By Aleksandra Oleksak, The Real Estate Chick
Being a landlord in Toronto can be a lucrative thing, especially when the average rent for a one bedroom apartment is $1573 and $2155 for a 2 bedroom. But the key thing to being a landlord is not how much money you collect, but the type of tenant you find. In Ontario, tenants have more rights then landlords do and it is not any easy process kicking a bad one out. Therefore before you start counting your money all the way to the bank, make sure you do your homework first!
Requesting a credit check is a great place to start when vetting potential tenants. A soft credit check can be performed by the tenant themselves at Equifax.ca where they can obtain a full report as well as their credit score. The report will help you determine their credit worthiness and show you if the tenant’s pay their bills on time and how much outstanding debt they have. Low credit score, coupled with late payments and high debt may yield you a high-risk tenant that may not pay rent on time.
Next to the credit check, this is a very important step, so make sure to request an employment letter stating where the tenant works, how long they have worked there for and how much money they make. This will show the tenant’s stability and affordability, a general rule of thumb is 30% of their income should be used for rent. After receiving the employment letter, I would take it one step further and call to verify employment as Photoshop can make any employment letter look real.
Make sure to ask for a landlord reference or two. I think it is best to call the previous landlord and find out what kind of tenant they were. Were they clean, disruptive, missed rent payments, etc. This helps you paint a better picture of who this person actually is and how they will treat your investment.
If you are still uncertain about this potential new tenant, why not request to meet them in person. Based on their appearance and their mannerisms, it might make you feel either more comfortable or less comfortable renting to this person. They will also feel less like a stranger and hopefully more like an acquaintance that will treat your place like as if it were their own.
Residential Tenancies Act
When becoming a landlord it is important that you know your rights and the rights of your tenant. As I mentioned previously, tenants do have more rights then the landlord, so you want to be familiar with the ins and outs to have a smooth and cordial relationship with your new occupant. In return they will be less difficult and will take better care of your investment. The Landlord and Tenant Board website is very informative as well and you can always call them with your questions.
Although this may sound like a lot of work to undertake and shortcuts may look more favorable, isn’t it worth it for a great tenant? A few hours invested at the onset, can save you from a bunch of headaches later on that will end up being time consuming and even costly.
Aleksandra Oleksak is Her City Lifestyle’s “Real Estate Chick,” and a Toronto real estate professional with Sage Real Estate. As @RealtyQueenTO, her real estate blog has been named one of the top 50 real estate blogs in Canada.