“If you do not mind, I will delete you from the list of my friends, because I do not know who you are.” This message I received from one of my old Facebook friends, a real estate agent who sent me an invitation eight years ago after I attended one of his open houses. I politely accepted it and since then we did not communicate in any way.
“No! – I responded,- It is not the best time to do it. Our company recently designed a new product for real estate investors and I wanted to run it by you and see if there is an opportunity for us to work together. I know that you are dealing with the investors on a regular basis.”
He courteously agreed and we met at Tim Hortons at Bathurst and Finch. I wanted to know whether he sees a demand for legal services for small- and midsize real estate investors that would greatly reduce risks of renting out to a bad tenant and incurring legal costs associated with eviction procedure.
Canada Mortgage and Housing Corporation (CMHC) reports that a large number of people turn to real-estate investing as a mean of protecting and growing their savings as well as securing passive income. Not all new investors understand that buying a rental property is just the beginning. They know nothing yet about the bad tenants and scammers who increasingly in the last years target, according to the same report, those small scale landlords.
You might ask why these scammers target specifically the small scale investors. First, the larger owners have property management companies and legal offices on a full- time basis that watch after the property owners’ rights. Second, it is easier to con a newbie. They know how desperate you are about renting, because of your mortgage burden; they also know the tricks how to make you like them at the first glance, and they also know how to manipulate you into believing that a non-payment is just an accident. Once you realize that you are being taken for a ride your losses are out of control and now you need to spend more to evict them. If you really want to make money out of your property and grow, you should treat your tenant as your asset. This asset is not less important than the property itself. You should be as diligent in selecting a tenant as you were in selecting your property.
As with my vis-a vis, he did not let me talk for long. It turned out that he owned a rental property himself and run into problems with two of his tenants. He asked me for help and we scheduled another meeting at his office. My partner and I were sitting at the table finishing our coffee stunned with the fact that a very successful realtor could not protect himself from unscrupulous tenants.
Hmm…anything can happen to anybody; bad things happen to good people… – I was thinking to myself when a gentleman approached our table and asked whether he could take a chair that was just vacated by the realtor. “Of course, you are very welcome”, – I said. He was not in a rush and you could tell he did not mind socializing. As we chatted we learned that he also owned a rental property which he apparently rented to a drug addict. When I asked him whether he would be interested in our product, he said happily: “Oh! my Realestate (that is how my new acquaintance called his agent) does it for me, never mind.”
“What your Realestate does for you?”- I asked thinking about a realtor I just had a meeting with. “Ah, he checks the tenant for me and gives me a contract template. You would not believe, the last time, when the tenant turned out to be an addict and left in two months without notice, my Realestate found me another tenant for free.” “You must have been born under the lucky star to get rid of your last tenant that easily,”- I thought. I also thought about “what would that Realestate do if the weird tenant stayed in your apartment?” But I said something different.
My new acquaintance was looking at me as if he was just born. Eyes and mouth open, he whispered: “I have never thought about it…”