Five Tips for New Self-Managing Landlords
By: Sebastian Marquez | Tolobi
If you thought being a landlord was as simple as watching an e-transfer deposit a lump of money into your bank account each month, then you’re dead wrong. Any experienced landlord will tell you that it takes thoughtful considerations and doing some extra homework. If you’re still new to the game, here’s are some key tips to be mindful of:
Evaluate before you advertise
Before you put up your home for rent on internet listing sites, classifieds, social media or Tolobi, accurately assess the value you’re providing with your unit. If you set the rent too high, you run the risk of having a vacant unit for too long, missing out on a month or two of rent. You may also miss out on potential high-quality tenants attracted for better deals elsewhere. And if you set the rent too low, you don’t get to reap the full potential of your property.
Gauge the other listings in your area — what makes them pricier or cheaper than your original listing price? If they have similar features, you ought to calibrate your original price to theirs.
Know the flip side of rent
While the end goal of any landlord is to get that rent every month, experienced landlords in Ontario know that high-quality tenants are more important than making an extra $50 or even $100 a month from a “riskier” tenant. A tenant-landlord relationship fraught with conflict requires far more time and management work than most landlords are prepared to commit. Plus, as a landlord, it’s not so easy to simply walk away from a tenancy.
Experienced landlords always screen potential tenants. Pay attention to credit history and decide beforehand what is the minimum credit score — i.e. 650 or 750? — that will give you confidence. If you’re new or don’t have time to read the full report, you can always trust Tolobi to conduct an independent credit check and do thorough reviews of credit history on all of your prospective tenants.
Beyond the credit history, however, there is always things like proof of income — employment letter, paystubs, etc. Make sure the numbers match, and if you can, try to verify with a third-party. References are always insightful. For consistency, Tolobi conducts personal, employment, and landlord reference checks to make sure everything lines up.
Note that many prospective tenants may not be able to provide you the kind of documentation and history that will give you the full picture. There are plenty of students coming to the Greater Toronto Area every season, and people new to the country move here everyday. In those cases, meeting in person and getting to know the prospective tenant may be your only means of doing any process of screening.
Draft a comprehensive lease
As a landlord, one of the best ways of protecting you and your property is to invest the time in drafting a comprehensive lease. The lease will shape your relationship with your tenant for however long it lasts.
Do your research and understand what leases are all about. Your lease should always include protection against property damage and late payments, utilities arrangements, clarifications on divisions of labour — e.g. snow removal, furnace filter changes, lawn mowing — and move-in and move-out procedures. If you want to get even more technical, Tolobi offers 20+ pages of additional terms, which is included with every lease completed through its services.
Be sure to consider the Residential Tenancies Act, Human Rights Code, and other relevant laws when drafting up your lease, because lease terms that contravene the Residential Tenancies Act are void. This means not asking for pet deposits or having “Punjabi students only” written in your listing.
Be mindful of the renovations
You may not have the prettiest home to rent out, but that doesn’t mean you need to make drastic changes and renovations. Spruce up your unit only if you know it’ll be appreciated! Don’t invest in renovations that won’t give you a higher rent. At the end of the day, prospective tenants will be making a lot of considerations on their own, and not every neighbourhood will attract tenants willing to pay over $4,000 per month for a deluxe condo. The point is to know who your customer is going to be, just as any successful business-owner knows — remember, landlords have customers too.
Some renovations, however, are safe bets. If there’s space, add a bedroom or den to bump your listing to the next pricing tier. Bathroom renovations and additions like hooking up a washing machine will yield higher rent. Hardwood floors look more modern than carpeting and, in the long run, can be easier to clean — spills on carpets are far more unsightly than scratches on wood.
Another thing to consider is whether you can simply repair rather than replace. Re-sealing decks and patios, or resurfacing kitchen and bathroom cabinets will go a long way in cost-savings. And if it’s in your means, ensure that there’s curb appeal to your home — i.e. having neat landscaping, clear pathways, and well-kept exteriors — because first impressions do matter in getting the best possible tenant.
Require tenants to get insurance
Being a landlord is often about risk management and being farsighted . In fact, if you nail that part of the job down, then the rest is smooth sailing. That’s why it’s not just astute but downright sensible for you to require your tenant to get insurance. By doing that, you mitigate potential disputes over damaged or stolen property. Apart from that and protecting you from personal liability disputes, tenant insurance also often covers additional living expenses, which could make it easier for both you and the tenant should something happen so as to put your tenant out of their home.
In addition, asking your tenant to get insurance shows that you’re a responsible and reputable landlord. By showing that you care about people who rent from your home means that you’re not only focused on the monthly cheque. By having your tenant pay that extra $20 or some bucks per month in insurance, both of you are afforded a peace of mind that’s priceless.
Remember that being a landlord is a lot like being a manager for a small business. Be professional. Treat your tenants like valued customers, and whenever you can, go a little a beyond that. Your home is your investment, and if you want them to treat your investment will, they need to be taken care of too. And if this all seems a little too much for you to handle at this point in life, you can always turn to Tolobi for our Rental Assistance Service.
