Attention Landlords and Want to Be Landlords
Monday Oct 22nd, 2018
Many of us have thought about becoming or are actually Landlords. I have some information that I would like to share with you that will be a relief to landlords.
Owning a rental property can be a great way to invest.
The Tenant pays the mortgage.
The main reason why many people are hesitant to become owners of a rental property is the fear of the risk that the Tenant does not pay the rent.
That is a reasonable fear, the cash flow implications can be very uncomfortable as you as the Landlord have to pay the rent until the issue can be resolved. See Residential Tenancies Act, 2006, S.O. 2006, c. 17 and Landlord and Tenant Board for the rules and procedures about what is involved in evicting a tenant for non payment of rent.
Getting a tenant is not difficult. Getting a great tenant requires a little bit of work.
The rental market is very tight, and rents are increasing. Click here for the Rental Market Report Quarter 3 just released by the Toronto Real Estate Board.
Due diligence is the most important thing to do before signing an Agreement to Lease.
If you list your property for rent with an agent it will be exposed on the MLS system.
At a minimum a potential tenant will be required to complete a rental application , have a credit check done, meeting a minimum score, provide a letter of employment showing the length of employment, posiition and resposibilities, provide either a T4, or at least 3 recent earnings pay stubs, and references from previous landlords. This is the role that the agent representing the tenant has and it is up to the agent representing the landlord to double check.
If everything checks out than you have a the makings of a great tenant.
This due diIegence works I have had over ten rental transactions and my client/landlords are still happy after fifteen years.
Things change and this could be the tipping point for those that are thinking of become owning a property to rent out.
Insurance company April Canada recently launched Landlord Protection Insurance covering unpaid rents and damage caused by tenants.
"Two of the biggest concerns for Canadian landlords are that the tenants do not pay their rents or that they find their tenanted property damaged at the end of the tenancy. These two risks are not addressed by the current insurance offering as historically, insurers have treated landlords like any other homeowners, which they are not." says Charlotte Malaurie, national residential director for April.
She says the product insures against unpaid rents arising from rent arrears, the tenant's death, or untenantable property "and other unfortunate situations," as well as theft or damage caused by tenants - whether accidental, malicious or not."
The company says it was the first to insure properties listed on short-term rental platforms such as Airbnb across Canada in 2014.
If you have been thinking of becoming a Landlord this may be something worth considering to take that last bit of doubt away from making a decision.
Thanks for reading.