You’ve purchased a rental property and it’s currently vacant. What do you do now? It’s getting harder and harder to make ends meet and you’ve got to rent out that property just to pay the mortgage. You’ve found a person that is willing to move in immediately, but don’t bother with credit checks or reference checks- the person seems honest so you decide to rent to them.

What could go wrong? This lovely new tenant could be unstable and pull a knife on her roommate. Yes – it happened to us at 3am on a Wednesday night several years ago. We had to call the police and have them separate the two tenants. The innocent roommate moved out the next morning and we were left with the knife wielding tenant who then stopped paying rent and refused to move out. It took us three months to evict her. We had to send a collection agency after her for the rent money. We never received a dime.

As you can imagine, we’ve taken great pains to find good tenants ever since. Here’s the overall process:

– Step 1: Prepare the unit for showing

– Step 2: Get your paperwork in order

– Step 3: Research the market rents and place your ad

– Step 4: Show your space

– Step 5: Choose your new tenant.

Step 1: Prepare the unit for showing

Nice people like to live in nice places. A good renter can afford to be little choosy, so you want to make sure they choose yours by making it look as inviting as possible.

So how do you make your property look and smell nice?

– repair any cracks or holes and apply a new coat of paint on all walls

– make sure all the little things like lights, appliances, doorknobs and sockets work the way they’re supposed to

– create a checklist to use when the tenant moves in and out. Include details for everything in every room and the current condition- doors, windows, drapes/blinds/shutters, plugs and light switches, shelving, appliances etc.

– open all the doors and windows to help make the unit smell fresh.

Step 2: Prepare all of the paperwork that you will need

Nothing inspires confidence and prevents headaches later like being a good landlord. And good landlords always have their paperwork in order. If you’re not sure that you do, you need to contact your government’s local residential housing branch. You could also go online to find the following forms:

– applications for tenants

– leases

-eviction notices or other forms you might need later – sometimes you have to order the forms, so it’s better to just have them on hand.

Quick tip: Every state or province may have different forms, so make sure you have the form that is legal for your area.

Step 3: Research the rent rates and place your ad

Make sure the Price is Right!

When renting a property it’s best to price it just below the market. You’ll have more tenants choose from, and it will rent faster. And the best thing is, a tenant might decide to stay there longer. Online is a great place to research comparable units to make sure yours is always priced below the market.

Get the word out! We’ve found tenants through all of these methods:

– tell all your friends and family and even coworkers about the unit you have available for rent, as you never know where your next tenant could come from. Using e-mail is a good way to do this, as it allows you to attach pictures of the unit

– advertise online

– make a sign with a phone number and put it in the yard or in the window of the property

– local newspapers can be a fairly inexpensive way to advertise. Ask the classifieds agent what day is the best for advertising to ensure that you have the most eyeballs seeing your ad

– university Housing Boards.

Step 4: How to show your unit

The tried and true method of showing your property is with the classic open house. You should plan times for two open houses in case the first open house doesn’t produce a good prospective tenant. Open houses should usually last about two hours and be held in the evening or on a weekend. When someone wants to see the unit, tell them about the first open house and let them know that there might be a second open house.

Be dressed in business casual attire with tenant application forms on hand when you greet the prospective tenants.

Open houses are great, as they can create an atmosphere of demand. Knowing another person may want to rent the apartment makes others feel that they should want it too. Urge people to complete an application form before they leave so that you can write your impression about the prospective tenant right on their form.

Step 5: Choosing your new tenant

– go over the application forms very carefully. Pay special attention to any information that doesn’t match with what they told you or time periods where the applicant hasn’t listed where they were living

– run a credit check. Once you’ve found one or two people that you like and that have a good application, run a credit check. This is a critical piece. Many veteran landlords say they just trust their gut. Well, I trust my gut, and then verify it!

– always check references. You’ve asked for them on the application, and you should check them. Remember to ask the critical questions: “Would you rent to them again?”, “How long have you known the applicant?” and “What is your relationship with them?”.

– final gut check. So they have decent credit, nothing came up on their application that makes you uncomfortable, and the references had nothing negative to say. What’s your gut telling you? Do you get a good feeling about them? Do they seem honest? Do you think they will be too messy? Or too picky? If you are happy with the gut check then you are ready to choose your new tenant.

Once you are sure about your choice and you have deposited taken a rent cheque from your chosen tenant to the bank , make sure you let all the other possible tenants know that the unit is rented. If they ask why they weren’t chosen, never indicate that it was because of race, religion, age or social status- regardless of how you actually made your choice. It’s far better to say “the other tenant had a very strong application”.

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