Anybody here own rental properties?

[bottleneckblooz]

Thinking about buying a rental property, anyone on here own any rental properties? Can you offer any advice?

[physique]

i own 1.

as for advise, dont do long term leases. as if they ever screw you, you cant get rid of them. you have to jump through a ton of legal hoops to get them out of your place. and all thewhile they dont have to pay and rent when you finally do evict them.

its bs really, that when you own the place and someone doesnt pay, you cant turf them the next day.

i only do my leases for 3 months. this way i never get ****ed, or if i do, they are gone fast and i am not out a ton of money.

also when interviewing them, do the first interview by phone. do second interview at their current residence. this way you get to see how they live and treat the place they are in. If the place is a pigstie, then you will have your answer. no way in hell do you rent to them. also watch out for bleeding heart single moms. I dont rent to them, nor any woman. reason being, i want the guy to know personally what i am like and not to **** with my house or there will be consequences. this point is a hell of alot easier to make man to man then woman to man.

after that. make sure you have everything on paper that they can and cant do. depending where u live, there shouldbe a contract on your provincial. i am in Bc and i took parts from the residential act and parts that i got from the notory.

thats about it. so far i havent had any problems.

[Freebsd1977]

Do like most renters do here in Kingston, rent only to students and bill OSAP directly.

[fathead]

depending where you live rental properties can be very good investments or poo poo. Im living in vancouver where real estate prices are waaaaay ahead of rental prices... you cant come close to covering your mortage without putting down 30-40% minimum.

also, always keep in mind your goal. if the property is for rental income and investment only remember that. buy what works, whether or not you like it. Thats a mistake I made. I was looking for things that appealed to me moreso than made the numbers work. If you can find a total dump in a area you dont care for but the numbers work than great, go for it.

as phys said, tenants are very important. I wouldnt do 3mnth leases myself, I would go for 1 yr. perhaps do an initial 3 month and then 1 yr after that one incase they are nitemare tenants but you want to make sure its full all the time and 3 month leases will lead to higher turnover which is bad.

According to a family friend who manages the largest property company in vancouver, the ideal tenant is a single young male believe it or not. Males are never home, dont "nest", dont make the place their own, dont hang pictures, paint, dont have people over, etc etc.

No pets, no smokers, no matter what.

Finally, you cant legally access a potential tenants credit rating, but you can casually request that they bring it with them for their interview. Dont rent to those with bad credit. People who dont pay their debts dont pay their rent either!

[bottleneckblooz]

Thanks for the advice guys. What expenses can you claim against your income? Can you claim your mortgage payments or just the interest on your mortgage?

I can only put about 5-10% down, and what I'm finding is that when breaking it down on a month to month basis, after figuring out all expenses inc. mort. payment, there is very little profit left over if anything. So I'm wondering what happens at tax time. Do all the expenses you claim against generally result in a large refund? Or do they just generally reduce the tax burden?

[sam31]

You claim the interest cost portion of the mortgage - the tax man doesn't care what your total mortgage payment is - only you care....
Generally "repairs" get written off in the year they happen and "replacements" get "written down" over many years - this is why it might be beneficial to pay more than you would think wise on repairing say a stove - when a new stove is not much more......but always check with an accountant for accurate info.

Good luck - it's nice to have "someone else" pay your mortgage(s).

In certain markets, if you care to speculate, even if the purchase price is way out of line compared to the potential rental income - like in Vancouver, you can make money if the property appreciates greatly over a specific period of time - as it has in Vancouver - so even if the rental property "lost" $5k per year - you still might have made 10x that in capital appreciation....

And to provide complete balance in this discussion - You can also lose money over a time period and experience grief with bad tenants, bad or changing neighbourhoods, etc. There are few guarantees in life.

[Anatomy]

Most importantly, make sure you understand the local economy and understand what's driving housing as well as longer term trends. Timing matters

sounds like you don't have a bunch of cash. Get something that doesn't need renos or require the vendor to complete renos as part of your purchase contract [contact me for tips here if you like]. This way you are financing 90-95% of the reno cost which is key when you remember that a key RE strategy is leverage

get great tenants. write your ads like you are a large organization with customer service in mind. Answer every response right away since potential tenants are partly testing your responsiveness. The tenants you want [low maintenance, good communication, honest] prefer to deal with that type of company. phone interview is mandatory, don't be shy with your questions... most people will answer any question you ask. A good trick for getting to see their home, as Phys suggested, is to call them when you are close by [you should already have the address from their application] and stop in to drop off a receipt [lease template, rules of tenancy... whatever]. That said, I've never done it because it takes a lot of time. Make sure your application gets their permission to run a credit check since that can be invaluable... a few late payments aren't bad but watch for evictions, unpaid rent and lots of recent problems paying. If you have to turn down someone, don't give them a false reason no matter how tempted you are, you don't have to give them a reason at all.

Term of lease is debatable; here I can only raise rent every 12 months with the same tenant but rents are rising quickly in this market so 6 months is working well for me. It sometimes allows me to raise rent 2x/y since I can do that if I get new tenants. I also have the option of not renewing a lease if I choose. Not a bad idea to go 3 months for the first one [tell them it's like a dating period before marriage]. Any less than 6 month terms is too much work to maintain long-term. I usually collect the 1st 3 rent payments in person and do a walkthrough to inspect the property then take post dated cheques for the remainder.

Just some quick tips there.

Different expenses have different classifications but you can definitely write off the interest you pay on a mortgage. CRA has a great doc for describing this stuff look up t4036 and download the guide.

I just realized you didn't ask for much about landlording and managing the business. Generally speaking, you can make a bunch of money if you're in the right market, buy well, finance well, get great tenants and treat treat your tenants like gold.