Don’t use real estate agents to find tenants

The simple fact is that real estate agents have no vested interest in finding you a good tenant. I have noted this before.  Do not use a real estate agent to find you a tenant. The following article reinforces this view.



Raffi Anderian illustration

How to avoid the tenant from hell

September 30, 2010

Jennifer Brown

Special to the Star

When Barbara Milean’s husband was transferred from Toronto to Ohio with his job as an operations manager at Chrysler last year, the couple faced a difficult decision — what to do with their yet unfinished three bedroom condo.

The Mileans had bought the condo on The Queensway in 2005 with plans to live in it with their children. But delays in the completion of the building meant they never actually got to move in before the job transfer came through. Faced with a tough real estate market in late 2007 the couple’s real estate agent persuaded them to rent the unit instead of selling it and potentially losing money on a brand new unit.

“We were carrying two mortgages and he told us it wasn’t selling so we should consider renting it,” says Milean.

The real estate agent found a tenant for the condo in December 2008. The woman was young and had no credit history but the agent got her to pay three months rent up front for the unit, which was listed for $2,100 a month.

“We didn’t realize it isn’t legal to do that,” says Milean, a busy mother of three. “She said she was working as an independent contractor for her mother so didn’t have much of a credit history.”

The real estate agent didn’t conduct any background checks on the tenant.

The tenant moved in and didn’t pay another month’s rent after that. She also didn’t pay the electric bills. After much frustration, Milean hired a property management firm to take control of the situation and represent them at the Landlord and Tenant board. At the time the tenant owed $13,000 in back rent. For months, the Mileans found themselves embroiled in legal wrangling with the tenant.

“It’s a five hour drive for us to come to Toronto from Ohio so we were happy the property management firm could represent us there,” she says.

“It’s like she (the tenant) had more rights than we did,” says Milean. “Even at the hearings, if she promised to pay they would give her more time to pay and let her stay in the unit.”

It’s a scenario all too familiar says Brandon Sage of LandLord Property and Rental Management in Toronto, who represented the Mileans.

“This was the classic nightmare tenant scenario which could have easily been avoided with reference checks,” says Sage.

The tenant finally left on her own after appearing three times in hearings before the Landlord and Tenant board.

Even after the tenancy had been terminated by an order of the Board, the tenant succeeded in manipulating the system to further drag out the eviction date and, upon vacating, left the suite in a condition that required $2,000 in repairs.

The tenant was ordered to pay the Mileans the back rent owed and now sends the couple $500 to $600 a month. So far has paid back about $7,000 in back rent.

“We have been successful in holding the judgment over the tenant’s head — and the threat to her income and credit rating it presents,” says Sage.

“Because she said she was an independent contractor, in the end, that we couldn’t garnishee her wages to get our money back,” says Milean.

In September 2009, the property management firm found the Mileans a good tenant who eventually ended up buying the condo.

The Mileans paid LandLord Property management about $75 a month for their services and for time spent appearing on their behalf in court to recoup the back rent.

Sage and his colleague Gotham Chandidas say the Mileans situation is one they encounter frequently — either a rookie property owner tries to rent their place without understanding the basic rules of landlord and tenant management, or they hand it over to an agent who also has little vested interest in what should be done to properly clear a prospective tenant.

”It becomes a very emotional and volatile situation. Sometimes we have to act like a property SWAT team that acts as the buffer between the client and the tenant,” says Chandidas. “Often the situation is so bad it requires a lot of work to get the property and the renting relationship back on track for the owner.”

Some of their clients include individuals like the Mileans, investment firms and vice presidents of large banks who live out of country but need their multi-million dollar homes managed while they are away.

Often, too, landlords need to be educated about what makes for a good property to be rented. Too often, says Sage, “Band-Aid” owners think they can patch a place and rent it to great tenants.

“Sometimes we take over management of properties that have fallen into such disrepair and mismanagement we have to develop a three-to-four year strategy to rehabilitate it,” he says.

With proper tenant background checks and regular investments to their properties, landlords can have a good business, says Chandidas.

“Some clients just don’t get it. They make the mistake of getting a basement apartment tenant living in their home that they haven’t properly checked out and suddenly they have a nightmare tenant they can’t get out of the unit,” he says. “I’d rather have a unit be one month empty than one year sorry.”

For the Mileans it was a hard lesson learned but one they won’t live again.

“We love Toronto and miss many aspects of it. Toronto’s such a safe city and has so many great things to do. But I would never rent out a place again the way we did that one,” says Milean.

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