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Real
estate investing can be absolutely beautiful! One of the easiest
ways to buy a house and get someone else to make your mortgage
payments is by investing in a house with a rentable basement suite.
You can ask a realtor to search the market for you. Be prepared,
some basement units are total dives. Some could be beautiful with a
change of paint and flooring, and some are already very
renter-friendly. If you are a handyman/woman, it can be very
satisfying to take an unusable or ugly space and transform it into
something that tenants would be pleased to call home.
There
are some things to take into consideration when buying a house with
a suite. Usually these suites are classified as “in-law suites”
or “summer kitchens”. Quite often that means that they are not
zoned for two families, and you will have to decide if you want to
continue in your purchase.
Not
all houses with suites are suitable for renting out. Naturally your
tenants will need a kitchen and a bathroom with a tub or shower. You
will need to have a separate entrance for your tenants, and there
will have to be adequate parking space. It is easier to rent out a
suite that has lots of windows and natural light. Often laundry
rooms are in the basement, and so unless you’d like to put in a
separate laundry, you will have to have access for both of you
without encroaching in each other’s space. Sometimes it’s quite
simple to reconfigure the space so that it addresses some of these
issues, by moving or adding doorways. If you don’t have the
knowledge to decide if these types of renovations are possible,
bring someone with you that can advise you. Here are some things
that tenants look for when choosing a rental unit:
-
Safe,
secure, separate entryway with plenty of lighting
-
Adequate
parking nearby
-
Clean,
bright living spaces
-
No
musty odors
-
No
mold or mildew
-
Quiet
upstairs neighbors and adequate sound barriers
-
Easy
access to downstairs
-
Affordable
-
Outdoor
space
It
is very important that you familiarize yourself with the Landlord
Tenants Act in your province. Regulations differ greatly from one to
the other, and some provinces act very much in favour of the
tenants, so if things don’t work out, you might regret not having
screened your tenant properly. Here are links to the websites for
the provinces and territories:
How
much can I charge?
The best way to find out what suites are renting for is to pretend
you are looking for a place for yourself. Look online and in the
newspapers. If you want to check out to see how other places compare
to yours, go ahead and make an appointment to view some of the
competition. You don’t need to tell them why you’re there. You
should be able to get a pretty good idea of how much suites are
being rented for.
Advertising
your suite
Many people advertise on free websites like Kijiji,
Craigslist
or more local sites. Take some photos of the best features of your
suite, make sure they look light and bright, and you should get some
interested prospective tenants. Newspaper ads can be costly, but
people still read the want ads when they are looking for something
particular.
Screening
tenants
Many landlords will ask
prospective tenants to fill out an application form. It’s
very important to check the references provided. Make sure that you
call the employer to verify that this tenant is employed, and for
how long. Call the previous landlord. That’s a very good way to
find out if the tenant always paid their rent on time, if they left
the previous suite in good condition, and if their behaviors and
habits were legal and unobtrusive.
If
you wish, you can also do a credit check on your applicant. Here’s
a link: www.tenantverification.com.
There is a fee for this service.
No
one wants to get stuck with the tenant from hell. It is important
that you know your rights as a landlord and understand the eviction
process; however, it is wisest to select the right tenant from the
start.
Signing
the lease agreement.
Standard lease agreements are
available for free from your Landlord Tenant Office, and available
on line. Follow the links above to your provinces website. Make sure
that you make two copies, one for the tenant and one for yourself.
Once your tenant is ready to move in, you can use the website to
find a Move-In/Move-Out Inspection Report. It’s very important to
go through the rental suite with the tenant to document the
condition before they move in so that if there are damages that
occur during the occupancy you will have a record of the previous
condition. You can also take dated photos to document the condition
of your suite.
How
much is the damage deposit?
Generally, you may only
charge one half of one month’s rent, but some provinces such as
Ontario, have different regulations. Often you can charge an
additional deposit if you will be allowing pets.
Who
pays the utilities?
There are several ways that landlords handle this. Some landlords
share the cost of the utilities 50/50. Other landlords calculate the
percentage by the number of people in each part of the house. Some
landlords include the cost of the utilities in the rent. (Be aware
that tenants may take advantage of this situation. They may turn up
the heat and open the windows in the winter to get some fresh air,
for example, or take showers that last an eternity.) Make sure
that you have an agreement in writing.
Other
things to consider
If you are the type of person that must have absolute peace and
quiet, want to be left alone, and consider your home a refuge from
the crazy world out there, then probably renting out a basement
suite isn’t for you. Many people will find that having tenants a
little disruptive. You might be the kind of person to have little
patience if you find that having tenants disturbs your daily life.
But for lots of other people it is well worth the hassle. You
should decide before you spend any money on renovations whether or
not you are willing to put up with the occasional added stress or
annoyance. Choosing the right tenant is key to making this situation
a positive experience.
If
you enjoy the feeling of financial freedom by letting someone else
pay for your home, becoming a landlord is relatively easy and can be
very enjoyable. Do some research, possibly make a few changes in
your home, and spend a little time finding the right tenant, and you
will be very pleased with the result. |
