Aside from the usual, human rights and discrimination aside, are there those type or class of applicant that you will not even consider renting to. Excluding the obvious such as criminals, those with pets or children etc based on your specific property type.
Off the top of my head and keeping in mind that we all have standards that may not be strictly legal would you reject some of these :
Neck and facial tattoos, single guys, recently separated women, single mothers, welfare, restaurant workers, nationalities know to cook offensive smelling food, smokers, low income immigrants, bikers, tattoo artists, recreational drug users, prostitutes. others.
Or based on human rights laws etc. is everyone welcome as long as they pass basic screening standards.
How do you feel about intermixing these types into a multi unit environment.
Whoa, whoa, whoa! Are Canadians even allowed to disagree in public!? Isn't that against the law too? Because it sure sounds like everything else is.
I read all of these regulations very simply: Don't be a real estate investor in Canada.
Fascinating. I will ask the fellow who prepared our comparison for some clarifications.
What would occur in the instance of a term lease? If I were to rent a property for a 9-month or 12-month fixed term (not periodic, so there is no automatic renewal), could I be compelled to keep the tenant beyond the term of the contract?
@Thomas S. I agree with you, the LTB definitely favours tenants and it's next to impossible to get an eviction unless it's based on non payment or major damage. I attended Springfest last year and went to a great seminar about tenants human rights that was put on by FRPO. I'm simplifying this, but at the end it pretty much boiled down to the fact that you can't deny anyone for anything. However, you also don't have to disclose to the prospective tenant why they weren't a successful candidate. My take-away was to be very vague. Now in any advertising that I do, it only talks about the property and says absolutely nothing about the type of tenant we're looking for since you can't advertise for 'young professional' or 'mature female/ male'. If I have someone looking at a unit that has no income, 4 dogs and a pet snake I'm saying of course we don't mind pets, here's an app.
With all of that being said, I definitely screen based on the unit/ building. I have a 4-plex right now with a vacancy, the other 3 units are all young professionals and really great tenants. My ideal tenant is not a young family with 4 kids even though I'm sure they'd be great tenants. I want all of my existing tenants to stay happy so I work hard to find a good fit. I try not to judge any one on looks ie; tattoos/ piercings, clothing etc because the old adage is true - you can't judge a book by it's cover. I had a tenant once that was a big biker guy, covered in tattoos but he was the nicest guy, super clean and would chase me down on the 1st to give me rent. Everyone screens in some way though, otherwise you'd rent to the first person that walked through the door and that's not a good business practice. I think it all starts with the vibe you get when you first meet them and then being really thorough with reference/ credit checks.
Fascinating thread, and concepts - I am of the opinion that open discussions are good, almost no matter what the subject. Not discussing problems just makes it worse.
As had been established, you can't legally discriminate on the basis of a bunch of things, and yes, there is WIDE variation in landlord-tenant laws in different states and/or countries.
From reading between the lines, it seems like @Thomas S. isn't advocating illegal behavior, but asking what external triggers give you pause, or might cause you to look within your legal rights to deny an applicant.
I happen to live in a really, really landlord friendly state, and am glad that I do. I can certainly agree that there are lots of external flags that I have which will cause me to give a polite "I'm sorry, your application was denied".
Most have to do, I think, with the understanding that people's life choices affect their finances. A 2-pack a day smoker spends more on cigarettes some places than the power bill. And as the landlord, you are stuck with the consequences when they kick the bucket from a personal lifestyle choice. Not super cool. Ditto on the production of obnoxious odors, whether they be food-borne, or not.
Good tenants are wonderful things, and I'd say that while I have a few triggers that are absolute no's, I'll also slide towards the side of my good tenants when the decision becomes a judgement call, or "gut feeling".
I do not tolerate anything illegal, zero tobacco use indoors, non-verified income, guests over 3 days that aren't on the lease, or slobs. My leases have a "keep it clean" clause in them that has worked wonders. Those parameters alone get rid of most of the bad ones.
I don't care about tats, unless they come with gang signs and felonies. In that case, the felony takes care of the rejection.
And for the record, we can discuss anything we want here, protected by the 1st amendment. No laws have been broken unless those illegal suggestions are acted upon and can be proven....just sayin.
Kevin
Don't concern yourself with being harsh. Maybe you are misinterpreting. You may not have a clear picture. I do not need to break the law to serve mine or my tenants best interests. Business has may options that the inexperienced may not clearly understand. I am neither a racist or a bigot although only others can make that determination. All decisions are based on what is best/lowest risk for my existing tenants and my business. I am cold, callas and calculating to that end.
Money is blind. You should be concerned with: Do they pay their rent? Do they pay it on time? Do they take care of the property? Are they respectful other tenants and to you, as Landlord? Do they contact you asap if there's a property issue to be reported. Care about those things.
I have no answers to any of those questions. When I screen individual applicants none of them ever bother to inform me they intend to screw me. I must make decisions based on statistics, experience and the lowest possible level of risk. It would be nice to not care about the risk level one applicant may or may not have over another but I do not have that luxury. Unlike yours my dam crystal ball refuses to work. :)
I can give reason for why every example I have given is of higher financial risk for a landlord. Should that not be enough reason for a landlord to reject them if they choose. Racism, bigotry, profiling, experience, knowledge call it what ever you like but for me it is simple hard business decisions.
I have never screened a welfare recipient that did not have a deplorable credit score. In Ontario all individuals receiving income through government assistance are deemed "untouchable" by the government. Creditors may not garnish their income.
I have been burned by every welfare recipient I have ever rented to. Am I stupid to rent to them or discriminating when I decide no more. By the law clear by me a simple and necessary business decision. Thankfully I never have to decide as a better applicant will always come along to make that decision for me. Same applies to every other applicant I decide, for whatever reason, is high risk.
By legal definition I never discriminate. By the same token I have never rented to anyone I do not want to rent to.
Landlords can all claim the high road and swear up and down they would never discriminate but..............
Roy in Ontario term leases automatically become month to month. It is the tenants choice as to if they wish to stay beyond the end of the term lease not the landlords choice. Tenants are for life unless they choose to leave voluntarily or you are successful at a justfiable eviction..
In the NB RTA we have the concept of a long-term tenancy (any tenancy >5-years) who are afforded additional rights under legislation. The list of reasons a landlord may terminate a tenant are almost identical to those listed in the ON RTA, but for all, save a long-term tenant, we are not obligated to renew a tenancy. It would appear all tenants in ON are treated as are our long-term tenants.
I'll re-read the ON RTA to see where I missed, the crucial difference ... I'm a little more concerned that the study we commissioned also appears to have missed that key difference.
@Roy N. It was my statement that Ontario is so brutal that you responded to in that other thread. I didn't want to argue with you because a) I'm the new guy and b) you're clearly very experienced and well-read in tenant laws. However, @Thomas S. has said about a tenth of what I would have said, and I'm sure that is about a tenth of what he could have said on the topic of what a minefield Ontario landlords live with. It is IMPOSSIBLE to get rid of a tenant simply because you want to. It is IMPROBABLE to get rid of a tenant despite having good cause.
Here's two examples of the stress imposed upon us:
1) I have been losing sleep trying to find a way to reject an application for perfectly reasonable business grounds because I am terrified of being sued. The problem is that the applicants tick the box on about a half dozen "protected classes", none of which are my reason for rejection.
2) When I read the original post in this thread, I IMMEDIATELY assumed that the poster is NOT a landlord but a "tenant advocate" or a lawyer trying to collect names to throw lawsuits at.
So, to answer the original post of this thread, NO WAY would I risk my entire livelihood and bankruptcy by denying a person for reasons that are protected classes! I'm having a hard enough time denying a person for GOOD reasons who HAPPENS to be a protected class!
*okay, take a breath Matt... *
</rant>
In the NB RTA we have the concept of a long-term tenancy (any tenancy >5-years) who are afforded additional rights under legislation. The list of reasons a landlord may terminate a tenant are almost identical to those listed in the ON RTA, but for all, save a long-term tenant, we are not obligated to renew a tenancy. It would appear all tenants in ON are treated as are our long-term tenants.
I'll re-read the ON RTA to see where I missed, the crucial difference ... I'm a little more concerned that the study we commissioned also appears to have missed that key difference.
If you set a date fro a tenant to move out before a lease is signed, that is not valid. If you and a tenant agree after the lease is signed that the tenant will move out on a certain date, that is valid. One of the reasons that tenants cannot be evicted without cause is rent control. Rent increases for existing tenants are similar to CPI, but capped at a maximum of 2.5% per year. The fear is that after a few years, the landlord wants to increase the rent to market rents on an existing tenant, so evicts the tenant at the end of a lease term, and gets a new tenant at current market rents. They don't want this to happen, so a tenant needs to be evicted for cause.
Also, rent control only applies to buildings in existence prior to the early 1990's, so if you are renting a newer condo, rent control does not apply.
Everyone is complaining, but they are still landlords in Ontario. It's frustrating, but if you treat a tenant fairly from the beginning, and know and follow the RTA, you can still make good money as a landlord. If you evict a tenant for a reason that has nothing to do with a protected class, you shouldn't have a problem with wild accusations thrown against you.
You should have let me have it on the other thread (my skin is pretty thick) as it has now become apparent I was working from incorrect information (both my own interpretation of what I rent in the ON RTA and the results of the commissioned comparison we had produced in advance of investing in ON).
@Luc Boiron I agree that it hasn't driven landlords out (well... all of them). What's frightening is the landmine factor. You hit the wrong tenant and BOOM, bankrupt (this applies to small landlords, not those with 100 doors to absorb the explosion).
@Roy N. did you keep the receipt for that study? :p
Basically, somewhere around 3% of renters stop paying their rent. It takes an average of 3-5 months for eviction. So if you have lots of doors, make sure that you drop your annual NOI by 3% of 3-5 months and you're good to go. Don't say a bloody word about anything under protected classes or you can write a cheque for up to 25k.
But yeah... investing in RE s great. That's why I'm doing it. That's also why I am spending a lot of time and money picking the correct first tenants for my first property - so I don't sink my entire life savings in the next 5 months.
Well informed, experienced landlords should not ever live in fear of their tenants or in fear of making the wrong decisions. If you are losing sleep at night due to the stress of dealing with tenants, concerned about repercussions, fearful you are making wrong choices in dealing with tenant issues you are in the wrong business. Being cautious and being fearful are opposites. What kind of business are you operating if you are afraid of your customers.
I have two types of tenants, those that tell me I am the best landlord they have ever had and those that openly curse me. I make sure every good tenant is treated like gold and feels valued. I make sure bad tenants regret the day they meet me but I try very hard to do them the favour of rejecting their application regardless of, or in spite of, race, creed, colour, religious, political or social affiliation.
Navigating this business is like driving on a highway. It is the law and you absolutely have the right to drive exactly at the posted speed limit. Good luck with that.
Roy the problem with your study is they only compared the language with out taking into consideration how the Board interprets it and the fact that adjudicators are granted the authority to ignore the regulations in making their decisions.
Here is an example of the authority of the board.
I had two identical cases 3 years apart. First case was regarding terminating a lease based on frustrated contract law as the result of house completely destroyed by fire. Text book case. Terms of lease could no longer be meet, I wanted to terminate lease tenant did not. Civil law is very clear and tenant had no legal case. Board ruled in favour of tenant ignoring civil law. Tenant received rent rebates and held control of my vacant lot, and preventing me from developing it, for 2+ years without having to pay rent.
Three years later identical case, different tenant, home destroyed by fire, except this time I wanted tenant to uphold their lease requirements, and I expected easy win based on previous case and surprisingly having the same adjudicator. This time the adjudicator again ruled in favour of the tenant siding with civil law and ignoring his previous ruling. Tenant was allowed to walk away without paying rent owed.
The only difference between the two cases was that in order to support/protect the tenant opposite rulings were required by the adjudicator. I challenged the ruling in both cases and was denied requiring me to proceed to civil court. Neither case warranted the expense on my part and they were dropped.
Welcolme to Ontario.
@Luc Boiron I agree that it hasn't driven landlords out (well... all of them). What's frightening is the landmine factor. You hit the wrong tenant and BOOM, bankrupt (this applies to small landlords, not those with 100 doors to absorb the explosion).
@Roy N. did you keep the receipt for that study? :p
Basically, somewhere around 3% of renters stop paying their rent. It takes an average of 3-5 months for eviction. So if you have lots of doors, make sure that you drop your annual NOI by 3% of 3-5 months and you're good to go. Don't say a bloody word about anything under protected classes or you can write a cheque for up to 25k.
But yeah... investing in RE s great. That's why I'm doing it. That's also why I am spending a lot of time and money picking the correct first tenants for my first property - so I don't sink my entire life savings in the next 5 months.
I agree Matt. Screening tenants is even more important in this tenant-friendly environment.
When I started, I tried being nice and giving my tenants a chance to catch up if they were late on rent. The result was that I would end up giving them an N4 notice for non-payment of rent when they were about 2 months behind. Of course, some tenants caught up quickly and it never got there.
Eventually, I started serving N4's almost right away (by the 5th of the month). If a tenant would say that they would pay me on Friday, or next week, I would still serve them the N4, and tell them that as long as they paid by the day they said, they wouldn't be evicted, but the N4 protected me in case I didn't get paid by that date. Also, if a tenant pays late almost every month, and I serve them an N4 every time, I can eventually evict a tenant with an N5 notice for regular later payment of rent, if it is appropriate.
Luc if you don't mind... a small piece of advice.
A N4 is fine although all it really does is provide your tenant a 14 day grace period to pay rent owing.
If they do not pay you must file your L1 which is an eviction request with a filing fee of $170. At a board hearing the tenant will be instructed to pay rent owing and your application to evict will be denied (always will). You will be out $170.
First time a tenant is late a N4 is fine as they will likely pay ahead of the L1 but if it happens a second time you need to take a different tact. On the second of the month, when tenant has not paid, immediately file a L9, request for rent owing. You will need to pay the $170 filing fee but the difference is that at a hearing the adjudicator will order the tenant to pay rent owing and uphold your application. You request the tenant pay your filing fee and the adjudicator will always order it.
As soon as you file the L9 the tenant will owe you the filing fee in addition to their rent. I have had tenants pay the rent and refuse to pay the fee resulting in me continuing the process to a hearing in order to collect my filing fee. Once a tenant has been through this once they will never be late again.
Remember late fees are illegal except for the $20 admin fee on top of bank fees in the case of a NSF.
Aside from the usual, human rights and discrimination aside, are there those type or class of applicant that you will not even consider renting to. Excluding the obvious such as criminals, those with pets or children etc based on your specific property type.
Off the top of my head and keeping in mind that we all have standards that may not be strictly legal would you reject some of these :
Neck and facial tattoos, single guys, recently separated women, single mothers, welfare, restaurant workers, nationalities know to cook offensive smelling food, smokers, low income immigrants, bikers, tattoo artists, recreational drug users, prostitutes. others.
Or based on human rights laws etc. is everyone welcome as long as they pass basic screening standards.
How do you feel about intermixing these types into a multi unit environment.
He must have attend the Real Estate school at Trump "University".
This is probably the biggest debate going in Ontario. I would side with @Thomas S. there are lots of "grey" areas for rejecting a tenant. I would say I'am very inclined to keep advertising if I don't like a potential tenant for one reason or another. A colleague of mine from Alberta likes to call us as the "socialist republic of Ontario"
I screen the pants off of any potential tenant for any of my rentals or clients rentals. Would I take someone on government assistance or disability unlikely,because they don't fit my screening process,nothing to do with who they are. If they don't have great credit , can't supply proper pay stubs, references, maintain my property as in snow shoveling, etc. I'am not going to take them. Although if someone applies and fits all this criteria yeah for sure ill take them on regardless of where they're from.
Is it discrimination because I also wouldn't take someone with all cash and little work history as they are likely a drug dealer?
Is this prejudice? I don't believe so, is it not more unfair for me to take on a un-satisfactory tenant strictly because they are experiencing an unfavorable situation and leave a hard working one with a good job and great references out in the cold.
If the the provincial government wanted landlords to take bigger risks on sub-par tenants they should make it easier for us to take legal recourse.
There my 2 cents now I await the angry response :-)
If the the provincial government wanted landlords to take bigger risks on sub-par tenants they should make it easier for us to take legal recourse.
There in lies the rub. The government wants private landlords to carry the burden of housing sub-par tenants knowing that if they allow evictions many would fall on the government to provide them subsidised housing. Then at the eviction hearing they point the finger at us and say we are stuck with them because we did a poor job of screening.
Been there done that, apparently although I am not allowed to ask on the application if they are crazy I am suppose to know he is a untreated paranoid schizophrenic tormented by voices telling him to do who knows what (maybe to kill his landlord). In Ontario landlords are required to accommodate disabled tenants regardless of the extent of financial burden it places on the landlord. I guess it is all my fault but the stories I could tell.
@Roy N. I am surprised you had not heard that Ontario leases automatically renew and cannot be terminated without cause. I guess it is natural to think by extension that other jurisdictions are like your own. From what I have gathered from your posts in the past, landlord and tenant law in the Maritimes seems to be fairer and more balanced. There have to be rules, the thing is the Ontario government has mixed in so much social policy and populist ideas into landlord and tenant law that you end up with a whole series of pitfalls for the unwary.
Having said that @Matt Geerts it is possible to get a fair return on investment in Ontario because leverage, the fundamental benefit of real estate investing, does not go away whatever the RTA says. If you are losing sleep over screening one potential set of applicants for your first rental property then this is a problem. In order to be successful in this business you have to be able to handle stressful situations, and your stress tolerance is going to have to be a lot higher than this. There will inevitably be bumps along the way. If there were not then more people would seek the higher returns that are available to landlords through sound management and leverage. But most people cannot take this on comfortably. If you can't manage the stress of bring a landlord you should acknowledge this early on; sell now and invest in ETFs. I would suggest logging off the more excitable Ontario landlord forums as a lot of the posts there are frenzied and unrepresentative. The likelihood is that if you follow some basic systems and screen properly you probably will be OK. But but unfortunately it is inevitable if you become a landlord that some bad things are bound to happen at some stage whether it be a burst pipe or a drug dealing tenant. If you can't handle that, it is time to move money into passive investments.
Good discussion here, all. @Stephen E. You definitley caught me on the OLA forums. It was great learning, but yes, sensationalist.
I think you've mistaken a figure of speach with literal sleep loss. A problem with hyperbole on the internet. I am all-in on this first deal and my first eound of tenants were the landmines I mentioned above. However, I have just left a message on the answering machine of an A+ applicant.
How about "has no bank account"? Fussy or high drama? Has sued others in the past?
We have learned that folks that get their income source in installments rather than monthly, like student loans, are less reliable payers.
Nationalities know to cook offensive smelling food is an interesting one. We have had units wrecked because of cooking and general tolerance of humidity. I could see how smells could be an issue for multi's. Think you have to deal with it with procedures/rules rather than excluding them.
As you see from the back-and-forth with @Thomas S. unbanked individuals are far more rare in Canada than in the U.S.A. as banks are required under law to provide an account to any citizen who wishes to open one. The only exception(s) under which a bank may refuse service is if you have committed a crime against any bank or are found to have presented false identification to secure the bank account.
I don't rent to:
1. Anyone born in a leap-year. Or anyone born on a leap-day. I didn't know leap days existed until a few weeks ago, and I'm still not sure what a leap year really is.
2. Fluffies - these types of folks like to go to conventions dressed up in furry animal costumes.
3. Vampires - I need to know about maintenance issues right away.
I don't know about 1 and 3 but I believe 2 may be discrimination........ under sexual orientation.
Also in Ontario we can not prevent tenants from having pets so denying Fluffies may be a problem as well. I know they are not actually pets but I am fairly certain our LTB will rule they are if necessary.