1 Rental properties: Do it legally, or don't do it.
Weather you have a free standing single family home, duplex or triplex in the Sarnia area do it the proper way. Just because you have space for 3-4 renters doesn't mean you're allowed that amount. Plus, Some municipalities don't issue permits for secondary suites. So if you build one anyway or do an addition to accommodate renters (there's always a contractor out there who will do work without permits), and you're discovered, you can be forced to pay fines and even dismantle the rental property. Besides zoning issues, "a prospective landlord must verify that a second unit meets the requirements of the fire code. All the info you need to know It's just a phone call, and it could save you a lot of headache. So do your homework! If you are found to have an illegal unit, your insurance can become compromised. Always be honest with your insurance company about all aspects to do with your rental property. If there is an issue and they catch you, they can terminate your insurance immediately, not give you any money against a claim.
2 You might not pocket the entire rent—it's taxable and there are expenses.
You'll need to issue a receipt to your tenants for the rent they pay on their rental property, and they may use it to claim a deduction on their income tax. Even if they don't, you're expected to declare the rent as income and pay tax on it accordingly. Tax aside, landlords face other expenses. Plan to spend a couple thousand every few years on "something" . Always make sure you have a 'slush fund' put aside, in case of a major or minor repair. If you have high turn over in your rental property... painting, minor repairs, and cleaning services will be required every time a tenants move out. Remember about appliance repairs, and fixture upgrades or replacements when those turn overs happen.
3 The space you have might not attract the tenants you want.
If you are planning on renting out a space in your primary residence like your basement....Be cautious. Sharing driveways and/or yards can be a major inconvenience, so you want to be 100% sure, you want to share YOUR space with another. Make sure your electrical service can accommodate more people (you might have to upgrade from 100 amps to 200); consider a larger water tank so the tenant won't knock on your door because they can't shower when you do laundry. Don't spend lavishly on decor, but make sure the apartment is one you would want to live in—that way you're more likely to land a tenant. Prospective renters often try to negotiate the rent and extras, like new paint. Be extra careful about who you get in there.
4 Once they're in, it's extremely hard to get tenants out.
Rules vary across the country, but in a nutshell ... TENANTS HAVE MORE RIGHTS THEN LANDLORDS. All renters are protected by provincial legislation and governing bodies, and the requirements for eviction are extremely difficult. The Canadian government sees it as: No one should feel their home could easily be taken away. As a landlord, you should be knowledgeable of the Residential Tenancies Act. Tenants these days are very knowledgeable of their rights under this act. See below at bottom of the page: the ONLY reasons you can get tenants out in 2020.
5 Showing your space and finding the right tenants is hard work.
A prospective landlord, especially a first-timer, should consider the services of a realtor. (Sarnia realtor experienced specially in rentals)
You'll pay him/her the equivalent of a month's rent, but the agent will teach you so much ! He/she will determine a realistic price; inform 250 agents in Sarnia about it, he/she will enter it as a listing and post it on realtor.ca, which is accessed by tens of thousands of real estate professionals & the public. Better quality tenants work with real estate agents. Realtors try their very best to screen all the inquiries about your home and applications thoroughly. That means credit checks, getting an employment letter and contacting prior landlords to see if there is a history of NSF cheques, too. If you decide not to use a realtor, be prepared to spend hours findings candidates, filtering through them with rigorous investigating on your own. And since time is money, you should factor that legwork into your balance sheet. Sarnia's rental market has such low inventory right now expect 20-50 people to contact you off your kijiji ad. Which you will find frustrating in a few days. Experienced realtors know how to go about it the smartest, quickest, efficient way possible.
6 A rental unit won't necessarily add to the value of your home.
Some home renovations are almost always worth the investment: an updated kitchen or bathroom, for example, or new paint and floors. But some aren't: swimming pools, saunas, landscaping/backyard structures, usually. So if you love and use them, go ahead and install them for your own enjoyment, but don't think of them as an investment. Same goes for a rental unit. Chop your home into a duplex, might not fly with everyone and when you go to sell you'll be eleminating 95% of the market. ** If you do construction without permits, future owners of your home will have to contend with that. If they can't rent the space out, or don't want the risk since it's not legal. They might use that as a negotiating tool to get your asking price down.
7 Landlords should be handy
Ok, you don't necessarily need to be handy BUT it's sure going to save you a ton of money on service calls over the years. Or hopefully a friend or family member can help you out. Here's why: if tenants confront even a small a problem (a leaky faucet, say, or a light that won't go on), they don't have to solve it, they just have to call the landlord. If you can't handle the work yourself, you need to find someone who can. And finding someone for small stuff is extremely difficult. It's one thing to manage your own space and problems, but add someone else's washing machine to the mix and it can get to be too much.
8 Tenants can break their lease.
YUP, they can leave before a lease is up :( They basically just legally need to give you two months notice from the first of the month. Just like you would owe to them. So you want to ask questions to determine that they're staying a while. Why? The longer you keep a tenant, the cheaper it is for you in the long run: when tenants move out, you need to show the space, get repairs done and wait for the next appropriate candidate. This can take weeks during which you won't be collecting rent. You should also know that not all clauses in a lease are binding. For example, if you write into the document that there are to be no pets or children in your space, and your tenant agrees by signing, but later gets a four-legged companion or a bundle of joy anyway, you can't evict them.
9 But It's been proven it's Worth the Risk
Remember, that you can't protect yourself from all risk. People become landlords everyday. People have made a lot of money over time with rentals. There are more positive stories regarding rentals vs negative. Remeber you should ALWAYS ask for first and last month's rent when your tenants move in, but a security deposit to cover holes in walls, broken appliances or ruined hardwood, is not allowed in Ontario. Familiarize yourself with the rules in your area or you could unwittingly break the law.
Reasons you CAN evict a tenant :
You can give notice to a tenant for either of the following reasons:
• Reason 1: You, a member of your immediate family or a person who provides or will provide care services to you or a member of your immediate family wants to move into the rental unit and occupy it for at least one year.
• Reason 2: The purchaser, a member of the purchaser’s immediate family or a person who provides or will provide care services to the purchaser or a member of the purchaser’s immediate family wants to move into the rental unit, and, ▪ the complex contains no more than three residential units, and, ▪ you have entered into an agreement of purchase and sale of the complex.
For more info :
Can I help you find an investment property in 2020 ? I'm personally & professionally experienced with rental properties and I'm ready to help you ! Reach out to me today. Direct : 519-381-3937 .