New tenant offering 6 month of rent instead of the standard 2...

Not sure where you are, but for curiosity I checked Condos.ca today to see how many rental units are available downtown.

There are 6215 available units in total.

Putting a price range of $1500-2000 to weed out basement apartments, shared units, and focusing only on single occupancy units, there are 2054 available units.

You have a tenant in healthcare who is willing to give you 6 months worth of rent at once and has good credit and references, and you're having reservations? Count your blessings my friend.

What is the method of payment for the first 6 months?

Did you ask why they volunteer to pay 6 months upfront?
As long as their background checks out I don't see a reason not to take them. Maybe they are offering this large deposit because they really like the unit and want you to choose them over other applicants - some tenants can be weird like that.

Anyways, make sure they understand that this deposit is covering the last 5 months and not the first 5. That should give you a nice cushion in case things go south.

budwizestest wrote: ↑ Hello,
So, we are looking for a new tenant for our investment condo.
We have a potential tenant who is offering 6 months of rent upfront at the time of signing the lease. This is to go towards the first month, and the last five months of the 12 month lease.

His employment is legit and checks out (in a healthcare setting), reference from his last landord is also good. Credit reports are also good. He is moving to be closer to his new workplace (no WFH for him...).

For the other months (starting from Nov) he will be giving us post-dated checks.

The only concern is that the his GDS is close to 40% instead of the standard 36% (reflection of living in Toronto??).

With this background, is there something that i should be wary of? Especially as the Ontario standard lease stipulates 2 months of rent at the time of signing the lease.
Thanks!

Are you being serious?

raxen wrote: ↑Not sure where you are, but for curiosity I checked Condos.ca today to see how many rental units are available downtown.

There are 6215 available units in total.

Putting a price range of $1500-2000 to weed out basement apartments, shared units, and focusing only on single occupancy units, there are 2054 available units.

You have a tenant in healthcare who is willing to give you 6 months worth of rent at once and has good credit and references, and you're having reservations? Count your blessings my friend.

We are about bang in the middle of the price range; it is a 1BR in Toronto, and a pretty decent location esp if someone is working where he is.

sircheersa wrote: ↑What is the method of payment for the first 6 months?

For the first 6 months - the first month is part of the 6 month deposit. After that 6 postdated checks for each month, and then the last 5 months come off the deposit.

Ofirsc wrote: ↑Did you ask why they volunteer to pay 6 months upfront?
As long as their background checks out I don't see a reason not to take them. Maybe they are offering this large deposit because they really like the unit and want you to choose them over other applicants - some tenants can be weird like that.

Anyways, make sure they understand that this deposit is covering the last 5 months and not the first 5. That should give you a nice cushion in case things go south.

The reason for the 6 months deposit with lease is a mix of - said really liked the unit and the building, his GDS/TDS ratio is a little high, looking for a quick occupancy as cant handle the daily commute from the other side of GTA to the office.

And yes, the 5 months is the last 5 months not the first three months that is spelled very clearly in the lease and the post dated check are also according to that,

Also, the unit - although a standard run-of-the-mill 1BR, shows well - professionally cleaned and freshly painted (by yours sincerely :-)). We also gave a $50 break on the listing price to him (this is actually a $150 lower than what the previous tenant was paying - but such is life).

I also think his agent is a bit inexperienced so might have pushed him into an progressive offer. When they came to view the place, it just happened that they were sandwiched between 2 other viewings on Saturday evening. I think that got their competitive juices flowing too.

ricodeals wrote: ↑ Are you being serious?

Short answer - Yes.
Long answer - The way the deck is stacked against small landlords, we have to be super choosy (we turned down some offers before this) and ensure that we evaluate everything very carefully.

budwizestest wrote: ↑ With this background, is there something that i should be wary of? Especially as the Ontario standard lease stipulates 2 months of rent at the time of signing the lease.
Thanks!

Since as you note the RTA only stipulates 1st and last months rent is allowed, the tenant could technically go to the LTB at any time and demand you pay back those extra 4 months deposit regardless of what you may have in the lease. In general any lease clause you have that goes against the RTA can be voided.

rob444 wrote: ↑ Since as you note the RTA only stipulates 1st and last months rent is allowed, the tenant could technically go to the LTB at any time and demand you pay back those extra 4 months deposit regardless of what you may have in the lease. In general any lease clause you have that goes against the RTA can be voided.

We looked that up and came up with precedence in court on this - https://www.rentalhousingbusiness.ca/on ... -up-front/


We have email exchange from the agent in which they offered this upfront, we never asked for it.

budwizestest wrote: ↑ We looked that up and came up with precedence in court on this - https://www.rentalhousingbusiness.ca/on ... -up-front/

We have email exchange from the agent in which they offered this upfront, we never asked for it.

How stupid are you? Like seriously, how stupid? All they have to say to the LTB is that you pressured them.

Furcorn wrote: ↑ How stupid are you? Like seriously, how stupid? All they have to say to the LTB is that you pressured them.

Umm maybe you are the stupid one? Read the link and the fact that I have an email trail as proof

Seeing how there’s an agent involved the risk is minimal as the email trail can be used to report the agent to RECO I suppose.

At the end of the day, if the tenant looks good after your due diligence checks and you’re comfortable renting to them, but this 6 months prepayment is a sticking point, then just accept 2 months and move on. Win-win for everyone.

If you decide to decline, throw him my way. I need a tenant LOL.

budwizestest wrote: ↑ Umm maybe you are the stupid one? Read the link and the fact that I have an email trail as proof

raxen wrote: ↑ Seeing how there’s an agent involved the risk is minimal as the email trail can be used to report the agent to RECO I suppose.

At the end of the day, if the tenant looks good after your due diligence checks and you’re comfortable renting to them, but this 6 months prepayment is a sticking point, then just accept 2 months and move on. Win-win for everyone.

If you decide to decline, throw him my way. I need a tenant LOL.

Yes, with the agent involved, and the 5 month deposit cushion we are probably going to move ahead with the lease. We are also going to keep the offered 4 months over the standard 2 also because, his ratio is high, and to be honest we wouldn't move forward because of the high ratio without that cushion.

I will let you know if we don't move forward :-); seems like a lot of people are looking for tenants right now.

budwizestest wrote: ↑ Yes, with the agent involved, and the 5 month deposit cushion we are probably going to move ahead with the lease. We are also going to keep the offered 4 months over the standard 2 also because, his ratio is high, and to be honest we wouldn't move forward because of the high ratio without that cushion.

I will let you know if we don't move forward :-); seems like a lot of people are looking for tenants right now.

Your agent was correct until the 2017 changes.

Good thing s/he has errors and omissions insurance and liability, they'll need it if your tenant gets better advice.