commercial tenancies…a world of difference…

When looking for a property to invest in, there is obviously lots of research to do – you need to understand the area, economic climate, the population trend, whether there’s adequate means of transportation, upcoming changes to demographics, etc. etc..

Then, of course, there’s lots of number crunching and sitting with your team to draft the offer and work through the acquisition process.

One thing to also consider are the rules and laws governing the kind of property that you are interested in purchasing.  There are different rules that apply to multi-unit properties, commercial properties, hotels, mobile homes, rooming houses, etc.

A case in point……….

I have a customer that invests primarily in commercial properties, and overall, does fairly well.  Commercial is certainly riskier than residential, but can certainly be more rewarding, and while the last few years have been a little hard, he has seen a turning point, and we have secured some good solid tenants.

He recently strayed into the residential arena by inheriting a mix-use property (commercial and residential combined) in Toronto.

This month, the existing residential tenants refused to pay (bitter about the sale or something), and without further adieu, he changed the locks on the door, and exclaimed that it was his right!  They didn’t pay, they no longer have access to their property, and he will look into selling or disposing their property at his leisure.  Ahhh, if it was only that simple.

He called me after he received a call from the Investigations and Enforcement Unit of the Ministry of Housing.  It took me a while to explain, and convince him, that the laws were different, and we now have a plan in place to ensure that the tenants pay, or they will be evicted…legally.

So, back to my original point, investment properties have different guidelines and laws….get to know them, or make sure your management company knows them.  If not, you could be in for a rude awakening, or at the very least…a phone call.