- Think of your rental as a business
William Blake is a full-time landlord who owns properties in Ontario and Alberta and is an Ontario Landlords Association (OLA). He has good news for those who wish to be like him.
“You can make money by owning, both from monthly cash flow and from increasing the value of your property,” he says. It’s not like buying mutual funds, however: you have to be prepared to face the same type of difficulties in a business.
It may sound simple, but Mr Blake has already dealt with new landlords who have not adopted this way of thinking and are taken aback: “Some have called me in a panic the first time the rent has been a day late, even before calling their tenant, he reports. In general, I recommend that they call him and realize that it was a simple misunderstanding.
- Buy the property that is suitable for rental
Mr Blake likes to invest in duplexes for the peace of mind they provide. “In a duplex, there are two dwellings; if you lose a tenant for a while, it usually only affects one unit, not both. You continue to have cash flow.”
You may want to buy a property in a fashionable neighbourhood, but the very high house prices in this type of location could mean insufficient monthly cash flow. Mr Blake, therefore, suggests buying in a less desirable area: “You may have to wait two or three months before renting in a less prestigious area, but you will benefit from better cash flow because the price of houses is lower, but the rents are similar to those in trendy neighbourhoods, he points out. And your property will increase in value as the sector develops.”
- Know the provincial rental rules
Rental rules differ by province; therefore, you must know the ones in force in your. Several provincial associations such as the Corporation of Real Estate Owners of Quebec (CORPIQ), the OLA and the Landlord’s Self-Help Center can help landlords.
Other resources, including government agencies such as the Régie du Logement du Québec and the Canada Mortgage and Housing Corporation, offer advice for tenants and landlords on various topics (e.g., getting to know the rules for finding tenants, fixing problems).
A subject often annoys new owners: can they demand a deposit in the event of damage? “In Alberta, I can ask new tenants for a deposit [that doesn’t exceed the monthly rent], but I can’t do that in Ontario,” says Blake. In Quebec, regardless of the amount, security deposits are still prohibited, recalls Hans Brouillette, director of public affairs at CORPIQ. This is why we must know the provincial rules that apply where we buy our property.
You also need to make sure you use the proper forms for different issues (tenant inquiries, non-payment of rent, rent increase). You can find these forms on the agency’s website governing housing/housing in your province.
- Learn well about your potential or existing tenants
We’ve all read horror stories about tenants who make a fuss, damage their unit, or even stop paying rent.
To protect yourself, Blake recommends doing credit checks (through credit reporting agencies like Equifax and TransUnion) and asking for references from employers or former owners. Additionally, it compares references and the credit report, which shows previous addresses, to ensure the tenant is telling the truth.
- Cultivate the landlord-tenant relationship
Once you’ve found suitable tenants, you’ll want to keep them as long as possible.
Jennifer Waters adheres to the “little extra effort” principle. “We do different things, like buy our tenant’s gift cards for Christmas and have flowers delivered to them when they move in,” she says. My husband is also quite skilful, and we are very receptive, which is necessary.
Mr Blake agrees: “I buy good properties, I clean the gutters every year, and, in case the tenants are elderly, I have their driveways cleared. These are inexpensive gestures that help me keep my tenants for six, seven, eight years.”
