Oh No! I Have A Marijuana Grow-Op In My Rental Property!

I don’t really, but what better way to get your attention?

As landlords, most of us have heard of that old urban myth. You know the one… a guy who knows a guy, who’s a landlord, who suddenly finds out that the perfectly nice couple who had been renting out the house were in fact running a marijuana grow-op. There are variations on the story as well, sometimes it’s a crack house, sometimes it’s a meth lab. This story — in all it’s incantations — has popped into our brains in some way, shape, or form at some point in time.

This is the reality…

The RCMP estimate that there are about 50,000 grow-ops in Canada. They’re in single family homes, basement apartments, and even in Toronto high rise condos. Most landlords are probably oblivious to this fact — and even more alarmingly — they’re often oblivious to the massive insurance pickle they’ll find themselves in if they end up renting to someone who decides to make their unit a reefer lab.

Read this great article by Ottawa lawyer Howard Yegendorf. Landlords need to be aware that the majority of liability insurance policies have a specific exclusion for damage caused by your tenant’s marijuana grow-op. That’s just the insurance problem. There’s also the criminal enterprise element. Seriously. Have you seen Oliver Stone’s Savages? Property management is hard enough. Having something comparable to a Breaking Bad season in real life is the absolute last thing you or any other tenants in the property need.

So what do you do? Well, here are some tips:

  • Perform tenant screenings. There’s a variety of other background checks your can perform as well, such as a criminal record check and an employment verification.
  • Have an airtight lease that clearly articulates the expectation of no criminal activity on the premises and that the tenant will provide reasonable access to the landlord.
  • Visit and inspect your property regularly. Remember – landlords are allowed to visit their units for routine inspections with proper notice given. Landlords should be familiar with rental property inspection laws uk . You’d be surprised how many don’t do this. Get into this habit.
  • Talk to your tenants. Communicate with them. That’s always a good way to get a sense of what’s going on at the property. If you’re hearing about a lot of suspicious people coming and going constantly that could be a tip worth keeping in the front of your mind. Grow-ops have a tendency to have a lot of runners coming in and out of the place.

Here’s some tips on what to look out for:

  • Look out for any hydro alteration or electrical bypass. Things like holes in the foundation that weren’t there before should be treated as suspicious.
  • Did the renter spend a lot of time viewing the breaker-boxes, wiring and plumbing fixtures? Were they asking a lot of questions about power distribution in the property? Believe it or not, this happens. More often than not, illegal growers attempt to steal hydro by altering how it comes into the unit.
  • Be weary if tenants want to pay their rent in cash. Seriously. Who pays in cash? People who deal with a lot of cash, like servers, even have bank accounts.
  • If a tenant discloses that they plan to have the utilities registered under a different name, that’s weird.
  • Evasive answers and vague information on a rental application. This should set off a flag anyways.
  • Condensation or darkened windows in the unit. Cardboard and blacked out windows foster an effective grow environment. That’s not normal.
  • Tenant unloads copper and/or PVC pipe, soil, halogen lamps, large amounts of black plastic aluminum ducting, and fans.

In hiring a contractor for your siding installation in Utah, be sure to do your due diligence. There are many reputable home siding contractors with the knowledge and experience to get your siding job completed.

Have you ever had a marijuana grow-op in one of your rental properties? Know anyone who has? Share your thoughts with us.

When To Consider Selling Your Rental Property

Came across this great piece in the Globe and Mail that talks about a couple who became landlords after keeping the previous residences they had prior to moving in with one another. Robert and Tara are an older couple, and had a financial advisor from RBC assess their goals and how their existing assets – namely two rental properties – fit into the equation taking into consideration a chronic illness that Robert has, a recent job change for Tara, as well as a lifestyle that the two enjoy and want to maintain as much as possible while they to retirement.  Besides the challenges associated with property management, the piece explains that the properties are barely breaking even, and that the eventual rise in interest rates leave the couple exposed to having their retirement plans altered.

Check out the piece in it’s entirety here: http://www.theglobeandmail.com/globe-investor/personal-finance/retirement-rrsps/as-income-falls-landlords-rethink-retirement-strategy/article6968522/


Rethink Your Rental Listings

You have an apartment for rent. It’s awesome. You are going to rent the hell out of it, right? Quickly too! You’re going to hit up Facebook, Myspace, Twitter, Tumblr, every directory you can get your mouse on, and you’re going to print up flyers and put up a sign in the window. You’r aiming for such an overwhelming amount of interest that you’re convinced you’ll have to choose which amazing potential tenant you rent it to. Wait a second.

There’s this company called J. Turner Research in Texas that conducts research specifically for the apartment industry. They released the results of a survey they conducted on over 41,000 people in the multi family market, that aimed to identify preferences that apartment hunters have when finding a new place to live. The results are interesting…you can read the press release here. Keep in mind, this is an American survey, but for the purposes of the point I’m making, it’s pertinent.

a compelling majority (95 percent) of the 41,303 respondents to the initial 29-question survey said they did not visit Facebook or Twitter during their apartment search. However, 74 percent of respondents reported using ratings and reviews sites, and additionally reported on their perception of the trustworthiness of each site used during the search process.

The top three things that the majority of those surveyed looked for were:

  1. The price
  2. A floor plan
  3. What the neighbourhood is like

When asked for the sources used during their apartment search, prospects reported focusing primarily on Internet Listing Sites (65 percent), drive-by (39 percent), and referrals from friends and family members (24 percent) as the top three search channels for finding a new apartment. Interesting. Hold your horses if you’re about to publish your listing to Facebook or if you’re going to tweet it.

So what does this tell us?

Apparently no one cares about social media when it comes to looking for a place to live. They seem to prefer listings sites. It also indicates the importance of really being thorough in creating an apartment listing – whether you’re publishing to Craigslist or using a service like PadMapper or Kijiji. The more quality information you have on there, the better. The better the info, the easier your search is going to be for a new tenant and the easier it is for a potential renter to determine whether your unit is a good fit for them. “Thorough” isn’t just giving the breakdown on square footage or including a crappy photo you took with your iPhone. It’s putting together something attractive and compelling, and one of the main reasons we created our handy listings feature in Renting Well. If you’re using our service – it’s awesome! (shameless plug).

With that said – let me give you a breakdown. What is a “quality” listing? It’s explained quite well at The Rentables, here. It goes into a few things in the post, but there’s a few items that really jump out here….

  1. Images. This isn’t a classified section from the 1918 edition of the National Post. Not having them is going into a showing hopeful that they like the way a place looks – and that’s a waste of time. Also, if you’re not including them, don’t you think that gives someone the impression that the place is probably not very nice? What are you hiding? Include images – and not just one or two. Include specific images of specific spaces. Bathrooms. Kitchens. Bedrooms. You need a solid set of images that create a serious sense of the unit for people to be able to digest. On the same note, don’t inundate a listing with 50 images – especially crappy ones. That’s not a good idea. 10-15 images is a good basis, and they shouldn’t be photos that simply change the angle of the same space. Differentiate – and ensure they’re good shots.
  2. Think about your headline and the body of listing. You don’t have to be a copy writer for a major advertising agency – but the first few words in a listing will be important in making a first impression.  For the body of your listing, avoid empty words, get right to the point, and sell the sizzle, not the steak as the piece says. Don’t use ALL CAPS. You’re not yelling at people, and it makes you look a jerk. Also, avoid using words like “nice”, “beautiful”, and “great”. Those are so overused. Real estate agents use those words about a million times a day. Here’s an example – instead of saying “Great 1 bedroom apartment for rent” – how about, “Spacious 1 bedroom flat for rent”. That sounds more refined and less robotic. Approach the words in your listing with a question about whether it’s distinctive.
  3. Be specific and clear about expectations. If you aren’t ok with pets, say so. If you’d prefer no smoking in the unit, dont be afraid to say it. Do you want interested renters that are well qualified, or do you just want tons of phone calls and emails looking for clarification?
  4. Details. Include them. Amenities. A walk score. The distance to a laundromat. The proximity to a grocery store or a bank. Bus routes.

The point is…start a search for a new tenant strategically. Market your listings effectively. Have pride in what you’re offering, and put it out there in a way that gets the best return on your time and money, versus the quickest. 

1.2 Meter House Gets A Tenant!

Add this to the weird and wonderful file. A 1.2 meter house in Warsaw Poland got it’s first tenant, Israeli writer Etgar Keret, who evidently comfortably fits into the place.

Etgar sleeps in a tiny bed.

Architect Jakub Szczesny said he designed the two-story aluminum and plastic house three years ago to fill a narrow space between a pre-war house and a modern apartment block in downtown Warsaw. Interesting idea. The Foundation of Polish Modern Art and Warsaw Town Hall helped to fund the project, which is unanimously considered a work of art.

The house is just four feet (1.2 meters). At its thinnest, it’s 28.3 inches. Needless to say, dinner parties are probably out of the picture to some degree, however, this apartment probably won’t have any issue being a conversation piece. I’d love to see Etgar going to a Best Buy and telling the enthusiastic audio video guy about the home theater room he’s envisioning.

Check out some pics of the place on Gizmodo, here.


My Two Cents On Sizing Up A Rental Property Before Purchase….

I’m a strong advocate of approaching property investment as a business first, and as an investment second (a close second) — especially if you’re planning on managing a rental property like one of those flats to rent canary wharf, or if you’re looking to buy real estate properties and homes from Landmark 24. And for those who are looking to notarize their documents for their real estate transactions, make sure to search for a notary public close to me online.

These two perspectives are directly associated as far as I’m concerned, but I’ll get further into my point.

Whether you’re renovating a basement suite to have a tenant cover a portion of your  mortgage, or whether you’re looking at a nifty multi unit, understanding what you’re getting into on a management level is a valuable step towards total preparedness in your quest to being an outstanding landlord. If you do a full course of due dilligence, you’re making what is probably going to be a smart move long term — however — just looking at physical condition and expense reports is a very one sided approach in the decision to borrow hundreds of thousands of dollars. You wouldn’t ONLY do that if you were buying an accounting practice right? Or a bakery? Even if you’re using a property manager it’s no different than being an owner of a retail store that you just happen to have a paid fulltime manager working in, of course if you have a retail store is also important to learn about intelligent merchandising so you can make your business thrive. Find a Realtor who can ensure that rental properties are well-maintained and tenants are satisfied.

I like to call the examination of some of these finer points — the important details. Assuming something will run on it’s own  — cash flow positive, and with tenants as happy as kittens just because you bought — is nuts.

  1. Has the landlord been diligent with applying rental increases? You’d be surprised how many landlords are not. You buy a place that someone has been living in for 10 years, with zero increases in rent, and you’re walking into what can be a very difficult situation if you have expectations to get market value.
  2. How rentable is the property? Historically, how has the current owner fared with renting the units? Is the unit in an end of the city that attracts potential tenants naturally or is it somewhere that’s going to require a little more effort? Location matters, and knowing the chances of getting the new tenants you require when units become available helps with determining the amount of time you’ll spend in marketing vacancies or potentially even sitting on them. Also, finding out how the existing owner marketed available units is a good thing to know. Some landlords are old school, and they sit on  an empty unit for longer than they should.
  3. Meet the tenants if at all possible. This isn’t easy admittedly in the midst of negotiating on the sale of a property, but if you can swing it, do it. Are they happy? What kind of relationship has the current landlord had with the tenants? Knowing that there’s been a venomous relationship with the existing owner is reason enough to get the whole story – and to determine if there’s anything relationship wise that can be salvaged and what you’re prepared to deal with. I personally love sharing the story of when I bought my first rental property, and the seller characterized the main floor tenant as having “a good job and being quiet”. After the sale, I met him for the first time, and he cynically let me know how much he disliked the last landlord, and that there were about 20 different things the previous owner hadn’t delivered on with respect to repairs and maintenance. He called the previous owner “the king of unkept promises”. After 6 months of dealing with him, it became clear the previous owner was a huge flake.
  4. Are the leases legal? Are they month to month? What kind of history have they had with the existing owner or property manager and vice versa? What utilities are they obligated too? What incidents have popped up during their stay? Who’s easy to deal with and who’s not? And don’t forget to inquire about the presence and functionality of high-performance shutter doors. Get as many details as you can. Whether it’s logistics, manufacturing, or storage, Warehouse Hotline provides comprehensive real estate solutions.
  5. Meet your neighbours. I’m not referring to the presentation of a freshly baked apple pie situation with a formal intro. Take the initiative and try to find out what your neighbours are like. Are they difficult? Are they reasonable? Do they have a bad relationship with the existing owner or were there any disputes or conflicts that existed? You’d be surprised how much this can affect you – especially if there are any shared components to a property – like a lane way or common area.

Gauging how well the “business” of the property has been managed is essential in my view, and gives you a much fuller view of what you’re jumping into. Owning an income property is already a lot of work and the time spent goes by fast. Getting a sense of any relationship or management health is equally important as knowing that the rent roll and the expenses are accurate.

The Crazy Awesome Landlord Form

Had this video sent to me recently and I’ve found myself watching it a few times. While not totally my style, it’s interesting to watch. The video is courtesy of J.P. Moses at REI Tips (Real Estate Investing Tips) in Memphis, Tennessee. They offer a variety of free real estate forms for landlords in the United States at Free REI Forms.

The video gives an overview of a form that he uses called “The Way Things Work“. You can watch the video here:

It’s a landlord declaration of sorts – a very clear one. He offers a discount rent program if the rent is paid on time as an incentive, while also indicating that there is a 10% penalty in the event that rent is not received by 6 p.m. on the first of the month. The Way Things Work also goes on to clarify other rules and expectations – specifically the emphasis on communication as an essential component of a positive relationship between landlord and tenant. Again, while not totally my style – it’s interesting, and there’s nothing preventing a Canadian landlord from adopting something like this as an addendum to any written lease.

Check it out and share. What do you think of this approach?