Tenant nightmares are a fact of life. The possibility of a bad tenant is always there and one bad tenant can make even the most seasoned landlord lose their hair. So can you be a landlord? Should you be a landlord? How do you become a landlord? What forms should you ask for? Who is the right tenant? There are so many questions and things to worry about but as with all things in life, experience will make things easier the second time you do it.
Insider Condos recently listed a bunch of condos for lease due to investors purchasing condos a while back. And it seemed to us that we were seeing the same questions over and over with each investor. So we decided to write this blog post to help out anyone thinking of becoming a landlord.
When we lease a condo (or a house), here is what we ask a potential tenant to provide us:
- Rental Application. Should include all their information as well as their bank account info. Tip: Ask for an emergency contact number as well. The tenant will usually list someone close to them so if they don’t pay the rent, contact their parents.
- References. Ask for job references and references from previous landlords.
- Letter of Employment. Get it on company letterhead and make sure it includes how much they make and when they started working there. Pay stubs are also acceptable. Just make sure you get several sequential pay stubs because there are weeks where you can get paid more for a variety of reasons. (Commission, overtime etc.)
- Credit Score & Credit History. Credit score is good to have and will usually reflect the credit history very well but the credit history shows how many times they were late and what their other financial obligations are.
Having all this information guarantees that you can make an informed decision as to whether you have a good tenant or not. It is easy to make a bad choice and pick a tenant when you’re pressed to lease your unit before the end of the month but remember that a bad tenant is 10 times worse than no tenant. Stay calm and make a good decision. You have everything you need to know, a gut feeling is not what you require for choosing a tenant. Look at the information you have and choose wisely.
So once you have decided which tenant is right for you, give them a call and finalize the rest of the papers. Here is what else you will need to make a binding agreement:
- Rental Agreement: Not to be confused with rental application, the agreement will set the terms of the lease and protect you from every foreseeable event.
- Deposit Cheque: Minimum 2 month deposit cheque is required. One to cover the first month’s rent and one to cover the last month’s rent. If the tenant is not ideal on paper, you can get more of a deposit to minimize your risk. Get the full rent up front if you need to.
- Post-dated Cheques: Whatever your lease term is, make sure you have 1 cheque for each month of the term. (Not including the months that are covered by the deposit of course.)
Now there are many very important clauses that you need to include in your rental agreement. If you don’t have one, ask your lawyer or your real estate agent to provide you with one. Insider Condos has their own custom rental agreement form that goes over and beyond the regular real estate rental form. Send us a message and we will provide you with it free of charge.
So do you dare to be a landlord? Yes you do! You don’t need to be brave to do this because now you are covered for every circumstance & the only real question that remains is when will you be a landlord?