What you need to know about renting your condo
Sometimes it's necessary, or just a good idea, to rent out your condo unit. For example, if your job offers you an opportunity in another city and you don’t want to sell your home because you plan to return, having a tenant come in to rent the unit is a great way to help you cover expenses in your absence. However, before you go looking for renters, you should become familiar with the rules and regulations related to renting out your condo.
1) Before you buy
What is the best type of condo to buy and rent out?
It is important to note that if you can often charge the same rent for a previously owned unit and a brand-new unit, so you should always choose the lived-in unit. Sales tax is charged on the sale of new units but not existing units and this can add 5 to 13 percent to the closing costs without increasing the rent you’ll collect from the unit.
Of course, that assumes that the existing apartment is in great condition with up-to date appliances. A new unit or freshly renovated unit is much easier to rent because it is usually cleaner and has better amenities.
Can an owner always rent out their condominium?
Not necessarily. In British Columbia, the condominium by-laws can place restrictions on short-term and long-term rentals, so reviewing the condo by-laws is important. As well, keep in mind that the condo board may revoke the right to rent in the future. In provinces like Saskatchewan and Manitoba, the law mandates that condominium owners are permitted to rent their properties. In these provinces, condominium by-laws cannot supersede this and prevent owners from renting out their condos.
Saskatchewan also specifies that owners are allowed to rent out units in what's called a short-term management pool, which allows for rentals of less than one month by a single owner or multiple owners.
Can an owner be charged a deposit for renting out their property?
Condominium corporations can charge owners a deposit for renting out their properties. The deposit must be refunded if there are no damages to common property or any other expenses incurred by the corporation resulting from your rental. This deposit cannot be passed to your tenant, it is a separate deposit from the one a landlord collects from the tenant. Check the corporation by-laws for deposit requirements.
Does the owner need to provide notice to the corporation about renting out their property?
Yes. In some provinces, owners must provide written notice to the condo corporation 30 days prior to a new tenant taking residence.
2) Preparing the Unit for Tenants
What is adequate repair and maintenance?
In recent years, Vancouver and Toronto landlords could earn good rents with units in relatively poor condition. But a unit which is well maintained and up-to-date is more desirable for the tenants and can garner higher rents and more reliable tenants. The reason the best tenants won’t settle for a poorly maintained condo is that they believe the condition of the unit is an indication of the quality of the landlord.
They don’t want to incur moving expenses to and enter into a 1-year contract with a landlord that they expect will not make needed repairs in a timely manner. Even though tenants are protected by provincial legislation, they don’t want to have to use those protections. They would rather sign a lease with a reasonable landlord who will treat them fairly. Therefore, it is crucial to have an exceptionally clean and tidy place for viewings and move in. Also ensure that any repairs are taken care of well in advance of move in day.
3) Finding Tenants
There are certain aspects that you need to keep in mind to ensure you can find high quality tenants quickly:
Who do I set the rental rate?
To make the most from your rental, you should price your condo at the “market rent” for an apartment of it’s type. Search Craigslist and PadMapper to see the rate other landlords are charging. You can’t simply charge enough to cover your costs; the price is set by the market. If there are fewer apartments for rent, then rental rates usually rise and when there are high vacancy rates rents drop and landlords offer incentives.
When comparing your unit to other rentals keep in mind the location, how many other apartments are listed for rent and compering against yours, the amenities you provide, and lastly, the condition of your condo. Property management companies can help you evaluate the worth of your property to make sure you are on the right track.
How should I market my condo?
To be certain your condo is reaching prospective tenants list the property on Craigslist and PadMapper. If you are willing to pay for someone else to manage the rental while you collect a healthy income, then property management companies can take care of everything or you. The traditional marketing in newspaper classifieds are not as effective in the digital age.
4) Steps to Renting Your Condo
These are the essential steps to make sure you rent out your condo to quality tenants.
Conduct Background Checks
Renting out your condo to the wrong tenant poses danger to your property as well as your finances. It is crucial to check the prospective tenants’ earlier tenant history, their credit score, and their source of income. The potential dangers you would be putting yourself in would include not receiving rent from the tenant, and the tenant conducting potentially criminal activities on your condo for which you may or may not be held responsible. Finally, when you are conducting viewings for your apartment ask questions to determine what kind of activities potential tenants might get up to and look out for any warning signs that they may cause mischief or unruly damage.
Prepare a Rental Agreement
A rental property lease would act as an agreement which states that the tenant agrees to your specific terms of renting a condo. The lease would clearly state the period for which the tenancy would last for, the amenities which would be included in the rent, the pet policy and other such important details. This lease is an important piece of documentation you need, should there be any misunderstanding later, and if the tenant denies any of these agreed upon terms.
The provincial government in BC provide a standard rental agreement for landlord to access. Though you can make your own, be sure that it complies with provincial regulation by running it past a property lawyer.
Complete a move-in condition inspection report
Under the Rental Agreement, you must complete a written property inspection within one week of a tenant moving in and out of your unit. Once an inspection is completed, you must immediately give the tenant a copy of the written inspection report. Best practice is to take photos at both inspections in case there is a dispute in the future. You must keep copies of the inspection reports for at least three years after a tenancy ends. If the inspection reports are not completed, you will not be entitled to take money from the security deposit to cover damage to the unit.
All forms for BC rentals, including the condition inspection report, can be found here.
Tenants must follow your condo by-laws
Tenants are required to follow the condominium’s bylaws during their tenancy and they should have access to a copy of the bylaws. As a responsible landlord, you should familiarize yourself with the bylaws so that you can properly advise the tenant about the condominium’s rules. You should also ensure that the lease agreement accurately reflects the bylaws.
Get Rental (Landlord) Insurance
Regular homeowner insurance doesn’t cover rentals. You need special home insurance for a rental apartment. Find out what you need to know about Home Insurance.
Consider a Rental Property Management Company
The days when traditional property agents were incapable of providing tenants for an urgent requirement, are long gone. The advantage of consulting a rental property management company is that they are capable of making sure that your condo has a great reach with the help of their online listings. Furthermore, these rental property managers are excellent at scanning through the tenant applications for your convenience. You don’t have to unnecessarily worry about the quality of your tenants renting a condo.
Quality property management companies such as Rental Advisors are popular among both the landlords and the tenants. This is because they help landlords with their exclusive property management contracts, also making sure that they handle the redundant paperwork which goes into a rental property lease with their property evaluation services. The landlords and the tenants both appreciate the way their online property listings are useful for both parties.
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