Ads Google

Inside the rental commitment agreement

by Joe Rosengarten on 28 Mar 2018

There can be some anxiety attached to a real estate investment, even if all of the boxes are ticked and the development you’re buying into is a guaranteed winner. ‘What if I don’t find a renter for the property quickly?’ It’s a question that many investors ask themselves during long sleepless nights.

In order to make those worries a thing of the past, a leading real estate development has created a rental commitment agreement that cover all of the bases.

“As part of these agreements, the development company is responsible for finding quality tenants and taking care of all of the property management functions,” says Kirin Singh, Vice President, ROi Developments. “The investor never pays an occupancy fee and receives an automatic distribution each month even if a tenant is not in the property. Every aspect of an investor’s needs has been thought of.”

While these types of agreements are not compulsory, if offered, investors are recommended to take the opportunity. As well as finding quality tenants and taking care of all of the property management functions, after the first year, rental commitment agreements between landlords and investors also create a ‘rental pool’ for all of the investors in a condominium development. For example: If 26 of a development’s 27 units are not rented out, the owner of the unoccupied property will still collect rent. The investors take the loss collectively, so the loss is divided by 27.

“All investors share the gain and the loss; it alleviates the pressure on people,” Singh says. “It really puts a firecracker under the property manager/developer to find tenants because that loss is coming out of their property.”

After the first year of the agreement, the investor can either choose to extend their terms for a small fee or opt out. “It’s up to the investor, they can either choose to continue with the passive, stress free investment or they can start dealing with all of the tenant and property management themselves,” Singh says.

Most Trending News

Canadian buyers returning to major cities, expecting to spend more: BMO survey
News

The survey shows that buying a home in a major city centre has risen 5% since last year.

Read More
Hiking development charges will only make homes more unaffordable
News

The more time and money a developer spends navigating the extensive labyrinth of procedural processes, the costlier it becomes to build a new home.The more time and money a developer spends navigating the extensive labyrinth of procedural processes, the costlier it becomes to build a new home.

Read More
Upcoming Multifamily Conference offers investors unmatched opportunities to learn, network and grow
News

Coming to Toronto May 14-15 is an in-person event discussing multifamily investing and the benefits it can have for new and experienced investors.

Read More