Are you ready to be a landlord?

Consider the following five steps to decide whether you are ready to become a landlord:

Understand the Responsibility Involved

First, you must determine whether being a landlord is an obligation you can even handle. The benefits of renting are numerous, such as the ability to generate passive income that covers the expenses and possibly even create a positive cash flow, the ease of tax breaks and the ability to deter the vandalism that often plagues an empty home.

However, being a landlord may not be as smooth as you expected. You need to stay on top repairs and maintenance, collect rent and potentially deal with problem tenants.

Prepare your home

Second, you need to prepare for the new tenant by thoroughly cleaning your home and making sure any appliances are working and are in good condition.

If you've decided that you are renting out a room or area within your house, make sure that you can secure that area from the rest of your home.

The next step is to write ads describe your property features that will “sell” and post it on major websites. Moreover, you need to consider the timing for rent. In general, Renters move in particular seasons; March, April, May, June, July and August are typically been the best times to locate a tenant. It is also necessary to make sure you have enough money to cover all the expenses during the period of vacancy. Normally it takes 6-8 weeks to rent out your house.

Hire professionals

It’s important to hire lawyers to draft a lease agreement making sure that it follows local laws.Furthermore, you need to work with a mortgage broker to check out renter’s credit history.You also need to find out which expenses is tax deductible.

In case of any incurred landlord-tenant issues, you may seek legal assistance to protect your rights. For more information, please check the Landlord and Tenant Board Ontario website.

Set a Competitive Price

Do a research to know the average renting price in your neighborhood and the conditions of those rental properties. Then set rent at a competitive price and make sure you highlight all the most valuable aspects of your home.

Select tenants carefully

Remember, you need to choose your tenants very, very carefully. Always check tenant’s credit history and ask tenants to provide the proof such as two most recent pay stubs, an employment letter and their previous landlord contact info.  Plus, trust your gut feeling to find tenants who will not only pay the rent on time but also maintain your house in good condition.

Once you’ve found a right tenant, ask for a reasonable security deposit (usually it’s the amount of the first and last month rent) and arrange a payment schedule.

In general, tenants will cover all utilities i.e. water, electricity, gas and water heater rental. You may choose to transfer the utility in tenant’s name. However, if your tenant fails to pay the bills, the unpaid amount will reflect on your property tax. On the other hand, you can still keep the utility in your name and collect the amount when you receive the bills.