As a landlord, finding the right tenant can make all the difference in managing your investment. A great tenant can provide you with an easy, low-stress experience. However, a bad tenant can lead to late rent payments, property damage, and in rare circumstances legal issues.
With this in mind, it’s extremely important to conduct a thorough screening before allowing a tenant to lease your property. This post will be a general guide to help you do exactly that.
Starting out as a landlord in Toronto? Click here to read our list of essential Dos & Don’ts.
Create an Application Document
Given Toronto’s widely competitive rental landscape, you could be screening dozens if not hundreds of potential tenants. With that in mind, you’ll want to stay organized.
A strong tenant screening process begins with a well-designed rental application. This document should gather essential information about interested renters, which you can use to sort through and narrow down candidates.
Keep in mind, a rental application is different from a rental agreement or lease. Once you find a great tenant for your property, you’ll need to have them sign an Ontario Standard Lease – more info on that here.
Want to know more about real estate investment in Toronto? Check out these blogs for a few helpful tips.
- The Best Toronto Neighbourhoods to Invest in
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Verify Employment & Income
Stable employment and sufficient income are crucial indicators of a tenant’s ability to pay rent consistently. As part of your screening process, ask tenants to provide proof of income. This could be in the form of a recent pay stub or a formal letter from their employer. To be safe, always verify the information provided on the rental application by contacting the applicant’s employer directly.
Ideally, a potential tenant’s monthly income will be three times your rental rate. That said, a tenant may still be able to afford the property comfortably even if their income is slightly outside of this margin.
Perform a Credit Check
Another way to assess a potential tenant’s finances is with a credit check. Look for a credit score that indicates responsible financial behaviour and a history of on-time payments. Keep an eye out for any outstanding debts or past bankruptcies.
Check References
You’ll always want to ask for (and follow up with) references from past landlords. This step is essential for identifying potential red flags early on and can provide you with valuable insights into their overall trustworthiness.
By reaching out to their included references, you can gather information about the applicant’s reliability in terms of rent payment, respect for the property, and adherence to the lease terms.
Know What You Can’t Ask
While there are a handful of important details you can verify about a prospective tenant, some information is off-limits. Under Ontario law, there are certain things you can’t ask during tenant screenings. These include,
- Whether or not they’ve ever been part of (or currently are part of) a dispute with the Landlord & Tenant Board (LTB).
- Their age, gender or sexual orientation, personal beliefs or religion, and place of origin.
- Whether or not they are disabled or currently receiving social assistance.
These restrictions are designed to protect tenants from potential scams or privacy intrusions, along with making the screening process fair and equitable.
Looking for more landlord resources? Check out these other posts from our blog.
- A Guide to Interim Occupancy in Toronto
- Should You Lease Your Home Instead of Selling?
- Basement Apartments: Retrofit Doesn’t Mean Legal
Interview Top Candidates in Person
Once you’ve sorted through applications, you’ll want to interview your top candidates in person. This will give you a chance to assess their overall demeanour, professionalism, and how they present themselves. Ask about their long-term housing goals and what they’re looking for in a rental property.
An in-person interview also gives potential candidates the opportunity to ask any questions they may have about the property, tenant responsibilities, and your degree of experience as a landlord.
After speaking to a potential tenant in person, trust your instincts. While gathering personal information and checking references are important parts of the screening process, don’t ignore your gut feeling. If something feels off during the screening process, move on to the next candidate.
Looking to purchase or build a profitable income property? As seasoned experts in Toronto real estate, our team would be happy to assist you. Call 416-587-3300 or send us an email at office@torontoism.com.
