The trick to being a successful landlord is to buy time. That means keep the peace and carry on the business as long as you can without obstacles or drama. As a landlord time is on your side, the longer you hold a property the better your situation. If you invested smartly you enjoy the best of three worlds. Your net operating income is positive and you get paid a small salary every month; the rent pays down your mortgage and thus increases the equity you have in your property; And lastly market appreciation raises the value of your property year-over-year. The common proverb “don’t wait to buy real estate but rather buy real estate and wait, is both smart and true.”
When two tenants out of three in a triplex I own, notified me they will be leaving at the end of their agreement, I was sad and concerned.
We’ve had a good and caring relationship and suddenly out of nowhere a break up, a double break up! What did I do to deserve that ?probably nothing. I had the units refreshed and renovated not long ago, l attend to any complaints or requests they have fairly quickly and generously, and we were friendly, so why leave? Well, people lead their lives. One went back to school and had no money for rent and the other wanted to move in with a friend and live closer to downtown.
Unfortunately, when a tenant leaves you lose one month’s rent since they paid the last month in advance, you may lose more if the unit remains vacant or if you hire a realtor it’ll cost you another month. Then there is the painting, the cleaning up, perhaps some minor or major reno to improve the value of the unit to fetch more rent. Utility bills need to be checked and switched and the headache and pocket ache go on.
This is when I remind myself what I tell my clients. Being a landlord is never easy unless you hire a property manager. But if you are an active landlord, hands-on, then prepare yourself for dramas and headaches. I always say the bigger the headache the bigger the value you get back. Similar to other things in life, if you are willing to pay the price your reward will be accordingly.
Once I decided to act and stop feeling sorry for myself, things started falling into place very quickly. I am a realtor so I handled the listings myself. One of the tenants actually had a friend interested who replaced him at the unit. I interviewed him, raised the rent slightly and he moved in seamlessly with no vacancy time. That is when I asked myself, perhaps this was actually a blessing in disguise. The other tenant that left was a problematic one. She was quarreling with the upstairs neighbor about noise, calling the police and when I saw the state of her unit as she was moving out I thanked God she was leaving.
On the afternoon of the showing there was a lineup of people all around the house. Today’s rental market is extremely landlord favorable. I managed to get the cleaners and painter in 48 hours before and a trustworthy tenant moved in, again without vacancy time at all.
The big advantage you have when you accept new tenants is that you can ask for any rent amount you like and are not compelled to follow city guidelines. I raised the rent but kept it reasonable.
Once this episode was over, I realized I was better off than I was before. The property was earning more income, the units were in better shape and the quality of the tenants had improved. How long until I will need to do this again? Hopefully long. I’ll do my best to keep tenants as happy and comfortable as possible but when it comes around, and naturally it will, I’ll make the best lemonade I can.
Broker of Record, Schichter Realty Inc.
zvi@schichterrealty.ca
647-294-2285