The tenant next door…

Many new real estate investors envision purchasing a 2 unit rental property with a tenant residing on one unit while the owner lives in the other.  Let the “tenant pay your mortgage” is quoted by many. This is a viable option however it may have some quality of living consequences if the landlord – tenant relationship breaks down. 

A landlord – tenant relationship is (or should be) primarily a business relationship. The tenant pays rent and expects a certain level of service as legally mandated by the province or municipality – fire alarms, water, sewer, land tax, property maintenance standards and others. 

 Similarly, the landlord expects to be paid rent for services provided. When one or the other party is not meeting the expected standard there will be demands for these to be resolved. Disputes will typically include services or repairs not provided by the landlord or a tenant’s unpaid rent or utilities. This is very different from a typical live and let live neighbour to neighbour relationship. 
The fear of what to do with the hostile neighbour / tenant has prevented many from taking the first step into residential real estate investment. The solution to this potential problem is far simpler than many envision – Buy the duplex, rent “both” sides and maintain your own home somewhere else.  Rental income will double with 2 tenants covering building expenses AND potentially pay a net monthly return.  Use this monthly return as income toward your own home expenses or, use it to pay down the mortgage on the rental property. Both strategies have merit.

No money for the down payment? Use equity in your existing home (or line of credit) as a business loan to your new real estate investment business for the down payment. Have the income for the rental building repay your equity or line of credit loan. This is a real life investment scenario that I have used and it works.

I would be happy to discuss my experience and how you may successfully enter the real estate rental investment market.

Peter Adamovits

Peter Adamovits

Sales Representative
CENTURY 21 Explorer Realty Inc., Brokerage*
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