Author Topic: Struggling with Raising Tenants' Rent - Toronto  (Read 4011 times)

TightFistedScot

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Struggling with Raising Tenants' Rent - Toronto
« on: January 31, 2017, 06:17:10 AM »
I have a house in Toronto with 2 apartments. I live in the basement apartment and rent out the upstairs 2-bedroom unit for 1570/month + 50% of the electricity bill. So tenants pay approximately 1620.00/month.

In my neighbourhood 2 bedrooms are currently listed for anywhere between 1650-2500ish. I had intentionally priced it a bit under market when I rented it last May, and housing prices have increased a lot since then. Toronto has about a 1% rental vacancy rate.

In Toronto we have an Act that legally guides rental increases. They can be done after a 1 year lease is up, and the city sets the percentage. This year landlords can raise the rent by 1.5% with 90 days notice to tenants. So I could legally raise it $23.00/mnth.

I am unsure whether I should bother raising the rent by $20.00 per month. On the one hand, they are relatively good tenants - the best I have had in terms of how they take care of the property.

On the other hand, I find them quite disrespectful and entitled and take a lot of liberties around the property. For instance parking in my spot without asking even though they don't have parking included, planting stuff every where on the property, telling me I shouldn't paint the exterior of the house because they like how it currently looks, asking me to replace the floors even though they are in decent shape, bugging me to use my shed to store stuff in in even though I said "no" once. A couple months ago they took apart a whole electrical socket without telling me/asking and I had to get an electrician in to fix it - both me and the electrician gave them a stern talking to after that!!!!     
I also let them use my internet for no charge for 6 months (even though I was very clear from the beginning it wasn't included in rent), but when I asked them to get their own internet they put up a big stink about that.... And they are ALWAYS home during the day when electricity is at its most expensive.

But I haven't had any issues with them paying rent on time.

In my situation what would you do? Raise the rent or leave it as is? How would you frame the rental raise if you went in that direction?

It makes it a bit more challenging because I live below them, and I also let them come into my basement unit to do their laundry weekly (this is a privilege in their lease).

Ultimately I guess I don't really care if they left over me raising the rent. It wouldn't be difficult to find new tenants, but there is a big risk in finding tenants who take good care of the property and pay rent on time.

« Last Edit: January 31, 2017, 06:24:33 AM by TightFistedScot »

Papa bear

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Re: Struggling with Raising Tenants' Rent - Toronto
« Reply #1 on: January 31, 2017, 06:20:43 AM »
Raise the rent. Don't think about it again until it's time to raise again


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Jon Bon

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Re: Struggling with Raising Tenants' Rent - Toronto
« Reply #2 on: January 31, 2017, 06:27:06 AM »
Raise the rent.

Would you bother moving out over 20 bucks? I would not BUT if they do sounds like you are not at a huge loss.

I would write a better lease next time and enforce it. No parking in your spot, get the hell off my internet and either have laundry installed or don't allow them to do it in your house. That's a little too close for comfort.

NoStacheOhio

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Re: Struggling with Raising Tenants' Rent - Toronto
« Reply #3 on: January 31, 2017, 06:51:53 AM »
Raise it, if you're limited in increases from the city, you don't want to end up in a situation where you don't raise rent, and then end up way under market with no recourse until they choose to move out.

Drifterrider

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Re: Struggling with Raising Tenants' Rent - Toronto
« Reply #4 on: January 31, 2017, 06:52:02 AM »
Look up "free loaders".

Are you a business or a charity?  The answer to that should guide your decision.

TightFistedScot

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Re: Struggling with Raising Tenants' Rent - Toronto
« Reply #5 on: January 31, 2017, 08:02:17 AM »
Look up "free loaders".

Are you a business or a charity?  The answer to that should guide your decision.

hah good point. My master's is in social work and a lot of my social circle/extended network is full of social justice/activist/socialist type people. So I struggle to balance those values with running this rental property like a business. I am really not a business person, but it's the only way I can afford a house in Toronto.

TightFistedScot

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Re: Struggling with Raising Tenants' Rent - Toronto
« Reply #6 on: January 31, 2017, 08:03:16 AM »
But yes, I think I will raise the rent. I have to send the tenants' the paper work today to raise it for May 1.

the_fella

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Re: Struggling with Raising Tenants' Rent - Toronto
« Reply #7 on: January 31, 2017, 12:04:12 PM »
Raise it. Sounds like they've put you through enough bullshit; I'd want to shake them down for every penny I could.

BabyShark

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Re: Struggling with Raising Tenants' Rent - Toronto
« Reply #8 on: January 31, 2017, 12:07:28 PM »
Absolutely raise it.  They likely know they're paying below market.  Just like NoStacheOhio said, you're going to regret it later if you don't do it now.

sailinlight

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Re: Struggling with Raising Tenants' Rent - Toronto
« Reply #9 on: January 31, 2017, 12:09:21 PM »
Sounds like they're not really taking care of the place if they cause you stress and invade your personal space like that.  I would raise it to the max in an effort to get them out.. you have the place rented out for under or at least the bottom of market rate.  For that price, you should have angels in the unit who bake you pies and offer to let you use their internet for free.

TightFistedScot

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Re: Struggling with Raising Tenants' Rent - Toronto
« Reply #10 on: January 31, 2017, 12:43:29 PM »
Thanks for the feedback, this has been really helpful!

I sent them the N1 form today giving them 90 days notice of the $20 (1.3%) increase. I did 20.00, mostly because it seemed silly to put it up by 23.55.

TBH once it gets closer to Spring I'm also going to tell them they aren't allowed to plant anything in my back yard anymore. Last summer I had to see them every day because they would be out there almost every day when I got home from work. Always over-watering everything too. Had a high water bill over the summer, of course. Actually I told one of the tenants to stop watering the grass in July because it was my job as the landlord... and she pleaded with me "dont' take away the thing that brings me joy". LOL. I politely stood my ground, but in my head was screaming (find some other way to be joyful than wasting the damn water!!!!) Caveat: It didn't bother me so much with them watering their plants, but the grass would be sopping wet when I got home from work every day.


BabyShark

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Re: Struggling with Raising Tenants' Rent - Toronto
« Reply #11 on: January 31, 2017, 12:56:58 PM »
Your tenants sound like a treat, I'd bet there are some other great stories about them.

former player

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Re: Struggling with Raising Tenants' Rent - Toronto
« Reply #12 on: January 31, 2017, 12:58:10 PM »
I'd put one of those demountable posts in my parking spot and put a lock on the outside tap/take away the hose - if you do it now it will look less pointed than after they have started the watering.

In a tight rental market such as you describe, your tenants either need to shape up or ship out, as they are easily replaced.

K-ice

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Re: Struggling with Raising Tenants' Rent - Toronto
« Reply #13 on: January 31, 2017, 04:30:06 PM »
I would raise it since it sounds very reasonable and your don't want to get behind.

Future tip. Don't let the tenants know you own the building.


My friend who was a resident Dr. had no time for his tenets, so even though he lived above them he had a very reasonable woman manage it for 5%.

She got the emergency calls, collected the rent, did brief year end books and everything.

Your situation is a bit different.

They can know you manage it but when they ask for anything tell them you will take it to the office.

Your office is really just an excuse to take a bit of time to think about it & decide later & put a buffer between you and them.

Now you are not the bad guy (girl).

"The office noticed the water bill is higher than usual and asked that only I water the lawn."







Drifterrider

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Re: Struggling with Raising Tenants' Rent - Toronto
« Reply #14 on: February 01, 2017, 06:16:41 AM »
Thanks for the feedback, this has been really helpful!

I sent them the N1 form today giving them 90 days notice of the $20 (1.3%) increase. I did 20.00, mostly because it seemed silly to put it up by 23.55.

TBH once it gets closer to Spring I'm also going to tell them they aren't allowed to plant anything in my back yard anymore. Last summer I had to see them every day because they would be out there almost every day when I got home from work. Always over-watering everything too. Had a high water bill over the summer, of course. Actually I told one of the tenants to stop watering the grass in July because it was my job as the landlord... and she pleaded with me "dont' take away the thing that brings me joy". LOL. I politely stood my ground, but in my head was screaming (find some other way to be joyful than wasting the damn water!!!!) Caveat: It didn't bother me so much with them watering their plants, but the grass would be sopping wet when I got home from work every day.

You left money on the table.  Warren didn't get rich like that.

Papa bear

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Re: Struggling with Raising Tenants' Rent - Toronto
« Reply #15 on: February 01, 2017, 07:18:02 AM »
Thanks for the feedback, this has been really helpful!

I sent them the N1 form today giving them 90 days notice of the $20 (1.3%) increase. I did 20.00, mostly because it seemed silly to put it up by 23.55.

TBH once it gets closer to Spring I'm also going to tell them they aren't allowed to plant anything in my back yard anymore. Last summer I had to see them every day because they would be out there almost every day when I got home from work. Always over-watering everything too. Had a high water bill over the summer, of course. Actually I told one of the tenants to stop watering the grass in July because it was my job as the landlord... and she pleaded with me "dont' take away the thing that brings me joy". LOL. I politely stood my ground, but in my head was screaming (find some other way to be joyful than wasting the damn water!!!!) Caveat: It didn't bother me so much with them watering their plants, but the grass would be sopping wet when I got home from work every day.

You left money on the table.  Warren didn't get rich like that.

Plus haven't we all learned about compounding??  Your base to raise next time is lower too! Get that 3.55/month back in there!


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rothwem

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Re: Struggling with Raising Tenants' Rent - Toronto
« Reply #16 on: February 01, 2017, 08:51:00 AM »
I would raise it since it sounds very reasonable and your don't want to get behind.

Future tip. Don't let the tenants know you own the building.


My friend who was a resident Dr. had no time for his tenets, so even though he lived above them he had a very reasonable woman manage it for 5%.

She got the emergency calls, collected the rent, did brief year end books and everything.

Your situation is a bit different.

They can know you manage it but when they ask for anything tell them you will take it to the office.

Your office is really just an excuse to take a bit of time to think about it & decide later & put a buffer between you and them.

Now you are not the bad guy (girl).

"The office noticed the water bill is higher than usual and asked that only I water the lawn."

I know that some people do this, but it just comes off as sketchy to me.  Man (or woman) up and take on the confrontation.  If you have trouble doing that, you probably shouldn't be owning rental properties. 

RFAAOATB

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Re: Struggling with Raising Tenants' Rent - Toronto
« Reply #17 on: February 01, 2017, 10:04:16 AM »
Thanks for the feedback, this has been really helpful!

I sent them the N1 form today giving them 90 days notice of the $20 (1.3%) increase. I did 20.00, mostly because it seemed silly to put it up by 23.55.

TBH once it gets closer to Spring I'm also going to tell them they aren't allowed to plant anything in my back yard anymore. Last summer I had to see them every day because they would be out there almost every day when I got home from work. Always over-watering everything too. Had a high water bill over the summer, of course. Actually I told one of the tenants to stop watering the grass in July because it was my job as the landlord... and she pleaded with me "dont' take away the thing that brings me joy". LOL. I politely stood my ground, but in my head was screaming (find some other way to be joyful than wasting the damn water!!!!) Caveat: It didn't bother me so much with them watering their plants, but the grass would be sopping wet when I got home from work every day.

You left money on the table.  Warren didn't get rich like that.

Plus haven't we all learned about compounding??  Your base to raise next time is lower too! Get that 3.55/month back in there!


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It is your sworn duty to get as much money as possible out of these tenants.  After getting the 3.55 a month spend the rest of the year campaigning against the unfair treatment of landlords to accept rent controls that keeps them from maximizing their investments.

TightFistedScot

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Re: Struggling with Raising Tenants' Rent - Toronto
« Reply #18 on: February 01, 2017, 12:08:26 PM »
Thanks for the feedback, this has been really helpful!

I sent them the N1 form today giving them 90 days notice of the $20 (1.3%) increase. I did 20.00, mostly because it seemed silly to put it up by 23.55.

TBH once it gets closer to Spring I'm also going to tell them they aren't allowed to plant anything in my back yard anymore. Last summer I had to see them every day because they would be out there almost every day when I got home from work. Always over-watering everything too. Had a high water bill over the summer, of course. Actually I told one of the tenants to stop watering the grass in July because it was my job as the landlord... and she pleaded with me "dont' take away the thing that brings me joy". LOL. I politely stood my ground, but in my head was screaming (find some other way to be joyful than wasting the damn water!!!!) Caveat: It didn't bother me so much with them watering their plants, but the grass would be sopping wet when I got home from work every day.

You left money on the table.  Warren didn't get rich like that.

Plus haven't we all learned about compounding??  Your base to raise next time is lower too! Get that 3.55/month back in there!


Sent from my iPhone using Tapatalk

It is your sworn duty to get as much money as possible out of these tenants.  After getting the 3.55 a month spend the rest of the year campaigning against the unfair treatment of landlords to accept rent controls that keeps them from maximizing their investments.

Ha touché.

TrMama

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Re: Struggling with Raising Tenants' Rent - Toronto
« Reply #19 on: February 01, 2017, 02:06:58 PM »
Are you my mother in law? We just spent the past 9 months extricating her from a giant hornets nest of problems caused by exactly the same reasoning you're using.

1. Yes, compound interest works in both directions. After 10 years with the same awful tenants she ended up getting only half the market rate for her unit from them. Do you know how long it takes to raise the rent from half of market value to full market value when you can only increase 2%/yr (thanks for that extra 0.5% BC!)? Approximately, half-past-never.

2. Tenants paying below market rate never, ever leave. Bonus, since they're not paying much, they don't have to work much so they have more time available to devote to fighting their landlord on every. single. thing.

3. How are you going to afford the maintenance and insurance on this place when you're not getting full value and your ROI decreases year after year? Guess how much fun it is to get the insurance bill and realize you can't afford to pay it because you're providing nearly free housing to people who neither need, nor appreciate it?

4. However those are all minor problems compared to this kicker. Ever tried to sell an income property that's not actually producing any income? Guess who will want to buy it from you? No one. Even in a hot market like Vancouver or Toronto, not a single person will buy an income property with tenants who are barely paying but are still current and haven't provided you with a legal reason to evict them. Your $2M shack will be unsaleable. Sure, you'll be able to find a buyer willing to pay half of what it's worth, but by then your Mr. Nice Guy attitude will have cost you 6 or 7 figures.

Not only do you need to raise the rent to the fullest possible amount. You need to get rid of these tenants and only take in future tenants under terms that allow you to raise the rent according to market rates.

With This Herring

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Re: Struggling with Raising Tenants' Rent - Toronto
« Reply #20 on: February 02, 2017, 11:43:08 AM »
Look up "free loaders".

Are you a business or a charity?  The answer to that should guide your decision.

hah good point. My master's is in social work and a lot of my social circle/extended network is full of social justice/activist/socialist type people. So I struggle to balance those values with running this rental property like a business. I am really not a business person, but it's the only way I can afford a house in Toronto.

This comment and your username don't match up... :)

They don't really sound like good tenants.  Can you start charging them for a portion of the water bill as well (and trash pickup and whatever other utilities), or does Toronto also limit those sorts of changes?

Out of curiosity, does Toronto limit the property tax increases to the rent increases?

You need to charge what the market will bear.  Is there any provision for small landlords like yourself to decide to move into the upstairs apartment and kick them out on that basis?  Or will you need to start drum practice at 3 AM? (I am not a lawyer.  This might be an illegal idea.)

Drifterrider

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Re: Struggling with Raising Tenants' Rent - Toronto
« Reply #21 on: February 02, 2017, 01:09:44 PM »

It is your sworn duty to get as much money as possible out of these tenants.  After getting the 3.55 a month spend the rest of the year campaigning against the unfair treatment of landlords to accept rent controls that keeps them from maximizing their investments.
[/quote]

Business is business.  It seems whomever posted the above doesn't mind spending other people's money (in this case the owner of the property being discussed).  Do you insist in getting ALL of your change back?


Berubeland

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Re: Struggling with Raising Tenants' Rent - Toronto
« Reply #22 on: February 02, 2017, 05:35:10 PM »
I'm a property manager in Toronto and rents have gone up a hundred or two even since last year, regardless unless your rental is built after 1991, you can only raise the rent according to the rent increase guideline.

You really should keep up with it, as the increase is not reflective of the real increases in the market rent.

Other than that, the struggles you describe are reflective of living in a shared situation, frankly other people are going to disturb you occasionally. Boundaries are very useful things. However like any neighbor it's better to get along than not.
 

Metric Mouse

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Re: Struggling with Raising Tenants' Rent - Toronto
« Reply #23 on: February 02, 2017, 11:54:30 PM »
Raise it, if you're limited in increases from the city, you don't want to end up in a situation where you don't raise rent, and then end up way under market with no recourse until they choose to move out.
This would be my concern.

Megma

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Re: Struggling with Raising Tenants' Rent - Toronto
« Reply #24 on: February 03, 2017, 09:35:10 AM »
Raise it, if you're limited in increases from the city, you don't want to end up in a situation where you don't raise rent, and then end up way under market with no recourse until they choose to move out.
This would be my concern.

+1
If you are limited to a small percentage for annual increases, it's important to do it every year by the amount you are allowed.

You can be a nice, pleasant neighbor but don't forget - it's your house. You make the rules and if they don't like it, they need to leave. You should not be inconvenienced by them parking in your space, messing up your lawn or otherwise. Since the vacancy rate is 1% and you are a little low on the rent side, you can easily find other tenants who will pay. Just because they pay doesn't mean you should let them walk all over you. Lots of people will both pay and be generally pleasant and respectful.

TightFistedScot

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Re: Struggling with Raising Tenants' Rent - Toronto
« Reply #25 on: February 06, 2017, 08:05:01 AM »
Look up "free loaders".

Are you a business or a charity?  The answer to that should guide your decision.

hah good point. My master's is in social work and a lot of my social circle/extended network is full of social justice/activist/socialist type people. So I struggle to balance those values with running this rental property like a business. I am really not a business person, but it's the only way I can afford a house in Toronto.

This comment and your username don't match up... :)

They don't really sound like good tenants.  Can you start charging them for a portion of the water bill as well (and trash pickup and whatever other utilities), or does Toronto also limit those sorts of changes?

Out of curiosity, does Toronto limit the property tax increases to the rent increases?

You need to charge what the market will bear.  Is there any provision for small landlords like yourself to decide to move into the upstairs apartment and kick them out on that basis?  Or will you need to start drum practice at 3 AM? (I am not a lawyer.  This might be an illegal idea.)

Yes. In fact all I need to do is give them 2-months notice indicating that I am moving back upstairs, and that's their good-bye letter. Or I could do a major renovation which is another way to kiss them goodbye.

Part of the reason I don't sweat it so much. I've gotten rid of 2 previous sets of tenants this way.

TBH I most likely will be moving back upstairs this coming September. I'll have no problem getting rid of them by issuing a "notice to occupy for personal use".


Oh, and no, landlords can't change the terms of the lease after the fact. The lease is inclusive of all ultilies with the exception of electricity. We split the electric bill and they have been very good to pay it on time (or early most of the time).
« Last Edit: February 06, 2017, 08:19:26 AM by TightFistedScot »

TightFistedScot

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Re: Struggling with Raising Tenants' Rent - Toronto
« Reply #26 on: February 06, 2017, 08:12:12 AM »
Raise it, if you're limited in increases from the city, you don't want to end up in a situation where you don't raise rent, and then end up way under market with no recourse until they choose to move out.
This would be my concern.

+1
If you are limited to a small percentage for annual increases, it's important to do it every year by the amount you are allowed.

You can be a nice, pleasant neighbor but don't forget - it's your house. You make the rules and if they don't like it, they need to leave. You should not be inconvenienced by them parking in your space, messing up your lawn or otherwise. Since the vacancy rate is 1% and you are a little low on the rent side, you can easily find other tenants who will pay. Just because they pay doesn't mean you should let them walk all over you. Lots of people will both pay and be generally pleasant and respectful.

Yeah exactly. For the most part I have been fairly friendly and try to be easy-going because we have to live in such close quarters.

However, I did send them a VERY FIRM e-mail a few months ago reminding them that this is my house, and certain things will not be tolerated as per landlord/tenant boundaries. And that the property outside of their apartment is mine, that I share with them, not the other way around. This was after losing my cool with one of them after she took the electrical outlet apart without first asking me. I definitely raised my voice an octave, and told her she could have caused a fire, and that it was my house, not hers. LOL.

I had 2 sets of REALLY BAD tenants before these ones, which is why I feel like they are better than the last.
« Last Edit: February 06, 2017, 08:26:46 AM by TightFistedScot »