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Starting out as a residential real estate investor can be intimidating. After all there are a large number of new skills you need to master in order to succeed and generate meaningful wealth through passive cash flow. However, all of this starts with learning how to be a good new landlord.
It does not matter how much money you invest into rental properties if you do not know how to properly engage with and manage your tenants and properties you are running the risk of losing money due to high turnover rates and excessive maintenance requirements. However, by following these five tips, you can learn how to develop key strategies to help you succeed as a new landlord.
However, before we dive into managing your properties as a new landlord, click the link below to book a free strategy call to learn how you can better invest in real estate with strong financing options.
Understand Your Local Rental Laws as a New Landlord
Before you begin investing into rental properties and become a new landlord, it is essential that you take the time to develop a firm understanding of what is and is not permitted under federal, provincial, and municipal law. Depending on where you invest there will occasionally be significant differences in the ways you are allowed to manage rental properties and the types of rentals you can own. There are also laws that will apply anywhere in Canada that determine your rights and responsibilities as a landlord as well as the rights and responsibilities of your tenants, such as the Residential Tenancies Act (RTA).
For example, cities such as Toronto and Ottawa have strict guidelines regarding the offering of short-term rentals. A short-term rental is a property that is available to rent for less than 28 consecutive days and includes properties available for rent through online services such as VRBO, Airbnb and Booking.com. In these cities, short-term rental properties must be properly licensed, and, in some circumstances, individuals will only be permitted to offer their own primary residence for short-term rental.
Get The Proper Insurance
Owning and managing a rental property is different than simply owning your own home. This means that there are circumstances where normal homeowner’s insurance will not be able to cover your tenants or your property and as a result you will need to adjust your insurance policies accordingly. This will include ensuring you get the appropriate amount of rental insurance, property liability insurance and any other required forms of insurance that are applicable to your specific property or required under local law.
As well, you should encourage all of your tenants to secure their own renters’ insurance. This will not only help them protect their own possessions but also will cover damages caused by negligence which can benefit you as the new landlord as well as your tenant.
Overall, it is incredibly important to ensure you have adequate insurance. The last thing you want is to spend an excessive amount of money unexpectedly due to an emergency you could have prepared for and had protection from.
Discover Residential Property Management With This Step By Step Guide
Be Thorough During the Tenant Screening Process
In order to become a successful new landlord, you need to make sure you are finding ideal tenants who will allow for you to succeed. This is best achieved through proper tenant screening. Your tenants are going to be living in your property and you need to be able to trust that they will pay their rent in time and will not become a liability and damage your property.
When you are screening, be thorough and make sure you include elements such as background checks, credit reports, income verification, and rental history. If the tenant is unwilling to complete these checks or the checks show a concerning history for that potential tenant, you may want to find someone else to rent your property to.
However, as a new landlord it is still your responsibility to ensure you are not being discriminatory in your tenant screening process. Under laws such as the Ontario Human Rights Act, you are prohibited from refusing a tenant for reasons such as age, race, gender, sexuality, religion, disability, marital status, or family status. If you are caught using discriminatory screening procedures, you will open yourself to a series of expensive lawsuits that could easily be avoided by remaining open during screening.
Regularly Inspect Your Properties
The majority of successful new landlords become successful by being proactive and staying ahead of any problems that may arrive. So, in order to ensure you do not end up with larger problems down the line, it is key that you schedule regular property inspections so that you can catch any minor issues before they worsen.
These inspections can be done personally or carried out by professional property managers or inspectors, but ideally, they should be done seasonally. This allows for you to make a list of any safety concerns that need to be addressed immediately as well as keep an eye on potential issues that may require your attention later.
To ease this process, make sure you outline your plans in the lease agreement while including any maintenance tasks that fall to the tenant.
Follow Through on Promises and Warnings as a New Landlord
Finally, in order to succeed as a new landlord, you need to stick to your word and firmly address any warnings you issue. Your tenants need to know that you are serious, and they cannot take advantage of you, while also being assured that they can trust you to follow through on the promises you make them.
If you tell your tenants you plan to update the heating and cooling system or replace an outdated appliance, make sure you do it as soon as possible and communicate the process with your tenant. Otherwise, they will begin to believe you do not care and they may decide to begin looking elsewhere.
On the other hand, if your lease agreement outlines a certain level of responsibility for your tenant to maintain the property, you need to follow through and make sure they do it. If they do not listen, then you will need to ensure the appropriate consequences are met. However, you will need to ensure any penalties or fees you charge are legal under local law.
Bonus: Finance Your Income Properties
Before you begin managing your income properties and tenants, it is important you get the best financing options available to help you maximize your monthly cashflow. So, in order to help you meet that goal. We here at LendCity work with a variety of lenders to find the best rates available for you and your investments. To get started or learn more, visit us online at LendCity.ca or give us a call at 519-960-0370. Alternatively, click the link below to book a free strategy call with our team today.