires certain humidity levels that may damage apartment walls, and the electrical wires required to run the operation can start fires, according to Hutniak. Budding plants also give off a pungent aroma that can seep through door cracks.

Failing to implement regulations that allow landlords to ensure smoke-free, grow-free units could lead to higher rents, according to William Blake, spokesman for the Ontario Landlords Association. Some provinces, including Ontario, block landlords from extracting damage deposits from tenants, said Blake, who once spent more than $5,000 to clear the smell from a marijuana smoker’s unit.

“This is not a political issue for us – we care about taking care of our tenants and keeping costs low,” Blake said. “When we have to pay out thousands of dollars, landlords will want to raise the rents for the next tenants.”

Finding an affordable apartment in supply-squeezed cities like Toronto and Vancouver is already challenging, and vacancy rates are at record lows. For people who use pot, the search may get even tougher: It is “legal and legitimate” for landlords to select tenants who don’t smoke, Dickie argued.

Source: MortgageBrokerNews.ca – by Ephraim Vecina13 Feb 2018

 

Would legal cannabis become a rental property nightmare?

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