Steps to Becoming a Landlord
| Step | Timeline |
|---|---|
| 1. Assess finances | Months before |
| 2. Get pre-approved | 1-2 weeks |
| 3. Find rental property | 1-6 months |
| 4. Close purchase | 30-60 days |
| 5. Prepare property | 1-4 weeks |
| 6. Find tenants | 2-4 weeks |
| 7. Manage ongoing | Continuous |
Financial Requirements
Down Payment
| Property Type | Minimum Down | Notes |
|---|---|---|
| Rental (investment) | 20% | Required for non-owner-occupied |
| Owner-occupied rental | 5-20% | If you live in one unit |
| Commercial (5+ units) | 25-35% | Higher requirements |
Example Costs
| Purchase Price | 20% Down | Closing Costs | Reserves | Total Needed |
|---|---|---|---|---|
| $400,000 | $80,000 | $6,000-$16,000 | $10,000 | $96,000-$106,000 |
| $600,000 | $120,000 | $9,000-$24,000 | $15,000 | $144,000-$159,000 |
| $800,000 | $160,000 | $12,000-$32,000 | $20,000 | $192,000-$212,000 |
Closing Costs Breakdown
| Cost | Amount |
|---|---|
| Land transfer tax | 1-4% of price |
| Legal fees | $1,000-$2,500 |
| Title insurance | $300-$500 |
| Home inspection | $400-$600 |
| Appraisal | $300-$500 |
| CMHC fee | 0% (20%+ down) |
Rental Property Financing
Mortgage Options
| Lender Type | Advantages | Disadvantages |
|---|---|---|
| Big banks | Stability, relationship | Stricter criteria |
| Credit unions | Flexibility | Geographic limits |
| B lenders | More lenient | Higher rates |
| Private lenders | Fast approval | Very high rates |
Qualification Factors
| Factor | What Lenders Check |
|---|---|
| Down payment | Minimum 20% |
| Credit score | 680+ preferred |
| Income | Debt ratios |
| Rental income | Often 50-80% added to qualify |
| Experience | First-time vs seasoned |
Stress Test
| Rate | Impact |
|---|---|
| Contract rate + 2% | Must qualify at higher rate |
| Or 5.25% floor | Whichever is higher |
| Reduces borrowing | May need larger down payment |
Analyzing Rental Properties
Key Metrics
| Metric | Formula | Target |
|---|---|---|
| Cash Flow | Rent - All expenses | Positive |
| Cap Rate | NOI ÷ Price × 100 | 4-8%+ |
| Cash-on-Cash Return | Cash Flow ÷ Cash Invested | 4-10%+ |
| GRM (Gross Rent Multiplier) | Price ÷ Annual Rent | Lower = better |
Example Analysis
| Item | Monthly | Annual |
|---|---|---|
| Rent | $2,500 | $30,000 |
| Less expenses: | ||
| Mortgage (P+I) | $1,800 | $21,600 |
| Property tax | $350 | $4,200 |
| Insurance | $100 | $1,200 |
| Maintenance (5%) | $125 | $1,500 |
| Vacancy (5%) | $125 | $1,500 |
| Property mgmt (0-10%) | $0-$250 | $0-$3,000 |
| Total Expenses | $2,500-$2,750 | $30,000-$33,000 |
| Cash Flow | $0 to -$250 | $0 to -$3,000 |
Many Canadian properties are cash-flow neutral or negative.
Where Profit Comes From
| Source | How It Builds Wealth |
|---|---|
| Cash flow | Monthly income after expenses |
| Mortgage paydown | Tenant pays your mortgage |
| Appreciation | Property value increases |
| Tax benefits | Deductible expenses |
Choosing a Property Type
| Property Type | Pros | Cons |
|---|---|---|
| Single-family home | Simple, desirable | Lower cash flow |
| Condo | Lower price, amenities | Condo fees, restrictions |
| Duplex/triplex | Live in one, rent others | More management |
| Multi-family (4+) | Economies of scale | Complex financing |
| Student rental | High rent/bed | High turnover |
House Hacking
| Strategy | Description |
|---|---|
| Duplex/triplex | Live in one unit, rent others |
| Basement suite | Rent basement of your home |
| Room rentals | Rent extra bedrooms |
| Benefits | Lower down payment (5%+), cover mortgage |
Finding Tenants
Advertising
| Platform | Cost |
|---|---|
| Facebook Marketplace | Free |
| Kijiji | Free-$50 |
| Rentals.ca | $50-$150 |
| Zumper | Free-$100 |
| Property management | 5-10% of rent |
Tenant Screening
| Check | How |
|---|---|
| Credit report | Equifax/TransUnion (consent required) |
| Employment | Verify with employer |
| Income | 3x rent typically required |
| References | Previous landlords |
| Rental history | Eviction records |
Red Flags
| Warning Sign | Risk |
|---|---|
| No references | Unknown history |
| Rushed timeline | Hiding something |
| Cash only | Income concerns |
| Poor credit | Payment risk |
| Frequent moves | Stability concern |
Provincial Landlord-Tenant Rules
Rent Control by Province
| Province | Rent Control? | Max Annual Increase |
|---|---|---|
| Ontario | Yes (some) | 2.5% guideline (2024) |
| BC | Yes | 3.5% (2024) |
| Quebec | Yes | Based on calculation |
| Alberta | No | Market rate |
| Manitoba | Yes | 3% (2024) |
| Saskatchewan | No | Market rate |
| Nova Scotia | No | Market rate |
| New Brunswick | No | Market rate |
Ontario Rent Control
| Property | Rent Controlled? |
|---|---|
| Built before Nov 15, 2018 | Yes |
| Built after Nov 15, 2018 | No |
| All residential | Some protections apply |
Security Deposits
| Province | Allowed | Amount |
|---|---|---|
| Ontario | Last month’s rent only | 1 month rent |
| BC | Damage deposit + pet deposit | 0.5 month each |
| Alberta | Security deposit | 1 month max |
| Quebec | No security deposit | Illegal |
| Manitoba | Security deposit | 0.5 month max |
Eviction Rules
| Province | Grounds Required | Notice Period |
|---|---|---|
| Ontario | Specific grounds (LTB) | 60-120 days |
| BC | Specific grounds (RTB) | 30-120 days |
| Alberta | Various | 14-90 days |
| Quebec | TAL process | Varies |
Landlord Expenses
Deductible Expenses
| Expense | Deductible? |
|---|---|
| Mortgage interest | ✅ Yes |
| Property tax | ✅ Yes |
| Insurance | ✅ Yes |
| Maintenance/repairs | ✅ Yes |
| Property management | ✅ Yes |
| Utilities (if included) | ✅ Yes |
| Advertising | ✅ Yes |
| Legal/accounting | ✅ Yes |
| Travel (property visits) | ✅ Yes (reasonable) |
| CCA (depreciation) | ✅ Yes (with caution)* |
*CCA can cause recapture issues on sale.
Not Deductible
| Expense | Why |
|---|---|
| Mortgage principal | Not an expense |
| Capital improvements | Add to cost base |
| Personal use portion | Must prorate |
Property Management
Self-Manage vs Hire
| Factor | Self-Manage | Property Manager |
|---|---|---|
| Cost | Free (your time) | 5-10% of rent |
| Time required | 5-10 hrs/month | Minimal |
| Night calls | You | Manager |
| Tenant screening | You | Manager |
| Best for | Local, few properties | Remote, multiple |
Typical Property Management Fees
| Service | Fee |
|---|---|
| Monthly management | 5-10% of rent |
| Tenant placement | 50-100% of first month |
| Lease renewal | $100-$300 |
| Maintenance markup | 10-20% |
Common Landlord Mistakes
| Mistake | Consequence | Solution |
|---|---|---|
| Overpaying for property | Negative cash flow | Analyze before buying |
| Poor tenant screening | Non-payment, damage | Thorough checks |
| Ignoring maintenance | Bigger repairs later | Regular inspections |
| Wrong insurance | Claim denied | Landlord-specific policy |
| Not knowing laws | Legal trouble | Study provincial rules |
| No reserves | Crisis when repair needed | Keep 6 months expenses |