Here in Ontario, there are a number of reasons that drive people towards becoming a landlord. One group will rent out space for profit while others will rent out part of their homes or entire homes to help cover their mortgages.
How to Become a Landlord
Whatever the reason behind the move to becoming a landlord in Ontario, the following tips will help you have a stress-free experience down the road. Landlord/tenant relationships can be strenuous. However, it can be turned into a positive and profitable experience with the right information and plan.
Handle the Rental Arrangement as a Business
Landlords can benefit two-fold from their rental property. First, the monthly cash flows will help you turn a profit. The second avenue is through capital gains when the property appreciates in value.
You must understand that turning a profit through rental property is not a walk in the park. Be ready to navigate through a few challenges just like with any business. Sometimes, rent will be late, a tenant may cause trouble and you need to mediate, tenants may damage your property, you may not have a tenant for a unit, and the regular repairs to keep the property in good shape are some things you have to contend with.
Ensure You Have the Right Property to Rent Out
If you are investing in rental property, make sure that you fully understand market dynamics before taking the plunge. Some landlords have ended up with negative cash flow having invested in homes found in neighborhoods with ridiculously high property prices. You may opt to go to a neighborhood with lower home prices but will give rental prices comparable to nicer spots and where home prices will appreciate more with time.
When becoming a landlord, you can go for multi-unit rental properties such as duplexes where you will rarely be without tenants on all units. Ensures that the electrical service can accommodate the extra people and that you have a larger tank to meet the needs of all dwelling units. The advantage is that you will have some cash flow even as you work to find a tenant for the vacant unit.
Do It Legally
First and foremost, any prospective landlord must verify to the city or province that the dwelling unit they want to rent out meets building requirements and the fire code. Ensure that you have obtained all applicable permits before bringing in a tenant. Failure to have the necessary permits will lead to hefty fines and even demolition of the dwelling unit.
Secondly, being a landlord you must understand the rules governing rental properties. Surex will help take you through the relevant regulations with regard to rental properties in Ontario. The rules are different from one province to another. In Ontario, familiarize yourself with the Residential Tenancies Act 2006 which governs landlord/tenant relationships.
As landlord, you can join associations such as OLA and the Landlord’s Self-Help Center that provide assistance when needed. Other resources include the Canada Mortgage and Housing Corporation website which provides information and advice for landlords on how to get started, finding tenants and how to address various problems.
The Ontario Landlord and Tenant Board provides the different legal forms required for tenant applications, rent increases, evictions and all other forms.
Carefully Screen Potential Tenants
A landlord should carefully screen potential tenants before finalizing tenancy agreements. Tenants can prove to be a nuisance especially those that damage property, create endless noise that results in complaints, and who will repeatedly default on rent payments.
You should carry out credit checks with agencies such as Equifax and TransUnion and ask for references from their employers or former landlords to get good tenants. The cross-checking of information also helps to weed out inconsistencies and dishonest people.
Rental Expenses and Taxes
Not all rental income is pocketed by the landlord. Landlords must pay taxes on rental income as the applicable rates. They will also need to cover various expenses with regard to maintaining their rental property. The most notable expenses are appliance repairs, fixture replacement and upgrades, painting and upkeep related costs, general maintenance, cleaning services, and any other expenses that arise.
Landlords should provide receipts to their tenants for the rent they pay in the rental property. Some tenants will use these receipts to claim deductions on their income tax.
Promote a Good Landlord-Tenant Relationship
Being a landlord in Ontario, you should aspire to hold onto good tenants for the longest possible time. There are small gestures that will help you cultivate a good relationship with tenants such as sending them flowers when they finally move in and sending gift cards during holidays.
Additionally, become super responsive whenever they have an issue that requires your attention. Tenants that are assured of support from their landlords will stay longer. You can choose to clear driveways for seniors and other small jobs that may not cost much but go a long way in making a big impression.
Be Hands-on in Managing the Rental Property
Landlords should create a network of handymen, plumbers and electricians who will be just a phone call away when need arises. Problems such as a leaky faucet and faulty electrical fittings require immediate attention before the situation worsens. It will help you respond quickly to problems raised by a tenant and you will be sure that repairs or other jobs are completed to the highest standards.
Take Out an Insurance Policy for the Rental Property
You will need to purchase insurance for your rental property so that you are comfortable knowing that the property is covered if anything happens. It is not a legal requirement to ask tenants to take out an insurance policy but it is good to let them know that they aren’t covered by your policy. Advise the tenant to buy insurance to cover their personal property against damage and other occurrences.
If you are renting out the basement in your home or an apartment as part of a duplex, your existing home insurance policy is sufficient coverage for everything. Make sure that the insurance provider is aware of the dwelling unit. Always work with insurance experts to learn what the best options are, it will save you from headaches.
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