Is Being a Landlord Right for you?
When you’re starting to think about buying an investment property, a lot of people will focus on the numbers first. They work with their Realtor, Mortgage Broker and Financial Planner to crunch everything together on a spread sheet to see if it makes sense. I’m here to tell you that where you need to start before the crunching stage is thinking in very realistic terms about whether or not being a landlord and managing the property is something you want to do.
Rental properties are not headache-free. That’s the cold hard truth. They require time, money, and sometimes a lot of energy! You can to choice of hire a property manager, which may be the easiest thing to do, but remember that this costs money and takes away from your bottom line.
Stressful yet Rewarding
If you choose to self-manage, then you will have to do things like advertise the property, show it to prospective tenants, process their applications, check references, run credit checks, etc. Once they’ve moved in, you are of course responsible for collecting rent and ensuring the bills for the property are paid. Not only do you have to actually pay those bills but you have to keep close track of the accounting and when tax time comes, you’ll have to ensure your shoebox is in order because CRA wants to know what all the receipts are for!
For the most part, with good tenants in place and a solid property, things can chug along quite easily. But then the kitchen sink leaks on Christmas Day or the furnace breaks on the coldest day of the year. These are real things that have happened to me as a landlord. Or most recently the main water service to a century home has a hole in it and needs to be replaced to the tune of several thousand dollars! Not even kidding! While these situations can be very stressful, they are also fixable.
What’s the Verdict?
I don’t mean to sound all doom and gloom and make it seem like it’s not a good idea. I just think it’s important to be realistic about what you want and what you can handle. I personally get a real sense of satisfaction in figuring out solutions when problems come up. I love the pride of ownership in managing a really great property in a wonderful location. I love the opportunity to meet new tenants and how excited they get when they’re moving in to the place that they will make their home.
Buying real estate as part of your investment portfolio can more often than not be a really good strategy. The number crunching can work and it can work really well. It’s about so much more than that though! If you’d like to chat more about the ins and outs of owing rental properties, not just the numbers but all of it, please reach out. We would love the chat!
