If you have to rent your home, or have decided to buy and rent an investment property, it can be a bit daunting. Ontario laws are friendly to tenants; it can be hard to get rid of someone once they’ve moved in if they don’t work out. Here are some tips to find, and keep, a quality tenant.
Use a realtor. Realtors will charge you a full month’s rent to find a tenant (the listing agent gets half of that, the agent who brings in the buyer, the other half). HST is on top of that. But in return, your property will appear on MLS with interior pictures and verified information; your realtor will take care of requests for showings, vet all applicants, and do up the paperwork.
I recently listed a property that needed some work. I found my clients a trade on short notice (he literally was able to start work the day after they took possession); recommended suppliers to them for some of the things they needed, priced out upgrades like vanity tops for them, staged the property (at my expense), took pictures, listed the property and stickhandled calls.
When I thought we had the right tenant for them, I arranged for a face-to-face meeting so they could judge for themselves. The process of renting, particularly in an active listing, can be overwhelming for an owner who has other commitments. Use a realtor, and let them handle it for you.
Fix what needs to be fixed. I’ve seen rental properties that were in terrible shape. Who wants to rent a place that has cupboard doors hanging off the hinges, or dirty walls and carpet, or dripping taps? All of those scream a landlord who doesn’t care about their own property. If you want to have a high quality tenant, the property needs to meet high quality standards. Get the work done before you list, or at least have it underway so the prospective tenants know that the property has been, and will be, well-maintained.
Stage it. For rentals, I rarely stage the entire property, it’s not worth it. But I always stage bathrooms, kitchens and make sure there are curtains up. Here’s an example of a kitchen I staged in my recent listing: a picture on the wall, a bowl of pears, some nice bar stools and a few cookbooks were all it took to make the space inviting:
Similarly, I never leave a bathroom without a shower curtain and towels and a floral arrangement of some type, it makes a huge difference!
And I always stage a fireplace mantel. It’s a feature; you want to show it off.
This is another good reason to use a realtor, by the way. Many of us have staging items like this tucked away that we can pull out for listings.
Cost to my client? Free.
Change up the lighting. You want your property to look terrific, but so many rentals I see have terribly out-dated light fixtures. Some landlords think they should cheap out and not put money into something they are going to rent, as if it’s a zero-sum game where whatever they have to spend is money they won’t get back. But that’s the wrong way of looking at things.
The better the property is and the better it shows, the more rent you can charge for it and the more likely you are to find a tenant who will take good care of it.
Changing a light fixture is such an easy fix, but can totally transform a room. I picked up this one for my clients at Rona. For $ 150, it looks like a million. Their new tenants loved it. So much better than the ugly flush mount that was there before, and it helps define the dining room space as well.
Get a completed rental application. Whether you are renting your property yourself or using a realtor, get a rental application completed by your prospective tenants. It will have their employment history, reference names and numbers, whether they have pets, what their financial obligations are, names of those who will be living in the property, and enough information for you to get a credit history.
Call their references. I cannot emphasize this enough. I have my clients contact the references even when I am involved as their realtor because they are the people who have to be satisfied that the tenants will be reliable.
A good tenant shows up at appointments on time, answers emails and calls promptly, and provides information. My red flags go up when prospective tenants are late, don’t respond to my questions or seem evasive. So far my gut instincts have been right, but I don’t rely on those alone. We call references. and see if those instincts are solid or not.
Do a credit check. A credit check doesn’t have to be perfect, but it should be good enough that you know that the tenant is paying their bills on time, and paying down loans. Look for consistency: someone who pays their bills on time over a period of years is going to pay your rent on time too.
Call their previous landlords. This is probably the most important call of them all. Did they pay their rent on time? Were there any issues or complaints? When they moved out, was the unit in good shape? Any problems with pets or noise? If your prospective tenant has a landlord who speaks well of them, that’s worth gold.
Don’t ban pets. Ban smoking, yes, but don’t ban pets. First of all, you can’t unless you are renting a condo that bans them. You can say you don’t want them but you can’t evict a tenant for having one, so banning them just loses you a potentially great tenant or puts you in a situation where someone who wants the unit lies to you about having one (and yes, I have heard of that happening).
Be open to persuasion. A great tenant with a well-behaved pet is probably having a hard time finding a pet-friendly rental because so many landlords refuse to consider them. You can be the person who snags that great tenant by keeping the door open. Make the pet subject to your approval, and put a clause in the lease that requires them to repair any damage the pet may cause.
Meet the prospective tenant in person before you sign an Offer to Lease. I can’t emphasize this one enough either. Meet them, assess them, ask why they are moving, find out if they like the property. Someone ambivalent about your unit will not take care of it, or stay on after the lease ends. Someone looking for a short term rental while they get ready to buy won’t stay long either. Find someone who loves your property and plans to stay there for as long as you’ll have them. That’s your tenant.
Be open and honest about your own plans. If you plan on selling the unit down the road, be sure to tell them. If you plan on moving in sometime, tell them that too. Allow your prospective tenants to make informed decisions. Communication is key.
In my last rental, the owner was in another country. She wanted a twelve month lease but after that wanted someone comfortable with a month-to-month rental because she wasn’t sure when she’d be posted back from overseas. By being open with the prospective tenants about her plans, we found someone who was very comfortable with that arrangement. Both tenant and landlord could proceed, knowing ahead of time what would happen.
Get a deposit. You are entitled to get a first and last month’s rent deposit from your tenant. Do it. A tenant who has a hard time providing that upfront may have problems paying rent. If you are using a realtor, that deposit is paid to your realtor’s brokerage and the commission (one month’s rent plus HST) is deducted from it when the tenant moves in. The balance is sent to you.
Know the Residential Tenancies Act inside out. There are lot of provisions in the legislation that favour tenants. It’s not easy to evict one. Do your vetting up front. But know your rights and be sure to follow the rules when it comes to your tenancy. If you have the right tenant, you’ll work most things out without worrying about the legislation. But just in case, you need to know the requirements. Good luck!