So you’ve found the perfect investment property. Maybe it’s a condo you bought years ago for yourself and now you’re ready to move into a house, maybe it’s a secondary suite attached to your current home, or maybe it’s a brand new condo you’ve just purchased for the sole purpose of renting it.
Whatever the case, congrats! You’re entering the exciting world of real estate investment! Owning an investment property is an amazing way to generate extra income and grow your wealth over the years.
But talk to any landlord in Toronto these days, and many will tell you about the pitfalls and challenges that come along with operating an investment property.
One of the biggest challenges we see is finding a great tenant for your investment.
Now, here’s a quick shameless plug, Homeplicity actually offers property management services. But in this blog, I want to give you my tips and tricks for finding the right tenant for your property. If it all sounds like too much, you can always give me a call and I can help!
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There are a lot of steps you need to take to find a really great tenant for your investment property. Here’s how I do it:
The Price is Right
No amount of marketing, advertising, and pictures can convince someone to pay more for a rental than what it’s worth. Before anything else, you need to get an idea of what similar properties are listed at. Research them on sites like TorontoRentals, Facebook Marketplace, or even the MLS® to see where your competition is at.
You should also look at the financials and find out how much things like the mortgage, property tax, maintenance, and utilities (if you plan to include them) will cost. Once you have your carrying costs, you can start to get a better picture of what you need to charge in rent to break even or, even better, make a profit!
The Toronto real estate market is changing–big time! Here’s a look at what we see for the future: A Look at the Toronto Real Estate Market Today
A Picture is Worth a Thousand Words–Literally
We’ve all seen bad rental photos. There’s even entire websites dedicated to some of the most WTF-worthy shots that landlords think it’s perfectly okay to publish. Do not be one of these people, please.
Do yourself a big favour and spend a little money upfront to get beautiful professional photos of your rental. Trust me. The price for this is usually between $250-$350 and you can reuse the images everytime you lease out the property.
Nice pictures will make your property stand out. You’ll get more inquiries, and you’ll be able to charge more for rent. It’s a small price to pay for such a big impact.
Don’t Waste Your Time at Showings
When clients hire us, we take care of everything. All the marketing, qualifying, advertising, and showings. Hands-down, the biggest time-suck for many landlords is the showings. But in my experience, they just aren’t doing it efficiently enough.
Picture this, you get an inquiry from a potential tenant wanting to see the unit. You drop everything to show it to them, maybe drive across town to meet them, and they don’t show up. Well, you’ve just wasted a couple hours of your time. Now you’re annoyed, and you’ll never get that time back.
Instead, I would suggest setting specific showing times during the week. Plan to be at your rental for a time period and book showings on those days only. You’ll likely need to include at least one Saturday or Sunday. Book the showings in 15-minute increments so that if someone is a no-show, you’ve only wasted 15 minutes of your time, not hours.
Having overlapping appointments is also a great way to drum up excitement and create a sense of urgency among potential tenants.
Looking for a fabulous location for your next investment property? You should consider Fort York! Here’s why: 5 Reasons Why We Can’t Get Enough of Fort York!
Prepare Yourself–And the Property
Preparing your rental to be occupied is more than just slapping on a fresh coat of paint (more on that in a sec), you should speak with your insurance provider and make sure the coverage is updated and accurate. You’ll also need to speak to your accountant and make sure everything is good on that end. As a landlord, you’ll have tax implications such as capital gains and claiming rental income.
It’s a good idea to get the home appraised on the date the property transitions from being a primary residence to a rental. That way, if you sell it down the road, you will have a value established on the date it became an investment property.
While you’re at it, make sure any repairs are done before the tenants take possession, that way they won’t be calling you annoyed that something is broken.
And on the subject of paint: I always suggest clients just get the unit professionally painted between tenants taking occupancy. It might be a little pricey, but trust and believe you do not want the tenants doing it themselves. They could be the nicest people in the world, but painting is just not their forte.
Also, remember that any costs you incur as a landlord (such as painting or professional fees from working with a property manager) can be written off at the end of the year if your rental is profitable.
Lofts are an iconic staple in the Toronto condo market. But what’s the deal with them? Personally, I love lofts. Read some of my past blogs about them here:
- Toronto Loft Lingo and Who Actually Buys Them: Spilling the Tea!
- Ew David! 5 Loft Turn-Offs You May Not Have Considered
- Toronto’s Most Iconic Loft Conversion: The 411 on Tip Top Lofts
Your Bible: The Lease Agreement
This is one area of being a landlord that you want to pay special attention to. Do your due diligence and craft a lease agreement that protects both you as a landlord and your tenant. You can’t get a tenant to agree to anything that contravenes the Residential Tenancy Act. So if you’re not an experienced lawyer, you might have to make some calls to the Landlord-Tenant Board to get your ducks in a row.
There are typically two lease agreements for tenants in Ontario:
- Offer to Lease – This spells out the pricing and terms of the lease such as which appliances are included, whether or not utilities are included in the rent, etc.
- Ontario Standard Lease – This document legally needs to be provided to the tenant. If you don’t provide the Ontario Standard Lease, your tenant technically doesn’t have to pay rent.
Lease agreements are no joke, so if this is something you are not comfortable handling, it’s always best to consult with an expert who can guide you through.
Do Not Skip the Reference Check
At this point, you’re probably a bit exhausted. You’ve done your pricing research, taken profession pics, prepped the property, and you’ve established a rock-solid lease agreement. But this next step is super critical: the reference check.
You need to know more about the people who you are trusting with your property. When I get a rental application, I am skeptical from the start, then I put on my detective hat and start to creep them online. Check their LinkedIn and make sure the job listed there is the same as their application. If the company has an HR department, call that instead of the number provided on the application (anyone can get their buddy to give them a good reference!)
I also find that the current landlord is not always the best person to get intel from. If the tenant is a pain in neck they will say anything to get them out of their rental. Instead, talk to older landlords who are usually a bit more forthcoming.
Also, don’t forget to check their credit score! Make sure they can actually afford the unit you are renting. As a general rule, rent shouldn’t be more than a third of the tenants income.
You really want to cross the T’s and dot the I’s at this step. Leasing laws heavily favour tenants and if you have an issue with your tenant, it’s really hard to get them to move out. You might be on the hook for over a year of legal proceedings and fees, all while potentially losing income on your income property. Doesn’t sound ideal right? So check the references.
You’ve Found the One!
Once you’ve found the right tenant, you job is not over. Then comes the key exchange, collecting rent, providing maintenance, and all the other logistics associated with being a landlord.
If all this sounds like something you want to take on, great! We wish you all the best in your investment journey! But if you’re feeling a bit overwhelmed and wondering why you signed up for such a big commitment. No worries. Homeplicity can help. Our property management services take care of everything for you, so you don’t have to worry about unhappy tenants or problems with your investment property. We have it all covered.
To learn more about our property management services or to just chat Toronto real estate, you can call or text me at 647-973-8392 or sign up for our newsletter right here and get the latest listings and exclusive content sent straight to your inbox!
