Thinking about buying a rental property or a home with a rental suite, there are a few things you should think about before you jump into the role of landlord. 1 Rental properties: Do it legally, or don’t do it.
Just because you have space for a renter doesn’t mean you’re allowed to get one. The municipality may not issue permits for secondary suites. If you build one anyway (there’s always a contractor out there who will do work without permits), and you’re discovered, you can be forced to pay fines and even dismantle the rental property. She and her business partner, Helene Katz, broker of record at the same agency, have 35 years combined experience and have helped scores of homeowners become landlords.
Besides zoning issues, “a prospective landlord must verify that a second unit meets the requirements of the fire code,” says Rebecca Isenberg, sales representative at Sutton Sadie Moranis Realty Brokerage in Toronto. For example, are there two exits, and is the ceiling high enough? If something goes wrong—a fire, for example—in an illegal dwelling, the landlord is on the hook. If your insurance company isn’t aware of the second dwelling, they may not pay your claim, if you make one. They certainly will not cover the tenant’s possessions, and you might have a lawsuit from your tenants.
2 You probably won’t pocket the entire rent—it’s taxable and there are expenses.
You’ll need to issue a receipt to your tenants for the rent they pay on their rental property, and they may use it to claim a deduction on their income tax. Even if they don’t, you’re expected to declare the rent as income and pay tax on it accordingly. Tax aside, landlords face other expenses. On average, plan to spend the equivalent of a couple months rent every year on home maintenance and upkeep of the rental property (painting and cleaning services when tenants move out, appliance repairs, and fixture upgrades or replacement).
3 The space you have might not attract the tenants you want.
Especially if you share common areas like a driveway, foyer or yard, you want to be extra careful about who you get in there. To preserve your family’s privacy, your rental property might need more than drywall and a new shower stall. Soundproofing and carpeting can help, but retrofitting can be expensive, and unless you share the same taste in television, you might need to look into the noise levels. Make sure your electrical service can accommodate more people (you might have to upgrade from 100 amps to 200); consider a larger water tank so the tenant won’t knock on your door because they can’t shower when you do laundry. Don’t spend lavishly on decor, but make sure the apartment is one you would want to live in—that way you’re more likely to land a tenant you want to live with. Landlord Beige might not work in your home, but it’s a good choice for a rental space. A subdued colour lets your tenant imagine their own life in the space and is one less thing for them to ask you to contend with before moving in. Remember: like prospective homebuyers, prospective renters often try to negotiate the rent and extras, like new paint. More next time. Or call your Royal LePage Black Tusk Realtor for more info.