Why you shouldn’t be a landlord in Alberta

Being a landlord in Alberta can be a rewarding and profitable experience. Over my years being a landlord, I’ve averaged $10,000 per year per house in mortgage paydown and about 15% appreciation on the homes that we own. This has led to a significant increase in my overall net worth, but, as my mother would say “nothing comes for free.” If you aren’t interested in some good old-fashioned elbow grease and dealing with the occasional call from tenants, I’m not sure being a landlord is for you.

As a landlord, it's important to be aware of the associated risks and take steps to minimize them. In this blog post, I will explore some of the biggest risks of being a landlord in Alberta.

• Tenant Issues

One of the biggest risks of being a landlord in Alberta is tenant issues. This can include problems such as late rent payments, property damage, and eviction. It's important to carefully screen tenants before renting to them, including running a credit check and checking references. It's also important to have a strong lease agreement, that is in line with the Residential Tenancies Act, that outlines expectations and consequences for non-payment or property damage.

• Maintenance and Repairs

Another risk of being a landlord in Alberta is the cost of maintenance and repairs. As a landlord, you are responsible for maintaining the property in good condition and ensuring that all repairs are made promptly. This can include expenses such as repairing appliances, fixing plumbing issues, and replacing roofing or windows. It's important to budget for these expenses and have a plan in place for handling unexpected repairs. We have always put aside what we (unprofessionally) call our “holy shit fund.” For each door that we own, we put $5000 aside for unexpected maintenance an repairs.

• Legal Issues

Landlords in Alberta must comply with a variety of laws and regulations, including the Residential Tenancies Act and the Fair Trading Act. Failure to comply with these laws can result in legal issues, fines, and even loss of rental income. It's important to stay informed about the latest laws and regulations and work with legal and financial professionals to ensure that you are in compliance. A great resource for landlords is the Government of Alberta website.

• Property Damage and Liability

As a landlord, you are responsible for ensuring that the property is safe for tenants and visitors. This includes maintaining the property in good condition and addressing any safety hazards promptly. Failure to do so can result in property damage, injury to tenants or visitors, and liability issues. It's important to have the proper insurance coverage to protect yourself and your investment. As a landlord one of our largest expenses is insurance. We review our policies every year and have dealt with significant increases to our costs over the years. When choosing a policy we carefully examine our deducible and make sure that it doesn’t exceed our tenant’s damage deposits and we always look to include a clause for rental income replacement in the event the property was uninhabitable for a number of months and we were unable to collect rent to cover our mortgage payments.

• Non-Payment of Rent

Finally, non-payment of rent is a risk that all landlords face. If a tenant fails to pay rent, it can result in financial losses and legal issues. It's important to have a plan in place for handling non-payment, including taking legal action if necessary. It's also important to work with tenants to address any financial issues they may be experiencing and find a solution that works for both parties. We have always used a tenant payment system that allows for different forms of payment for rent. Currently, we are using the Tenant Pay system to collect our rent.

In conclusion, being a landlord in Alberta comes with several risks, including tenant issues, maintenance and repairs, legal issues, property damage and liability, and non-payment of rent. To minimize these risks, it's important to carefully screen tenants, maintain the property in good condition, comply with laws and regulations, have the proper insurance coverage, and have a plan in place for handling unexpected issues. With careful planning and preparation, being a landlord in Alberta can be a rewarding and profitable experience.