If you’re looking for a way to increase your income, you may need to look no further than your own home. These days, more and more Canadians are turning their homes into income properties. An income property is a home that is bought or developed in order to generate income, typically by renting it out in part or in its entirety. Renting can be a financially rewarding experience, either to provide extra income, or to help pay off a mortgage. So if you’re thinking of going the income property route, here are 10 important steps you should take:
1. Contact your local or municipal government to first determine if you are legally permitted to turn your home into an income property. Work with them to ensure the unit adheres to all existing building and fire codes.
2. Get to know the landlord-tenant relationship regulations in your province. These laws will give you a better understanding of your role and responsibilities as a landlord.
3. Inform your insurance company about your plans for renting out space in your home and ask them if you require any additional coverage.
4. Get your home “renter-ready”. From a simple change such as a fresh coat of paint to a major renovation, try and make your home look and feel as spacious, bright, and comfortable as possible. Your home should look appealing inside and out in order to attract potential renters.
5. Price and market your unit competitively. Scan the classifieds and visit rental websites to find out how much similar units are being listed for.
6. Conduct a screening process for applicants. Consider running a criminal background check, as well as a credit check, on prospective tenants.
7. Draft a written tenancy agreement. It may contain information such as: the date the tenant will move into the rental unit, the rent amount, the date rent is to be paid, what services are included in the rent (such as electricity or parking) and any separate charges, as well as the rules that you require the tenant to follow.
8. Consult a lawyer to look over the contract. Although not necessary, a lawyer can ensure there are no legal problems or issues with the contract before you present it to your tenant.
9. Request a minimum deposit of one month’s rent in advance that may be used against any property damage or unpaid bills, depending on the laws in your province.
10. Have the tenant sign the contract. Ensure the tenant receives a copy and keep the original for your own records. Happy renting!