Real Estate

Rental Increase Rounding

  • Last Updated:
  • Jan 15th, 2019 7:09 pm
Deal Fanatic
Feb 29, 2008
6368 posts
1819 upvotes
jacnel wrote:
Jan 12th, 2019 9:49 am
But I’m not talking about that. I’m talking about people trying to go above the legislated limit.

And you people wonder why rent control was expanded.
And I CLEARLY stated the number should be exactly what the calculation says. No lower, no higher, but I'm not going to bitch over a dollar. Rent control again was brought in because of tenants not seeing the whole picture. They were too fixated on the few scummy landlords and not the abundance of landlords who charged fair rent and didn't raise rents too often. Same mentality that I'm talking about here. Too busy fighting over principal and not actually taking the time to see the entire picture. Well, now you have higher rents, more pissed off landlords and even more headaches when looking for places.
Deal Addict
May 12, 2014
1485 posts
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Montreal
Now that rent control has been implemented for almost all housing, those that don't raise every year are taking a huge risk: what if the next Liberal government institutes tenant to tenant rent control?

(Ie no market reset when a tenant leaves. This has been the law in Quebec for... 40 years?)
Deal Fanatic
Feb 29, 2008
6368 posts
1819 upvotes
FrancisBacon wrote:
Jan 12th, 2019 9:33 pm
Now that rent control has been implemented for almost all housing, those that don't raise every year are taking a huge risk: what if the next Liberal government institutes tenant to tenant rent control?

(Ie no market reset when a tenant leaves. This has been the law in Quebec for... 40 years?)
Precisely. LOL @ tenants saying landlords should keep the rent the same for 5 years. Complete nonsense.
[OP]
Deal Addict
Feb 9, 2013
1541 posts
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Mississauga
JayLove06 wrote:
Jan 12th, 2019 1:12 pm
Sorry, my units are rent controlled. I did not raise rents before the government put a cap on how much I could raise it. Now, I raise the rent to the max amount I can. Tenants can't have it both ways. You can't cry about wanting rent controls across the board then complain when landlords raise rents to max levels. You're a good tenant? Great. I'm a good landlord, why should I get less than market rent because you don't trash the place?

Tenants don't even understand the amount of crap landlords have to deal with. You can flat out not pay and landlord can't do anything about it. You can decide to own 5 dogs and not clean up, guess what? Landlord is on the hook. Landlord can't even take back their own place without paying a tenant. On top of that, those who are rent controlled can't even raise rent to recoup increasing costs.

But the tenant thinks the landlord should EAT the cost because the tenant is holding up their part of the agreement. So landlord should not raise rent for 5 years, then raise it 1.8% in the 6th year because you're a good tenant? Complete delusion.

You can't wage an assault on landlords then complain when landlords want to treat the transaction like a business. Before rent controls I didn't raise rents every year. With rent controls, I do. Nothing personal, just business.

LOL @ 4 years with no increase. You call that being savvy? Hardly.
Kudos !!!

There are good tenants, and then there are bad tenants. If there was no rent control, and the tenant is A+, I have no problem keeping the rent lower than market.
But what bad tenants are reluctant to understand is property taxes increase every year, utility companies increase their rates every year, maintenance increases every year.
If a landlord is kind enough to not raise rents, tenants need to realize it translates to landlords making less every year.

Honestly I rent just to help cover part of the mortgage. But if tenants make it difficult for landlords, I have no problem taking it off the market to save the headache. One less rental unit means one more tenant left homeless.

To end the thread, if the tenant is bad, they will get the full 1.8% increase of $732.96. They weren't considerate to help save on the massive hydro bills, so why should I be lenient to help them save $0.96.
Deal Fanatic
Feb 22, 2011
5197 posts
4813 upvotes
Toronto
JayLove06 wrote:
Jan 12th, 2019 1:12 pm
Sorry, my units are rent controlled. I did not raise rents before the government put a cap on how much I could raise it. Now, I raise the rent to the max amount I can. Tenants can't have it both ways. You can't cry about wanting rent controls across the board then complain when landlords raise rents to max levels. You're a good tenant? Great. I'm a good landlord, why should I get less than market rent because you don't trash the place?

Tenants don't even understand the amount of crap landlords have to deal with. You can flat out not pay and landlord can't do anything about it. You can decide to own 5 dogs and not clean up, guess what? Landlord is on the hook. Landlord can't even take back their own place without paying a tenant. On top of that, those who are rent controlled can't even raise rent to recoup increasing costs.

But the tenant thinks the landlord should EAT the cost because the tenant is holding up their part of the agreement. So landlord should not raise rent for 5 years, then raise it 1.8% in the 6th year because you're a good tenant? Complete delusion.

You can't wage an assault on landlords then complain when landlords want to treat the transaction like a business. Before rent controls I didn't raise rents every year. With rent controls, I do. Nothing personal, just business.

LOL @ 4 years with no increase. You call that being savvy? Hardly.
Same. I never once increased rent before rent control. I never wanted to risk the person leaving and having to find someone else which is annoying.

Now I increase the max every year, can't let it fall behind market rent too much.

I think an unexpected benefit is the tenants now pay on time without question every month and are extremely cautious in how they approach issues.
Deal Addict
Dec 6, 2006
4221 posts
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Toronto
Just do $732.96. You're over thinking it. It doesn't take any more time to write 96 vs 00.
Member
Jun 19, 2007
367 posts
86 upvotes
Halifax
JayLove06 wrote:
Jan 12th, 2019 6:29 am
I do not agree. Round up or down won’t break anyone’s bank. Why is there more of a push for the landlord to foot the bill? People think landlords can print money or something. Do the exact number. Done.
Staunchly disagree. So you've gotten you're extra $10 a month per your legal maximum rental increase. Let the good times roll? In terms of dollar's and cents that quantity of money should be a non-event. More impactfully, it sends a message that the tenant is merely a cow to provide milk, and that as the LL you're out to squeeze those udders for everything it's worth.

You say you want a purely business relationship that's all by the book, but how does that affect a tenant's behavior who otherwise picks up and changes a 25 cent O-ring to fix a leaky faucet vs you having to do it or calling out a plumber? If you have a tenant who can pay the rent with the regularity of a bank dividend, and saves you several hundred dollars in costs that would go to labour why would you go in there poking there bear which has very limited upside (An extra 1.8%/year - if everything else otherwise remains unchanged) vs even if you need to suffer 1 month vacancy because the principle of the 1.8% increase was enough to push them out the door? You're looking at almost 5 years - even if the new person is stellar as the previous until you're in the same position as you would have been had you just left the rent alone.
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Jul 14, 2008
8029 posts
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Ontario
seadog83 wrote:
Jan 14th, 2019 1:38 pm
Staunchly disagree. So you've gotten you're extra $10 a month per your legal maximum rental increase. Let the good times roll? In terms of dollar's and cents that quantity of money should be a non-event. More impactfully, it sends a message that the tenant is merely a cow to provide milk, and that as the LL you're out to squeeze those udders for everything it's worth.

You say you want a purely business relationship that's all by the book, but how does that affect a tenant's behavior who otherwise picks up and changes a 25 cent O-ring to fix a leaky faucet vs you having to do it or calling out a plumber? If you have a tenant who can pay the rent with the regularity of a bank dividend, and saves you several hundred dollars in costs that would go to labour why would you go in there poking there bear which has very limited upside (An extra 1.8%/year - if everything else otherwise remains unchanged) vs even if you need to suffer 1 month vacancy because the principle of the 1.8% increase was enough to push them out the door? You're looking at almost 5 years - even if the new person is stellar as the previous until you're in the same position as you would have been had you just left the rent alone.
Good tenants are very valuable, no doubt. However, I don’t think a LL is “milking a cow” by passing along the maximum rate increase. The majority of businesses pass along small annual increases to avoid the backlash that would be felt with a one time major increase. That’s one reason, but another more practical reason is the LL also has costs that are increasing. You’re essentially saying, sure, treat this is a business but absorb the extra costs because you pay on time?

Speaking of cows, do producers of milk not increase their selling costs because feed has increased, thus increasing the consumer cost? It’s the way of the world. And FWIW, the paltry maximum increases don’t even cover what LLs are experiencing in terms of cost increases. Not a matter of complaint, but we ARE in fact absorbing some of the cost.

A long term tenant is the unfortunate benefit AND risk to the LL. The annual increases in carrying costs are usually not part of the costs LLs can apply for over guideline increases, so if you don’t at least systematically chip away at it, you risk being hundreds in the red needlessly after numerous years without. In the old scheme, you could hope for tenant turnover eventually or have a frank talk after numerous years of holding steady, a rate increase is necessary. The rent control measures stunt the latter.

And I do agree, make it the maximum to the penny or just round down.
Sr. Member
Aug 14, 2006
816 posts
31 upvotes
Maybe this is the wrong thread to ask in but since were talking about rents I want to ask. Currently I am unfortunately running a negative $200 on my cash flow because of insane maintenance, property tax and insurance fee's increases over the years since beginning this rental agreement the. Current rents for same unit are going for $1600-$1700 and I'm only charging $1400. Tenant gives me 0 issues no bounced cheques and gives 6 months of cheques in advance for the last 4 years since the lease expired and he is month to month.

Based on appreciation and what not and principal being paid off is it worth renewing for another 3-5 year term come fall 2019? My rate that will likely renewed at, based on recent rates, would at leave by 0.50% higher making that negative $200 flow worse.

Would you sell or renew my situation? Capital gains and all that good stuff and realtor fee's would be almost $25,000. House was bought at $275,000 and now valued at maybe $410,000 and I did do a 20% down payment back in 2014. Based on rough math I'd walk away with $192,000 before capital gains implications.
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Mar 23, 2008
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Edmonton
ids748 wrote:
Jan 14th, 2019 2:47 pm
Maybe this is the wrong thread to ask in but since were talking about rents I want to ask. Currently I am unfortunately running a negative $200 on my cash flow because of insane maintenance, property tax and insurance fee's increases over the years since beginning this rental agreement the. Current rents for same unit are going for $1600-$1700 and I'm only charging $1400. Tenant gives me 0 issues no bounced cheques and gives 6 months of cheques in advance for the last 4 years since the lease expired and he is month to month.

Based on appreciation and what not and principal being paid off is it worth renewing for another 3-5 year term come fall 2019? My rate that will likely renewed at, based on recent rates, would at leave by 0.50% higher making that negative $200 flow worse.

Would you sell or renew my situation? Capital gains and all that good stuff and realtor fee's would be almost $25,000. House was bought at $275,000 and now valued at maybe $410,000 and I did do a 20% down payment back in 2014. Based on rough math I'd walk away with $192,000 before capital gains implications.
So your property has been appreciating at a rate of (410000-275000)/60 = $2250/month, and you're worried about a negative cash flow of $200/month? Not to mention that negative cash flow goes away when you consider how much of it is principal being paid down...

If you can afford it and you believe the property will continue to appreciate at a reasonable rate, it seems to be a no-brainer to keep things running as they are. Your tenant will move out eventually, and you can jump the rent then.

If you can't afford it, you could look at some form of HELOC on the property, as you have more than enough equity to qualify. Use that to tide you over on the shortfalls, as needed. Again, when your tenant moves out, you can start to pay that back.

Another option is to move into this property for a period (a year to be really safe) to get rid of the tenant. Then re-rent it out after that. Again, a way to get rid of the tenant and reset the rent price.

C
Sr. Member
Aug 14, 2006
816 posts
31 upvotes
CNeufeld wrote:
Jan 14th, 2019 3:20 pm
So your property has been appreciating at a rate of (410000-275000)/60 = $2250/month, and you're worried about a negative cash flow of $200/month? Not to mention that negative cash flow goes away when you consider how much of it is principal being paid down...

If you can afford it and you believe the property will continue to appreciate at a reasonable rate, it seems to be a no-brainer to keep things running as they are. Your tenant will move out eventually, and you can jump the rent then.

If you can't afford it, you could look at some form of HELOC on the property, as you have more than enough equity to qualify. Use that to tide you over on the shortfalls, as needed. Again, when your tenant moves out, you can start to pay that back.

Another option is to move into this property for a period (a year to be really safe) to get rid of the tenant. Then re-rent it out after that. Again, a way to get rid of the tenant and reset the rent price.

C
I am not worried about affording it or not. I just bought a 3rd property, my dream home, and now going to be carrying 3 mortgages, 2 rentals plus an owner occupied. My only worry is that the bank/current mortgage lender, will penalize me for renewal because I'm at such a negative flow and not positive flow. This is what I'm worried about. I am not worried about negative flow at ALL. The 200 negative is a wash in terms of the tax's I pay on the principal paid so its not that bad at all. The option of moving into it for a year is absolutely not a possibility for me at the as I personally can never live in a townhouse again I think.
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Mar 23, 2008
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Edmonton
ids748 wrote:
Jan 14th, 2019 3:24 pm
I am not worried about affording it or not. I just bought a 3rd property, my dream home, and now going to be carrying 3 mortgages, 2 rentals plus an owner occupied. My only worry is that the bank/current mortgage lender, will penalize me for renewal because I'm at such a negative flow and not positive flow. This is what I'm worried about. I am not worried about negative flow at ALL. The 200 negative is a wash in terms of the tax's I pay on the principal paid so its not that bad at all. The option of moving into it for a year is absolutely not a possibility for me at the as I personally can never live in a townhouse again I think.
Penalize you how? I suspect the only problem you MIGHT have is if you want to switch lenders at the end of this term, and your new lender will need you to re-qualify on the mortgage. If you stick with your current lender, they'll probably just send you updated mortgage documents that you sign and send back in. You may want to talk to a mortgage broker in your area for details on that, if you're not sure.

C
Sr. Member
Aug 14, 2006
816 posts
31 upvotes
CNeufeld wrote:
Jan 14th, 2019 3:29 pm
Penalize you how? I suspect the only problem you MIGHT have is if you want to switch lenders at the end of this term, and your new lender will need you to re-qualify on the mortgage. If you stick with your current lender, they'll probably just send you updated mortgage documents that you sign and send back in. You may want to talk to a mortgage broker in your area for details on that, if you're not sure.

C
Always do work with a broker and working with one now on this 3rd property. Thanks for the clarification I shall see what happens. The only thing is I wanted to pull some equity to buy a new truck next year but maybe not the greatest idea now.
Deal Addict
Jul 3, 2011
4985 posts
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Thornhill
jdu0ng wrote:
Jan 10th, 2019 3:22 pm
The guideline for 2019 rental increase is 1.8%. I am currently renting for $720, so increase would make it $732.96. Do landlords round to nearest dollar $733 (1.81%), exactly 1.8% $732.96 or round down to $732 (1.67%)?
Can't believe any rational person would complain that you exceeded the allowable increase by 9 cents and rounded up by 10 cents.

It's all in the negotiations isn't it?

Best thing to do in a case like this is to presume the next year's rate increase will stay the same then pitch it to the tenant this way:

Your current rent is $720.00
The allowable increase is 1.8% or $12.96.
Your new rent if raised exactly as allowed would be $732.95
Presuming that the same rate is allowed next year, your exact rent at that time would be $746.14.
However if you will accept this year's rent to as rounded to the nearest dollar it will be $733.00, then next year's rent would instead be $746.00
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Dec 27, 2009
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Ottawa, ON
licenced wrote:
Jan 14th, 2019 3:51 pm
Can't believe any rational person would complain that you exceeded the allowable increase by 9 cents and rounded up by 10 cents.
To me that would look terrible on the landlord. Far better to round down the penny (or whatever). It would leave a bad taste in my mouth. It is the principle, not the amount necessarily. As a landlord (which thankfully I no longer am), I would have NEVER done this to my tenants.

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