7 Tips For Your First Income Property
Posted on: Tuesday November 11, 2014
My first rental property wasn’t purchased with the intention of owning a rental property. I purchased it as a primary residence, but then a career change caused me to move to a different area. I didn’t think it would be the best idea to sell it within such a short period of buying it, so I decided to rent it out. I learned a few things from the time I owned that property, and hope to learn many more with future properties. Here are some tips:
- Be clear with your tenants as to the acceptable methods of payment. I was living in Brampton while my rental property was in Hamilton. I wasn’t visiting the Hamilton area for anything else regularly, so I didn’t want to drive there just to pick up cheques or cash. We agreed that e-mail money transfer would be best.
- Be clear with your tenants as to the preferred methods of communication, and the expected response time. I preferred text messages or e-mails, as they allowed me to look further into issues if necessary, or gather my thoughts before responding. If you work full-time outside of real estate investing, you should also make it clear that you will not necessarily be responding immediately. By doing this, your tenants won’t feel like you are ignoring them if they have to wait a few hours for a response.
- Develop relationships with local tradespeople (close to the rental property) who you trust. This is vital to reduce your level of stress. I had my tenants call me once about the dishwasher not working. Luckily, I was able to call someone I knew who specialized in the repair and sales of used appliances. The dishwasher was replaced without me having to interrupt my regular schedule or make a trip to Hamilton.
- Think ahead when getting the property ready for tenants; anticipate the problems they could have. My property closed in the summer, and that is when the tenancy began. When the winter hit, I received a call from my tenants saying that the master bedroom was far too cold to stay in or shower in. The problem was that the master bedroom was directly above the garage, and insulation was severely lacking. This is something that was not checked during the home inspection when I purchased the property. I had to contact an insulation company and have the work done on a rush basis. If this was discovered during the home inspection, I might have been able to seek a reduction in the purchase price.
- Conduct a thorough walk-through inspection with the tenants prior to the tenancy. Have them sign the inspection report. I didn’t do this, and I received an e-mail from my tenants with a picture attachment of a large hole on the back of their child’s bedroom door. They said it was already there, and they wanted it repaired. I hadn’t noticed it before, and to this day don’t know whether or not the damage existed prior to the tenancy.
- Have a reasonable understanding of the Residential Tenancies Act. This doesn’t mean you need to read the legislation or memorize anything specific. The Landlord and Tenant Board’s website has a very useful FAQ page, as well as brochures on various topics. You should at least know where to find relevant information.
- Keep a detailed record of all rent and expenses. If you want to excel at something, it helps to be able to track your progress. This will also help you from an accounting perspective.
I hope some of these tips will be helpful to you in your role as a landlord. If you have any questions, please feel free to contact me at firstname.lastname@example.org.
Written By: Vic Bansal, B.A. (Hons.), J.D., Associate Lawyer