So, You Want to be a Landlord?

There seem to be many misconceptions relating Landlords. People seem to think it’s a lottery ticket. People seem to think it’s a sure-fire way of having someone else pay down their mortgage. People seem to think it’s an investment. I’m here to tell you that it’s none of the above; it’s a full-time job, and it’s not easy. Ok, maybe it can be viewed as an investment, but not in the traditional sense. Typical investments have you fronting the money after you’ve researched and decided on a sound option. Once you’ve invested the money, you typically sit back, monitor and hope for the best. With a landlord investment, the work doesn’t stop after you’ve fronted the money. That’s when the work begins.

Now, I’m not trying to dissuade anyone from becoming a landlord; in fact, it can be incredibly lucrative. But it’s no cake walk, and you should know that. So, before deciding on becoming a landlord, here are a few factors to consider:

Being a Landlord is a Full-Time Job, Not a Winning Lottery Ticket

Right in line with my opening statements, being a landlord is a lot of work. You constantly need to keep up with rules and regulations, you need to go through vigorous screening processes when finding tenant candidates, you need to be able to moderate relationships, you need to monitor and maintain upkeep of the unit. The list goes on and on. Granted, the work can be incredibly rewarding both financially as well as emotionally, but you need to be prepared for it.

You Need to do it Legally

Some municipalities don’t issue permits for secondary suites. If you build one without the proper permits, you may find yourself in a world of trouble. You may be forced to pay obscene fines, or even be forced to tear the unit down. Zoning issues and fire codes all need to be adhered to, along with building permits. Just because you have the space for a rental unit, doesn’t mean you can legally pull it off. Do the research, and make sure you are following the legalities. There have been scenarios of disgruntled neighbors reporting illegal units, and that’s a scenario that you don’t want to put yourself in.

The Entire Monthly Rental Amount is Not Pocketed

Tenants may wish to claim their rent on their income tax forms. You’ll need to be prepared to issue your tenants with receipts for the rent they pay you. Even if the tenant doesn’t wish to claim the rent come tax season, you’ll be expected to claim the income and pay tax on it accordingly. Moreover, Landlords face many other expenses that can eat away at their profits. Home maintenance and upkeep of the rental property is typically the responsibility of the landlord. In between tenants, landlords are usually faced with many costs in the process of making the unit desirable for the next tenant. Otherwise, they’ll have a very hard time attracting the type of tenants they want. Which brings me to my next point.

Bad Tenants are a Dime a Dozen

No landlord wants to be faced with a tenant from hell scenario. Bad tenants will end up costing a landlord more than they’re worth, regarding both finances as well as mental health. A bad tenant can be an extreme source of stress, and stress can lead to a multitude of mental and physical issues. It’s just not worth it. Thorough screening processes are key to avoiding such a scenario, and even so, some bad tenants will fall through the cracks.

Once the Tenant Has Moved In, It’s Hard to Get Them Out

Regarding bad tenants falling through the cracks, getting them out once they’re in can be next to impossible. The Landlord and Tenant Board tends to favour tenants, and many landlords have been stuck in the impossible situations of dealing with a bad tenant. This can be incredibly costly and detrimental to a landlord’s livelihood, and it can take months to evict. In some scenarios, an eviction will not even be granted. This is perhaps the biggest issue that landlords face today.

This is simply cracking the surface when it comes to landlord need-to-knows, but it should give you a general idea of what Landlords must deal with. So, don’t go jumping into this endeavour thinking it will be easy-breezy, because chances are, it won’t. That said, if you’re prepared to research and put in the work, being a landlord can be a smart move – just don’t jump in blind.

 

*Photo Source: http://vipgloballistings.com