Good tenants are the ultimate goal of the majority of landlords and finding the right tenant for your property is one of the most important things you’ll do. So how do you find good tenants and make sure they’ll be the right ones for your rental property?
Let’s start by looking at what a good tenant actually is. While there are some details that may vary between landlords, there are a few things that we can probably all agree will make someone a good tenant:
Some of these details speak for themselves. Other perhaps less so. You want a tenant who takes cares of the property because they will help reduce the number of costly repairs that you will have to undertake. Someone who is a welcome addition to the neighbourhood is a tenant who will respect their neighbours and that will lead to fewer angry complaints coming your way. If your tenants stay long-term, that reduces the need to be regularly searching for replacement tenants and will help you to have an enviably low vacancy rate.
So, what can you do to find a good tenant? First, we should cover what you are not allowed to do. In Ontario, it is against the law to refuse a tenant based upon their sexual orientation, race, religion, place of origin, ethnicity, marital or family status, or disability.
In terms of what you are allowed to do when selecting tenants, the Residential Tenancies Act states: “In selecting prospective tenants, landlords may use, in the manner prescribed in the regulations made under the Human Rights Code, income information, credit checks, credit references, rental history, guarantees, or other similar business practices as prescribed in those regulations.”
Looking at this further, the Ontario Human Rights Code states that: “The right… to equal treatment with respect to the occupancy of residential accommodation without discrimination is not infringed if a landlord uses in the manner prescribed under this Act income information, credit checks, credit references, rental history, guarantees or other similar business practices…”
That means you have lots of room to check potential tenants and some clearly defined examples of what you can do. Let’s take a closer look at each of those and how you might use them:
These two go hand in hand. When selecting a tenant, you want to know that they can afford to pay the agreed upon rent. As a rule of thumb, an affordable rent is said to be approximately one third of a tenant’s income. Obviously, this should be used as a guide and not necessarily a hard and fast rule, but they only way to get an idea of whether someone will be able to afford to rent your property is to verify their income and employment.
There are a few ways you can go about this. Asking the prospective tenant to provide pay stubs is the probably the simplest. If this is the route you go down, you should make sure that the employer is genuine and may want to reach out to them to check if the employment is stable.
Knowing that a prospective tenant has a steady job with a regular income is a great way of ensuring that rent will be paid on time but it isn’t the only way. If income is less steady, you may want to ask for a guarantor or additional proof of ability to pay rent.
A credit check can give you a good idea of someone’s reliability in meeting financial obligations. As a landlord, you are permitted to access a tenant’s credit report but you must receive consent from the person. Alternatively, you can ask the prospective tenant to provide their credit score and use that score to assess their financial reliability. When looking at a credit score, anything above 740 is considered to be very good, while over 800 is considered excellent. If someone has a low credit score, it can indicate problems meeting financial commitments in the past so you may want to start thinking of the need for a guarantor.
When a person is looking to rent your property, ask them for references, in particular previous landlords. By reaching out to their previous landlords, you can get a very good idea of who they are as a tenant and what they are going to be like. Although past experience isn’t always a perfect indicator, this is one of the better ways of assessing whether someone s the right kind of tenant for you.
The term “other similar business practices” is somewhat vague but a criminal record check could be covered by this. If your initial checks and interactions with a potential tenant make you suspicious, you may want to run a check like this, although you will need permission from the person to do this. However, if a person is of such a concern to you that you feel like running a criminal record check, you might already have your answer as to whether you want them as a tenant.
Both before and after conducting the legal checks above, you can encourage the right type of tenant by stating clearly what you will and will not accept in your property. You are entitled to ask that there will be no smoking and no pets in the property, for example. If that is the case, make it clear in your rental listing and in the tenancy contract. If you are telling people what you don’t want, you are less likely to receive approaches from people who want to do those things.
There is a long list of permittable clauses to add to a rental agreement. Examples include not allowing business activities, not allowing the property to be sublet, rules about whether additional appliances will be permitted. The list goes on, so speak to an expert to find out what you are and aren’t permitted to exclude.
Finding a new tenant can be a stressful affair. There are a variety of checks to make, laws and rules to follow, and decisions to make. One simple way to get all this done is to pay someone else to do it. A property management company like Living Properties has years of experience dealing with vetting new tenants, among other things. That expertise provides you peace of mind for a low monthly fee and lets you know that your property is in good hands. If you want to know more about our property management services, reach out to us using the contact form below.