Agents who see themselves as lifecycle advisors, from purchase through occupancy and beyond, are better positioned to build lasting, profitable relationships with investor clients. This means becoming more familiar with strategies for rental considerations.

Finding the right tenant (or tenants) for an investment property is essential for maintaining steady rental income and minimizing issues. It involves thorough screening while following anti-discrimination laws. 

What Can Landlords Ask Prospective Tenants?

For clients who are inexperienced, recommend that they consult a legal professional or landlord association to get informed about relevant rental laws and best practices. 

Questions they are allowed to ask include:

• Name, address and date of birth, only for the purpose of a credit check
• Details from their passport or driver’s license to confirm identity
• Past renting experience (however, a lack of rental history cannot be a reason for rejection)
• Permission to run credit checks and access credit references
• Source of income and expenses to assess financial stability
• Specific questions like:
  • What is your income?
  • Are you employed? Where do you work?
  • Who will live with you? What are their names?

What Topics and Questions Do Landlords Need to Avoid?

• Personal Identifiers:
  • Age
  • Country of origin
  • Religion
  • Gender expression
  • Family status
• Protected characteristics:
  • Disabilities
  • Sexual orientation
  • Pregnancy status or whether they have children
  • Marital status
• Financial assistance:
  • If they are on social assistance
• Dispute history:
  • If they have ever been involved in a dispute
• Lifestyle choices
  • Whether they smoke (Instead, specify if the property is non-smoking in the lease agreement)

Who Is an Ideal Tenant?

Before a property owner lists a unit for rent, recommend they take the time to consider what characteristics an ideal tenant would have and what restrictions they wish to impose. Clarifying these details in advance ensures a smoother, more effective process. Key aspects to consider include:

• Minimum income requirements
• Whether a guarantor is needed if the income is below a certain level
• Preferred consistency and length of previous renting experiences
• Desired move-in date and rental period (short-term or long-term)
• Quality of references from employers and previous landlords
• Your policy on pets and smoking
• Type of tenants, such as professionals, students, or families, while ensuring non-discriminatory practices

Clarify Criteria in the Rental Listing

When helping a client with a rental listing, create a clear and concise listing to attract qualified tenants, highlighting key information so that their ideal tenants are more likely to notice and be interested. Position the most crucial information prominently. Be clear on any requirements, such as a pet-free or smoke-free environment.

Pre-Screen Potential Tenants Thoroughly

Recommend clients develop a set pre-screening process and develop a comprehensive pre-screening questionnaire. This helps clarify whether a potential tenant is qualified enough to be considered further.

Application Forms

The application process provides deeper insights into potential tenants:

• Collect Essential Information:
  • Request details on rental history, income, references and credit scores, within legal limits
• Evaluate Applicant Behaviour:
  • Note their promptness, eagerness and communication, which can indicate reliability

In-Person Meeting and Viewing

Property owners should meet potential tenants in person, or have a trusted designate do so, to evaluate them thoroughly and allow them to see the property. The landlord or designate can answer their questions, gauge their active interest and take advantage of another opportunity for screening.

Verify Applicant Identity and Information

Always take the time to ensure all provided information is accurate and legitimate. Verify identification, employment status and income, and perform thorough credit checks. Contact previous landlords to verify rental history. Consider conducting a criminal background check for additional assurance.

Assess Rent Affordability

Determine if the tenant can comfortably afford the rent. Confirm their rent-to-income ratio, and follow the guideline that rent should not exceed 35% of the tenant’s gross income to ensure affordability.

Tenant Screening Tips

There are some key best practices to follow, to ensure both fairness and legal protection. Ensure your clients are aware of them.

Clients should:

• Screen all co-applicants and adults who will reside in the property to mitigate risks associated with unscreened individuals. 
• Apply uniform standards to every applicant to promote fairness, prevent bias and ensure legal compliance.
• Maintain consistency in their approach in order to streamline the screening process. 
• Use comprehensive, standardized application forms and questions to collect consistent, relevant information from all prospective tenants. 
• Keep detailed, organized and securely stored records of all applications, communications and selection decisions to protect themselves in the event of disputes, and to maintain a clear audit trail that supports their decision-making process.

These steps can help clients find reliable tenants for a steady rental income.

By advising clients on key activities beyond the transaction, you help them with informed, strategic decisions while strengthening your reputation as a knowledgeable and trusted advisor. Providing valuable information like this creates opportunities to maintain contact with clients, and to keep your name top of mind, while adding value to your services.

Agents who are interested in expanding their real estate knowledge and skills can do so with the RLP InvestorsEdge™ Masterclass Series: an exclusive Royal LePage^® program offering advanced training in property investment and connecting you with a community of motivated peers dedicated to mastering real estate excellence.