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How to Be a Successful Landlord
Becoming a real estate investor can be incredibly rewarding. By becoming a landlord, you are simultaneously building home equity, generating passive rental income, and strengthening your investment portfolio with one of the oldest and most secure forms of investment.
You are also providing a home to one of Canada’s many renters and contributing to the housing solution the country so desperately needs, while building your future.
But what does it take to become a great landlord with long-term investment success? Much of it starts with laying a solid foundation and having the right team to support you and your property. Learn what you will need to have a prosperous, smooth-running rental so you can start off on the right foot!
What You'll Learn...
- Acknowledge the Commitment and Work Required
- Understand the Financial Details
- Learn the Landlord and Tenant Rules
- Stay Updated About the Rental Market
- Know What Tenants Want
- Prepare for Challenges
- Create Protocols for Each Step
- Simple Task Checklist For Landlords
- Basic Skills Every Landlord Needs
- Your Shortcut to Real Estate Success
- Key Takeaways
Acknowledge the Commitment and Work Required
The first requirement is having a realistic mindset about becoming a landlord. There will be real money, time, and effort involved, especially at the beginning of this journey. You should have a grasp of the different tasks involved, whether you tackle them yourself or hire an expert to handle them. These include:
- Understanding the local rental market
- Communicating with tenants and vendors
- Following provincial rules and regulations
- Conducting home inspections and repairs
- Budgeting and bookkeeping effectively
- Understanding the local rental market
- Communicating with tenants and vendors
- Following provincial rules and regulations
- Conducting home inspections and repairs
- Budgeting and bookkeeping effectively
You will also need to stay on top of daily, monthly, and yearly tasks, such as scheduling regular maintenance, collecting rent, and filing taxes. Protocols will need to be established for the end of each lease, including moving, inspections, cleaning, marketing, screening, and paperwork. Once you have a firm grasp on the work required, you will be better prepared for this exciting journey.
Understand the Financial Details
Practically, you will also need to have the right capital. What funds do you need exactly to become a landlord? First, you will need enough to purchase and hold a property, which means having a 20% down payment and enough for closing costs. You will also need to set aside an emergency fund for unexpected expenses and long vacancies, when there will be zero income to cover carrying costs. These long-term costs typically include:
- Mortgage payments
- Property taxes
- Insurance
- Utilities (if applicable, tenants usually cover utilities)
- Maintenance fees (if applicable)
- Property management (if applicable)
- Mortgage payments
- Property taxes
- Insurance
- Utilities (if applicable, tenants usually cover utilities)
- Maintenance fees (if applicable)
- Property management (if applicable)
Next, you will need to do some math. When you begin selecting a property, you must calculate the potential returns in order to pick an investment that will best help you reach your financial goals. For example, you may be investing to prepare for your retirement, which means you will want to generate enough passive income to support your desired lifestyle by the time you stop working.
Or you may be investing to provide generational wealth for your family, which means you will want a property that offers steady and predictable income that outpaces inflation for many decades. Whatever your goal is, you will be investing so that your money works for you (otherwise, you will always be working for money).
In order to best work out what kind of investment returns you are aiming to achieve, it is recommended that you talk to an experienced real estate agent and financial advisor who will be able to crunch the numbers for different properties and help you understand what your expected landlord earnings will be.
Learn the Landlord and Tenant Rules
One of the most important things to keep in mind is the law. In Ontario, landlords and tenants are governed by the Residential Tenancies Act, which outlines the rights and responsibilities of both parties. It also sets out rules about proper notices for when you are making changes to the lease agreement.
For landlords, the basics to be aware of include rules on rent (including deposits and rent increases), tenant privacy, advance notice, lease start and end dates, and legal eviction procedures. It’s a good idea to always have a real estate lawyer review contracts and notices before you sign or send them out.
Stay Updated About the Rental Market
The best investors are those who understand exactly what they are investing in and can make informed decisions that serve their long-term goals. For landlords, this means staying up to date on the real estate market, including changes in property values, rental rates, and even tax policies. All this information is vital to operating efficiently and remaining profitable.
One of the easiest ways to keep abreast of real estate news is to follow GTA-Homes! We provide regular market updates via our email newsletters and on social media platforms, so investors always know what is happening and how to respond. You can also register to connect with an experienced real estate agent directly, who can personally help you navigate the market. Our award-winning guidance has helped countless clients excel as landlords and homeowners.
Know What Tenants Want
A crucial element to your success is truly understanding what tenants want from their landlords and rental homes. This will help you maintain a good relationship and ensure that your investment is fruitful. After all, there’s nothing worse than investing in a property that simply does not attract renters and cannot generate reliable income.
You will need to research the local market to see what most tenants are looking for. For example, in cities, many renters will be urban professionals who want easy access to everyday conveniences; meanwhile, in family-focused suburbs, many people want to be close to schools and parks. Student renters, of course, want to be close to their schools. You can target investment properties accordingly and ensure they have the features future tenants desire. A seasoned real estate agent can help you understand the local market and perceive what renters are looking for so that you can best position yourself as a landlord and investor.
Prepare for Challenges
Realistically, you must also be ready for various problems that may arise. Common issues you may encounter as a landlord include:
- Broken appliances or home systems
- Property damage and potential liability
- Flooding, leaks, and pest control
- Difficult tenants (rent arrears, eviction processes, etc.)
- Long vacancies
- Cash flow problems
- Broken appliances or home systems
- Property damage and potential liability
- Flooding, leaks, and pest control
- Difficult tenants (rent arrears, eviction processes, etc.)
- Long vacancies
- Cash flow problems
To protect yourself legally and financially, you will need a good lawyer in your back pocket as well as comprehensive landlord insurance to handle various situations. You can avoid many tenant-related problems with proper screening, but you will also need to know how to build strong tenant relationships to triumph in the long run.
You should also have a rainy day fund or financial buffer to cover major expenses, especially if the unit is vacant for many months and you will still need to shoulder the property's carrying costs (e.g., mortgage payments, property taxes, and utility fees). Taking these steps to prepare will help you avoid bigger headaches, should they occur down the line.
Create Protocols for Each Step
As a landlord, you are fully in charge of your investment property, which means you dictate how it is managed. The best way to manage your rental is to establish protocols for all required tasks, from maintaining the unit to handling tenants and tracking finances. Once you have systems in place for everything and a strong team to support your investment journey, you can enjoy a growing investment providing you with many years of passive income. You will also be able to scale up and reproduce similar results with other rental properties!
Simple Task Checklist For Landlords
- Set a financial goal for your property investment
- Build a professional team (realtor, lawyer, manager, accountant, contractor, insurer, etc.)
- Acquire the right property for your needs
- Prepare the unit for tenancy and advertise availability
- Screen tenants and sign a lease agreement
- Manage and maintain the rental unit
- Track rental income and property expenses
- Files taxes accordingly
- Stay informed about the real estate market
Basic Skills Every Landlord Needs
- Property Care: You should have a basic understanding from your experience owning your home, so you can handle minor maintenance and repairs for your investment. For larger issues, you will want to have a skilled contractor on hand.
- Communication: Aim to build a good landlord–tenant relationship through strong communication. You’ll also need this skill to work with your team and keep things running smoothly.
- Math & Accounting: Stay on top of the income and expenses for your rental property, and file taxes on time each year. This knowledge is also important for selecting an investment with high potential returns.
- Organization & Time Management: You’ll need to regularly track multiple tasks and coordinate with different people. It’s vital to manage these responsibilities effectively to be prosperous.
Your Shortcut to Real Estate Success
If all this seems overwhelming, don’t be stressed! You can succeed with the help of GTA-Homes’ expertise. For over 2 decades, we have assisted real estate investors in finding ideal properties in prime neighbourhoods that renters love. We offer full leasing services to find and screen qualified tenants for you, and we provide property management so you can be a hands-off, worry-free landlord. While there is some hard work required at the beginning for your real estate investment journey (including saving, investing, and maintaining), every good thing in life requires effort. After all, if it were easy, everyone would be doing it! The years are going to pass by no matter what, so if you don’t prepare for the future right now, you will have nothing built up by the time tomorrow arrives.
Investing is much like tree-planting. You must spend time, effort, and money to buy a sapling, dig a hole, plant the tree, water it, and support it. After 10, 20, and 30 years, you will see it grow into a larger tree that provides shade, protection, and fruit for you to enjoy. It’s why there is a famous saying: “The best time to plant a tree was 30 years ago. The next best time is now.” Therefore, invest now and don’t delay!
Key Takeaways
- Becoming a landlord offers many benefits for investors, but it requires real work. Understanding this and preparing early can help you achieve long-term gains.
- You will need to have the capital to buy a property and shoulder the carrying costs. You will also need to set aside emergency funds to handle any cash flow challenges.
- Research is required to operate as effectively as possible. Make sure you learn about landlord-tenant laws, stay up to date on the rental market, and understand what renters want.
- Be prepared for challenges such as emergency repairs, uncooperative tenants, or long vacancies. You will need landlord insurance and a good lawyer, at a minimum, plus a rainy-day fund.
- The best way to thrive as a landlord is to work with experienced professionals who can guide you with their valuable knowledge and experience.
GTA-Homes is here to help you navigate your real estate investment journey and achieve long-term success. We have aided countless clients in preparing to be landlords, finding profitable rental properties, and continuously educating them about the real estate market.
Lean on our professional guidance and leasing services to reach your ultimate investment goals. Connect with us today!
