Finding a great tenant!

I am a landlord myself and I sometimes am asked by clients to help them find a tenant. I am constantly meeting people who are not happy with the calibre of tenants they’ve had, and who have had to do a lot of work when the tenants finally moved out. I have never had that issue: all my tenants looked after my property as if it was their own, paid their rent on time, and were a pleasure to deal with.

Here are my tips to finding a great tenant:

First of all, make the unit as nice as possible. Being able to present a fresh, clean unit that shows well is huge. As you can tell from my blog, I renovate whatever I have to. I  redo cracked tile flooring, make sure the paint is pristine, buy new appliances if needed, and install new backsplashes and lighting. I will update the electrical and plumbing, replace old baseboard heaters with new ones, and replace old hot water tanks. Not only does this let me charge top dollar, but I don’t have to worry about the unit I’m renting being unsafe. This is a huge selling point too!

Once you’ve fixed it up, set a rent that reflects its condition. I recently rented my unit in Hunt Club for hundreds more than the comparables, and I had a line up of prospective tenants. I want high calibre tenants, and a higher rent attracts more of them.

Meet your prospective tenants in person. A lot of landlords farm this out to their realtors or property managers to do. I think that’s a mistake. You can tell a lot about a person by meeting them face-to-face. Did they show up on time? Are they enthusiastic about your unit? A tenant who loves your place is eager to move in and it shows. Your ideal tenant will show up on time or early and get you all the paperwork you want ASAP. They want your rental, and they’re anxious to hear from you; they don’t let things sit. Someone who can’t be bothered to show up on time, answer emails promptly, or provide documents when you ask for them, is probably going to be equally indifferent about paying your rent on time.

Get a credit report. This is the single most important document in a tenancy. A score above 600 is good, above 700 is great. One in the 800s is extraordinary!  I recently met a prospective tenant with a credit score of 848 — that’s the highest I’ve ever seen!

A high credit score tells you that the prospective tenant pays their bills on time and always has. A credit report that shows a history of late payments, collections, or even bankruptcies means you have a person who has had problems managing their budget.

It’s not fatal: I would consider renting to someone trying to build or rebuild their credit, but it is a giant red flag. It means you and the prospective tenant need to talk about whether they can afford the unit or not, and what will happen if they over-extend themselves. It’s not good for them to be evicted for non-payment of rent, and certainly not good for you. On the other hand, someone who has sacrificed other bills during tough times so they can  pay their rent can be a very good tenant.  I want context, and I want them to tell me about it before I find out in the credit check.

Call the tenant’s references, and especially their previous landlord.Don’t rely on reference letters alone. I ran into a prospective tenant who had a pretty good reference letter. When I actually called the landlord, it turned out there had been a fire in the unit, caused by the tenant. Ask if the tenant paid on time, what condition they left the unit in, if there were any issues during the tenancy and what rent they were paying. This is a big one: if the previous rent was much lower than what you’re asking you want to make sure they can afford it.

Some people insist on seeing employment information and proof of income, and insist the tenants be professionals.  I don’t. I’ve heard plenty of horror stories about professionals who were horrible tenants.  I know of one mortgage broker who rented to a lawyer who stopped paying rent because he knew it would take months to evict him. I’ve heard of others who complained about everything. Don’t get hung up on what someone does for a living; it’s irrelevant. What’s important is what kind of tenant they are.

As for employment information, I usually do call employers for references, but the credit report pretty much tells me everything I need to know about how someone manages their money. The last employer reference I got for a tenant of mine was unequivocal: “they’re good people,” the employer said. “Simple people, but hardworking.” That was all I needed to hear.

The bottom line is that there are only three things you really need to know about any tenant:

1) that they will pay your rent on time (which is why you get the credit report to see how reliable they are when it comes to paying bills, and make sure to call their previous landlords);

2) that they won’t damage the unit (which is why you ask their previous landlords what condition they left the unit in) and

3) that they won’t disturb other tenants (which is why you ask if there were any issues).

When you start super-imposing criteria like they have to be single, or have no pets, that’s going to restrict your tenant pool unnecessarily, and may land you with a human rights complaint as well. I don’t care if my tenants have pets, as long as they are well-behaved, and I’ve never had a problem.

So, to summarize, I look for someone who is enthusiastic about my property, cooperative, reliable and has a great credit rating or a good explanation if they don’t, and a plan for moving forward.  So far every tenant I’ve ever had has been terrific, and so have the ones I’ve picked for my clients.

One more thing: I make sure I’m a great landlord too. I give my tenants  gifts when they move in, like a bottle of wine and chocolates, or most recently, for tenants who loved the kitchen, a cookbook holder. I usually pop around at Christmas with something for the tree. Many of my tenants have become good friends.

I make sure we establish the rules ahead of time for what they can and cannot do (for example, my units are professionally painted, so I don’t want them painting the walls, but I’m fine with them hanging pictures.)

I make sure to respond immediately to any problems. And I let them contact my other tenants for references  if they want to, so that they can ask them what I’m like as a landlord too. I get tenants who treat my property well because I vet them carefully, and treat them well, and that makes all the difference.

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