September 24th, 2018

A basic do’s and don’ts guide for rookie landlords

Managing a property comes with some risk, a lot of responsibility, and frankly, a lot to learn. To fill the property in the first place, you may wish to hire a property management company to deal with all the paperwork, or, you may wish to take on the challenge yourself.

This post is our basic do’s and don’ts guide for new landlords. Keeping these tenets in mind ensures both you and your tenant(s) get the most out of the property and business-relationship.

DO run the numbers

You have to calculate your finances with any rental property, including your mortgage payments, insurance rates, property taxes, and maintenance expectations.

Experts will say to set aside 2% annually for property maintenance alone for unpredictable incidentals. A good buffer for expenses or a vacant month is three months of expenses saved in case something out of your control happens.

Also decide on your budget for finding and securing a tenant, plus the administrative fees. Property management companies will take about 10% of your rental income, but have a proven track-record of finding good tenants who pay on time.

DO run background checks

Background checks are essential for weeding out any bad tenants. One of your main jobs as a landlord is to bring in a good, stable tenant who is respectful of the space.

Doing a reference check and a credit check on any serious applicants will help you understand their financial responsibility and see if they’ve had any problems with previous landlords.

DO prepare a lease

A lease is a legal contract that establishes expectations of the landlord and tenant during this working relationship. If you work with a property management team, they will have leases ready for your selected tenant.

If you manage your property yourself, there are many online resources that will help landlords prepare their leases based on provincial bylaws.

DO treat it like a business

Get professional advice on taxes, lease provisions, exit strategies, maintenance and repair. Unless you’re a certified handyman, you’ll probably want to get expert help for certain concerns, such as a leaky roof.

As a landlord managing a property, you’re essentially starting a small business, and businesses must spend money to make money. If you’re not willing to invest for a return here, you’re in the wrong business.

DO get the proper insurance coverage

Insuring your rental property is going to be different than insuring the home where you live. Tenants, homeowners and landlords all have their own insurance category.

With landlords insurance, the structure of the building, its shared areas and installed appliances will receive insurance coverage. The personal property of your tenants would have to be covered by their own individual insurance policies.

DON’T get emotionally attached

Again, being a landlord is a professional operation at all times. Don’t fall for the sob stories tenants use to elicit sympathy for late payments, no matter how real the situation.

If someone is consistently late on rent, putting you in the hole, you probably have grounds for eviction.

Always remember tenants aren’t your friends; it’s business. Also, think deep and hard about renting your place out to family members – emotions are sure to bubble up.

DON’T be nosy

You may wonder what your tenants are up to, who their guests are, why they got home so late, etc., but monitoring the behaviour of your tenants is a deal breaker.

Questioning guests, peeking through windows or taking extravagant measures to surveil are all violations of the tenant’s right to privacy, and, you could face legal action under the right conditions.

DON’T enter the unit without permission or notice

This is a big one. You need consent in order to enter an occupied unit -- yes, even though you own the property.

If you arrive without notice to the unit, the tenant must explicitly allow you to enter the premises. If not, 24 hours’ notice has been served and you are allowed to enter the unit after that time has elapsed, provided you're entering for a solid reason such as repair or inspection.

Your tenant pays for their space, respect it!

DON’T be misinformed

All landlords and tenants in Ontario are regulated by the Residential Tenancies Act. Landlords in other provinces will follow similar provincial legislation.

If either you or your tenant are found to be in violation of the laws set out in the Act, both parties can face lawsuits and lengthy legal processes. It's a landlord's duty to understand the Act so they can govern their property in a fair and legal matter.