4 Tips to Prepare Your Toronto Rental Property for “Forever Renters”
With real estate prices being out of reach of even well-salaried Torontonians, we’re at the start of the era of long-term renting. This makes it extra important to vet tenants properly, make sure your prices are set right initially, and all of your legal obligations as a landlord are met in terms of the upkeep and ongoing maintenance of the property. It’s also the right time to start looking at a property management company to protect your investment.
Setting prices right
A long-term tenant gives you only one opportunity to get your monthly rental rate right. Many rental property owners who only have one or a few properties make the mistake of setting the rental rate too low. Sure, this will fill the vacancy quickly, but the long-term drawdown on your investment is worth much more than the property being vacant for an extra month or two.
First, look at the rental prices for similar properties in your area. Rentseeker, Kijiji and other websites will allow you to do this. Don’t set your rate in the middle of the range of prices – set it at the highest end. This will give you the flexibility to lower it if necessary rather than getting too many applicants because you’ve set the price too low. If you engage a property management company like Highgate, you can let the experts do the math for you.
Vetting long-term tenants
Making sure you have proper vetting in place for tenants is a must, no matter how long-term the rental will be. However, it becomes more important to vet them properly since each renter may be a potential long-term renter in today’s market. Accept nothing less than impeccable credit and check their previous landlord references (and make sure their references are actual other landlords and not their Uncle Joe).
While you want to keep emotions out of business as much as possible, if you have a bad gut instinct about someone, don’t rent out the property no matter how good their references look. Usually, instincts are right – unless you are paranoid, in which case you need to work on that to be a successful landlord.
Setting money aside for repairs
Again, while this is something most landlords should be doing, it may not be something you are doing in practice. If you want a easy practice to follow, set aside 10% of the tenant’s monthly rent for repairs, maintenance and appliance replacement. DO NOT take from this fund, as you never know when you will need a major repair or replacement. At the very least, you’ll be using it to revamp the unit when the tenant vacates.
Get a lawyer
If you don’t yet have a real estate lawyer, make a connection with one. Long-term renters need more ironclad legal tenancy agreements that are drawn up in accordance with the Residential Tenancies Act, and it is always good to have them on hand for advice.
Realistically, long-term tenants require the same care and attention as short-term tenants do – it’s just more important to make sure you’re following the proper steps so you don’t get locked into a low monthly rental rate, accept bad tenants for your unit, or any of the usual pitfalls since the consequences could be worse with a misstep if the tenant is in the property for a long period of time.