An investment property is a great step on the real estate ladder because it’s a chance to build up your financial portfolio and gain some extra cash in the bank. More than a simple case of putting tenants into the property and watching the cheques come in, the role of a landlord is often considered more of a part-time job.
Before jumping into the position of a landlord, take a look at these useful tips so that your experience will be both positive and profitable.
Invest in the Property
An investment property is something that should be treated more like a business in order to succeed and make a profit. Some people think just owning a property and getting tenants in will be good enough, but they should really consider the long-term effects of not investing time or money into it.
Stay on top of repairs and make sure everything is up to code. Taking care of repairs and necessary renovations before getting tenants in will greatly reduce issues further down the road. Also, keep in mind the safety of future tenants by ensuring smoke detectors and carbon monoxide detectors are up-to-date and working properly.
Take the Time to Find Great Tenants
Every landlord wants great tenants in their investment property, so take the time to find them. Sure, it may cost money to have a vacant rental, but the long-term benefits of great tenants are endless.
Carefully screen potential tenants to find the ones who have a good credit rating, great references, and a history of being responsible in past rentals. Aim to find tenants who will not only pay on time but will take care of your property as if it were their own.
Prepare a Move-In Checklist
Plan and go through a detailed move-in checklist on the day new tenants move into your property. This list is to describe the condition of each room and the appliances/furniture you have included. Once completed, both you and the tenants should sign individual copies for reference on the last day of their tenancy.
A move-in checklist is the best way to compare regular wear and tear with possible damage and liability that may have occurred during the tenancy.
Finding good tenants is important but keeping them happy is the best way to build a solid relationship that could last for years. Keeping long-term tenants will ensure you have steady cash flow and that your property will be in good hands.
Many tenants are afraid to tell landlords of any issues that come up within the property and will only contact them when it’s already too late. To build a good and honest relationship with them, try to be approachable and proactive from the start.
Communication is Key
Give tenants your contact information with the hours that you will be available to help them out. Just like a business, you can have standard work hours when you should be reached, but also reassure your tenants they can reach you at any time in an emergency.
Reach out to your tenants to make sure everything is going well and keep lines of communication open. At some point, you will also have to contact them about getting access into their home for repairs or installations, so make it a friendly habit to keep in touch.
Brush up on the Laws
Every province will have a different set of laws and regulations when it comes to rental properties, so it helps to know what you are obligated to provide as a landlord. Join your provincial rental association to stay up-to-date with news and regulation changes for rentals.
By knowing what’s involved with renting to tenants, you will be able to help them through their tenancy and keep yourself covered without any major surprises.
Be Fair with Rent Increases
A landlord has the right to increase rent due to inflation or other needs but consider being fair to keep happy long-term tenants. The rent regulations in Canada control how much a landlord can increase rent and the periods to do so, and each province will have its own regulations that all landlords should be familiar with.
Rent can be increased every 12 months with an average maximum of 2.2%. Landlords are also required to give current tenants a notice period of at least 90 days before choosing to increase rent, which will give them time to accept the new terms or move on.
Be a Hands-on Landlord
There will come a time while tenants are in your investment property when repairs will have to be made. Whether you are a handy person who can deal with basic repairs or not, being prepared for them will give your tenants confidence and ease the stress of scrambling to replace or repair things within a reasonable timeframe.
Prepare a list of professional contractors in the rental area, so that it’s quick and easy to call them up in a pinch. Gathering contacts ahead of time will make any repair quick and easy, which is especially convenient while you are away on vacation or business trips.
Budget for the Unexpected
Owning a property can get expensive, even an investment property with tenants covering some of the costs. Building an emergency fund for those sudden costs is essential to avoid stressful situations when quick cash may be needed.
Build a savings amount that will cover sudden vacancies, major damage or urgent repairs. Having an emergency fund that can be easily accessed will ease the stress that you feel with the unexpected.
Insurance to Cover You and Tenants
It comes as no surprise that you should have full property insurance coverage, but it’s also a good idea to have your tenants get their own tenant insurance. Although not a requirement for renters, they should understand their personal items (furniture, appliances, electronics…) are not covered by landlord property insurance.
By making sure your tenants are covered for damage from accidents, fire, flooding or theft will not only protect you from messy situations but also give the tenants peace of mind their possessions are safe.