We’ve all heard horror stories about bad tenants before, so naturally, it makes us question if we should get into the world of investing ourselves. But having a rental property can come with a lot of benefits. Though becoming a landlord comes with a lot of new responsibilities, especially when it comes to protecting your investment that you’ve worked hard for, you’ll find that coming across bad tenants is much rarer than finding great tenants.
However, they are still out there which is why it’s a good idea to follow these tips to both attract and keep good tenants without a real estate agent’s assistance.
1. Do your research and understand your target
This is more of a step you should take before you even purchase a rental property so you can get a feel for the neighbourhood, which type of potential tenants are interested in the area, what kind of city amenities are nearby, and the amount of rent you can charge according to the housing laws.
2. Market your rental property accordingly
Now that you know more about what type of tenant to look for, you can advertise your rental property accordingly. This is a great way to ensure that the right people are seeing your advertisement on different digital platforms. You should also include as much information as possible about your property so tenants know exactly what to expect like if pets are allowed, if appliances are included, if there’s a balcony, how many parking spaces are available, if there’s a storage locker, etc. When it comes to photos or a virtual tour of your property, you may want to consider hiring a professional so tenants know that you’re professional and dedicated. This is also important depending on the types of tenants you want to attract
3. Check that they have good credit
Once you start receiving rental applications and you think you’ve found the right tenants, it’s time to do your due diligence and get to know them before jumping the gun. This is the step that is known as a full tenant screening and that begins with a credit check to ensure they’re in good standing with their bank and that they’ll be able to pay their rent on time. Generally, credit scores ranging from 660 to 800 are very good. Any score below 579 and under is considered bad. Just keep in mind that if the potential tenants are new to the country, they may not have built a credit score yet that reflects their financial situation accurately. If that’s the case, you can ask them to provide you with proof that they have a stable income, which brings us to the next point.
4. Verify their income
This is one of the most important steps you can take as a landlord to ensure you’ll be choosing the right tenant. This can be done by asking for a record of employment, a pay stub, or even a T4 slip from their bank to prove regular deposits are made. Typically, it’s suggested that your tenant should have 30 per cent of their monthly income set aside to pay for rent.
5. Check-in with their previous landlords and rental history
Any good tenant will provide references to landlords from either previous landlords, or employers. You may have heard it being brought up before that landlords cannot technically give their tenants a bad reference, but this isn’t true. Landlords can stick to the facts, like if the tenants were slow with paying rent on time (and ask for proof), if damage was documented on the property (again, ask for proof), if they gave proper notice when vacating the property, etc. If they were good tenants, ask the landlords why they’d recommend them.
6. Do a criminal background check
In Canada, yes, a landlord can run a criminal record check during the tenant screening process, but you cannot perform one without asking for permission first. If tenants are hesitant, there may be a sign that there’s something to worry about. If something shows up, you can deny their application, however, just remember that (depending on their record), a criminal record check doesn’t tell you everything you need to know about them. Obviously, a tenant with a violent history or who were charged because a property was damaged may be considered a liability.
7. Do they fit your lifestyle expectations?
Choosing tenants that suit your lifestyle can help make sure that they won’t break the rules you’ve laid out like no smoking, no pets, or how many people are in the household. Ask them those necessary questions as well as when they want to move in, why they’re moving, and if they’re comfortable with signing a rental agreement for one year. If red flags are raised, move onto the next tenant application.
8. Make sure they’re comfortable paying the deposit
Typically, when a new tenant moves in, they’ll be required to put a “deposit” down, which is really just last month’s rent. If they can’t provide the payment when you ask, this could be another red flag as to if they can continue to pay their monthly rent. And remember that this is a rent deposit, not a security deposit. In Ontario, security and damage deposits on a rental property are not allowed.
Qualities to have to be considered a great tenant
Now for the tenants looking to rent a new property and make a great impression on their potential new landlords.
You’ve probably heard stories about bad tenants, too. Naturally, it makes you angry because you don’t want landlords to think that you fall under that category. So, how do you make sure you make a great, lasting first impression so they choose your rental application over others?
The top five qualities landlords like to look for are:
1. Are you a reliable paying tenant?
If you have a poor history of not paying rent when it’s due, this is the biggest red flag that will make the landlord pursue other applicants. Proving you’re reliable and having a previous landlord vouch for you is one the best things you can do when applying to rent a new property.
2. Being respectful of the property even though it’s not yours
While paying rent is a top quality that landlords appreciate the most, so is treating their property with the respect it deserves even though you’re just the renter. There’s a huge difference between natural wear and tear and actually causing damage to the property. And if accidental damage occurs, be upfront and honest with your landlord rather than trying to hide it or deny it. Honesty is the best policy, which brings us to the next point.
3. Report any maintenance problems
Have you noticed a leak under the sink? Did your dishwasher stop working correctly? As soon as you notice something like this, report it to your landlord so they can get it sorted out immediately. Not dealing with leaks or other maintenance issues right away can only make them worsen over time and may leave you in a bit of a rut.
4. Get renter’s insurance
Not only does renter’s insurance cover you if anything of yours is damaged or stolen, but it can also help the landlord cover costs associated with damage to the property, reduce their liability in legal claims, and more. While it isn’t mandatory to obtain renter’s insurance in Ontario, most often than not, a landlord will require a tenant to obtain insurance as part of the rental agreement. Plus, it’s also just highly recommended so in the case of a fire or a flood, for example, your renter’s insurance will cover replacement costs of lost items.
5. Show your stable
Every landlord loves a stable, good tenant. Even if you’ve bounced around from job-to-job or you’re self-employed, prove that you have a steady and reliable income every month in your rental application. A credit check will also be run during the tenant screening process, so you’ll want to make sure you’ve been paying bills on time in order to be considered a good applicant.
So … is it hard to find good tenants?
Is every tenant you come across going to be your dream tenant? No, but you can definitely do your due diligence when it comes to screening prospective tenants in order to find the best tenant for you and your rental property. It’s important to understand what type of tenants you want to attract and how, running a credit check to ensure they make their payments on time, ensure they have a steady income, and ensuring they suit your particular lifestyle requirements within your property.
Even if you’ve heard stories about poor tenants, don’t automatically think that every single tenant will be like that. And if you find red flags, your gut will let you know that you need to move onto the next applicant. If you need help with the tenant screening process, there are apps and online templates available.
As a tenant who is applying to rent a new property, be an applicant who stands out by ensuring your credit score is good ahead of time, treating each property you rent with the utmost respect, and keeping landlords informed about any maintenance issues. And always, always, always get renter’s insurance to help make your life and your landlord’s life easier.
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