Purchasing a house and renting it out after you are gone?

[Humphrey Bogart]

I am just wondering if anyone on Army.ca has experience with this sort of thing, I have been strongly looking for ways to further supplement my income and this is one way I thought would be a pretty good one, my partner is currently living in Kingston working for Kingston Public Health and with me moving to a new posting she is going to be here for the next year at least.

One of the things we had considered doing was even though I am moving, we could purchase some property that she could live in until her contract is up and then when we move back in together (posting and job opportunity depending) we could rent our former property out to students, young professionals etc.  I actually have a plan to do this in most places I am posted and was wondering if anyone has any experience with this sort of thing?

What are the pros and cons of this sort of investment?

 

[2010newbie]

Everyones situation will be different, but I have had some success with it over the last few years. It is important to ensure that your inccome is sufficient enough that you can still cover the mortgage if the house is vacant or the renters break something and you have to hire someone to fix it because you are not in the area. The first year I allowed the renters to maintain the grass and pool, but 6 months later when I received nasty phone calls from my neighbours saying the grass was 2.5 feet high and the pool was green because the filter was clogged with beer cans, I decided to reevaluate that approach. I hired someone to maintain the property and the pool, so I always knew it would be done. Your impression of the investment's success or failure will be directly tied to the vacancy percentage, attitude of the renters, and available cashflow. Now that I have been accepted in the CF, I will be moving back to the house and staying there while I finish university.

 

[Humphrey Bogart]

Thanks for your response,

one of the things that does worry me is getting undesirables, not saying that all students typically leave places looking like "shitpits" but many student houses I have seen end up looking like this.  Whats some advice you have for avoiding this sort of scenario?

 

[Fishbone Jones]

Thanks for your response,

one of the things that does worry me is getting undesirables, not saying that all students typically leave places looking like "shitpits" but many student houses I have seen end up looking like this.  Whats some advice you have for avoiding this sort of scenario?

Don't rent to students period. Why bother even taking the chance. If that is the only demographic that you can rent to, you have a problem. If it's not, don't even make them a consideration.

 

[Bzzliteyr]

I actually had this conversation a few times in the past weeks...

One of the cpls here has two triplexes.  He told me some very interesting horror stories as I am looking to rent my home when I am posted next month.

My other friend (who rents multiple places) suggested a very thorough interview process including background and employment checks.  I was even given some forms to use to initiate the process with potential renters.

I will be renting my place at the Montreal average and it should bring in some good cash.  I plan on chatting with a real estate accountant as from what I understand there are tax breaks related to vacating a residence due to posting. 

I know there is something about being able to use rent to pay off the mortgage and not pay taxes on it or something like that, like I said, I need to get informed.

 

[Fishbone Jones]

I don't know what it costs, but I've heard it's not much in the long run, to get a property management firm to look after the place and keep an eye on the tenants. It can probably be arranged through whoever holds the mortgage, as they have a vested interest in the condition and market value of the property anyway.

Like I said, I don't have a clue about it, but it certainly seems to be a viable option.

 

[Task]

A few points I have experienced:

1) Get a good property manager. Some property managers will call an electrician to change a lightbulb, a $60 lightbulb.??

2) Rent to military people if possible. You know where to get a hold of them and "generally" will not be fired while you are renting to them. If IR comes back you can charge HIGH rate for your Rent. Ie Petawawa $1900/month

3) When you create your contract(s) be specific on what you want. Ie no pets/smoking.

4) Be aware that every province has different tenant acts. In Ontario you can NOT ask for a damage deposit. And the max you can raise the rent per year is 3%.

5) If you are using the home as an income property, make sure your mortgage rate is high as you can get it. This is because you will get that money back in taxes. If you want more info on that pm me.

6) When (if) you sell the home you will be taxed on the profit you made compared to when you bought the home. Ie you bought for 100,000 and sold at 110,000, you would get taxed at 10,000 capital gains.

Good luck hope it goes well.

 

[PMedMoe]

[Off topic]

IR rate in Petawawa is $1900?    Who the hell pulled that figure out of their a$$?

[On topic]

 

[Task]

IR rate in Petawawa is $1900?    Who the hell pulled that figure out of their a$$?

@ PMedMoe It's actually $1800 with $100 for parking 

 

[PMedMoe]

IR rate in Petawawa is $1900?    Who the hell pulled that figure out of their a$$?

@ PMedMoe It's actually $1800 with $100 for parking 

I suppose it's because there's not too many places for rent, or furnished places.  We only get $1600 (+$100 for parking) in Ottawa.  :

 

[Bzzliteyr]

I thought it was a CF wide flat rate?  Montreal is $1200 +$100.

 

[PMedMoe]

I thought it was a CF wide flat rate?  Montreal is $1200 +$100.

Nope, varies by area.  $1200 for Montreal seems a little low to me.

 

[ballz]

Don't rent to students period. Why bother even taking the chance. If that is the only demographic that you can rent to, you have a problem. If it's not, don't even make them a consideration.

The student demographic is not the problem. In fact, I'd be willing to bet if you're going to rent to 18-22 year olds, your best bet is to rent to a student. I find it rather irritating when people refuse to take students. If you can't take the time to tell an idiot from a sensible person, and aren't diligent in keeping a check on the property and tenants, it's not students or any other tenants that are biting you in the ass, its your own damn fault.

Hate to say it, but besides being a responsible landlord (good selection process and keeping a check on things), the price range is generally the best way to deter morons from your property.

 

[Fishbone Jones]

The student demographic is not the problem. In fact, I'd be willing to bet if you're going to rent to 18-22 year olds, your best bet is to rent to a student. I find it rather irritating when people refuse to take students. If you can't take the time to tell an idiot from a sensible person, and aren't diligent in keeping a check on the property and tenants, it's not students or any other tenants that are biting you in the ***, its your own damn fault.

Hate to say it, but besides being a responsible landlord (good selection process and keeping a check on things), the price range is generally the best way to deter morons from your property.

Yep. Oh wait. What's that saying about opinions and assholes?

 

[armychick2009]

You can rent to students but... make sure they are MATURE students... maybe those in a second career? And, rent to ONE person... ie, a renter and their family... do not individually rent out a four bedroom home to four individual students. That is a nightmare waiting to happen. You can make more money doing it that way but - unless you are in the same city and can deal with issues right away, I wouldn't. Not with a ten-foot pole. If you want to rent to someone while you're out of province, find a property management company to take care of any problems while you're gone. Worth the money, trust me.

Good luck!

 

[Bzzliteyr]

I will be renting in the $2000/ month range for a 3 bedroom in Montreal West with driveway, front and backyard, alleyway access and 3 stories.

I will be leaving all kitchen appliances and there is a laundromat up the street though connections for washer/dryer if the tenant needs.

I feel by pricing it in this range i will most likely find a professional or family that will take good care of the place.  There is no way I'd rent to a bunch of frat boys unless they checked out.  I've already had interest from a friend of a friend and said no.

The question now is, where to list?  I want to do this alone, with no agents.  Craigslist, Kijiji.ca and louer.com are the first to come to mind, any others?

 

[2010newbie]

My Mother rents out rooms and a basement apartment in Whitby. She has had a lot of success with Kijiji.ca. I rent out rooms in my house, but I only rent via word of mouth.

She also performs reference and credit checks on the prospective tenants. She has only had one wackjob - a crazy librarian that went nuts in the middle of the night. Police had to come and remove her from the premises.

 

[Bzzliteyr]

That's my plan.. references and credit checks.  Anyone willing to go through those is probably safe...

 

[ballz]

Yep. Oh wait. What's that saying about opinions and assholes?

Mine is right and if you don't agree you're an asshole? Har har! ;D

 

[TimBit]

Nope, varies by area.  $1200 for Montreal seems a little low to me.

Montreal is a cheap place to rent. Average rent in 2009 was 'round 650$. Speaking of which Bzzlite, make sure you take into account the large availability of cheap rentals in Montreal.

As a student, I lived there for 5 years and never had any issues finding proper well located appartments below 800$.