Investing in a rental property can be a great way to expand your current retirement portfolio. As with all investments there are some potential risks. However if you manage it well the long term gains can be substantial and can be less risky than the stock market.

The first step in buying your first rental property should be consulting with an experienced Real Estate Agent that knows the rental market in your preferred area well, and one that has done leasing in the past. Your Agent can advise you on market rents for specific neighbourhoods, and recommend which areas to avoid. An Agent experienced in the rental market can make recommendations on the style, size, and types of properties that are most desirable to renters.

Next, start your search. When I am showing properties to my clients that are looking to buy their first rental property, I often recommend that they should buy a home that they could see themselves actually living in.  Your Agent can also advise you what updates to décor or property repairs required that you should consider that will get you the highest rents.

Once you find a property your next step is finding the most ideal tenants. Some landlords prefer to do their own advertising, property showings, screening of applicants, and lease preparation. Many others hire the services of a property management company or a Realtor that has experience with rentals, to take care of these tasks.

When I work as the Agent for an Investor, I handle all of the showings of the unit. All of the applicants are pre-screened for the Landlord by confirming their employment and income, I contact their references and credit history and do personal interviews with the applicant.

Thorough research of the applicant is a necessity. Although not fool proof, it does help avoid problems in the future. 

Once you have chosen your preferred candidate you must prepare the lease. You can purchase one at Staples, or your Realtor will can prepare one for you. The lease should include several clearly written clauses  to protect you, explaining when the rent is due, the rental amount, what the tenant cannot do to the unit without your permission (such as paint), what utilities the Tenant is responsible for and what appliances are included. These are just a few examples.  There are several others that should be added. 

Once signed, to secure the unit the tenant must provide you with their first and last month's rent deposit. Security deposits are not allowed in Ontario. I also require the Tenant's to secure a Tenant's Property Insurance policy for their personal property, with at least $1,000,000 liability insurance. They should provide you with a copy of the policy, prior to their move in date.   

After they move in, it is important that you work on building a strong Lanldord/Tenant relationship. Always respond to their calls or concerns as soon as possible. I recommend allowing the tenants to personalize the home with paint or through gardening as long as they allow you to approve the colours etc. Always provide a minimum or 24 Hours (preferably a few days) written notice for any visits or seasonal maintenance. If possible, I suggest that you don't raise the rent (unless it's absolutely necessary) if your have a reliable tenant that you have had a good report with if they elect to re-new their lease.

A happy tenant is more likely to take better care of the unit, pay rent on time, and stay longer which ultimately saves you money down the road.

For information on the Landlord Tenant Act, go to:

http://www.ltb.gov.on.ca/en/STEL02_111286.html

This site explains all of your rights and responsibilities, and gives you free access all of the proper forms that you may need in the future. 

I hope you found this helpful, and if you have any questions regarding buying a rental property, or how to prepare a lease feel free to contact me! As a Durham Region Real Estate Agent with substantial experience in leasing rental homes it would be my pleasure to assist you! 

Christie Stefan, Sales Representative, Sutton Group Heritage Realty Inc. Brokerage 

I have a passion for assisting clients with various real estate needs. I am a trusted and well trained professional who strives to provide you with the best solution.

Clients are impressed by the dedication and effort I put into making sure that they receive top quality service and amazing results. Explore my website to find detailed listing information, features that suit your real estate requirements.

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