Historically low interest rates over the past few years paired with a thriving housing market has pushed many Canadians to purchase investment properties and become landlords. It’s projected that at least 33% of newly constructed condos bought in Toronto during 2011 were purchased by investors. However, only between 10%-15% of condos are introduced to the market for resale throughout a year. The remaining percentage of condos are either being held by the buyers and listed as rental properties
Are You Examining the Facts or Going with Your Intuition?
Typically, property management firms are hired to locate tenants and manage transactions but many independent investors take on this process on their own. Located a qualified tenant that makes payments on time and takes care of the property is harder than it seems
A spokesperson from the Rent Check Credit Bureau notes that going with your intuition when choosing tenants accounts for close to 30% of measurable losses of rental property assets and to beware since some tenants have the knowledge to falsify their identity or rental history
Many landlord support groups have stated that tenancy laws are too relaxed and that some tenants have found ways to manipulate these laws. One Ontario judge shares his experiences of how some dishonest tenants have taken advantage of tenancy laws and have been allow to live in the rented properties longer than agreed to and in some cases rent free. This further complicates the responsibilities of landlords and has caused many landlords to seek help from the government
How Some Tenants Avoid Paying Rent
One example of this unfair treatment is shown with a landlord from Ontario who leased out a unit in October of 2011. The tenant agreed to pay $3,600 monthly for the apartment but never made any payments. This obviously led to multiple eviction hearings in which the tenant was able to defer the eviction process by giving the landlord faulty checks. At the time of the court ruling the tenant had owed more than $25,000 in unpaid rent and the landlord was only awarded a little over $13,000. After further investigating this unruly tenant, the landlord discovered that the tenant had a history of similar activity in the past
How to Properly Qualify Potential Tenants
Canada Mortgage and Housing Corp. (CMHC) indicates that there are different regulations depending on where you’re located but typically landlords are allowed to question tenants in order to qualify them for the property. Landlords are allowed to ask the tenants place of employment, how much they are paid, how many tenants will occupy the unit and the names of additional tenants. Landlords are also permitted to ask for references, find out if any pets will occupy the unit, whether or not they smoke, and written consent for background or credit checks
Landlords should not ask the nationality, birthplace, citizenship, sex, age, marital status, or whether or not they’re receiving government assistance in any way. The Canadian Mortgage and Housing Corp. also states that some of the basic financial information that was once accessible from credit reports are no longer there and advise using the Rent Check Credit Bureau
One of the most significant pieces of information that a landlord can ask for is previous rental history and references from past landlords. This will help landlords to determine if this potential tenant makes payments on time and if there were any complications with the tenant. It’s recommended that landlords ask for references from three previous landlords There are many landlord support groups that will assist you to find the proper resources to adequately qualify your potential tenants.