Red Flags
The tenant selection process is a time-confusing process that needs to be performed thoroughly when selecting tenants for your rental property. What are some of the red flags you should look out for?
Recently we were reviewing an application for one of our clients. We contacted the tenants’ references and most were good references. The tenant landlord refused to speak with us until they had given notice, which made us wonder what the relationship is between the two parties.
Due to the landlord not speaking with us we requested further information and the tenant sent us six months of bank statements showing they have paid their rent on time each month. This was great. We could easily see that they had paid the rent on time. What the tenant didn’t notice or realize is that two of the six months his bank account was in a negative balance, meaning they had spent more than they brought in. On one of the statements it was clear that their car payment was NSF, the most recent month. We elected to perform the credit check and found further information that made us elect not to move forward with this applicant.
The credit report does start with a “score” but that is not the only thing one should review on the report. In this case the score was poor. The report also showed that they had a high ratio of credit utilization used. It showed two credit cards and another loan, which with some online research you can see this is from a short term payday loan. All of the debt added up to more than one year’s salary for the applicant. All of this information allowed us to make a decision not to rent to this person who was showing high risk of not paying the rent on time.
It is not one thing that makes a decision, it is all the factors involved in the process of selecting a tenant.
Our advice to tenants would be not to submit bank statements that show your account in a negative balance. This is not the first time I have received information like this from an applicant.
Need help managing your investment properties. Cartref Properties can assist you, call today to discuss your needs. You can find more information about us at: www.cartrefproperties.com
Who does the rental manager work with?
Cartref Properties provides rental management services to investor owners renting their properties. What does this mean?
We enter into contracts with owners of the rental property to assist them in finding tenants for their properties. We advertise the property for rent, show the property to prospective tenants, screen applications and select tenants for the property. We then complete the move in process at the start of the tenancy. During the tenancy we manage the communication between tenants and landlords. At the end of the tenancy we complete the move out process as required under the tenancy laws.
We are often asked by Real Estate Agents to help their clients find a rental. A rental manager works for the owner of the property and therefore we are permitted to work for tenants who are looking to rent a property. The ironic situation is that licensed Real Estate Agents who are permitted to assist tenants to find a place to rent, often ask us to assist their clients find a rental.
Why are rental managers not permitted to assist a tenant locate a rental property. This would be considered dual agency if it was one a rental that they were managing for their clients which is prohibited by the real estate council rules.
If you are an owner looking to find a tenant for your property a rental manager can assist you with this task. If you are a tenant looking to search for a rental, a rental property manager can’t assist you with this task. They can show you properties they have for rent, but as they represent the owner, their client they are not able to provide advice on the rental of the property.
Need help managing your investment properties. Cartref Properties can assist you, call today to discuss your needs. You can find more information about us at: www.cartrefproperties.com
Residential Tenancy Laws.
The BC Provincial government has announced plans to amend the Residential Tenancy Act to help protect tenants. We wanted to try to explain why they are making these suggested changes.
These changes include amendments restricting rent increase when a minor is added to the home, providing tenants a longer period to dispute an eviction notice and increasing the time an owner must occupy the rental property after an eviction for personal use.
These changes are “targeted” to protect tenants from bad landlords. Governments have in the past and will in the future change laws when the general public has concerns over how they are being treated. Many government changes are reactionary to actions landlords are doing at that time and how they are perceived to be manipulating current legislation.
The proposed change of restricting landlords from increasing the rent simply due to a child being born is due to many landlords seeking options to increase the rent outside of the tenancy agreement. Why are landlords adding an increase in the rent when a newborn child is born”. The landlord’s argument is that more people creates more wear and tear on the property. A new born child is not going to add very much wear and tear, so is this really necessary. This is being brought forward due to some landlords increasing the rent by a significant amount. If the increase was reasonable, tenants may not care about it. Cartref Properties advises landlords not to increase the rent based on a child entering the property.
Why has the government proposed a change of increasing the length of time from six months to one year for personal use occupancy?. Many landlords have evicted tenants for personal use with the full intention of re-renting the property after six months or sooner if they can find a reasonable reason. An eviction for personal use is intended to remove the rental unit off the market. This change is a reaction to many landlords trying to manipulate the tenancy laws and re-rent their property at an increased price while the economy is pushing rents higher. Currently there is an over supply of products and I am sure we will see less of these evictions in the next two years. Cartref Properties won’t work with a landlord who wants to evict a tenant under three conditions and re-rent the property in the less than required time frame.
Providing a tenant a longer time to challenge an eviction slows the process down as some landlords try to use the quick times to evict a tenant. It appears this increase is going to be related specifically to the personal use evictions or two month notice as that is the eviction that currently has a 15 day requirement to dispute the notice. There may be a time when a landlord tries intentionally to send a tenant a notice knowing they are not going to be able to dispute this notice due to being on vacation or some other reason. If the eviction is legitimate it should not be an issue for a landlord if they dispute in 15 or 30 days. For these evictions the government needs to speed up the hearing as it impacts many people outside of the tenancy including purchasers and or family members who are expecting to move into the property. A better solution here would have been to extend it to a three month notice for personal use, still with one month’s free rent. That would give the tenant longer to find a place and time to dispute the notice and have a hearing.
What are other areas the government could target in the future. Cartref Properties has experienced many landlords removing parking stalls and storage lockers from the tenancy agreement and renting these for an additional cost to the tenants. This provides the landlord the option of increasing the cost of these to any amount as they are outside the agreement. Although this provides landlords with potentially more revenue in good times when tenants have less choice of rental properties, it creates a dilemma during the tenancy. The parking stall and locker are not part of the agreement and the tenants may do things to the stall and locker which you have no right to evict them for as it is not part of the tenancy agreement. This potentially means more headaches and a need to pursue correcting these actions through other legal means including the Civil Resolution Tribunal. Creating an agreement that creates animosity between a landlord and a tenant often leads to a negative experience for both parties. It also leads to tenants leaving when the market changes and they are able to find lower rent that includes these amenities with their tenancy.
If the tenant chooses not to rent the locker or parking now the landlord needs to put more effort into renting that stall or locker to another person. In a stata corporation that must be someone residing at the building and this creates another relationship for the landlord to manage. This relationship would also be outside the tenancy agreement and require other forms of legal recourse if there was a dispute between the two parties.
As a landlord it is important to understand the laws, and that they can change at any time during your tenancy agreements. Cartref Properties have found that when landlords and tenants both follow the laws, the experience is a positive one for both parties.
Cartref Properties can assist you, call today to discuss your needs. You can find more information about us at: www.cartrefproperties.com
What kind of housing are we building?
The lower mainland is always considered an expensive place to live and governments are saying they need to build “affordable housing” . The question is what does that mean. More and more condo buildings and rental apartment buildings being built in the lower mainland are advertised with all these great amenities including fitness rooms, recreation rooms and other common area spaces. Is that the best place to build these facilities?
If we are building the amenities inside the buildings and limiting their use to occupants in that building is this the best way to serve the community?. Many of these in building fitness rooms and amenity spaces are not used to capacity or even close to capacity. The other effect these amenity rooms have is municipalities are nto building community centres or parks for the local area based on the amount of people now in that location. Is this creating a more segregated population of people who only interact with other people who live in their building?. With the increase of people working from home and the buildings having these facilities, people no longer have a third place to meet and socialize with other people in their community. Housing was not designed for people to spend all their time in that location and not interact with others in the community. The less we interact with each other the less understanding and tolerance we develop for each other.
My request to the local governments is don’t approve developments with all these amenities. They take up valuable space that could be used for more units in buildings which will make housing more affordable and won’t create segregated communities. Instead, require developers to contribute to building community centres and outdoor spaces all people in the community can utilize which builds a better community in the long run. Everytime one of these developments are approved people who live in buildings without these services are being denied community resources.
Cartref Properties can assist you, call today to discuss your needs. You can find more information about us at: www.cartrefproperties.com
Rental Market Condition
Governments are often late to the table to make changes when an issue is negatively affecting the market. The Federal Government raised the interest rates slowing the housing sales market. The provincial government has made multiple changes in an attempt to add more rental products to the housing market with the expectation this will reduce the rental prices. They recently introduced a new tax, which is a “Flipping Tax”. The flipping tax is a 20% tax on the gain in the value of the property sold in less than two years of ownership, and takes effect January 2025.
All of these changes are having an effect on the rental market and the biggest one is the soon to be ban on short term rentals in BC. The deadline is May 1st which means after May 1st properties currently being rented as short term rentals will be prohibited. We expected many of these products to come to the market though it appears to be a larger number than anticipated. We have seen a significant increase in the number of furnished rental properties on the market seeking long term tenants indicating they were short term products before. This combined with the slower sales, a number of developments which recently completed where owners may have elected to sell the product but are turning to rent since the sales market is not giving them what they anticipated has increased the rental stock significantly.
This has created a market where tenants have time to search for the best option for them. We are seeing more and more prospective tenants indicating they have not given notice, their unit is not being sold, they are not in a hurry to move, they are just looking for a better option than they currently have. This is putting downward pressure on the rental prices. At this time it is unknown if there are more short term rentals who are still renting until the May deadline and will then enter the market or if they will convert to the selling market. We anticipate some current advertised rentals and future products will move to the selling market if they are unable to find a suitable tenant in a reasonable time frame. Many rentals are owned by “small individual landlords” and may not be able sustain a long term vacancy.
It will take longer to find the right fit.
These factors are going to increase the vacancy rate to a much higher level than what is normal for Vancouver and the surrounding area. We think eventually more of the short term landlords will convert to selling, or it will cause other landlords to sell taking product out of the rental market. We are unsure how long this will take to adjust the market though we anticipate it will be through the summer and into the fall now before we see changes. It is these times where it is more important to be diligent when selecting a tenant
Cartref Properties can assist you, call today to discuss your needs. You can find more information about us at: www.cartrefproperties.com