Finding the Right Tenant in Toronto
You have purchased your new investment property and are ready to find a suitable tenant. Sounds simple and straightforward, right? Securing a tenant can be a daunting experience for some or a breeze for others. It depends on your approach, your temperament and sometimes luck. I prefer to avoid relying on the later. Operating a property management company in the GTA has yielded some key insights in the rental space, which we hope will benefit you in finding that “ideal tenant”. Know the Rental Market It is important to understand the rental market before you put an ad together. Trial and error on the price could cost you considerably. Price it too low and it will take you a while to get to proper market rent through annual increases. In addition to pricing it too low your cash flow gets impacted. Price it too high and your property will just sit there. A macro economic approach like understanding what the employment situation is like, vacancy rates or even population trends is helpful, but you should intimately know the specific area where your investment property is located. Ideally, this type of analysis takes place well before the property is purchased. Is your property near a subway line? What are comparables in the neighborhood? Understand all the variables before pricing it out. Marketing Are you positioning the property well? People typically buy or rent based on what they can afford on a monthly basis and on the emotional factor. Is the unit staged well? Are you familiar with nearby amenities like shops, restaurants, grocery stores, hospitals and schools? Are you asking the right questions when you meet prospective tenants? A deep understanding of the property’s upside will help differentiate your rental from your competition. If you are working with a Real Estate Agent, make sure they understand the market, and don’t just list your property on MLS and wait. Ask what their strategy is for marketing your rental. Timing You don’t always have control over this, but the majority of people do not like to move in the winter. You will have a greater demand between April to October than the winter months and as a result will be able to either charge slightly higher or secure a qualified tenant faster. Also, if you post an advertisement more than a month in advance of when you need to rent it out, you may attract prospective tenants who have provided proper notice to their existing – a nice indication of how they will treat you! History There is a saying “the easy way is the hard way and the hard way is the easy way”. Do your homework in the beginning or you might be spending many months later doing your work to evict the tenant. I still find if alarming that some Toronto Landlords still rent their properties based on a gut feeling without doing any due diligence. I understand experience and strong people skills will help weed out some problem tenants, but there is no substitute for doing a credit check. Contacting employers, former landlords (not the most recent, but the one prior), and asking the right follow up questions after going through their application is critical. Know how to read a credit report and what are some of the pitfalls. Even a solid beacon rating can be misleading at times if there is major debt and revolving payments. Pretend you are lending money out of your own pocket, would you do it? Setting Expectations This is something that should be done before the person signs and application and lease. Make sure you cover your basis early on so there are no surprises later. Tenants should understand the process entailed to get in contact with you, and expectations on repairs. Complete a documented pre and post inspection with every tenant. Inspections help mitigating your risks and establishing a common ground between both parties. Legal Due Diligence Whether you hire a property manager, real estate agent or locate tenants yourself, make sure you have the proper legal documents. Applications, leases and inspection documents are a must. Also, ensure that your insurance policy covers you if the investment property is vacant for over 30 days. Insurance providers vary and so do their policies. It is a very timely and expensive process to evict bad tenants. Know the market, get to know the prospective tenants and understand the landlord/tenant laws in Ontario. Otherwise, hire a professional to help you so you don’t have to learn from your own mistakes. Mekler Property Management offers property management services in the Greater Toronto Area. For more information please visit us at www.Mekler.ca – We help you be a landlord without being the landlord!
Very well designed site. Keep up the good work. If you are looking for a plumbing contractor you gotta check out this site. I’ll come back soon to check on this site.
I have fun with, cause I found exactly what I was having a look for. You’ve ended my 4 day lengthy hunt! God Bless you man. Have a great day. Bye
great post! I am regularly on the lookout for very good blogs on Toronto related topics
great post! I am always trying to find well written information on topics related to Toronto