The 5 Biggest Mistakes That Landlords Make

09 July 2015

Real estate is one of the smartest investments that you can make, especially in a red-hot market like Toronto. Even though owning an income property can be a very rewarding experience, it’s important that you’re prepared for the responsibility and aware of the common mistakes that landlords can make when purchasing and renting out a property.

So whether it’s your first time being a landlord or you’ve been at it for a while, let’s take a look at the biggest mistakes out there so that you can avoid some major headaches in the future.

Not Researching The Location

Just like when buying a home for yourself, location is one of the most important parts of determining whether or not to pull the trigger on a property. Research the market to figure out which neighbourhoods will not just be popular right now, but years down the road. When renting out a property, location is very important because there needs to be sustained demand down the line as your tenants might change over the years.

Think about who your ideal tenants are and what might be important to them. If you’re thinking about renting out to university students, look for properties near major schools, transit, or nightlife. Are young families your ideal tenants? In that case, good schools and nice parks will definitely be a bonus if they’re nearby.

Not Putting Aside Enough Time To Be A Landlord

Being a landlord is more than just getting someone to sign a lease, it takes time and effort over the long-term. Property management can be a time consuming job, but it will pay off in the long run. First, make sure that you read up on Ontario’s landlord/tenant legislation and the rights and obligations both you and your tenants will have in a rental situation.

You’ll also have to set aside time to upkeep your property on a day-to-day basis. Things will break, your tenants will have requests and concerns, and your property will need to be taken care of; you need to keep your tenants happy and their home looking great to ensure that it’s always rented. This means that you should check in on your property and tenants regularly (while giving them the appropriate amount of notice) because they might not always mention small problems like broken windscreens or leaky faucets that could be bigger issues in the future.

Not Preparing Financially

Yes, an income property can be a great way to generate some extra income for your family, but that’s only if it always has a tenant. Don’t hedge your bets on your new property always generating you a certain amount of income, it should be supplemental and not something you rely on for your financial wellbeing. Don’t take a risk; do the proper accounting beforehand, so that your rental property doesn’t put too much financial strain on your household.

Not Running Proper Checks On Potential Tenants

As you may know, you can’t judge a book by its cover and you can’t necessarily judge a tenant by a phone call either. Waiting for a tenant’s rent to come in can be an anxiety-inducing experience, so give yourself peace of mind and run the appropriate checks before you get them to sign their lease. Whether it’s a credit report, references, or proof of employment, these simple procedures can give you a much better idea of whether someone will be a reliable tenant or a potential nightmare renter.

Not Thinking Things Through Before Purchasing A Home

Any real estate purchase is a huge decision and this is especially true for buying a rental property. Even though you won’t be living there, it will require a lot of time and consideration before you know that you’re really ready. Don’t rush to purchase a home or building just because it seems like a good deal. Get as much information as you can about a property and don’t be afraid to ask your realtor lots of questions. A real estate agent should always be an open book, prepared to tell you anything that you need to know about a property.