Rental Income Protection comes to Canada

Great news for my Toronto and Mississauga Real Estate Investors

Canada is fast becoming a popular destination not only for affluent immigrants but also investors. Many smart investors want least hassles when it comes to investing their money. Real estate prices in Canada are projected to move up in 2014.

After having worked with dozens of investors turned landlords each year in Mississauga, Milton and Downtown Toronto combined, I personally feel that a rental income protection program serves well wherein landlords are covered up to several months of lost rent and protected from other unforeseen hassles.

The rental income protection program makes even more sense for the DIY (do it yourself) landlords over those who choose to have professionals screen tenants on a regular basis.

Rental Income Protection Cost

It’s a tough call when landlords have to handle irresponsible tenants. It’s a further dent in the pocket to cough up 4% out of the rental income for a rental protection plan but it might be worth it to protect yourself from the perils that come with the bad lemons.

But when you combine this plan with lesser expensive property managing solutions like my A la Carte Property Management Program (managing the property of landlords, especially those located abroad), the plan offers relief from such hassles, despite the 4% of gross rent payment towards the rental protection program.

Usually bigger cities like Downtown Mississauga invite more quality tenants over smaller towns outside the GTA. In my decade long real estate experience in Canada, I have heard more horror stories about poor quality tenants in smaller towns.

Many small town investors gravitate towards real estate investments based on positive cash flow without paying any heed to quality tenants or property appreciation.

Some of these novice investors return back to bigger cities after a bad taste in the mouth from foul experiences arising from irresponsible tenants or negligible appreciation after years of investing in small towns. But they end up finding themselves in a fix when they are priced out of growing suburbs like Mississauga, Milton etc. In small towns, the Rentshield rental income protection program is highly recommended.

Positive cash flow is the basic ingredient for a successful real estate investing business. But that does not mean that one should not be prepared for some negative cash flow when weighing value against other factors like price appreciation, tenant quality, vacancy rate etc.

If you pit downtown Toronto versus downtown Mississauga, the latter doubtlessly makes a better investment value. (Toronto’s vacancy rate is 1.4% vs. 0.6% in Peel region. Downtown Toronto 2 BR condo apartment rents for $2,600 per month vs. $1,700 in Downtown Mississauga. Downtown Toronto condos sell for $80,000 to $100,000 more than similar condos in Downtown Mississauga).

This is because simple, lesser priced properties are more affordable and tend to appreciate more with time than more expensive properties.

The more is the affordability, the more is the demand and price appreciation. As affordability erodes, price growth tends to slow down or reverse, till income growth catches up.

Tell me, how many folks earning $100k gross income can continue to pay $2,600 rent for two bedroom in downtown Toronto? This is what an average downtown Toronto condo renter pays, as per our latest GTA condo rental report.

Appliance Protection Program

Appliance protection is also a boon to real estate investors. Fixing appliances after their warranty period expiry is often a pain in the neck. Usually, the cost of servicing appliances is not even worth the effort in Canada so it makes better sense to simply replace them.

Here’s a quick tip for good investment returns: when you buy a new builder condo or home, try negotiating a 4 year extended warranty within the first year from the date of installation. This appliance warranty later becomes a value-added benefit when you sell the property.

Let me give you a few more details on the Rentshield Protection™ Resource Center Membership for rental income

Rentalshield Protection

The Rentshield Protection™ Resource Center Membership provides each member with a Rental Guarantee to cover up to 11 months of delinquent rent, covers the cost of an agent, lawyer or paralegal to appear before the Landlord and Tenant Board Tribunal or provincial court and obtain orders for evictions and cost orders against delinquent tenants. The Rental Guarantee is subject to the terms and conditions found in the Membership Agreement.

Subject to the terms and conditions of the Membership Agreement and the Rental Guarantee, Landlords are covered for 11 months of lost rent in any 12 month rental period up to $100,000 dollars for each of their rental properties identified in their Membership Application. Unpaid rent is paid within 60 days of proof of loss as described in the Membership Agreement. It is a condition that the Landlord provides a proof of claim under the terms of the Membership Agreement. There are three simple requirements to qualify for the benefits of the Rental Guarantee:

Be registered and approved as a member in the Rentshield Protect™ Resource Center Membership Association
Provide your signed declaration form appointing their Agent to act on your behalf to appear at the Landlord and Tenant Board Tribunal or Small Claims court.
Provide Proof of Loss under the terms of your Rentshield Protection™ Resource Center Membership Agreement.

Rentshield Protection (Canada) Corporation and the Rentshield Protection™ Resource Center Membership Association are 100% insured against Rental Guarantee capital deficiencies. Rentshield Protection (Canada) Corporation is wholly owned by Accurantur (Canada) Corporation.

For further clarification on the rental protection program or real estate investment, you can contact me.

Relevant links: