Found a Rental… Now What?
Found a rental property... Now what? | When purchasing a rental property with existing tenants, it’s crucial to know whether their tenancy is month-to-month or fixed-term, as different procedures apply for each.
Month-to-Month Options
Keep the Tenants:
You can maintain the existing arrangement if the tenants are reliable.
End the Tenancy:
You can’t terminate a month-to-month tenancy without cause. However, you can do so if you or a family member plans to move in or major renovations are necessary.
Increase Rent:
While you can’t evict tenants solely for paying low rent, you can issue a rent increase notice. In Saskatchewan, there’s no cap on rent increases. As a Saskatchewan Landlord Association (SKLA) member, you can enforce the increase after six months instead of the standard one year.
Amend the Agreement:
You can propose lease amendments, but the tenant has the right to accept or decline.
Convert to a Fixed Lease:
You may offer a fixed lease with new terms. Again, the tenant has the option to accept or decline.
Fixed-Term Options
In a fixed lease scenario, you must do an intention letter (whether to renew or not) 2 months before the fixed lease expires. In this case, you can go about it two ways:
Renew at a Higher Rate:
Two months before the lease expires, you can propose a new one-year lease at a higher rate. The tenant may accept if they value stability.
Issue a Rent Increase Notice:
With SKLA membership, you can enforce a rent increase with six months’ notice. If agreed upon, you can offer a one-year lease at the new rate later.
What is an SKLA Membership?
Joining SKLA connects you with a network of professional landlords, property managers, and industry leaders. Membership ensures your voice is heard in media and government while keeping you informed on trends and legislation. The cost is starting at $129 annually, depending on number of units owned.
Remember:
When buying a rental property with current tenants, it’s essential to determine if their lease is month-to-month or fixed-term, as each requires different handling. The tenancy type and duration can either enhance the appeal of the investment or be a dealbreaker.
Conclusion:
While month-to-month leases offer flexibility, fixed leases provide more control. Fixed leases allow you to end tenancies without specific reasons, unlike month-to-month arrangements, which require a justifiable cause.
When purchasing a preexisting rental property with tenants, there are many intricate details to consider. If you have any questions, we would love to help you out!
