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In cities such as Toronto, the business of wanting to manage rental properties is common. There are many avenues to explore when it comes to finding a lucrative option to invest and manage but understanding the process and your objective is key to finding where those opportunities lie.
Managing rental properties provides a great foundation for your business ventures but it must be done properly in order for it to have a significant return. Understanding the core of why you want to manage rental properties along with the necessities that you must know before investing time and energy into doing so will be crucial to success.
Your Rental is a Business
As a landlord, you have the opportunity to make a substantial amount of money, allowing for positive cash inflow quickly into the investment. However, it is not like buying a stock or a mutual fund where you can watch it fluctuate based on market decisions. The job of managing a rental property results in handling minor to major conflicts, anything from rent being late to major damages on the properties, you have to have the correct mindset before investing your time and energy into this project. There are many things that can go wrong and as a manager, you need to be the person who can handle that well.
Find the Right Properties
A couple tips when it comes to finding the right properties to turn into a rental property for you to manage: invest in duplexes – there are two units for you to manage so that even if you do not have tenants in one of them, you will still have the other unit to bring cash inflows.
In addition to that, when it comes to finding prime locations in the city, the house prices may be so high that you end up making a negative return. There is no issue in finding a property that is not the most highly valued currently because the cash flow there will still be consistent as opposed to high-value properties with high rental fees.
Understand Provincial Rules and Regulations
Pending on the location of where the rental property you are managing is, the rules and regulations may differ. Each province has general rules that help to govern the rental properties. There are also certain associations that exist to help with managing these properties.
When it comes to support, most provinces have tenancy branches as well as Canada’s Mortgage and Housing Corporation which exists to help provide advice for landlords that are just getting started so that they have advice on how to find tenants and how they can effectively deal with any problems that come up. For example, often landlords question whether they are entitled to damage deposits or not. In Alberta, that is negotiable but in Ontario, that is not an option, which limits the accountability landlords can impose on tenants.
Pending on your province, you will have different forms to issue as well. You can find the provincial specific forms for tenant applications, non-payment for rent, and rent increases on the website of the rental-housing agency in accordance to where the property is.
Screen Potential Tenants
Beyond understanding how to manage a rental property, part of the job is managing the tenants who have endless complaints and bring more chaos than benefits. As a landlord, you do not want tenants who are constantly damaging property and refuse to pay rent. To mitigate this, before allowing someone to be a tenant, getting credit checks alongside references will ensure that the applicant can (1) pay rent long-term and (2) is a reliable individual. One without the other will still cause you problems, thus keeping track of each of these components will be vital to have responsible tenants.
Maintain a Landlord-Tenant Relationship
After you find tenants for your property, it would be nice to maintain that relationship as you want them to continue to rent. This way, you do not have to repeat the process frequently. Whether this be having good conversations through responsive messaging or celebrating the holidays with a gift exchange, being a good landlord means you check up on your tenants for more than just rent payments.
Good tenants may be hard to find and so you want to ensure you give them quality service and management. As a result, that component itself will be a reason as to why they continue to rent that property.
Being a hands-on landlord will save you time and money. In addition to having a good relationship with your tenants, you can take it a step further and be proactive to mitigate any issues. As you manage the property, the issues from the structure of the house or the heating within the home will be your responsibility. If there are minor issues, chances are you can fix them without calling for external help. If it is major, you will want to ensure that your network of professionals is just a dial away. Ensure that these connections are made so that you are ready for any issue that may arise.
Check Insurance Coverages
If you are renting out a portion of your home, your insurance policies should be fine to cover any issues that happen with that component but if it is a property that you do not live in, there will be additional insurance costs that you will need to look into. This is not mandatory but warning your tenants beforehand so they know where their risks lie and how they can be properly insured before renting is a good way to continue to maintain the trust and relationship from landlord to tenant.
Property management can be confusing, especially for first-time landlords, but with our team and the expertise that we have had managing rental properties, we are able to shed some insights on what is important in this industry. If you’re looking for a management company that knows the ins and outs, contact our team for more information.