My first guest blogger EVER is someone I have known forever, through middle school, high school, and university. Stephanie Kim is 31, currently living in Ontario with her husband and minpin, Mandy. They have 3 investment properties in 3 different cities. Fun fact - I recently got engaged on her birthday. And forgot to wish her a happy birthday because I was wrapped up in my own excitement. Sorry Steph :)
“Success does not consist of never making mistakes, but in never making the same mistake twice”. – George Bernard Shaw
In 2013, my husband (fiancé at the time), our amazing dog Mandy, and I decided, after living in our three-bedroom bungalow for four years, that we wanted to explore investment properties and to grow our equity as part of our retirement plan. We started talking to friends that had investing experience and began researching the right way to get into the market. My husband had purchased our house in 2009 and we decided that we would move out to rent the house and find a duplex to move into. We began researching comparable rentals to our house and comparing numbers. The internet is a great way to find how much you can list your rental for, as well as to find prospective tenants. We chose to list our rental on Kijiji, as this platform was the most popular for our area (rural Ontario). We quickly found tenants for our home.
Our tenants were a family of five originally from Australia that had a little Pomeranian dog. Doing what we thought was our ‘due diligence’, we requested first and last months’ rent as well as a reference from a previous landlord. When the day came to hand over the key in December 2013, the father of the family, who I’ll refer to as Patrick, arrived with one of his daughters and provided cheques for the first and last months’ rent. In Ontario, the only deposit that a landlord may collect is a rent deposit and the amount of a rent deposit shall not be more than the amount of rent for one month. As well, the rent deposit can only be applied to the last month’s rent. Patrick was a man with a larger build and spoke down to me, but in a very polite manner. I had a nagging feeling that there was something not quite right about Patrick, but could not place my finger on exactly what it was. We would learn later that this family we had moved into our home had a long history of not paying rent and trashing any rental they came in contact with.
Lesson #1: Have an in-depth application process for potential tenants and pay attention to your gut!
When I got home, I took a closer look at the cheques provided to me and noticed that they were not in Canadian currency, but rather in Australian dollars. When I went to the bank, I was informed that they are required to put a hold on foreign cheques for 30 days or longer. Due to the holidays, I immediately contacted Patrick and requested an alternate form of payment for rent, but because I had already handed over the keys and possession of the unit, I was essentially stuck.
Lesson #2: Always make sure that the payment is valid!
What happened over the next month was a back and forth with Patrick via emails and face-to-face meetings, attempting to collect rent. Patrick kept insisting that he could only do cheques and that, while they had a credit card, they could not withdraw large sums of money but would try for a wire transfer instead. However, this wire transfer could take two weeks. Patrick also kept stating that legally he had paid rent and that just because our bank chose to put a hold on the cheques was no concern to them (THIS IS NOT TRUE!)
Being new to the landlord game and unfamiliar with the Landlord and Tenant Act in Ontario was likely why we allowed the charade to go on far too long. Also, being naturally trusting did not help my case. The biggest lesson learned was that when a tenant issue comes up, don’t delay the paperwork. You need to get on that ball right away!
Lesson #3: Familiarize yourself with the rules and regulations of being a landlord in your province and serve your tenants with any necessary paperwork right away!
Of course, bad things always happen when I’m on my own. In January, my husband left for a business trip for about three weeks. During the first week, I got word that there was septic backup in our basement, which not only damaged all the flooring and drywall in our basement, but also our furnace. Normally you need to provide written notice to the tenant before entering a rental unit, but because this was in a case of emergency, no notice was required. The entire following week was spent with our insurance company and our contractors trying to repair the damage and sort out the insurance claim. Side note: I am incredibly thankful for the friends and community connections that came to support me and provide guidance during that time and for Mandy’s unwavering love as I tried to deal with my tenants from hell.
After weeks of stress, I finally served the tenants with a N4: Notice to End your Tenancy Early for Non-payment of Rent as well as an N5: Notice to Terminate a Tenancy Early as the tenant had wilfully and/or negligently damaged the rental unit. By scrutinizing Patrick even further, we discovered that he and his wife had provided us with false first names and that his vehicle had been reported stolen. As well, he had done the same thing to another landlord approximately 30 minutes away and still owed the landlord over $7,000 in rent and damages.
While the process can seem like it takes forever (and it is lengthy!), we finally had a Landlord and Tenant Board (LTB) hearing. The best advice going into a hearing is to be prepared; you do not need to hire someone to represent you. In preparation, I called the number available for landlords and got advice on my rights in the situation, then called the number available for tenants and got advice on tenant rights as if I was a tenant in the same situation. Knowing the rights for both parties was incredibly helpful in building my case. As well, it was very important to have three copies of any document or picture you have: one copy for the judge, one for yourself, and one for the tenant. We also had witnesses that came to the hearing to corroborate our case. Writing out a detailed timeline for yourself will help immensely with keeping facts straight during the proceeding, and it’ll also help to deter any nervousness during the hearing. Following the hearing, we actually received a mini round of applause from some of the other landlords in the room because of the extensiveness of our case, how prepared we were, and the lack of valid arguments on Patrick’s side.
Sadly, in the end we did not recuperate our costs from the few months that the Australians lived in the house. What we did do however was change our tenant vetting process. Our application form requests references from the last two landlords at a minimum, and we often request employer references as well. We also request information to complete a credit check. We remain extra diligent with payments and with paperwork when something doesn’t seem quite right. I am happy to say that we now have three amazing tenants in three different rental units :)
TLDR - Takeaways:
1. When vetting tenants ask for more than one reference, complete a credit check, and always listen to your gut!
2. Make sure payments are valid before handing over the keys.
3. Familiarize yourself with the rules and regulations of being a landlord in your province and serve your tenants with any necessary paperwork right away! By doing this, you’ll go into any court proceedings more prepared and have a better outcome.