It’s a good time to be a landlord in Toronto, given the currently low vacancy rate. CMHC estimates that the vacancy rate for 2016 in the GTA will be 1.9% for purpose-built rental units, with a slightly lower vacancy rate in the city. With a low vacancy rate comes high demand for available rental units and the opportunity for owners of rental properties to raise rents. Another effect produced by limited supply is that landlords may have to contend with multiple applicants to fill vacant units. However, having to choose from more than one qualified applicant is a good problem to have, if you have a good system in place for screening prospective tenants. Without question, the key to managing a successful rental property is finding good tenants, so don’t cut corners when it comes to this important task. Below are several often-overlooked things to consider as part of a thorough tenant-screening process:
- Credit Check – A tenant with a high credit score is ideal, however, a tenant with a poor credit score is not necessarily a deal-breaker. In fact, writing-off a tenant with less-than-desirable credit could mean that you’re passing up a wonderful and responsible tenant that would actually add value to your property. Be up-front and honest with the prospective tenant; tell them you are concerned with the results of the credit check and need some re-assurance. Ask them to explain their situation and what led to the poor credit rating.
- Employment History – While a bad employment history can be alarming to landlords and property management companies alike, it doesn’t actually say much about a tenant as a person. Not giving someone a chance because they have a short history of employment could mean that you’re passing up a perfectly fine tenant that might serve your rental property well.
- Divorce – A tenant that is a divorcee might seem like a less than financially perfect applicant, however, this doesn’t mean they wouldn’t be a perfectly wonderful tenant to occupy your investment property. In fact, many divorcee’s were homeowners themselves, and are well aware of the investment that’s involved.
- References From Current/Past Landlords – In our opinion, speaking directly with a tenant’s current and (if possible) past landlords is the most important part of the tenant screening process. You will gain first-hand knowledge of a fellow landlord’s experience with the tenant in question…did they pay their rent on-time? did they keep a clean apartment? were they respectful of other tenants in the building? This information can make or break the decision to extend an offer of tenancy to the prospective tenant.
While a credit score and job history are integral aspects to choosing the right tenant, they are not the only aspects. An applicant with a credit score of 800 and a great employment history could also be a slob that wreaks havoc on the neighborhood and your rental property, causing tension between you and your tenants and neighbours. It’s important to remember that a person is more than a number, and should be treated as such. Don’t sell yourself short of finding a great tenant by discounting those that are divorced, have a low credit score, and a bad job history. Instead, try to paint a complete picture of the prospective tenant so that you may judge their merits fairly. If you’re in need of assistance with screening tenants, and would like to consider having a property management company look after your rental property, please don’t hesitate to contact the professional property managers at Bridgeway Property Management. We are eager to help keep your investment property safe and well managed.