Today I want to share the highlights of my recent presentation at RBC Bank about buying and maintaining an investment property.
For this presentation, I covered some key property investment considerations, including how to choose a good tenant, what a landlord’s obligations are, and how to manage a property.
First, though, I addressed one of the chief questions people often ask me: “Why do you want to deal with tenants?”
I then explained how I got into the property management business to begin with. 10 years ago, I was in Dubai selling pre-construction condos and realized that the only way I could make 16 sales at one time was by opening a property management company. My first experience with dealing with tenants was when a family came to me one day and told me they’d give me their five properties, but only on the condition that I handled their first eviction. When I gathered a team of sheriffs to enforce the eviction, we opened the door to the property only to find out nobody was home.
Now, the first thing you need to decide if you want to get into property management is where to buy your property. To determine this, talk to a Realtor so you understand the costs and objectives and you can figure out your long-term goals.
To choose a good tenant, there are certain criteria you need to follow. First, you want them to be able to keep the property clean and inform you of anything that needs to be repaired. You also want them to be able to handle the small repairs themselves. Remember, all of your money is in how you screen your tenants.
I find that many landlords are in a rush to get their properties rented out because they want to avoid vacancy. This is especially true for landlords in brand-new condominium buildings who have to rent their properties at a cheap rate and can only increase that rate by 1.8% between now and the end of 2018, according to the new rental guidelines. I caution against rushing to get your properties rented out, because there are a lot of professional tenants, professional agents, and scam artists out there.
There are several potential reasons to evict a tenant, including nonpayment of rent, persistent late payments, illegal activity, interfering with others or overcrowding, and undue damage.
What are your obligations as a landlord? You must provide a safe property that’s in accordance with fire regulations. For houses, this means providing a smoke alarm and carbon monoxide detector on every floor. For condos, you don’t need to provide a carbon monoxide detector, but you do need to provide a smoke alarm. The heating, plumbing, and electrical systems also must be functional in your property, and the structure of the building must be maintained. Additionally, the refrigerator and stove must be operational at all times, and all common areas of the property must be clean.
There are several laws that were implemented by the Rental Fairness Act, but one in particular I want to mention involves landlords who want to move back into their investment property. If you want to move back into your property, there are certain regulations you have to follow.
First, you have to give the tenant occupying the property the equivalent of one month’s rent or find them a new property yourself. Then, you have to file an N12 form and attend a tribunal in order to prove that you’re actually moving back in. If you don’t move back into the property and the tenant that you asked to leave finds out, you can get fined up to $25,000. My team and I work closely with our landlords, so if one of them is in this kind of situation, we offer to help them represent themselves during the tribunal process.
If you would like to watch my full presentation, click here.
If you have any further questions about property management or there’s anything else I can assist you with, don’t hesitate to reach out to me. I’d be happy to help you.