My First rental property - questions?

Question

Hi all, I just purchased my first property in the Durham Region, Ontario. I'm currently trying to setup all of my paper work (leases, rental app etc...) What is the consensus on this forum with regards to the following;

Length of lease - month to month vs term and why you've chosen one over the other?

Utilities - my property is a duplex. Do you prefer to pay utilities yourself and collect from the tenants or have them pay the utility companies directly? My first thought is because it's a duplex I don't want one tenant collecting from the other, I'd rather pay myself and collect from them.

Lawn care and snow removal - how do you deal with this?

All advice appreciated

Thanks

Reaz Ahmed · Answer

Lease

I can't think of any reason why anyone would want month-to-month. You may be be able to charge a slightly higher rent for this option, but they can leave at any time, leaving you with rent-ready costs and time to find a new tenant. In the long run, this option will cost you more.

I prefer to lock tenants in a long-term lease. Twelve month is the standard, but I go as far as to offer a discount for a 2-yr lease when I have a good tenant.

Utilities

Never would I want to pay upfront, then attempt to collect, unless that was the last resort.

Based on what you said, it sounds as though the duplex isn't separately metered. In such a case, I'd get annual estimates of utility costs, pay for it myself, but adjust/increase their rent to be all inclusive.

You may consider splitting the meters at some point in the future.

Lawn

If it's a side-by-side duplex, you can easily partition the front/back yards and make tenants responsible to maintain their respective areas. If it's not laid out that way, you will have to maintain the lawn.

You can always offer an incentive to one tenant to maintain it for you.

Snow

In my experience thus far, tenants have been responsible for snow removal. But I'm in the US and not sure if regulations are different in Canada.

Troy Pirsich · Answer

@Mathew Scott

I would stick with yearly leases rather than month to month if possible. Most GOOD tenants would probably also prefer this rather than M2M

As for utilities I would either make it inclusive or put them under the tenants name. Having them under your name and having the tenants pay you is a recipe for disaster. Plus, why make more work for yourself if you don't have to. As Jacob and Thomas said above, make sure you're doing your due diligence with projected utility amounts if you do decide to make it inclusive.

Thomas S. · Answer

Lease term ?

In Ontario the length of term is irrelevant since the tenants may leave when ever they choose with proper notice and the landlord does not have the right to non renew a lease. Term leases automatically convert to M2M at completion with the same language.

Tenants and landlords in Ontario are primarily governed by the RTA as opposed to their lease.

All my tenants are permanently on M2M so that I avoid having to redo/resign a new lease every year.

Utilities... it is always preferred that utilities be in the tenants name not the landlord. If you do not have separate meters that is a problem. Easiest solution would be to include utilities and bump up the rent (plus some) to cover the costs if you are not prepared to install separate meters. Find out from previous owner or utility companies what the costs were in the previous 2-3 years to estimate a monthly cost. Just make sure you pad the number to cover in the event of wasteful tenants (tenants that do not pay directly for utilities are all wasteful).

If you have not already memorised the RTA you should get on to that immediately.

Jacob Perez · Answer

@Mathew Scott

This seems to be pretty straight forward.

Lease Term - Unless there's a specific reason you wan't month-to-month I'd lock your tenants into a 1-year lease.

Utilities - Are these separately metered? Might need some context on this.

• If the utilities are already seperated I'd set the rent to be ___+ utilities, have your tenants set up the account directly with the utility company and pay themselves, saves you on step.
• If the utilities are shared, you can include a % in the lease of the utilities each pays, in that scenario you'd pay it yourself and collect each tenants respective % owing when the bill arrives.
• Thirdly, you can rent them all inclusive and adjust your rent price as a result.

Lawn Care / Snow Removal - If they're willing to do it, let them lol. If it's a scenario where everything is shared and it's unreasonable, have it professionally taken care of.