Raising the rent on inherited tenants

[MrHamilton]

Hello there,

I know you fellow REIN members out there can impart some wisdom on a relative noob.

I have come across an opportunity to acquire a duplex with tenants who would like to stay.

Problem is the rents are 15-20% below market so the question is, how do I raise the rent? Are the rules of raising rent different from the annual CPI increases if there is a change of ownership?

FYI, the property is in a suburb of Hamilton, Ontario.

thank you in advance,
Erwin

 

[Ready4Rent]

The rent increase rate for 2008 is 1.4 percent, check out www.ltb.gov.on.ca and get the propert form. You also have to give 90 days notice

Hope this helps

John

 

[dplummer]

Purchase the property tennant free. Perform any needed repairs. Charge new rents.

Doug

 

[invst4profit]

Doug is right. With your rents 15-20% below market you will never catch up unless you get new renters.

 

[realfortin]

QUOTE (dplummer @ Aug 7 2008, 05:51 PM) Purchase the property tennant free. Perform any needed repairs. Charge new rents.

Doug

Ok but in Ontario can you kick them out when you buy?

 

[Thomas Beyer]

QUOTE (ErwinFromBurlington @ Aug 7 2008, 11:55 AM) Hello there,

I know you fellow REIN members out there can impart some wisdom on a relative noob.

I have come across an opportunity to acquire a duplex with tenants who would like to stay.

Problem is the rents are 15-20% below market so the question is, how do I raise the rent? Are the rules of raising rent different from the annual CPI increases if there is a change of ownership?

FYI, the property is in a suburb of Hamilton, Ontario.

thank you in advance,
Erwin
Welcome to the socialist republic of Ontario.

No, you cannot raise rents more than the published CPI, right now around 2% in Ontario UNLESS you spend significant capital in in-suite upgrades .. then you can apply for an exception.

On turnover however, you can set market rents.

Usually this leads to slum landlording by landlords not spending a penny on upgrades until the tenants moves. It also causes people to stay longer in their suite. As an example, if a widow who had 3 kids and a now deceased husband remains in her 4 BR, it makes sense to her, but the upwardly mobile family that wishes to rent this 4BR can`t find a place and essentially subsidizes her. Socialism in its purest form.

Invest in SK, NB or AB instead where you can adjust to markets much much faster !

We own an apartment building in Sudbury, ON with 93 units, and we get rent increases of around 35 to 50% on turnover, and with turnover being around 33% this is sufficient for us, as our value increase target is 50% in about 4-5 years, doable even in Ontario (or BC) in an apartment building.

 

[Thomas Beyer]

QUOTE (dplummer @ Aug 7 2008, 06:51 PM) Purchase the property tennant free. Perform any needed repairs. Charge new rents.

Doug
hard to impossible to do as you can`t just cancel a lease in ON and say "get out". This is illegal.

 

[nicool]

I also have property in Sudbury (61 units) and was lucky enough at the beginning to purchase vacant on possession at a time when the tenants really didn`t know their rights but Thomas is correct when he says "welcome to the Social...of Ontario". It has become more difficult to purchase this way and tenants are beginning to find out that they don`t need to move just because the landlord is selling and the buyer wants it empty.

If you decide to renovate and use this as a reason for eviction the tenant has the first opportunity to the move back in at the old rent. Your hope is that if the tenant moves out temporarily that they will find another place to live and won`t want the invonvenience of moving again. A gamble but you never know, it could be worth it. Also if you use the reason that you want the unit for a (immediate) family member, the tribunal office will require that person to sign a legal form stating that they will be moving in. Also, be careful with this one because friends of the old tenant usually watch to make sure a member of your family actually moves in.

Greg Miller


QUOTE (thomasbeyer2000 @ Aug 10 2008, 05:56 PM) hard to impossible to do as you can`t just cancel a lease in ON and say "get out". This is illegal.

 

[dplummer]

That is why I suggest purchasing the building vacant. Let the vendor evict the tenants.While I wouldn`t argue the facts I do believe the right lawyer would help the vendor persuade the tenants to see the light & move. Leases can be legally canceled with proper notice for infractions of the landlord/tenant act along with proper compensation to the tenant.Money, moving allowance, ect. can be a powerful motivation to a tenant if they know your selling & need to have them move to make the sale.

Doug

 

[wealthyboomer]

QUOTE (thomasbeyer2000 @ Aug 10 2008, 05:55 PM) Welcome to the socialist republic of Ontario.

No, you cannot raise rents more than the published CPI, right now around 2% in Ontario UNLESS you spend significant capital in in-suite upgrades .. then you can apply for an exception.

Isn`t there an exemption under the Residential Tenancies Act that states the provincial guidelines don’t apply to new rental units occupied after Nov. 1, 1991?
This provision allows landlords to set an annual rent increase in these buildings to whatever level they see fit, without a cap of any kind.

 

[ShannonMurree]

The rules have changed and you cannot evict a tenant because of wanting to make repairs to a unit. Actually, yes you CAN evict them but they have "first right of refusal" and the right to re-occupy the unit once the repairs are done. AND, you have the right to make an application to the Tribunal to have the cost of renos/repairs be reflected in their rent however, once those renos are `paid off` it`s my understanding under the law the rents are to be re-adjusted back to their original rates.
The gamble is, if tenants have already leased somewhere else once they`ve been evicted, are they really going to come back once you`re done? Maybe, maybe not.

Now, in regards to the original posters questions:

Always, make sure you`re covering your behind and use the proper forms and methods as outlined under the Landlord and Tenant Board or else you can find yourself be taken to the tribunal if you don`t do it right. If you`re not sure, look for a paralegal who knows the rules of "landlording and tenanting`.

Or, once you take possession, ask the tenants to sign the form N10 (Agreement to Increase the Rent Above the Guideline). Can be found here:
http://www.ltb.gov.on.ca/graphics/stel02_111573.pdf This way you`re outlining what additional repairs/services and asking to have increased above consumer index guideline.

Also familiarize yourself with form N1 can be found here: http://www.ltb.gov.on.ca/graphics/stel02_111532.pdf

All forms for notices of increase here:

http://www.ltb.gov.on.ca/en/Forms/STEL02_111311.html

And please familiarize yourself with the Law found here: http://www.e-laws.gov.on.ca/html/statutes/...r17_e.htm#BK135

After meeting with REIN members from out west the other day, I really feel Ontario Landlords get shafted. It`s unfortunate there`s so much `red tape` and tenants get away with so much. Ridiculous really...however, much success!


**note, I am NOT a lawyer and this is not to be construed as legal advice. I`m an Ontario Licensed Realtor with property management experience and own investment properties. Please do your own due diligence and consult a lawyer or the Tribunal for services on the act itself and your rights.

 

[ShannonMurree]

QUOTE (realfortin @ Aug 10 2008, 08:43 PM) Ok but in Ontario can you kick them out when you buy?

Only for personal possession for yourself or an immediate family member. There are other methods yes, but stipulations to this where tenants would have `first right of refusal` and the right to re-occupy otherwise.

 

[ShannonMurree]

QUOTE (dplummer @ Aug 7 2008, 08:51 PM) Purchase the property tennant free. Perform any needed repairs. Charge new rents.

Doug

Can`t just do that Doug. There are laws and regulations here in Ontario.