What You Should Know Before Becoming a Landlord

Becoming a landlord in Canada can be a rewarding venture, but it's not without its challenges. Whether you're looking to invest in rental properties as a source of income or planning to rent out a part of your home, there are several factors to consider before taking the plunge. It isn’t as simple as letting someone pay to live in your space; maintenance, repairs, and different tenant personalities can play a huge part in your overall experience.
Here are some essential things you should know before becoming a landlord.

Understanding Landlord-Tenant Laws

One of the first things you need to familiarize yourself with is the landlord-tenant laws in your province. Each province and territory in Canada has its own set of rules and regulations governing rental properties. These laws cover various aspects, including:

• Rent control: Some provinces, like Ontario and British Columbia, have rent control regulations that limit how much you can increase rent each year.
• Tenant rights: Tenants have rights to privacy, maintenance, and timely repairs. Understanding these rights will help you avoid legal issues.
• Eviction procedures: Knowing the proper procedures for eviction is crucial in case you need to remove a tenant from your property.

Consult the residential tenancy act for your province to ensure you comply with all legal requirements. And if you need help drafting the documents, LawDepot has several free documents to help you get started.
To really understand what the market is like for renters, we recommend looking for renter’s guides online as well.This will help you understand aspects around starting, maintaining, and ending a tenancy. 

Financial Considerations

Before becoming a landlord, it's essential to assess your financial situation. Owning a rental property involves more than just collecting rent. You need to account for various expenses, such as:

• Mortgage payments: Ensure you can cover your mortgage even if your property is vacant for a period.
• Maintenance and repairs: Budget for regular maintenance and unexpected repairs.
• Property taxes: Keep up with property tax payments to avoid penalties.
• Insurance: Consider landlord insurance to protect against potential damages and liability claims. Housing is definitely one of those aspects you’ll want insurance for—on the flip side, tenants can also opt to get tenant’s insurance as well for an added layer of protection.

 Create a detailed budget to understand the financial implications of becoming a landlord and ensure you have a financial cushion for unexpected expenses.

Finding the Right Property

Choosing the right property is crucial for the stability and growth of your investment. Consider the following factors when selecting a rental property:

• Location: Look for properties in desirable areas with high demand for rentals. Proximity to schools, public transportation, and amenities can make your property more attractive to potential tenants.
• Condition: Ensure the property is in good condition or budget for necessary renovations. A well-maintained property can attract quality tenants and reduce maintenance costs in the long run.
• Rental market: Research the local rental market to understand rental rates and demand. This information will help you set competitive rent prices and anticipate potential vacancies.

Screening Tenants

Finding reliable tenants is essential to your success as a landlord. Proper tenant screening can help you avoid problematic tenants and ensure a smooth rental experience. Here are some tips for effective tenant screening:

• Credit checks: Assess the financial responsibility of potential tenants by running credit checks.
• Reference checks: Contact previous landlords and employers to verify the tenant's rental and employment history.
• Background checks: Conduct background checks to ensure there are no criminal records or red flags.

Create a thorough application process to gather all necessary information and make informed decisions.
However, ensure you remain objective while screening your tenants. You’ll want to be as comprehensive as possible, but remember that it’s illegal to refuse a tenant based on their age, race, gender, color, disability, language, religion, and other discriminatory reasons.
Consider using the landlord credit bureau, which allows landlords, property managers, and tenants to record rent payments. With permission, landlords can pull up the credit history of prospective tenants and see whether they’ve paid their rent on time for previous occupancies.

Drafting a Lease Agreement

A clear and comprehensive lease agreement is essential to protect your rights as a landlord and outline the tenant's responsibilities. The lease agreement should include: 

• Rent amount and due date: Specify the monthly rent amount, due date, and acceptable payment methods.
• Security deposit: Outline the security deposit amount, conditions for its return, and any deductions for damages.
• Maintenance responsibilities: Clearly define the maintenance responsibilities of both the landlord and the tenant.
• Rules and regulations: Include any property rules, such as pet policies, smoking restrictions, and noise regulations.

Consider consulting a lawyer to ensure your lease agreement complies with provincial laws and adequately protects your interests.

Maintenance and Repairs

As a landlord, you are responsible for maintaining the property and ensuring it is safe and habitable. Regular maintenance can prevent costly repairs and keep your tenants satisfied. Create a maintenance schedule for tasks such as:

• HVAC servicing: Regularly service heating, ventilation, and air conditioning systems.
• Plumbing and electrical checks: Ensure plumbing and electrical systems are in good working order.
• Pest control: Schedule regular pest control inspections to prevent infestations.

Promptly address repair requests from tenants to maintain a positive landlord-tenant relationship.

Preparing for Challenges

Being a landlord comes with its share of challenges. Be prepared to handle situations such as:

• Late rent payments: Have a plan for addressing late rent payments and enforcing late fees.
• Tenant disputes: Develop conflict resolution strategies to handle disputes with tenants amicably.
• Vacancies: Be prepared for periods of vacancy and have a plan to attract new tenants quickly.

Seeking Professional Help

If managing rental properties seems overwhelming, consider seeking professional help.
And if you want to take a step back completely? Property management companies can handle tasks such as tenant screening, maintenance, and rent collection, allowing you to focus on other aspects of your investment.
Becoming a landlord in Canada can be a profitable and fulfilling experience, but it requires careful planning and preparation. The best landlords have to be great at a variety of skills: communicating, networking, research, maintenance, and management.
Remember, being a responsible and proactive landlord will benefit both you and your tenants in the long run.
If you’re ready to take the next step to becoming a landlord, get your rental property insurance quote for free in under 3 minutes.