21 Jan Are you Ready to Become a Montreal Landlord?
This article is part of The Mose Report: New Homebuyer Series.
Are you thinking about buying a duplex, triplex or multiplex and making the transition from tenant to landlord?
For most tenants, it’s a dream come true. After years of dealing with nasty impatient landlords, we have an altruistic idea about what a landlord should be: kind, gentle, considerate, fix everything right away, and of course, renovate everything beautifully!
We’re sure you’ll do your best. However, it’s important to remember that while buying a duplex or multiplex can bring you additional income and help you build equity, you need to beware! Being a landlord is a job; and for most Montreal landlords, it’s a second job. It’s a business, and it’s not always a walk in the park. There’s a lot more to it than simply collecting rents.
We invite you to ask yourself some basic questions before you take the plunge:
Are you good at managing your finances?
Being a landlord is rewarding. Putting extra monthly income in the bank is certainly satisfying.
But there are ups and downs, as with any investment. Your total household budgeting will now include repairs and maintenance on an entire building. Do you own the appliances? You’ll be responsible for them too. Do you pay the heat? Heating and cooling costs fluctuate, so if oil prices are high, you’ll be charged more, without immediately getting more rent. Is the building old? Upgrades and repairs will be constant.
There are numerous monthly costs associated with maintaining a building. In addition to your mortgage payments, you’ll have to pay home insurance, property taxes, school taxes and maintenance costs. Most small multiplex landlords maintain a line of credit to ensure they have the funds available to pay unforeseen maintenance. Sometimes, these funds can quickly dry up, especially if you have a structural problem, falling bricks, need a new heating system, or have a problem with water infiltration.
Saving for Long-Term Costs
You’ll also need to think about long-term maintenance costs. Most flat-roofed Montreal buildings need a new roof about every 20 years. The balconies need scraping and painting every two or three years to avoid completely rusting, and then there’s the small stuff, like doorbells, locks, electrical plugs, railings and plumbing fixtures?
How old are the water heaters? They need to be changed every 10 years or so too.
It’s important you pay attention to your home inspection report and ask as many questions as possible. In effect, you are starting a business; you need to know what you’re getting into.
Are you a good manager?
We’re not talking about learning how to post an ad to kijiji or craigslist to find a tenant. We’re talking about unexpected surprises and problems with the building or tenants. You need to be calm, accept that problems are going to come up, and be ready to seek advice and learn new things. Even the most experienced landlords find themselves researching home maintenance from time to time. It’s to be expected.
You’ll face challenges such as:
- Accepting a phone call at 2am about a hot water tank that has sprung a leak.
- A mouse infestation. Your tenant, who’s a light sleeper, is calling every day complaining.
- Heat distribution in your triplex is not right, and one of the apartments is always cold. Your tenants are not happy about it.
Then there are those smaller, annoying problems, for example:
- Your tenant gets locked out of the house, and needs you to come to the rescue.
- The doorbell is not working, and your tenant simply can’t figure out how to change the battery.
- Your tenant has decided to start a tie-dying company and there’s dye stains all over the floor and laundry machine.
- The front door won’t close properly in summer because of heat expansion on the doorframe.
- The pipes in the crawl space keep freezing.
- The electricity in the kitchen no longer works, and your tenant simply can’t understand that they just need to reset the breaker on the electricity panel.
Of course, there’s always tenants that can’t pay the rent now and again. Do you cut them some slack or take them to the Régie du Logement du Quebec? It’s important you have enough money to cover the mortgage, insurance and taxes, even if the rent doesn’t get paid, or if you are unable to find a tenant.
Being a landlord means you’re ready to learn the basics about being a good homeowner, and can deal with people with confidence, but also with some compassion.
Make sure you’re ready to troubleshoot and find solutions to problems with your building, and you’re ready to do your best to be a fair landlord. You can learn about landlord and tenant rights throught the Régie du logement du Quebec. Most importantly, you need to keep a cool head, have the flexibility in your schedule to deal with these issues, and accept that owning a building is not a perfect science. The question is not “Will something go wrong?” Rather, it’s “When will something go wrong?”
Learn all you can about the building before you buy it
While the traditional image of a landlord is one that owns multiple properties, most Montrealers that own a duplex or triplex are simply trying to make ends meet. Knowing how to use a drill, paint walls, and change a washer are good skills, but they’re not going to help you understand the bigger problems your building will face in the coming years, or how to be patient with the small problems when dealing with tenants.
Getting a thorough home inspection report by a certified professional will help you understand some of the issues your building will have, both in the near future, and later on. Consider the home inspection report part of the manual for running your new business.
Make sure you hire a certified professional inspector with experience. Many inspectors at Mose Home Inspection Services are homeowners and landlords in Montreal, and have a very good understanding of the common problems with older Montreal buildings. Ask lots questions. Get informed.
An income property offers security and is a great way to generate equity or build a retirement solution. If you’re up for the challenges of dealing with tenants and managing building maintenance, you can certainly reap the benefits over the long term.
Mose Home Inspection Services offers detailed duplex, triplex and multiplex home inspection reports, and will answer questions regarding that report for as long as you own your home. Call now to book a home inspection, we’ll give you the manual you need to manage your building with confidence. 514-426-1095