Do you know the number one reason why people do not want to buy RENTAL PROPERTIES? It is the fear of having BAD tenants. Well! It is a genuine fear, and that is why choosing the right tenant is absolutely important.
It’s better to have an empty apartment for a few months instead of months of late rent and court dates.
It is important to do due diligence before signing the lease, it is very difficult to evict tenants later. It will save you from a lot of headaches and sleepless nights.
IT IS A BEST INVESTMENT, SO WHY NO ONE DO IT?
RENTAL APPLICATION FORM
This is must, always have an application form to be filled out for prospective tenants. It must contain some basic information like Name, Date of Birth, SIN\SSN, Current Address, Previous Address, Current Employer, Previous Employer, Signed Date and Signature.
Application forms serve many purposes like, it makes it easier to compare applicants. You can use this to track tenants in future if ever tenant leaves without notice and you will require this for credit check.
RED FLAGS TO WATCH OUT FOR IN THE APPLICATION
- Poorly filled out application is not a good sign; I normally ignore these applications.
- Missing reference, applicants must provide their current and previous landlord, current and previous employer. Sometimes, you don’t need all of those but missing this information is a RED FLAG.
- Leaving their current place within just 3-12 months or not completing their current lease is a RED FLAG, I will surely ask a lot of questions to figure out more about their situation to make sure we run into very picky tenants.
- Moving from one apartment to another every year, I have seen this many times that people are moving every single year, I wouldn’t like to work again next year to find another tenant and paint the apartment again. I would like to pick people who like to stick around a little longer.
CREDIT CHECK
Never ever rent an apartment without checking CREDIT, specially do not fall for sweet talks.
You will know the real person as soon as you have their credit history in front of you. You are not looking for the best credit people out there, because if you are , you will never find a tenant to rent your place. The purpose of checking credit is to illuminate people with the worst credit.
TURE STORY:
A schoolteacher lives with her son, and they want to move to this neighborhood because of the nice school close by. It seemed to be a perfect tenant without any issues and a believable situation. As a rule, I always do a credit check, no matter what. It turned out that she has a credit score of 400 and a lot of collection. CREDIT CHECK SAVED ME, NOT JUST ONCE.
RED FLAGS TO WATCH OUT FOR IN THE APPLICATION
- PERSONAL EXCUSES: Do not fall for excuses like I just had a bad breakup, and my ex ruined my credit. It is bad credit, that is the end of the story. Sometimes, these excuses can be true but how will you know? Sometimes, in this case, you can ask for a co-signer with good credit. Not too long ago, I rented an apartment to a girl with bad credit but her sister with amazing credit co-signed the lease and that saved me.
- SHARED LEASE: Applicants who have bad credit and want to sign lease just on their Spouse name. Both will be living in the apartment and if that spouse with good credit leaves, you are still stuck with the one with BAD Credit even though you signed the lease with just one person
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OVEREXCITED APPLICANTS
Beware of Applicants who want to sign right away and are ready to move in the next day and bring cash with them to pay first month’s rent. First of all, I don’t like this rush rush situation, if it’s not giving me enough time to do a proper background and credit check. Secondly, I don’t prefer people who bring cash. Who is carrying cash around to pay rent in 2021?
UNPUNCTUALITY
Applicants who do not come for visit and keep on rescheduling. How can you trust someone who doesn’t even keep his word to show up for an apartment visit? Normally, I try to give them one more chance and I reschedule the visit once, but these people are not on my priority list.
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APPLICANTS WITH DANGEROUS ANIMALS
After having a lot of troubles with dog owners in past, I stopped accepting tenants with dogs. I still allow Cats though; I have no bad stories of cats yet as compared to dogs.
You do not want to have a big dog who shakes the apartment when he runs or a Pitbull who scares other tenants or has dog poop all around your property.
Don’t go with your GUT feeling, it won’t be right, but the credit check will be.
Treat it like a business and have a system. If one advice you can take from this whole video\Blog is credit check. People with good credit are the best tenants, they will keep the apartment in the best condition, and you will receive rents on time every single month.
PROPERTY MANAGEMENT TIPS
I like to add some property management tips at the end which are really helping to manage my properties.
1. Join local Landlords Association
In Montreal, we have CORPIQ which represents rental property owners, they also have good advisers\lawyers to help you out with difficult situations. I pay around $250 per year membership and it also comes with Discounts at local stores for paint and renovations.
2. Avoid tenants who want to pay cash.
According to my personal experience, people who pay cash are late for rent payments every month and also need a lot of communication to pick up rent on 1st of the month. Sometimes, it’s impossible for you or the tenant to schedule a time, it always needs a bit of chasing.
3. Use Interac for rent payments
I prefer Interac for rent payments, it’s easy and convenient. Money directly goes to your account.
4. Clean property and apartment
Good tenants want good property to stay, and this means you need to work on your property to make sure it looks clean. Put some flowers in the summer to make it pretty.
5. Google Sheets
I use Google sheets for my Rent Roll, It’s free and I can use it on my phone or laptop which makes it very easy to update as soon as rent is received every single month. I can’t remember all the rent payments anymore for all 25 units, Google Sheet is really helpful.
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