Six tips on becoming a landlord or investor in rental property

1. UNDERSTAND WHAT IT MEANS TO BE A LANDLORD: Residential real estate generally provides three possible ways to get a return on your investment: when it’s sold, assuming it has grown in value, by collecting rent, and through tax savings, such as the mortgage interest deduction.

So, if you elect to buy a property for the long-term investment potential, the goal should be to ensure that the rental income covers the cost of your mortgage and monthly maintenance costs.

If you buy a foreclosed home, you’ll have to factor in the cost of repairs to ready the home for rent. And if you have a mortgage on the property, you’ll need to be prepared to cover the costs for however long it takes to find a tenant.

“Real estate is a great investment if people are paying their rent,” says Princis. “If they’re not paying their rent, it’s a horrible investment.”

2. BUY IN AN AREA WITH A HISTORY OF STRONG RENTAL DEMAND: Neighborhoods near universities are a good option. For homes in residential areas, proximity to schools can be a good draw for families.

Condominiums and similar properties in communities with a homeowners’ association can be a great option because the association arranges for upkeep on the property.

But check the fine print on your mortgage and homeowners’ association rules to make sure turning your property into a rental isn’t forbidden.

If you’re going to buy a foreclosure, be prepared to compete with other investors, many of them paying in cash. And because many require upgrades and repairs, expect that it will take longer until you’ll be generating rental income.

3. CONSIDER USING A MANAGEMENT FIRM: Determine whether you want to select the tenant and handle property issues or hire a company to do it. If you take on the responsibility, you are obliged to fix any problems (leaky faucets, broken furnace, etc.) or find professionals to do it.

“Are you prepared to do all of this on your weekends or evenings or get calls while you’re at work because a pipe burst and it’s flooding?” asks Jim Warren, chief marketing officer for property management company FirstService Residential Realty. “What’s that threshold worth to you?”

Property management firms can charge a percentage of the rent, sometimes 10 percent or more.

Hiring out the hands-on landlord job also makes sense if your rental property is not in the same city where you live.

4. DO THE MATH: Although prevailing rental prices will go a long way toward determining what you can charge, getting the best return on your investment starts with making sure you’re going to get enough rent to, ideally, cover expenses and costs.

Princis’ formula is charging 15 percent above monthly mortgage and maintenance costs. So if those costs add up to $1,000, he’ll look to charge $1,150.

Of course, flexibility might be called for if you’re unable to get a tenant in for months and months.

Experts recommend starting with popular rental listings in newspapers or on Web sites such as Craigslist.com, Trulia and Zillow, to see what comparable apartments or rooms are going for.

The good news: Rents for single-family homes rose 2.3 percent last year from 2011, according to Trulia.

5. SCREEN TENANTS THOROUGHLY: Once your rental starts drawing inquiries, it pays off to screen prospective tenants by asking for previous landlord references and running a credit and a criminal records check.

Experts also recommend asking for a deposit equal to one month’s rent, plus extra if the tenant has pets. Also, have a walk through of the unit with the tenant and ask that they sign off on the condition of the property before they move in. That will help avoid conflicts over the security deposit if there are damages once they’re ready to move out.

6. GET FAMILIAR WITH LANDLORD LAWS: As a neophyte landlord, it’s important to know your exact responsibilities under the law.

Rescue a Rental Kitchen

Rental apartment kitchens can often be the most difficult to personalize. Unlike other rooms, the kitchen is already furnished, like it or not. Don't despair - there are still temporary ways to cover an old appliance or disguise ugly flooring and walls.

Cover the Floor The best way to keep your attention off that ugly flooring is by putting a rug on top of it. Outdoor rugs, like this 5'x8' Chevron Rug from World Market, are ideal for the kitchen because they'll survive food messes. $127.49

Line Your Drawers and Shelves Lining your shelves and drawers can help hide ugly old laminae and dirty drawers. This Real Simple Easy-Cut Shelf & Drawer Liner from Bed Bath & Beyond is $7.00/roll but there are plenty of other options out there.

Install Roll-Out Drawers in Your Cabinets At about $50 each these Bamboo Roll-Out Cabinet Drawers from The Container Store may seem a little steep for dressing up a rental kitchen, but you can take them with you when you leave. And once you've installed these roll out drawers where there were once plain ole shelves, you'll never go back.

Disguise Old Appliances If your landlord is clinging to that old refrigerator, consider temporarily disguising it. This Black Side by Side Custom Refrigerator Cover from Appliance Art will disguise the old fridge and make it feel more modern. $84.95

Put Some Light on It Adding under cabinet lighting, like this RATIONELL LED Lighting from IKEA, will help brighten up the kitchen counters. $49.99

Cover Ugly Tile If you're dealing with ugly tile in the kitchen, consider covering it with wall tiles, like the FASTBO from IKEA. For a temporary application, use sticky-backed velco to apply the panels to the wall. $29.99

Switch Your Hardware Replacing the hardware on your cabinets can provide a quick and affordable facelift. Be sure to choose hardware that matches the holes already on the cabinet and drawer fronts. This Martha Stewart Living Medallion Cabinet Hardware from The Home Depot retails for $1.99/each.

What should be included in a rental application?

The main question on a landlord's mind when he/she meets a prospective renter is: Will this person pay the rent on time? Personal impressions are all good and well, but as a landlord, you're going to want something a little more substantial before you entrust your property to a stranger. This is where rental applications enter the picture.

A rental application should paint a picture of the tenant's finances and reliability in paying rent. Formulate a list of questions, in document form, and have a lawyer check it over to sure that you are adhering to fair housing laws, and to protect you from any discrimination claims in relation to your tenant-screening process. Include a code of conduct for the kind of behavior that is or isn't acceptable while living in your unit. State the amount of rent you are requesting and be sure to have the prospective tenant sign the application.

In the application you'll want to ask for personal information, such as name and contact information, as well as how many kids and pets will be living in the property. You should ask for the applicant's permission to run a credit check. You'll need his/her Social Security number and a photocopy of his/her driver's license for this.

You will need proof that the applicant will be able to pay the rent. Ask the prospective renter to provide bank statements and recent pay stubs. If the monthly rent amounts to more than one-third of his/her monthly income, he/she may have trouble making the payments on time and this should sound an alarm for you. Check on the prospective renters' employment history -- how long have they stayed in each of their previous jobs? Evidence of jumping from job to job should give you pause.

Perhaps most important is a rental history including contact information for previous landlords. Call them and check whether this tenant was evicted or remiss with his/her rental payments. A complete history will help you know if this is who you want to entrust your property to.

Reasons to keep renting!

Recently I read a newspaper commentary about Canada’s over-inflated housing prices. At times, these articles can be pretty flat, but this one really sparked my interest.

In short, the writer used rental property prices in Toronto and compared them to what people would expect in a return on their investment from a bond portfolio. He estimated that housing costs in that city are inflated by $100,000.

What’s more, the writer, a finance prof, added that he expects prices to tumble in the next few years. If that’s the case, people buying homes in the near future could find

themselves sorely disappointed in the value of their property and may lose a significant chunk of money if they decide to sell.

Not long ago I wrote in another blog that I bought a condo in Victoria – a market that was touted as being very resilient to economic ups and downs, and generally wouldn't stray from an upward trend – when the market was softening. I expected that the low price I paid for my investment would turn into a profit when I sold three years later. Not so.

What I take from the commentary the professor wrote is renting is far more financially sound still. There may come a time when buying is the best bet for your money, but in the meantime, rental rates are right where they should be, whereas price tags are way out of proportion with what you’ll get for your buck.

Tips on how to survive living with roommates!

Here are some  tips to take to heart before moving in with roommates.

1. Lay out the rules, right from the start. Don’t wait until problems happen before addressing them – make rules when you move in, or even earlier if possible, so everyone knows what to expect and what the consequences are for breaking the rules. Some issues you’ll want to set up rules for include:

 Excessive noise

 Late rent

 How utilities are split

 Having friends over

 Cleaning up

 Who gets to use the bathroom when

 Borrowing stuff

 Going into your roommate’s room without permission

 Which expenses to share (toilet paper, dish soap, garbage bags, laundry detergent, etc.)

Then, write them down as you’re going over the rules and make sure all roommates see what’s being written. This way it’s clear you've all agreed and no one can make accusations that the rules have changed along the way.

2. Have the downtime talk. Tell your roommate about your lifestyle and what you like to do in your spare time before you move in together. This applies whether you’re moving in with a friend, significant other, or someone you haven’t met before. If you’re a big drinker who loves having friends over to party and even spend the night, but your roommate values his or her quiet time with a book or a movie, the living situation could get complicated.

3. Fights are going to happen. Deal with them. Don’t avoid problems because they’ll only get worse. Talk to your roommate about what’s bugging you, rather than letting it fester. It’s guaranteed that something you've repressed will come up again in the future in a much bigger way. So when you do address what’s been ticking you off, be upfront about it, but talk about it calmly to come up with a mutually beneficial solution.

4. Bond a little. Spend time with your roommate in the house or apartment, and out of it. This doesn't mean you have to be best buds, and in fact it can be better to spend plenty of time apart since living together can get intense at times. But going out for a drink or a coffee together and chatting about something other than the dishes or the rent could be a big booster for your relationship with your roommate.

5. Compromise on almost everything. Having roommates means putting together people who might come from totally different backgrounds. Your living situation isn't going to be exactly your idea of perfect all the time, because everyone has their own idea of what perfect is. So be flexible on most things – it will keep everyone happier. For example, if your roommate is sleeping in but you’re an early riser, keep the noise down in the morning. That said, there are some points that you should stand firm on, such as illegal activities. If you don’t want your roommate smoking pot in the house, that might be a point not to compromise on. And if you’re not comfortable waking up to random people passed out on the couch, say so.

6. Lock up for safety and respect. When you go out, make sure all the doors and windows are locked. This isn't just for the safety of your own belongings, you have a roommate who cares about his or her stuff too. Besides, think about how furious you’d be if your roommate didn't lock the door and your laptop went missing as a result. It’s a treat-others-as-you-want-to-be-treated thing. Protect your stuff and your roommates at the same time.

Renters Should Not Overlook at 5 things

Renting is an ideal option for those who enjoy exploring new cities or have recently moved to a new area, as it allows a great insight about the benefits and drawbacks of living in an area without the long-term commitment of owning a home. However, with many rental leases calling for a yearlong agreement, renters must consider several things that could ultimately add to or detract from the renting experience.

Read the following top five overlooked things to consider when signing a lease.

Laundry is a situation that varies on the type of rental property. Rental complexes with several units can offer coin operated shared washing facilities or hookups within each unit. If there are hookups consider the cost of purchasing a washer and dryer if they are not included. When laundry facilities are offered in a common area, consider if they are easily accessible in all types of weather or if climbing stairs with laundry is something that fits into your lifestyle.

Refrigerators are another big appliance that is not always included in a rental. Some may see the lack of this 

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