Buying an Income-Producing Residential Property

Small multi-unit buildings are a common entry point to residential investment. They also concentrate the most frequent mistakes.

Verify the rent roll

Ask for each unit's current rent, deposit held, lease start date and date of last increase. Where possible, confirm the figures with the tenants themselves through a signed acknowledgment, arranged lawfully and respectfully.

Confirm the units are legal

Converted houses frequently contain units built without permits. Fire separations, egress and electrical service are safety matters, not formalities, and remedying them can be expensive.

Understand rent regulation

Whether a unit is subject to the rent increase guideline depends on when it was first occupied for residential purposes. Below-market rents in long-standing tenancies may remain below market for years.

Inherited obligations

The buyer steps into the landlord's shoes: existing deposits, maintenance obligations and any matters before the Landlord and Tenant Board. Your lawyer can structure adjustments and representations accordingly.

Municipal licensing

In municipalities that license rental housing, confirm whether the property holds a current licence and what is required to keep it.