The legal obligations are not optional
Maintaining the unit in a good state of repair, respecting entry notice requirements, following the standard lease, and complying with rent increase rules are baseline duties. Fire safety in secondary suites is where most owners get caught: interconnected alarms, proper separations, and legal egress.
Screen properly, once
The single most expensive mistake in this business is a bad tenant. Credit check, employment verification, previous landlord references, and a completed application every time. Consistency in your screening criteria also keeps you on the right side of human rights obligations.
- Same criteria applied to every applicant
- Verify employment directly, not just with a letter
- Speak to the previous landlord, not only the current one
Model the real cash flow
Rent minus mortgage is not cash flow. Subtract property tax, insurance, maintenance, a vacancy allowance, and management if you use it. If the number is thin at today's rate, test it at renewal with a higher rate before you buy.
Financing a rental purchase
Rental properties require at least twenty percent down and are underwritten on a combination of your income and the property's. Some lenders qualify using a debt coverage ratio on the property itself, which can be the better route for investors with several doors.
Frequently asked questions
- How much down payment do I need for a rental?
- Twenty percent minimum for a residential rental property. Small multi-unit buildings have their own programs, including insured options.
- Do I need a reserve fund?
- Yes. Three to six months of full carrying costs per property is a sensible minimum given tribunal timelines.
Talk to a Toronto private mortgage specialist
We arrange equity-based financing across Toronto and the GTA, whether you need a first position from a private lender or a second mortgage behind the bank you already have.