Rent is skyrocketing in Canadian hotspots like Toronto. Just this past April, average rents soared to $3,000. Your ears might perk up if you’re an aspiring landlord — but that $3,000 doesn’t hit your bank account clean. 

Being a landlord in Ontario requires time, attention, and thinking on your feet. In other words? Work. We talked to Mike Soder and Sam Renaud, two property investors primarily investing in Ontario real estate.

“I don’t find being a landlord difficult at all,” says Mike Soder, real estate investor. “Without a doubt, real estate is the best investment. I wish I started earlier — year over year, the numbers support it.”

But Mike has a system that supports his financial freedom, like strong communication with tenants and outsourced property management work to ensure he meets all his obligations. Hands-on activities that some investors might prefer to do without, taking a more silent investment approach. Let’s explore more. 

1. Don’t slack on tenant screening — in Ontario, that’ll cost you.

Landlords usually have three ways to screen a tenant: past landlord references, proof of income, and credit checks. Still, you might not always predict whether a tenant will pay their rent on time. If they’re a little late, you should have some wiggle room to make sure you make your own mortgage payments on time. 

But if you land a tenant who decides not to pay their rent? A non-paying tenant doesn’t have to leave your property until you’ve followed the RTA process of issuing an N4, applying for an L1 hearing, and then waiting up to a year for that hearing to take place. Yes, the LTB website says 25 days — but backlogs have made that wait time closer to a few months, at the very minimum. 

So, what can you do?

“I check landlord references, personal references, credit checks, and require a detailed application,” says Sam Renaud, Ontario real estate investor. 

Of course, you could hire a real estate investor to handle this for you, but Renaud prefers her personal touch. 

“I prefer to meet tenants myself. I also like to ask why they’re vacating their previous residence and how long they were there. This gives me a good idea if they hop from place to place because of consistent evictions.”

2. You need a cash reserve for, well, everything. 

Mortgage approval and a down payment aren’t enough to sustain a rental business. You need more capital to take care of maintenance, interest rate hikes, and empty months. 

A surprise broken heating system could force you to cough up thousands of dollars in one night. Or you might get a text — a tenant is breaking their lease, and your unit might sit empty for a month before you find a new tenant. 

See the dilemma? While being a landlord is a great investment in theory, you can’t do it with an empty bank account after buying your rental property. 

You have to budget for both money and time as a landlord. If you get more value out of outsourcing, a property manager could be worth budgeting for as well. 

“While I currently self-manage my properties, I always budget for hiring a property manager when underwriting,” says Sam Renaud. 

3. Keep an eye on interest rates and refinancing options. 

Recently, the Bank of Canada has steadily increased interest rates, making variable-rate mortgages a bit of a nightmare for real estate investors. But a solid landlord prepares for this possibility with research on other lending options, an ability to refinance, and understanding of the business.

“Interest rates will come down again at some point,” says Mike Soder. “You have to look at it long-term. If you have to chip in a few hundred a month because of high rates, it’s not the end of the world. You’re still having someone else pay the majority of your mortgage.”

Sam Renaud focuses on a specific kind of real estate to combat increasing interest: multifamily and commercial property. 

“My primary focus is on large multifamily real estate investments that necessitate commercial mortgages linked to the bond market, as opposed to being influenced by the Bank of Canada’s interest rates. Still, as with any other variable in real estate, interest rates are worth keeping an eye on.”

4. Get help if you need it. 

We get it — hiring help takes away from your profits. 

But if you forget a vital maintenance visit, or overlook a rental increase — that hurts your bottom line, too. 

“I hire a real estate agent to look after rentals and agreements. I have a landscaper look after all outside maintenance.”

All this helps Mike fix issues quickly when they arise.

Still, a bit more planning and organization could help a landlord handle these things solo. Despite budgeting for management costs, Sam prefers to fix things herself. 

“My goal is not to buy myself a job. That being said, there are hybrid options available. For example, you could have a caretaker living in the building that acts as your “boots on the ground” while you manage the trades and budget. Creativity in real estate is key.”

5. Know the rules. 

Ontario’s Residential Tenancy Act (RTA) is a piece of legislation that dictates landlord and tenant laws in Ontario. 

• Do you know what’s legal and illegal to base tenant approvals on?

• What constitutes reasonable enjoyment hindrance, and what are the consequences? 

• How often and how much can you increase rent?

• What are permissible reasons to evict a tenant, and how do you enforce them?

These are just a few vital answers you can find in the RTA — but slacking on this knowledge can result in serious fines. We’re talking tens of thousands of dollars for loss of enjoyment or bad-faith evictions.