In these days of low interest, some Canadians are dissatisfied with the returns offered by many investment vehicles and are turning to real estate. Investing in real estate for use as an income property potentially offers the dual advantage of both appreciating in value, while you rent it out at a profit. If you’re considering this option, here are a few tips you should keep in mind:
• Know your rights – and your tenant’s rights too: Before you decide to rent out your property, you should have a clear understanding of the rights and obligations this will entail. Your real estate lawyer will be a good source of this information and there are many helpful websites that spell out the requirements under the Landlord and Tenant Act and other legislation. Be sure that you research both roles of the rental relationship. You’ll need to know not only what your rights are as a landlord, but also what tenant’s rights you’ll be expected to honour.
• Target your advertising: If you’re looking for a certain type of tenant, you can ‘weed out’ undesirable applicants simply by targeting your advertising. For example, if you’re looking for a student, a professional woman or a senior, target publications or bulletin board locations that will be seen by only these groups.
• Screen your applicants: It’s amazing how many people would never let a stranger drive their car, yet they’ll turn over the keys to a house that costs hundreds of thousands of dollars just because the prospective tenant presents themselves well and has the rent cheque ready. There are many different tenant screening services available online. Simply run a search for “tenant check” or “tenant screening”, plus your province name and your search engine will offer you several to choose from.
• Ask for a security deposit: Some landlords make the mistake of simply asking for first and last month’s rent, thinking that will cover any problems when a tenant leaves. Ask for an additional amount – perhaps two to four weeks rent, depending on the condition of your property – to cover any repair or replacement costs that may be required after a tenant moves.
If you follow these guidelines, you can avoid many unforeseen problems down the road.