For homeowners, renting out a room in your home, a basement apartment or purchasing an investment property can be an appealing way to help with the mortgage, utilize extra space or make a real estate investment.
According to Phil Dorner, president of the Ontario Real Estate Association, beyond the additional income, a rental property can be a valuable asset to your investment portfolio, as well as useful for family needs (including housing an aging relative or perhaps as a home for college-aged children close to campus).
“While there are clear benefits, before you consider becoming a landlord, make sure that you have a good grasp of what getting into the rental property business really entails,” says Dorner.
Here are a few tips for prospective landlords to get started: Read the Residential Tenancies Act: Know your rights and responsibilities as a landlord. Understanding the Act will help protect you as a landlord and also provide clarity on the roles of landlord and tenant.
Screen tenants: Choose your tenants carefully. Make sure that you have prospective tenants fill out an application, check their references and finally, carry out a credit check through a credit bureau.
Talk to your insurance company: Make sure to notify your home insurance company to avoid liability. Ensure your rental suite is legal: Make sure your suite complies with municipal bylaws. If the suite is not up to standards, you will not be able to get insurance.
Learn from other landlords: Do your research and talk to successful landlords
who know the lay of the land. Tapping into the expertise of successful and experienced landlords is invaluable for first timers.
Understand the responsibility and time commitment necessary in being a landlord and, if you are considering renting out a room in your home, make sure that you are comfortable making concessions in terms of your personal space and privacy.
Adds Dorner, “It is also important to keep in mind that whether your rental suite is in your home or another property, the onus is on you to be available for dealing with anything that goes wrong – from a flooded basement to a broken toilet, you will need to be on call to deal with these situations if and when they should arise.”
If you are planning on purchasing an investment property, speak to your Realtor about your goals so that you can be sure that the property you choose is appropriately situated, outfitted and conducive to attracting high quality tenants.
Source: EMC Lifestyle (Submitted by the Ontario Real Estate Association.)
What Happens when Buyers change their mind and want out of a Real Estate Transaction?
Here are some answers to common questions.
If you are buying a new condominium from a builder, then you have 10 days to change your mind. You do not need a reason. This does not apply if you buy a new house from a builder and does not apply if you are buying a re-sale home or condominium.
Can a Buyer change their mind and just not pay the deposit?
No. Once an offer is accepted, the Buyer cannot just change their mind and not pay the deposit. They can be sued by the Seller for any loss that the seller might incur.
For example, the Buyer offers $300,000 which the seller accepts. The Buyer changes their mind and does not pay the deposit. The Seller re-sells the property for $275,000. The Seller can sue the Buyer for the difference, or $25,000.
Can Buyers change their mind and just not waive their conditions?
Most real estate contracts are conditional on the Buyer being able to obtain financing, being satisfied with a home inspection report, or being satisfied with a condominium status certificate when buying a re-sale condo. Many buyers think that these conditions give them the automatic right to just change their minds and say they were not satisfied. It is not that easy. Case law has demonstrated that Buyers must try and satisfy any condition in good faith meaning that they need to have a legitimate reason why they found the home inspection report or condominium status certificate unsatisfactory.
What happens to the deposit when the Buyer changes their mind?
In most cases, the deposit is held by the Seller’s real estate brokerage, in trust. Under the law, when a deal breaks down, the brokerage cannot pay the deposit to anyone without both the Buyer and the Seller agreeing on how the money should be paid out and to whom. If the parties to the sale cannot agree, they can take the matter to court and have the court decide on the disposition of the funds.
Is there a “legal” way for a buyer to get out of a deal?
This is not an easy answer. If for example, there was a major easement on title that was not disclosed to the buyer in advance, they can usually cancel the agreement without penalty. However, there have been other cases that indicate that if there is a problem with a city work order or title problem for which the seller can obtain title insurance to protect the buyer, then the buyer cannot refuse to close. A buyer can also cancel if there has been substantial damage to the property before closing, such as a flood that was not repaired. You can’t refuse to close if the oven is not working on closing.
The better answer in all of these situations is to be very careful and serious before you make any decision to buy a home. Changing your mind later can be very expensive.
With winter settling in, it’s time to get your fireplace ready for the cold months ahead. Stay safe and warm with these fireplace safety tips.
Annual Inspections – Have your fireplace and chimney inspected and cleaned by a professional to ensure that it’s obstruction free and clear of creosote – a black, oily accretion that builds up on the inside walls of the chimney. Because creosote is highly combustible, a thick accumulation creates a fire hazard.
Length of Use – Use the fireplace for short-duration fires, no longer than five hours.
Plan Ahead – Clear the area around the hearth of debris, decorations and flammable materials. Use a metal mesh screen with fireplaces. Leave glass doors open while a fire is burning.
When to Clean – During periods of heavy use, clean the wood-burning firebox regularly once the embers are cold. Leave about an inch of ash because it acts as insulation, allowing the coals to heat faster and retain more heat.
Upkeep – Check that vents are unobstructed and able to do their job. Clean the fan and all air circulation passages. In non-wood burning fireplaces, clean and adjust glowing embers and logs for best appearance.
Cap Your Chimney – Have a rain cap and screen installed at the top of the chimney to deter animals from entering, help prevent water damage and keep debris from blocking the opening. A spark arrestor will prevent live embers from escaping the chimney.
Safety First – Always keep a fire extinguisher on hand in case of emergency. Install smoke and carbon monoxide detectors in the same room as the fireplace.
Use Common Sense – Never leave the fire unattended. Make sure the fire is completely out before leaving the house or going to bed. Keep children and pets away from the fireplace. Do not use a vacuum to clean up ashes, because embers can smolder long after the fire is out, creating a real fire hazard.
Source: RE/MAX Realtron Realty Inc., Brokerage
•You can try out the neighbourhood and if you change your mind later, you can just cancel the option;
•If the market price of this home is more than $280,000 at the end of your lease, you still get to buy it for the same $280,000.
•If the market collapses and the home is worth less than $280,000, you do not have to go through with your purchase.
Here are some disadvantages:
•There is no guarantee that a bank will give you your financing when you exercise your option. You still have to improve your credit score or find someone to co-sign your application;
•If you don’t go ahead with your purchase, you usually have to forfeit the option payment.
Here are some advantages for the landlord:
•Tenants on rent-to-own typically take better care of the property, thinking that they may own it one day;
•Your profit is fixed at the time of the option.
In all cases, it is important that the parties have legal advice. Some agreements state that if your rent is late once, the tenant forfeits the right to buy the home. This needs to be changed so that as long as the tenant cures any default in a timely manner, they do not lose the right to buy. The tenant should also have the title checked to make sure that the correct owner of the home is giving the option.
Landlords need to make sure that the option payment is covered in a separate agreement, and is not included in the lease. If it is included in the lease and then the tenant defaults, if can be harder to evict the tenant from the property. Landlords also need to conduct a thorough credit and background check, to make sure that the tenant looks like they will have the means to make all of the required payments.
Rent to own can work for landlords and tenants if you are properly prepared in advance.
Source: RE/MAX Realtron Realty Inc.,Brokerage