Niagara Region saw double-digit increases in properties throughout 2021. But did that translate to the rental market? What does that mean for the real estate investor in terms of rents that can be commanded?
Sue Ore and Margaret Cameron of Complete Properties share market data and advice for the Niagara Region.
Sarah: I will say these ladies are amazing. They have helped my students tremendously with finding tenants, screening tenants, property management and everything in between and really cover the Niagara region really well. Welcome ladies. Hi Margaret, hi Sue, excited to have you. What I'll do is I'll give you the floor and feel free to give us a little bit of who you are and share your presentation.
Margaret: We're going to talk today about leasing and managing your investment property with a specific look at the Niagara region and what the Niagara region might offer you as tenants and how that might differ in other areas that you're used to investing in.
I'm a senior property manager with Complete Properties. I've been in property management for about eight years. I'm an investor myself. My first home was a house hack. We bought a triplex and lived in that. We've had other residential investments since then and most recently I purchased land in Northern Ontario to look at different types of investing there, running some campsites hopefully is the plan.
Sue: I'm Sue, the Chief Operations Officer here at Complete Properties, not to be confused with Susan who is the CEO of Complete Properties. Here at Complete Properties, we're all investors. I've been in property management and investing in Hamilton for about 12 years now.
Margaret and I actually used to work together in property management and another company. We have specialized in Hamilton mainly, but now with Complete Properties, we're also into the Niagara region and St. Catharines.
Margaret: When we talk about Niagara and how that differs with property management, we want to take a look at who lives in Niagara. Who's working in Niagara and how that can affect your tenant profile. We find that in St. Catharines, we actually get a similar tenant profile to Hamilton where we're looking for those young two income, two to three-year tenants that are going to outgrow the property when their family grows or when they are ready to buy a house, great credit.
The tenants were mostly looking forward to Hamilton and St. Catharines and we find that really similar in St Catharines, one notable difference that I find while in Hamilton there's areas that draw students and roommates in St. Catharines overall. We have a higher application rate of students and young groups of rebates.
In Niagara falls, specifically with the high service industry, we see more people working in that sector and again, that leads to more young roommate applications as well, which can in itself also be a benefit because you want the tenants going to stay for a couple of years. Roommates are often not as long as they still have the credit and the income, then they might stay with you for a couple of years until they're ready to rent on their own.
We're seeing a lot more investment activity in Welland. A good portion of our current available rentals are in Welland. I think a lot of investors are looking that way and I like it to what we saw in Hamilton 10 years ago. It's going through a shift, it's going through a change. It's maybe more affordable for investors to purchase there.
We have new people looking in Welland. Not just people who lived in Welland for a long time, but people moving out to St. Catharines, Hamilton. We do see a lot of that migrating, not just in Welland with people working remotely. We have people moving from Mississauga, Toronto, skipping Hamilton, going right down to St. Catharines, Welland, Niagara.. I will say, there is a bit of a different tenant profile. I find that we see off, sometimes we see people who are looking more for a long-term rental than that two to three year stepping stone rental, but someone who might be looking for 5, 10 years.
I find that our approval rates for Welland in some areas in Niagara aren't as high as they are in other areas. For example, we expect to have an approved tenant for every four tenants that apply. In Welland that's lower. It's probably one every time. I think that just comes with part of the turnover though you're looking for that person that is migrating, that is still you're a tenant.
You can still find that time in, it's just you're going through more applications to achieve that. Here, we take a look at the average rents in the different areas in Niagara for one bedroom and two bedrooms, and you can see how they compare across the area. You can see the volume is up close to Lincoln, it's higher than Thorold.
This shows us how St. Catharines compares to Hamilton and Toronto. This is December, 2021. In that month, St. Catharines surpassed Hamilton for the average one bedroom rentals. It's moved up into the top 10 for cities in all of Canada. Toronto is still number two, but you can see St. Catharines is eight and it's getting just about, or just above what you might see in Hamilton right now. It shows the same thing too, for the two bedrooms. Hamilton's a little bit higher, but they're very comparable.
One thing to note about Niagara is that the city of Thorold requires residential rental licensing. All the other areas listed there require licensing for short-term rentals, but the world requires us for all rentals. If you have a property in the world, this is another step to go through. It's some paperwork, some inspections, but it's more of a registration than an application. It's something that we've worked through before.
When we talk about the different areas, having maybe a bit of a different tenant profile and we talk about the ratios of approval that might be different in different areas. It all still comes down to you having to stick to your process and you have to keep in mind who's going to qualify and how do you vet them and how are you sure of who you're approving no matter what. No matter where your rental is, have a robust rental application, ask all the questions up front and get everything you need, check their references and be sure that they're true references.
I would say that that's one thing that we find fairly often is someone that has been distruthful in the references. You have to check. Does that person who they say, is there a way, do they own the house? Is it a property manager, then who's the company, call the company, don't call the number that they gave you. If you're not sure, Google it. See if you can find the old rental. Does that name match? Are these references true? Then that can go a long way.
You're going to run your own credit check sometimes, we're going to run through a whole application. May look great, but you have to pull your own check to really see if you have a tenant sending you their credit karma score, it's really a surface level check. If you do a deep check on your own that you're paying for, it's going to pull much more information and you're going to get a much more accurate score and then you want to take the time to get to know people when you go and you show them the place, talk with them, take the opportunities. When you have questions, reach out to see how they respond to you. Just get as much interaction with them as you can. You can get an idea of who you're working with.
Sue: We're going to talk about warning signs on an application. There's a lot of the time when you're getting inundated with applications, you've got to be really careful. You've got to make sure that what they're saying to you is consistent. Every time they're telling you the story, it's the same. You're going to look for characteristics of their personality that might be undesirable as a tenant.
Yes, moving is a very stressful time. However, people can still be polite. They can still be respectful. If there's any wavering off of that normal behavior that may be a warning sign that maybe they're not going to be the ideal tenant, and maybe there will be more demand than what is ideal. Just be careful that when you're screening your applications you really do want to ask the previous landlords about their behavior and about the history with them. If they've damaged the property or if pets were a problem, then that's obviously going to be a big red flag as well.
Margaret: I'm just going to add that you should always try to go to past landlords, two landlords, who do they currently live with? Make sure that's right. But who did they live with before? Because sometimes the current alerts might have some skin in the game. If they want the tenant to move.
Sue: We have a pretty robust tenant documentation checklist. We do insist on certain things. They need to provide their photo ID, they need to provide their social insurance number because we cannot always perform a full credit check without it. You're going to want a list of their past landlords, including a phone number and an email.
You can do your own research to make sure that's valid and it's correct, also you're going to be able to check it against their credit check to make sure that the addresses match. If they don't match, that's a red flag. You're going to want a government issued photo ID as well. There are certain things that we will take and there're certain things that we won't take because. It needs to match their government issued ID, the names on the application, the names on the rental lease and at the end, it needs to match their government issued ID, or it could very rarely ever happen, but could affect any LTB proceedings in the future.
If things like that, you're going to obviously want their financial data, their current employer, where they get all of their income from, if they're not employed, if they're on some sort of assistance, they're going to need to give that information to you. If they can't give you pay stubs that you're going to provide you with bank statements. Bank statements can show quite a lot of accurate history of what's actually coming in and not what just they're declaring.
We do ask for a list of their pets. Photos of their pets. We find that asking about that upfront is a good thing. We can't obviously say that we're not accepting pets, so we want them to be upfront about what they are bringing into the property. We're going to ask them to sign a pet, a dental, when we do sign a lease, just to make sure that we're protecting ourselves against any potential damage, and then they'll be responsible for repairing it or paying for the repairs when they move out.
If it should come to that. If their credit score isn't exactly perfect, or if they have any little blips that you're concerned about, asking for a co-signer is a great route to ensure that you're going forward with as much protection as you can for yourself as an investor. Tenants who might have had a little hiccup, especially with the past few years and employment status, are changing.
We'll have a great co-signer that is willing to vouch for them and to put their name onto the lease. And if they do have any struggles are willing to pay the rent for them really. It will affect their credit as well. It really speaks as a great positive thing if they can provide a co-signer.
Margaret: We also ask everyone over 18, who's going to move in to submit an application. They don't always go on the lease for instance, if it's an adult couple and they're 45 and they have a 20 year old child, the child might not go on the lease, but we're asking for that application. They ended up one of the leases because they're going to move out from their parents' house probably soon but we do always ask for that.
The time to make sure you're getting those. If we asked everybody for their emergency contact. Sometimes, if they say their emergency contact is a partner, but the partner hasn't applied, ask their past landlord, does the partner live with them? And if they do, you need to see that application because everybody has to be fully vetted. Just gives you another opportunity to get a little more information for sure.
Sue: Common forms and when to use them. LTB forms, it's standard all across Ontario to use the approved forms and the legal forms to survey and notice. The N4 is obviously the most common one. Basically, if your tenants don't pay, you're issuing it and for two days after their rent is due It gives you basically a document trail of them not paying rent. It also is the first step towards eviction, potentially, if that should be on, if that should continue to be unpaid the rent.
We do suggest obviously to do this every time, the rent is not paid, not just the first time. Notice of entry, legal requirements in Ontario, you do need to give 24 hours written notice to enter the unit. Whether that be email or posted on the door, if they do not respond to email that's up to the landlord and whatever is the normal method of communication. The N9, I notice that the tenant is moving in, ending their tenancy.
N11 is a mutually agreed document to end the tenancy between the landlord and the tenant. That can happen when let's say they got a new job in the city, in a different city and they're cutting their lease two months short. That's basically just a kind of mutual release of the tenancy agreement.
The N12, that's a big one right now. That is what a purchaser would serve a tenant. If they are planning on moving into the building. Basically, you're asking them to vacate by the sale date so that they can take that money. Take residency of the property.
Margaret: We use a paralegal for our N4 notices. We start with the paralegal that we trust from the beginning. We know our forms are done right that they're tracked, that it's done the way that it needs to be. You may have heard the stories of you waiting and waiting for your hearing date at the answer be and go, and your N forms are filled out incorrectly and you have to start over again because it's like a traffic ticket and with the names wrong.
If the unit is wrong, then you're starting over and having a good paralegal for issues. But also consultation is really valuable to be able to refer to somebody who's just seen so many different situations. I can give you the answers. It's someone you should definitely have on your team as an investor.
Sue: To add to that, this is what they do all day, every day. They are the professionals, they are the experts. We're going to defer to the experts when anything is slightly muddy. Yeah. Property maintenance schedules. We do semi-annual and annual property maintenance. 70 annual inspections and we do some preventative maintenance while we're there.
We replaced the furnace filters twice a year. That's just a good habit to get into for any property owner. We do that for the tenants because we find that we know it's done. If we do it ourselves and same with the smoke detector batteries. We will do that while we're there as well. We do it once in the spring and once in the fall, basically before the winter and after the winter.
We're going to inspect for water, especially after a winter, we're going to be inspecting for leaks. We're going to turn on or off the exterior taps before the winter. We're going to turn them off so that nothing freezes and there's no issue. Of course, we're going to inspect the property very thoroughly, twice a year to make sure that the tenants haven't broken anything, nothing needs repair and that everything is as good as it should be.
Annually as well in the fall. We're going to check the eaves and the gutters to make sure there's no leaves and debris in there that can cause issues over the winter. We're going to clean the exterior dry. To make sure that it's fire safe, we're going to check all the seals around the doors and the windows before the winter, because that's when those heating bills get really high. If there's too much you lost.
Margaret: I hear from investors sometimes that they haven't seen their own property sometimes in years. I have been guilty of the same thing. You have a good tenant. They've got a ride. I mean anything and you don't see your property for, until they call you for something.
Having a regular medium suspension, it just gets you in the property for preventative measures, senior tenants, and see what's going on. See if there's something that maybe they thought was minor and they didn't want to bring up, but something needs to be taken care of. It's just good practice to make us better. What's important to them, or what's important to us might not be informed to them. They might not even know that there's an issue that needs addressing. It's best to go check for yourself.
Sarah: Ladies, I think we're going to wrap it up in about a minute.
Sue: That's actually perfect because this is our last slide. If you have rental properties, the tax deductions are great. You can deduct your insurance. You can deduct the interest on money borrowed, your utilities, your legal and accounting fees. Those paralegal fees are deductible office expenses that you might incur from managing your properties. Your property managers, the company and or property manager and those fees that they incur are deductible. The advertising for your leases is deductible, so are the cost of repairs and maintenance, your property taxes and your travel expenses. Write as much of that off as you can. That's it.
Sarah: Thank you so much, Margaret and Sue. That was great. You do have a wealth of knowledge and you really are the go-to property management company for Hamilton and Niagara. I know many REITE club members currently who are working with you and are very happy. So, that's amazing.
- Log in or register to post comments
- ARNEL-LLEMIT-1637316866's Blog