Mayor John Tory Already Has All The Tools To Create Affordable Housing

September 27th, 2016 · Property Management, Rental Property, Tenant Resources

2016-09-21-15-12-14

I’m so sick of people flapping their lips about affordable housing. Especially politicians. Because it’s all bullshit.

Here the city of Toronto website page about affordable housing Everyone is confused, let’s have a meeting about it (with catered lunches and committees.) That will work won’t it?

The real conversation is about poor people being hard to help, and how complex an issue housing is. Even when you give the poor an almost free apartment, like they do in social housing, a certain portion of the population sees fit to hoard, deal drugs and turn tricks out the lobby of the building. The city of Toronto can’t afford to fix the apartments they have never mind build new ones. They sell off as many units as they can after they are turned into cesspits by the people who live there, likely to be turned into more condos.

However, the city of Toronto has a rarely used tool to lower rents on a scale that has never been seen in Toronto or anywhere else for that matter. Furthermore it would be the fairest most equitable way to provide equity for the most disadvantaged part of society you have ever seen.

Lower Taxes on Multiresidential Apartments

2016 Property Tax Rates

Description City Tax Rate % Education Tax Rate % Transit Tax Rate % Total Tax Rate %
Residential 0.4970292% 0.1880000% 0.0029439% 0.6879731%
Multi-Residential 1.4492567% 0.1880000% 0.0028860% 1.6401427%
New <——-
Multi-Residential
0.4970292% 0.1880000% 0.0029439% 0.6879731%
Commercial General 1.4569742% 1.1800000% 0.0028860% 2.6398602%
Residual Commercial –
Band 1
1.2562142% 1.1800000% 0.0024883% 2.4387025%
Residual Commercial –
Band 2
1.4569742% 1.1800000% 0.0028860% 2.6398602%
Industrial 1.4492567% 1.2536020% 0.0028860% 2.7057447%
Pipelines 0.9560674% 1.4820840% 0.0056628% 2.4438142%
Farmlands 0.1242573% 0.0470000% 0.0007360% 0.1719933%
Managed Forests 0.1242573% 0.0470000% 0.0007360% 0.1719933%

Look at that crap… a tenant living in those Parkdale cockroach infested rat traps is paying 3 times the property tax than those shiny new buildings.

Part of the reason that tenants are poor and landlords can’t fix up their buildings is because the City of Toronto is a greedy inequitable tax sucking behemoth.

It’s the law that if property taxes are lowered, the tenants automatically get a rent reduction. I know this because I was managing a building when the city moved our garbage bill from our property taxes to the water bill and it triggered an automatic rent reduction when they’d actually raised our costs.

Here’s quote from the brochure from the Landlord & Tenant Board Brochure about Automatic Rent Reductions.

When a landlord’s property taxes are reduced by more than 2.49% from one year to the next, the Residential Tenancies Act (the “Act”) requires that rents also be reduced to reflect the decrease in the landlord’s municipal property taxes. This is called an automatic rent reduction. If municipal taxes have been reduced by more than 2.49%, municipalities must send a notice of rent reduction to landlords and tenants of residential complexes that have 7 or more rental units. The notice of rent reduction sets out the percentage rent reduction that will be applied to all residential rental units in the complex.

This is a matter of equity, and if the City of Toronto wants affordable housing they can do it immediately using the tools they already have. Why should tenants living in a 30-40 year old building pay 3 times the property tax as all the downtown condos and brand new rental buildings ? The poorest of the poor are subsidizing the property taxes of the richest of the rich.

Or maybe all these committees and catered lunches are about the same old rehashed and tired memes about equity when basically it’s just coffee time for bored bureaucrats and more of the same lies. You need balls of steel to stop talking about affordable housing and do something.

Mr Mayor Tory, you already have the tools, now do you have the balls?

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Why Are Condos and Investors Such A Bad Combo?

September 9th, 2016 · Property Management, Rental Property

Toronto view

To understand a little about why condos are not the best fit for investors, you have to understand how condos operate a little bit.  The condo is an idealistic creation of democracy at work. Simply put, the building entity is put into a corporation and each unit owner owns a share of the building/corporation.

Each owner gets a vote for the Board members and those Board members are responsible for the operations of the building in conjunction with the property manager if there is one. Owners also need to vote on major building issues.

I’m going to ignore the fact that 99% of people are not qualified or understand in any way the complex building systems and contracts in a condo and the fact that another giant percentage of people are difficult, litigious, cranky, ignorant and obscene.

I’m going to simply talk about the fact that condos were originally designed as a corporate entity for people who lived in the building. The idea was a community of people with a common goal of having a nice decent place to live and everyone would work together for the benefit of all.

There are two problems with the system, one is general apathy and the other is that investors do not care to attend Board Meetings. In many cases you must live in the building to be on the condo board. You also don’t get paid and people will nit pick, complain and second guess everything you do.

What happens when investors and others are not involved is the following that I received several months ago.

Dear Home owner,

As you will now be aware the response to the AGM meeting that took place was very low and we were unable to obtain the required Quorum to pass the bylaws.

The meeting has been rescheduled for another date. Therefore we are asking for you to please complete and return the attached proxy, completing all highlighted sections and items.   Please submit via email  or alternatively you can leave these with concierge.

If you have any queries or wish to discuss this further, please contact the Management Office.
 
Your prompt response is appreciated.

Poor Ignored Property Manager...

So imagine that you are in a building that is 80% investor owned and most of those investors are not involved in the community of their building or Board affairs, you simply can’t run the building. At one point you the manager or condo board have no legal mandate to enact or do anything at all.  This is what is going on in this particular building.

ADJOURNED OWNERS MEETING (AGM)
Further to the Annual General Meeting a vote has been called and motioned to adjourn a meeting to the following Agenda Items due to insufficient of votes to meet the required percentage of the matters tabled at the meeting.

In the matter of Borrowing Bylaw #4 allows the corporation to place replacement mortgages against the Superintendent’s suite (this requires 50%+ of votes)

In the matter of Borrowing Bylaw #5 allows the corporation to place replacement mortgages against the Guest Suite (this requires 50%+ of votes)

In the matter of Borrowing Bylaw #6 allows the corporation to place replacement mortgages against the Guest Suite (this requires 50%+ of votes)

For the vote on sale of the guest suite (requires 67%+ votes)

In the matter of modification to the common element fees. (requires 90% of votes)
We anticipate that we will achieve all required votes and pass the Borrowing By-Laws including the matter of modification to the common element fees.

If you can not attend the meeting, please send in your proxies for quorum and achievement of the above initiatives. For your convenience, proxies will be available at concierge desk. Please come and fill in the Proxy, date it, sign it and submit to Management office (see attached blank proxy form and explanations).

NOTE: If you have submitted your proxy and voted ahead of this meeting, you are not required to send in your proxies again – thank you.

If you have any questions or queries, do not hesitate to contact the Management Office.

Thank you.

Poor Ignored Property Manager
In this case the manager is trying desperately to remortgage the guest suites and Super’s suite because the developer is charging them some unholy percentage of interest.The goal is to save the unit holders lots of dinero in maintenance fees. But a lot of their investors are not there in the building and no one is voting because it’s too much trouble and so no one (not even God) can do anything in the buildings.

This is common and that’s the problem.

There is no such thing as passive real estate investing!

Just like you won’t look like Arnold Schwarzenegger without exercise, you won’t make money in real estate without working for it. Investors buy condos because they are passive investments they think they don’t have to do much with and then the property managers and Board members can’t run the building because investors can’t be bothered to vote.

I wrote a few days ago about how condos are crappy and a twitter follower said “Investors shouldn’t buy condos unless they are going to participate and be informed about the condo board and governance of the Condo Corporation” and he’s right and it causes tremendous problems and the response to the problem caused by these investors and non voting bystanders is even worse than the problem it was designed to repair.

To recap, investors are told condos are a passive investment and they don’t participate in the running of the building which hamstrings the condo corporation, the condo board and the property manager.  Complete chaos ensues. No one can do anything about it et vitam eternam.

Can you say Inertia?

 

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David Strashin – Lawyer & Landlord Super Hero

September 7th, 2016 · Landlord & Tenant Board, Property Management, Real Estate Lawyer, Rental Property

purpleHeroCloud

The other day my friend sent me a link to a Star Article about gaming the Landlord & Tenant Board System. He asked me if I had seen the article and I was actually in the process of dealing with a case identical to it.

Enter The Prostitute “Miss Kitty”

Many years ago when I was  a baby property manager with my very first portfolio of properties, I had the pleasure of dealing with a tenant that my predecessor had seen fit to rent to… after he was fired. This tenant was unlike the other tenants for several reasons, first she was a prostitute and she changed her message every day. This was a source of endless mirth for the office ladies in accounting, and we would call her to collect the rent on speakerphone so we could all hear the latest creative ad on her voicemail.

The second reason she was different was because after we had evicted her for non payment of rent, she appealed her eviction to Divisional Court. That was the first time I met David Strashin, and she actually had someone show up in court a few days after the September 11 attacks and claim that she was ministering to the victims of September 11th. That was my introduction to the world of pathological predatory tenants who will say anything and do anything to live a free life at the expense of their real victims, their landlords.

Enter “Mr Mercedes”

Recently I have had another opportunity to deal with David, as another tenant takes full advantage of the loopholes in the law to rip off a landlord to the fullest extent possible with almost a year in unpaid rent.  This joker’s wife works full time and he drives a Mercedes.

Like the prostitute many moons ago, the entire game with this tenant is to get free rent and take advantage of the system. Justice Matlow, a divisional court judge, said in this judgement, “My recent experience sitting as a single judge of this Court to hear motions has convinced me that there is a growing practice by unscrupulous residential tenants to manipulate the law improperly, and often dishonestly, to enable them to remain in their rented premises for long periods of time without having to pay rent to their landlords. It is practice that imposes an unfair hardship on landlords and reflects badly on the civil justice system in Ontario. It calls for the Government, the Landlord and Tenant Board and this Court to respond.”

That was in 2012 and 4 years later nothing has been done to close this loophole in the system.

The Basic Order Of Events In Non Payment Cases

  1. The tenant doesn’t pay rent or the rent check goes NSF
  2. Fill out and deliver an N-4
  3. Wait 14-15 days
  4. Fill out an L-2 and apply to the Landlord & Tenant Board for a Court Date
  5. Wait a month or two months until you get a court date.
  6. Go to a hearing at the Landlord & Tenant Board.
  7. It your paper work is correct, you will get an Order
  8. Wait up to 10 days for the Order to be written
  9. The Order gives them another 11 days to pay up.
  10. Your tenant may first “Review” the Order, in Mr Mercedes’s case he agreed to a payment and didn’t make the payments. Regardless they will be granted another hearing most of the time, even when they didn’t show up even without proof.
  11. You will wait for another hearing…
  12. If you didn’t lose, which is pretty hard to do in non-payment of rent cases (They can pay you after all. )Another Order gets issued.
  13. You wait 10 days for the Order to be written and about 5 days for mailing… again
  14. You take this Order or you may have taken the previous Order to the Sheriff for Enforcement and pay $340
  15. They take their sweet, sweet time, mail a letter etc. to the tenant telling him that the eviction is coming.
  16. Wait at least 3 weeks more.
  17. You will get a sheet that says “Call the sheriff on this date” with a two hour window… Don’t forget or you have to pay them again, like you have an extra $200 for the goddamn Sheriff at this point.
  18. By this time 4-6 months have elapsed and you have subsidized your tenant’s lifestyle to the tune of thousands of $$$. Don’t worry ! It gets worse because your tenant is one of the greedier leechier types that will take things to the next level.
  19. The tenant Appeals the Non Payment of Rent Order to Divisional Court. Here you are in a rather elite crowd of scumsuckers. These are the real professionals and they have game.
  20. You cannot waste time here, there is a limited window of opportunity to “quash” their motion to appeal. (Stop their bullshit)
  21. Unless you are familiar with Divisional Court, you will need a lawyer here and you need a lawyer that knows Landlord Tenant Law. David Strashin is one of those rare lawyers.
  22. If you wait too long to get your lawyer and fight their Appeal right away, you will have to wait for a regular court date but that may take 6 months or more. A long, damn time.
  23. Now most of these cases have no merit, lets face it if they wanted to pay they would have. But… here we are, the final gasp in the system, hopefully their Appeal will be denied, and you will get another court document lifting the “Stay of Eviction”
  24. Next you take that court document to the Sheriff (Enforcement Office) and after they go through their process of mailing etc, they will show up to a house that will 99% of the time be empty and your soul stealing tenant will be some other poor landlord’s nightmare. Why not? It’s not like they will be punished in any way or have to pay you back.
  25. All that will be left to remind you of your tenant will be a Court Order with a big number that they owe you, but like those Reader’s Digest contest entries where you win a million dollars, chances are you will never see a penny.

Bad tenants are like microorganisms, just hope for the common cold, a couple weeks and they’re gone. Other tenants are like MRSA, they fester and take a while to get rid of. The worst bunch are like a case of C.Difficile and Necrotizing Fasciitis combined, you’ll have to eat shit to survive and you may lose a limb in the process.

Bad Tenants… 0/10 I would not do again.

 

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Why Are Condos So Crappy ?

September 5th, 2016 · Property Management, Rental Property

21 Nelson

I’ve rented a lot of condos, and I’ll rent thousands more I’m sure. I’ve seen my share of awful layouts, bad treatment from security, substandard common areas, unfinished buildings and more recently absence of parking.  After this weekend and the lack of power at Cityplace… 3 times this week, someone has to ask this hard question.
I have a theory about why a lot of situations exist.  Investors buy condos pre-construction, from plans. Developers can pretty much change whatever they want, add what they want, remove what they want and you have to suck it up. Investors mostly care about how much money they will make. They will never live in the place, chances are they will just rent out the suite for a year or two then sell it.

The developer is therefore marketing their product to the investor who just wants to make money and will never live in the suite. This is why I have to rent two bedroom condos with no room for a full size sofa in the living room because of concrete pillars. Another place I rent has three bedrooms in 900 square feet and a very small combined living dining kitchen room. At least you can fit a full size sofa in, but as one of the only 3 bedrooms I’ve seen built in this city, it’s completely impractical for a family. I’m 99% sure this developer did not put this weird sprinkler system in his brochure.

2016-03-04 17.23.18

That’s what happens when you buy a unit at a side of the building that firetrucks can’t reach with their hoses. In any case it’s ugly as hell and probably not what wifey has in mind when she’s planning window treatments.

That’s my point, the reason that condos are so crappy is because the person who ends up living in the condo is not the person who purchased the condo. With the HST, it’s likely that the first person to live in the condo is either the investor or a tenant. Tenants are selective but aren’t as picky as buyers. In fact an argument could be made that most condos in this city are not marketed to the end user.  This creates a complete disconnect between what the end user user needs and the product available.

Condos As Glorified Hotel Rooms

For the most part, the new condos tend to blend together in a bright white palate of similarity. Differences are minor, layouts are pretty boring and blah. As a innovation I’ve liked the Jack & Jill Ensuite. Most ridiculous is the One Bedroom plus Den at Ice Condos at 12 york, where the “den” is a six inch recess in the wall where you couldn’t fit a sofa table.

The spaces are most suitable for young professionals who stay out all the time, landing for the night after dining out, occasionally doing laundry only to leave in time for work the next day.

Condos for Boomers

This idea is so funny. I see boomers trying, but they have to dispose of their furniture, and hire organizers. I doubt that there will be mass adoption of the condo by boomers. I do see the upsurge of senior help services to help boomers stay in their houses and neighborhood. The kind of shoe box currently being built by developers and bought by investors is kind of offensive to the Boomer lifestyle.

Shoeboxes…

If you’re a developer, it’s a “micro condo” but if you’re a university student trying to subsidize the rent, it’s a walk in closet. I’m not sure what I hate more, the disappearing parking spot or the shrinking condo. Spaces have to be liveable and sometimes they aren’t or have significant problems.

Preconstruction As An Investment

I can’t really say more than David Fleming about preconstruction condos. Here’s two brilliant videos about that whole deal.


 

My Advice About Investment Condos

Long term, unique and livable layouts, room for a table and chairs and a decent building are tops. Personally I don’t think that buildings that are 50% or more one bedrooms or bachelor or studios make for stable buildings. They make more money for developers but, they also will have a lot of moving in and out and transitory renters.

Ask Yourself “Would I live there?”

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Pricing Your Rental Is Like Shopping For Mangoes

September 3rd, 2016 · Property Management, Rental Property

mangoThere’s three things I love in my life, renting properties, eating mangoes, and eating fresh tomatoes I grew myself.  The other day I was dealing with an owner who was unhappy with us. He was unhappy because his friend had priced his property at $1700 for a 3 bedroom house and had 18 offers and he had priced his property at $1900 and we had none. Apparently his friend could even have got $1800 even. I had not seen the other property so I had no comparison to go by except general market knowledge.

Underpricing Your Property Is Not An Intelligent Strategy

Most of the owners we deal with have one or two properties, the trick is to get the most money out of your property while still having a AAA+ quality of tenant. It’s not a yard sale where you’re trying to get rid of your VHS tapes. It’s not hard to have 18 offers, just price your property a couple hundred bucks below the average and you’ll have plenty of applications. Having said that, we don’t really want applications, we want tenants and we only want one in most cases. By setting your price really low, you got 17 applications you didn’t need, wasted a lot of time reviewing all those applications, and every month you’re losing $200 or $300 out of your pocket.

There’s a good chance that a lot of the quality applicants walked away from your crazy bidding war because why would they even think of  it, it’s not like you have the only rental on the market and there’s lots of competition for quality tenants.

Overpricing Your Property Is Not An Intelligent Strategy

We did the market survey looking for a lot of other properties similar to yours in your area, we find 3-6 and they’re all from $1800 to $1900 with one kijiji scammer posting a house at $1300 if you’ll just send him a $500 key deposit in Nigeria where he’s ministering to AIDS and Ebola victims. Other than that there is a range. You might have a a very high end place for $2100 but the ad says “Available For May 1st” and it’s July.

The $2100 guy gets crickets, his ads are all posted, but he’ll get a showing a week. If it’s legitimately a high end superior house worth more than the average house, it’ll rent with sparse showings. There are a lot of people looking for a particular kind of property who are willing to pay for better quality, but it has to be legitimate. Tenants in the higher ranges tend to be very selective.

There are quite a few people thought that think that they should put the price up so that if a tenant wants to bargain down they have some wiggle room. This is where the mangoes come in.

Mangoes

Almost everyone goes grocery shopping and we all get those ubiquitous flyers. Let’s say you want some mangoes. You look at the flyer. No Frills has Mangoes on for 4 for $5 and Metro has Mangoes on for $3 each. Where are is the mango shopper going to go? No Frills. Why? Because people like a good deal.

Does it matter that Metro’s mangoes are the huge hulking mangoes that are ripe delicious and juicy and worth every penny and more than No Frill’s rock hard, small, disappointing lemon flavoured mangoes? Not really, because most people are going to check out the deal first, and while they are there they are going to get mangoes. Or and this is the case with most renters, they just can’t afford to pay $27 for mangoes because they want all their relatives to get a mango and $3 is a lot per mango when you have 9 people to feed and you have to pay your electric bill and car payment and the parking ticket you and all the other bills you have to pay.

When you advertise your place the majority of the people are going by the price. Tenants are not wasting their time going to look at places they can’t afford so they can negotiate down a deal. It’s just not happening.

In the case of our friend who was upset with us, we gave him a market survey and he priced himself higher than the market. We’ve showed the property many times, but no applications are forth coming. Usually this is because the potential tenants are finding more value elsewhere.  Either improve the property or say a lot of prayers or reduce the price.

The Rental Market Doesn’t Care How Much Your House Costs To Carry

In this crazy housing market, people are buying investment properties and a lot of them do not cover all the costs of owning the property. The longer you hold out for the price, the longer you suffer vacancy loss. The market survey tells you where other properties are in your area. No tenant is going to pay you an extra $500 per month because you have a custom built kitchen with special closers. Sure it’s nice, but not $500 per month nice.

If you look at wage growth in Canada it’s been pretty stagnant for a long time, renters pay their rent with their wages/income so once you get past a certain point, it’s only 1%ers that can rent your place and most of them can easily buy if they want to. At one point looking for renters for those properties is like breathing on Mount Everest, there’s just not that much oxygen up there and there’s not many renters looking in that market.

The entire point is that we are are in a fluid market, there is some luck involved, there is some strategy involved, and for the most part the market is speaking to you all the time, you’re just not listening.

Listen to the juicy delicious sounds of the market telling you…mangoes.

 

 

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