Rent Revaluation On Purchase - ONTARIO
- Thread starter orei
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It depends.
Generally you don`t.
You can raise rent once per year by a small amount that varies per year (generally 1-3%)
You can raise rents above amount allowed for a few years by apx 3 percent more with going to ltb under certain circumstances only.
You wait until tenants leave and then re-rent at market rates.
You can take occupancy in one unit to live in for awhile.
Generally you don`t.
You can raise rent once per year by a small amount that varies per year (generally 1-3%)
You can raise rents above amount allowed for a few years by apx 3 percent more with going to ltb under certain circumstances only.
You wait until tenants leave and then re-rent at market rates.
You can take occupancy in one unit to live in for awhile.
I would like to take on the current tenants, but not at the current rent roll
Basically, I guess I am wondering if there is some opportunity to take on vacant possession of a multi-plex and then re-rent it (potentially to the same tenants). Is this permissible by law? Does anyone have experience doing this with a multi-plex?
Basically, I guess I am wondering if there is some opportunity to take on vacant possession of a multi-plex and then re-rent it (potentially to the same tenants). Is this permissible by law? Does anyone have experience doing this with a multi-plex?
QUOTE (orei @ Oct 28 2009, 11:53 AM) I would like to take on the current tenants, but not at the current rent roll
Basically, I guess I am wondering if there is some opportunity to take on vacant possession of a multi-plex and then re-rent it (potentially to the same tenants). Is this permissible by law? Does anyone have experience doing this with a multi-plex?
I am afraid there is no good news on this one. I once looked at a triplex with great potential. I found out that even if I asked tenants to move out due to extensive renovations, they would reserve the right to move back in after the work is done at .. the same rent. Needless to say, I did not buy that property because it would not cashflow at that income level. That`s one of the challenges of living in the Socialist Republic of Ontario
Basically, I guess I am wondering if there is some opportunity to take on vacant possession of a multi-plex and then re-rent it (potentially to the same tenants). Is this permissible by law? Does anyone have experience doing this with a multi-plex?
I am afraid there is no good news on this one. I once looked at a triplex with great potential. I found out that even if I asked tenants to move out due to extensive renovations, they would reserve the right to move back in after the work is done at .. the same rent. Needless to say, I did not buy that property because it would not cashflow at that income level. That`s one of the challenges of living in the Socialist Republic of Ontario
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Ask for vacant possession as a condition of purchase. This is very common in Ontario. If the seller agrees he will be responsible to evict (or ask) his tenants to leave. Assuming they do leave the sale can proceed and at closing you will be responsible to find new tenants.
Although the tenants do not have to vacate it will be the sellers problem not the buyers and the buyer is protected by the vacant possession clause.
Although not strictly legal in Ontario as the buyer you are doing nothing wrong.
If the seller refuses you walk on the deal.
Although the tenants do not have to vacate it will be the sellers problem not the buyers and the buyer is protected by the vacant possession clause.
Although not strictly legal in Ontario as the buyer you are doing nothing wrong.
If the seller refuses you walk on the deal.
QUOTE (OlegP @ Oct 28 2009, 08:37 PM) I am afraid there is no good news on this one. I once looked at a triplex with great potential. I found out that even if I asked tenants to move out due to extensive renovations, they would reserve the right to move back in after the work is done at .. the same rent. Needless to say, I did not buy that property because it would not cashflow at that income level. That`s one of the challenges of living in the Socialist Republic of Ontario
I know one place (3 or 4-plex, don`t remember) with the only tenant left who makes mess in and around the property... Lucky owner <g>.
I know one place (3 or 4-plex, don`t remember) with the only tenant left who makes mess in and around the property... Lucky owner <g>.
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Has no one ever filed a notice of increase above the guideline? (will open the instructions on PDF)I`m not saying it`s easy (because of the one-sidedness of Ontario Laws in favour of tenants).Application for above guideline increase
126. (1) A landlord may apply to the Board for an order permitting the rent charged to be increased by more than the guideline for any or all of the rental units in a residential complex in any or all of the following cases:
1. An extraordinary increase in the cost for municipal taxes and charges or utilities or both for the residential complex or any building in which the rental units are located.
2. Eligible capital expenditures incurred respecting the residential complex or one or more of the rental units in it.
3. Operating costs related to security services provided in respect of the residential complex or any building in which the rental units are located by persons not employed by the landlord. 2006, c. 17, s. 126 (1).
Have to make sure in your offer they haven`t had increases recently. Can`t evict on false pretenses (pretending you or family member are going to live in it when clearly you`re not as it`s an investment, for example). Also, if you do this and put in your Agreement to Purchase Agreement, A lawyer usually has you, the buyer sign an Affidavit or Declaration stating you`re going to live in unit. If you sign off on this, you`re committing fraud as this is a Sworn Statement. I do not recommend this as you could get into serious trouble.
Could also potentially try offering cash rebate or incentive if the tenant is willing to leave (document, document, document and use the right forms it`s mutual). I also don`t recommend having a unit empty as someone suggested as that defeats the purpose of being an investor if you`re not going to have any cash flow.
Maybe they won`t like a new owner is coming in, or else who knows? Also, if you take possession and find out they`re late...serve Notices immediately the next day, establish paper trail and get them out by then serving Notice to Terminate based on persistent lateness; or too many occupants if not on Lease, etc.
It`s sticky because Ontario Laws are tough. Also, if there are signed leases in place, you can`t terminate until the Lease terms are up.
I empathise but there are creative Legal ways to do it.
126. (1) A landlord may apply to the Board for an order permitting the rent charged to be increased by more than the guideline for any or all of the rental units in a residential complex in any or all of the following cases:
1. An extraordinary increase in the cost for municipal taxes and charges or utilities or both for the residential complex or any building in which the rental units are located.
2. Eligible capital expenditures incurred respecting the residential complex or one or more of the rental units in it.
3. Operating costs related to security services provided in respect of the residential complex or any building in which the rental units are located by persons not employed by the landlord. 2006, c. 17, s. 126 (1).
Have to make sure in your offer they haven`t had increases recently. Can`t evict on false pretenses (pretending you or family member are going to live in it when clearly you`re not as it`s an investment, for example). Also, if you do this and put in your Agreement to Purchase Agreement, A lawyer usually has you, the buyer sign an Affidavit or Declaration stating you`re going to live in unit. If you sign off on this, you`re committing fraud as this is a Sworn Statement. I do not recommend this as you could get into serious trouble.
Could also potentially try offering cash rebate or incentive if the tenant is willing to leave (document, document, document and use the right forms it`s mutual). I also don`t recommend having a unit empty as someone suggested as that defeats the purpose of being an investor if you`re not going to have any cash flow.
Maybe they won`t like a new owner is coming in, or else who knows? Also, if you take possession and find out they`re late...serve Notices immediately the next day, establish paper trail and get them out by then serving Notice to Terminate based on persistent lateness; or too many occupants if not on Lease, etc.
It`s sticky because Ontario Laws are tough. Also, if there are signed leases in place, you can`t terminate until the Lease terms are up.
I empathise but there are creative Legal ways to do it.
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QUOTE (orei @ Oct 28 2009, 07:19 AM) I`m currently looking at a property where the rents are well below the market rent in the area. How does one go about have the rents revaluated upon purchase? In particular, I am wondering for the province of Ontario.
Six options exist that should each be evaluated:
a) ask for vacant possession .. which is hard to implement in Ontario
b) move in yourself (and be challenged by tenant if you do not)
c) do not buy
d) do not buy in Ontario, but elsewhere with no rent control
e) buy a property with "at market rents"
f) offer tenant a significant enough voluntary incentive to move, say $2000 to $5000
Six options exist that should each be evaluated:
a) ask for vacant possession .. which is hard to implement in Ontario
b) move in yourself (and be challenged by tenant if you do not)
c) do not buy
d) do not buy in Ontario, but elsewhere with no rent control
e) buy a property with "at market rents"
f) offer tenant a significant enough voluntary incentive to move, say $2000 to $5000
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QUOTE (thomasbeyer2000 @ Nov 1 2009, 01:53 PM) Six options exist that should each be evaluated:
a) ask for vacant possession .. which is hard to implement in Ontario
b) move in yourself (and be challenged by tenant if you do not)
c) do not buy
d) do not buy in Ontario, but elsewhere with no rent control
e) buy a property with "at market rents"
f) offer tenant a significant enough voluntary incentive to move, say $2000 to $5000
$5000 each eh. why not just send them all to Hawaii 5 star hotel for a week. ha ha.
a) ask for vacant possession .. which is hard to implement in Ontario
b) move in yourself (and be challenged by tenant if you do not)
c) do not buy
d) do not buy in Ontario, but elsewhere with no rent control
e) buy a property with "at market rents"
f) offer tenant a significant enough voluntary incentive to move, say $2000 to $5000
$5000 each eh. why not just send them all to Hawaii 5 star hotel for a week. ha ha.