I rent a lot of new condos, and it’s not always easy. Frankly the halls and lobby are dirty and dusty, some of the elevators don’t work, the amenities are not ready and a host of other not-so-easy-to-justify-those-condo-rent-prices issues. It seems that every year developers are occupying the suites that are finished with the common areas more and more unfinished.
Then there’s the other elephant in the room… competition from other landlords. A few years ago I saw the same suite I was renting for $1600 rented by another landlord for $1250. Considering there was about 10 close to identical units available for rent at the same time, I can understand the desire to “just get it rented”.
Bad time of year, competition, less than decent rental conditions all lead to landlords giving tenants some very good deals at times. Regardless one year later the landlord can increase the rent to help offset some of the good deal they were forced to give away by adverse market conditions.
Here’s some examples.
169 Fort York Boulevard – The Garrison
I rented this large one plus den for $1600 originally, the tenants stayed for well over a year and I gave them and above guideline increase to $1650. They moved out and we added a nice double french doorway to the den and it now rents for $1700.
105 The Queensway – NXT2
I rented this large one plus den for $145o with a parking, again in mid construction, with some quite major deficiencies that still needed to be repaired. Once the tenant moved in, the washing machine was missing a part and the tenants had no washing machine for a month. It took numerous attempts to get the right part and was by all intents a major f-up that required daily telephone calls to address. It was quite similar to the dishwasher situation that had me steaming.
However the rent prices for the area were unusually strong and so I recently did a market survey and the area rents are around $1600 to $1650 for the same suite. The owner and I decided on a rent increase of $100 and we sent a nice letter to the tenant, explaining that the maintenance fees have increased, and that our market survey showed that similar suites were renting for $200 more than they were paying. We also sent the Above the Guideline Increase For Partially Exempt Properties according to Ontario law and the tenants are paying the increased rent. The owner did not want them to move because they are really decent people and because suite turnover cost lots of dough. Chances are you will end up with a month of vacancy and possible some painting and fixing of the apartment and there goes your brilliant rent increase “profit” for 3 years.
61 Town Center Court – Forest Vista
This gorgeous apartment again a one plus a den was rented at an awful time. When the owner was buying the suite we did a market survey and we agreed that we could get $1450 as it is a very lovely quiet condo building. The suite is very spacious. The amenities are fantastic and the place backs onto a park and you can throw a stone at public transportation. Unfortunately by the time the suite had closed and possession had turned over to the owner, a brand spanking new condo down the street had opened up for occupancy and there were more than 50 suites available in that building for several months.
Needless to say we had to change our pricing strategy, and the suite rented for $1300. The owner was looking around the area and over a year later prices have adjusted back to the original market conditions and suites in that building are renting for $1450. Once again we gave a nice letter to the tenants, showing them a market survey, telling them about the inevitable maintenance fee increases and telling them we want them to stay along with the Rent Increase. They now pay $1400 and so they are getting a deal from prices in the area and the owner also gets to keep their good tenants.
225 Sherway Gardens Road – One Sherway
Somehow during the rental process, these tenants ended up getting free hydro instead of having to pay, and they’ve been there for several years now. We gave them an increase of $100 which just brings them up to par with what the other units we are managing in the same building have rented for recently. They are lovely people but have outgrown the apartment and are actively looking for another apartment. I know they are planning to leave, and I want them to cover their costs while they live there.
I love this building by the way and these tenants above are really fantastic and looking for a 2 bedroom in that building complex if anyone has one.
Best Practices For Above The Guideline Rent Increase For Units Partially Exempt
- You must use the Ontario Landlord & Tenant Board Approved Form
- Send a nice letter thanking your tenants and asking them to stay.
- Explain why you are increasing the rent, in most new condos there is a jump in maintenance fees after the condo is taken over by the owners and the new management company.
- Do a market survey first, some suites are not renting for more than I could get for them 3-4 years ago, tenants aren’t stupid, they can and will move out to the suite down the hall if you get it wrong.
- Give the tenant a deal, if prices have gone up $200 then raise the rent $150 and the tenant will still get a $50 below market rate apartment and the landlord will recoup at least some of the money they are paying out to mortgages and maintenance fees.
While many landlords do not want to risk losing a tenant, some landlords want tenants to pay closer to market rates for rent and are willing to take that chance. I have found that many tenants are willing to pay the premium price for a premium property and are reasonable when it comes to paying for the services they get.
I do love the challenge of renting and managing all these new condos, it keeps me on my toes. There’s always something new and interesting coming up.