When people think about renting out part of their home or a secondary property to a tenant, most people are immediately intrigued by the idea of passive income. Although this can be a significant benefit of being a landlord, many fail to realize just how much work goes into being a landlord and keeping a property in working order for a tenant. From setting up the property to finding the right tenant, addressing any maintenance requests, and cultivating a positive landlord-tenant relationship, many things go into running a rental property that people might not think about beforehand. That’s why our experts at Soni Chachad Real Estate have compiled a list of 7 things to consider before becoming a landlord so that you can understand what you’re getting into when you decide to take on a rental property.
1. Finding the Right Property
The very first thing you’ll need to do if you’re thinking about setting up a rental unit is work on finding the right property. For some, this might be as simple as converting their basement into a suite with separate access, while for others, this might involve scouting out a new location to start their rental property journey. Either way, when it comes to creating a rental property, it’s all about location, location, location. Ask yourself: What amenities is the unit close to? Is the location centralized, or will your tenants need to be okay with commuting? How close are the nearest schools, parks, and community centers? And how far away am I if something breaks and I need to come to fix it? When you consider how the location will affect you and your prospective tenants, you can choose the right property that will be the best financial investment for your endeavour as a landlord.
2. Determining Market Rent
Now that you’ve decided on the location, it’s time to work on determining market rent. To do this, we recommend starting with market research to evaluate how much you can charge for rent. Look at comparable rentals in the area to see how much they charge, and remember to consider community amenities such as pools, dog parks, or playgrounds, as these will appeal to tenants and can positively impact your property value. Completing this research is critical when determining market rent because if you set it too high, you will drive tenants away, or if you put it too low, you might attract tenants but not cover your expenses. At the very least, the rent you charge your tenants should be able to cover your costs, if not have a little extra leftover each month to compensate for your efforts as a landlord.
3. Understanding Fair Housing Laws
So, you have the property lined up, and you know how much you’re going to charge, but what else do you need to be doing to get set up for success as a new landlord? Well, one thing many landlords overlook but is critical to ensuring a smooth rental experience is understanding fair housing laws. Different provinces have different rules regarding rentals, but these resources are easily found online, so you can be prepared for whatever might get thrown your way. For example, there are differing regulations from province to province regarding damage deposits and eviction, so it’s important to do your research to understand how these laws could affect your rental property.
4. Marketing Your Rental Effectively
Now that you’ve completed all this preliminary work, it’s finally time to get the word out about your new rental! This is where marketing your rental effectively becomes critical. Yes, you could put up flyers in the neighbourhood and attach a sign to the yard, but is that really the best way to reach your ideal tenants? You need to meet your tenants where they’re looking – online. When you list your unit online, prospective tenants can view photos of your property, review the description, and reach out to you directly to set up a tour. In other words, marketing your rental effectively online connects you to serious, qualified renters ready to move into your rental property.
5. Screening Potential Tenants
So, how do you ensure that you find a great tenant? This comes down to the process you have in place for screening potential tenants. Screening your tenants before handing over a key should be non-negotiable. Your prospective tenants need to be able to provide proof of steady income, a credit report, and references from previous landlords or employers. You might also consider using a reputable screening service to ensure your renter hasn’t fabricated this information. Once you have all of the information upfront, you can decide if you think this renter will be a good fit for your property.
6. Ensuring Proper Insurance Coverage
Something else to consider when setting up a rental property is ensuring you have proper insurance coverage. Typically, your existing home insurance policy should be enough coverage if you’re renting an apartment within your home. But, if you’re renting a building you don’t live in, you should look into landlord insurance. Although landlord policies can differ depending on your needs, they typically include coverage for the building, contents that you own on the property, liability arising from ownership of the property, and loss of rental income. However, one important thing to note is that your landlord insurance does not cover your tenants, meaning they would need to look into their own rental insurance to ensure coverage.
7. Hiring the Right Property Manager
Finally, if you want to take a more hands-off approach to your rental property but still want to ensure that everything is taken care of, it might be time to consider hiring the right property manager. Many of the things we’ve discussed in this article, including screening tenants, collecting rent, understanding rental regulations, and addressing ongoing maintenance, would become the property manager’s concern rather than yours. The trade-off is that you then pay a percentage of your rental income to the property management team; however, this means you don’t have to be on call for your tenants 24/7. Sounds nice, right? At Soni Chachad Real Estate, we want to help your dream of owning a rental property become a reality. Thanks to our comprehensive property management services, you can now enjoy the passive income from your rental property, knowing that the day-to-day operations are being handled by a team of experienced professionals.
Final Thoughts
As you can see, there are many factors to consider before deciding to become a landlord and investing in a rental property. If we’re being honest, setting up a rental unit can take a lot of time and effort, and even once your new tenant is settled in, you still need to be on standby constantly. That’s why we created our property management services – to give landlords back their time so they can enjoy the passive income from their rental property without getting caught up in the details. Instead, we handle your tenant requests, ongoing maintenance, rent collection, and anything else needed to keep things moving forward so you can focus on other things, like the next addition to your real estate portfolio.
If you’re a new or existing landlord looking for support with your rental property, contact our experienced team at Soni Chachad Real Estate. We’ll help you realize and streamline your dream of becoming a landlord today!
