5 Steps to Become a Landlord in Canada
If there is one thing you should strive to do is to become a landlord in Canada. Do you realize that being a landlord in Canada can bring a whole fortune to you financially? Like, people are making it in life as house owners! Being a landlord is a great way to make money or supplement your income.
Likewise, it is also a long-term investment because your home will rise in value over time. As a result, if you take the appropriate steps, it might be a rewarding business.
Recently, the Canadian government announced that it is going to stop foreigners from buying home in the country due to an over 50% increase in the cost of owning a home. What does this mean for you as a landlord?.
This means that it is time for you to be on top of your game. Have the mindset that being a landlord is as good as owning a business and put in your best.
Hence, this article provides you with a step-by-step guide on how to become a landlord in Canada.
What is it like to be a landlord in Canada?
Like every other business, being a landlord has its own good and ugly side, that is the advantages and disadvantages. They are explained below.
Advantages of Becoming a landlord in Canada
Let’s start with the most obvious perk – you are going to have a regular monthly income. That is, the rent you collect minus the expenses you have had means a steady and reliable cash flow. That sounds great, isn’t it?
Another thing is that, as a landlord, you will be able to deduct many of the costs related to your property as a tax deduction. Items such as property taxes and insurance, as well as upkeep and repairs, utility bills, plus advertising and accounting fees, are all tax-deductible. At the absolute least, these tax deductions will improve your bottom line and leave you with extra money.
In the same vein, appreciation is a good characteristic of landed properties. You can almost be certain that over time, your property will worth more than it is now, in a few years to come…
Disadvantages of Becoming a landlord in Canada
On the other hand, becoming a landlord in Canada is much more than fixing up a basement suite or buying a duplex to rent out. There are a whole lot of things to do, and one of such is shouldering the responsibilities that come with being a landlord.
You will have to deal with house repairs as at when due as well as maintenance, tax, insurance, and mortgage payments. Another thing is finding a tenant. Finding a tenant and more importantly, a good one at that could be a daunting task. So, you need to have the patience, lifestyle, and doggedness, that will ensure that you get the right kind of tenant you want.
Also, you need to screen prospective tenants so you find the ideal renter. While you might enjoy tax incentives, your income tax and home insurance will increase. You will have to document the gain you have made from selling the property higher than you bought. Hence, your rental income will be taxed and you could also lose certain government benefits such as old age security.
In addition to rental income tax, if you want to become a landlord in Canada, you have to familiarize yourself with the rules around becoming a landlord. Be familiar with the rules that apply to your responsibilities as well as the responsibilities of tenants.
However, there are no general laws for landlords in Canada, laws can differ by province or territory. The Provincial and Territorial Fact Sheets from the Canada Mortgage and Housing Corporation can help you learn more about specific condominium rules
5 Steps to Become a Landlord in Canada
#1. Buy the right property
The first step you need to take to become a landlord in Canada is to own a property. Either you buy a property for resell or you want to rent out some portions of your house. If you want to buy, make sure you get the right type of property, especially if it is the only one you will own for a start. You might want to buy a duplex for the comfort it brings. With duplexes, there are two units, you can stay in one unit and rent out the other.
In addition to buying the right property, you should also consider the location. Do a quick research on the rents and ideal locations you’ll like to rent a house. Chances are, you’ll love to get a property where there are good jobs and a booming population. Find out what the rents are like the demand and occupancy rates, while you ensure to choose an appropriate mortgage.
#2. Know the prevailing laws in your province
One important step you should take to become a landlord in Canada is to carefully research and understand the rental laws in your province. Different provinces have different laws, so ensure you’re acquainted with the ones in your area. Landlord associations such as the OLA and the Landlord’s Self-Help Centre have sprung up in recent years to help. So this could ease a lot of stress off of you.
Also, there are some provincial government agencies such as the B.C. Residential Tenancy Branch and the Canada Mortgage and Housing Corporation’s website offer information for landlords on how to get started, find renters, and deal with issues.
#3.Screen Potential Tenants
Having to screen potential tenants before finally choosing one, might be a daunting task. But guess what? It’s worth it. Undoubtedly, you have heard of various stories of tenants that have come to be torn in the flesh of their landlords.
Most of them damage properties, use loud music(if you’re staying in the same house) and some even go as far as not paying their rent. That can be very frustrating, and I believe anyone will want to avoid that.
So, to avoid stories that touch the heart, always do a proper background check, like ‘credit check’ before you rent out your space. You can even ask for references from former landlords or employers for more clarification.
#4. Validate your insurance coverage
As part of the steps to becoming a landlord in Canada, getting appropriate insurance coverage is absolutely necessary. Like your land or home, rental property is an invaluable asset. The right insurance can safeguard your home from the financial consequences of an unexpected event.
Thus, you might need additional insurance if your existing policy does not cover additional expenses that are associated with having a tenant. However, if you’re renting an apartment within your home, your existing home insurance might be sufficient.
#5. Build the landlord-tenant relationship
One thing you should learn to do if you want to become a landlord is to cultivate a landlord-tenant relationship. Once you have found great tenants, you’ll want to keep them for as long as possible. Go out of your way sometimes to make a good impression.
Try to build a cordial relationship with your tenant and be approachable and considerate. Also, thoughtful deeds like buying your tenant’s gift cards during Christmas could mean a lot.
#6. Consider hiring a property manager
Hiring a property manager can make becoming a landlord in Canada less stressful. Even though it might cost you a lot and possibly reduce your rent revenue by 8-10%, it can also be very rewarding. You wouldn’t have to be collecting your rent fees or doing repairs directly, everything will be duly handled for you.How to Become a Programmer in Canada
Frequently Asked Questions
How do I become a landlord in Canada?
To become a landlord in Canada, you need to follow the steps below:
- Have enough money
- Buy the right property
- Know the prevailing laws in your province
- Validate your insurance coverage
- Build a landlord-tenant relationship
- Hire a property manager
How much do landlords make in Canada?
According to talent.com, the average landlord salary in Canada is $62,500 per year or $32.05 per hour. While many experienced workers may get up to $87,375 per year, entry-level workers get around $48,497/yr for a start.
Is it worthwhile to be a landlord in Ontario?
Absolutely Yes! However, keeping that in mind, the upside of becoming a landlord in Ontario is that it can be both financially and personally satisfying, which is why many people across the province aspire to be landlords.
Do I need a qualification to be a landlord?
No educational qualification is needed in order to become a landlord in Canada. However, ensure that your property meets the requirement for renting such as safety and insurance.
Becoming a landlord in Canada is quite simple if you follow the steps we have provided for you. Asides from the responsibilities you will have to fulfil as a landlord, a steady monthly income should be more appealing. You are sure to always get your rent at the end of the month or depending on your agreement.
So, whether you want to rent a part of your apartment or you want to buy a separate apartment for rent, either way, the benefits and responsibilities come in different shades! Take a shot at it, and watch your financial status get liberated!