This is the most common area of concern after the Management Agreement is signed: you will want to know “Where’s my money?” Disbursements to the owners are labeled “Owner’s Draw” on your monthly statement. The timing of disbursements is directly related to when the rent is received at the Real Property Management Service office.
When the Owner’s Draw is Disbursed
Deposits are typically made the same business day as the rent cheque is received. Real Property Management Service then determines if the tenant’s cheque clears, and Owner’s Draws are processed in batches on the 10th and 25th (only for clients on PAD agreement) of the month, or the following business day if the disbursement date lands on a weekend or holiday. Your Owner’s Draw will be sent to you either by cheque or by direct deposit. Direct deposits will take up to three business days to clear through the banking system. Your receipt of a cheque is dependent on the postal service delivery times.
|A short note on Owner’s Disbursements:|
Please understand that you will probably not be able to use the tenant’s rent payment to make your mortgage payment in the same month that the rent is received. The rent disbursement cycle is too tight to meet most mortgage due date requirements. It is recommended, therefore, that you have two (2) months of mortgage payments in reserve in case the current month’s rent payment is not disbursed to you in time for you to pay that month’s mortgage payment.
How the Owner’s Draw is Calculated
The calculation for the Owner’s Draw is fairly simple:
Monthly rent received minus management fee, minus maintenance expenses (if incurred), minus other expenses equals Owner’s Draw.
Examples of “other expenses” may include, but are not limited to, additional advertising expenses, utility bills, emergency maintenance costs, Condominium Fees, and tax payments that some owners request Real Property Management Service pay on their behalf.
What If the Rent is NOT Received?
The tenants are aware that their rent payments are due no later than the 1st of the month. While most pay on time, there are some that pay late. This can be due to a one-time event or can be a recurring problem. The steps that Real Property Management Service takes to resolve late or non-payments are consistent, but can be stopped at any stage. These steps include:
- Email / phone call to tenant – this is usually all that is required to find out why the rent is late, and to establish a commitment as to when it will be paid.
- Letter to renter – a eviction notice from Real Property Management Service is the first step in formally documenting the lateness of the rent. This letter is sent to the tenant around the 4th of the month if the rent has not been received before then.
- If the late payment of rent is a recurring problem or if the rent is severely late, it may be appropriate to start the first step in the legal eviction process. Your Real Property Management Service office uses an eviction Paralegal. Fees may be incurred in order to begin this process. Please see section on evictions.
How are Late Fees Handled?
Late fees not allowed in Ontario. Your Real Property Management Service does have a process to apply a prompt payment discount of 2% to your rent, fees are incurred by tenants in accordance with the lease agreement, and provincial law, when they do not pay their rent on time. When the rent is finally paid, it is applied to the resident’s account in the following order:
- Prompt Payment fees are paid.
- The remaining balance is applied to the rent past due.
Prompt Payment fees are administered in accordance with your Management Agreement with Real Property Management Service.