5 Important Things to Know Before Becoming a Landlord
I became a landlord in my twenties, after buying a cheap house, living in it for a while, and then relocating for work. Rather than sell the property, I decided to rent it out.
Choosing to rent out a house that you’ve lived in and love is not an easy decision. I had put time and sweat and money into making my house a home for me – with the paint colours and finishes that I liked. It wasn’t a fancy house, but it felt like mine. Offering it to someone else felt very… personal, like inviting someone into your space and never being able to ask them to leave.
As an introvert, renting was also a bit more challenging. I knew I would likely have to advertise, post pictures of my home on the internet, and talk to lots of people about their situations in order to find a good tenant. Just by fluke, I ended up getting a tenant through word of mouth instead, so I didn’t have to worry too much about it this time around! But I know in the future that putting myself and my house in the public eye is a risk I have to accept.
Having tenants ended up being a very positive experience. Financially, it’s really nice to have that little extra income coming in each month, and the rent covers the mortgage payment on the house. But also, because I’m renting a house in a rural area, it feels good to contribute to the housing stock, and give a safe and clean place to live to other young people like I was when I bought the house.
Whatever your motivations for renting out a property or becoming a landlord, so many negative situations can be avoided with good preparation, relationship building, and clear expectations.
Here are five important things to know before becoming a landlord.
- Write everything down. If it isn’t in the lease, or in the attached schedules, then it doesn’t exist. It isn’t that you don’t trust your tenant; trust is important in the relationship. But things can happen, circumstances change… other people are unpredictable! Writing everything down, and being very clear in advance about your expectations can help build the relationship on solid footing.
- Choose your tenant carefully. I was really lucky – I knew personally and professionally the tenant who ended up renting my house. It’s easy if you live in an area where housing is scarce, to have many many applicants for a house or unit, and to get bogged down in choosing. Some factors to consider include obvious things like, is the person employed, do they have pets, do they seem responsible… But less obvious things can be who they choose to give as references, do they have small children who are likely to go wild with the crayons on your freshly painted walls, and even thinking about how long you expect they will stay. If you’re looking for a year after year tenant, maybe someone with a family and a job in the region makes sense. If you want to have access to the property again though after a year or so, perhaps someone who seems likely to move again, or someone with a more transient job would be a better choice.
- Pricing your rental can make a big difference. This feels obvious – of course, the amount of rent you get for your unit or your house can have a direct impact on your back account, or your financial comfort level. But the price you set can also dictate who is able to rent your unit, and who would want to. I knew I was renting my house at a time and in a place where there was not a lot of choice for tenants. There were very few options, so I knew I had a captive audience for my unit. I could probably have hiked up the rent, and forced tenants to have roommates, or really narrowed my possible tenants to wealthier people. But I wanted to consider the kind of tenant I wanted; I knew I might not want someone for more than a year. I wanted some flexibility. And I didn’t want someone who was going to be very demanding about maintenance. It can help to make a list of the qualities you want in the tenant, and then price accordingly. Just because the market can handle a really high monthly price, doesn’t mean that those are the tenants you want!
- Being a landlord can be profitable on a month to month basis, but can also be time consuming. One of the big fears I had going into this whole landlord situation was the amount of my time that could be taken up with it. While I knew I would make some money off the rent, I didn’t want my role to take up so many hours that the price wasn’t worth it. I felt confident that if I needed work done on the house, or maintenance, that the tenant would let me know and I could access those services. But if I hadn’t been so sure of that, I might have felt that this whole situation would take up way too much of my down time! Fortunately, there hasn’t been much need for the tenant to contact me, but when things happen – the power goes out, a window cracks, whatever – you have to be available. Make sure you feel ready to take on that commitment.
- Everyone is self-interested. Tenants care about what matters to them! They want things in the house to work. They want the apartment to be well cared for. They want the landlord to be responsive. They don’t care about the things you, the landlord, might care about. Recognizing that reality, how can you create systems and a relationship that protects both you and the tenant, and your different priorities? Building a relationship with the tenant can create a positive rapport. Understanding where the other person is coming from, and being prepared for what might bother them in the future, sets up the relationship for success.
Have you ever considered being a landlord? What fears and concerns do you have about the process?