7 Tips on Choosing the Right Tenants

7 Tips on Choosing the Right Tenants

Every property owner or landlord dreams of having multiple qualified tenants applying for their units. On the flip side, we’ve all heard horror stories of bad tenants that disregard rules you’ve set in place to preserve and protect your property. These two opposing possibilities make us all question how we can make the most out of our property investment ventures. 

Though becoming a property owner means a lot of new responsibilities, you’ll generally find that finding bad tenants is not as common as you might think. Despite this, there are still a fair share out there, so you need to make sure you have a well-crafted screening process to minimize this as much as possible. Read through our 7 essential steps below to ensure you attract great tenants for your multifamily property. 

  1. Do some research and get to know your target audience

This is the first step you should take before you invest in your multifamily property. Research will give you a better understanding of the neighbourhood, and what types of people are interested in the area and the type of property you have purchased, whether it’s a luxury skyscraper apartment or a modest fourplex. This should also let you know what amenities are nearby, and how much rent you can charge according to housing laws.

  1. Market your property according to your research

Now that you have a better idea on what your target audience is, you can create tailored advertising campaigns in accordance with your research. This way, you make sure the right people are seeing your ads on the right platforms and mediums. It’s a good idea to include as much information as possible about your property so you can maximize the number of informed applicants – and most importantly, they will be aware of regulations you have in place. For example, if your building has limited parking availability, or is a pet-free establishment, your applicants should be aware of this right from the get go. 

  1. Check your applicants’ credit score

While numbers can’t paint the full picture about a person, they give you a good sense of their financial health and literacy. Generally, credit scores between 660 and 800 are ideal, while anything under 579 is considered a ref flag. It also goes without saying that applicants with piling debt, overdue accounts, and poor repayment histories should likely not be considered. However, keep in mind that applicants who are new to the country may not have had adequate opportunity to build a credit score that accurately reflects their financial situation. In this case, it’s a good idea to ask them to provide proof of a stable income – which takes us to the next point.

  1. Verify their monthly income

As one of the most simple and standard forms of tenant screening, you should check to make sure your applicants’ financial documentation shows that they can afford to set aside a third of their gross monthly income on rent. This can be easily checked through a record of employment, pay stub, or even a T4 slip from their bank to verify that regular deposits are being made on a monthly basis. 

  1. Check your applicants’ tenant history

While the documentation mentioned above provides you a fair amount of information about a person’s credibility, you can always learn more from direct conversation with their contacts. We highly recommend requesting references, such as employers, previous, and current landlords. Invest time into reaching out to them and asking open-ended questions to learn as much as you can about your potential tenants – just like a talent recruiting process. 

  1. Check their criminal record

Laws surrounding criminal record checks vary from province to province, though landlords in Canada are legally allowed to run a criminal record check in tenant screening if consent is given. Of course, hesitancy in applicants to show you their criminal record may be a cause for concern. A criminal record check doesn’t tell you everything you need to know about the person, though serious charges like violence, assault, or drug-related convictions are most definitely appropriate grounds to deny applications on. As for the milder charges, it’s up to your discretion as the property owner whether or not you are willing to look past them. 

  1. Make sure they fit your lifestyle expectations 

Another extremely important factor in consideration of your applicants is their lifestyle. Choosing tenants with lifestyles that suit you can go a long way in making sure they follow the regulations you’ve carefully laid out for your property. Rules such as no smoking and limits to the number of visitors at a time are things your potential tenant should be aware of should they continue through with their application process. Ask your applicants these types of questions as well as why they’re moving – how they answer this can tell you a lot about them as a tenant. Should you encounter any red flags, you should move on. 

Concluding thoughts

As mentioned previously, more often than not you will encounter a good tenant rather than a bad one. That being said, it’s highly important to your financial success and wellbeing of your property assets that you do your due diligence in finding tenants that are the right fit for your building. You’ll see this hard work pay off, as acquiring great tenants will result in long-term tenants, lowering your turnover rate and in turn, securing your revenue stream. Not only will your tenants be more responsible as clients, but you will save time and resources otherwise spent on advertising, leasing, and move-in costs. 

While the most detailed and thorough screening process won’t be able to rule out every single bad applicant, you should run into fewer problems down the road if you’ve properly set up your screening measures. 

Data is supplied by Pillar 9™ MLS® System. Pillar 9™ is the owner of the copyright in its MLS®System. Data is deemed reliable but is not guaranteed accurate by Pillar 9™.
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