If you own real estate and you’re not a professional real estate developer you most likely have to deal with tenants. In finding and purchasing your property you likely spent hours and several thousand dollars checking the place out, having it inspected, financed and doing all of your due diligence.
For those of us who invest using REIN’s ACRE System, we’re planning on holding the property for 5 years or so. Our tenants are the key to being able to hold onto the property, so you’d better work your butt off to get good tenants. (You don’t need great tenants, but that’s another story.)
The biggest problems I’ve seen after working in Edmonton’s property management field for more than a decade are:
No Application: This isn’t too complicated and you can make up your own form. Every city and province has some sort of a body that provides templates. Ask for references, where they work, how much they make, and where they lived last.
Call and ask questions: Ask if the information they put on their application is true. Then ask if they were good tenants. Did/how many cheques did they bounce? Did they pay on time? Would you rent to them again? Did they provide proper notice for vacating?
No Credit Check: There are lots of ways to do this. Equifax and TransUnion both do it, and there’s no excuse for doing it. Pull a credit history! This it the number one way to see if there will have a problem paying their rent, and how likely they are to skip and leave their rent unpaid. That said, if they have one or two R9’s, ask them about it. There are good people with bad credit, and there’s often a good reason. Either way, everyone gets a credit check.
No Money, No Keys: If they don’t sign everything and don’t give you a security deposit, do not give them the keys. You wouldn’t give someone the keys to your car, sure as heck don’t give them the keys to your real estate investment.
Renting Real Estate means get a Lease: Barry Maguire from Ritchie Mill Law Office talked about this as the last Real Estate Investment Network workshop…get a lease, and make it a good one.
In-Out Report: Before they move in, do an in-report. Take pictures, and if you’re like me, use your camera phone and take a little video. I use mine to record all sorts of important events, including delivering notices when I was taking bad tenants to the Residential Tenancy Dispute Resolution Service. I also just ordered a Flip video camera, which is too cool for words. Without a condition report you’re going to have a heck of a time getting any money back from your tenant if they trash the place.