You’ve taken the plunge and purchased your first investment property! At this point, you may very well wonder what you’ve gotten yourself into. Buying a new house can be stressful, especially if you don’t plan to live in it.
However, you can rest assured that owning a rental property is one of the best investments you can ever make. Your equity will grow quickly over time as your unit appreciates in value. Not only that, but you can now look forward to years of passive income. As you pay off the mortgage, more of that income becomes straight profit you can use to build your portfolio.
The news for the long term is all good!
Real estate investing is a topic we are passionate about! Here are a few of our other posts we think you’ll enjoy:
- Leverage Your Investment Property to Build Wealth
- How to Be a Millenial Landlord
- How to Sell Your Investment Property When You Have Tenants
The question is, what do you do now? How do you find and manage a tenant? We’ve put together this “New Landlord Checklist” to help you stay on track and enjoy a successful venture into the world of real estate investing.
Understand Your Responsibilities
As a landlord, it is your responsibility to ensure a safe living environment for your tenant. You likely had a safety inspection done before purchasing the property. If not, you’ll need to arrange one before a potential tenant even steps foot inside. An inspector will watch out for several key safety factors:
- The plumbing, electrical and ventilation are all in good working order
- The building is structurally sound
- There are no broken baseboards or faulty stairs
- The house is free of contaminants or infestations
- Change the locks on every door, even if the previous owner left the keys
Another way to help ensure your tenant’s safety and comfort is by installing an alarm system. This step isn’t required, but it can go a long way to making a tenant feel that you have their best interests in mind. It can also be the deciding factor for potential tenants who are considering multiple options.
Get The Property Rent Ready
After purchasing a rental property, you’ll want to find a suitable tenant as quickly as possible so you can start recouping your investment. The first step is to make the unit rent-ready by making it look its best. It’s a lot like preparing a house for sale.
You don’t need to undertake any major renovations, but a minor facelift will make the unit more appealing to potential renters.
Thorough cleaning: The previous owners probably performed a deep clean and declutter, but it doesn’t hurt to go through the house again, especially if it has been vacant for any length of time. Give all floors a sweep and wipe down all windows and surfaces to remove all dust. Nothing appeals to a potential tenant more than a sparkling clean house!
Minor upgrades: If it hasn’t been done already, apply a fresh coat of paint to brighten the space. Also, go through and make minor repairs, fixing nail holes, re-sealing the bathtub and replacing any missing or broken cabinet handles. You might even add a smart thermostat and a keyless lock to appeal to a younger demographic.
Add curb appeal: The first thing a potential renter sees is the outside of the property, so you want to add as much curb appeal as possible. Make sure the walkways are clean and free of debris. For added effect, consider adding some potted plants for a splash of greenery by the entrance.
Find a High-Quality Tenant
Getting a problem tenant is every landlord’s worst nightmare. Fortunately, modern technology makes it easier than ever to advertise your property and qualify the people looking to rent it.
There are many free and low-cost ways to generate interest, including:
- Online classified websites (Kijiji, Craig’s List)
- Community newspaper ads
- Rental specific websites
- Word of mouth
- Advertising boards at local businesses
When searching for your perfect tenant, don’t overlook what might be your number one resource. Many local real estate agents also work to help people find rental units.
Once you start drumming up interest, you’ll face a new challenge. How do you choose the right tenant? You want someone who will stay for the long term, pay their rent on time, and take good care of the home. What are the best ways to vet your potential tenants?
Obtain a credit check: If a potential tenant has a history of paying other bills and loans on time, chances are you can trust they will also pay their rent. Otherwise, a history of late and missed payments can mean you will spend much of your time chasing them for payment.
Perform a criminal background check: This simple step can save you a world of hassle and headache if it turns out your potential tenant has a history of violence, vandalism or theft.
Verify income or employment: If a tenant appears to check out, ask to see a recent pay stub to verify their income. Ideally, the rental cost shouldn’t surpass half of the renter’s income.
Ask for a referral from a previous landlord: You can find out about the tenant’s payment history and how well they cared for the last property they occupied.
The right tenant can make or break your investment. Fortunately, we go into even more detail on this topic in How To Find a Great Tenant.
Get Everything in Writing
Once you’ve found the right tenant, it’s time to detail the terms of the agreement. The more detail you have in writing, the easier it will be to resolve disputes if they arise. Some standard lease terms include:
- Length of the agreement
- Will you allow pets?
- What day is the rent due each month?
- Your smoking policies
- How many occupants the agreement covers
- The tenant’s responsibility to cover damage to the property
- The tenant’s responsibility to care for and maintain the property
- Agreement to respect neighbours and other occupants of the building
Take a Pre-Move Walkthrough With Your Tenant
It’s essential to document the condition of the property before the tenant moves in. Schedule time with your tenant to walk through the unit together for a pre-move inspection, which you will both sign. When the tenant leaves, you’ll do another review to ensure no damage has occurred beyond the wear and tear of occupancy.
Aim For A Long-Term Relationship
A long-term relationship with a high-quality tenant is one of the top secrets to succeeding as a landlord. The longer your tenant stays, the more profitable your investment will be. How can you do your part to enhance the quality of the relationship?
Know your tenant’s rights – and your own: Getting familiar with the tenancy laws in your province will help you avoid disputes and even expensive lawsuits. Consulting with a lawyer is your best bet, but you can see an overview of the Ontario Residential Tenancies Act here.
Respond to questions and concerns quickly: The number one quality tenants value in a landlord is that they respond quickly when there is a problem.
Be courteous and fair: You don’t have to become friends with your tenants, but you should always treat them the way you want to be treated and be fair with them. Ruthless landlords may succeed in the movies, but in real life, kindness pays off with tenants who make your unit their long-term home.
Real estate investments are one of the safest investments you can make and are almost always profitable in the long term. Do you want to find out more? Learn about our buying process and book a meeting with us today.
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Curious about your real estate options? Relocating to the Peterborough area? Our experts are ready to help.
