Buying the right rental properties can be a challenge in itself! We know, we’ve helped enough people look at potential rental units. But if you thought that was hard – the act of being a landlord is by far the hardest part.
If you are up for being a landlord rental properties can be the key to a great deal of profit and financial freedom. But, you have to do things the right way from the start – or at least learn from your mistakes along the way.
Being a landlord is a business. Most people suggest they had known more about the business before they got started. If you are considering buying rental property we’ve outlined some suggestions for you.
Suggestions:
Screen Your Tenants For Your Rental Properties:
Screen all your tenants very carefully. We cannot stress this enough. Know exactly who they are. Check in with their past landlords. Look at them on Facebook to see what type of people they are. If every picture shows them partying – you might expect that at your house? Look at their Instagram and LInkedIn. You will be able to tell a lot about people from their online presence.
Expect The Unexpected:
When it comes to being a landlord, anything that can happen probably will. So, you have to be prepared.
Be ready for insurance to go up, property taxes to go up and damages to occur. Some people have seen their property taxes increase by X% since they bought their rental properties. Some people have seen their insurance skyrocket because of frequent problems.
Don’t base rental prices on old mortgages bills. Create a proforma, know that rental rates will need to increase yearly and know that you will need to budget for incidentals. If you do readjust the rent and raise and end up being in a higher property tax bracket be prepared for that as well.
Renters Can Cause A Lot More Damage Than You Think To Your Rental Properties
Talk to anyone who has owned rental properties, they will all have their own horror stories about “renting gone wrong”. Most people are not quite prepared or expecting to live through it themselves.
We’ve worked with a family that rented out their loft. They found out how stressful renting could be when one of their tenant families broke their month-to-month lease abruptly and moved out in the dead of winter. When the owners showed up at the house to do the final walk-through of the property, they honestly couldn’t believe what they saw.
The tenants had used the home as a business and had put wallpaper stickers all over 20 foot ceilings. Their children had completely destroyed a custom built living room carpet and we are not even going to talk about the bedroom.
Long story short – after the repairs and being taken to the rental board the owners decided to sell their rental income property. The owners will tell you renting their property was lucrative until it wasn’t and most (90% of their renters were amazing).
Great Tenants Are Worth Their Weight In Gold
When you get a great renter you know you rarely need to check on them. You know they are keeping your property in pristine condition. They probably even upgrade things you don’t even know need repairs.
When you get those renters, you don’t want to lose them. Sometimes you even keep rental rates the same to keep them. When you run your proforma’s you will notice that even keeping rent lower sometimes saves you money because you are not repairing, fixing, painting every time someone moves out of your home.
Set Rules and Stick To Them
Once you set ground rules, there will be clear expectations. If you suggest that you will charge a late fee per late cheques – charge it. If you suggest that you stop by quarterly to change furnace filters – change them. Once a precedent has been set – keep it that way! Everything will be smoother moving forward.
As always if you need help buying or selling your home – or a rental property – we are here to help.
Gregg Bamford and Ryan Bamford
