Have you considered moving from your home and said, “why don’t we keep this current home and rent it out?”  Many have considered this and John Weber talks about some of the pros and cons of owning an income property.

Q: What are the benefits of an income property?

The benefits are if you buy at the right price, if you hold it long enough, somebody is going to pay your mortgage for you. In the City of Barrie that property is going to go up in value approximately 5% per year. So it’s a good, solid, investment under the ideal conditions.

 

Q: What are the downfalls?

You are dealing with the unknown, you are dealing with renters. Every renter is different. They can be really, really nice on the surface and they have good intentions. Then things change. Everything in Ontario is set up to be in the tenants favor. The whole tenant-rent review board and all the rest of it, is provincially legislated, it is really really angled towards the tenant. Being a decent reputable landlord, you can find yourself in some really tough situations. Things get damaged, property is really almost destroyed and you don’t have a lot of recourse.

 

Q:Can there be legal issues involved?

There can be lots of legal issues from smoking to pets to nonpayment of rent. Trying to solve those problems, it can be really really challenging.  Again, basically the courts and the province say the tenant has to be protected. Well, they are more than protected. So then the landlord has to go in and get involved with a lawyer or take it to small claims court. Even small claims court you probably need some legal advice when dealing with tenants.

Q:Which properties do better as income properties and what features should buyers look for?

The big thing is whether it is maintainable? Is it an older home? Probably not a good idea. Some of them have 40 or 50 years on them and the repairs will be higher. If it’s relatively newer, a cookie cutter from a builder, those tend to rent fairly well. They are fairly popular. A house that is not going to need a lot of maintenance or a lot of upkeep. Not something with beautiful gardens because a  tenant isn’t going to look after the garden.

Don’t do it if it’s something you care about and cherish. You sort of think, that’s a lovely home but my partner and I both have a home, so we will rent one out. If it’s something you care about I wouldn’t be in a big hurry to rent it out.

 

 

 

Q: What can home owners do to protect themselves when renting their property?

What you can do is use a property management company that does work on single home people. You don’t have to have 4 or 5 properties to rent out, some of them will work landlords that only have a single apartment condo or home. Get somebody professional to rent it out for you. They will do the background checks, employment checks, referral checks and they will protect the landlord as much as possible. Not that they are perfect, but it is a better system than winging it on your own.

They do charge for it, its quite reasonable. There are two different levels. You can have full service property management company that will even go and pick up the check and you have no contact with the renter at all. That costs more. Or there are people like, in our company, there is somebody by the name of Lloyd Jensen that does a lot of rental and he has for over 20 years. He will rent it out, he will get the people in there and he will help out through the whole process. I think he charges a nominal fee for that service. There are options out there.