I had a conversation with a friend recently that split me on how to respond. The topic was renting out living
space for supplemental income. Whether it’s a room in your house, a basement bachelor suite or a finished
carriage house, there’s an ever-expanding number of ways to earn income as a landlord. But the real question is preparation when it comes to becoming a landlord.
And I suppose that’s why this question left me feeling like I could give two completely different answers. As
a real estate professional, I completely agree that the economics of renting are sound. For first-time buyers,
building an in-laws suite and earning income is a great way to offset your household expenses while
maintaining your privacy and personal space. But, as a friend, I had a different response in mind. ‘DON’T
DO IT!’ flashed in my mind in blinding neon glow. Sound as the economics can be, I have no shortage of
nightmare stories about tenants from hell. I’ve even experienced a few of them firsthand.
I immediately recalled an instance selling a beautiful condo near Kensington Market a few years ago. My
client owned the condo as an investment and was planning to sell. I had hired a cleaner to help get the
place staged and ready for the photographer to come in and get the listing photos. He rented it to a pair of
University of Toronto students as it was an investment property.
He had given them ample notice I would be coming, but somehow they were still surprised when I knocked
on the door with the cleaner. The condition of the condo also let me know that my arrival had caught them
by surprise. Despite only being a few years old, the place was cluttered, messy and had a very strong cat
odour – despite there not being an inch of carpeting in it. I had to offer the cleaner double because she was
ready to leave. In the end, the photographer and I had to help her get the place looking presentable – it
took us over 3 hours, all told.
Some of the things we saw that day, let me tell you, were firsts for me as a real estate agent. Not even
offering to tidy their bedroom to help save us time, the photographer subtly pointed my attention to certain
– let’s call them ‘marital aids’ – which had been left in plain view on a nightstand alongside a pair of fuzzy
handcuffs and a number of lotion bottles. They just left everything out for us to figure out.
I just remember thinking ‘Dude, I’m just trying to sell a condo. What the hell?’ I’m so damn good at my job
that not only did the listing photos turn out amazing, it sold in under a week – AND I helped the messy
tenants buy a condo of their own.
To say my client was less than impressed when I told him this story is an understatement. He was angry
that my time as a professional had been wasted, and he was angry that his property was being treated so
poorly. And that’s on the lighter side of bad tenants that I’ve seen. I’ve seen clients with tenants who
stopped paying rent for extended periods of time (pre-COVID), and clients who have had tenants do actual
damage to their property. It’s an occupational hazard when becoming a landlord.
Becoming A Landlord: Some Straight Talk
In the end, I’m going to share this advice here because it runs along both personal and professional lines: I
think there’s a huge amount of risk involved in renting out space to supplement your income. But, just like
in any other situation, risk can be mitigated if handled properly.
What’s most important to mitigate this risk is ensuring you understand your rights and responsibilities as a
landlord as they relate to the type of housing you’re offering. This is important because they’re completely
different if you’re renting out a room or a self-enclosed rental suite. The better both parties understand their
roles, the smoother the relationship will be.
Tap Your Network!
Next, I recommend clients considering renting out space to look in their own personal networks first.
Whether it’s friends or family, having at least shared acquaintances with a prospective renter can make a
world of difference in the relationship. Combined with both parties observing their rights/responsibilities in
good faith, having a pre-existing relationship can actually go a long way to helping manage any potential
I’ve had clients buy duplexes/triplexes where their first tenants have been friends. That’s kind of a cool
thought if you think about it – imagine having your bestie/buddy just downstairs, but everybody has their
own personal space to go back to at the end of the day. In the end, the business relationship stayed strong
because everyone had skin in the game and had prior practice communicating with each other.
Becoming A Landlord: Cost vs. Benefit
Next, what is the cost/benefit to you as a landlord? How much better off will the revenue from renting make
you? Can you afford the mortgage without it? How knowledgeable are you with common household repair
issues? Are you prepared to be on-call 24/7 in case any problems arise? Most importantly above all, how
important is personal space to you?
If you don’t like the idea of even the most general shared space (including parking, laundry facilities, yard
space, etc.), you certainly wouldn’t be able to handle an arrangement where you share a kitchen, bathroom
or living room with someone renting a room. I actually think that last question is more important than whether
you need the money. At the end of the day, if you’re a person who values privacy and quiet on your own
terms, you can’t really negotiate that down.
The Bottom Line
In the end, there are bad tenants, and there are also bad landlords. Above both, I think most commonly there
are just bad situations. The easiest way to avoid a bad situation is to equip yourself with as much knowledge
as you can acquire. I think that renting out living space is a great way to make extra income, but to assume
it’s ‘free money’ is foolish.
Being a landlord is – at minimum – a part-time job in terms of hours invested, and grows as you add more