Four Simple Steps To Becoming A Successful Landlord
While our expertise and focus is on buying and selling real estate, we have plenty of clients who have chosen to rent out their property and we are happy to share our top four tips on becoming a successful landlord.
We want to draw your attention in particular to finding the right tenant as that is the most important step in our opinion—and don’t be afraid to get professional help from a property manager if needed.
1- Create an amazing rental listing
Now, this tip is one we are very familiar with as much of the same principles apply for listing a property on the market—whether to sell or rent, it is crucial that you draw people in and make them want to live there. To do this, great photos are everything. I am sure we can all think of the rental listings we’ve seen that show messy rooms, no clear layout, bad angles, and lighting. Don’t be that person!
Make sure to also list all the necessary details so you don’t deal with the same questions from every person. This includes the following:
- Is it furnished?
- What is the square footage?
- What is the length of the tenancy?
- Are pets allowed? If so, are there any restrictions on size, number etc.?
- Is there a parking spot and/or a storage locker? Is this price included in the rent?
- Are utilities included? Though we would recommend against doing so given the rising cost of utilities and government limits on rent increases.
- Are there any building amenities?
- What’s the neighborhood like?
Lastly, be realistic about the price point. It’s a good idea to have a look at similar units to yours in the area to make sure you are competitively priced.
2- Make sure to do your due diligence on finding the right tenant
We have all heard of the horror stories of non-communicative people, unpaid rent, damages, and the long process it can take to remove tenants in BC. We cannot overstate how important it is to effectively screen your potential tenants.
It is a good idea to have an application form that interested people can fill out that includes all relevant information about them including their rental history, employment details and allows you to do a criminal and/or civil check and a credit check (the tenant can do this for free and give you a copy).
A good place to start is doing a quick Google and social media search on anyone you are considering – make sure they are who they say they are. But do actually check references and ensure they are legitimate. Again, Google can be your best friend here – check the name and phone number and make sure it matches up to what you’ve been told. It is also important to speak to at least two past landlords in case the current one is desperate to get rid of them. It is also always helpful to talk to their employer reference to make sure their income is accurate and their employment is steady.
And remember, you don’t have to provide a reason why you aren’t renting to someone – you can be vague as this can come back as a human rights issue down the road.
3- Create an iron-clad tenancy agreement
This is crucial to protect both you and the tenant. You can download the standard one on the BC Government website but we would recommend you include an addendum with any additional expectations you may have. This is also a good place to include bylaws for the tenant to be aware of, as they will be taking on that responsibility.
As part of your agreement, you will be collecting a security deposit – but keep in mind, this cannot exceed more than half of the monthly rent amount. It is also important to note that you are mandated to keep the security deposit during the tenancy and pay interest on it in accordance with the regulation.
Make sure you also do a condition inspection report with the tenant before they move in—this will ensure that any damage that may occurs can be documented and the tenants can be held responsible for paying for any needed repairs.
4- Get advice from your accountant
Before you start renting a property out it is prudent to talk to an accountant to make sure you have a fulsome understanding of what it means to transfer a property from a primary residence to a rental as this will impact your eventual capital gains and the implications of tax when you eventually sell.
To learn more about capital gains, check out the following previous West Haven Group blogs: Do You Pay Tax When You Sell Your House?, Capital Gains in Vancouver- How to Reduce Your Taxable Income or How Do I Report Capital Gains in BC?
We hope that was helpful. If you are you are a new landlord or thinking of becoming one, we recommend visiting Information for New Landlords on the Government of BC’s website which offers an extensive portfolio of resources as well as guidance.
Please don’t hesitate to reach out if you have any questions about starting to rent out one of the properties we have helped you purchase – we are here to help and can offer introductions to real estate lawyers, photographers, property managers, accountants, and many other helpful people to get you all set up.