8 Things to Know About Renting Out Your Condo in Toronto
Renting out real estate is a great way to earn a passive income while allowing someone else to pay your mortgage for you. Over time, your property will increase in value as the loan is paid off with the help of your tenant.
If you have a condo that you're thinking about renting out, there are plenty of factors to consider. Let's get into them.
Find Out if Your Condo Corporation Allows Rentals
First things first: does your condo let owners rent out their units? If not, your ability to become a landlord stops here, unless you've got other properties to rent out. Otherwise, you should find out the exact rules surrounding renting in your complex.
Even if you are allowed to rent out your condo, you should determine the specifics, such as the particular regulations associated with the condominium. For example, you may be allowed to rent, but only a certain percentage of units in the complex may be rented out at any given time.
It's important that both you and your tenants are aware of the rules to ensure a successful arrangement.
Understand All Local Tenant & Landlord Laws, Rights, and Regulations
Not only will the condo have its own rules about renting, but so will the city and province. It's important that you find out what your rights and responsibilities are as a landlord, as well as what rights and requirements tenants must follow. If you or your tenant breach any of these regulations, you could wind out in court fighting over them.
Boost Your Insurance Coverage
You should have insurance to cover your belongings in your condo. But if you're renting it out, you may want to add a little more coverage to protect yourself.
When looking into an insurance policy, think about investing in a policy that covers various equipment, too. Plus, certain policies may consider any liability or harm to protect in the event that someone is hurt on your property.
Consider Property Management
If you can spare the time to take care of the rental property, then you can save yourself some money. But this also takes time and can be a hassle, especially if the tenant is needy or problematic.
Instead, consider dedicating a certain amount of money each month to paying a property management company to take care of everything for you, including advertising the unit, screening tenants, and collecting rent cheques.
Be Thorough With Tenant Screening
The wrong tenant can be an absolute nightmare for you as a landlord. It pays to take the time and effort to thoroughly screen prospective tenants since you'll be stuck with them for a while.
Make sure to do the following when looking for tenants:
Get permission to pull their credit report
Ask for references
Check on their employment history and current employment status
Ask for first and last months' rent
Get information about any pets
Find out who will be living in the unit
Ensure You Have an Airtight Lease Contract
Hire a real estate lawyer to help you draft up a lease agreement. This will ensure that all appropriate terms and conditions are included to protect you.
Crunch the Numbers To Make Sure It's Profitable
You want to make a profit on your rental, or at least break even, As such, it's important to do some math beforehand to see what type of return you can get.
Consider expenses such as utility bills, property taxes, insurance, mortgage payments, and so forth. Deduct these expenses from the rent you plan to charge to see what you'll be left with each month.
Establish a Rent Price Based on the Current Market
You want to charge a rent price that's profitable for you, but it must also be in line with what the current market dictates. It'll be tough for you to find a renter who's willing to pay a lot more than what they can get with a similar unit elsewhere.
Get some help from a local real estate agent to see what the current rent price is for the type of unit you're renting in your area.