As a small landlord who has built a technology company due to my experience with some bad tenants. I always wondered if I could have done something different to avoid the situation with my first tenant in Canada? Of course, I could have done a lot of different things, however one thing that would have provided me some peace of mind, saved some money and the horrible treatment I received from my tenants is Rent Guarantee. Looking at the brighter side of my failure, I am thankful that it happened and that is the only reason we have Tenantcube and we help a lot of small landlords sleep in peace. If you don’t know my story, checkout my blog here.
Today, I wanted to reevaluate the situation with Tenantcube Rent Guarantee Program.
When I decided to rent my property, I did some research like every other landlord and landed on a price a bit higher than the market rent. We all do that and I am no different, we want that extra bit. So I listed my property for $2100 for a 3 bedroom, 2.5 bathroom semi-detached home with a backyard and ensuite. It is an amazing house, and I have a lot of emotion attached to it as it was our first home in Canada.
Fast forward 5 months, our tenants did not pay me the rent, missed utility bills, unpaid water bills and some damages. Here is how the numbers looked when everything was said and done. You will note that there are no legal fees. The tenant’s girlfriend decided to vacate the house and run as her boyfriend is in jail for life. Well, most of my friends and some paralegals said I was lucky and it could have been another $10,000.
Tenantcube Rent Guarantee Program
If someone offered me rent guarantee when I rented the property, honestly I don’t think I would have taken the deal and paid the 5% fees. Some reasoning behind that decision is that I would have been confident as I have rented properties in another country and never had a problem. I was good at it, and my ego would have stopped me from paying that 5% of rent which could have been $105 per month. Most landlords have been lucky to find great tenants and they have not had the need to be protected. However, the defaults are increasing every month and the laws against landlords are not getting any better. Tenants have more rights and it takes ages to remove a tenant when they default or damage a property.
Let's do some math. The tenant stopped paying me after 5 months:
Scenario 1: Apply for rent guarantee and get approved.
Monthly Rent : $2100
Rent Guarantee Fees: $105 per month
No.of Rent Guarantee Payments : 5
Total cost of Rent Guarantee : 5*$105 = $525
If you have read this far, I am sure you are looking to see what could have been my gain if I chose to sign up for rent guarantee.
ROI = (Gain from investment - Cost of investment) / Cost of Investment
ROI = (9500-525)/525 = 17.095 *100 = 17,095% over 5 months. Savings of $9500!!!!
This gives you a rough idea of how rent guarantee can help sleep in peace and cover your expenses when you really need it. Today, every property I rent is backed by our rent guarantee program. Thankfully, my experience with some bad tenants has served me well and I have been able to find great tenants recently.
Scenario 2: I apply for rent guarantees and it's not approved.
I would have learned a lot and hopefully selected a better tenant and would have avoided the situation. Who knows maybe I would have been lucky. Or ended up with someone bad and lost tons of money.
We have seen landlords increase the rent by 5% to cover the cost of rent guarantee or they simply pay the 5% for peace of mind. We know the cost does not matter and it's irrelevant when you think of a situation which can arise from a rogue tenant. Feel free to contact our team if you need a quote or simply learn how to screen tenants better. We are always here to help and we love to see landlords do well!