Congratulations! You’ve finally decided to rent that property of yours. As you’re most likely already aware, you’ve made a wise investment – one that is bound to bolster your income for years to come. But, before you pop the champagne, it’s vitally important to recognize that becoming a landlord for the first time is no easy feat. It’s certainly not as simple as collecting a fat cheque once a month.
Without being prepared for potential hardships, being a landlord can be quite difficult. To avoid headaches and make your new venture as a landlord a successful one, it’s wise to take a few very important steps.
Here are five tips for first-time landlords:
1. Get familiar with Ontario’s housing regulations.
As an Ontario home owner who plans on renting his/her property, your first step should be to learn as much as you can about the province’s housing regulations, namely the Residential Tenancies Act. You should also become familiar with the Landlord and Tenant Board, which is one of the governing bodies that uphold the regulations.
By becoming knowledgeable about Ontario’s housing regulations, you will fashion yourself a fair and capable landlord. Not to mention, you’ll avoid the legal ramifications of trying to impose rules on your tenants that are unlawful. For example, were you aware that unless your property is a condo (where rules are set by the condominium corporation), you cannot prohibit a tenant from keeping a pet on your property?
2. Carefully screen your potential tenants.
Employers perform background checks on their candidates, right? As a landlord, you have every right to put your potential renters through a thorough screening process. Naturally, you should meet and interview the people who wish to rent your property. Just as employers do, you should perform credit and reference checks. This will ensure you’re renting your property to someone who will be reliable with their monthly rent payments.
In many cases, you’ll also have to trust your gut instincts. Be sure to have friendly conversations with your would-be tenants to get a feel for their personalities. Are they people you’d feel comfortable living in your property? Are you confident they’ll maintain the home and avoid causing any damage? Do you feel they can be trusted to pay your rent on time? Positive answers to these questions are a must.
3. Be diligent about collecting your rent on time.
If you’ve successfully completely step number two, it’s likely you’ve rented your property to someone you could possibly consider a friend. Naturally, it’s wise to welcome a tenant who you can get along with. However, the start of a new and friendly relationship doesn’t negate the fact you have a job to do. As a landlord, it’s imperative you collect your rent on time.
Make clear to your tenants when the rent is due by stipulating the day of the month when a payment is expected. Many first-time landlords find it difficult to ask for their rent when it is missed. However, allowing a tenant to get comfortable with the bad habit of either paying late or not at all isn’t something you should accept. Be sure to contact the Landlord and Tenant Board for information about the hopefully-avoidable task of filing eviction paperwork.
4. Learn all about landlord taxes and your eligible deductions.
Your new job as a landlord is just that – a job. Clearly, you’ll have new revenue to report come tax time each year. It’s important to remember that, as far as the Canada Revenue Agency is considered, it doesn’t matter what type of property you own – as a landlord, you’re making rental income. You must declare all of it.
That also means you can list some expenses that are eligible for deduction on your tax return. You are eligible to list such short-term expenses for your rental property as repairs, maintenance and painting. You’re also entitled to declare such long-term expenses as driveway paving, installing new windows and HVAC replacement. Remember that when your property expenses exceed your rental income, it’s considered a loss.
5. Keep all of your documentation in order.
To be a successful landlord, you also need to be a master bookkeeper. At the very least, you need to make sure your documentation is organized. There are particular forms you’ll need to keep handy at all times. They include rental applications, condition reports and locally required disclosures (such as the presence of radon, lead or mould in the property). Be sure to keep several copies of your documents. It certainly doesn’t hurt to have them saved to a hard drive or in an online database. And, under no circumstances should you give away your only copy of any document. If you need to have your tenant sign something, be sure to have the form returned to you right away.
SingleKey is your go-to platform for everything rental. If you’re a first-time landlord, please don’t hesitate to give us a call at 1-877-978-1404 or email us at firstname.lastname@example.org . You may also fill out the form on our Contact Us page!