What should I know about rentals and tenants?
Canada’s real estate market is booming fiercely. Not wasting any opportunities, several Canadians have decided it’s the right time to become a landlord. After all, housing is a basic need for everyone.
The most important role of a landlord after purchasing the property is to find tenants. The tenant signs a lease after the agreement is confirmed by both the parties that dictate the rental price and terms. By renting in Canada, tenants secure tenant rights by the Government to protect them. As a property owner, you will come across various types of tenants. There will be few experiences which might be a nightmare. But, for the most, you will hopefully end up liking your choices.
The right tenant is someone to value because they’ll impact the quality of your investment and lifestyle. Here, we talk about rentals and tenants and what you should know.
Tenants can pay the mortgage for you
How many people do you see that have cash lying around to spend on a home? We are no Warren Buffet! Even Mr. Buffet would leverage low-interest debt, like a mortgage, to buy a house. And for the sole purpose of fetching himself a good cash flow through tenants.
The role of your tenants is equally important whether you are a first time home-buyer or fifth.
If you are planning on living in the home you can either rent out rooms to family or friends or find a multi-unit home and rent out the other units.
The thing with real estate is, if done right, you can leverage the equity in your home to buy a second or third property as well. You’ll be surprised to see how many Canadians are arming themselves with the knowledge to invest in real estate.
A good tenant can be an asset to you, just as your property. Your property needs to be taken care of to ensure that it appreciates in value. As a landlord, you must make repairs and maintenance. A good tenant can take care of the property, lawn, walls and other components of the house. Although inevitable, they can certainly prolong or minimize these liabilities.
Canadian landlords with multiple houses to rent usually hire Property Managers to take care of their real estate. With the right tenant, you don’t have to bother yourself with them. This is where you need a thorough screening of your tenants before they stay. A good background check and reviews of their previous landlords can benefit you a long way.
It’s not an easy task to find the right tenants. Over the first few years of owning a house, you will most likely come across the wrong tenants for your property. Especially when you are new, you will be tempted to fill up the rooms of your house. The allure of rental payments flowing into your bank account can cloud your judgment. The more experienced landlords are okay with taking it a bit slow to find the right tenants.
Ask more questions to your potential tenants. If they plan to stay long-term, they could be a good choice for you. You can skip the process of finding tenants every single year that way.
Excellent long-term tenants = less hassle for you
While the right tenants will certainly make your life easy, there are certain downsides as well that you may encounter with them.
Dealing with late rent payments
A landlord is happiest at the first of every month, right? Not all the time! A common concern for landlords is late rent payments by tenants. The bigger issue is that these problems could keep surfacing repeatedly.
The tenant screening process is not 100% precise. If a similar situation has been happening with you on a constant basis, take action. Late rent means your mortgage payment can also get delayed. Your only option would be to pay it from your savings, which can put stress on your budget. At the end of the day, you are responsible for your mortgage payments, and picking the right tenants, with a track record of on-time payments, will help to ensure you get rent payments on time.
Disturbance and complaints
Tenants aren’t owners. And sometimes, they can get swayed by a party or loud music that’s happening at the house. Sometimes, they may just squabble with the neighbors. Other times, they won’t dispose of garbage. Your tenant might also be using your house for illegal reasons.
Unfortunately, the worst-case-scenario list can be endless! As the owner, you would be the one to step in and take action against this. It also tarnishes your reputation in the neighborhood and can have a negative impact on your next tenant hunt.
Standard wear and tear are understandable. But some tenants who have sour relationships with their landlords, tend to purposely damage the property. The damage could potentially be more than the deposit they have paid. At times, they would completely trash the place before leaving.
This should help to prioritize your search for a good tenant. Remember, a good tenant is a gem. Building a good relationship starts with honesty and trustworthiness. Be sure to ask applicants questions before making your choice. This will help you save time, money, and headaches long term.