Real Estate

Tenanted Rental Property

  • Last Updated:
  • May 18th, 2019 7:15 pm
[OP]
Sr. Member
Sep 24, 2006
709 posts
60 upvotes

Tenanted Rental Property

Hello,

If I purchase a tenanted rental property in Ontario and the tenant is on a month to month, my understanding is that the only way I can evict him or her is if I or a family member intend on moving in.

So if the tenant is on a month to month that's 10% or even 20% below market rate and I have no inclination of moving in, there is nothing I can reasonably do to increase the rate above the 1.8% or so annual guidelines?

I'm currently getting differing opinions from realtors. One says I'm stuck with the renter and the other days I can force them to move out since I'm a new owner of the unit.

I figure I should ask the experts on this forum :)
12 replies
Sr. Member
User avatar
Jun 6, 2007
961 posts
18 upvotes
Toronto
Long story short, if you or your immediate family member are not moving into the unit, you are stuck with the tenant on a month to month and cannot increase the rent above 1.8% per year.
This has caused a lot of investors to shy away from purchasing already tenanted investment properties.
Stumbled upon RFD by mistake, best mistake of my internet life i must say...... :D
Sr. Member
Feb 21, 2010
777 posts
193 upvotes
Scarborough
You are stuck with tenant. You cannot ask him/ her to move out. You cannot adjust rent to bring it to market.

Seller can ask tenant to move out only if prospective buyer is purchasing to occupy or buyer's immediately family will move in or caretaker of his immediate family.

Seller can negotiate with tenant and offer few thousand dollars and get tenant out. But you as the buyer will only assume the tenancy, so be careful.
Jr. Member
Jul 4, 2018
128 posts
75 upvotes
hank755 wrote:
May 17th, 2019 8:15 am
Hello,

If I purchase a tenanted rental property in Ontario and the tenant is on a month to month, my understanding is that the only way I can evict him or her is if I or a family member intend on moving in.

So if the tenant is on a month to month that's 10% or even 20% below market rate and I have no inclination of moving in, there is nothing I can reasonably do to increase the rate above the 1.8% or so annual guidelines?

I'm currently getting differing opinions from realtors. One says I'm stuck with the renter and the other days I can force them to move out since I'm a new owner of the unit.

I figure I should ask the experts on this forum :)
Find a relative who can live in on a discounted rate with out agreement and pay cash..

Or

Occupy as self use and Plan to keep it vacant for an year
After an year rent it at current rent.
Peace of mind plan

Or

occupy for self use
Keep it vacant for 3 months
Rent it thru Kijiji and cross your fingers if old tenant would complain
[OP]
Sr. Member
Sep 24, 2006
709 posts
60 upvotes
Thanks for the replies. It seems that rental income produces diminishing returns over several years if the renter doesn't leave.

So it seems that investors are mainly looking for capital appreciation as the endgame? Is the time of holding on to a rental property for 10+ years over?
Deal Fanatic
User avatar
Mar 23, 2008
8709 posts
5240 upvotes
Edmonton
hank755 wrote:
May 17th, 2019 11:05 am
Thanks for the replies. It seems that rental income produces diminishing returns over several years if the renter doesn't leave.

So it seems that investors are mainly looking for capital appreciation as the endgame? Is the time of holding on to a rental property for 10+ years over?
Keep in mind that the tenant's rent is also paying down a chunk of your mortgage every month too. So your equity is going up, even if the property isn't appreciating in market value. It's just not readily available as cash flow income. That's why you can only claim mortgage interest as an income deduction, rather than your entire mortgage amount.

C
Sr. Member
Feb 21, 2010
777 posts
193 upvotes
Scarborough
Also tenant can transfer tenancy to another tenant and as long as the credit score of new tenant is in same range as existing tenant, you have no ground to not allow the transfer. I know this is valid for first year but not sure about month to month
[OP]
Sr. Member
Sep 24, 2006
709 posts
60 upvotes
Excellent point!
CNeufeld wrote:
May 17th, 2019 11:09 am
Keep in mind that the tenant's rent is also paying down a chunk of your mortgage every month too. So your equity is going up, even if the property isn't appreciating in market value. It's just not readily available as cash flow income. That's why you can only claim mortgage interest as an income deduction, rather than your entire mortgage amount.

C
Deal Addict
Nov 2, 2005
3465 posts
855 upvotes
Ottawa
This confirms what many of us already know. 50% of realtors give out misleading or self serving information.
Deal Fanatic
User avatar
Mar 23, 2008
8709 posts
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Edmonton
romeocanada wrote:
May 17th, 2019 11:56 am
Also tenant can transfer tenancy to another tenant and as long as the credit score of new tenant is in same range as existing tenant, you have no ground to not allow the transfer. I know this is valid for first year but not sure about month to month
You don't have to accept this, though. You can refuse to let them assign, and all that means is that the tenant can then give you 30 days notice to terminate their lease (without penalty to them). Which is fine, since you want them out anyway so you can jack up the rent.

https://stepstojustice.ca/steps/assign-new-tenant
If your landlord won't let you assign to anyone
If your landlord won't let you assign at all or does not give you an answer within 7 days, you can move out with 30 days' notice.
The part you're referring to is if the landlord has given permission to assign, but is refusing to allow the tenant to assign to a particular person.

C
Newbie
Jan 8, 2011
67 posts
42 upvotes
Ottawa
CNeufeld wrote:
May 17th, 2019 12:10 pm
You don't have to accept this, though. You can refuse to let them assign, and all that means is that the tenant can then give you 30 days notice to terminate their lease (without penalty to them). Which is fine, since you want them out anyway so you can jack up the rent.

https://stepstojustice.ca/steps/assign-new-tenant


The part you're referring to is if the landlord has given permission to assign, but is refusing to allow the tenant to assign to a particular person.

C
I'm assuming this is different than subletting, correct? A landlord can't refuse a sublet unless there is a 'good reason'. A tenant could therefore remain in the unit, with the rent kept artificially low, for years.
Deal Fanatic
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Mar 23, 2008
8709 posts
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Edmonton
SWilliams2 wrote:
May 18th, 2019 6:42 pm
I'm assuming this is different than subletting, correct? A landlord can't refuse a sublet unless there is a 'good reason'. A tenant could therefore remain in the unit, with the rent kept artificially low, for years.
https://stepstojustice.ca/steps/sublet-new-tenant

Left hand menu from the other link I posted. If the landlord says no, tenant can apply for a hearing to either “force” the sublet or end the lease.

C

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