Annual Inspections – Smoke / Carbon Monoxide Alarm

December 13th, 2016 · Property Management, Rental Property

fire-safety-tipsIt’s the time of year when we do Fire Inspections around here, and I have to say after the house I went to see last week, I’m going to adopt a big fat no policy towards my clients doing their own fire safety checks.

The landlord had her contractors install the fire alarm / carbon monoxide detectors and they were the kind meant to be hardwired in.  Like these…

plug-in-smoke-alarmThe alarms did have a a battery back up, so they were working, but battery back ups are meant to work for a short period of time when there is no power to the alarm. Not a full year. So I about had a heart attack when I saw what kind of alarm had been installed.

I also uninstalled an alarm from 1996 in the laundry room.  If you don’t need a device take it off.

My understanding is that you need

  • One smoke detector on every level of the house
  • Smoke detectors less than 10 years old
  • One carbon monoxide detector on every level of the house
  • Carbon monoxide detector less than 7 years old
  • These devices should be located close to any bedrooms/sleeping areas in the house.
  • If you have any gas appliances, you need a carbon monoxide detector.
  • It’s not just for the floor the gas appliance is on, it’s on every floor of the house.
  • Smoke & Carbon Monoxide detectors can be combined.

I despise the plug in carbon monoxide detectors, when I do inspections people bring them to me unplugged from a shelf in their garage because they needed to plug in something and they removed it and forgot to plug it back in.  There’s no way to get around it people are stupid and do stupid things. Your fire safety planning should include this undeniable fact.

My Current Fire Safety Policy

I like the following combined smoke/carbon monoxide alarm with a sealed in 10 year battery.

This alarm is sealed which means your tenants cannot take batteries from it for their remote control or kids toys, and then report you to the City Fire Inspector when they owe you 2 months rent. I use to buy the replaceable battery kind, but now I buy this kind. One guess why I only buy the sealed battery kind now.

Sometimes I do need a hard wired smoke/carbon monoxide detector, and there are some with 10 year sealed battery units.

These alarms are not cheap, but a lot cheaper than going to jail if your house has a fire. I also use just the smoke/carbon monoxide detector with typical battery backup for these hardwired alarms, it’s not so crucial if the battery is taken out of this one. In any case it’s a 9 Volt so not really a popular battery.

Lots of time I’m stuck with what I can get in stock at the local home improvement store and they usually cost about $60 plus tax each or more depending on the store.

So for the holidays this year, give the gift of safety and go visit your tenants and check their alarms, replace any smoke alarms that are older than 10 years, and any carbon monoxide detectors that are older than 7 years old. If one of the units needs to be changed I usually get one new combo unit for both and add a sealed 10 year battery. This method is simplicity. There is one device for every floor. You don’t have to try to remember if it’s AA batteries or D batteries. You don’t need any batteries at all. There is no problem with tenants unplugging the carbon monoxide detector because they need the plug.

Also… while you are all in fire safety mode… Change your own damn batteries/alarms and go grab the carbon monoxide off the shelf in your garage. You are worthy of your own sparkling new combined smoke/ carbon monoxide detector with sealed 10 year battery unit. Give yourself the gift of escape from fire/suffocation for this holiday! I hear it’s the new trend in Europe.

Less is more. Simplicity is Awesome!

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Foreign Investors – Joys of the NR-6 & NR-4

December 11th, 2016 · Kids & Family


Many people may be blissfully unaware of the rules for foreign investors in Canada. I am not. Every year I fill out the necessary Canada Revenue Agency Forms on behalf of the foreign investor clients I have.

There are very important benefits of having a property manager that knows what they are doing when it comes to compliance with Revenue Canada, not to mention the benefits of having someone here locally to deal with tenant issues, repairs and maintenance and the odd vacancy. Unless you feel comfortable leaving your $500,000 to $1,000,000 property unsupervised and unattended while you’re on the other side of the globe. (In which case… Go You!)

The Rules If You Go It Alone

According to CRA the tenants or yourself are supposed to send 25% of the gross income to CRA.  If the rent is $2000 you are supposed to send $500 per month to CRA. At the end of the year, you file an income tax return and you pay a tax of 25% of the Net Income (Income after expenses) and you get money back from Canada Revenue.

Rules If You Have An Agent

If you have someone willing to be an agent in Canada (this doesn’t have to be a property manager) they sign a form guaranteeing that you will fill out an income tax return. Then you fill out a paper (We use a spreadsheet) with the expenses of the property and you pay 25% of the net income monthly to the CRA. In many cases that amount is $0. Basically if you have a mortgage, and deduct mortgage interest, you don’t pay anything.

We Provide This Service For Free

For the clients that need it, we provide this service for free with our property management service. There’s no extra charge and to be honest, it’s not that big of a deal. For those clients that need it, we also refer our accountant to do the annual income tax return. (That’s not free, we have to pay him)

Ex-Pats Are Our Major Customers For This Service

For our company, there is no flood of “foreign devils” with boatloads of cash. Most of our clients are people who live here and have to go work overseas and need someone to take care of their house. I have nothing against a flood of foreign investors, even a trickle would be lovely, but I think I just have 2 that are truly from other countries originally and never lived here and just have a house as an investment.

The NR-6 and NR-4 forms

Realistically they aren’t a big deal, they are one page forms, but they can be a bit intimidating until you get them figured out and develop a process to keep all the rents, deductions, letters, and sundry all sorted out properly. However to protect ourselves we do collect the rents directly for those properties so we can disburse funds to the CRA monthly if required.

This year, I’m all on time and done with my NR-6 forms and I feel quite organized about it…

Happy Holidays to Me!

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Rent Thieves – Consequences

November 2nd, 2016 · Landlord & Tenant Board, Rental Property


As I write this post, I’m sitting in an apartment for the entire purpose of watching someone pack. After a long legal ordeal, the tenants’ tenancy was terminated. These tenants have taken advantage of a loop hole where you can void your order time after time by paying your arrears. While it seems to make sense, it’s extremely inconvenient for the landlord because they must pay the entire mortgage and expenses and wait for a payment that may never come. In our case, as a third party property manager, we hire a paralegal to evict the tenants and I think this is the fifth time.

At the Landlord & Tenant Board, they have a rule where you can file multiple applications for the same $170 fee as long as you do it all at the same time. The final Notice of Termination for Non Payment was accompanied by a Notice of Termination for Continual Late Payment. With the 4 previous Orders as evidence, and the lack of appearance by the tenant to defend themselves, the final termination of their tenancy was allowed by the Adjudicator.

My serial rent thieves did not even bother to read any of the notices, notices of hearing, Orders or Sheriff papers because they went ahead like they have done 4 times before and paid me every single penny of the arrears on the afternoon the sheriff came.

Except, they can’t move back, they overpaid me (Because of their Last Month’s Rent) and I quickly returned the payment to them and told them that they had 72 hours to move. I also collected all the arrears for the landlord.  Fucking brilliant.

Honestly though, I still have no idea what is going on with these tenants, they are immigrants, very clean, don’t seem to drink or have drug problems. Their place is immaculate.  They just don’t pay the rent until the sheriff is at the door or sometimes a day after. Polite, well spoken, decent credit, well dressed and they have already found their new landlord victim. The moving truck is arriving in an hour.

Considering this drama has been going on for over a year now… I’m quite happy that my problem is going to move on and be someone else’s problem.

And that’s why you can’t trust landlord references for shit.

P.S. I did not give these people a reference but it happens. A. LOT.

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Attention: Mr. Evan Sidall

October 18th, 2016 · Kids & Family

2016-08-12-14-21-56Dear Mr Sidall,

I have written about the ridiculous assertion that our vacancy rate in Toronto is 1% or some ridiculous small percentage, and I have figured out why the numbers are completely skewed compared to other countries.

Basically the vacancy numbers include all the condos ever built instead of just the ones that are for rent or in the rental pool.

This means that our vacancy rate number essentially means nothing and even tiny fluctuations represent thousands of units on the market.

500,000 condos are built

100,000 are in the rental pool

10,000 are currently for rent or vacant or under renovation

A proper vacancy rate calculation would end up with a 10% vacancy rate.

Current calculations would end up with a 2% vacancy rate.

I actually did consider during my investigations about the computation of the vacancy rate last year, doing this myself, but it is too big a job for my company.

I am very glad that someone seems to have seen the light at CMHC about some of the risky, dangerous behavior that is so common in this out of control market.

CMHC has a very important role in protecting Canadians, the idea that has been floated around that Banks and Mortgage Originators should bear some of the risk if mortgages go sour. That is just common sense.

Regardless, like the foreign investment numbers, the vacancy numbers are being skewed, I urge you to look at the methodology of the calculation and compare it with other countries and you will see that our vacancy rate has been manipulated to look a lot lower than it is. Investors are being misled by the people who are supposed to protect them.

We absolutely need to maintain the integrity of CMHC and it’s purpose as a watchdog and protector and bean counter for the Canadian people.

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The Link Between Air BnB and Affordable Housing

October 1st, 2016 · Kids & Family, Property Management, Rental Property

Image result for Airbnb
Air BnB is a symptom of our crazy out of whack housing system. That’s my conclusion after speaking to the expert on Airbnb Dr Daniel Guttentag. So welcome to the rabbit hole of my thought process here… here’s an explain like I’m 5 version of Airbnb, how it affects housing, and what I think about it as a business for landlords and tenants as well for that matter.

What is Airbnb?

Airbnb is a website where you can put your house/room/apartment up for rent for a few days/weeks or months and they charge a fee to facilitiate this process and perhaps offer some measure of security if things go horribly wrong. This property manager rented out his downtown condo for $2000 per week and got something he didn’t expect. In fact there is an entire website ( devoted to posting stories about what happens if things go horribly wrong for Air bnb hosts or travellers.

Ostensibly this was designed for friendly people who wanted to share an extra room or a couch with a similarly friendly traveler needing cheap digs for the night and a shower. However, this hallowed idea has morphed into a system where 2/3 of the listings are for fully empty homes and condos and some professional hosts who buy homes solely for the purpose of Airbnb.

It’s not like bed and breakfast of short term furnished rentals are new. They are not. What is new is that there is now a website aggregator that makes it easy and simple to find a place or post a place for rent. Anyone who has enjoyed the services of your average hotel can understand the attraction of landing somewhere and winding up in a home with a place to cook and the comforts of a nice place to live for the same or even a lower price than a motel or hotel.

It’s a bit like my property management business, I manage properties but instead of being in one spot, we have rentals scattered about the GTA. Airbnb is a hotel with rooms  in random people’s homes, condos, all managed by the world’s quirkiest concierge. Airbnb for their part claims they are just a facilitator, Tinder for travellers.

Stranger Danger

Let’s just admit that Airbnb wouldn’t even be a thing if 95% of the time the transaction wasn’t pretty good.  The way the website is designed introduces you to the host or the traveler and leads to a greater sense of security. Most people are pretty decent so it works. However there are some abusers and criminals like Robert Charles Reid (currently wanted) operating in this space and obviously all the condos are cracking down on Airbnb activity.

Risk Management

I’m not against Airbnb at all, in fact, I think it’s a valid business; however, just like other short term rental situations such as student housing, short term rentals and hotels it is undeniably riskier than renting a house long term to a stable professional couple.  The numerous transactions increase the risk because if even 1% of your rental transactions end in a problem obviously you are going to deal with problems a lot sooner if you rent your house for 3 days at a time rather than 2-3 years at a time.

Hotels hire full time people to make sure situations stay under control and even then you get some serious problems. Condos have a concierge that is usually 24 hours and that means that it is very likely you will get caught. If someone rents a room in your house, you are there to supervise the people, but 2/3rds of people renting on Airbnb are renting their entire house/condo space.

This is what led to the discovery that my tenant had decided to rent out his condo and terrace for birthday parties. This yokel couldn’t even be bothered with giving over the keys himself, preferring instead to use the concierge to manage that part of the business for him. After the police became involved with one of these rental situations, the building manager and I worked together to evict our friend and stop his unauthorized renting of the space.

The really wrong part about tenant doing Airbnb is that they have no skin in the game. They do not own the house and in some cases rent the house just for the purpose of Airbnb like one guy who tried to rent a house from me at Yonge & Eglinton. If the house has $30,000 in damages it is unlikely that you will recover the money from your tenant.  So they make the profit and you the landlord home owner take the risk. If the tenant is upfront about disclosing the information, and is properly insured, no problems but that is not often the case.

Yield & Work

One the most interesting fact that arose in my conversation with Dr. Guttentag is that Airbnb hosts do not seem to last in the system. (They turnover 75% new hosts every year. < Corrected) They turnover a high percentage of new hosts every year. (One study found host churn of one-third within just six months). That is pretty easy to understand once you know a bit about business. There are a great many businesses that do not scale well or at all. You need a certain amount of skill and savvy to have a business enterprise but to grow a business you need more people to work than you because you can only do so much work, after all you need to sleep and it might be nice to have a vacation every once in a while.

With Airbnb, you make more money but you also do more work. Every time a traveler leaves you must clean, sort, take the keys, hopefully wash the bedding or you must hire someone to do it for you. You can take my word for it, cleaning people are not that cheap and not that reliable. If you rent your place for $200 per night and you need to give $100 to the cleaning lady, it’s not as profitable as if you do the work yourself.

I tried to figure out how I as a manager could take advantage of the trend and I like to pay myself a living wage, and get paid travel time down town and I don’t like cleaning and know how unreliable cleaning people are, and so… I couldn’t figure out how the owner and I would both make more money then a regular rental and so I left it to the purview of the people who do these things the best, owner/operators. You may be able to find managers, but if they don’t make a living wage you are unlikely to keep them over time

I have known a lot of vastly successful student rental and short term rental operators and all of them self manage and do most of the work themselves. There’s just not enough money in the business to hire someone, manage them and make a profit worth talking about. So Airbnb doesn’t scale, not in my mind anyways.

It doesn’t matter how much you make, it also matters how much you spend and once you start hiring people your entire profit disappears.  I hear echoes of past hosts talking about how it was all fun and games until they had to clean vomit from the toilet.

In any case, this is not a “passive income” business.

Symptom of a Greater Problem

So why are landlords/innkeepers/airbnbers so desperate for the extra money? The reason is the eternal problem of wanting to be in business to make a profit. Landlording is a business. However; tenants no longer pay enough rent to cover the expenses. Over and over I hear landlords losing money, the last landlord’s cash flow is lower by $600 per month.

Landlords are expected to suck it up because the asset itself is going up in price and landlord are rich, but in reality someone needs to put in that $600 per month in negative cash flow.

Ontario law pretty much sucks a lot when you consider how long a tenant can live for free. Much better to not have to deal with the Landlord & Tenant Board and if your tenant is an entitled asshole, he’ll be gone in a few days so who cares.  These are the attractions of Airbnb, that and the allure of full bookings at a maximum price.

The appeal of actually being able to cover your mortgage, property taxes, insurance and even make some money is very attractive but like similar social sharing/work like UBER the reality may not add up to the promised profits unless you cut corners like keeping your vehicle insured for personal rather than commercial use, or renting out your condo when it’s not allowed by the building. It’s not a business model that is scaleable or sustainable.

Airbnb Is Extra Housing

Critics say that Airbnb is removing housing from the market, this is true but it’s not actually affordable housing that’s being removed.  Airbnb is actually the luxury market space or the for sale space. It’s just not true that people will start renting their condos out for any rent no matter how much money they have to pour into it. Outlaw Airbnb and all you end up with is a bunch of high priced condos and houses for sale on the market. The people who are performing all this work to try to break even or make a profit are not going to be happy to take a loss and may not be able to take a loss.

It reminds me of a guy who had 5 houses as student housing in a condo complex and the board outlawed student rentals, he sold them all after I told him he coulds only get $1000 per month.

No one is going to start renting their condo units for affordable housing. It’s bad enough and for every owner there is a breaking point where the negative cash flow causes them to sell. No need to belabor the point that it doesn’t scale.

Airbnb – A novelty not a business.



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