Buying and renting out apartment in Toronto

[Wendigo]

Hi guys, I'm looking into buying a condo in the range of $190k to $250k and would like to rent it out. I've got relatives in Canada and they are all in construction business since years, so getting a mortgage shouldn't be too much of a problem. However I'll be most of the time outside Canada due to other obligations. I've got PR and I'm aware that I'm running the risk of losing my PR status if I stay too long outside Canada, but that is another story. On the other side I don't need a visa to enter Canada with my passport, so in the worst if lose my PR it's not the end of the world.

But how about renting out an apartment? Does anyone know if I need a special license or whatsoever to be able to rent out a property?
And would it make any sense to do so? I'm kind of afraid that renters could break down the kitchen or anything else and then I'll end paying $10k or more for repairs etc.

Do we have any landlords here that could share their experience? Thanks.

 

[Leon]

The problem with owning a condo and renting it out is that you have to have somebody to take care of it for you. If your relatives are up to that, cool. Otherwise, maybe you can find some kind of managing service to do it because there will be times that the tap leaks or the lock is broken or the window doesn't close and your tenants will call and expect somebody to come and fix it. There would also be a time when the tenants move out and you need somebody to show the place to the new tenants as well as clean up a bit after the old ones. In ON, the law does not allow you to hold a damage deposit so tenants often leave apartments a bit messy, not necessarily damaged but they often don't bother clean before they leave and sometimes leave some garbage and/or old furniture behind. The new tenants will not expect it to be clean but they will not expect to have to move old furniture out before they can move in.

Because you can't ask for a damage deposit, if your tenants break down the kitchen and put holes in the walls, then you have basically nothing you can hold of theirs. You could sue them but that's hard if you are not there and if they are the kind of people that break down a kitchen, they probably don't have any money to pay for it anyway.

 

[Wendigo]

Leon thanks for your very useful information. Appreciate it.

No damage deposit? That is really a downside from a perspective view of a landlord. One really has to weight the pros and cons of renting out an apartment I guess. Some people really take care of an apartment as if it was their own, whereas others don't give a damn.

It would probably be the best to know your tenants personally...

 

[Leon]

No damage deposit is very good from the prospective of the tenant. In Alberta, landlords are allowed to take up to 1 months rent in damage deposits and it's very unusual to get it back or at least to get all of it back. The landlord will actually make up damages or blame the tenant for damages that were already there to keep it. They do not even have to show any proof that they fixed anything. The only resource is to take them to court which most people don't bother with.

Having tenants you know can also backfire. They may feel that they have certain priviledges like paying the rent late, being loud etc. I lived in one building where one couple was always fighting very loudly and when we complained to the landlord, he said they were friends of his children and he wasn't comfortable talking to them about this. Instead he was getting bugged by the other tenants in the building as well as you would be bugged by other owners who live around your tenants if they are being loud.

 

[shakira2009]

Hi Wendigo, thank you for this thread, I'm actually considering the same: buying a place and renting it out while I live abroad with my Canadian husband. I'll wait until I get the PR though, cos I imagine the process being much easier rather than buying property without even having a residence visa.

Leon, thanks to you also for the information.

Having tenants you know can also backfire. They may feel that they have certain priviledges like paying the rent late, being loud etc.

Now that you said this, I heard that tenants in Toronto can literally stop paying the rent and you (the landlord) cannot kick them out because the law protects the tenants' rights better. Is this true??? If so, the landlord would have additional burdens because they have to do some kind of background check, right?

 

[Leon]

You would have to check what the law actually says before you buy a place to rent it out. You could actually look for the Ontario tenants board and find out from them, if you are a tenant and don't pay, what can be done to you. Start here: http://www.ltb.gov.on.ca/en/Key_Information/STEL02_111483.html

From what I know from people I've known, one woman was a day late with the rent and she immediately had a letter from the landlord evicting her with a 14 day notice. She talked to him and paid and it was fine but he said he always delivered eviction letters just in case. That was in Ontario. The other 2 cases were in Alberta, one building where I was living, the tenant forgot a pot on the stove and went to sleep, the fire department was called because of the smoke and they had to break down the door, the tenant was fine and there was no actual fire luckily but he was out of there pretty much the next day.

Another one I know was a friend of mine. He had a habit of being late with the rent and his landlord was a very nice guy, he'd just say pay when you can. Then at some point, his fridge breaks down and as is most common in Canada, the fridge and stove are the property and responsibility of the landlord, he phoned the landlord and asked for the fridge to be repaired or replaced. The landlord kindly reminded him that it was the 7th of the month and he still owed half the months rent but if he'd pay it, he'd have the money to get him another fridge. The guy was getting so used to being able to pay when he wanted that he thought this was not a reasonable request and phoned the tenants association. The tenants association advised him that being late with the rent was not a reason for the landlord to not fix the fridge so he put in a complaint, also about some loose tiles in the bathroom. Of course the next thing that happened was that the landlord showed up and said, here I am to replace your fridge and fix your tiles and here is your 14 day eviction notice for continually being late with the rent. He talked the landlord into staying a few extra days until the end of the month. I don't know what would have happened if he'd tried to fight it.