10 Principles: How to find and then select a tenant for your residential property

goodchoiceWhenever I speak  with a  prospective client the question of how to  select a tenant comes up. To be clear, tenant selection is the single most  important aspect of  property management.  Once you find a good tenant you must provide good service  to  keep that good  tenant. But, the first  step is to find that  good tenant. There are two distinct steps:

1. Locate a potential tenant

2. Screen the tenant.

You must learn how to screen a tenant.

Tenant  selection is more of an art than a science. You must be flexible and aware. You will get better at this over  time. You must recognize that finding a tenant in a small  town in Northern Ontario is different from finding a tenant in downtown Toronto. So, after  more  than 30 years of finding and selecting tenants, here are some of my thoughts about  how to select a tenant.

Remember: You will solve your problem of finding a good tenant only if you can solve the tenant’s problem of finding a good  place to  live! You can solve  your problem only by solving the tenant’s problem.

Ten Principles of Successful Tenant Selection:

1. The property must make  sense for the tenant!

If the property does  make sense  for the tenant, the tenant makes no sense for the landlord.


A. Does it make  sense for this particular tenant to want to live  in this  particular  property in this particular location? Where  does  the tenant  work? How does  the tenant get to work? Are  there children involved?  How would  the children get  to school? How many cars  does the tenant have?  Are  there  any potential parking issues (always a factor in downtown Toronto). If the property is too far from the “center  of gravity of the person’s  life, it will not work.

B. Is  the rent an amount that the tenant can reasonably afford? Put yourself  in the position of the tenant. How much “after tax income” is required  to carry the property? Would you rent this  property if you were  that tenant?

C. Who is paying the rent? Is it situation where you are  renting to a group of adults?  If so,  will each be  paying a share  of the rent? Are all of them actually working? Beware of  a situation where  one of the  tenants is temporarily unemployed.

D. If you are renting  to a group of adults – consider  this  question. Have  those  people  ever  lived  together before? There is nothing that strains friendships  more  than living with another  person.

2. You must give the tenant honest and full disclosure about anything and everything

At the initial  stage  you must observe  and listen. You  will be asked questions. Answer  all  questions to the best of your ability and as honestly as you can.  If  you are requiring the tenant to  pay the utilities, do NOT  minimize the cost  of the utilities. Make sure that  you know  what  the last  year of  utilities  cost. Do NOT minimize  the distance to grocery stores, subways, schools, etc.

3. Be a good listener! Pay careful attention to what the tenant says and the questions  the tenant asks

When you are listening to the tenant’s questions and comments, look for clues that  suggest  what  their attitude is toward the landlord. Some examples  of possible  red flags:

– saying negative  things about  a previous landlord or property

– making excessive  references  to the  Residential  Tenancies  Act.  Few  people even know  what is in the statute

– and more

4. The Problem of “Tenant Mix”

This can be  an issue if you are renting a duplex, triplex, basement or any other situation where different tenant groups live  in close  proximity.

Here are examples of  the problem:

If  you have a young family with a baby in one unit, you cannot  have a young  adult who has loud  parties and the like in the other  unit. Same for  smokers. Same for parking issues, etc.

The question you must  ask is: will  this tenant fit in with the other tenants in the small  building? This is critical. You want  tenants to  have incentives  to stay. Not  incentives to leave.

5. The level of rent – how much  should  you  try to charge?

There are  differing views on  this subject. My opinion is that  you should  NEVER charge a rent that is  even slightly higher than the market  level. Higher than market  rents:

1. Give the tenant an incentive  to leave; and

2. Give the tenant an incentive to call you for even the smallest thing.

You are safe  renting a unit at the market level. You will get  the  longest term stability if your rents are slightly below the market  level. But, you must  remember  that the level of rents  does affect the economic  value of small  apartment buildings. Therefore, if you are the owner of a small apartment building you cannot  allow the rents to fall below  the market.

That said, as a  general  principle:   Your best rent  is not  necessarily your highest  rent.

6. Do your homework on the tenant

If you have decided  that  you would  be  willing to  rent to   this particular tenant, it’s  now time  to  do some outside investigating.  This  means that you must:

– call  previous landlords. Whatever  the tenant did  with the previous landlord, they will  do  with you. Do  NOT rent to somebody who has “walked  out on a lease”. There are certain times of the year where it can be very difficult  to get replacement tenant. Obviously you are also  concerned  with with whether  they pay their  rent on time.

– call  their employer. Make sure that they are giving you accurate  information about their  source of income. You will also get a sense  of how  the employer feels  about  them.

7. Credit Checks – Use  only as  a confirming mechanism

The reliability of the person’s  income stream is more  important  than the credit  check.  That said, if you reach the point where everything else  “checks” (no pun intended) out,  most  people  want to do a credit check. That’s fine. But, it is only a negative  result  that would  affect  your decision to rent to the person. A  positive result  is  to be  presumed.

8. Where to advertise for tenants

If you have a property that is attractive because it is near a certain place of employment  then advertise there. Examples: schools, hospitals, etc. Try to put an ad on their  bulletin board. When you advertise the property, state that the property is near  a certain landmark. Ask yourself:

For  what kind  of person does  this  property make  sense? Who is the logical tenant?

Toronto Examples:


Sick Children’s Hospital

These descriptions should  be  prominent in the ad. Remember the  principle:  the property must  work  for the tenant!

General  Advertising:


Craigslist, viewit.ca, etc. We are living in an “online world”.

I am finding that  print advertising (newspapers, etc) is becoming less and less effective and more and more  expensive.


Use small  online ads (Craigslist and the like) that direct interested parties to a web page or  blog. The ad should have minimal information: What (condo, detached), where (Ryerson, Square 1), rent (including whether  it includes utilities), date available, www.theproperty.ca, phone

Example: Toronto, Ryerson, three bedroom townhouse, $2000 + hydro, Sept. 1, www.whatever.ca, phone

(Note on the phone: For  the purposes of renting a property you should  use a “disposable  phone number”. You can get a prepaid  wireless or alternate number  added to your phone line. Some people do NOT want a  phone number  in the ad, preferring to provide  the phone number on the web page. This is a matter of preference. Think carefully about this. Obviously if you are renting properties  on an ongoing basis, you would want a separate phone number for that purpose.)

I usually create a web page  that describes and shows the property. You want people to know  lots about the property before  they come to  see the property.

9. Should  you wait until  an existing tenant moves  out before  attempting to rent the property?

Remember  that  the law  requires  that an existing tenant be given significant notice to  enter  a  property. On the other  hand, if the existing tenant gives  permission …

On the one hand:

It is  more difficult  to  rent, sell  or do anything  with a property that is occupied  by tenants. In some  cases  it is better  to  let  the existing tenant leave. Once the existing tenant moves it you will be  able to do  the “fix up”, “clean up” and “paint  up” that is usually required to attract the quality tenant that you need.

On the other hand:

If  your  current tenant is  cooperative  and the property “shows  reasonably well”, the existing tenant may be willing to  “show the property for  you”. This  of  course  depends  on the  quality of the relationship you have  with that tenant. (One more reason why you want a good  relationship  with your tenant.)

10. How  and when to  show vacant properties

You should  have “open houses” for  prescribed hours during which people  can come  by. Simply have  a blog that  describes  the property, has plenty of pictures, that  people  can view  prior  to attending.  You only want people to come  see the property who have  seen the property online and have an interest in it.

Be careful  about  scheduling individual  appointments.  People frequently just  fail to show up.

In conclusion (at least for now) …

Hope you found these thoughts helpful. They are some of the  things  I have  learned in more than 30 years of  tenant selection. There is always more. I may update  this  post  at a later time. But, those of you who have comments, feel free …

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