Planning to Rent? What do I need to know?
Leasing a home is almost as complicated as purchasing a home. It takes many of the same steps but rather than a bank qualifying you, that's a decision for the Landlord to make. It can be a pretty overwhelming process and there are many legal ramifications that must be considered. A real estate professional will be able to help walk you through this process and do their best to ensure a smooth transaction.
There are many things to consider before you start looking for places:
Figure Out What You Can Afford
There's a lot more to it than just the monthly payment the Landlord is asking for. The majority of the time, if you're renting a full house, you'll also be responsible for 100% of the cost of utilities. These are things like gas, hydro, water, and sewage (and often the hot water tank rental). You may also be required to set up your own cable and internet. If it's a condo rental, sometimes the landlord will have the condominium maintenance fees built into the price of the monthly rent or it could be an extra payment on top of your rent. You'll also need to protect your belongings and that will come in the form of Personal Content Insurance which is inexpensive but very important.
It's important to know all the extra costs that you will be required to pay. You'll have to do some digging and make some phone calls to the utility companies to get a rough idea of how much each service will cost for the size and location of the home you're inquiring about. So add up estimates for all these costs and keep these in mind for when you're looking at the monthly price of the rentals.
If the costs of utilities, insurance and rent itself wasn't enough, remember that you'll also want to make sure you have enough left over for food, clothing, furniture, transportation, social/entertainment funds, but most importantly SAVINGS!!! While having freedom of renting a place on your own can be great, it's VERY easy to get stuck in a cycle of renting where the majority of all of your income goes towards the rental and very little goes into saving for a down payment on a house. A down payment may be the difference between being a long term renter or having the opportunity of gaining equity and eventually being mortgage free. If you are planning on renting for a long time, it's crucial to start saving for retirement right away because you will not have the luxury of living mortgage free after you retire.
If you have any questions on anything above, feel free to email me and I'll be happy to assist.
How Do Landlords Qualify Me?
Landlords will ask for several things to make sure they feel comfortable that you'll respect their home and will pay rent when it's due. They'll ask for a number of things to get an idea of the type of tenant you'll be and it is ultimately up to them if they'll let you rent their home.
For all tenants on the lease agreement, Landlord's will generally ask for:
Credit Reports - Equifax or TransUnion are the go-to companies in Ontario to provide credit reports. They offer a full history, including closed accounts, that landlords will look at to see the amount of debt you're currently carrying. These reports will also show how many missed or late payments you've had which is what landlords will pay the closest attention to.
Employment Letters - Written from the management or HR department stating length of employment with the company, your position, wage/salary, and the amount of hours you work if it is a part-time job.
References - From previous landlords or personal references if you've never rented before,
Rental Application - A real estate professional can send you this form which outlines who the tenants will be, their employment history, current and past residences, vehicles, financial obligations, etc. and
Record Check - Sometimes the Landlord may ask the applicant to get a police record check to mitigate the risk of a tenant with ill intentions or a history of fraud.
Let's Start Looking!
Once you figured out that you do want to rent and you know what you can afford, now comes the fun part- finding the house. It can be very overwhelming, scanning the internet on countless websites looking for places to rent. There are many places to find available homes but another decision you'll need to make is whether you want to try it on your own or work with a Realtor to help find you the property. There is almost always no cost for the tenant to use the services of a Realtor to assist securing a place to lease. It's basically the same as buying a home where the Seller, or in this case the Landlord, is the party that pays for the Seller/Landlord's agent as well as the Buyer/Tenant's agent. The only time a Buyer/Tenant would be required to pay commission is if the Seller/Landlord is not offering commission for the buyer brokerage but that is something that would be determined easily. It would then be up to the Buyer/Tenant to either pay the amount, usually 1/2 Month's rent for a lease, that was agreed upon in the Buyer Representation Agreement that you would have signed when you decided to use a Realtor or select a different place that is offering commission. The choice is up to you but I always think it's easier to have professional help, especially if it might not cost you a thing.
So these are some of the basic things to know about rentals. If you have any further questions or want to get started, don't hesitate to reach out and I'd be happy to give you a hand! I'm a Realtor in the Orangeville area and would love the opportunity to help you find a place rent or help you lease out an investment properties by finding qualified tenanats. The areas I serve are Orangeville, Caledon, Mono, Brampton, East Garafraxa, Shelburne, Grand Valley and Amaranth. Call, text or email me anytime!