4 Ways to Avoid A “Professional Tenant” Nightmare for a Luxury Rental Property
Anyone who owns a luxury rental property in Toronto or has been thinking about buying one has probably been following the not-so-illustrious career of “professional tenant” James Regan. In case you haven’t been, here is the sordid tale. Regan has rented three high-end Toronto properties and in each case, has nefariously used legal loopholes to not pay rent and continue residing in them. He was finally charged with something – a physical assault on one of his former landlords – this past week.
While most of his landlords have managed to get judgements against him through the Ontario Landlord and Tenant Board, it’s unclear if any of those funds will be recoverable since Regan appears to be a con man without a cent to his name – even if his appearance belies something different. Fixing the regulations on what tenants are allowed to get away with will take years, if it is even ever addressed by the government. Unfortunately, it’s up to landlords to properly vet rental applicants to keep from getting into this situation in the first place. So how can you do this to make sure your luxury property is actually making you money instead of embroiling you in a legal battle?
- Make sure you get the security deposit before the tenant moves in
Most “professional tenants” will at least come up with the security deposit before they start stiffing you on rent. Not so with Regan. In each case, he came up with some reason that he was waiting on money and somehow managed to weasel the keys out of the landlord. This is a fairly simple thing to combat – no money, no keys. Anyone who checks out on a rental application for income should be able to come up with the money, especially for a high-end property. Many high-end tenants are in business themselves, and so will understand the rule.
- Look out for the overly charismatic, well-dressed charmer
People with money don’t always dress up. A guy in his twenties wearing a hoodie and sporting a full beard could easily be Canada’s next tech mogul – and this will check out on his rental application. In some cases, the less-employed spouse will be doing the apartment hunting because the primary income earner is too busy during the day. If you have someone showing up dressed impeccably and wanting to be your best friend during a typical workday, this should set off alarm bells in the high-end rental market.
- References, references, references
It goes without saying that a tenant looking to rent a high-end property should have a solid source of high income and either rental references or proof of owning their own property in the past. A thorough credit check and income verification with an employer should be enough to verify income and ability to pay the rent. Someone like Regan will try to explain away bad credit, provide false references for income verification, and offer excuses as to why they can’t provide information. You are allowed to refuse to rent to someone if they refuse to let you do a credit check. If they refuse to give you their Social Insurance Number, which can be a valid privacy concern, you can still run a credit check.
- Hire a property management company
If you are renting a property out for thousands of dollars per month, you want a professional to handle your property. Chances are that you are a busy person yourself, and your rental property is an income-generating investment, not your full-time job. An experienced property management company like Highgate can sniff out tenants like Regan in the application process, preventing them from moving in at all. If anything, our fees pay for themselves as insurance against tenants like Regan. While having us manage your property isn’t a guarantee against non-payment of rent by your new tenant, we will only place highly qualified applicants in the property and reduce the chances significantly that this will happen.
If there are issues with a tenant, we act as a firewall between you and the tenant so they can’t prey on your sympathies or bully you into yet another month of not accepting rent. We have legal means at our disposal should tenants not pay rent, and will swiftly take matters into hand for non-paying tenants so that they can’t drag the process out longer than they are legally allowed to. We are also experts at marketing higher-end properties and successfully manage a number of them.
Image Credit: Eric Lefevre-Ardent, Flickr