Are you looking to supplement your income by becoming a landlord, either by investing in a rental property or by moving on from a smaller 'starter' home and converting it into a rental?
Here are some tips to help first-time landlords navigate the property rental business.
UNDERSTAND THE LEGALITIES
Familiarise yourself with the Rental Housing Act and the Consumer Protection Act (CPA).
You must have a written lease agreement that all concerned parties understand. The lease must contain all the information about the tenancy, such as the start and end date, the rental amount, deposit details, the use of the property, and conditions around how disputes will be addressed.
You will need to provide your tenant with a copy of the signed agreement and issue the tenant with a receipt for every payment received.
FACTOR IN ALL THE COSTS
Research what you can charge for rent on the property. Then, estimate your expenses to calculate your profit. Remember to include costs like bond payments, insurance, levies, maintenance, and cleaning in your calculations.
Make sure you are in a relatively secure position financially as unforeseen circumstances can deal a blow to your finances. If you have an access bond on the property, you could use this to cover any larger-than-anticipated expenses in an emergency.
SCREEN POTENTIAL TENANTS
It is vital to do a proper credit and background check on a new tenant. If you’re managing the rental yourself, ask the prospective tenant for a certified copy of their ID, three months of bank statements, proof of income, and references from previous landlords. You can also approach an online data aggregator to do these credit and background checks after you’ve received consent from your prospective tenant.
CONSIDER HIRING A RENTAL AGENT OR PROPERTY MANAGER
If you want your passive income to be a bit less active, hire someone to do the hands-on management of your rental. A professional will know all the legalities in renting a property, how to screen tenants, deal with disputes, and collect payments. This comes at a cost, so it's up to you how much time you think you’d need to set aside to manage a property
CREATE A NETWORK OF CONTRACTORS
You may be handy around the home, but repairs on your rental may take up more time than you’re willing to give, and some repairs may fall out of your area of expertise. Create a list of trusted maintenance people (electricians, plumbers, and painters) you can call on.
UNDERSTAND YOUR RESPONSIBILITIES
Your first responsibility is to ensure that your property is fit for rental purposes and well maintained. You also need to be available to your tenants whenever issues regarding the rental arise. If you receive an emergency request for a repair, you must attend to the issue in a reasonable amount of time.
Most importantly, make sure you keep on top of maintenance. Don’t let months go by without popping into the property to ensure that your tenant is keeping it clean – not everyone is as tidy as you. This will make a future transition to a new tenant less onerous on you and less costly in the long run.