To rent or not to rent...
Secondary suite rentals are a great way to supplement your income or to help you pay your mortgage. Becoming a landlord can also be quite the job, so it’s important to know what you’re getting yourself into before you make that leap. Renting out a secondary suite comes with a lot of advantages, for instance, with the extra income you could afford to buy a house in a popular urban neighborhood and it’s also a great way to dip your toes into the property business. Even so, what does becoming a landlord entail? What are some of things you need to know in order to begin that process? How about what type of insurance you will need? Keep reading if you want to know these answers and more.
What to consider before renting out your secondary suite:
Round the clock work:
Being a landlord means that you have new responsibilities which cannot be ignored. For example, you are now charged with finding good tenants, and finding these tenants can be quite a challenge.
You are also under obligation for repairs around the property and to ensure your tenant is safe and comfortable in their living quarters.
It’s important to treat being a landlord like owning a business by having a cushion in your account for unexpected repairs and by keeping track of everything through proper documentation.
Giving up privacy:
When renting out a suite in your home, ask yourself if you are willing to give up some of your privacy. For instance, will you be sharing an entrance, washer/dryer, backyard or deck? Are you OK with not having the same level of privacy your accustomed to?
Do your research:
Familiarize yourself with Alberta's bylaws for secondary suites. What permits do you need? Is your zoning up to snuff? What about fire and safety regulations? Are your basement windows large enough? If you disregard these regulations, you could be shut down at any time and could even face fines and charges. For more information regarding zoning and permits, please visit this link.
Choosing the right tenants:
Who do you want to share your space with? Are you looking for students? Mature students? Single adults?A young couple? Make a list of the characteristics you would like your tenant to have. What is important to you? Where do you live? Do you live close to a university that will attract student renters? Are you downtown and close to many office buildings? Interview your potential tenants, and try to get references when possible to help you make your decision.
Get your tenants to sign a lease agreement:
A lease agreement is your best way to ensure both you and your tenants are protected. It also helps lay out what you expect from your tenants and what they can expect from you. Determine the length of lease you would prefer, for instance, you can weigh out the benefits of either a six month or one year lease term. For guidelines and examples of lease agreements click here.
What you need to know about rental insurance:
We would be remiss as an insurance broker if we did not stress the importance of having proper insurance both for yourself and for your tenants. Typically, if you own your home and you are renting out your basement suite, you need to contact your insurance company right away to let them know. They will document this in your file, or may have to consider underwriting the space depending on the specifics of the situation. That way, in the event of a claim, you can rest assured that you have done your due diligence and disclosed everything to your insurance company to prevent any issues with the claim resolution process.
Your insurance, however, will not cover any damages incurred by the tenant or any damages to the tenant’s own property. For instance, say your tenant vandalized the suite, your insurance typically doesn’t cover those losses. However, if you make it a condition of the lease for your tenant to have his or her own tenant’s insurance, their liability coverage could pay out for the damages. Moreover, it will also keep your tenant protected in the event of a fire or loss that affects his or her contents.
If you have any insurance questions regarding your rental suite, we are more than happy to assist you. You can call us toll free at 1-877-218-2008 or shoot us an email with your questions to [email protected]