Most Canadians who want to invest in real estate never actually do it. They worry about bad tenants, vacancy periods, and buying a lemon property. Here’s the thing: these concerns are totally valid. But each one has a straightforward solution.
Let me walk you through how to fix these problems and show you the three ways real estate builds wealth.
The Bad Tenant Problem (And How to Fix It)
This is the number one fear. Nobody wants a call at 2am about a broken toilet. Nobody wants tenants who don’t pay rent or trash the place.
The solution? Hire a property management company.
I know what you’re thinking – that costs money. But hear me out. Professional property managers have tricks you don’t. Here’s one my property manager uses:
When a potential tenant looks good on paper, he’ll call them up and say something casual like “Hey, I grabbed a coffee and have a quick question. I’ll meet you at your place and we can chat.” Then he shows up unannounced at their current home.
Why? He’s checking how they actually live. Are they clean? Do they have pets when they said they didn’t? This one trick catches problems before they become your problem.
What Good Property Managers Actually Do
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Verify employment by checking actual bank deposits, not just letters
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Visit potential tenants at their current homes
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Check a database of problem tenants that individual landlords never see
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Require first and last month’s rent (professional bad tenants avoid this)
Yes, property managers charge a fee. But compare that to one bad tenant who doesn’t pay rent for six months while you go through the eviction process. The math works out.
Real example: My property flooded once. I found out through an email. Everything was handled. I did nothing. That’s the dream.
The Vacancy Problem (And How to Fix It)
Paying a mortgage with no rent coming in is scary. This happens in two situations: right after you buy, and when tenants move out.
Fix #1: The 60-90 Day Closing Strategy
When you buy an investment property, set your closing date 60 to 90 days out. Most sellers are fine with this.
Here’s what you do with that time:
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Hire a property manager immediately
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Have them find a tenant and collect first and last month’s rent
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Set the tenant’s move-in date to match your closing date
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Never pay a mortgage without rental income
Fix #2: Managing Tenant Turnover
Tenants must give 30 days notice before leaving. Good property managers use this time to show the property and find the next tenant. The new tenant moves in right as the old one leaves.
Important note: This only works if your property is decent. If you buy a dump in a bad area, nobody wants to rent it no matter how good your property manager is.
Fix #3: The Cash Reserve System
Despite your best efforts, vacancies might happen. Here’s how I handle it:
Put all rental income into one account. Keep a minimum balance as a float – like a cushion. If a property sits empty, the money comes from this account, not your pocket. When rent starts again, the float builds back up. Only take profits once you’re above your minimum.
Using the 60-to-90-day closing strategy and a cash reserve system keeps vacancies from hitting your wallet — book a free strategy call with LendCity to make sure your mortgage structure supports that plan.
The Lemon Property Problem (And How to Fix It)
Even professional home inspectors miss things. Their contracts say so – they’re not liable for missed problems. Nobody’s perfect.
So here’s my two-layer system:
Get a regular home inspection like normal. Then bring in a contractor you trust.
Make a deal with this contractor: they get all your repair and renovation work across all your properties. In exchange, they walk through properties before you buy and tell you what’s wrong and what it’ll cost to fix.
This has saved me tons of money. My contractor has spotted things I missed, even with my experience. Sometimes he’s told me not to buy something even though fixing it would mean a big payday for him. That’s the value of a good partnership.
With detailed repair costs, you can decide if the property still makes financial sense before you’re stuck with it. And when the numbers do work, having flip mortgage financing lined up lets you move fast on renovation deals.
Now Let’s Talk About Making Money
Real estate builds wealth three ways. Most investors focus on one or two and completely miss the third.
Way #1: Appreciation
Your property goes up in value over time. You don’t see this money until you sell or refinance, but it’s real wealth.
Think about houses your grandparents bought for next to nothing that are worth hundreds of thousands now. That’s Appreciation at work.
Markets go up and down. During recessions, values drop. But look at any long-term chart – real estate goes up over time. If the market crashes, don’t sell. Just hold on and wait for it to come back.
The key is Find Real Estate Opportunities in Canadian Markets | Guide. More people moving in means more demand. More demand means higher prices. Avoid markets where people are leaving – like old coal mining towns that emptied out.
Way #2: Cash Flow
This is the money left over after you pay all your expenses. I mean all of them – mortgage, taxes, insurance, plus money set aside for vacancies and repairs.
Here’s the trade-off: markets with heavy appreciation often don’t cash flow well. A property that goes up 25% in value might cost you money every month. You put in little money down but gain massive equity, so some investors accept negative cash flow.
I disagree with this approach. If the market crashes and appreciation stops, you’re still bleeding money every month. Cash flow gives you income no matter what the market does.
That said, plenty of investors do well with appreciation-focused properties. Toronto investors often accept negative cash flow because the appreciation makes up for it.
Way #3: Mortgage Pay-Down
This is the sneaky wealth builder everyone forgets about.
Say your mortgage starts at $500,000. A few years later, it’s down to $450,000. That’s $50,000 you didn’t pay – your tenants did through their rent.
Your net worth just went up $50,000 and you didn’t do a thing.
The longer you hold property, the more obvious this becomes. In the first year or two, you might wonder if investing was worth it. After several years, you call a realtor and find out your property went up $100,000. You calculate the principal your tenants paid down. Suddenly you’re looking at serious wealth creation. One investor used this exact approach to build a Building a $12M Real Estate Portfolio from Scratch | Canada over time.
Once your tenants have paid down $50,000 or more of your mortgage balance, that built-up equity opens real doors — book a free strategy call with us and we will show you how to put it to work.
The Smart Refinancing Strategy
Here’s an advanced move: after owning a property for a while, refinance to a longer mortgage term. This lowers your monthly payment and increases cash flow.
Your strategy depends on your goal:
If you want to retire early: Pay mortgages down fast. Shorter terms mean higher payments but you own properties free and clear sooner. More cash flow to replace your job income.
If you want to build a big portfolio: Refinance often to maximize cash flow. Use the extra money and pulled-out equity to buy more properties.
Fair warning – real estate investing is addictive. There might not be a “satisfied amount” of properties.
Why This Beats a Regular Job
Nothing’s wrong with having a job. I run a business that takes plenty of my time. But there’s something special about real estate income.
With a job, you work, get paid, go home, repeat. With real estate, you can be anywhere – on vacation, at the beach, at work – and rent checks show up automatically.
Once you set up the right systems with a property manager and the best property management software for Canadian investors, it runs on autopilot. It’s the easiest money you’ll ever make because it happens whether you’re working or not.
Your tenants are building your wealth while you sleep. They’re paying down your mortgage, providing cash flow, and riding the appreciation wave with you.
The problems that stop most people from investing are real. But they all have solutions. And the wealth-building potential is too good to ignore.
Frequently Asked Questions
Do I really need a property manager for just one rental property?
How do I avoid paying mortgage during vacancy periods?
Should I invest for cash flow or appreciation?
Is a home inspection enough before buying an investment property?
What's the minimum down payment for an investment property in Canada?
How does mortgage pay-down build wealth?
Should I refinance my rental property to extend the mortgage term?
What makes a good market for real estate investing?
Disclaimer: LendCity Mortgages is a licensed mortgage brokerage, and our team includes experienced real estate investors. While we are qualified to provide mortgage-related guidance, the broader financial, tax, and legal information in this article is provided for educational purposes only and does not constitute financial planning, tax, or legal advice. For matters outside mortgage financing, we recommend consulting a Chartered Professional Accountant (CPA), licensed financial planner, or qualified legal advisor.
Written by
LendCity
Published
December 22, 2025
Reading Time
8 min read
Appreciation
The increase in a property's value over time, which builds equity and wealth for the owner through market growth or forced improvements.
Cash Flow
The money left over after collecting rent and paying all expenses including mortgage, taxes, insurance, maintenance, and property management.
Down Payment
The upfront cash payment when purchasing a property. For 1-4 unit investment properties, minimum 20% down is required. 5+ unit multifamily can use CMHC MLI Select with lower down payments, and house hackers can put as little as 5% down on owner-occupied 2-4 plexes.
Equity
The difference between a property's current market value and the remaining mortgage balance. If your home is worth $500,000 and you owe $300,000, you have $200,000 in equity. Equity builds through mortgage payments, appreciation, and property improvements.
Mortgage Term
The length of time your mortgage contract and interest rate are in effect. Typically ranges from 1 to 5 years in Canada, after which you renew or refinance.
Principal
The original amount of money borrowed on a mortgage, not including interest. Each mortgage payment includes both principal (paying down what you owe) and interest (the cost of borrowing). Over time, more of each payment goes toward principal as the loan balance decreases.
Refinance
Replacing an existing mortgage with a new one, typically to access equity, get a better rate, or change terms. Investors commonly refinance to pull out capital for purchasing additional properties (cash-out refinance) while retaining ownership of the original property.
Property Management
The operation, control, and oversight of real estate by a third party. Property managers handle tenant screening, rent collection, maintenance, and day-to-day operations.
Due Diligence
The comprehensive investigation and analysis of a property before purchase, including financial review, physical inspection, title search, and market analysis.
Vacancy Rate
The percentage of rental units that are unoccupied over a given period. A critical factor in cash flow analysis, typically estimated at 4-8% for conservative projections.
Security Deposit
Money collected from tenants at the beginning of a lease to cover potential damages beyond normal wear and tear or unpaid rent at lease end. Security deposit rules vary by province, with some jurisdictions limiting amounts and requiring deposits to be held in trust.
Eviction
The legal process of removing a tenant from a rental property for reasons such as non-payment of rent, lease violations, or property damage. Eviction laws vary by province and typically require landlords to follow specific notice periods and tribunal processes.
Turnover
The process and cost of preparing a rental unit for a new tenant after the previous tenant moves out, including cleaning, repairs, marketing, and vacancy time. High turnover rates significantly reduce profitability through lost rent and preparation expenses.
Rental Income
Revenue generated from tenants paying rent on an investment property. Gross rental income is the total collected before expenses, while net rental income subtracts operating costs to show actual profitability.
Contractor
A licensed professional hired to perform construction, renovation, or repair work on investment properties. Using licensed and insured contractors is essential for permitted work, as unlicensed contractors can result in voided insurance, property liens, and liability for injuries.
Property Inspection
A professional examination of a property's physical condition, including structural elements, mechanical systems, roofing, and other components, typically conducted before purchase. Thorough inspections help investors identify problems, estimate repair costs, and negotiate purchase prices.
Real Estate Agent
A licensed professional who represents buyers or sellers in real estate transactions, providing market expertise, negotiation skills, and access to the MLS. Working with an investor-friendly agent who understands rental property analysis and financing strategies can significantly impact deal quality.
Cash Reserve
Liquid funds set aside by a property investor to cover unexpected expenses such as repairs, vacancy periods, or mortgage payments during tenant turnover. Lenders may require proof of cash reserves as part of mortgage qualification.
Hover over terms to see definitions, or visit our glossary for the full list.