As a realtor in Niagara and a rental property owner, I understand the importance of finding and vetting great tenants. It's essential to ensure that the people who rent your property are reliable, responsible, and trustworthy. After all, your rental property is your investment, and you want to protect it. In this article, I will share some tips and tricks on how to find and vet great tenants for your rental property.
Advertise Your Property
Advertising your property is the first step in finding great tenants. You can use a variety of advertising methods, including online rental websites, social media platforms, local newspapers, and even signs in the area where your rental property is located.
When creating your rental listing, be sure to provide detailed information about the property. This includes the location, size, number of bedrooms and bathrooms, and any amenities such as parking, laundry facilities, and access to public transportation. You can also include photos or videos of the property to give prospective tenants a better idea of what the rental unit looks like.
Tip: Make sure if you're not listing your rental through a realtor on MLS that you post it on Facebook Marketplace. This tends to be the best place to search for the right tenant in my opinion outside of the MLS
You should know that there are limitations on what you can and cannot say in a listing description and what you can and cannot enforce. There's ways to work within this that protect both landlords and tenants which I'd be happy to share about with you if you'd like to chat more about that.
Screen Potential Tenants
The next might be the most complicated and important and that is to screen potential tenants. The goal of screening is to identify any potential red flags that may indicate a tenant is not a good fit for you and/or your property. You can do this by asking for references from their previous landlords and employers, as well as conducting a background check.
Some things to look for when screening potential tenants include:
Rental history: Check for past evictions, late rent payments, and damages caused to previous rental properties.
Employment history: Confirm their employment status and income level to ensure they can afford the rent.
Criminal history: Check for any criminal convictions, particularly those related to drug or property offenses.
Conduct an Interview - and not just through messenger or text chats. You'll get a much better feel of your potential tenants character and nature and honesty if you
Conducting an interview is an important part of the tenant vetting process. This step will help you get to know the prospective tenant better and ask any questions you may have about their renting habits and lifestyle. You can conduct the interview in person, over the phone, or through video chat. During the interview, ask questions about their employment, rental history, and any pets they may have.
You can also use this opportunity to discuss the rental application process, lease agreement, and any policies or rules related to the rental property.
Here are some helpful questions to ask in your screening process with your tenant:
So how many people are looking to move into the property?
Awesome, and when were you looking to move?
Are you currently in a lease right now?
Have you given your landlord 60 days notice to move yet?
What’s your reason for moving?
What do you do for work?
How long have you worked there?
What would the total household income be?
How many pets do you guys have?
Gauge Affordability and Credibility
After learning more about your applicant it's good to follow up on 2 key factors Employment/Income and references. A general rule of thumb in healthy financial planning is that you don't want your GDSR to be more than 33% for rent and utilities. A more simpler way to gauge this is that you don't want your rent and utilities to be more than 3x your net income.
This is not just helpful for landlords but also helpful financial advice for tenants as well.
Example: If your rental unit is listed for $2000/month all inclusive than your tenant or the household income should total $6000/month.
35% is great
40% and above is cutting it close
48% and over is too high
You can calculate this using this formula:
GDSR = (Rent + Utilities) / monthly income X 100 = ________%
Check Credit History
Checking the prospective tenant's credit history is an essential step in the tenant vetting process. A credit check will give you a better understanding of their financial situation and whether they can afford the rent. You can obtain a credit report by requesting one from a
credit reporting agency or asking the potential tenant to provide one.
When reviewing the credit report, look for any outstanding debts, late payments, or other financial issues that may impact their ability to pay rent on time.
As a landlord I like to conduct my own credit check rather than accepting at face value what has been offered to me. I like to use SingleKey for my full reports
Ask for a Security Deposit
Asking for a security deposit is a standard practice in the rental industry. A security deposit will act as insurance for any damages that may occur during the
rental period. Be sure to document any pre-existing damages before the tenant moves in and return the deposit when the lease ends, minus any deductions for repairs or damages.
The amount of the security deposit will depend on the rental property's location and the local laws governing security deposits. But for those in Niagara or Ontario for that matter a security deposit should be equal to one or two months' rent.
Review the Lease Agreement
The lease agreement is a legally binding document that outlines the terms and conditions of the rental period. It's essential to review the lease agreement with the prospective tenant before they move in. This document will protect you and the tenant in case of any disputes or legal issues that may arise during the rental period.
The lease agreement should include the following information:
The start and end date of the rental period
The amount of rent and security deposit
The payment due date and late fees
Any restrictions or rules related to the rental property
The tenant's responsibilities related to maintenance and repairs
The landlord's responsibilities related to maintenance and repairs
In conclusion, finding and vetting great tenants for your rental property is essential to the success of your investment. By following these tips and taking
For Ontario Landlords you are required to use the Ontario Standard Lease as a basis point for your lease. Many landlords use that and call it a day. This is a huge mistake. The Ontario Standard Lease is a bare skeleton that barely outlines the basic terms of the lease and offer little to no protection to the Landlord should things need to be brought to the Landlord and Tenant Board (LTB).
There are strict rules about what you can and cannon enforce in a lease appendix but we don't have time to go through those nuances here. Simply put you should have a paralegal work with you on outlining those terms so everything with you prospective tenant is clear and your protected long term.
Finding and vetting great tenants for your rental property is an essential step towards maximizing the success of your investment. As a realtor in Niagara and a rental property owner, I understand the importance of having responsible, reliable tenants who will take care of your property and pay rent on time.
By following the tips outlined above, you can significantly increase your chances of finding the right tenant for your rental property. It's important to take your time during the vetting process and not rush into selecting a tenant just to fill a vacancy quickly. A thorough screening process and interview can save you time, money, and potential headaches down the line.
Remember to set clear expectations from the beginning, and make sure to have a detailed lease agreement that outlines the terms and conditions of the rental period. This document will protect both you and the tenant in case of any disputes or legal issues that may arise during the rental period.
Overall, finding and vetting great tenants requires effort and attention to detail, but it's a crucial step in ensuring your rental property's success. With patience and due diligence, you can find the right tenant who will take care of your property and provide a steady income stream for years to come.