The rental process should be a straightforward one, but the unfortunate reality is that it’s a multilayered process requiring a lot of due diligence on the parts of both the landlord and the tenant. The former wants to find the best possible candidate to move in so they can enjoy peace of mind, while the latter wants a place that best fits their lifestyle and budget needs. Landlords sometimes believe that a property is all that’s required to get the ball rolling, but they fail to see the potential pitfalls that lie ahead.. Here’s 5 of the most common.
NOT FOLLOWING MARKET TRENDS
No matter how beautiful your house or condo is, it has to match the market rental value. Your property isn’t the only property available for rent, and tenants will be shopping around and setting up showings at different places. Demanding a premium can mean your rental property stays on the market for a prolonged period of time, and that’s going to cost you money. If you are a landlord looking to pay down the mortgage on your property by renting it out, this is a major problem. Also, the vast majority of tenants will not bother trying to negotiate a lower rental rate because they believe it’s set in stone. This is a lose/lose scenario. Make sure to stay within market trends, and in some cases, sweeten the pot by going a tad lower.
NOT UNDERSTANDING THE LAWS
Every province and region has its own set of laws and by-laws that must be adhered to by all landlords. Failing to recognize any of them means you could land yourself in hot water, especially if things go sour. Make sure you understand the ins and outs of being a landlord in your area, and what you can and cannot do. Wrongful evictions, meddling with security deposits and failing to abide by basic privacy regulations can mean legal woes coming your way. Always remember that renting is a two-way street and it is a relationship between two parties who each have a lot to gain and lose. Think of the tenant’s needs as well as your own, and you’ll avoid stepping into what can become a huge nightmare
ASSUMING IT WILL ALWAYS BE OCCUPIED
It can get very costly to believe that your property will always be rented.It doesn’t matter if your particular region is experiencing a massive housing boom and properties are being snatched up by renters left, right and center. No market is immune to exceptions and vacancy rates can vary widely by neighbourhood, street or even between adjacent condo buildings. Many have entered the market with a rental space that can stay on the market anywhere from 1-3 months without any serious offers. The longer the space goes unrented, the more costs are being absorbed by the landlord. Some have even been forced to foreclose on their property because they lacked the cash flow to maintain the mortgage payments. Plan in advance and be prepared to adapt quickly in order to attract new tenants. That may mean offering incentives or lowering the rental cost. Alternatively, it could just be a matter of time. The point is to have a backup plan to ensure that any dry spells won’t leave you with a crushing debt load.
KEEP A WRITTEN HISTORY
You may think you’ve found the perfect dream tenant(s), only to realize later on that it was nothing but a facade to get into your good graces. Before you know it, you’re stuck with a problematic situation that may lead to an eviction. If this scenario unfolds, you’ll want to have as much ammunition as possible before you go to court – if it comes to that. Make sure to keep a tabulated history of phone conversations, text messages, Emails and other communications between yourself and your tenant so that you can map out a timeline of events. Be wary that you aren’t breaking any potential privacy laws in the process, however. Let your tenant know beforehand that you’re going to keep notes and logs about interactions. A good tenant will understand and have no issue with you taking precautions. Even if the relationship has been smooth sailing for a few years, it’s wise not to let up on your standards. People change, and sometimes not for the better.
The initial screening process is your first line of defense when it comes to weeding out bad tenants from dream tenants. Sadly, many landlords relax their standards and/or fail to follow the right screening procedures which can be a significant risk. Many landlords are so determined to fill a vacancy and start collecting rent that they forget the importance of taking time to accurately screen their tenants. Some forego background checks and financial information that can paint a story about who a tenant is, and what to expect from them. Some do not request the right documents or do not understand what documents are really of importance. Unfortunately, it is also not hard for a bad tenant to obtain fraudulent documents that look every bit the part of the real thing. Dream tenants are hard to come by, and that’s why it’s important to seek them out as a primary priority.
For more information on how both tenants and landlords can avoid many common pitfalls and enjoy a great relationship together, contact Royal York Property Management today! We’re here to take the guesswork out of the process.