Buying a home and then renting your home to become a landlord can be a great way to really take advantage of a property. Tenants not only pay rent every month, but they also maintain the integrity of the property. (Just the simple act of using the plumbing system regularly can help it stay intact.) And if something goes wrong, such as a leak in the ceiling, the tenant will be there to alert the owner. But just because tenants can be a boon for property owners doesn't mean that all of them are worth the trouble. Here are a few tips to keep in mind before moving forward on a candidate.
Start with the Regulations
Canadian rules for tenants will vary depending on the province of the property, and these rules can be exceptionally important to landlords. For example, in most provinces, a landlord can deny the tenant if they have a pet. However, landlords in Ontario are not technically allowed to put a no-pet clause in their stipulations. Owners with homes in a co-op or HOA may not even have the right to have renters, so it helps to check into the specific regulations beforehand.
Look at Each Prospective Tenant
Most landlords already know that they can't use the tenant's ethnicity, religion, disability, sex, or number of dependents to determine eligibility. These rules are set and very strictly enforced. Additionally, there are other discrimination protections in certain cities, counties and states. Check the rules, laws and regulations in your area. The tenant doesn't even need to prove that the discrimination was intentional in certain provinces in order to win their case.
However, what property owners may not realize is that they still have a number of ways to confirm the character of the person in question. For example, a simple credit and background check can show them how a person has handled critical life choices. And while poor credit or a criminal past can't predict the future, it can tell a landlord if the tenant has struggled with responsibility.
Springbank Hill home and property owners are also allowed to delve deeper into a person's financial situation by inquiring into their DTI ration. Debt-to-income accounts for all debt in the tenant's life (credit card, alimony, car loans, student debt, etc.) against the person's total income. Income can be anything from a steady job to stock dividends. If the ratio is greater than half, landlords may want to think twice before renting to someone. The more debt a person has, the more likely it is that rent will be pushed to the side if an emergency situation occurs.
Talk to People
Looking at the numbers of a person may sometimes cause landlords to miss out on some great candidates. That's why it may help to get a little more personal. Here are just a few references a landlord can ask for to help the picture become that much clearer.
- Past landlords: The tenant's old landlord can tell a property owner whether they were respectful, quiet, and responsible.
- Character references: While many tenants may list their friends or family members, landlords can still gain insight into a person's life through their character references. If the character references consider each question carefully instead of rattling off superfluous praise for the tenant, it's a good sign the tenant has stable connections.
- Employer: The ability to hold down a job and get along with coworkers can be easily dismissed by many people, but these qualities should not go overlooked by a landlord.
Tenants can do a lot of damage to a property—damage that a security deposit can't even come close to covering. Before a landlord allows someone to enter their property, they should have a strong impression on the person they're renting to. These tips can't weed out all the bad apples, but it can go a long way to preventing a big mistake.