A great way to supplement your income and help with your mortgage is by having a rental space within the home you are living in. Having a suited home can increase the value of it as well when you go to sell it in the future. It does come with challenges that many people are unaware of when first deciding to go down this road. Below are some tips to ensure that you have a positive experience with your first tenant!
1. Loss of privacy. Although you will be in separate suites, there will still be a loss of privacy. There will be shared areas such as the yard. Are you okay with this? Does the extra money make up for this?
2. Avoid renting to family. Renting to family will undoubtedly change the family dynamics. It would be more difficult to try and collect unpaid rent from a family member or evict them for not following rules. If this occurred it would likely destroy your relationship and could have repercussions on relationships throughout the family.
3. Sign a proper written lease. Never accept a renter without a proper lease. This lease should include rules, late rent penalties, expectations, and length of term. Every adult who resides within the suite must sign it.
4. Make sure you charge enough rent . You want to attract renters who are not focused solely on dollars. Low rent generally leads to more frequent turnover as these types of renters often continue to look for lower rent. Do your research on what other landlords are looking at for rent with similar suites. Look at the amenities, location, and size to get an accurate picture of what rent you should charge.
5. Do your research. Make sure you understand the legislation in your particular province in regards to landlord-tenant relationships. You should also understand your local municipal bylaws which include things like guidelines and standards for fire and building safety. They also cover zoning and permits which you should be aware of.
6. Tell your home insurance company. Make sure you inform your home insurance provider that you are renting your suite out. Landlords often forget to do this. You need to be sure you are covered if anything happens in the rental suite and you do not want to give them an argument that they were not informed thus voiding the policy.
7. Research the tax repercussions. Once you have a rental suite in your home, you have to claim that rental income on your tax return. In addition, once you start using the property for revenue, a portion of the capital gain when selling the property could be deemed taxable.
8. Learn from other landlords. Talk to other landlords and learn from them. Ask them questions. Join social media chats or read blogs. Knowing the tricks of the trade is important and who better to learn from than other landlords?