Nobody really knows the total number of people who consider themselves landlords in Canada.
If you’re toying with buying a rental property, read on as we discuss five often-overlooked factors you should consider before becoming a landlord.
1. Legal and financial responsibilities
Being a landlord involves more than just collecting rent. You need to familiarize yourself with local landlord-tenant laws, which can vary significantly from one province to the next.
Understanding your legal obligations as a landlord is essential to protect your rights and avoid potential legal troubles down the road. We urge all new landlords to consult a legal professional to ensure compliance.
The province provides some good information here.
Moreover, being a landlord requires a solid grasp of your financial responsibilities. You’ll need to factor in costs such as property maintenance, repairs, insurance, property taxes, and mortgage payments.
Be prepared for unexpected expenses, such as a leaky roof or a broken furnace, which can quickly eat into your profits. A comprehensive financial plan will help you weather these challenges.
2. Time and commitment
Owning rental properties may appear to be a passive income source, but it requires a significant investment of time and energy if you don’t hire a property manager.
From finding and vetting tenants to addressing maintenance requests and handling administrative tasks, being a landlord is a commitment that demands your attention.
Consider whether you have the time and willingness to take on these responsibilities. Are you prepared to be available 24/7 for emergencies? Can you handle tenant inquiries promptly?
If you’re already juggling a busy schedule, you might want to think twice before becoming a landlord. Alternatively, you can hire a property management company to handle these tasks, which will cut your profits.
3. Dealing with Difficult Tenants
As a landlord, you’re likely to encounter various types of tenants, and not all of them will be easy to deal with. While most tenants are responsible and respectful, there may be instances where you have to handle difficult situations.
Late rent payments, property damage, noise complaints, and even eviction procedures can be financially, emotionally, and mentally challenging.
Now I’ll share some of my experiences with you. Let’s see if you still want to be an investor after my stories 😉
I was a new owner of a 5-plex in HIgh Park in Toronto. I think I was 1-2 months into the honeymoon period when I got a call from one of our tenants. Keep in mind this was a tenant that we inherited when we purchased the property. Well, it turns out this tenant was living in Canada illegally. She made the mistake of not stopping fully at a stop sign, the police noticed and stopped to give her a ticket, or at least to discuss the infraction. The next stop was Pearson Airport and a flight home, she had been deported.
All of her belongings had been left behind in her apartment, and the rent for the next month was not going to be delivered on time as promised. What rights did we have as landlords? The right to rent out her apartment again after we had emptied it, that was about it.
Welcome to life as a Landlord! Our second experience happened about 2 years later. We had renovated one of the units and rented it out to a young couple. Turned out the boyfriend had anger management issues. We had checked references, employment, and credit checks etc, all came back positive. One of our tenants called and said she heard a lot of noise coming from the unit, and saw the couple leaving.
They had left the unit and taken off separately, but, the boyfriend had left his boot mark on our new stove, smashed it in actually. They had already left without any notice, we had their security deposit, I guess they wanted to get their money’s worth before they left. No, it didn’t cover all of the damages, and our rights were directed to small claims court. Good luck with that!
We had some wonderful Tenants over the years, and, unfortunately experienced the bad as well. It comes with the territory sadly.
You can read more here about delays when trying to evict a tenant, CBC news had a good article last year that explained what is happening: Backlog at Residential Tenancy Branch
Developing strong communication and conflict-resolution skills is crucial to handle these situations effectively. Being fair, firm, and proactive can help maintain a positive landlord-tenant relationship.
4. Market volatility and vacancies
The real estate market is prone to fluctuations, and vacancies are an inevitable part of the job.
Assessing the local rental market and gauging the demand for rental properties in your area is important. Understanding the vacancy rates and rental prices will help you make informed decisions and set appropriate rent levels.
CMHC has some good information that you can view here
I’ll share some of the highlights below. Keep in mind this was last October, the latest numbers should be coming out later this month:
Vancouver Vacancy Rates:
Kitsilano: 0.4%
Kerrisdale: 2.5%
English Bay: 0.9%
University: 0.2%
Additionally, periods of vacancy can result in financial strain, as you’ll still be responsible for mortgage payments and other property-related expenses. To avoid undue stress, have a financial buffer to sustain yourself during these lean periods.
5. Emotional attachment
While it’s natural to feel a sense of attachment towards your property, especially if it’s your former home or an investment you’ve poured your heart into, emotional attachment can cloud your judgment as a landlord. It’s a different philosophy when it comes time to purchase.
Remember that this is a business venture, and making decisions based solely on sentimentality may not be in your best interest.
Treat your rental property as a business asset and make decisions based on sound financial considerations. Keep emotions at bay when dealing with tenant issues or making decisions about repairs and upgrades. It’s important to detach yourself emotionally and approach situations pragmatically.
Remember, being a landlord is not for everyone, and that’s perfectly okay. Weigh the pros and cons, evaluate your personal circumstances, consult with your legal and financial advisors, and make an informed decision. And, if that didn’t deter you, give me a call!
About the Author:
5 Things to consider before becoming a landlord: What they don’t tell you was provided by Regan Pyke, a Vancouver Realtor and a leader in the field of sales, marketing, and real estate investing. Regan can be reached via email at [email protected] or by phone at 778-228-2448.
Thinking of buying or selling your Vancouver West, Kitsilano home, or Condo? I would be happy to help you!
