Investing in real estate can be very rewarding, but is not without its challenges. So, to help you prospective and current investors avoid some potential missteps, here’s 6 tips to having a great experience as a landlord:
1. Get flexible lending terms
If you’re in the position where you need to borrow money to finance your property (and let’s face it, most of us are), make sure you get flexible terms. Why? Because, at some point, you may need to get out of the deal quick and you don’t want a substantial penalty to stop you from making the termination decision. This is especially true if you’re a newbie investor and you decide that this business isn’t for you.
2. Do the work before you get tenants
For many reasons, this makes complete sense. Renos can be dirty work and often require multiple trips. Just think about how messy and time consuming patching drywall can be. It’s so much easier doing that work with a vacant property when you or your trades can come and go freely, without inconveniencing the tenants.
3. Training your tenants
Without sounding disrespectful, this is your house which means its your rules. Being clear up front can save you headaches later. This includes things like how and when you want to receive rent, who’s responsible for exterior maintenance and what issues are and are not worthy of a late-night phone call. The landlord is the one holding the risk, so its fair that you determine how things go.
4. Know your numbers
This is very helpful when looking for an investment property. Knowing the local rents can mean the difference between a cash-flowing property and one that requires monthly stimulus from your own pocket. Once you have a rental property ready to hit the market, or one that’s already tenanted, it’s important to give the local rental market a quick survey to make sure you’re still listing at the right price point. How? Spend five minutes looking on kijiji for comparable properties (same number of bedrooms, bathrooms, equivalent square feet, lot size, parking spaces, finishes, etc) in your area. This is probably the best and quickest temperature check out there.
If you wouldn’t want to live with certain functional elements of a house, (small bedrooms, no closets, an outhouse, etc) chances are a tenant won’t either.
5. Know your neighbourhood
Similar to the last point, know what’s going on in the neighbourhood and how that will affect your property. This can be both positive and negative. For example, say, the city has been given a sizeable cheque for a light rail transit system, properties on the proposed route may be impacted. Or, if there’s a development proposal before city council for a shuttered school on your block. Keep up on what’s happening as it could affect you or your tenants.
6. “Would I want to live here?” test
This is straightforward enough. This goes for both location of the property as well as the floorplan and finishes inside the property. If you wouldn’t want to live with certain functional elements of a house, (small bedrooms, no closets, an outhouse, etc) chances are a tenant won’t either. Also, if you don’t feel safe showing the property at night, that’s a huge red flag over that project. Investing in the right property and providing a great product will hopefully create a greater sense of ownership with your tenants, meaning they’re more likely to treat the property as if it was there own.