Are you considering investing in a residential real estate in Ontario? These days, it’s a particularly tricky landscape for both tenants and landlords. Both parties are facing their own set of challenges however, tenants do have more rights and recourse within the system. Here are a few tips to help focus on the right type of investment for you, and to make the process run smoother. This is by no means all inclusive, but it’s a good start.
1. Be Clear On Your Goals, Time Frame, And Budget.
- What is the time frame for your investment?
- How hands-on are you able to be?
- What are your cash flow needs (for example – many Toronto condos actually don’t make money month-to-month, but are realizing long-term gains when they eventually sell)?
- Do you have a comprehensive and realistic understanding of the carrying costs?
2. Do Your Research.
- There are a ton of Facebook and community groups where landlords can share tips and tricks. Be familiar with the day-to-day and potential challenges.
- Learn about the RTA (Residential Tenancies Act) and LTB (Landlord Tenant Board) to be informed of your rights and responsibilities and how the system works.
- Have access to a good paralegal or lawyer as they will be very helpful to ensure you are protected as well as is possible.
3. . Know The Particulars Of The Local Market And Potential Tenants.
- Figure out the demographics in the area you’re interested in and then consider investing in a property that will suit their needs (i.e., If you are looking at an area that has a lot of students, make sure there is easy access to laundry, groceries, transit, etc.).
- Know what future development is planned in the area as it will have an impact your potential tenants, property value, and competition.
4. Ensure A Cushion In Your Budget.
- Can you carry the property for more than a few months if something goes wrong?
- Do you have realistic repair, maintenance, tax, and vacancy rates built into your budget?
5. Make Sure You’re Vetting Your Tenants Carefully.
- Be thorough and strategic when you follow-up on references, credit score, and proof of income.
- Beware of scams like those offering “legal” fake landlord and employment references.
6. Establish Good Will, Open Communication, And Clear Expectations.
- If there’s something that needs to be attended to on the property, respond quickly and be a reliable landlord.
- Ensure your agreement to lease has clear and legal expectations for both parties.
- While there can always be bad behaviour on both sides, if you are an attentive and responsible landlord, you will have a better chance of resolving issues as they come up.
If you have questions about what’s the right investment property and strategy for you, set up a meeting with with a Realtor that you trust, and talk it through. If you’re considering investing with friends or family, you might find this blog helpful.
On a side note, here are some updates for residential-tenanted properties during COVID.
- You can now list and show tenanted properties if the tenants agree (you can list a property that tenant will not allow to be shown but cannot force showings)
- You cannot evict anyone (“no new eviction orders will be issued until further notice and sheriff’s offices will postpone any scheduled enforcement of current eviction orders. Tenants must pay rent while an eviction order is not being enforced.”)
- LTB is currently closed (“suspending all hearings related to eviction applications, unless the matter relates to an urgent issue such as an illegal act or serious impairment of safety”)
Photo by Richard Kidger on Unsplash
