Though every investment always comes with varying degrees of risk, there are a lot of reasons why you should invest in rental properties.
Aside from the long-term investment potential, having a rental property offers a lot of tax benefits and regular cash flow. That is why a lot of homeowners choose to become a landlord and buy rental properties.
Whether you’re planning to rent out your old house or buy a separate rental property for short term rentals Toronto, there are a couple of tips you need to follow to ensure you’re doing everything right. Here are some of them:
Prepare for the Job
Though the financial gains of owning a rental property might be great, being a landlord is also an extremely difficult job. Aside from collecting the rent and maintaining the property, there are a lot of other things you need to consider when you’re a landlord.
If you want to do the job on your own, you should expect to take care of the financial aspects, promotions, and marketing along with all the other tasks. This includes repairs, maintenance, enforcement, lease agreement preparation, and tenant screening.
Make the Property Rentable
If you want to become a landlord, you’ll need to know the basics of how to rent your property and prepare it for future tenants.
Keep in mind that preparing your rental property for rent isn’t just about making sure it looks great. You also have to make sure that your property meets all the state and municipal housing codes.
Because of this, you might need to hire a professional house inspector to see if your rental property is up to code.
It’s easy why a lot of people want to become a landlord. Rental prices are constantly increasing. The truth is that rental prices increased by 15-20% from 2019 to 2021 alone.
That is why you need to set a reasonable rental price for your property. This will help you ensure you’ve got a more accurate estimate of your income potential.
Make sure you think about local rent control laws, the rental value of similar properties, characteristics of your rental home, and other factors that influence changes in the market.
You also have to calculate your expenses. This includes vacancy expenses, HOA fees, property taxes, insurance, repairs, maintenance, mortgage payments, and more.
Understand the Reason You Want to Become a Landlord
Before you start renting your property, you should know the reason why you’re doing it. Why do you want to rent out your property? There are 3 common reasons why people choose to rent a property. This includes:
- They want to create another source of passive income
- The current housing market condition does not favor them to sell the house
- You want to keep your property as an investment and wait for its value to appreciate before selling it.
If you relate to at least one of these reasons, then you have an excellent reason why you want to become a landlord. However, there are also other reasons that might not be listed here.