Do you increase rent in Ontario every year for ALL tenants or are there any exceptions?
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QUOTE (investmart @ Mar 1 2009, 10:43 PM) i.e. good long term tenant on disability(?) many strongly recommend increasing rent whenever possible. especially in the case of Plexes, it also increases property value. What are your exceptions, if any, to the rule?
Exception 1: raise vacant suites to MARKET rents.
Exception 2: Move into one suite yourself is an allowed exception.
Exception 3: You can also apply for renovation and must offer the same suite to tenant that has moved out at SAME rent .. but if he doesn`t take it .. then you can go to market in ON !
Exception 1: raise vacant suites to MARKET rents.
Exception 2: Move into one suite yourself is an allowed exception.
Exception 3: You can also apply for renovation and must offer the same suite to tenant that has moved out at SAME rent .. but if he doesn`t take it .. then you can go to market in ON !
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Hi Thomas, I was referring more to the ~2% increase allowed per year in Ontario REGARDLESS of renovations (assuming no renovation).Do you recommend to increase ALL tenants by the 2% allowed no exceptions?
(again, assuming no renovation during that year. if renovating - yes increase even more)
Thanks,
Neil
(again, assuming no renovation during that year. if renovating - yes increase even more)
Thanks,
Neil
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Hi Neil,
Interesting topic
I have raised the rents with the allowed increase to all tenants - with the following exception: I have a couple that is renting one of the units in one of my 5plexes who do extra stuff around the property, have ALWAYS paid on time and are a married couple who are university students (grad students). I agreed to keep their rent fixed for a two year period if they agreed to sign a two year lease (they are great tenant and I am trying to keep them for as long as possible
)
For tenants who are renting other space from you (ie garage, storage space, parking) - as these spaces are considered commercial spaces, you can increase the rent whenever you want to whatever the market will bear (assuming that you have a separate, commercial type rental agreement).
Yevgeni
Interesting topic
I have raised the rents with the allowed increase to all tenants - with the following exception: I have a couple that is renting one of the units in one of my 5plexes who do extra stuff around the property, have ALWAYS paid on time and are a married couple who are university students (grad students). I agreed to keep their rent fixed for a two year period if they agreed to sign a two year lease (they are great tenant and I am trying to keep them for as long as possible
For tenants who are renting other space from you (ie garage, storage space, parking) - as these spaces are considered commercial spaces, you can increase the rent whenever you want to whatever the market will bear (assuming that you have a separate, commercial type rental agreement).
Yevgeni
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Hi Neil,
Because you are so limited in how much you can raise rents in Ontario, I would raise it every year by the amount that is allowed unless you personally feel there is a good reason not to. I would do this with a good letter explaining why you are increasing, such as the fact that cost of energy is up by X% which is more than what Ontario allows you to raise. In most cases, the increase allowed by the province is always less than inflation. One of my 2 triplexes is severly under market rents because the previous owner never raise the rents. Now, I can only raise the rent by the 1.8% or whatever they choose each year. Essentially I can never get market rent until I get that tenant out. I have to bite the bullet until they move out(not likely as they know where ever they go, they will pay 50% more rent).
If you don`t raise rent every year, then as the costs to manage, heat, maintain goes up each year, your cashflow goes down. Use other incentives to reward good tenants, like a 50$ gift card at Wal-mart, gift baskets, thank you letters, cards etc
There are always exceptions and it`s great to have the ability to make them. That great tenant that wants to stay in that suite for "ever" increases your cashflow in the sense that you don`t have to factor in the vacancy rate. Good topic Neil, I can`t wait to see what others reply.
Real
Because you are so limited in how much you can raise rents in Ontario, I would raise it every year by the amount that is allowed unless you personally feel there is a good reason not to. I would do this with a good letter explaining why you are increasing, such as the fact that cost of energy is up by X% which is more than what Ontario allows you to raise. In most cases, the increase allowed by the province is always less than inflation. One of my 2 triplexes is severly under market rents because the previous owner never raise the rents. Now, I can only raise the rent by the 1.8% or whatever they choose each year. Essentially I can never get market rent until I get that tenant out. I have to bite the bullet until they move out(not likely as they know where ever they go, they will pay 50% more rent).
If you don`t raise rent every year, then as the costs to manage, heat, maintain goes up each year, your cashflow goes down. Use other incentives to reward good tenants, like a 50$ gift card at Wal-mart, gift baskets, thank you letters, cards etc
There are always exceptions and it`s great to have the ability to make them. That great tenant that wants to stay in that suite for "ever" increases your cashflow in the sense that you don`t have to factor in the vacancy rate. Good topic Neil, I can`t wait to see what others reply.
Real
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Yes. Every year without exception.
If you do not you are negatively effecting the value of your investment and penalising the next owner.
Tenants expect a rent increase and when done annually no explanation is necessary beyond the notice.
If you do not you are negatively effecting the value of your investment and penalising the next owner.
Tenants expect a rent increase and when done annually no explanation is necessary beyond the notice.
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QUOTE (investmart @ Mar 1 2009, 11:42 PM) Hi Thomas, I was referring more to the ~2% increase allowed per year in Ontario REGARDLESS of renovations (assuming no renovation).Do you recommend to increase ALL tenants by the 2% allowed no exceptions?
(again, assuming no renovation during that year. if renovating - yes increase even more)
Thanks,
Neil
usually .. assuming that rents are not over and above what they should be for the market situation .. of course in Windsor, ON maybe -20% is in order ..
2% is well below inflation .. and in a normal economy with inflation rents would go up 4-5%/year .. as expenses like utilities, wages, taxes go up this much every year too !
(again, assuming no renovation during that year. if renovating - yes increase even more)
Thanks,
Neil
usually .. assuming that rents are not over and above what they should be for the market situation .. of course in Windsor, ON maybe -20% is in order ..
2% is well below inflation .. and in a normal economy with inflation rents would go up 4-5%/year .. as expenses like utilities, wages, taxes go up this much every year too !
Correct me if I`m wrong, but let`s say you didn`t raise your rents for 5 years (hipothetically speaking), you could raise the rent the collect amount of each of those years...
Example, (again hypothetically speaking)...
2004- rent increase permitted =1.5%
2005- rent increase permitted =1.4%
2006- rent increase permitted =1.6%
2007- rent increase permitted =1.5%
2008- rent increase permitted =1.5%
The total = 7.5%.
Apparently you could raise the rent in 2009 by 7.5% plus the amount allowed for 2009.
Example, (again hypothetically speaking)...
2004- rent increase permitted =1.5%
2005- rent increase permitted =1.4%
2006- rent increase permitted =1.6%
2007- rent increase permitted =1.5%
2008- rent increase permitted =1.5%
The total = 7.5%.
Apparently you could raise the rent in 2009 by 7.5% plus the amount allowed for 2009.
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QUOTE (JoefromTO @ Mar 2 2009, 10:30 AM) Correct me if I`m wrong, but let`s say you didn`t raise your rents for 5 years (hipothetically speaking), you could raise the rent the collect amount of each of those years...
Example, (again hypothetically speaking)...
2004- rent increase permitted =1.5%
2005- rent increase permitted =1.4%
2006- rent increase permitted =1.6%
2007- rent increase permitted =1.5%
2008- rent increase permitted =1.5%
The total = 7.5%.
Apparently you could raise the rent in 2009 by 7.5% plus the amount allowed for 2009.
no, you can`t ..
Example, (again hypothetically speaking)...
2004- rent increase permitted =1.5%
2005- rent increase permitted =1.4%
2006- rent increase permitted =1.6%
2007- rent increase permitted =1.5%
2008- rent increase permitted =1.5%
The total = 7.5%.
Apparently you could raise the rent in 2009 by 7.5% plus the amount allowed for 2009.
no, you can`t ..
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In Ontario it is a use it or lose it situation which is why it is essential that landlords increase the allowable amount every year.
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There`s one other good reason not to raise rent - If you want to get tenant on a new lease or fixed term (for saleability or seasonality of local rental market) Ie offer to tenant - if you agree to enter in this new lease with X difference in terms or that`s fixed for (X) months by in the next two weeks I won`t raise rent. - I`ve done this before