How to Properly Screen a Potential Tenant

We all know that potential tenants can be crafty. Any landlord who’s been in the game for long enough has likely experienced this first hand. If you’re a new landlord, you’ve probably heard the horror stories of fully suited tenants who speak well and present themselves professionally who actually turn out to be complete and utter nightmares. Of course by the time you figure this out, it’s too late;the tenant is already living in your space and giving you trouble. So how do you minimize the risk of choosing a bad tenant? How do you tell when someone is simply putting on a show? Understanding the importance of the screening process can give you a significant advantage over a crafty Tenant from Hell.

Important Processes:

First and foremost, you should start by having every potential tenant fill out an application form. There are many sample forms available online, like this one. Alternatively, you can request a sample rental application from your local real estate association, or create your own personalized application using a Microsoft Office template. The application should cover financial information, employment information and personal information. Be sure the application states that a full criminal background check and credit check will be required, and that the tenant is authorizing a check into his or her financial, employment and personal history.

Next, you’ll want to go ahead and run acredit check. You can request it directly from the tenant, asking them to cover the cost, or you can incur the cost yourself; your call. It’s not mandatory that the potential tenant complies, but remember that you are the one in power. If they put up a stink, they are likely trying to hide their bad credit score.

Once the credit check clears out, it’s time for the Background check. Companies like Sterling Talent Solutions are able to offer an employee background check for a fee, and companies like Screening Works are able to offer online tenant screening, background checks and Criminal Reports. Typically, all you’ll need is the tenant’s Social Security number.

Ok, so the credit check and background check look clean. Now what? Now it’s time for you to contact the tenant’s previous landlords as well as their employer. Past landlords will be able to give you insights into whether or not the tenant was timely with their monthly payments and respectful of the property. Contacting the employer will give you peace of mind knowing that the tenant has a steady and reliable source of income.

So the previous landlord gave a glowing testimonial, and the employer has verified that the tenant has steady, reliable work. Great! You’re almost at the finish line. With that said, don’t assumeall is well. Now comes the really important part: Interview the Tenant. Interviewing the tenant will give you insights into the tenants personality, and will allow you to pinpoint any potential deal breakers that the screening process may have missed. Here are some crucial questions to ask:

  1. Are you aware that we will require first and last months’ rent? Will this be an issue? Their answer will allow you to gauge if the tenant understands the arrangement and is OK with the monthly payments.
  2. Why are you moving?If they say something like “my last landlord was horrible!” than you may have a problem tenant on your hands. However, this isn’t a given. Ask follow up questions and use your best judgment
  3. When are you looking to move? The sooner you fill the space, the sooner you gain a revenue stream.
  4. Are you a smoker? You’ll want to lay ground rules for smokers based on your comfort level.
  5. How many vehicles do you have? How frustrating would it be if you finalized everything and then found out that the tenant has more vehicles than you can accommodate?
  6. How long do you intend to rent the property for? Long term is always better for a landlord, as it limits the amount of times you have to go through the process of finding a new tenant.
  7. Do you have any pets? Although a “no pet’s” clause is technically unenforceable, if a pet is a make or break for you, you can choose not to rent to a tenant with pets.
  8. Have you ever been evicted? If the answer is “yes”, that’s a red flag. Still, ask follow up questions. There are always exceptions to the rule.
  9. How many people will be living in the apartment? Overcrowding a space can only result in unwanted wear and tear on your property.
  10. Do you have any questions for me? This will allow you to gauge where the tenants head is at, and the questions they ask can provide insight into how the tenant intends to treat your space.

Following these steps will limit the likelihood of you ending up with a bad tenant. Use your instincts when screening, and if you start to get a bad feeling, don’t be afraid to walk away. There are plenty of potential tenants out there! Ideally, you should hire a management company like CMG Toronto to handle these processes for you. Let the professionals do what they do best!

Fooled by the Tenant From Hell: Time to Evict?

The Tenant/Landlord relationship is a complex beast. In a perfect world, tenants wouldn’t have to worry about bad landlords, and landlords wouldn’t have to worry about bad tenants. Alas, no such world exists, and as a landlord, you may find yourself renting to the dreaded “tenant from hell”.  Potential tenants can be crafty, and if you haven’t done your due diligence in exploring the tenants’credit checks and referrals, then you’re running a major risk. So what do you do when your tenant stops paying rent? What do you do when they start to treat your property with a lack of respect? When they start treating your other tenants with a lack of respect? If your tenant has exhausted the opportunities you’ve given them to adjust, then you’re final solution may be to evict the client.

Ontario is one of the most bureaucratic regions in the world when it comes to landlord/tenant relationship management.  Red tape and legislation arms tenants with some pretty powerful ammo. Of course, tenants feel that landlords have all the power. Neither side is entirely right or entirely wrong. It’s never easy to manage a relationship where funds are exchanged for a living space; it’s a complex agreement to say the least. With that said, it’s important to know the process for eviction if you are a landlord who needs to get rid of a bad tenant. But first, you’ll have to be aware of legitimate reasons to evict, as listed by the Ontario Residential Tenancy Act (RTA). The RTA lists a surprisingly large amount of potential reasons to evict.These are the most common:

Non-Payment:

The most common and obvious reason to evict: tenant has stopped paying rent. This can mean that they are one day late, one month late, one dollar short, etc.

Persistent Late Payment:

Here’s another obvious one, but the surprising part is that there aren’t really any guidelines related to this. It’s up to the Landlord and Tenant Board to determine if the tenant “persistently” fails to pay the full amount by the due date.

Illegal Activities:

If the tenant uses the unit for illegal activity, such as drug dealing or prostitution, then you have the right to evict.

Constant Disturbances:

For example, if the tenant is excessively loud and consistently disturbs the landlord or other tenants in the building, than you can potentially evict.

Undue Damage:

You can evict if the tenant has caused excessive damage that can be attributed to much more than normal “wear and tear”.

The list goes on.

Despite an imperfect system, if your tenant is violating any of the reasons outlined in the RTA, you do have the right to evict. It may take longer than you’d like, and cost more than you’d like, but it may be necessary. This is the process:

  • The landlord must first send a written notice a certain number of days prior to the date that they would like the tenant to move out. Typically, the written notice will have a name starting with Notice to End Your Tenancy, with a certain number at the top i.e. N4, N5, N6, N7, N8, N12 or N13.
  • The notice must indicate the reason for eviction, and it must be in line with the RTA.
  • The number of days prior to asking the tenant to move out is in direct correlation with the reason for eviction. For example, if the reason is non-payment, it is 14 days. If the reason is persistent late payment, it is 60 days etc. Please refer to the RTA for all of the scenarios.
  • After the necessary time frame has been given to the tenant, if the problem persists and the tenant is still occupying the unit, the landlord must apply to the Landlord and Tenant Board for a hearing. This will cost the landlord $170.
  • If the landlord wins his or her case at the hearing, he or she will need a copy from the board, which may take another 5 days.
  • At this stage, the landlord must file an “eviction order” with the county Sheriff, who then arranges the physical eviction.

The whole process can be rather lengthy in the mind of a landlord. On average, it takes around 90 days. In some instances, it may take longer depending on the reason for eviction, postponed hearings, or if the tenant has made claims against the landlord regarding harassment, or non-maintenance of the rental premises. In this case, the landlord may be faced with even more legal fees. On top of this, a Landlord may be faced with legal fees related to obtaining any past due monies that are owed.

In the end, the process can be heart breaking, wallet breaking, tedious and exhausting. Your best bet as a landlord, is to extensively research any candidate that you may consider for your rental space. Do your due diligence, and with any luck, these problem tenants will be few and far between.

Landlord Pricing Strategy: How Should I Price My Property?

As a landlord, determining the best monthly price for your property can be tricky. Price point means everything;it will directly correlate to how quickly you find a tenant, the quality of tenant, and your return on investment. Here are some factors to take into account when determining a price point:

How much your property costs to carry doesn’t matter:

Ok, it matters to you. I get that. But the point to take into account here is this: the rental market isn’t concerned with your costs. You may have fitted your rental property with impressive kitchen and bathroom upgrades, beautiful new appliances and extra closets and storage space. These upgrades may have cost you a pretty penny, tempting you to raise the price point well above the average rental space in your area. Now, you may be thinking that these upgrades justify an additional, let’s say $400 a month, over the average rental unit cost in your area. Renters won’t see it that way. The upgrades are nice, and they may be attractive, but renters are typically renting because they cannot yet afford to buy. So these upgrades won’t justify an extra $400 a month in your potential tenants’ minds. By taking this route, you’ve narrowed down the market drastically, which will likely result in long vacancy’s. What’s important to keep in mind is this: those upgrades will still yield a strong return on investment when you are prepared to sell the property, so the monthly rental fees may not be that important in generating a return.

Upgrades can still justify a slight increase in monthly costs:

At the risk of sounding contradictory, it’s still a good idea to price your property slightly higher than the average cost in the area if you’ve fitted the space with some costly upgrades. The right rental price does correlate directly to how desirable the unit is. It’s a fine line to walk, but there is always a “right” price point to put on your property based on the area as well as the quality of the space. For example, if you see rental units with minimal upgrades, poor window views, set on the first floor going for $1200 a month, you shouldn’t feel the need to match that if you have nice upgrades, beautiful views from the window, and a higher floor level. View, updates, square footage, layout, floor level, extra windows, storage space and/or balconies are all important aspects that can justify a slight increase in price…just not a $400 a month increase.

Understand your specific market:

Monitor other rental properties in the area. What price points are they going for? How do they compare to your unit? Understand how many rental units are available in your market, which ones are filling up, and which ones are staying vacant. Check out online ads, local newspapers and free classifieds to understand your competition. An even better idea would be to check out these units in person, allowing you insights to compare properties. Monitor how many landlords are offering rental incentives to attract tenants; if you see an abundance of landlords offering incentives, this may indicate an overly saturated market, meaning you may need to lower your desired asking price.

Don’t underprice your property:

Underpricing your property will have two affects: an overabundance of rental applications, and an overabundance of poor quality tenants.  Remember, this isn’t a liquidation sale. You’re in this to make money, and to do it as easily as possible. Having a wealth of rental applications isn’t necessarily a good thing. It’s a lot of headache, and takes a ton of time to sift through. By the time you get to an application from someone who you may deem to be a quality tenant, they will likely have moved on. Some landlords underprice as a way to create a bidding war. That’s not a bidding war that you want. How will a handful of poor quality tenants, who don’t want to pay much to begin with, result in a positive outcome for you, the landlord? They’ll never bid the price you want, and you’ll end up taking a lower monthly amount than you had hoped for, along with the lower quality of client that comes with it.

Don’t overprice your property:

In addition to upgrades, some landlords overprice their property in hopes that it will give them wiggle room to negotiate. In theory, that’s a great idea. In practice, it rarely works. You’ll end up with minimal applicants, and long vacancies. The ultimate goal is to fill the unit fast; every vacant month is money out of your pocket. Tenants who can afford the higher end rental amounts are typically very selective, and securing a rental agreement with this audience can be a tricky and lengthy process.

For most tenants, price point is the ultimate factor. But remember, they are still people who want a high quality of life. Price is important, but it’s not the only factor. As a landlord, listen to the market and be strategic in determining the monthly price.