How To Become A Toronto Real Estate Landlord

Real Estate

It sort of stands to reason that if real estate investment was a get-rich-quick scheme, everyone would jump in with both feet.

It, of course, is not. Nor is the rather pragmatic business of being a real estate investor meant for everyone – especially if you are going to be a landlord.

Given the lack of stock and the consequently escalating prices of single family dwellings in the city of Toronto, for some, purchasing a property that can provide an income component can be their passage into ownership of this coveted housing type.

You’ve likely often heard the debate that homeownership is not meant for everyone, basically because of the necessity of matching investment with investor temperament, personality and time horizon. The same sort of self-examination can be used to determine if you’ve got what it takes to be a Landlord.

Here are 6 questions to ask whether you have what it takes to be a Toronto Real Estate Landlord.


What’s Your Motivation?

If you have a long-term time horizon, an income property can be an excellent means to generate income and to provide shelter and income against your mortgage at the same time. Talk about two birds and one financial stone! However, know what you are getting into. It’s also a good idea to identify your goals (i.e. plans to renovate all or part of your own living space). What if tenant needs emerge and you have to push your own timeline out? Can you live with that if you have to (what is your level of “property patience”)?

What are your financial goals as well? Does this type of ownership fit in with them?


The Financing

To purchase a primary residence, you need at least 5 percent down, which you may or may not already know. But depending on the type of income property you are purchasing – and whether or not it is going to be your residence – the down payment requirement may differ slightly (rule of thumb, an investment property will require 20 percent down). Read on for a past post from urbaneer entitled “On Financing an Investment Property“, which delves into the details around down payments and other financing requirements.

In addition to the down payment, you will likely need some cash flow or financing available to support potential renovations and repairs. How much do you anticipate having to spend before the unit(s) are ready to rent? How about other potential costs in the near and longer-term future? Do you realistically have adequate capital to finance these oft-required housing uprgrade expenses?


The Fine print

There is far more involved to being a landlord than fixing leaky faucets and collecting rent cheques. What do you know about tenant and landlord rights? There are rules and regulations set out by the province that will govern how much you can charge, and how much you are allowed to increase rents in a given period of time. Here is a recent Urbaneer post about Rent Controls For Ontario Landlords And Tenants. This touches on some of the challenges faced by landlords in terms of increasing rents on par with the cost of living and costs of maintenance.

And how financially literate are you? In all matters of real estate, it behooves you to be as knowledgeable as possible. However, when you branch out into investment property status, you are entering another area of taxation, for example. Income derived from rentals is treated as straight income, but you are also possibly eligible for some additional tax benefits as a landlord. What do you know about these (or do you have a solid accountant already who can help you navigate and fully leverage these opportunities)?  Here is an Urbaneer post that provides some helpful hints with Tax Tips for Property Investors.


The Human Factor

So how are your people skills? And we don’t mean for the purposes of hosting neighbourly dinner parties. Much of your function – and success – as a landlord will hinge greatly on very human skills – negotiation, flexibility with (and respect of) others, self-assertion and conflict resolution among others.

Many landlords will tell you the untold value – financial and otherwise – in the ability to being able to land a long-term, solid tenant. Part of that has to do with the property and part of that has to do with you – as a landlord, and as a person.


Property Management=Time Management

This is one of the more pragmatic issues with being a landlord. Assuming you are going to manage the tenants yourself and not outsource that post, do you have time to fit it in? Do you already work a bazillion hours a week in your day job? Do you travel often? Realistically, are you as available as you’ll need to be to make this situation work? Alternatively, if you’re going to hire a property manager to take care of the property, have you budgeted for this expense? The more services a property management service provides, the less net income you’ll have to generate a return on your investment.


DIY? Or DIY-Not?

Do you know which end of the hammer to swing, should you need to, or are you likely to run for the hills when something breaks? While ownership denotes a certain responsibility when you’ve got to step up to meet your end of the landlord bargain, don’t expect to have a complete personality change, simply because you’ve changed your ownership status. It’s really about what you are comfortable with. That said, if you are admittedly non-DIY, does your circle of influence include a solid contractor that you know and trust? For some folks, this may be the most important (and stress saving) tool in their toolbox. But make sure your team understand that when something breaks in your tenant’s suite, it may need immediate attention. A quick turn-around time to respond to problems requires a reliable repair team ready to act.


At Urbaneer, we draw real-life experience from the ups and downs of property investment, tenancy and renovations. In fact, our blog called The Tales Of Upper Hillsborough documents our own journey through the search, acquisition – including Tackling The Property Tune Up, and ultimate transformation of a dilapidated triplex in Charlottetown, PEI (including The Black House Financial Tally) into a luxury vacation rental –> How I Came To Transform A Vintage Home In Charlottetown, PEI.  Not only have we learned valuable lessons from our own experiences, we are pleased to be able to share these with our clients to enrich and enhance their own property experiences. Our success over the years translates into your own success with home ownership. We are here to help!


~ Steven and the urbaneer team

~  Steven Fudge, Sales Representative
& The Innovative Urbaneer Team
Bosley Real Estate Ltd., Brokerage – (416) 322-8000

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