On The Beach Education Corporation

The province of Ontario has forms that the landlord must use to communicate with their tenants from enforcing late payment of rent (N4), willful and negligent damage (N5), causing substantial interference with the reasonable enjoyment of the residential complex (N5), persistent late payment of rent (N8), 90-day rent increase notices (N1) and a host of other forms. Each form has its own set of termination dates so I will cover the most common eviction notice, the Form N4 Notice to End a Tenancy Early For Non-Payment of Rent.

You can go to the Ontario Landlord Tenant Board (LTB) website at www.ltb.gov.on.ca to view these forms.

As corporate policy, all tenants who do not pay their full rent on the 1^st day of the month are automatically served a Form N4 on the second day of the month. I give tenants a grace period until 12:00pm noon of the second day. The reason for acting so swiftly does two things: (1) it trains your tenants that you want your rent paid on time, and (2) the sooner the notice is served, the sooner you can process the eviction if it is required.

The Form N4 is a legal notice that could lead to you being evicted from your home. The operative word here is “could” and does not necessarily mean it will happen. The notice has a termination date which is the deadline date for the tenant to pay their rent before the landlord can apply to the LTB for an eviction hearing. The operative wording here is “apply”.

The termination date is calculated 14 days after the landlord gives the tenant the notice. So on the 2^nd day of the month, fourteen days after is the 16^th day of the month. This is the day that the landlord can apply to the LTB for a hearing.

If by the 16^th day of the month, the tenant has not paid their rent, we fill out a Form L1 Application to evict a tenant for non-payment of rent and to collect rent the tenant owes. The form is 7 pages and the landlord must include a copy of the Form N4 that was served which is 2 pages. The application fee is $170.00. The application is faxed to the nearest branch that services the area which is listed under Regional Offices and Locations on their website.

And then you wait anywhere from two days to two weeks for a response from the LTB. When you receive the Notice of Hearing, your application is assigned a 7-digit NOL number with the date, time and location of the hearing.

You must attend the hearing in person or send an authorized representative. The representative must have written authorization to act on your behalf.

The hearing is scheduled anywhere from two weeks to two months. It is usually within two to three weeks. In the case of the Christmas season, it can be as long as two months to get a hearing scheduled.

The tenant that we evicted on February 10^th started with an L1 application submitted on November 17, 2009. We received the Notice of Hearing on November 24, 2010. The hearing was scheduled for January 12, 2010.

All hearings begin at 9:00 a.m. and go all day. The files are called up in numerical order by NOL number.

In about half the cases, the tenant shows up to plead their case to the adjudicator. In these instances, the adjudicator favors the tenant and will recommend the landlord give the tenant the option to pay installment payments on their back rent. However, if the tenant has a history of non-payment of rent, this is where your previous Form N4’s on file are proof that the tenant is a risk. The landlord can plead their case to proceed with the eviction.

In my case, the tenant did not show up and I won the application. The judge approved an Order Under Section 69 of the Ontario Residential Tenancies Act, 2006. The Order is mailed out to the landlord. Two originals of the Order was received on January 18, 2010. One original is for the landlord’s file. The second original is delivered to the tenant.

The Order stipulates that the tenant must move out of the rental unit on or before January 25, 2010, along with other information about the amount of rent and compensation that is owed.

The tenant remained in the rental unit on January 25. The Landlord is then allowed to file the Order with the Court Enforcement Office (Sheriff) to enforce the Order on the following day. I filed the Court Enforcement Order at the court house on January 27. They mail out the Notice To Vacate; one gets mailed to the landlord and one gets mailed to the tenant.

We received our copy of the Notice To Vacate from the Superior Court of Justice on February 1, 2010. The eviction date was scheduled for February 10, 2010 at 10:00 a.m.

The tenant failed to vacate the premises. The Sheriff arrived at 10:00 a.m. on February 10 to evict the tenant. The tenant was not home so the Sheriff posted the notice on the door. The rental unit is now technically in the landlord’s possession. However, the tenant has an additional 72 hours to remove their personal belongings. The tenant is permitted access to their unit between the hours of 8:00 a.m. to 8:00 p.m. but cannot stay in the unit overnight.

The 72 hour period ended on February 13, 2010 at 10:00 a.m. The tenant pleaded for thirty more minutes. I arrived back at 10:30 a.m. and the tenant pleaded for more time. When I refused, the tenant demanded more time and refused to leave. This is when you call the police. The police arrived within five minutes to escort the tenant off the premises.

If you feel the tenant is a disturbance and a continuing threat to the building and the other residents, you may fill out a Trespass Notice to Prohibited Person available at the police station. This Notice must be served to the tenant prior to their vacating their unit and prohibits them from entering the building or else they will be arrested and fined.

On February 13, 2010 at 11:00 a.m. I took possession of the rental unit. All of the contents now legally belongs to the landlord to dispose of as they see fit. And that’s how an eviction process works from beginning to end.

This incident was a worst case scenario. The LTB does not schedule any hearings during the month of December so delinquent tenants are given a month grace. In a portfolio of 243 rental units, this is the only eviction we have had to process to this extent. The majority of our tenants pay on time and issuing the Form N4’s ensures compliance.

Life has certainly been unpredictable and that’s the way it should be. I am living in Thunder Bay managing 243 units and spending Christmas with new friends. Life is about change. Change is what gives us strength, flexibility, vitality, resourcefulness, resilience. I look back at some of the most challenging times in my life. They are what defined me. These devastating events made me who I am today. I learned to appreciate my depression, anger, despair, anguish, hopelessness; to celebrate my capacity to feel the length and depth and breadth of these intense emotions. That’s what makes us human. Emotions are energy in motion. They are meant to be felt and then to move forward. It is the intensity of these emotions where magic and miracles reside. I learned to transmute this energy into manifesting my new reality. Because the truth is this: the Universe has a grand plan for you. These experiences are what you need in order to take you to the next level. After you have survived the ordeal, you begin to see with clear 20/20 hindsight. This is part of the initiation process called life. Because the Universe sees you as a diamond-in-the-rough (polishing is not a pleasant process) so that you may become a brilliant light for the world.  For I know too well that the holiday season may not feel like a great time for many people. Regardless of how you feel, you are so very precious. Your life is a masterpiece. This season of your life is an exciting one. Enjoy it while you can because you may never feel the intensity like this again. Like a volcanic eruption, it will go extinct, leaving its mark and a wiser stronger you. Celebrate your life… in your despair… in your joy… because either way you are loved and cherished. My blessings go with you.

CHRISTMAS BLESSING
I would like to save some trees this year instead of sending out cards. You are all, every one of you, a special blessing to me.
http://www.jacquielawson.com/viewcard.asp?code=2007134554829&source=jl999

MAKE A LIFE CHANGING DIFFERENCE
Can you spare $25 this month? Perhaps drink less Starbucks? And give an entrepreneur at KIVA.org an opportunity to thrive. When that loan is repaid, you can recycle the donation to another entrepreneur.

DATE WITH DESTINY
This is an awesome event put on by Anthony Robbins.  Amazing. Transformational. Words cannot describe. It is to be experienced. There are 6 human needs: Certainty, Significance, Uncertainty, Variety, Love/Connection, Growth. At DWD you learn how all relationships are based on these 6 needs. Tony gives you the tools so you can use it for your own personal growth and to help others. He has also incorporated new relationship material that is fascinating. You can read more about the Meadow Report on my Blog. My caveat: as with all of his events, there are no official breaks so come prepared with water, snacks and food.

MY NEW LOGO

I love it and I hope you do too. The On The Beach logo has been eluding me since 2003. Finally, thanks to my brilliant media designer, Bojan (pronounced “boy-yan”), he intuited my description into this wonderful logo. Bojan is the head of our new OTBEC Media Group. He does graphic and web design, newsletter templates, videography, audio engineering, photography, storyboarding, image manipulation, business cards, brochures. He’s one talented boy (pun intended) and he is available to serve your needs if you are looking for unique and creative design work. He can be reached at bojan@otbec.com for a consultation.

PRO-ACTIVE PROPERTY MANAGEMENT – PART 3

Training tenants. It starts at the beginning from that first phone call to when they vacate the premises. Be aware of your voice; the timbre, inflection, tonality speak more than your words. If you end your sentences with a vocal inflection going up as you would ask a question, this creates uncertainty in the listener. Consciously choose to end your sentences with a downward inflection as this creates certainty. For this reason, I hired a vocal coach, Jesai Jayhmes, before I launched my first seminar. It’s all about communication. Make sure that your expectations are understood and that the tenants are made aware of the consequences for non-compliance. Verbal communication alone is not enough. You must have your expectations written down on paper and explain it to them. Even something as simple as paying rent on the first of each and every month must be reinforced. Get them to sign a separate addendum that they promise to pay on time. When tenants are ready to vacate, give them a move out checklist including instructions on what to clean, how much it will cost if they don’t clean it, where to dump their unused furniture, instead of leaving it behind for maintenance to clean up. (to be continued next issue)

Money is like manure; it’s not worth a thing unless it’s spread around encouraging young things to grow. Thornton Wilder.

July Ono

I’ve been living in Ontario since mid-October 2009. Our portfolio of 229 units was not performing well under professional management despite our efforts to modify management techniques from reactive to proactive. This required careful discussion over a ten month period and the decision was obvious: fire existing management and take over active management.

This type of decision does not come lightly. It comes from having a clearly defined vision, mission statement and purpose for your life and business. Answers come easily when you know who you are, who you are serving, what your purpose is, why you are on this planet and how you are going to implement it.

These past twelve weeks has been a priceless learning experience: a gift from God. These types of gifts are often challenging to accept and receive because it’s pretty damn hard work and it requires a lot of stretching out of your comfort zone.

This is the gift. Challenges create perseverance, patience, resourcefulness, flexibility, determination and fortitude. Where in the world do you get these wonderful gifts? You could say that fortitude is having the guts to go for your dreams even when it requires you to walk through shit to get to the roses. Because that’s what it feels like for me right now. Steve is from a different planet. He’s always happy and enjoying himself. Put him in a sewer and he’d find a way to play in it. It’s a mixed blessing. I always react this way and I don’t want to feel this way whenever I am stretched. It happens when I am growing and learning. It’s not comfortable. Que sera sera whatever will be will be.

The other side of the coin is to stop growing and retreat to my comfortable life and play golf every day. Been there done that. It’s a dead end. No wonder people die within five years of retiring. There is no more purpose for them to continue, no more challenges for them to solve, no more growing and learning to the next level.

It was pretty cool to retire at 41 and it lasted about three months. So I renegotiated my dreams and realized they weren’t big enough. Now I have an 80 year plan and a $2.224 Trillion dollar goal. This kind of manifesting requires a lot of growth, on my part, which I don’t like by the way, but its part of building character, experience, wisdom. You just can’t skip this part. It’s mandatory. It’s a pre-requisite for the next level. No skipping grades.

I just wanted to share with you that life is what you make it. I can make this a horrible experience or I can make this a glorious experience. It’s all in my interpretation. My excitement and enthusiasm comes from knowing that my gains through these experiences will serve me for the rest of my life. That puts things into perspective. And isn’t it always rosy when you’re looking back with 20/20 hindsight? That comes after the fact, not during it.

I’ve seen in my daily experiences why people give up. They don’t have the fortitude to keep going. They quit. Fortitude will keep you going through the tough times, when you don’t feel like it, but you do it anyway. Fortitude is when you’re doing it for the right cause even in the face of sacrifice. Fortitude is having the patience to wait for your desired outcome. Fortitude rewards you with riches beyond measure. This is not something that can be taught. This is something that must be experienced. So embrace your opportunity right now and have the fortitude to see it through.

7 Profit Centers - Part 1
with July Ono

7 Profit Centers - Part 2
with July Ono

If you have investments that you are depending on for retirement, then the book “Conquer the Crash” by Robert R. Prechter Jr. is a must read. Today’s financial world is not for the blithely ignorant passive investor, you will lose most or all of your money if you are. The financial world is no longer static, you can’t just leave your money in a savings account, GIC, Stock, commodity, forget about it and prey it’s there for you when you retire. Those days are gone, never to return. You are empowered to take control of your money. Start today. Read a book. Hey, I don’t profess to understand everything in Robert Prechter’s book. I’m intelligent and I can study. I’m learning for my sake and for my investors. It’s pretty scary when you see “206 trillion dollars of US based notional amounts of derivative contracts and 800 trillion dollars tethered to the global financial system… with total US savings at 700 billion dollars. Keep in mind that all paper money systems in history have failed!” Exert from Hillier advisers December update. As dire as all this may be there are solutions and strategies you can take to mitigate your future losses and prepare for a buying spree at 10 cents on the dollar when the dust settles. It starts by educating yourself so you can take the right action for your financial goals. Be a smart investor.

This blog will be of interest to anyone who owns real estate in Ontario. I’ve been noticeably absent because I have been living in Ontario, having taken over active management of 243 units.

I mentioned in my July News in October newsletter that one of our decision making questions is whether we would be willing to move to where the portfolio is located as a worst case scenario. This decision is not made without adequate research first, about 60 to 80 hours worth, in order to determine the area’s demographics, economic fundamentals, amenities, etc. When our answer is yes, this means we are committed to the successful operation of that building. So far we’ve only had to spend a few weeks here and there to oversee renovations with buildings in Northern BC.

Between November 2008 to May 2009, we purchased seven apartment buildings in Thunder Bay, Ontario. Buying real estate is just the first step in the real estate investing process. The real business of real estate is in property management … pro-active property management.

It soon became clear that the property managers handling the portfolio had poor systems and controls. It became necessary to take extraordinary measures. This decision meant that we would be living in Thunder Bay for several weeks or months to stabilize the portfolio, establish clearly defined systems and controls, implement and enforce policies and procedures, create a maintenance schedule, streamline administrative protocols for everything from the rent roll, deposit procedures, move-in reports, move-out reports, auditing all tenant files, create a property management manual with all forms in a template format. The idea is to create a system that requires as little thinking as possible. This has been my job for the past four weeks.

The first order of business after firing the managers is to do an audit because the first order of priority is getting the money process under control. You must double check all of their information to ensure accuracy. I created a simple rent roll audit in Microsoft Excel with 36 columns, starting with the building, suite numbers, tenant name, tenant phone number, gross rent amount, discount rent amount, net rent payable, rental supplement portion, tenant portion payable of rent supplement, last month rent deposit in, last month rent deposit out, description area, move-in date, assigned parking spot, twelve months to schedule 90-day notice to increase rent, new rent increase amount, difference of rent increase, effective date of rent increase, and when to deliver the rent increase notice.

Review the entire contents of every tenant file individually and verify. Note the discrepancies and update any new information. Create a task list for every file. Trends will start to emerge. This template becomes your new master rent roll.

One of the trends I noticed immediately was something the property managers did not do. In Ontario, there is no security deposit or damage deposit. Any damage done to the suite must be invoiced separately. Landlords can only collect a last month rent deposit that must accrue interest according to the legislated amount effective January 1st of every year. According to the Residential Tenancy Act, Landlords are permitted to issue a 60 day notice to use the last month rent accrued interest towards their rent payment, instead of paying it out.

This may seem like a small amount on a yearly basis when you consider a 1.8% interest accrual on a $700 deposit is $12.60. I just issued a cheque request to refund the LMR interest to a vacating tenant in excess of $100. This refund amount could have been used to offset previous rent payments if previous management had chosen to implement it.

Once the rent roll is verified, the next step is to create a system for handling non-payment of rent. Our corporate policy is to issue a Form N4 Notice to End a Tenancy Early for Non-Payment of Rent on the second day of the month. You must train your tenants to pay rent on or before the first day of each and every month. When a Form N4 is issued, the Landlord must wait 14 days after the N4 is delivered before they can apply for an eviction. So if you issue an N4 on Day 2, the soonest you can apply for an L1 Application to Evict a Tenant is on Day 17. The L1 Application costs $170 and the Landlord Tenant Board schedules a hearing. Hearings occur every 2 weeks. By the hearing, you are already near month end. At the hearing, the judge makes the ruling. And it’s here where you really need your paperwork in order.

There are other forms at the Landlord’s disposal such as a Form N5 which can be used when a tenant disturbs the peaceful enjoyment of the community for others or willfully damages property. The delivery of two N5’s within a six month span is grounds for an automatic eviction. Or a Form N8 can be used to evict a tenant for the consistent late payment of rent. This information is available at www.ltb.gov.on.ca.

Your property management tools should include a copy of these files in binders: the Province’s Residential Tenancies Act, the local area’s city by-laws, animal/pet by-laws, Smoke Free Act, Landlord Tenant Board forms, and a binder with tenant forms.

The most common tenant complaint is excessive noise. There is a noise by-law in effect from 11pm to 7am. A Form N5 can be issued for tenants who disturb tenants during these hours. Registration of pets is mandatory. For example, the penalty for an unregistered cat is $155. The Smoke Free Ontario Act prohibits smoking inside public buildings. Fines start at $305 for tenants caught smoking in the hallways. There are fines imposed for pet owners who do not adhere to the local Poop and Scoop by-laws. My desire is to stop these nuisance calls coming in to the manager’s office and empower the tenants to call the appropriate enforcement office.

It is your responsibility to familiarize yourself with the local rules, regulations and laws. There are parts of the Residential Tenancies Act that the local property managers were not even aware of, which we are implementing. Just because you hire a property management company or manager(s) does not relieve you of your fiscal responsibilities.

The next area to tackle is to create a seamless move-in process. You can pretty much estimate how many turn-overs your building will have. Prepare a Tenant Move-In Folder with these 19 forms created in a template:
1.    application form
2.    credit check consent form
3.    lease agreement (2 copies)
4.    tenant rules and regulations (2 copies)
5.    memo: rent cheques made payable to …
6.    pet application
7.    pet registration
8.    move-in welcome letter
9.    tenant insurance requirement letter
10.    information for new tenants from the Landlord Tenant Board
11.    memo: no tampering with safety devices (required by fire marshall)
12.    memo: managing moisture in your suites (to reduce/eliminate condensation)
13.    animal by-laws hand out
14.    Smoke-Free Ontario Act hand out
15.    Form N9 Tenant’s Notice to Terminate the Tenancy
16.    suite condition prior to vacating
17.    tenant move-out check list
18.    end of tenancy report
19.    inspection report
20.    rewards program

Every tenant file is prepared with these forms ready to go. You will have noticed that the move-out forms are included in the move-in file. Prepare your tenants in advance of your expectations for when they eventually move out and how much it will cost them if they do not clean the suite according to your instructions. One copy will be the tenant file copy. The other copy will eventually become the tenant’s copy. There is a hard copy version and an electronic version.

Now that these systems are in place, I am writing up step-by-step instructions for the new manager(s).

Once this is done, our next assignment is to conduct a suite-by-suite inspection of all the units (again) and note any deficiencies, repair items, replacement items for a longer term maintenance project. This is something we do right after acquisition so we can schedule and prioritize our maintenance items and budget.

Your property manager is your business partner. The operation of any multi-family residential apartment building or complex requires partnership with many players. Keep documentation on your communications and monitor results. Poor performance can mean lack of understanding, lack of skills, lack of human resources or apathy. However, I’ve noticed that attitude is everything. The right attitude can overcome miscommunication, can acquire new skills, can attract the right manpower. The right attitude can create happy tenants, happy contractors and a well run building.

I’ll be here in Thunder Bay for a couple more months streamlining the systems we’ve put into place, hiring and training the right managers for the property, before I look at buying more property.

p.s.  I may be here working but I am here by choice. The few weeks of effort that we put in now will pave the way for a lean, mean, passive-income, money-making machine.

November 17, 2009

I receive a fair amount of email from people asking me to support this or that charity. Due diligence is due diligence whether you are researching real estate investments or charities. One of my first due diligence tasks is to Google the charity. My second task is to Google the Federal Charities Directorate or to go their website at http://www.cra-arc.gc.ca/charities/ and type the name of the charity in their search bar. All legitimate charities have a Federal charitable number that is 9-digits long followed by RR0001. It looks like this: 123456789RR0001.

The following excerpt is taken from an article in The Toronto Star newspaper so you can understand how charities work:

“One of the challenges in regulating charities is that they fall between federal and provincial law. The federal government operates the Charities Directorate, part of the Canada Revenue Agency. Charities are tax exempt and can issue federal tax receipts to donors. Provincial authorities, usually through the Public Guardian’s office, also have the power to step in and take a charity to court if it is doing something wrong. The guardians across Canada rarely take action. The Star found the primary regulator, the federal Charities Directorate, is virtually powerless to deal with problem charities. To begin, tax law forbids it from warning the public about bogus or wayward charities. The directorate, which is part of the Canada Revenue Agency, treats charities the same way the taxman treats personal taxpayers. So, even when auditors have found a charity is doing little or no good work at all they cannot tell the public. Each year about 800 to 1,000 charities are audited and half are told they have done something wrong, but the public can’t find out, even if it would be of major importance. Kevin Donovan can be reached at 416-869-4425 or charity@thestar.ca”

This excerpt from The Earth Times posted August 10, 2009:

“Registered charities in Canada perform valuable work in our communities, and Canadians support this work in many ways. The CRA regulates registered charities through the Income Tax Act and is committed to ensuring that charities operate in compliance with the law. Where a registered charity is found not to comply with its legal requirements, the CRA may apply monetary penalties or may suspend or revoke the charity’s status under the Income Tax Act.

The CRA is reviewing all tax shelter-related donation arrangements (for example, schemes that typically promise donors tax receipts worth more than the actual amount of the donation), and it plans to audit every participating charity, promoter, and investor. For more information about tax shelters, go to the CRA’s Tax alert Web page at www.cra.gc.ca/alert. For more information about the registration of Canadian charities, go to the CRA’s Charities and Giving Web page at www.cra.gc.ca/charities.

Contact: Canada Revenue Agency, Noel Carisse, Media Relations, 613-952-9184.”

To read the full article, http://www.earthtimes.org/articles/show/the-canada-revenue-agency-revokes,921485.shtml.

Under the Canada Income Tax Act Article 188.1 Undue Benefits explains what does not qualify as a charitable deduction.

There are some 80,000+ charities in Canada. It is impossible for auditors to review all these charities on a timely basis and can take up to 7 years to stop a fraudulent charity. It is up to you and your due diligence to determine where you wish to donate your hard earned monies.

Protocol seems to be a lost art these days so this is a lesson on how to make a great first impression when making contact with a complete stranger. Be prepared because it shows when you aren’t.

It’s a fantastic experience to be inspired by someone you admire and respect. In the emotional rush, you send a vaguely written e-mail asking for help or for a referral. To make it worse, you sign off only with your first name.

From my end, I see an e-mail from an excited person named Jane or John and their e-mail address. Their message says they need help and not much else. There is no last name, no address, no phone number, no commitment. I call these anonymous e-mails. The onus is placed on your role model/mentor to come through for you in your time of need. You have just sabotaged yourself.

Considering that I manage 8 different businesses and receive hundreds of e-mails every week, an e-mail like this is a time management issue. It becomes low priority if you don’t spend the time to explain how you discovered the resource that subsequently inspired you, where you currently are in your life (financial, personal, career), what your 10 year long term goals are, why you want to achieve this (your big why), your mission, vision and purpose clearly stated (you can have both corporate and personal mission/vision/purpose statements), and your short term action plan, preferably in increments of 3 months outlining your first year. Also helpful is sending a bio/resume explaining what you have studied to date and your experiences.

Put yourself in your mentor’s shoes. You are a multi-millionaire managing multiple business enterprises. You read your own email from this perspective. How would you respond?

So here is the plain and simple truth that you most likely won’t hear from other mentors because they are just too busy to respond.

Signing off as “Jane” or “John” is deemed unprofessional and the mark of an amateur. Business people want to deal with professionals. How you craft your message should appeal to the CEO/President as if they are reading correspondence from a peer/admirer.

Anonymous sign-offs is an indication that you are hiding information. That is a red flag indicator in my due diligence toolkit.

No explanation leaves everything else to guess work. My role as a mentor is about guidance and direction, not so much about giving answers. Getting answers is easy and requires no work. Getting you to think is the most precious gift a mentor can give you. Sometimes we can see that in order to get a specific result, the answer you think you want is not the answer you need. There are intermediate steps that are absolutely essential to support the foundation of your desired goal.

If you aren’t getting the results you want in your life, you may be curious to observe how you respond to situations and what your underlying motivation is. In the real estate business, the successful people are givers. How can you educate and empower the people who are already in your life? Because, if you aren’t doing this right now, getting into real estate will only magnify this deficiency.

This advice is for those of you who are serious about getting into real estate investing. Your first point of entry is to get your newsletter started. Contrary to popular belief, real estate is not about real estate, in my experience. Real estate is about people. And you can’t buy real estate without gaining their trust and without trust you won’t find the money. This process is explained in my book Your Million Dollar Network (www.yourmilliondollarnetworkbook.com) and is the one of the pillars of my real estate success, and those of my students.