How to make tenants pay for WIFI when it's previously been free.

Question

Facts:

-I am closing on a 42 unit mixed commercial (29) / Residential (13) property in Canada.

-The current owner has maintained this property to a very high standard, and has treated all of his tenants like family.

-Rents have not been increased (in some units) since 1997!!! They are currently below market value by roughly 30%

-Canada has been continuing its implementation of regulations to try and slow the market down. One of them being rent control increases favouring the tenants. For 2019 the allowable rent increase is inflation (2.5%).

-Currently the owner has most of the tenants as month to month. Regulations in Canada are an absolute pain to evict tenants without just cause, so increasing rent for current tenants will be a very slow process.

-All tenants have free wifi included in their rent, yet not stated in their tenancy agreements.

Plan:

-Upon closing, I would like to give notice to the tenants that wifi is no longer provided for free. It will now be charged at a discounted (relative to them getting their own wifi from a provider) monthly fee.

Question:

-How do I implement a system which tenants cannot access the wifi without my permission. ie: like a hotel giving you a time expiring code? I need something which tenants cannot share with other tenants, otherwise one tenant will purchase the monthly code and share it with everyone else. I also need to keep it somewhat simple for accounting and cost purposes otherwise it will not be worth my time.

Thank you,

Taylor

Mike McCarthy · Answer

i don’t know any technical solution that will prohibit them sharing a password.

You can hand out passwords for each paid apartment, and each password can be used on a limit if 5 devices. But if they only have two, they have 3 to share. Or if they have kids and 7 devices, what then? Or if they have 5, but the computer breaks and they get a new one... you’ll end up becoming the IT support team too.

I like the idea, but unless you charge per connection or limit it, you’re stuck. Plus you’ll have to update the codes when people move, and probably once or twice during the year too to kick off ‘borrowers’

Might still be worthwhile. I know there are tools out there that do it.

Sen A. · Answer

@Taylor Atkinson

You need to start with looking carefully at the current lease agreement. Does it say that WIFI is provided as an amenity by owner? If it says nothing, cancel the service completely and tell your tenants they need to provide WIFI for themselves. This isn’t an Airbnb or hotel.

You should be ecstatic that you’re inheriting month-to-month leases because you’ll immediately be able to raise rent 2.5% and update the lease agreements on your own terms.

There doesn’t seem to be much value add in this deal. I’d be a hawk and make sure that your tenants are not breaking their end of the agreement, i.e. subleasing illegally, own pets that are not allowed, have occupants that are not on the lease, etc.

Alex Smith · Answer

Taylor,

If some are month to month, are you not able to give those tenants a 30 day notice to leave so you can start bringing rents towards market value?

Taylor Atkinson · Answer

Thanks for your response Chris,

Unfortunately in my area leases go to a month to month automatically after expiration. Eviction laws are strict and it is very difficult to remove tenants.

The benefit of making them pay for wifi would be;

-This would be legal

-This May encourage them to leave on their terms allowing me to replace the tenant at fair market value

-A small $20/month fee adds 170k value to the purchase price.

Still looking for a tech system which could help with this issue.

Thanks

Chris Virgil-Stone · Answer

Personally I wouldn't continue to provide it at a discounted rate- there really is no benefit to you. If you're considering it an "amenity", it is fairly cheap for the tenant to get internet themselves and I doubt it would make or break a decision to renew. I would phase it out as leases expire.

Also- if the tenants have gotten used to the idea of below market rents and free internet, they'll likely gripe at the fact that you're increasing rents AND charging them for something that used to be free. I'm not sure what the rent control laws are on bumping rents on newly vacant units vs renewal of leases but I'd want the tenants to move anyway so I can move it to market rates, or close to.

How to make tenants pay for WIFI when it's previously been free.

How to make tenants pay for WIFI when it's previously been free.

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