As housing shortages become more and more common in big cities across Canada, turning your basement into a rental suite not only helps pay your mortgage, but gives those with lower incomes a place to live. While there are big financial benefits to renting out a part of your home, it’s also a big commitment to become a landlord. Here’s what you need to know before you make the decision.
Know the laws. Look into the various provincial and municipal laws to ensure you are following all the rules and taking the necessary steps in order to legally rent out a portion of your home. The contract you write should be based on the regulations set for your location by the Canadian Mortgage and Housing Corporation.
Have a repair fund. While you might be thinking that the income you are taking in from rent will be enough to cover any unforeseen expenses, don’t count on it. If something breaks, or you end up with an issue with a tenant, you might need more money than you realize, and you will be required to make repairs in a timely manner.
Consider a flexible mortgage. This mortgage may be preferred when renting out a portion of your home, as it allows for a little more flexibility in your monthly payments should something go wrong and you need to put a little more money elsewhere. It ensures you avoid fees for a late payment like with a fixed mortgage, and also gives you the option of paying off your mortgage sooner.
Have documentation in place. Renting out a part of your home that you are currently living in should be viewed as more than just a simple rental agreement—it is a business transaction. There are rules you will want followed to ensure you can still enjoy your home without any potential problems, and it’s necessary to have these rules laid out in writing and signed before anyone moves in.
Check on your tenants. Make it a priority to check on your tenants on a regular basis. This not only ensures your home is being maintained but also allows you the opportunity to create a positive relationship with them and ensure they are happy. Happy tenants take better care of your home and make for more pleasant neighbours.