17 Nov Is Being A Landlord Right For Me?
Today’s steep real estate prices are making home ownership harder and harder in Canada’s biggest cities. One option new homeowners are exploring is renting out parts of their home to help pay their mortgage. A basement apartment, a side-by-side duplex or even renting out a bedroom to a college student are different ways your new home can make you some money.
Regardless of what city you live in, finding a property with a rental space is a great way to enter the housing market. Now, you might be asking yourself if you have what it takes to become a landlord. If you’re willing to put a little work into finding the right property and learning about the laws that affect tenants and landlords, you can be successful!
So where should you start?
First Learn the Basics
Before you jump in with both feet, start by learning the basics. Read a book or two on rental properties in Canada (and your specific province). Talk to other landlords if you can. Get advice from a real estate agent to learn what is available on the market as well as from a mortgage expert to learn what you can afford. Careful not to get caught up in any of the late night TV get-rich-quick rental property schemes – they can be quite misleading.
Make Sure it’s Legal
If the space you’re looking at doesn’t meet the legal requirements, walk away. It can be quite difficult to get zoning changes approved. It’s also expensive to get a basement apartment up to code when it comes to fire proofing and ceiling height. Find a home that has a legal rental unit, not just a spot previous owners have MacGyvered into a rental.
Financing and Budget
How much house can you afford? Do you have enough for your down payment? How much do you qualify for when it comes to financing? Take the time to figure out your numbers. Don’t forget to keep cash on hand for closing costs and renovations that need to be done.
How Much Rent Can You Get?
Owning a home can be expensive. Costs include mortgage payments, house insurance, property taxes, utility bills, repairs and more. If you buy a home with an income suite, your tenant’s rent payments will help lower your housing costs. Do some research to learn how much rent you could expect to collect, and see if it makes sense financially. Keep in mind that some of the rent you collect will need to go to taxes and other extra expenses for your tenants, like higher utility costs.
Keep it Simple
As a first time landlord and homeowner, look for a property that is easy to manage, like a house with a basement apartment. Keep it small, keep it simple. Use this first property to learn the ropes and see if, down the line, more real estate investing is right for you.
Looking for information on a mortgage for your property with rental potential? See our homepage or contact us today at 416-639-0786 for free advice.