As many of you may be aware, the Bank of Canada increased the prime rate from 5.95% to 6.45% on Wednesday December 7, 2022. A move widely expected by economists, inflation remains prevalent on the global horizon, slowing economic growth in all hemispheres of the world. This increase will impact all debtholders, which includes those with mortgages to pay off – that is, those paying a variable rate mortgage. 

With interest rates increasing, now is a great time to understand what a trigger rate is. A trigger rate is the rate at which your mortgage payment will only be covering the interest. Since your mortgage payments are often fixed in a variable rate plan, this means none of the payment will go towards paying the principal. This is a worse case scenario you should avoid at all costs – as you will essentially never be able to reduce the debt to your lender. The issue is that you will have stopped paying off your loan – this can also be called negative amortization. It is highly recommended that with this increase in interest that mortgagees figure out what their trigger rate is. This can be easily determined by reviewing your agreement, or contacting your financial institution and lender.

As many of you may be aware, the Bank of Canada increased the prime rate from 5.95% to 6.45% on Wednesday December 7, 2022. A move widely expected by economists, inflation remains prevalent on the global horizon, slowing economic growth in all hemispheres of the world. This increase will impact all debtholders, which includes those with mortgages to pay off – that is, those paying a variable rate mortgage. 

With interest rates increasing, now is a great time to understand what a trigger rate is. A trigger rate is the rate at which your mortgage payment will only be covering the interest. Since your mortgage payments are often fixed in a variable rate plan, this means none of the payment will go towards paying the principal. This is a worse case scenario you should avoid at all costs – as you will essentially never be able to reduce the debt to your lender. The issue is that you will have stopped paying off your loan – this can also be called negative amortization. It is highly recommended that with this increase in interest that mortgagees figure out what their trigger rate is. This can be easily determined by reviewing your agreement, or contacting your financial institution and lender. 

Example

Let’s say someone recently obtained a mortgage for $1,000,000 with an Amortization period of 25 years. If this loan was taken out in January 2022, the prime rate would have been 2.45% and let’s assume their interest rate was the same. The monthly payments would be $4,454.80. However, if this mortgage was acquired in December 2022 the borrower would then be paying $6,667.96 each month, this is assuming their interest rate equals the current prime rate of 6.45%. This goes to show the extremely large impact the rising interest rate has had on debtholders throughout the year 2022. Assuming this interest rate were fixed for the next 25 years as compared to a 2.45% interest rate, a borrower would end up paying $663,945.99 more in interest payments.

Suggestions

As a mortgagee, rising interest rates are something you never look forward to. However, they are inevitable and are vital to the stability of the national economy. What can you do to make sure you don’t break the bank with monthly mortgage payments? There are a few viable options. Firstly, you can also ask your lender if they offer an interest rate cap – this is the maximum interest rate your lender can charge on a mortgage. This means you never have to pay more towards your interest than the cap rate, even if interest rates continue to rise. 

Another option worth considering is making additional payments, which can be done two ways – increasing your monthly payment amount or making additional monthly payments . The key to saving money on your mortgage is to pay off your principal as quickly as possible. Your lender uses your mortgage payment to cover the interest first, before allocating it to your principal, and then your taxes and insurance in some cases. It’s important to note here that towards the beginning of your amortization period, only a small proportion of your mortgage payment goes towards your principal, though this gradually increases until your principal is paid off. 

These complications make it more tricky to pay off your principal quickly, especially in times where interest rates are rising. Making extra and/or additional payments, if it is an affordable option for you, is a great way to combat this. Your lender will apply any extra payments under the terms of your mortgage towards the principal – reducing this amount can save you up to tens of thousands of interest dollars. However, this option is not advisable if you are racking up debts with higher interest rates – you should work towards paying those off before making additional mortgage payments. On that same note, it’s a good idea to adjust your budget if you decide to make additional monthly payments to balance out our other expenses. Ideally, you want to avoid resolving financial issues in one area of your life at the detriment of another. 

The strategies discussed above also work well in the context of situations in which you reach your trigger rate. Though these are perfectly reasonable steps to take in these cases, we hope none of you get to this point – treating these solutions as preventative measures to avoid reaching your trigger rate is a best practice. 

Conclusion 

Variable interest rates are a constant part of our day-to-day life. Whether you’re a long-time home owner, an aspiring property investor, or a serial shopper, financial literacy is intrinsically important to making sure you get the best out of life. We all need to be ready for changes in the market – this could mean adjusting our monthly spending budgets and choosing a different time to make large transactions. As with most issues we encounter in our busy lives, it’s best to get in front of the complications in your mortgage payments and put in the work to mitigate it instead of working hard to recuperate from reaching your trigger rate.

As many of you may be aware, the Bank of Canada increased the prime rate from 5.95% to 6.45% on Wednesday December 7, 2022. A move widely expected by economists, inflation remains prevalent on the global horizon, slowing economic growth in all hemispheres of the world. This increase will impact all debtholders, which includes those with mortgages to pay off – that is, those paying a variable rate mortgage. 

With interest rates increasing, now is a great time to understand what a trigger rate is. A trigger rate is the rate at which your mortgage payment will only be covering the interest. Since your mortgage payments are often fixed in a variable rate plan, this means none of the payment will go towards paying the principal. This is a worse case scenario you should avoid at all costs – as you will essentially never be able to reduce the debt to your lender. The issue is that you will have stopped paying off your loan – this can also be called negative amortization. It is highly recommended that with this increase in interest that mortgagees figure out what their trigger rate is. This can be easily determined by reviewing your agreement, or contacting your financial institution and lender. 

Example

Let’s say someone recently obtained a mortgage for $1,000,000 with an Amortization period of 25 years. If this loan was taken out in January 2022, the prime rate would have been 2.45% and let’s assume their interest rate was the same. The monthly payments would be $4,454.80. However, if this mortgage was acquired in December 2022 the borrower would then be paying $6,667.96 each month, this is assuming their interest rate equals the current prime rate of 6.45%. This goes to show the extremely large impact the rising interest rate has had on debtholders throughout the year 2022. Assuming this interest rate were fixed for the next 25 years as compared to a 2.45% interest rate, a borrower would end up paying $663,945.99 more in interest payments.

Suggestions

As a mortgagee, rising interest rates are something you never look forward to. However, they are inevitable and are vital to the stability of the national economy. What can you do to make sure you don’t break the bank with monthly mortgage payments? There are a few viable options. Firstly, you can also ask your lender if they offer an interest rate cap – this is the maximum interest rate your lender can charge on a mortgage. This means you never have to pay more towards your interest than the cap rate, even if interest rates continue to rise. 

Another option worth considering is making additional payments, which can be done two ways – increasing your monthly payment amount or making additional monthly payments . The key to saving money on your mortgage is to pay off your principal as quickly as possible. Your lender uses your mortgage payment to cover the interest first, before allocating it to your principal, and then your taxes and insurance in some cases. It’s important to note here that towards the beginning of your amortization period, only a small proportion of your mortgage payment goes towards your principal, though this gradually increases until your principal is paid off. 

These complications make it more tricky to pay off your principal quickly, especially in times where interest rates are rising. Making extra and/or additional payments, if it is an affordable option for you, is a great way to combat this. Your lender will apply any extra payments under the terms of your mortgage towards the principal – reducing this amount can save you up to tens of thousands of interest dollars. However, this option is not advisable if you are racking up debts with higher interest rates – you should work towards paying those off before making additional mortgage payments. On that same note, it’s a good idea to adjust your budget if you decide to make additional monthly payments to balance out our other expenses. Ideally, you want to avoid resolving financial issues in one area of your life at the detriment of another. 

The strategies discussed above also work well in the context of situations in which you reach your trigger rate. Though these are perfectly reasonable steps to take in these cases, we hope none of you get to this point – treating these solutions as preventative measures to avoid reaching your trigger rate is a best practice. 

Conclusion 

Variable interest rates are a constant part of our day-to-day life. Whether you’re a long-time home owner, an aspiring property investor, or a serial shopper, financial literacy is intrinsically important to making sure you get the best out of life. We all need to be ready for changes in the market – this could mean adjusting our monthly spending budgets and choosing a different time to make large transactions. As with most issues we encounter in our busy lives, it’s best to get in front of the complications in your mortgage payments and put in the work to mitigate it instead of working hard to recuperate from reaching your trigger rate.

As many of you may be aware, the Bank of Canada increased the prime rate from 5.95% to 6.45% on Wednesday December 7, 2022. A move widely expected by economists, inflation remains prevalent on the global horizon, slowing economic growth in all hemispheres of the world. This increase will impact all debtholders, which includes those with mortgages to pay off – that is, those paying a variable rate mortgage. 

With interest rates increasing, now is a great time to understand what a trigger rate is. A trigger rate is the rate at which your mortgage payment will only be covering the interest. Since your mortgage payments are often fixed in a variable rate plan, this means none of the payment will go towards paying the principal. This is a worse case scenario you should avoid at all costs – as you will essentially never be able to reduce the debt to your lender. The issue is that you will have stopped paying off your loan – this can also be called negative amortization. It is highly recommended that with this increase in interest that mortgagees figure out what their trigger rate is. This can be easily determined by reviewing your agreement, or contacting your financial institution and lender. 

Example

Let’s say someone recently obtained a mortgage for $1,000,000 with an Amortization period of 25 years. If this loan was taken out in January 2022, the prime rate would have been 2.45% and let’s assume their interest rate was the same. The monthly payments would be $4,454.80. However, if this mortgage was acquired in December 2022 the borrower would then be paying $6,667.96 each month, this is assuming their interest rate equals the current prime rate of 6.45%. This goes to show the extremely large impact the rising interest rate has had on debtholders throughout the year 2022. Assuming this interest rate were fixed for the next 25 years as compared to a 2.45% interest rate, a borrower would end up paying $663,945.99 more in interest payments.

Suggestions

As a mortgagee, rising interest rates are something you never look forward to. However, they are inevitable and are vital to the stability of the national economy. What can you do to make sure you don’t break the bank with monthly mortgage payments? There are a few viable options. Firstly, you can also ask your lender if they offer an interest rate cap – this is the maximum interest rate your lender can charge on a mortgage. This means you never have to pay more towards your interest than the cap rate, even if interest rates continue to rise. 

Another option worth considering is making additional payments, which can be done two ways – increasing your monthly payment amount or making additional monthly payments . The key to saving money on your mortgage is to pay off your principal as quickly as possible. Your lender uses your mortgage payment to cover the interest first, before allocating it to your principal, and then your taxes and insurance in some cases. It’s important to note here that towards the beginning of your amortization period, only a small proportion of your mortgage payment goes towards your principal, though this gradually increases until your principal is paid off. 

These complications make it more tricky to pay off your principal quickly, especially in times where interest rates are rising. Making extra and/or additional payments, if it is an affordable option for you, is a great way to combat this. Your lender will apply any extra payments under the terms of your mortgage towards the principal – reducing this amount can save you up to tens of thousands of interest dollars. However, this option is not advisable if you are racking up debts with higher interest rates – you should work towards paying those off before making additional mortgage payments. On that same note, it’s a good idea to adjust your budget if you decide to make additional monthly payments to balance out our other expenses. Ideally, you want to avoid resolving financial issues in one area of your life at the detriment of another. 

The strategies discussed above also work well in the context of situations in which you reach your trigger rate. Though these are perfectly reasonable steps to take in these cases, we hope none of you get to this point – treating these solutions as preventative measures to avoid reaching your trigger rate is a best practice. 

Conclusion 

As many of you may be aware, the Bank of Canada increased the prime rate from 5.95% to 6.45% on Wednesday December 7, 2022. A move widely expected by economists, inflation remains prevalent on the global horizon, slowing economic growth in all hemispheres of the world. This increase will impact all debtholders, which includes those with mortgages to pay off – that is, those paying a variable rate mortgage. 

With interest rates increasing, now is a great time to understand what a trigger rate is. A trigger rate is the rate at which your mortgage payment will only be covering the interest. Since your mortgage payments are often fixed in a variable rate plan, this means none of the payment will go towards paying the principal. This is a worse case scenario you should avoid at all costs – as you will essentially never be able to reduce the debt to your lender. The issue is that you will have stopped paying off your loan – this can also be called negative amortization. It is highly recommended that with this increase in interest that mortgagees figure out what their trigger rate is. This can be easily determined by reviewing your agreement, or contacting your financial institution and lender. 

Case Example

Let’s say someone recently obtained a mortgage for $1,000,000 with an Amortization period of 25 years. If this loan was taken out in January 2022, the prime rate would have been 2.45% and let’s assume their interest rate was the same. The monthly payments would be $4,454.80. However, if this mortgage was acquired in December 2022 the borrower would then be paying $6,667.96 each month, this is assuming their interest rate equals the current prime rate of 6.45%. This goes to show the extremely large impact the rising interest rate has had on debtholders throughout the year 2022. Assuming this interest rate were fixed for the next 25 years as compared to a 2.45% interest rate, a borrower would end up paying $663,945.99 more in interest payments.

Our Suggestions

As a mortgagee, rising interest rates are something you never look forward to. However, they are inevitable and are vital to the stability of the national economy. What can you do to make sure you don’t break the bank with monthly mortgage payments? There are a few viable options. Firstly, you can also ask your lender if they offer an interest rate cap – this is the maximum interest rate your lender can charge on a mortgage. This means you never have to pay more towards your interest than the cap rate, even if interest rates continue to rise. 

Another option worth considering is making additional payments, which can be done two ways – increasing your monthly payment amount or making additional monthly payments . The key to saving money on your mortgage is to pay off your principal as quickly as possible. Your lender uses your mortgage payment to cover the interest first, before allocating it to your principal, and then your taxes and insurance in some cases. It’s important to note here that towards the beginning of your amortization period, only a small proportion of your mortgage payment goes towards your principal, though this gradually increases until your principal is paid off. 

These complications make it more tricky to pay off your principal quickly, especially in times where interest rates are rising. Making extra and/or additional payments, if it is an affordable option for you, is a great way to combat this. Your lender will apply any extra payments under the terms of your mortgage towards the principal – reducing this amount can save you up to tens of thousands of interest dollars. However, this option is not advisable if you are racking up debts with higher interest rates – you should work towards paying those off before making additional mortgage payments. On that same note, it’s a good idea to adjust your budget if you decide to make additional monthly payments to balance out our other expenses. Ideally, you want to avoid resolving financial issues in one area of your life at the detriment of another. 

The strategies discussed above also work well in the context of situations in which you reach your trigger rate. Though these are perfectly reasonable steps to take in these cases, we hope none of you get to this point – treating these solutions as preventative measures to avoid reaching your trigger rate is a best practice. 

Concluding Thoughts 

Maintaining a property is a huge chunk of your work as a property owner or manager. It includes a wide range of items like the cleaning of common areas, safety checks, as well as routine and spontaneous repairs of appliances throughout a residential building. It is absolutely essential that this is not performed haphazardly in order to achieve the satisfaction of your tenants, which in turn improves your reputation – ultimately resulting in higher client retention and a more secure revenue stream. 

Property maintenance duties can be categorized into two main categories: routine and reactive. Routine maintenance duties, as the category suggests, are tasks done on a regular basis. This includes regular cleaning and HVAC filter replacements. Reactive duties deal with issues as they arise, like flooding and appliance failures. 

It goes without saying that the types and list of maintenance tasks vary by the size and type of the property – the work needed to upkeep a fourplex in a suburban neighbourhood is considerably different from a 30 story apartment complex in a bustling downtown district. Duties also vary with the seasons as well – the variation in the elements and weather conditions pose different risks to your investment property you should work to prevent. Scroll down below to read more about essential property maintenance items by season.

FALL & WINTER

For many of us, the end of summer brings cooler weather, falling leaves, and seeing your breath as a cloud of vapor as you exhale. For property owners and managers, this often means the threat of ice storms causing safety hazards and frozen pipes. Below are a list of a few of the most important tasks you should bear in mind during this time of year.

1. Prevention of frozen pipes. As mentioned earlier, frozen pipes pose a huge risk. Ice in your pipes can lead them to burst indoors and cause severe water damage if no preventive measures are taken. Make sure tenants understand the warning signs, what preventive procedures to follow, and steps to take in case of an emergency. It’s also not a bad idea to install pipe insulation for especially at-risk areas.

2. Water heater servicing. An essential piece of equipment as temperatures lower, the water heater is a hefty cost to repair and even more so to replace. Working with a licensed technician to drain the unit and remove any sediment that builds up once a year should go a long way to prevent large-scale disasters.

3. Reversing ceiling fans. Do the units of your property have ceiling fans? Changing the rotational direction of your fans can greatly improve energy efficiency – this pushes warm air down into the room and ultimately reduces heating costs. As an added bonus, this also reduces your carbon footprint.

4. Checking for water damage. Water damage poses several health and infrastructural risks to your property – mold growth can result from this as well the deterioration of your building’s structural integrity. Check for leaky pipes under cabinets, in basements, and around water heaters. It’s also a good idea to check the interior seals around windows and doors, which can allow cold air and moisture into your building if compromised. 

5. Cleaning the gutters. This is best done in late fall, as fallen leaves can build up on your gutters and prevent the proper drainage of water. When this happens, leaks and roof damage can result – which is why it’s especially important to do this before it starts to snow. If your property is situated in an area with evergreen tree species like pine, you may need to have your gutters cleaned every few months.

6. Winterizing outdoor hoses and taps. If your property includes external hoses or taps, you should disconnect and drain them before the temperature drops. Make sure you also turn off the external water supply so that no remaining water can freeze and cause pipes to rupture.  

7. Preparation for snow removal. In the case that the leases for your property don’t require tenants to take care of snow and ice removal, you as a property owner need to plan accordingly for these duties. It’s paramount that you secure a contract with a snow removal service provider as soon as possible – the most reputable and well-ranked companies will be fully booked up once winter arrives. Otherwise, you’ll be stuck with vendors that may not provide the best services and prices that fit your budget.

SPRING & SUMMER

With warmer, more humid weather comes ideas of vacationing and sun tanning. But as a property owner, you’d likely have your mind preoccupied on the threat of infestations and HVAC problems. However, these issues are not unmanageable when you exercise a little foresight and due diligence. See below for the list of key items to keep in mind for the warmer seasons. 

1. Emergency alarm testing. As smoke and carbon monoxide detectors save lives, this task is an absolute must-do. While each detector unit should have a lifespan of about 10 years, take your time to test each device throughout your rental one at a time. Don’t forget to check the detectors in your common areas!

2. Pipe inspections. Colder temperatures have a high potential in causing significant damage to your pipes and plumbing systems. The warming of the weather presents a great opportunity to check on this infrastructure for unexpected changes, damages, cracks, and the like. Make sure all connections are sealed properly and that there are no ‘sweaty pipes’ – this may be a symptom of ventilation issues.

3. Thermostat testing. You’ll want to make sure your thermostat is taking the temperature accurately – this will affect your tenants’ enjoyment of your units as well as your energy expenditure. As part of your HVAC preventive maintenance, check your thermostat. 

4. Replacing or fixing damaged window screens. Generally, windows have a lifespan of 10 to 15 years, though damages may occur that shorten their life cycles significantly. As such, screens should be monitored on a yearly basis. This is especially important in the summer so as to prevent bugs from accessing your units and causing an infestation. 

5. Cleaning exterior vents. Debris buildup in exterior vents can be easily overlooked. Make sure to inspect exterior outlets, range vents, bathroom and dryer vents to make sure proper airflow is sustained. This is one of the many vital steps to take for fire prevention and safety. 

6. HVAC servicing. It’s a good idea to have a technician to service the HVAC systems before the weather heats up. They’ll make sure the filter for air conditioning systems are replaced if needed and the other involved apparatuses are up-to-date. This way, your tenants can come home to a fully-functional air conditioning system after spending time outside in the sweltering sun. 

7. Security inspections. Statistically, burglaries peak in the month of June – this means that you should check to make sure doors, windows, and their locks are secure at the beginning of Spring to keep your property and tenants safe. Of course, security inspections can happen any time to adapt to the condition of the property and its surrounding environment as you see fit. 

The above list of tips is by no means an exhaustive list of all the important property maintenance items to keep in mind as a property owner. Every property is unique and requires different services to keep it in prime condition – ensure that you are aware of the needs of your investment property as a property owner. It’s also no secret that property maintenance can be quite costly on both a financial and mental scale. This means you’ll have to prioritize certain duties and balance your budget based on importance and frequency. 

It’s no surprise to renters and property owners alike that the rental industry in many cities across North America has suffered many blows over recent years, largely due to the economic downturn as a result of the COVID-19 pandemic. However, this was not the case in Calgary – access to rent relief and other support programs saw the proliferation of rental rates during this time. 

It would not be far-fetched to say the rental industry has benefited from the pandemic, as the rise of remote working placed a consumer emphasis on the need for nicer homes and better home maintenance in Calgary. With a greater number of people upsizing leading to higher demand, the pressure exerted on landlord-tenant relationships has never been smaller. That said, it does not mean that landlords and property owners don’t need to spend any time cultivating their relationships with tenants. In fact, now is the perfect time to capitalize on the trends working in your favour and decrease your vacancies, ultimately securing a greater ROI.

Having a good relationship with your tenants can not only save you the headache of dealing with leasing and amenity repairs. This, of course, comes with having great tenants. Check out our other blog on choosing the right tenants and read more below on our essential tips on building the ideal landlord-tenant relationship.

Communication is key

As with any relationship, maintaining transparent communication with your tenants, especially about policy changes and inspections is the foundation of a good tenant-landlord relationship. Landlords should also aim to be easy to get in contact with, as this strengthens the bridge between them and their tenants and makes it easier for tenants to reach out to them if issues arise. More open dialogue between landlords and tenants can open the door to collaborative solutions to problems that tenants may struggle with, like an individualized payment plan.

Centralize your communication with specific platforms

Speaking of communication, it’s generally a good idea to designate a single platform for which all communication between you and your tenant takes place. Various forms of communication, such as email, text, or even in person can easily overwhelm both the tenant and the landlord, as responses can get lost or missed. This can leave either party feeling invalidated and frustrated – this is what you want to avoid when trying to build any kind of relationship. The best way to go about this is to be very clear on how you will communicate with your tenant right from the get go, which can take the form of a designated landlord messaging app that everyone will have installed. There are a wide variety of multifamily property management softwares out there on the market with these features, which you can read more about here. Ensuring that all communication takes place on one platform will minimize confusion and act as a record of anything that should be in writing in the case that you need to reference it.

Know your tenant

One of the basic building blocks of any relationship, this should occur at the tenant screening process. Before you offer a lease agreement, it’s a good idea to invest time into getting to know your tenant. Through screening reports and person-to-person conversation, you can get to know your tenant’s personality and communication style – which will come to be a huge determinant factor in the success of your relationship. This also provides you the opportunity to set expectations and lay down the ground rules, clearing up any confusion from both parties.

Keep an open mind for suggestions

A huge part of any successful relationship is receptiveness to the ideas of others. Healthy two-sided communication between landlords and tenants greases the wheels of idea exchanges that will ultimately be mutually beneficial. Being open to suggestions exposes both tenants and landlords to the perspective of the other that may be otherwise overlooked. As tenants are actively living in the property, they may be more privy to noticing details that may elude even the most observant landlord. This, of course, strengthens the relationship between the two parties and breaks down the barriers of communication.

Hire a property manager

Even the most well-functioning tenant-landlord relationship can benefit from the mediation of a third party. This is where a property manager comes in – they are responsible for the daily management of the property, as well as rent payments, maintenance requests, and can be an asset in emergency situations. As this is their profession, they are experts on all there is to know on tenant-landlord law, which makes them a qualified mediator to keep the peace and ensure everything runs smoothly. Looking for a property manager? Don’t hesitate to check out our property management page and get in touch to see how we can make your property ownership experience a breeze. 

You’ll notice that the common theme with our tips is having top-notch communication skills. Not only are they vital for the functioning of your other relationships, but they are especially important as a landlord with anywhere from 5 to 50 tenants or more. The bulk of a landlord’s responsibilities and expertise comes from the day-to-day management of their rental properties and logistics-related tasks, though building healthy relationships with their tenants is also a vital part of a property owner’s success. Keeping up with all the work that goes into managing a property is just as worth your time as the interpersonal aspect of multifamily property ownership. 

Every property owner or landlord dreams of having multiple qualified tenants applying for their units. On the flip side, we’ve all heard horror stories of bad tenants that disregard rules you’ve set in place to preserve and protect your property. These two opposing possibilities make us all question how we can make the most out of our property investment ventures. 

Though becoming a property owner means a lot of new responsibilities, you’ll generally find that finding bad tenants is not as common as you might think. Despite this, there are still a fair share out there, so you need to make sure you have a well-crafted screening process to minimize this as much as possible. Read through our 7 essential steps below to ensure you attract great tenants for your multifamily property. 

1. Do some research and get to know your target audience

This is the first step you should take before you invest in your multifamily property. Research will give you a better understanding of the neighbourhood, and what types of people are interested in the area and the type of property you have purchased, whether it’s a luxury skyscraper apartment or a modest fourplex. This should also let you know what amenities are nearby, and how much rent you can charge according to housing laws.

2. Market your property according to your research

Now that you have a better idea on what your target audience is, you can create tailored advertising campaigns in accordance with your research. This way, you make sure the right people are seeing your ads on the right platforms and mediums. It’s a good idea to include as much information as possible about your property so you can maximize the number of informed applicants – and most importantly, they will be aware of regulations you have in place. For example, if your building has limited parking availability, or is a pet-free establishment, your applicants should be aware of this right from the get go. 

3. Check your applicants’ credit score

While numbers can’t paint the full picture about a person, they give you a good sense of their financial health and literacy. Generally, credit scores between 660 and 800 are ideal, while anything under 579 is considered a ref flag. It also goes without saying that applicants with piling debt, overdue accounts, and poor repayment histories should likely not be considered. However, keep in mind that applicants who are new to the country may not have had adequate opportunity to build a credit score that accurately reflects their financial situation. In this case, it’s a good idea to ask them to provide proof of a stable income – which takes us to the next point.

4. Verify their monthly income

As one of the most simple and standard forms of tenant screening, you should check to make sure your applicants’ financial documentation shows that they can afford to set aside a third of their gross monthly income on rent. This can be easily checked through a record of employment, pay stub, or even a T4 slip from their bank to verify that regular deposits are being made on a monthly basis. 

5. Check your applicants’ tenant history

While the documentation mentioned above provides you a fair amount of information about a person’s credibility, you can always learn more from direct conversation with their contacts. We highly recommend requesting references, such as employers, previous, and current landlords. Invest time into reaching out to them and asking open-ended questions to learn as much as you can about your potential tenants – just like a talent recruiting process. 

6. Check their criminal record

Laws surrounding criminal record checks vary from province to province, though landlords in Canada are legally allowed to run a criminal record check in tenant screening if consent is given. Of course, hesitancy in applicants to show you their criminal record may be a cause for concern. A criminal record check doesn’t tell you everything you need to know about the person, though serious charges like violence, assault, or drug-related convictions are most definitely appropriate grounds to deny applications on. As for the milder charges, it’s up to your discretion as the property owner whether or not you are willing to look past them. 

7. Make sure they fit your lifestyle expectations 

Another extremely important factor in consideration of your applicants is their lifestyle. Choosing tenants with lifestyles that suit you can go a long way in making sure they follow the regulations you’ve carefully laid out for your property. Rules such as no smoking and limits to the number of visitors at a time are things your potential tenant should be aware of should they continue through with their application process. Ask your applicants these types of questions as well as why they’re moving – how they answer this can tell you a lot about them as a tenant. Should you encounter any red flags, you should move on. 

Concluding thoughts

As mentioned previously, more often than not you will encounter a good tenant rather than a bad one. That being said, it’s highly important to your financial success and wellbeing of your property assets that you do your due diligence in finding tenants that are the right fit for your building. You’ll see this hard work pay off, as acquiring great tenants will result in long-term tenants, lowering your turnover rate and in turn, securing your revenue stream. Not only will your tenants be more responsible as clients, but you will save time and resources otherwise spent on advertising, leasing, and move-in costs. 

While the most detailed and thorough screening process won’t be able to rule out every single bad applicant, you should run into fewer problems down the road if you’ve properly set up your screening measures. 

People hire legal counsel for all sorts of matters, ranging from civil lawsuits to mergers and acquisitions. Real estate is an area that people don’t often consider hiring a legal professional for, however having a real estate lawyer at your side when it comes to property transactions can be immensely helpful and even essential. This is especially the case for multifamily property investments, as this will likely be one of the most expensive transactions you will make. 

Real estate lawyers handle a wide range of commercial and residential real estate dealings, including client representation in foreclosures, short sales, leases, as well as your average buying and selling transactions. With buying in particular, your real estate lawyer can oversee the closing process and look over any necessary documentation. Having a lawyer who is experienced and competent in your specific area of real estate can go a long way to ensuring a seamless transaction, especially if you’re in the business of multifamily property investment.

So you have your eye set on a once-in-a-lifetime multifamily property deal at an ideal location, and have chosen to select a real estate lawyer to work with. Now comes the careful selection process of which lawyer to go with – with so many reputable firms and professionals out there with varying specializations, this may be a tough choice to make. This is where you have to find the professional that’s the right fit for your specific needs. How should you go about doing that? You can start by asking friends and colleagues for a referral – recommendations from word-of-mouth can be reliable if they come from someone you trust.

Google searches can also tell you a lot about a lawyer. Having a solid online presence, such as a website with clearly laid out information about their services and pricing are green flags. You’ll also want to make sure they have a fair amount of online reviews, the majority of which should be positive. Additionally, it’s a good idea to have a quick chat with them to get a sense of their personality and communication style, as this makes a sizable difference. 

Once you’ve narrowed down your choices – and yes, it’s not a bad idea to talk to multiple lawyers – it’s time to conduct some quality screening. Here are three essential questions to ask in this process:

How long have you been practicing real estate law?

The general idea is that the more complicated the transaction, such as for a commercial property with a large number of units, the more experienced the lawyer should be – though keep in mind they will cost more. Along with this question, you should find out how many years they have practiced in your province, and even your city, as real estate laws can vary across regions. 

Have you handled cases like mine?

Every real estate transaction is unique and you’ll want to find a lawyer well-versed in cases similar to yours – namely multifamily property ownership. It’s highly beneficial to choose a lawyer who has handled the same type of transaction involved as they would be familiar with the intricate processes and be able to anticipate potential problems and resolve them. While you can’t ask for specific details about previous cases they’ve worked in, it’s a good idea to ask how they would approach your situation. This way, you get a good grasp on their competence and how knowledgeable they are in your area.

Will you be working with anyone else on my case?

If you’re considering working with a larger firm for a transaction, it’s worth noting that part of the lawyer’s workload may be passed to legal assistants and paralegals, so you should be sure that you’re comfortable with your information being shared with people other than your selected lawyer. In doing so, you should inquire about your options when you have questions about your case, as in who you can reach out to if your lawyer isn’t available. 

Final thoughts

Lastly, just by chatting with a lawyer can tell you a lot about whether they would be a good fit to work with you. Through informal conversation, you get a sense of their personality and communication style. Do they talk down to you, and do they get easily annoyed by questions you ask? Do they take weeks to respond to emails? All these seemingly trivial details are also crucial in ensuring a successful partnership and transaction. You want to make sure that your lawyer is not only competent in your area, but also someone you can rely on and work well with.

Investing in real estate is a great source of income, and multifamily investments are no different. In fact, investing in a multifamily property may be one of the more profitable choices of real estate. There are many reasons for this, with the most prominent being that during the 2020 global pandemic the multifamily real estate remained relatively stable in comparison to the majority of other industries and markets. Proving that the profitability of multifamily investments will not be going away in the near future, and is here to stay. The evidence of income in the multifamily industry includes generational shifts, supply changes, and that tenants continue to pay rent in difficult times. 

The first reason for the constant multifamily profits is the generational shifts. The driving force of this is Millennials, as they’re renting longer and don’t have the more traditional dream of owning a home. The benefits of renting appeals to many, as there is a lower barrier to entry (no down payment) and there is more flexibility as renters have more freedom in moving. Tenant turnover has also been decreasing, paired with the increase in demand and it makes sense why multifamily investments are continuing to be a good source of income. 

Secondly, multifamily properties are profitable due to recent supply changes. Developments of multifamily buildings have been slower due to market uncertainty. This uncertainty comes from the fact that renters are travelling from high dense and high cost areas to less dense and more affordable areas. With fewer multifamily properties in these regions, there is an increased demand with a lower supply. Resulting in a higher demand and a higher profit for multifamily property owners. 

The final reason that will be discussed is the fact that housing is a basic necessity. In difficult times such as the 2020 global pandemic, tenants were still able to pay the rent. The statistic showed that when compared to 2019 the payment for a given month didn’t decrease over 2%. This isn’t as unreasonable as some may assume, since the government provides financial aid in order for citizens to be able to fulfill their needs. This just goes to show that multifamily properties remain profitable throughout challenging periods as tenants find a way to pay rent and fulfill their basic needs. 

In conclusion, the profitability of multifamily real estate is undeniably one of the most constant types of investments as proved during COVID-19. Further trends and pieces of evidence such as generational shifts and supply changes continue to prove multifamily buildings provide a good source of income and will remain to do so for the coming years. To find your next multifamily investment project view our exclusive listings, or contact Kamil Lalji to gain professional real estate advice. 

Investing in a multifamily property requires more forethought and planning compared to casual real estate browsing. The preparation involved consists of multiple variables a potential owner may consider in order to create an income stream. Limiting the risks of purchasing a multifamily listing demands research on recent statistics as well as the numerical data of the desired properties. This article outlines the variables that factor into a real estate investor’s decision including the basic property characteristics, the value of a property, and how to choose the timing of the investment. Whether starting out as a first-time or experienced investor, learn more how Calgary Multifamily can maximize your revenue through their property management services (click here). 

When searching for a desirable investment property, it is important to see what the building has to offer. These characteristics can include location as well as the total number of units. Gaining a building in a prime location is bound to increase the amount of potential tenants therefore increasing the return of investment (ROI). Choosing a particular location is also a defining feature in who the target tenant audience will be and can help you refine your marketing to those demographics. Another basic feature is the total number of units, as well as number of rooms in each unit, which influences the amount of revenue and risk. For beginner investors, they should focus on a duplex (2 units), triplex (3 units), or fourplex (four units). The reason for this is because these buildings have a lower risk compared to larger multifamily listings. In general, the basic characteristics of the property itself has an immense impact on the desirability of a building and should be reviewed in length before making an offer. 

When purchasing a multifamily property, it is crucial that buyers compare data points that reveal the true value of the property. These statistics include the estimated income and total expenses. Calculating the income a property can accrue is vital in determining the value of the investment and is necessary to conduct a cost-benefit analysis to establish whether the investment will pay off. To simplify this process, there are sites available that can verify the rental prices of buildings along with the estimated total income. Costs are another large numerical factor which can differ in each situation. For example, owners who are planning on living in one of the units may be eligible for owner-occupied financing options. Expenses are also impacted by one's credit score, debt to income ratio, and down payment as these are all components considered by lenders. To generalize, multifamily investors must have a whole and accurate prediction of the property value and must weigh the cost and benefits of their potential investment. 

Lastly, it is important that investors identify market trends. These trends can help an investor understand statistics in the past, as well as predict what may occur in the future. Accurate estimates provide investors the knowledge of whether to make an investment quickly or hold off. Relevant market trends divulge the actions of sellers, other buyers, and consumers (potential tenants). Examples include consumer spending habits, mortgage rates, unemployment rates, as well as average property sale prices. It is important to understand the actions of stakeholders, and future stakeholders, when investing a property. To summarize, accurately researching and predicting market trends can communicate to (future) property owners the best time to invest in multifamily buildings to maximize their revenue stream. 

There are many considerations that must be given thought and research when choosing which multifamily property to invest in such as the property’s features and value. Furthermore there are multiple trends that are necessary in deciding when to invest. All of these factors, when explored accurately, can limit the risks of a property and increase the revenue. As a multifamily investor there is much more preparation needed when considering a listing in comparison to purchasing a single family home.