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Bad Tenants and the Role of Property Management: A Cautionary Tale

Bad tenants are something that every landlord will experience and be forced to deal with at least once during their real estate career – and that’s if they’re lucky. A bad tenant can cost landlords thousands of dollars in missed or late payments or damages, hours of valuable personal and professional time, and many headaches dealing with the legal process.

Even the most experienced landlords and property managers have regular experiences with bad tenants – the team at Highgate Properties have experienced a number of unfortunate run-ins over the years. We here at Highgate have decided to chronicle some of these experiences for readers in order to demonstrate the correct way to go about dealing with these tenants and the important role that can be played by property management companies like Highgate in these situations.

Bad tenants: More than meets the eye

One of the most compelling aspects of property management is the ability to get a snapshot of a tenant’s life, in most other industries, you never truly get to know your clients – in real estate, every new interaction with your tenants adds something different to this snapshot.

One of our most surprising experiences with a bad tenant involved a cash-rich tenant who had sold his house and was now renting a house for several thousands of dollars per month. What nobody knew was that this tenant was actually in the beginning stages of a three year descent into financial demise. This tenant had easily passed the appropriate credit checks prior to renting the house and kept an outward appearance of having a good deal of money to his name. Eventually, this tenant could no longer meet their monthly rent payments due to a long-term habit of misspending large sums of money on extravagant items.

Taking immediate action

The issue went to Ontario’s Landlord and Tenant Board (LTB) as soon as the tenant’s first rent check bounced – this provided an official paper trail of problems with the tenant which could later be recalled by the property manager if the issue went to the LTB. The tenant would go on to routinely be able to pay his rent and then submit checks which would again bounce, leaving the landlord to continue chronicling these missed or late payments with the LTB – in total, six notices were given to the tenant.

This behaviour continued until the tenant was finally evicted after a final unpaid rent payment – once he had begun living a lifestyle that involved spending money on extravagant items, he couldn’t go back to his old way of living. After his eviction, the property manager found item receipts for clothing over $650 that would cost around $60 at a regular store, among other things. The six filed notices with the Landlord and Tenant Board helped the property manager’s case, as it clearly showed that the tenant had a history of missed payments and was not going to overcome these issues.

Although this tenant appeared to be able to consistently make rental payments at first, it became apparent over a period of time that this was not the case. The income earned by tenants generally does not indicate whether or not a person will make a suitable tenant. Whether it’s a low-income or high-earning tenant, the only deciding factor for landlords should be the ability to pay the rent on time and in full amounts.

The important role of property management

One of the most important roles played by property management companies like Highgate is the ability to get to know tenants, building relationships with each and every one. This allows property managers and landlords to better understand when a tenant is heading down a path similar to the tale above, or if anything else is going off the rails. The only way this property manager was able to identify and understand the problems experienced by the bad tenant was through the careful building and fostering of a landlord-tenant relationship.

Building relationships is a time consuming process, as it requires trust from both parties which is built up through a variety of interactions over a long period of time. Independent landlords simply don’t always have the time needed to foster relationships, as they have more important matters to attend to like their career and family life. Property management companies like Highgate know how to build relationships that will allow them to identify potential problems with tenants down the road, and know how to proceed with the Landlord and Tenant Board as well as other legal avenues should any issues grow to become unmanageable. Filing notices of missed payments with the LTB is something that a busy property owner may not have the time to do, or may think isn’t needed – it’s something we take the time to do as we know it can help speed the eviction process if it comes to that.

For more information about how the property management services offered by Highgate Properties can make your life easier through experienced and knowledgeable management and relationship building, visit our website or contact us today.

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Dip in Real Estate Means Now is the Time to Buy Investment Property

The Toronto Real Estate Board’s recent Market Watch report held some promising revelations for anybody looking to invest in the city’s real estate market. November saw Toronto-area homes continue to fall in price, coming down 8.8% since May of this year. This recent drop is being reported as the most significant price decline in a six-month period since 2000. If you’ve been waiting to purchase a Toronto investment property, the time to act is now.


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Tips for Renting Your Toronto Property in a “Hot” Market


Great news for Toronto real estate investors – the Toronto housing market continues to thrive in its current “hot” state. With a vacancy rate hovering around just one percent over the last year and increasing rental prices, Toronto landlords have the luxury of being able to prosper in the hot market and to shop around for ideal tenants while also retaining them for longer periods of time.


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What to Remember When Purchasing Your First Toronto Investment Property

Making the jump into the world of real estate investing is something that takes time and patience. Making the wrong decision can cost you dearly, and might see you get stuck with a property you aren’t prepared to handle. In order to avoid things like unexpected costs, major renovations, or just plain bad luck, take the following into consideration.


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Why a Long Commute Doesn’t Make Sense

The CBC recently posted an article stating that a 200km commute to work in Toronto was worth it in exchange for a cheap mortgage outside the GTA. Even after waking up at an abnormally early hour for a long drive to work, ultimately extending the work day by a minimum of four hours, the interviewee agreed that it was worth it for the affordability of their mortgage.

The catch to this, CBC claims, is that “you’ve got to love driving”. Unfortunately, life isn’t quite that simple – the negatives of commuting such a long way five days a week far outweigh the positives of a less expensive home. Here are just some of the reasons why:


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Buying a Condominium as a Rental Property in Toronto and the GTA

Condominiums are the most attractively priced properties in Toronto and the GTA for people looking to take their first steps into the rental property market. But there are special considerations and pitfalls that you need to keep in mind when purchasing a condo as an income-generating property.


Before you buy: Check that you are allowed to rent to tenants

Each condominium property has a condominium board that sets specific rules and regulations for the property. Some may not allow long-term rental of the property, and almost all do not all short-term rentals (e.g. AirBnB) on the property. If there is any doubt about anything you are reading, contact a member of your condo board to clarify, ideally before purchasing the property.


Can you make your tenant adhere to condo rules?

While you are going over the document, ensure that the rules are reasonable enough that you can ask your tenant to follow them without violating their rights under the Residential Tenancies Act. Most rules aren’t egregious, but it is the owner and not the tenant that is responsible for ensuring that the rules are adhered to.


Do a price check on condo fees and historical increases

Setting your rental rate is one of the most important steps to ensure that your income property is actually generating income. Check how much condo fees go up each year and make sure they are built into your rental rate, in addition to any projected fee increases in the future. You can guess at this reasonably by looking at historical increases for the past few years, and some condominium agreements have fee increases built in to the agreement.


Get condominium and rental property insurance

While your insurance broker or agent is the best guide for this, you will need both condominium and rental insurance for your property. Condo insurance has additional items built in for damage to common areas, and rental insurance covers your use of the property as a rental property. On the plus side, condo insurance is typically less expensive than traditional home insurance.


Watch out for clashes between condo rules and the RTA

A common example of where you can run into problems is a tenant who decides to purchase a pet after they move into the unit. Many condos have strict no-pets policies. However, under the Residential Tenancies Act (RTA), you cannot evict the tenant for having a pet. The condo board is well within its rights in this situation to bring action against you, the property owner, and not the tenant. This is why you have to step up tenant screening for a condo property, and preferably have it done by a professional Toronto property management company such as Highgate. It is possible to find the right tenant that won’t bust condo rules on a whim, but you have to know what to look out for; most first-time rental property owners don’t.


Set an emergency fund aside for non-payment of rent

If your tenant isn’t paying rent, the condo board is still going to want its fees to be paid, and can register a lien against your property if they aren’t paid. To avoid this, make sure you set aside an emergency fund to cover things like condo fees, minor repairs in the unit, and so on. Again, a professional property management company can help you find the right tenants that will pay rent reliably and on time.

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Toronto Real Estate Board: Expect Single-Digit Price Increases Through 2017

The Toronto Real Estate Board’s June Market Watch outlined a number of key trends in Toronto and surrounding area real estate. An increased supply of listings has led to less price growth than we have been used to seeing in the market, but the price growth is still healthy at 6.3% year-over-year.


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Is Toronto Commercial Property the Next Step for You?


A recent study predicts that commercial rents in Toronto could soar as much as 50% in the next three years. Unlike the hot residential market, Toronto’s commercial properties are priced reasonably right now due to a reasonable supply, even though Toronto currently boasts the lowest commercial vacancy rate in North America. While we are at the peak of the Toronto housing market, the commercial market isn’t nearly as hot and the time is right to snap up property before it does heat up. With rents going up so much, it will do so sooner rather than later.


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HighGate Property Investments Inc: Your Source for Professional GTA Real Estate Services