Student rental property in Ontario

EDL67134234 wrote: ↑ Good evening,

I had recently bought a student property in Ontario through a private sale.

I have questions about few things. I ran through the numbers from the past few months and the cash flow is negative.

a. I took over the lease of the existing tenants. I can only increase the rent by 1.8 % as far as I understand? I am planning to do renovations in the near future, so there is no way to cover that renovation through a price increase? I need to give 90 day notice of the price increase?

b. Some of the tenants will be moving out, so I can provide them with new contracts and adjust rent accordingly. Part of the reason why I am negative is because of high utilities/gas. Let's face it. Students don't care, because it is not theirs. What is the best way of handling the high utilities? Ask them to split?

c. If the property was declared as primary residence, but is now a rental, does the property lose its primary residence status? What are the effects with CRA and the mortgage company? Will the first time home buyers be taken back? If yes, how do declare taxes and not lose primary status? The property is resulting in a net loss anyway.

d. To bring in new potential tenants, I have to give current tenants 48 hour notice. Are the current tenants obliged to open the room for viewing?

e. Standard practice is signing 12 months lease. Are there any other general tips, advice, on including causes in the contract? I see that some people add tenant insurance. I already got an insurance policy. With upcoming marijuana legislation, is it wise to include a no-smoking close?

Any advice is appreciated.

A) You should go look at the details on the Ontario RTA site. I believe it is possible to increase beyond the 1.8%, but you may have to justify it to the board. I would guess your chances are slim. However, since you have a turnover occurring with the tenants, you can increase the incoming tenant's rent by as much as you like (and that you can get).

B) Your current tenants don't have to split the utilities, but again, you can set up whatever deal you like with your incoming tenants. Splitting would make sense, although I could see it causing friction if you have a number of un-related tenants who get squabbling over Bob taking extra long showers or something.

C) A lender may ask for additional down payments or charge a higher rate for an investment property than for a residence. As far as the CRA is concerned, they don't care about what the previous status was, it's separate from the current owner's status.

D) I believe it's 24 hours notice, but check the RTA site. And yes, they're obligated to allow the viewing.

E) You should take a look at the upcoming "standard" lease, and probably use that for your template.

One thing you should do is verify your property is all legal for renting out. It sounds like you have a number of renters, and it only take one to shut you down if you have any violations. Smoke detectors, egress, etc. You need to get your own insurance in place, as your tenant's insurance will only cover their belongings, not your property.

C