Hi everyone, I’ve been so busy that even if I cloned myself I’d be overworked. In the meantime though I have a couple questions from tenants about how the rents affect them and their difficulty finding suitable accommodation.
Vancouver Tenant Asks…
I was wondering if you could comment on rents in Vancouver… Specifically 3 BR Plus, Detached, townhouses etc. They seem to range from $2000 to $20000 a month… unbelievable…
Given that the the average total household income (before taxes) here is about 80K do you think there is a market for rents this high? I look on Craigslist and where you would be hard pressed to find 20 detached 3 bedroom homes for rent just 2 years ago, there are thousands of them today.. Am I being hopeful in thinking this is going to put downward pressure on rents?
Are all these accidental landlords nuts? Or are the rents justified?
The selling price of Vancouver homes is astronomical and unsupported by any fundamental numbers. I expect to see a crash in Vancouver I just don’t know when. What you’re complaining about is specuvestors. These are people who buy homes praying for capital appreciation. After all the market has been climbing for years now. So far they’ve been right but one dark dreary day all these
landlords gamblers will be very badly burned by this mania.
I have never seen so many people think that property investment is the road to riches and I’ve never seen so many old savvy landlords sell. They are sitting on the sidelines in cash. They want to buy alright but they can’t find anything worthwhile. Funny thing about these old goats, they want to make MONEY. It reminds me of Warren Buffet, who wants to shoot fish in a barrel after the water has run out. They wouldn’t and don’t buy in this market. They’ll be buying later when prices come back to earth and you can make money on a rental property.
The facts are that renting in Vancouver is a gift as all these specuvestors buying at stratospheric prices and renting the properties out at less than 50% of the carrying costs. If you look at what these people are paying to buy these properties, the rents are way too low for them to profit from this business. The one trick pony is that the prices of these properties will go even higher than they are now and that’s how these landlords will make money. Unfortunately they can’t make money the way landlords used to by renting the place out and collecting the rents.
To answer your question about the proliferation of these landlords and the amount of vacancy I can tell you that it certainly will end up putting a huge downward pressure on the market. It’s the same here in Toronto. You see it really clearly in the condo market. I used to rent out a newer one bedroom condo for about $1200 five years ago but I would mostly rent them in 10 days max. Now I still them for $1200 but inflation means that I’m actually renting them for less today and they take much longer to rent to decent people. Rents in real terms are going down in Toronto even as properties go up in value. The problem with Vancouver is there isn’t a whisper of a chance that these landlords will break even on their investment. So they’re already in left field, it’s hard to say how long each landlord is going to hold out on their price and when they will reduce the rents. The rental market speaks to them but as far as I’m concerned they’re already crazy so it’s really difficult to predict what the nutters will do, how long they will hold out before they lower their prices and so on.
The other problem with renting off these people is they have no idea what being a landlord means, what their responsibilities are, and they just can’t wait until some bigger idiot buys from them at a higher price to rent it out for a greater discount to tenants. For someone like me who’s been around for years, the market in Toronto and Vancouver is obscene. It’s so far removed from the reality of what this business is about it makes me sick. If you can’t make money as a landlord from your rents, you should not buy the place. Period.
Speculate all you want but call it what is. The major problem as I see it is that these landlords are not being honest with themselves about what they’re doing. Tenants do get hurt in this market as they have to move over and over again, families do not have a stable home. This pushes more tenants into being buyers just because they want to stay rooted in one area. Once you have kids this becomes a real priority because you don’t want to be changing schools every year. I’ve even heard of landlords who will just sign a 6 month lease because they plan to sell.
Tenant On Assistance Asks…
I have a few questions regarding rental units cost and who the units are available to. First if you have a minute, I would suggest you take a small peek on kijiji Thunder bay. It will help you see what we have for rental units in this city. we have a College and University, which seems to make landlords jump at the opportunity to rent units geared to having only students renting each room between $400 and sometimes up to $600 per bedroom!
I understand there is many students who can group together and afford these places… But what about the average people like myself ? I am a single mother working and I am also on social assistance. I’ve been on a geared to income housing list for just over 2 years. My last landlord kicked me out to allow his brother to move into the unit and now I am sharing a room with my 4 year old son in storage in a friends basement.
I’ve applied to a few places even found a potential roommate to help … but I have been denied at the units I’ve applied for. One told me that my credit rating wasn’t high enough. I was unaware they could check your rating in order to rent a unit. If I had outstanding credit I would have just applied to buy my own house since mortgage and property tax is far cheaper then renting. Even my social worker told me she bought a house for this reason and her friend who was also in social work had to get a roommate just to afford rent in this city.
Is it fair to charge so much for rent? The units are rarely well kept in this city. I did live in Edmonton however there was a subsidy for lower income families where they would help you with the rent by up to $550! Here I get $100 and I cant find a 2 bedroom home for less then $800+ utilities and my budget just cannot stretch that high… I would really like advice as to what I can ask landlords as far as trying to rent a unit.
I take very good care of my home and I am aching to find a suitable clean unit that can be safe for my son as well. I find it odd Landlords would rather jack up the price and rent to messy careless students for the school term then fix everything and start again, as opposed to having one long term person who will take care of the property and maintain the unit as though it were their own… I hope I am not rambling on… I am just so confused as to why its so hard to be able to find a safe place to live. Any advice would really help, I need to know how to talk to landlords to let them know I am not going to ruin their investment.
While I understand your frustration, I can tell you that it is fair to charge that much for rent. The problem you are encountering is far more than your budget.
Tenants who are on assistance cannot have their assistance garnished. Last year in the entire portfolio I managed 100% of the people who were evicted were on Ontario Works. In that year I have about $50,000 or more in arrears I can never get back. While I do have tenants on Assistance who do pay the rent, my policy is to avoid having to go through evictions because of the loss of energy, time and money. If 100% of the people who I evicted are on assistance doesn’t it make sense that I would avoid renting to them?
Furthermore of those evictions, many of them also had a social problem component. So in addition to not paying their rent, they had loud parties or damaged the place. In one case the police were called too many times to count for everything to loud noise to their guests fighting in the halls and even after a year of getting parking tickets, they couldn’t manage to park in their own spot. One was a drug dealer. In all cases the apartments were completely trashed when the sheriff gave them back to me.
A while back the government made it possible for landlords to get the rent paid to them directly. This allayed many a landlord’s fears about not getting paid rent. A short time later the government decided that the tenant could call and cancel at any time. I had one poor landlord who had a tenant coming from out of town who got the first month’s rent. When the tenant came to move into the apartment, she didn’t have the last month’s rent. She called her worker who apologized for not mailing it out and promised to mail it right away to the landlord. The landlord gave her the keys. A few days later when she didn’t get the check from Ontario Works for last month’s rent she called the worker back. The worker refused to give her any information because of the Privacy Act. It turned out that the tenant as soon as she had the key got the worker to send the money for the rent directly to her. The landlord never did get paid.
That’s why no one will rent you a place. Many landlords would much rather leave a place empty rather than rent to someone on Assistance. It’s just too risky, evictions take too long and the chances of getting your place trashed are high.
My advice is to work hard to get a job and get off assistance. Then you will no longer have this problem. It takes about 4-6 months to evict a person. In that time, the landlord still has to pay his or her bills, the mortgage, property taxes, repairs and so on. Once a landlord goes through this once especially if there is a social problem component or damages, they will much prefer to leave the apartment empty rather than take a chance on a tenant.
Once the government either takes responsibility for this risky group of tenants by making sure the landlord gets paid the rent and reimbursed for damages to the apartment or makes it far quicker to evict people limiting their loss, you’ll find it easier to get a place. The only way landlords can make some money is through rents. They are not going to subsidize your rent. It’s supposed to be more expensive to rent than to buy. That’s because the landlord has to make some kind of profit because they invested their money to buy the place.
I’m sorry if my advice is not what you wanted to hear, but that’s just the way it is. Assistance is no way to live, you owe it to yourself and your son to make a better life for yourself. Good luck.