CostThe rental property you're buying already has a tenant in place, on an existing lease you didn't negotiate, with rent and terms you may not control right away.
What usually happens
In most Canadian provinces, a residential tenancy survives the sale of the property — as the new owner, you become the landlord under the existing lease's terms, including its rent amount, until that lease naturally ends or is properly changed under your province's tenancy rules. You generally can't simply reset the rent to market rate or ask a tenant to leave just because ownership changed hands; existing tenant protections apply to you the same as they applied to the previous owner.
What to check before you buy
- Get a copy of the actual lease and current rent amount — not just what the seller tells you verbally, since the lease terms are what actually binds you.
- Check the rent against current market rent for comparable units — a below-market rent, locked in by an existing tenant, directly affects your real cash flow versus what the listing's "potential income" might suggest.
- Understand your province's specific rules for ending a tenancy — rules for landlord's own use, renovations, or non-payment vary significantly by province and are often more restrictive than buyers expect.
- Ask about the tenant's payment history — a landlord with a documented pattern of late or missed payments is materially different information than a spotless record.
Who to ask
Have your real estate lawyer review the existing lease and confirm your specific province's rules for tenancy continuation and any changes you might want to make after closing. If the current rent is below market and that gap matters to your investment numbers, run the real cash flow at the actual current rent, not a hoped-for future rent, using the rental cash flow calculator — treat any future rent increase as a possibility, not a plan to bank on before it's actually allowed under your province's rules.