Stage one of a Tenancy
Stage one of a Tenancy
In a previous post I mentioned there were three stages of a tenancy. Stage one is the beginning of a tenancy. All three stages are important for different reasons. Stage one is where landlords have the greatest influence on creating a positive tenancy. Tenant placement is time consuming and should not be rushed. A Landlord’s goal in tenant placement should be finding a renter who will respect the property and treat it like their home.
Searching for a tenant begins with advertising the property and this should be done in an accurate and effective manner. You want tenants to be able to view the property and say I want to live there. Landlords should always use the most current photos. Every time a tenant moves out it is good practice to update photos of the interior and exterior, as the unit may have changed since the last photos were taken.
Showing a property is an opportunity to “interview” potential tenants in many different ways. Selecting a quality tenant is more than checking if they can afford the rent and will pay on time. A showing gives Landlord’s a chance to see if they will respect you and your property. Nothing is perfect, but I have found the following helps me find quality tenants.
Do they show up on time to the scheduled showing?
If they were late, did they contact you to advise they were going to be late?
How are they dressed and does that match their profession of work?
When entering do they take off their shoes or ask if you want them to take them off?
If you can see their vehicle is it clean inside and out?
These are some subtle actions that can show if a tenant will respect your property. If they show respect for your time and effort, their work, their own property and your property before entering I have found this often leads to a better tenancy. These are not the only things you should look for in stage one but they are a few small things that can make a big difference.
Looking for Property Management you can find more information about us at: www.cartrefproperties.com
Three stages of a tenancy
Three stages of a tenancy
There are many aspects of renting a residential property, which can be divided into three stages of a tenancy. The first stage is tenant placement, the second stage is during the tenancy and the third stage is the ending of the tenancy. Each stage has unique and different aspects to the process of renting your property. All three stages are important to having a positive experience with tenants.
Tenant placement is the stage where you make a decision on who will rent your property. It is very important to take the time required to make an informed decision. Performing credit, employment or personal reference checks is valuable to ensure the person renting is a suitable occupant for your property. Placing a tenant without reviewing the applicants information and background to the best of your ability often results in a negative tenancy experience.
After placing the tenant, many landlords feel they have a positive tenancy when tenants are paying rent each month. As we are seeing today more than ever tenant situations may change after the tenancy has started. In British Columbia landlords have the right to access their rental unit during the tenancy (with proper notice) and should take advantage of this opportunity to visit the property and review to ensure their tenant continues to maintain the property throughout the tenancy.
Ending a tenancy has many different steps and often provides the most conflict between a tenant and Landlord. Conflict usually arises over the move out condition inspection report as tenants and landlords often have different opinions of the condition of the property at the end of the tenancy. A condition inspection report is performed twice during the tenancy, once at the beginning and once at the end. Performing a successful condition report at the end is dependent on performing a thorough report at the beginning of the tenancy. Reporting the proper condition of the rental unit in the beginning eliminates conflict when the tenancy ends. What many landlords don’t understand is that if the tenant and landlord are unable to agree on the condition at the end of the tenancy this creates more work for landlords and possibly more costs in ending the tenancy.
Need help managing your investment properties. Cartref Properties can assist you, call today to discuss your needs. You can find more information about us at: www.cartrefproperties.com
Leasing Fee or no leasing Fee
Leasing Fee or no leasing Fee
Recently I was at a networking event talking to another property manager. They were describing their pricing as being more favourable in the market place than other companies due to the fact they don’t charge a leasing fee. A leasing fee is the cost most companies charge to locate a new tenant. Most companies including us, Cartref Properties, charge a fee equal to 50% of the first full month of rent.
For a property rented at $1500 this would be $750, A property rented at $2000 would equal $1000. What this manager explained is they charge slightly higher fees monthly but no leasing fee. This brings up the question of what is the more economical option. The answer is it depends.
It depends on one factor, how long will the tenant stay at the property. The averagage length of tenancy for our clients is 24 months. This means most tenants stay more than one year at a property. We will use the 12 and 24 months as the base for comparisons in this scenario.
We have seen other companies also advertising a higher monthly rate and no leasing fee, this individual we were talking to said their fee was 12% of the rent we have also seen 10%. Cartref Properties management fee is 8%.
If we take the two monthly fees of 8% and 12% compare the annual cost plus the one time leasing fee we see varying results.
For a property rented at $1500 with a management fee of 8% this equates to $120 per month for annual cost $1440. The leasing fee of 50% would be $750. The total fees paid would be $2190. The management fee of 12% equals $180 per month for an annual total of $2160.
This means in the first 12 months the 12% pays $30 in less in total fees. The leasing fee is only charged once and so at the end of the second year 8% annual cost reduces to $1440 from $2190 and the 12% fees remains at $2160. This means after the second year the 12% fee would cost a total of $4320 and the 8% fees would cost a total of $3630. That means after two years the 12% rate would pay an additional $690 during those two years. It also means for every year after the 12% rate equals an additional cost of $690 each additional year.
What would this mean for a property rented at $2500 with a management fee of 8% this equates to $200 per month for annual cost $2400. The leasing fee of 50% would be $1250. The total fees paid would be $3650. The management fee of 12% equals $300 per month for an annual total of $3600.
This means in the first 12 months the 12% pays $40 less in total fees. The leasing fee is only charged once and so at the end of the second year 8% annual cost reduces to $2400 from $3650 and the 12% fees remains at $3600. This means after the second year the 12% fee would cost a total of $7200 and the 8% fees would cost a total of $6050. That means after two years the 12% rate would pay an additional $1150 during those two years. It also means for every year after the 12% rate equals an additional cost of $1200 each additional year.
In most cases you do not know when the tenant is going to vacate the property, unless it is a fixed term where the landlord is moving back into the property at the end of the fixed term.
If you are renting your property for one year only, the higher fee and no leasing fee may be the better option. If you are unsure when the tenant will vacate and you plan on renting your property for multiple years, the one time leasing fee is the better option. Most tenants will stay in one place longer than one year as they don’t like to move each year.
When looking for a property manager it is important to consider all potential costs of the management contract when selecting a rental property manager. Another fee we have seen is some companies automatically sign a new tenancy agreement each year charging a fee. We charge a fee for a new agreement, although we advise clients it is not necessary to have a new tenancy agreement each year.
Need help managing your investment properties. Cartref Properties can assist you, call today to discuss your needs. You can find more information about us at: www.cartrefproperties.com
RTB Hearings?
RTB Hearings?
Recently at an event I was asked if we do dispute hearings? I said we have only attended one RTB hearing in the time Cartref Properties has been operating. They were surprised to hear that. We advised we do our due diligence in tenant screening and keep open communication during the tenancy to ensure positive experiences for our clients and tenants.
When we are speaking with potential clients we are asked about attending hearings at the RTB. Although a property manager can represent a landlord in the hearing, we advise potential new clients it is our goal to provide a positive experience for the landlord which results in the tenancy not ending up in the RTB.
How do we provide a positive experience in a tenancy?.
The first step is to perform proper due diligence on potential applicants for the property. We often say to our clients we have a long process for screening tenants. The tenant selection process should never be rushed. I am always surprised when a potential tenant views a property on the weekend and says they looked at a property that morning and when we follow up the next day they say they were approved for the unit they saw before ours. That tells me the landlord has not performed proper due diligence during the tenant selection process. During the selection process it is important to be forthcoming with tenants regarding the proess and how it happens.
After the tenants have been selected we move the tenants into the property and provide the documentation they are required to have. I have heard many tenants indicate to me they were never provided with a copy of the move in inspection form when they moved into the last property they rented. Many even say the landlord never performed the move in inspection at all. Failing to perform a move in inspections starts the tenancy in a negative situation. The RTB looks at the move condition inspection report to determine if damage has occurred during the tenancy. Explaining clearly to tents the expectations and requirements during a tenancy helps to ensure a positive outcome.
During the tenancy we perform regular inspections, which any quality tenant will have no issue with. If a tenant is not interested in this it is a red flag they will be doing something illegal or against the agreement. We keep an open line of communication responding to issues in a timely manner to reflect the urgency to which they are. An inquiry of a light fixture not working does not need the same attention as a flood or appliance not working properly.
If there are repairs tht are the landlord’s responsibility, we ensure they are completed in a timely manner.
At the end of the tenancy we communicate clearly the expectations of the tenant when vacating the property. Again we perform the move out inspection with the original report from the move in, which some landlords fail to realize is required. We are clear about the damage and costs that are potentially needed for the end of the tenancy. If there is no damage and the tenant is entitled to their refund then the funds are returned within the time frame required. Failing to return the funds as required can result in the tenant being entitled to twice the amount of the deposit. If there is a disagreement between the two parties at the end of the tenancy then the landlord must file a claim with the RTB within that 15 days to request a hearing to keep the funds disputed.
It is important to note that landlords are not permitted to keep deposit funds unless the tenant has agreed to it or they have an order from the RTB granting them permission to the funds. Many landlords just keep a portion of the deposit amount they want and return the remainder of the funds, this is an incorrect process.
During the tenancy we are clear to inform our clients of their responsibilities during the tenancy as well. Many landlords have a miss understanding of what they are responsible for repairing or maintaining during the tenancy.
Clear and open communication is important for both parties to understand their role and responsibilities during a tenancy. This is how we have positive experiences with our tenants and our landlords and try to avoid the RTB.
If you end up in the RTB it is often a misunderstanding between the two parties desires more than anything else.
Need help managing your investment properties. Cartref Properties can assist you, call today to discuss your needs. You can find more information about us at: www.cartrefproperties.com
Fixed Term Tenancies
Recently I was watching a video about rental and how the government has killed the market. A number of issues were raised including changes in 2017 to the fixed term rental agreement.
In December of 2017 the BC government changed the fixed term lease agreement requirements. Prior to this time a landlord and tenant could enter into a fixed term tenancy agreement with the agreement requiring the tenant vacate the rental unit at the end of the fixed term. If the tenants vacated the unit a landlord was free to re-rent the property to a new tenant at the current market rent.
This created a market where landlords would sign a one year agreement with a tenant and at the end of the agreement landlords would force tenants to sign a new agreement at a significantly higher rental rate. This put all the power in the landlords hands determining rental rates in the market. Tenants were in the position of having to move regularly creating unstable housing for renters.
For the above reasons the BC Government changed the law around fixed term tenancies. What changed? Two things changed affecting the fixed term agreements.
Now at the start of the tenancy a landlord must indicate on the agreement if they or a close family member are going to move into the unit at the end of the fixed term. If they indicate they are not going to move in then the agreement automatically becomes a month to month agreement at the end of the fixed term. Requiring the landlord or a family member to move in eliminated purpose built rental properties from evicting tenants at the end of a fixed term rental agreement.
Why were these changes made? As mentioned the landlord held all the power in the negotiations between the two parties. Some landlords would purposely rent just below market conditions to secure a tenant and then after the fixed term increase the rent by 25 - 75% or more. As mentioned this made it difficult for tenants to find affordable housing for long periods of time. The BC Government listened to tenants complaining that housing was difficult when every year you had to move to find a new place you could afford. They elected to change the rules regarding fixed term tenancies. Requiring the agreement to convert to a month to month agreement provided stability for tenants for longer term housing.
After this change was made many landlords found loop holes as they do to circumvent this rule. Landlords would indicate they were going to move in as per the requirements and then re-rent the property shortly after the tenants moved out. Even for month to month tenancies landlords were giving notice to evict tenants for family use and not moving into the property.
Due to these actions the BC government would later add punitive damages to the eviction process for wrongfully evicting a tenant for family use. These situations were exacerbated during covid with rent increasing rapidly and landlords trying to take advantage of the issue the government increased the punitive damages.
There are many reasons that one could suggest why this action was taken. For many years Canada, BC and the lower mainland had restricted the number of purpose built rental properties developed. In 2010 the Strata Property Act was changed requiring all new properties identify how long a strata lot can be a rental property. New developments quickly changed to identify new strata lots for periods of time in excess of 100 years. This created a two tier system with the majority of properties purchased after 2010 entering the rental market as investor owned units. By 2017 the number of strata lots rented increased dramatically in the Vanouver market. This created a large numer of landlords with no experience being a landlord.
As with many of the current tenancy laws that landlords complain about they have mostly been derived out of abuse or neglect of tenants rights. When landlords fail to follow the law it is easy for them to end up at the tenancy branch in hearing. Often these cases do side with the tenants when landlords have failed to respect a tenants rights.
Recently I was asked about attending the RTB, my reply was we have not had to as we tend to emphasize the screening process, and the in tenant relations to ensure a positive outcome for both parties.
Need help managing your investment properties. Cartref Properties can assist you, call today to discuss your needs. You can find more information about us at: www.cartrefproperties.com