A terrific way to start building some equity is to purchase a rental property. Although it may ultimately give you some cash in the bank, there are a few things Canadians need to know before inking that deal on income units.
Remember it’s a business. The bottom line is that you purchased the property to ultimately make money. Any business has its ups and downs, and it’s the same with owning a rental property. You need to have a budget for upkeep and repairs, and don’t sweat the small stuff. If tenants are a couple days late with the rent, give them a call before panicking.
Make sure to buy the right property for you. Maybe a duplex is easier to manage at first rather than a multi-unit building. It might also be easier to find the right tenants for a duplex, and chances are the vacancy rate is a lot less.
Familiarize yourself with the rental rules. Each province and territory in Canada has its own rules when it comes to rental units. As a landlord, you should have a copy of what those are and get as familiar with them as possible. There are provincial agencies that can help you with that.
Screen prospective tenants. It can’t be stressed enough how important it is to find the right tenants. The last thing you want is for a renter to cause damage, be rowdy and to affect the lives of other tenants negatively. There’s more to finding the right tenant other than if they will pay their rent on time. You have every right to ask for credit checks and references from past landlords.
Build positive landlord-tenant relationships. Keeping good tenants is crucial, so you will want to do everything you can for them when they need you. Being kind and understanding doesn’t cost you a cent and it will go a long way in keeping your tenants happy.
Be a hands-on landlord. It’s important to show your face around your property once in a while. You might also find it useful to develop a group of professionals who will help you if something does need fixing and you can’t do it yourself, such as plumbers, electricians or handymen.
Get good insurance. Make sure the building is well-insured against anything that could go wrong—that includes personal injuries on the property. And although you can’t force a tenant to get renter’s insurance, you might want to recommend that they do so since your policy won’t cover their personal property.