Finding Tenants – learning to trust your gut: Part 2 of 4

This is the second part of an 4 part series about my experiences of being a landlord for the past five years.

The first time I held a tenant’s open house, the realtor who sold me the property hung out with me and gave me some insightful tips. There were lots of folks wanting to rent the property, but not lots of folks I’d be comfortable renting to.

I recall one couple in particular. Both came together from previous relationships. Both had a few older teenage children. They were proposing that about 8 people live in this three-bedroom townhouse, putting a few teens in the basement. When I inquired about what the teens were up to, whether they were in school or working – the answer was pretty unclear. This was a family of folks that didn’t have a really clear direction, and my spidey sense said “no way”.

Another young couple thought it would be fabulous, if I lowered the rent. That didn’t happen.

A middle-aged woman came in with her adult, disabled sister and really wanted the place. She told me she didn’t work, but she earned an income as the primary care-giver for her sister, and her sister’s young son. She had brought a brother and another sister with her, who didn’t reside with her. The brother handed me a cheque for first and last month’s rent.

As they toured the house I said to my realtor friend “why would I rent to a woman with no income?” He advised me to look at her support system. There were other members of the family willing to hand me a cheque right away. I also had all the contact information for her extended family. They offered me every conceivable way to check them out. In the end, I did rent to this woman with no job, other than her income as caregiver for her sister. They never missed/bounced a rent payment. They weren’t the best housekeepers in the world, but in the final analysis, that doesn’t really matter much.

The second time the house was vacant,  I had more tenants to choose from. As a single mom myself, and having a good experience with a single mom tenant previously, I found myself attracted to a woman with three boys as a good prospect. Her credit wasn’t great, but it wasn’t in the dumpster either. She was recently divorced and was leaving the marital home. When we were in the final stages of signing an agreement, she let me know that her parents were moving in. There’d be six people in the house! I almost let the deal die.

She explained she couldn’t make it on her own without her parents help, both financially and just raising the three boys and working shifts. I was reminded of that support system my realtor friend pointed out, and I signed the agreement. While this tenant did bounce a few cheques, she always replaced them, and I was happy with her and her family as tenants. The early issues we had with cheques returned NSF had to do with unreliable support payments from her ex, while they were in the throws of their divorce.

This time around, there’s been a dearth of potential tenants. I’m also getting pickier. One fellow that called me that said he just drove from B.C. to live in Barrie and had no place to live and was living with his girlfriend in a local hotel and needed a place asap. He didn’t get much attention from me. Who drives across the country with another human being without any advance leg work on where you’re gonna live? That wreaks of irresponsibility to me, and I’m not too interested in it.

The young, professional couple who wanted a place to stay while their new townhouse is being built is likely to get the keys. While their stay is temporary, they’re bright, together and prepared.

While my gut has usually given me good information, I also check out the credit history on a potential applicant. I don’t miss this step. A potential applicant fills out an application which discloses personal information, as well as their own declaration on income and debts. A credit check helps me verify their disclosure. If they’re being dishonest with me, it’s a huge strike against them. If their credit score is below 600, I am unlikely to do business with them. In my early days of being a landlord, I found most potential tenants had a credit score below 600.

I won’t sign a rental agreement unless I have a certified cheque or money order for first and last month’s rent in my hands. I won’t accept a promise of later payment. In Ontario, once you give somebody keys to your property, it can be very difficult to get the law behind you to collect after the fact. Finally, I don’t hand over keys to the house unless the utility companies verify to me that the new tenant has arranged for the bills to be in their name and provided them with all their due diligence.

So far, I’ve been lucky. Yes, I’ve done some hard (and sometimes gross) cleaning and fix-ups after folks leave. Those folks paid the mortgage. I can certainly clean a stove and fridge and scrub a few floors every couple of years in thanks.

Tomorrow: Understanding the law


4 responses to this post.

  1. Great series! I’ve thought a lot about getting into the rental property business but have been too chicken of being tied down all of my weekends dealing with complaints. Plus mentally I would have to get over the whole debt thing — I think I would have a hard time leaving that mortgage alone…which would defeat the purpose of having someone else pay it…


    • Hi there! I haven’t spent any time dealing with complaints. One of the decisions I made early on was to just purchase a single family dwelling. Some landlords (like my former neighbor I mentioned yesterday) usually purchased a property with multiple units. The moment you do this, you open yourself up to complaints between the tenants.

      While my property is a townhouse, and there are attached neighbors on either side that I’m always mindful of, neither of them have ever called me about an issue. (Yes, I let the neighbors know who I am and how to get in touch with me – I want them to be comfortable too, they’re homeowners).

      What do you mean about being tempted over the mortgage?


      • What I mean by that is because I don’t like seeing debt, I’d likely start paying it off along side my own mortgage just to get debt free.

        Most people I know have longer amortizations on their rental properties vs. owner occupied as the interest become tax deductable. I just am not sure I could leave it alone.

        I think you buying a single family home is a very smart decision — Avoiding the potential multiple personality conflicts in a duplex and up scenario.

      • Ah, ha! Well of course! As you say that I realize that I had been putting a few extra bucks toward the principle of the rental property for about the last 18 months or so. While not a lot, it’s money that would likely have been put to better use going toward my debt reduction (meaning my existing line of credit).

        You’re right that the interest paid on the mortgage is a tax deduction, which is helpful.
        In the last year, my interest rate was so low (which is good) my tax deduction for interest was much lower than my handy accountant thought it would be (not that great for the tax return).

        Hopefully I’m getting smarter, and any future surplus of money that isn’t allocated toward savings will go toward the mortgage on my principle residence.

        When I started making extra payments toward the principle on the rental property, I was also co-habitating with somebody in my principle residence, and we were sharing household expenses, including the mortgage, and it was being paid down aggressively. However, when that relationship went south, and I bought him out and changed my financial landscape dramatically, I didn’t review my payments on the rental property and scale them back. I should have! One more payment to go before the mortgage is renewed, and hopefully I’ll get all my ducks back in a row.

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