Buying an income property can seem like a great way to earn some secondary income and invest your money in an asset that may give you a good return down the road.
Whether those income dreams turn into nightmares will largely depend on the kinds of tenants you get.
“Overwhelmingly most people are good, but it can be the one bad apple (that ruins it),” said Albert Bolter, a president and broker with Colliers International in Toronto.
“You don’t want to lose good tenants because of one bad tenant.”
Here are some tips to make sure you get reliable, responsible tenants – and avoid the ones who’ll make you regret ever getting into the rental game.
Get references
Screen potential tenants carefully by asking for references and actually calling those references. Don’t just assume that someone works where they say they do or have impressive people vouching for them. Follow through on the information you get and see for yourself.
Run a credit check
You’re within your rights as a landlord to run a credit check on possible renters, as long as you make them aware (ideally in writing) that this is something you plan to do . You’re also entitled to ask for first and last month’s rent when they sign the lease.
Use social media
People share an incredible amount of information on social media. Take a look at your candidates’ LinkedIn, Facebook and Instagram accounts to get a sense of whether they are people you’d be comfortable renting to.
Know your rights – and those of your tenants
Provinces like Ontario regulate residential real estate through the Residential Tenancies Act of Ontario as well as agencies like the Landlord and Tenant Board. Before you take on tenants, read through the rules and obligations you’ll be taking on to understand what you’re getting into. There are protections in place for tenants, which state you can’t just throw someone out if they’re behind on their rent. You should also get familiar with the process you’ll have to go through if you have a complaint – or if they do.
Consider outside help
If you can afford it, consider outsourcing the work of finding tenants to a property manager. These are people who will source tenants, collect rent, deal with repairs and generally oversee upkeep, for a fee. You can also get advice and support from industry associations, such as the Ontario Landlord’s Association.
