How to Become a Landlord in Canada

If you want to increase your income and boost your financial portfolio, becoming a landlord of a residential property is an excellent small business venture.

If you’re entering the residential property rental market now or thinking of doing so soon, your timing couldn’t be better. According to Rentals.ca’s July 2024 Rent Report, the average monthly rent for all residential properties was $2,185, an increase of 7% from one year ago.

However, becoming a landlord and maintaining a rental property is a lot of work, and first-time landlords have much to prepare for before advertising to tenants. We’d be remiss if we didn’t mention that landlords face many liability risks they must consider and prevent by taking proactive measures.

Whether you’re renting a secondary residence, such as a house or condo, a basement apartment or room in your primary residence, or a space in a rooming house, protecting your finances with a comprehensive landlord insurance policy is critical.

In this guide, we’ll provide you with seven things every first-time residential property landlord should do before renting their digs:

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1. Know the Tenant Laws and Regulations in Your Province

Know the laws and regulations in your province and municipality, including safety codes, tenant rights, and your responsibilities as a landlord. Each province has laws governing rent increases, dispute resolutions, and evictions.

The following links provide information on landlord and tenant rights and responsibilities in each province:

• Alberta
• British Columbia
• Manitoba
• New Brunswick
• Newfoundland and Labrador
• Nova Scotia
• Ontario
• Prince Edward Island
• Quebec
• Saskatchewan

2. Prepare Your Property for Tenants

Ensure the property or unit is ready for occupancy by making necessary repairs and upgrades inside and outside the property and to the appliances. Doing so serves two purposes: it makes the property an attractive option for prospective tenants and reduces the chances of a tenant or a visitor to the premises from getting injured.

Your preparations should include ensuring all utilities, such as water, electricity, and natural gas, are working correctly, battery-backup smoke and carbon monoxide detectors work, and the property’s exterior and interior common areas have adequate lighting. It’s also wise to have working fire extinguishers that are easily accessible in the building and “no smoking” rules included in your leasing agreements.

In cities and towns with colleges and universities, you might consider renting your property to students. If so, it’s important to understand the student housing market in your municipality. Doing so helps you set appropriate rent levels, prepare for turnover during summer breaks, and ensure your property meets the unique needs of student tenants.

It’s also recommended to hire a professional cleaning service to thoroughly clean and sanitize the home or apartment before welcoming a new tenant.

3. Set a Budget for Maintenance

Every landlord is a small business owner. Therefore, treating your rental property like a business is essential, including having adequate capital to cover routine and unexpected repairs.

Furthermore, it’s worthwhile to speak to a professional accountant or tax expert who can advise you on the many tax deductions you can use to offset your costs, including expenses for repairs, mortgage interest, and liability insurance.

4. Thoroughly Screen Prospective Tenants

Thoroughly vet tenant applicants by checking their rental histories, credit scores, criminal records, and verifying their employment and income.

To check a prospective tenant’s credit history and score, use one or both of Canada’s credit reporting bureaus, Equifax Canada and TransUnion of Canada.

For criminal background checks, contact the Royal Canadian Mounted Police or your local police force.

5. Draft Comprehensive Leasing or Rental Agreements

The lease you have tenants sign is vital for ensuring your tenants understand and agree to the terms of renting your property. 

We recommend consulting a legal professional to help draft and review lease agreements outlining the terms and conditions of your rental property, including details on monthly rent, security deposits, maintenance responsibilities, and general rules specific to living at the property.

6. Determine How Much Monthly Rent to Charge

Be aware of the real estate trends in your community and know the going rate for renting your type of property or apartment. 

Rentals.ca provides landlords with a monthly report on the average rents nationwide by property type, and you can list your vacant property on their site for free. 

7. Get Rental Income Property Insurance

Get a customized landlord liability insurance policy before renting to tenants to cover unexpected damages and losses to your property and the third-party liability risks you face.

A standard homeowner insurance policy is not designed to cover rental properties or apartments because insurers consider a rental property a business. 

A commercial or business liability insurance policy for landlords includes higher coverage limits, expansive coverage for the property and your business contents at the dwelling, and loss of rental income coverage if the property is uninhabitable following an insurable loss such as a fire.

Where to Get Low-Cost Landlord Rental Property Insurance in Canada

Zensurance is Canada’s go-to small business insurance brokerage. We cover thousands of small business owners and independent professionals with low-cost liability insurance, including landlord insurance.

Fill out our online application for a free quote in less than five minutes.

Our knowledgeable brokers will shop our partner network to find the low-cost coverage your rental property needs, customize it to suit your requirements, and send you your policy documents so you can get busy finding the right tenants for your dwelling.