Five Things to Know Before Becoming a Landlord
The idea of owning a rental property, either stand-alone or converting your home to add a rental unit to make extra cash on the side, can seem quite attractive. However, it’s not as easy as simply cleaning out your basement and putting up a “For Rent” sign in your window or placing an online ad.
There are a lot of things you need to consider before you become a landlord — including addressing the issue of rental property insurance. At Archway Insurance, we want you to be properly prepared — and insured — before becoming a landlord.
Here are all the things you need to consider before becoming a landlord:
- Make sure you have the right kind of property to rent out.
- Familiarize yourself with your province’s rental rules and local zoning by-laws that may limit your ability to convert a property into apartments for rent.
- Learn how to properly screen tenants.
- Know how to do basic repairs.
- And of course, check your insurance coverage!
We’ll walk you through each of these, and also talk about how Archway Insurance can help you with your insurance needs as a landlord.
Making Sure You Have the Right Kind of Property to Rent
Before you get into being a landlord, think about what kind of investment or responsibility you want to take on. You can choose to rent out space in your own home — but that means you are losing some privacy and having to deal with things like additional noise.
You can also buy a house or a duplex and rent them out — but that means you now have the additional expense of a mortgage unless you have the cash available to buy them outright. It also means that you have less oversight over your tenants than you would if they were in your own home.
Learn Your Province’s Rental Rules
It’s very important you learn the rental rules for your province and local zoning by-laws before you start renting out your property. If you don’t follow the rules, you could face fines or have to shut down your rental completely.
Here are some things to keep in mind when researching the rules for rentals:
- Always check with official sites. One location you can start with is the Canada Mortgage and Housing Corporation (usually referred to as CMHC), which has a section dedicated to landlords and renters.
- Keep in mind that not all provinces will let you collect a damage deposit.
- Be aware that there’s lots of paperwork involved in being a landlord — you must always use official forms to make sure everything is legal.
Learn How to Properly Screen Tenants
The right tenant can make or break your experiences as a landlord. A dream tenant can make your life so much easier — and a nightmare one can make it so much worse. The last thing you want to deal with is a tenant who causes noise complaints, damages your rental unit, or stops paying rent.
Here are some good ways to screen your tenants:
- Do a credit check and ask for your proof of ability to pay (e.g. letter from an employer re salary).
- Ask for references from employers and past landlords.
- Use a tenant screening service.
It may seem like a lot of work upfront to screen tenants, but it’s well worth it. If you end up with a bad tenant, you could lose months of rent trying to get rid of them. A good tenant is worth the extra effort.
Know How To Do Basic Repairs
Another thing you need to do (other than make sure you have rental property insurance, of course!) before you become a landlord is to know how to do basic repairs.
One of the reasons people choose to rent is that they don’t want the hassle of doing upkeep or repairs themselves. This means that if anything goes wrong — from a leaky faucet to a clogged toilet — they will call you and expect you to fix it ASAP.
So you must be both knowledgeable and comfortable with doing basic repairs and have a good set of tools you can do repairs with.
It’s also essential to have a good relationship with a variety of professionals if the repairs needed are beyond your skills. Having an electrician, plumber and handyman on speed dial are essential to your success as a landlord.
Check Your Rental Property Insurance Coverage
If you are renting out a room or an apartment in your own home, you may not need to take on any additional insurance. If you are renting out a space separate from your own — e.g. floors in a house, or apartments in a duplex, you’ll need extra insurance to cover those buildings.
The best way to ensure you have the right insurance coverage as a landlord is to work with an insurance brokerage like Archway Insurance, who can guide you on what kind of coverage you need.
You’ll also want to confirm that any tenant renting from you has their own separate tenant policy. This protects the tenant (and you) should they find themselves responsible for causing a fire, water damage or other issues to your property. It will also cover additional living expenses in case their apartment is damaged and they need to leave it immediately, as well as the cost of replacing their damaged belongings.
What can Archway Insurance offer me in the way of insurance as a landlord?
Whether you’re renting space in your own home or run a successful property management company, Archway has you covered. At Archway Insurance, we’re here to provide for all your home insurance needs. Home insurance can cover all of the following for your rental properties:
- The building or house structure of your rental property and additional detached structures, such as a garage, fence and shed.
- Replacing lost or damaged belongings such as furniture and appliances that you provided to the renters.
- Liability for claims of personal injury or property damage suffered by a third party. In the case of a personal injury, this may even include your tenant injuring themselves.
We’ll discuss your rental property insurance needs and customize your coverage to ensure that you and your rental property are covered properly.
You’re all set!
Becoming a landlord is a lot of work — but it can be well worth it if you find the right space to rent out and the right tenants to work with. You can save yourself a lot of time and money by pre-screening your tenants and doing basic repairs yourself.
And of course, you need the right landlord insurance. We’d love to talk to you about what Archway Insurance can do for you! Call us at 1-833-536-0529 or contact us online.