How to decide whether to become a landlord
Thinking about becoming a landlord? Learn how to assess rental income, costs, time commitment, legal obligations, risk tolerance, and tenant screening steps.
Becoming a landlord is a business decision as much as a financial one. It comes with real rewards but also real responsibilities. Here's an honest framework for deciding whether it's right for you.
The Financial Reality
Before anything else, run the numbers. Calculate your monthly carrying costs: mortgage payments if applicable, property taxes, insurance, and an allowance for maintenance and vacancy. Then look at what the property would realistically rent for in the current market.
If the rental income covers your costs and leaves a reasonable buffer, the numbers may work. If you'd be renting at a loss or with very little margin, factor in whether you're comfortable subsidizing the property in expectation of long-term appreciation.
The Time Commitment
Being a landlord takes time. Finding and screening tenants, managing maintenance requests, handling renewals and inspections, and dealing with any issues that arise all require your attention. If you have a demanding job, young children, or other significant commitments, consider whether you have the bandwidth.
Property management companies can handle day-to-day operations on your behalf, typically for eight to twelve percent of monthly rent. Factor this cost into your financial calculations if you're considering it.
The Legal Obligations
Landlords in Canada have significant legal obligations under provincial residential tenancy legislation. You are required to maintain the property in a good state of repair, follow strict rules around rent increases, entry notice, and evictions, and use the correct legal processes for every step of the tenancy. Failing to follow these rules exposes you to complaints, penalties, and orders from provincial tribunals.
Your Risk Tolerance
Tenancies don't always go smoothly. Late rent, property damage, and difficult tenancies are possibilities every landlord needs to be prepared for. The formal resolution process through provincial tribunals can be slow. Are you comfortable with that level of uncertainty?
If You Decide to Proceed
Use a verified rental platform like liv.rent to find and screen tenants thoroughly, use proper digital lease agreements, and keep detailed records of everything from the start. A well-run tenancy from day one significantly reduces the likelihood of problems down the road.