If the rental property exists in a city where the cost of living is high, you need to take this into account when assessing affordability. For example, two-bedroom Mississauga condos
typically rent for an average of $1,700, plus a hydro bill that can range from $30 to $80 depending on usage. In this region, the cost of living is moderate and landlords can typically feel comfortable if the tenant’s rent is less than 40% of their after-tax income. Every city will have its own rule of thumb with respect to an acceptable rent-vs-income ratio.
Since it's very easy for tenants to submit fake letters of employment, it's a good practice to ask for their three most recent paystubs. Paystubs are more difficult to duplicate. Making them a requirement helps lessen your chances of being a victim of tenant fraud.
9. Pull your own report
In my many years of being a Realtor and real estate investor, I have come across my share of fake credit reports. That is why I always advise landlords to pull a second credit report on any tenants they are seriously considering. This should be a standard protocol with respect to any tenant background check.
Before you approve a tenant, you should get a third party to pull a credit report for you. Do not rely entirely on a credit report you received from a prospective tenant. It's okay to use that as an initial reference. However, once you're about to make decision in favour of a tenant, it's important to pull their credit report to see if it matches the one provided. If it does, you can rest at peace knowing that the tenant has passed the best tenant screening processes one could possibly implement.
10. Verify photo identity
Now that you've approved the tenant, it's time to make it all official through the signing of the lease itself. When you meet the tenant in person for this final paperwork, it's very important that you request photo identification before signing any documents.
This is the final step to the tenant background check process, as it helps validate whether the identity you used to approve the application is belonging to the person standing in front of you.
It's impossible to protect yourself entirely from the possibility of assuming a bad tenant. This risk comes with being in the business of renting out residential homes. Nonetheless, the 10 tips provided here will help you administer the best tenant background screening possible. I can guarantee this from my own experience as a successful landlord.
Freedom Malhotra is an experienced real estate investor and Realtor. He is the founder of Condo Planet, which specializes in Mississauga condos.
Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate
Investment Hot Spots:
Shedden, Mersey Point, Alnwick/Haldimand, Annandale, Vegreville