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 |