Building up your networth? Growing your investment portfolio? Want to be a landlord?
Being a successful residential landlord in Ontario is not easy. Here are 5 important tips to remember:
1. Qualify your tenants! Get to know who is going to live in your investment. Do you want just about anyone to live in there? You want someone who can pay the rent on time, and is able to do so. So you can do this by asking for proof of income and getting a copy of their credit report. Everyone can get a copy of their own credit report on (Equifax or Transunion) for a nominal fee. Ask for references and then call the references that are provided. Call their employer, ask to speak to their direct manager (See if they are a good employee, are they always calling in sick, do they show up on time, etc.) Interview them, get an idea of how they live (Do they have pets, do they like to party, are they a student or young professional, etc.). Check them out on social media. Google them! If you have any concerns, you should always consult your real estate lawyer for legal advice.
2. Treat your tenants with respect. They are living in and taking care of your investment. They are building up your equity while maintaining your property on a daily basis! Check in on your property at least 2 times a year. Obviously with 24 hour notice. Show your tenants how well you take care of the property before giving them the keys so they know what kind of standard you hold. When you buy your investment property, think of what kind of tenant you want to target. Who would you want living and taking care of your investment? Cheap properties will get you cheap tenants. At the end of the day, treat your tenants with respect and even as a friend and they will return the favour by taking better care of your property. Maybe even reward your tenants with a small gift card if they pay rent on a time regularly.
3. Be understanding. If you’ve done your due diligence, your tenant should be a reasonable human being. Treat them as such. Sometimes life happens and it can be tough. Divorce, job loss, or anything that could cause them problems paying the rent, you don’t have to start evicting immediately. Meet the tenant in person, talk to them. Offer them a months free rent if they leave early or offer to cover the cost of them moving out if they have a friend or relative’s home they could move to. Let them know you won’t report them to the credit bureau (unless they really are trying to take advantage of you). If you can get your tenant to be willing to move out, the sooner you can get someone else in. Take a small hit for a month or two, rather than a longer vacancy period of not receiving any rent. Not to mention, being reasonable with a troubled tenant could help prevent them from damaging your property before they move out.
4. Be a landlord. Visit your investment at least 2 times a year to check on its condition and make sure upkeep has been satisfactory and if there are any issues you can help amend. As a landlord, you have the right to enter your rental property to inspect that state of repair as long as you provide 24 hours written notice and the visit takes place between 8am-8pm. Don’t abuse this privilege by going too often. Check in to see if the smoke detectors need any new batteries while keeping an eye out for any damages and how the tenant has been maintaining your investment. Show the tenant that you care about the house and the tenant should follow suit.
5. Cover your bases. Make sure you’re using a current version of the lease agreement. Again, verify clauses with your real estate lawyer as this is the legal document that will be judged on in court, should there be any dispute. All of these rules and regulations are set and governed by the Landlord and Tenant Board. Refer to their website for everything. Everything! By following these tips, your real estate investment can give you a healthy return, without the aggravation.