How #TorontoLlandlords can steer clear of bad tenants http://t.co/eLWTCHfkIx – 10 principles http://t.co/wWx7qFlxOv for #TorontoRentals
— Landlord Relief (@LandlordRelief) December 16, 2014
Tenant selection – do it carefully
Tenant selection is the single most important part of property management. It is a skill which you will develop over time. The bottom line is that any rental arrangement must work well for both the tenant and the landlord.
Working well for the Landlord
The landlords requirements are easy to identify. All landlords want tenants who:
– pay the rent on time
– don’t damage the property
– understand that they have responsibilities with respect to noise, cleanliness, etc
– stay for a long time
Note that these requirements are objective.
Working well for the Tenant
The tenant’s requirements are not as easy to identify and are somewhat subjective – but they must add up to a situation where the tenant is happy and has no incentive to look elsewhere. Remember that a vacant unit is your number one enemy!
Examples of things worthy of considering are:
– set rents that are no more than average and possibly a bit on the low side (you don’t want tenants feeling that they are paying more than they could pay elsewhere).
– Ask whether living in your property makes sense in terms of the tenant’s lives. For example, is the property close to where they work? Can their children walk to school?
– If you are renting to a group of independent adults – ask why would they stay together as a group? What happens if one of them leaves?
– Are these tenants capable of making small repairs without your supervision?
– Are these the kind of people who will respect municipal by-laws concerning garbage? This is a big problem in Toronto. You don’t want letters from by-law enforcement officers?
– Do these tenants have more cars then there is parking? Again, a big problem in Toronto.
The bottom line is that if the situation doesn’t work well for the tenant, then it can’t work well for you.
Interesting article. I definitely agree with most of it, including creating an environment where the tenants are happy and where they will stay on for extended periods.
The one part I disagree with though is setting rents that are average or slightly below. We’ve had far more success in our ten years as landlords by upgrading our properties to a slightly higher standard than other rentals nearby and then charging a premium for the property.
Inevitably, we hear from tenants that while we may be $50 or even $100 more per month than other properties they looked at, they would rather rent our property as it was nicer, better maintained and stood out from the others.
While this costs us more initially, we generally recoup this because of the higher rent and our tenants tend to also stay much longer. Currently our average tenant stays with us for over three years and the last two tenants we lost only moved because they finally were able to purchase a home.
One other part I should mention is the higher rent also helps push away the tenants who are looking for the cheapest possible rental unit. While many of these tenants may turn out to be great, they alos provide a larger risk for being short of rent each month and since I have to make mortgage payments each month whether rent comes in or not, I need to manage my risks!