Documentation is crucial when selling an investment property
The month of July is typically the time of year when the real estate market slows down somewhat before picking up again for the fall season. If you’re planning to sell your investment property this fall, the time to prepare it for the market is now and not the day before it hits the Multiple Listing Service (MLS). Before the property is listed for sale, sellers need to spruce up the exterior and the interior of the property, research the market conditions, and hire the right Realtor and lawyer to help with the transaction.
In addition, sellers should assemble and prepare the documents that buyers may request in an offer, and be in a position to provide these documents within the timelines that are identified in the Agreement of Purchase and Sale. When these documents aren’t provided within the agreed timelines, some buyersmay choose to walk away from the deal leaving both sides frustrated and the property back on themarket.
Thefollowing are examples of the types of documents that sellers should have ready to share before the property is listed for sale. Preparing this documentation can be a lot of work but the effort will be worth it.
Income and Expense Statement - Investopedia defines this as a “financial statement that summarizes the revenues, costs and expenses incurred during a specific period of time - usually a fiscal quarter or year. These records provide information that shows the ability of a company to generate profit by increasing revenue and reducing costs”.
Copy of the Rent Roll which includes the property address, tenant’s names, anniversary dates, move-in dates, the current rents, and a list of last month’s rent.
Copies of all leases, applications to rent, tenancy agreements, rent increase notices, and eviction notices.
Copies of the financial information including property tax, insurance and utility bills.
Copies of environmental and building inspection reports pertaining to the property.
Copies of all service contracts for the Heating, Ventilation and Air Conditioning (HVAC) equipment, appliances, snow removal, and lawnmaintenance.
List of all equipment, fixtures and chattels that are included in the purchase price.
2016 Rent Increase
The Ontario government has announced that the annual Rent Increase Guideline, the maximum percentage by which a landlord can increase the rent for most residential tenants without approval from the Landlord and Tenant Board, is 2.0 per cent for 2016. Remember that Landlordsmust give tenants written notice at least 90 days before the date of the rent increase. Visit the Landlord and Tenant Board website for details. http://www. ltb.gov.on.ca/
Sources: Ottawa Sun, Tony Miller, July 4, 2015.