The rental market has been hit hard by the pandemic. With Ontario experiencing a downward trend in the number of reported cases and several vaccines rolling out across the world, more investors are becoming hopeful of the rental market and general economy recovering. Whether you’re in Montreal, Vancouver, Toronto or any other major city in Canada, rental investors of all sizes have experienced the need to quickly adapt to the current market conditions. Here are some rental market lessons taught by the pandemic that you should consider as a landlord.

Run the numbers

The pandemic has taught us the importance of contingency planning and watching financials closely – or get used to being stressed out every time the bills are due. As a landlord, you should have a clear understanding of your own break-even rent price, factoring the following:

  • Mortgage payments
  • Property taxes
  • Utilities
  • Repairs and renovations
  • Landlord’s insurance
  • Building maintenance fees
  • Vacancy costs and move-in incentives
  • Professional fees, such as for tenant placement and property management

As we pass the one-year anniversary of the pandemic outbreak, we continue to notice more and more tenants in Toronto requesting early lease termination, assignment or subletting, as well as vacant units sitting on the market for longer. Keep yourself familiarized with your unit’s market price and annual rental increase potential.

In 2020, most Ontario landlords of rent-controlled units could increase rents by just 2.2 per cent and this year the rent freeze is in effect. Because of this, you should ask yourself if you want to heavily discount the rent to fill your vacancy ASAP, or keep it on the market for longer, possibly with move-in incentives, to get a higher base rent.

Keep track of all your costs and always have a backup plan!

Flexibility is key

It is important, now more than ever, to be flexible in the rental application review process. Many parts of the economy, including the rental market, have changed drastically due to the pandemic, and so have people’s financial situations. As a landlord, try to consider broader credit score ranges and income types in your tenant applicants, as well as easing up on some of the rules you have previously set – for example, pet restrictions.

Of course, that doesn’t mean that you should dismiss any due diligence – you should always conduct independent background and credit checks, including reference checks. Remember, a great tenant will not only pay rent on time, but they will also maintain the property and most importantly, give you a peace of mind. Don’t make a hasty decision, especially when many landlords are struggling to deal with their local tribunals.

Better customer service at every step

When you’re managing a rental property, you’re running a business. You should see tenants as your clients. Treat your tenants, both prospective and current, like you would treat an important client throughout the process:

  • Whenever possible, offer your prospective tenants options for viewing availability, since many work from home now and don’t follow the typical 9-5 schedule. Along with in-person viewings, you could offer virtual viewings via Zoom, Google Meet, WhatsApp and other conferencing platforms.
  • Ask the prospective tenants for their feedback during the viewings. See if you could make any accommodations before your tenants move in, such as applying a fresh coat of paint, paying for move-in expenses, or getting the unit professionally cleaned.
  • Surprise your tenants with a welcome gift, whether it’s a bottle of wine, baked goods or day-to-day products like soaps and detergents, complemented with a hand-written card. Such small gestures go a long way.
  • Check in with your tenants from time to time to see if they have any questions or issues about your property.

A little kindness and respect will go a long way when you’re looking for a tenant. Keep that in mind and you’ll save yourself a lot of time, energy and money.

Safety first!

With current social distancing and safety measures, many people are wary of open houses. Think about how to safely host viewings, such as having people at a reduced capacity (for example, a two-person maximum), requiring everyone to wear masks indoors at all times and providing hand sanitizers before they enter the unit. If your current tenants do not feel comfortable (and understandably so) with in-person viewings, take advantage of conferencing tools to host virtual viewings. We’ve seen quite a few tenants willing to do the viewings on their landlords’ behalf as well, to minimize entry into their unit, so talk to your tenants!

Work with your tenants

In the current market, finding and holding on to a good tenant has become a challenging quest of its own. If you are lucky enough to have great tenants, you should try to do everything you reasonably can to keep them. You may consider postponing any rent increases or offering payment plans (discounts or deferrals for example). Even the slightest accommodation for your tenants could go a long way in keeping them happy and maintaining a positive relationship with them.

As a landlord, you must prepare for scenarios where a tenant either doesn’t pay rent, requests for a rent payment arrangement or decides to break the lease early. Throughout the pandemic, we’ve noticed more cases of tenants looking to get out of their leases early. With classes now being offered virtually, many students don’t need to live close to their schools anymore. Many tenants are also finding cheaper rental options and some decided to purchase. Others are moving into the suburbs, as lifestyle in the downtown core is no longer the same and they no longer need to be closer to their offices. Unfortunately, there were even some cases of tenants taking advantage of the current eviction ban and case backlogs at the Landlord and Tenant Board. To mitigate this, and as intuitive as it may sound, treat your tenants to the best of your ability.

Keeping a good tenant happy is more important than ever. Little acts that show you care about them and the property will help you in maintaining the business relationship.

We understand that the pandemic hasn’t been easy for everyone, especially for landlords across Canada. Although no one has a crystal ball for foreseeing just when things might go back to the pre-pandemic normal, it’s important that you always do your homework and stay optimistic.

11 COMMENTS

  1. There is a telling statement in this piece, being: “If you are lucky enough to have great tenants…”, indicating the average—if not most tenants—are not great. Then one has to deal with government bureaucrats who have never been in the rental business who tell landlords what they can or cannot do, and who often side with tenants in tenant-landlord disputes due to their inherent bias against landlords. It’s a nasty business often. Been there, done that. Never again. For me, the money wasn’t worth the hassles.

  2. I hear what Bob is saying above, With rent freezes, rising taxes, huge hassles in getting very expensive insurance, demand from other tenants looking, and the general attitudes of governments that landlords should “babysit” tenants – why wouldn’t landlords dump their properties? Private property rights are eroding in our country and the charge is being led by our elected officials in order to buy votes.
    Doesn’t anyone realize the sacrifices made over the years by “long-haul landlords” to provide housing for tenants in places that they could not afford to buy? Like vacancies, repairs, bad tenants, high mortgage rates of the past, saving down-payments, pets using the units as “litter boxes”, calls in the night over domestic disputes???
    Maybe it is time for government and tenants to give their collective heads a shake before these landlords call it a day.

  3. Not sure how long some of my landlord friends in Toronto DT will keep their investments. They ended up renting $200~400/month lower than what they were getting before, and their units are rent-controlled too..

  4. I am thinking this article only applies to the GTA as in most canadian markets right now the rental market is extremely strong, with low vacancy rates and good monthly rents. As well rental properties have been selling for a premium . The world doesn’t revolve around toronto so there may be many others reading this article who think what is the author talking about.

    • I agree. I own multiple multi-family properties outside of “Toronto-proper.” Rents are rising, vacancy is near zero and I’ve literally written a 400-page book on the “Dark Side of Residential Landlording.”

      It is a landlord’s market but it’s also a minefield of potential extreme financial hardship, legal travesties, and government incompetence. A lot of this crisis is a consequence of multi-decade failures by every government at every level to satisfactorily address housing availability and, as subsets–housing that’s affordable as well as “Affordable Housing” (subsidized housing).

      I receive perhaps 100 inquiries and an average 3 to 6 applications for every vacancy.

      BUT … tenancy fraud is escalating rapidly. Many of the tenants who are on the move may be doing so for reasons that a landlord might not want to inherit.

      Residential landlording in Ontario in particular is not for the feint of heart and filled with many, many unhappy surprises.

  5. What the pandemic has also taught us is that the current rental legislation is seriously out of date and that the Landlord and Tenant Board process in Ontario is badly broken. If the government has any interest in maintaining the supply of rental units in Ontario owned by small and medium investors, then the legislation will need to be updated. Many landlords have already sold and more will do so once they can evict their tenants as new owner-occupants buy these properties.

    • True Bob; the LTB lacks.
      If I can get damage cost claimed, evict a non paying tenant etc; Then I might consider a larger pool of tenants. Now a landlord has to be very very picky to protect their property. Rather leave it vacant.

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