Posted by John Doe
Owning and maintaining a property can be an excellent way to make income. However, embarking on this type of venture takes much work and has ongoing costs. If you are interested in purchasing an income property and becoming a landlord, here are some tips on succeeding.
Know the Law
In every province, tenant and landlord acts are different. It’s essential to learn the rules so that you can avoid any potential conflicts. In Ontario, here are some of the various laws and regulations.
It is also crucial to understand the Ontario Human Rights Code and know what kinds of questions are okay to ask during an interview. By educating yourself on all the regulations, you can avoid potential court appearances and have a better relationship with your tenants.
Prepare Your Policies
When drafting your first lease, the first step is to decide on typical rental policies. If you continually make up the rules, it can cause disagreements with your tenant. Having a written policy in place that you can give to your tenants will help reduce future disputes.
Here are some policies to think about before you sort out your landlord and tenant relationship:
- Late fees
- Breaking the lease
The policies you create will be what works best for you and are reasonable for your tenants.
Assemble an Excellent Team
To ensure success as a landlord, you should get an excellent team together. Even though managing your own property is ideal for some landlords, if you cannot or it is not convenient, a property manager can be an asset. A property manager will manage all issues surrounding the property and the tenants.
Property managers usually receive a commission of 6% to 12%, and this can be negotiated in certain cases. Some managers also charge a flat rate, usually when a rental income is lower. This fee can be $100 to $200 per month.
Here is a list of some of their duties:
- Screening of tenants
- Repairs and maintenance
- Seasonal preparation
Two other team members that will lead your landlord ventures to success are a qualified attorney and contractors.
If you are managing the property yourself, you should screen the tenants carefully. One significant risk of being a landlord is losing money when rent doesn’t get paid. However, unpaid rent occurs less when landlords properly screen their prospective tenants.
First, you’ll want to interview potential tenants and ask questions such as: “How long do you expect to stay?” “How long did you live in your previous place?”
If you notice any red flags about their rental commitment, general reliability, or past concerns, that will factor into your decision-making process. Also, you should perform a credit check just to be safe. Once you have decided on a suitable candidate, they will need to sign a lease. You can go online and find a standard lease agreement online in Ontario.
Make it Move-in Ready
Even if you have done the work into becoming a good landlord, you’ll want the property to be in tip-top shape. Here are some types of preparations to consider:
- Clean thoroughly
- Change locks
- Provide a minimum of two sets of keys
- Basic landscaping duties
- Test appliances and plumbing
- Apply window coverings
- Do any minor repairs or improvements, such as painting
One of the essential components of your investment is getting insurance. That way, you’ll be fully protected. Here are the most common types of insurance that you’ll need to acquire:
Basic Homeowner’s Insurance
This type of insurance is necessary for an insurance loan. If you have gone through the process adequately, you’ll likely have this type of insurance already.
Landlord insurance is like homeowner’s insurance regarding coverage, but it does assume more risk by covering homes in which the owner does not live. You can even expect some homeowner’s insurance policies to get denied on rentals.
Landlord insurance is more expensive than homeowner’s insurance because insurance companies don’t expect renters to maintain the same kind of care as an owner would. Just be sure that you ask your provider to obtain this type of insurance for a rental.
Now that you have options for covering your property, it is crucial to acquire renter’s insurance for the tenant’s property. However, the tenant is expected to pay for their own. This type of insurance is also affordable, but necessary for potential emergencies.
It is best practice to make it a requirement for your renter to acquire this kind of insurance or mention it in the lease agreement. If you provide incentives like a gift card, then your renter may be more inclined to obtain renter’s insurance.
Get Ready for Income Tax Season
Since rental properties are a business, you can expect tax deductions to offset your income. In Canada, you can seek out a T776 Statement of Real Estate rentals. Be sure to keep every receipt and, as previously mentioned, consult an accountant. Taxes for landlords can be quite complicated, so it’s best to work with a qualified professional to file the paperwork correctly.
Having a rental property and becoming a landlord can be a lucrative enterprise, but it requires a lot of work. If you follow the previously mentioned tips, you will be well on your way to succeeding at your venture.
At Mortgages, Mortgages, we know that your home is likely one of your best assets. Since you’ll want to protect your investment(s), working with our team will provide you with the necessary resources. That way, you can better understand the processes of owning a home. We have years of experience in our field and work with all types of home and property owners in Ontario to ensure they get the most out of their investment.
For more information, call us today at 866-417-8805. We look forward to speaking with you about your prospects of becoming a landlord or any other pursuits you have.