Becoming a landlord is a life-changing decision. There are a lot of logistics to keep in mind. If you’ve been thinking about investing in an income property, there are some things to consider first.
Having passive income can be a great way to save up for that trip to Europe or buy a new car, but taking on a second mortgage isn’t easy. Speak to a lender before making any concrete decisions. They can help you determine how you can afford a second property and what you can afford.
Now that you’ve figured out how you’re going to pay for your rental property, it’s time to decide what you want to buy. There are many options to choose from such as a detached home, a townhouse, multi-dwelling buildings like a fourplex, or renovating a property, possibly to create more units.
One way to help you decide on a location is to picture the type of tenant you want to attract. If you’re looking for student renters, buying close to the University of Lethbridge and Lethbridge College, or along direct bus routes to these locations are going to be attractive to potential tenants. If you’re looking for older tenants then being closer to the hospital is beneficial. Families may be looking for nearby schools, parks and other entertainment options for the kids.
When you’re purchasing an income property, things really come down to money. Be sure to check big tickets items, like the roof, furnaces, electrical and windows, because they cost the most to repair and con inconvenience your future tenants.
Insuring your new property is mandatory and you should also ensure your tenants are insured. Renter’s insurance is easy to apply for through most companies that offer home and auto coverage. It’s available for single room rentals as well as units and houses so if you’re renting a room to a single person, have them provide proof of insurance.
Choosing the right tenant can be difficult, especially when you want to get someone paying rent right away, but be sure you properly screen your tenants to be sure they will take care of your property and pay rent on time. This can include applications, interviews, reference checks of former landlords and their current employer, credit checks and checking bank statements are real.
You’ll also want to decide if you’re going accept pets and what kind, include utilities, parking, snow removal or lawn mowing services. These should be mentioned in your advertising and outlined in the formal rental agreement.
Another thing to remember is that if you have multiple tenants, there may be disagreements and you are responsible for keeping the peace. These arguments can be easy to handle, such as asking someone to park their car a few feet ahead to noise complaints. Professionally handling these situations is not always easy, but being a landlord is a business and you need to treat your tenants for what they essentially are: clients.
Deciding on what to charge for rent can be daunting. Take a look at other properties in the area to determine what other units are renting for, what they include and the condition of the property. If your rental includes things such as on-site laundry, inclusive utilities or a storage locker, you may be able to charge more rent than a property that’s the same size in your area, which doesn’t offer these benefits.
Key features that tend to attract quality renters are having a dishwasher, washer and dryer in the suite. Quality tenants seek these features out and are willing to pay higher rent for the convenience.
Do you have the time and ability to keep your rental looking great? Maintenance is more than just keeping the carpets clean and repainting the walls between tenants. There are going to be plumbing, electrical and many other issues crop up along the way. Larger repairs may be covered by insurance depending on the cause, but replacing an outdated appliance such as a water heater or stove won’t be.
Lethbridge is a great market for rentals as we have two postsecondary institutions with thousands of students and there are many service and temporary workers that need places to live.
Before you sign a rental agreement with any tenants, read up on the most current rental laws and make sure your lease agreement abides by these laws. This not only takes care of you but takes care of your tenant.
If you’re looking to purchase an income property, call José Rauda and Lisa Shaw today at (403) 329-8899 and see how our team will help you with your real estate endeavours.