All the Monopoly hype lately has me reminiscing about the old days where my cousins and I would sit around and play for hours, until evidently the game ended in a fight.
My strategy - not unlike yours, no doubt - was to buy as much property as I could and sit back, relax and collect the rents... If only the real world were that easy!
Thinking about buying a rental property? Here are just a few things to consider.
- Make sure you’re handy. When a tenant calls with a leaky faucet or a broken pipe, most if not all of your profits can be easily eaten up by an emergency call to a trade person. It always helps your bottom line when you can fix and maintain the property yourself. If you’re not, don’t worry. Make sure you budget repairs into your equation and call around for quotes if necessary as part of your plan.
- Be willing to learn the Ontario Tenant Protection Act or the equivalent in your province. This is an extremely lengthy and detailed document available to anyone and in my opinion, if you want to stay out of court, it must be adhered to. It addresses things like eviction notices and even the proper way to gain access to your property to inspect it. As most government documents, it’s quite confusing and requires some expertise. Consider hiring a local property manager. It may cost more up front but can end up saving you thousands in legal fees.
- Are you able to pay the carrying costs of the property in the event it sits vacant or even worse your tenant is unable to pay? There’s nothing more deterring than finally making that investment purchase only to have to sell it to avoid financial hardship.
I’m not trying to discourage anyone from investing in real estate - as a second home, vacation property or otherwise. I think it’s a great way to invest and secure a solid financial future. Just make sure like any investment, you proceed armed with all the knowledge you need to do it right.
Who knows? Maybe the new Monopoly board game will include things like unpaid rents, maintenance fees and even retrofit certificates.... Nah, we'll leave that for the real world. For now we'll just keep fighting over who gets to be the car (token) on the board, and who has to act as the bank!
Ray Petro is a sales representative with Century 21 Professional Group Inc. in Brantford, Ontario.