Our Top 10 on Being a Landlord
Real estate is a great investment, but it's not easy, and it's not for everyone.
When I bought my first investment property it was sort of sprung on me. I did little research and had no idea what I was getting myself into. Luckily I had a network of people to go to for questions and advice, and like I'm hoping you learn from me, I learned a lot from them.
Over the years we received great advice from friends, family and clients (many who own several properties, and a few who had that one bad experience that caused them to get out of the game). Take it all in and learn from it.
1. Be Thorough Choosing a Tenant.
You have to have the mindset that it's better to have the home vacant a little bit longer than settling for a tenant. Once they are in it is difficult and expensive to get them out. When we choose our tenants I base a lot on gut feeling. From my first converastion with potential tenants I will filter them into two categories - good vibe or not good vibe :) From the smaller list of potential tenants I then begin to dig through their application forms. Do your research, ask for referrals, double and triple check the details, check out their social media profiles, become a private investigator and MAKE SURE the person you are renting your home to is someone you can trust. Trust your gut, but make sure you also do your homework.
* you can find a copy of the standard application form to download here
2. It's A Business. The one piece of advice that has stuck with me over all these years is that you have to run it like a business. Seems obvious. But when I first started out I let emotions take priority. There's nothing wrong with helping out someone in need, or giving someone worthy a second chance, but keep in mind this is your home, your investment, and your money at stake. You need to be consistent with your paperwork, make sure you are following the Residential Tenancies Act, keep proper records, and be sure to claim it on your taxes.
3. Don't Over Renovate. As long as the home is safe and clean, don't overspend on improvements. When we purchased our first rental property I was excited. I wanted our tenants to love the home as much as I did and I wanted to make it pretty and new for them. Once the first tenant moved out I realized why that wasn't my best investment. It's a terrible feeling spending time and money on a project to have the tenant not take as great of care of it as you would. Keep it simple - freshen it up, clean it up, maybe do a few small things, but just keep in mind some tenants may not maintain the home as you had hoped.
4. Get Organized. Have a file for each tenant and include their leases, renters insurance, correspondence, and any other paperwork between the two of you. Make notes for yourself as to when things expire so that you can stay on top of things (ie. their renters insurance, smoke detector acknowledgements, when rent can be increased).
* have your tenants sign a smoke detector/CO2 acknowledgement (you can find a copy to download here). Sometimes the tenants remove smoke detectors and if anything should happen you have this signed proving that you provided them with the necessary safety requirements.
5. Have a Reserve Fund. Just like owning a home there are always maintenance or repairs required so you want to make sure you have a separate account for any necessary work to the property. It's also important to have the reserve fund in case your property is vacant for a bit. You don't want to have to start dipping too much into your savings accounts.
6. Are You Handy? It's not a must but it certainly helps when repairs/maintenance are needed at the property. If you have to pay an electrician/plumber/handyman every time something comes up it's going to add up.
7. Take Excellent Notes
You hope it doesn't come to this, but if you ever get to the point where you have to take your tenant to court you want to make sure you have excellent notes. For each of our rental properties we have a separate binder with each tenants paperwork, detailed notes of when a tenant made a request or reported an issue and our response time, and any late rent payment notices and timelines. If you haven't been documenting important conversations, any issues that have taken place, start now. Have clear timelines that you can reference back to if needed.
* If your tenants communicate with you and let you know that rent may be a little late, or they have to pay in installments, for the most part we will work with them. If they don't pay their rent and ignore your calls/texts it is important to get the paperwork started right away because it can be a long process. Click here for the N4 - Notice to end tenancy early for non-payment of rent
8. Don't Let Credit Scores Make Your Decision. Most people who are renting do not have great credit scores, but that doesn't mean they won't be great tenants. We tell potential tenants that by signing the application form we are able to check their credit and to just be open and honest with us, and for the most part there are understandable reasons for their low score. My advice is take the credit check with a grain of salt. First impressions, application details, and doing your research are way more important in determining who the right tenant is for you.
9. Consider Renting For a Little Less. It is so hard nowadays for people to find clean and affordable homes to rent, and with the high demand for housing rent prices have increased. Although we could charge a lot more for rent in our homes we post for less than the going rate for a few reasons: 1) we get far more applicants and a larger pool of tenants so that we can have our top choice. 2) the tenants will stay longer knowing they are paying a fair price for the home which results in less turnover. 3) the tenants appreciate it and are good to us.
10. Be Good To Them. Be good to your tenants and they will be good to you. Make sure you respond to them in a timely manner, complete the necessary repairs, and make sure the home is in good repair and safe.
I hope you found some of this information useful; and if you want to talk more about buying your first investment property, finding a tenant, or other questions about being a landlord I am happy to help!
Do you have any advice or tips from being a landlord or a tenant? Share your stories or questions with us at www.facebook.com/yetmanandgomes.royallepage