Although being a landlord in the Ontario real estate market can seem lucrative, it’s not free of costs and expenses. Many aspiring landlords have to deal with a curveball when they encounter hidden fees. That’s not to say being a landlord is a losing proposition, of course. But it’s essential to know the hidden costs and fees associated with managing a property beforehand. In this post, we’ll look at fees associated with Ontario real estate and how a brokerage factors in to your path forward as a landlord.
Insurance is a MUST for Landlords in the Ontario Real Estate Market
If you are a regular homeowner renting out your basement, spare room or some other unit, you need to pay for insurance costs. Why?
If there ever is an emergency due to something like a natural disaster, you could face significant fines from the CRA without landlord insurance. Of course, the type of policy you pay will vary based on the type of policy coverage you seek.
Types of Landlord Insurance Policies & Costs
- Liability protection for injuries and property damage
- Protection from fire, water and wind damage
- Coverage policies for break-ins, vandalism and property crimes
- Coverage in the event a tenant defaults on their rent
- Coverage in case the rental property becomes uninhabitable due to repair
Paying for landlord insurance is a better proposition than paying the fines associated with not having insurance. Typically, the average cost of residential landlord insurance for Ontario real estate is $900 per year for a house and $400 per year for a condo or apartment unit. That may vary, of course.
With that said, working with a real estate broker can help you determine which policy is the right one based on the type of property you are renting and they can make sure you aware of and operating under the code of ethics when it comes to Canadian real estate transactions.
Safety Checks and Property Maintenance Costs
We’ve all heard horror stories about negligent landlords who allow things like mold, leaky pipes, or even infestations to persist without investigation. Make no mistake, though, that this is more than just negligence – it’s a violation of the law. Landlords are responsible for safety checks and property maintenance. Of course, that responsibility comes with a few costs.
Maintenance Costs for Landlords in the Ontario Real Estate Market
- Plumbing Systems – $58 to $260 per hour
- Damaged doors and windows – $800 to $4,000 (per window) $630 and $1,800 (per door)
- Mold and mildew remediation – $400 to $6,000 per job
- Faulty electrical units – $90 to $180 per hour
- Ceiling repairs – $320 and $1,300 per job
At times determining who is responsible for certain costs in the home can be a grey area. In the Ontario real estate market, though, the landlord is responsible for major repairs such as the ones listed above. A real estate broker can outline some of these costs before you welcome a new tenant.
Costs Associated With Daily Cleaning
One thing a landlord is not responsible for is keeping a tenant’s living space clean. However, you, the landlord, must keep the surrounding property clean. That can sometimes mean a tidy lawn, a clean backyard, and well-maintained walkways. Also, assume responsibility for maintaining garages and driveways if not otherwise agreed upon. You should also remove debris and clutter on the property that may attract pests such as rodents and cockroaches.
Fortunately, the cost of routine cleaning isn’t too exorbitant unless you’re facing structural damage of sorts. The typical landlord is looking at a few hundred dollars a month tops. Of course, this can vary depending on the size and condition of the property.
Legal Fees for Landlords in Ontario Real Estate Market
The last thing a landlord wants to hand out is an eviction. Having to evict a tenant is a nightmare scenario, and it’s always best to avoid that situation. Nevertheless, tensions arise between landlords and tenants, and there are times when you have to take legal action. Taking legal action against the tenant means paying fees.
Here’s a quick breakdown of what eviction costs may look like.
The Cost of Evicting a Tenant in the Ontario Real Estate Market
- It usually takes 3-5 months to evict a tenant
- Court application fees cost $175
- Sheriff fees cost $400 (although a landlord will rarely need a sheriff to evict a tenant)
- Legal fees cost $2,000
- Property damage costs may amount to $1500-$3500
- Lost rental income may amount to $9000
- Total eviction costs may reach $11,000 (or more) in severe cases
Fortunately, most landlords will never have to deal with tenant evictions. If they do, the eviction process will usually be smooth, and the tenant will comply. However, when you are dealing with a troublesome tenant, you can expect to dish out some fees to have legal action executed.
Navigating the Costs of Landlording in Ontario Real Estate
It’s important to remember that none of the costs mentioned in this post are set in stone. The cost will vary depending on your location, the type of unit you are renting, and the overall condition of the unit.
For costs related to listing a rental property, it’s advisable to speak with an Ontario real estate broker instead of listing on your own. They can help you list your property strategically to attract the most suitable tenants. In turn, this will reduce some landlord costs and make it seem like less of a liability.
Are you looking to list a rental property in Ontario? Get in touch with us so we can get your property on the market today!