If you have the choice to own an asset, owning one that produces income is much better than owning an asset that expends income. If you own a house or apartment for your own residence, for example, you need to pay for maintenance, repairs, taxes, mortgage interest, landscaping, utilities, or strata fees that cover some of these expenses. On the contrary, owning a house or apartment that is available for renting or lease will definitely become a better financial strategy.
Being a landlord is a viable vocation; after all, landlords exist for every rental tenant, and they often thrive financially.
But just like with any business, you need to get vital information beforehand. There are a lot of questions to be answered.
One particular aspect of renting out properties or units that generate a lot of queries is the tenancy.
When looking for tenants, the landlord will definitely have preferences on who will be living within their premises. Can you prohibit children? When a tenant is delinquent, can he or she be evicted or what are the procedures for doing so?
So before considering becoming a landlord, you should learn the relevant provincial or territorial rules or regulations to avoid lawsuits or violations that can have a negative effect on your business.
Important Legislations for Landlords
As a first time landlord, you should know that every province and territory have their own legislations when it comes to tenancy. Some are similar to each other or have their own versions. But, there are some rules that are worth taking a note of.
In Ontario for instance, only rent deposits can be collected. In Quebec, any kind of deposit is not allowed. Most places, however, allow the collection of any kind of deposit with no prerequisites except for Alberta, unless there is an agreement in writing.
As for collecting data on your prospective tenants, there are new legislations on privacy. Your questions for candidates need to be in compliance with the new laws. One example is transparency with the candidate. You need to inform him or her on why you are collecting information and what you plan to do with it.
You can contact the Privacy Commissioner for more information by phone at 1-800-282-1376 or by mail at 30 Victoria Street, Gatineau, Quebec K1A 1H3.
Now regarding a breach of a lease, in most areas, if it was a matter not undertaken in the local legislative, it is nowhere near the grounds for eviction while in other provinces it would be.
There are many ways to learn about tenancy laws and legislations. If you are planning to become a landlord, the best way to start is by looking into the Provincial and Territorial Facts Sheet. Also, looking in local bookstores for books on legislations, booklets, guides, or even brochures is another way, however, unlike the web, the editions are not automatically published and they may be out of date.
Rules are not permanent and they change over time in relation to the current outstanding issue of that particular time. This is one reason that you need to keep track of tenancy legislations. It’s like trying to keep up with the ever-changing qualifications of a computer technician, for example.
Another important question as a first-time landlord is whether or not the building you own to comply with the provincial and municipal bylaws. That’s in addition to the local legislations. Now the bylaws in local government stipulate the guidelines and standards for fire and building safety, as well as zoning and permits. You can contact the main branch of your local municipality.
Current Local Market Pricing
Another important factor to know is the market rental rates. Before setting the rent, every landlord should do the research and align the rental rate with comparable units in the area. One way to do this is to look at resources where rentals are being advertised. There are also registry databases available in some cities that have rent information for units over the past several years. If you need some extra help you can request for a rental market evaluation report for free.
Going back to the law, it is mandatory that you keep track of records and receipts for any financial transactions that are related to your business. This is something that you’d need to accomplish as a first-time landlord. Keeping everything on track including the flow will help you get everything controlled. You should familiarize yourself with business bookkeeping. You can consult with an accountant on this but first hand, you will still need to learn how capital assets differ from expenses and will need assistance setting up a Chart of Accounts; this is the ledger that is used to track income, expenses and other financial information for your business.
In addition to that, it is extremely important to keep track and document the condition of the rental premises. Always complete an inspection before a new tenant moves in and have him or her sign the worksheet of inspection. Also, make sure that they keep a copy of it as well. Some jurisdictions provide a standard form of the inspection worksheet and are required by law. If your province or territory does not provide a standardized inspection template you can use the Initial Inspection Worksheet in this Guide.
Yes, there are so much to keep up with. Being a landlord isn’t plainly black and white. But is a viable vocation nevertheless and probably one of the best financial strategies that one asset owner can partake in. But it does not come without challenges.
Another solution that will cover all the needful that were mentioned in this article and a lot more such as maintenance of your property, rent collection, advertising your business, and providing inspection reports, is hiring a property management company.
All the aspects of managing a house or apartment for rent is normally covered by a property management company. They are extremely knowledgeable of the local bylaws and legislations on tenancy so you don’t need to review all of it as well as keep up with the changes that occur which can be very frequent depending on the signs of times. A good property management company also includes bookkeeping services in their package to keep track of all financial transactions done with your house or apartment. And, finally, they have expertise on the local pricing of comparable units in your area. You can get your free rental evaluation by clicking here.