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Residential property

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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How to Solve Difficult Problems with Toronto Tenants

Over the course of your career as a landlord, you’re bound to experience at least one serious problem with a tenant. This may be due to rent or utility payment disputes, noise complaints, pest infestations, or a general lack of respect for your property or other tenants. No matter what the problem happens to be when it arises, it’s important for you to handle the issue promptly and effectively to minimize any potential damage, and to avoid a potentially lengthy process dealing with the Ontario Landlord & Tenant Board.


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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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Better Safe Than Sorry: Running Background Checks on Tenants

Finding the perfect tenant can be difficult for any landlord, no matter how long you’ve been in the game. Tenants can be unpredictable and can’t always be accurately judged based on the information they give you – unfortunately, almost every Toronto property owner has heard horror stories about bad tenants or dealt with them personally.

The CBC recently published an article about this exact scenario – a Hamilton landlord had to fight tooth and nail in order to evict a criminal after months of unpaid rent. Many bad tenant experiences like the one highlighted in the CBC article could have been easily avoided by running professional and personal background checks on prospective clients, with a focus on criminal history, credit history, and previous experience as a tenant.


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What Qualifies as Flipping Real Estate for the Canada Revenue Agency?

In October 2016 the Canada Revenue Agency (CRA) introduced new changes to its real estate sector reporting requirements. The biggest change was the CRA’s addressing of those who were non-compliant in the real estate sector, focusing on those who don’t correctly report their goods and services, unreported capital gains, unreported income, and most importantly for real estate investors – property flipping.

Here’s what you need to know to stay in the CRA’s good graces in the wake of these added guidelines.


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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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Winter Maintenance Checklist for Toronto Rental Properties

Winter is coming – this means that it’s about time for property owners and homeowners to go through their seasonal checklists and prepare their homes for the coming cold weather. This is the time of year to close up your pools and hot tubs, inspect boilers and furnaces, and to make sure that your property is properly protected from the freezing temperatures and falling snow.


Failure to properly prepare your property can result in expensive damage, loss of rental income, and further expenses resulting from not being proactive. The winter season is probably the most important season of the year when it comes to property maintenance, but don’t let that intimidate you – we talked with Highgate’s maintenance manager Bita Ebrahimzadeh who helped us prepare a winter maintenance checklist for you.


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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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