We sat down with one of our in-house brokers, Francesca Sgambetterra, for a Q&A about making the most of your rental property. Here’s what she had to say!
Q: How does somebody make more money with a rental property?
A: Typically, with a rental property, we’re looking at doing yearly rent increases. These increases allow you to stay in check with inflation and market value. So if you ever do try to resell the property later on, you’re not selling a property that has rent under value compared to everybody else.
Q: How do I calculate how much I can raise the rent?
A: Rental increases are based on operating expenses. These operating expenses for the property typically include insurance, municipal school taxes, condo fees if applicable, property management, and if you happen to do any major renovations, those capital improvements will also be considered.
You can do these calculations on the TAL (Tribunal Administratif du Logement) website, and
that will give you the accurate number.
Q: What happens if I send a lease renewal letter and the tenant refuses the rent increase?
A: If the tenant refuses your increase, you would just submit your numbers to the TAL and show them the proof. Realistically, they can’t really go against it. They either have to choose to leave the property or accept the increase.
Q: If I bought a brand-new condo that was built very recently, are there any exceptions to the rule?
A: Yes. If the property is less than five years old, you actually can increase the rent at will. The theory behind this exception is that since it’s a new building, condo fees and taxes might fluctuate significantly as everybody’s getting adjusted. So, you’re not entirely sure what your monthly expenses will be, and this acts as a grace period for them to stabilize.
Q: Is there anything else that we should be aware of when talking about rental properties and how to get the most out of them?
A: Aside from doing your increases on a yearly basis, I would just make sure that you do them on time. We see a lot of landlords forget to submit the form before the deadline, then they miss out on that year’s increase.
These increases, like we mentioned, are really important, whether you want to refinance a property or sell it later on or just keep up with market value. There is no other way to do that with an existing tenant.
Q: What happens if my unit has been vacant for the last 12 months?
A: If your unit is vacant for 12 months, you get to hit reset and price it at market value. Let’s say you were doing a renovation on your property: if you wanted to increase the rent on your current tenants to subsidize that, you’re not going to make much back.
But if you’re doing a renovation that might take over a year, then you can set it to a new market value and disregard the old rent.
Have questions about owning a rental property? We have answers! Reach out to our experienced team for tips, tricks, and pro advice.