You might have asked yourself about How to rent out a condo. Finding tenants and renting out your condo in Toronto might seem frustrating mostly because of the hyperactive rental market in Toronto, especially in central parts, such as downtown Toronto. Many landlords would ask how I rent out my condo, here we’re gonna go through a complete guide for you to outline all the steps for renting out a condo in Toronto.
Step 1: CMA and Price Valuation
As a Toronto landlord you’d want to rent your Toronto condo for the highest rent price possible. In order for you to be able to rent your condo in Toronto fast, you must do two things. First of which is to set a proper pricing. Also you don’t want to rent it out lower than the market price.
The second thing you need to do is to make your Toronto condo presentable and appealing to the potential tenants.
In order to determine the highest rent price to list your Toronto condo for rent, you’d need to do a CMA for your Toronto condo. CMA stands for comparative market analysis, a Toronto real estate agent who is specialized in the type and location of your rental unit can help you with that. If you want to rent it out yourself you can look at the similar units in the market and determine the price that way as well. However the CMA that a professional real estate agent prepares is more thorough and detailed and assesses more details.
Step 2: Marketing your property
Next step to rent your Toronto condo fast is to market it and put it in front of the potential tenants and demographic that you want to be your tenants.
If your condo is in downtown Toronto, your potential tenants are mainly young professionals, or students, or very young couples. If you have a large condo outside of the central Toronto area, your potential tenants are most likely to be younger families. So you need to market your Toronto condo for rent based on the demographics and the location.
At the end of this article you can see an alternative option to the marketing a landlord can do.
When you put up your Toronto condo for rent, make sure to have a professional photographer take photos from your condo. Make sure you declutter and or clean your condo before bringing a professional photographer to take photos, you don’t want to pay for photography while the unit is not nice and clean.
Step 3: Tenant Selection:
Tenant selection is one of the most important steps in renting out your Toronto condo. In Ontario, the Residential Tenancies Act is in place to define the main aspects of the landlord-tenant relationships in residential dwellings. The act has some exceptions ( such as short term rentals, units where the tenant and the landlord use a shared bathroom or kitchen, etc etc ).
Other than the exceptions, most of the condo units in Toronto and overall in Ontario, fall under the RTA. In the Residential Tenancies Act, the tenants have more rights than the landlords, which means that a landlord can not end a tenancy for any reasons unless those are defined by the law.
3.1 Your tenant’s Career
As a Toronto landlord, you’d want to make sure your tenant has the ability to pay the rent. That’s literally the single most important thing. If your tenant can not pay the rent, you can not tell your bank that you have to stop paying your mortgage because your tenant doesn’t pay the rent. The bank asks for the mortgage payment regardless, so you need to be able to bank on your tenant’s ability to pay the rent on time every month.
One thing that you always need to remember is that, life may not always go as planned, so you have to have a cushion just in case your tenant loses jobs etc and can not pay the rent. So there are always things that you need to be prepared for, such as lost or late rent payments.
3.2 Are they working from home?
Working professionals used to go to their office or work place and use home for resting and relaxing. Now that work from home has become a thing, they spend more time at home, which means more cooking and use of the utilities. So make sure you ask them to sign up for utility or hydro bills before moving in. In older Toronto condos, the hydro is included in the condo fee.
3.3 Are they Students?
If your potential tenant is a student, you still need to make sure about their ability to pay the rent otherwise why renting? If you are dealing with a student, usually one of their parents is willing to be the guarantor on the lease. So in that case, you want to check the Guarantor’s job, income and credit, the same way you screen a tenant.
Some students, for example MD Programs, have a big line of credits that allows them to pay for their costs of living. You would want to confirm the amount of approved line of credit with their financial institution.
If you are dealing with Post Grad students, some of them might be paid by the university in lieu of the programs such as TA or RA. TA and RA stand for Teaching Assistant and Research Assistant. Depending on the university, usually the amount that they get paid as a TA or RA can cover the minimum costs of living in the city.
3.4 Are they new to Canada and have no credit history?
While some landlords prefer to have tenants with a history in Canada when they rent out their Toronto condo, I personally like newcomers as my tenants. I get that some landlords are hesitant because of the lack of credit history in Canada, but from my personal experience I can tell you some of the best tenants that I’ve had were newcomers. There is nothing wrong with lack of credit history in Canada, my point is that you as a landlord should look at the whole package and the whole picture.
They might have great credit in their home country, or they might have big savings in the bank, or they have great job offers that they came to Canada with. So I suggest not rejecting an applicant that does not have a Canadian credit report right off the bat, you still can look at the other documents, talk to their references, etc, then make a decision.
Step 4: Ask for Tenant Liability and Content Insurance : A Must To Have
Every Toronto condo has a general insurance policy that covers the whole building for major issues. in order to know about the details you need to review your condo’s insurance policy, but I can tell you none of it covers the content and liability of the incidents that are caused by the tenant living there. So for that reason, you need to ask your tenant to provide you an insurance policy, which we call Tenant Insurance.
A Tenant insurance is basically a coverage policy that MUST cover 2 things, it might have additional coverages but the main coverage shall be Liability and Content.
Content is basically covering the chattels in the condo, so in case something like flooding or fire happens, the contents are covered. On the other hand the liability coverage is for the time that a litigation happens for when something adverse happens in the unit. In that case the first shield is the tenant’s insurance itself. In case anything happens the tenant’s insurance pays for it and deals with it first.
Step 5: Contract, Rental Application, and Paperwork
There are 3 types of documents when you are dealing with a tenancy in Toronto, Ontario. One is the Rental Application, the other one is an Offer to Lease, the third one is Ontario Standard Lease. I’ll explain about all three a little bit.
Rental application, the first document that you want the applicant to fill out and send over to you is a rental application. We ask for signed and dated rental applications on our standard form ( we can share it with you if you like). In the rental application form, the tenant fills out the fields that are necessary for screening. On top of that the signed rental application form allows us to run a credit check on the potential tenant’s credit history and get a credit report. Remember, a potential tenant has to consent for the credit check.
The offer to lease, this one might seem a bit complicated at the first look. Basically it shows the lease term, rent price, basic terms, etc, accompanied by the supporting documents. This is the document that we review alongside with the Rental Application. If we accept both the Rental Application and the Offer to Lease ( including all the supporting documents which we need to verify in our screening ), we’d accept the tenant. After accepting the tenant we’d go to the next step which is filling out the Ontario Standard Lease.
Ontario standard lease is a mandatory lease form that came into effect in 2018. That outlines main rights and responsibilities of both the tenant and the landlord, plus the lease details. The additional terms that you agreed on the Offer To Lease, would be attached as a schedule to the Ontario Standard Lease which forms your complete lease.
Step 6: Tenant relationship
Renting out your Toronto condo doesn’t stop where you find a tenant for your condo. It’s a business that you have to take care of on a constant basis. In this business your tenant is your customer, and has rights.
The best advice that I can give new landlords is to have a relatively good relationship with your tenants. It will make your life easier. If you want to go by rules and by the book and be a rigid landlord ( I’ve seen those in the industry ), you might attract the same kind of tenants. Your vibe attracts your tribe.
By a good relationship I don’t mean to be loosey goosey and let them take advantage of you, not at all. Keep the relationship very professional, but also try to be friends with them while keeping the boundaries. Having your tenant on your side would make your life much easier as a Toronto landlord.
How to make the process of renting out your Toronto condo even easier?
Renting out a condo for any Toronto landlord might look challenging, whether you’re a serial landlord or you’re trying to rent out your first condo. On top of the above 6 thorough steps that any landlord in Toronto should take to rent out a condo, we also offer additional suggestions.
As Toronto landlords, we know how to make the process of finding a tenant easier and smoother for our fellow landlords.
Thus we have curated a Landlord Services for those Toronto landlords who are too busy and can not follow all the above 6 steps themselves. Below you can also read the curated Toronto landlord services which might fit your needs in finding a tenant for your investment property.
What do we have in our curated plans:
A thorough assessment and walk through and creating a CMA to determine the highest rent price that you can charge
As we talked about in step 1, you’d need a CMA or a price evaluation to determine what’s the highest price that I can rent my condo in the first place. We’d do a walk through followed by a thorough assessment of the value of your condo and suggest the highest price that you can rent out your Toronto condo.
Creating a curated marketing plan to reach the maximum number of audience
Based on your property and our assessment after a thorough walk through, we’ll come up with a marketing plan to put your Toronto condo in front of the right audience. The right audience means the tenant demographic that is right for your Toronto condo.
Professional Photos and Photography
We believe that in order to get the best tenants possible for a Toronto condo, we have to present it in the best possible way. For that reason, we hire professional photographers to take photos of your Toronto condo. Professional photos present a condo much better than random photos you see online. Good presentation brings more applicants, and helps us to choose the best applicant for your condo in Toronto.
Referring trusted cleaners or painters if needed
If you want to attract the best tenants, you have to make your condo presentable to them. For that reason, when we do a thorough walk through we’d tell you our suggestions. Sometimes just a professional cleaning will go such a long way.
If your condo requires any cleaning services or maybe some painting or touch ups, we’d be glad to refer you to our trusted trades who have worked with us or our clients in the past.
Tenant’s thorough background check and screening
Before choosing a tenant and signing a lease, it’s very important to do a background check to confirm the information that is provided with the applications. We do a background check and if needed we have our in house credit check system which can do the credit check of our applicants.
We’d help to screen your applicants to make sure they fit your criteria.
Negotiating the price and terms
We have certified negotiation experts in our team, and we know how to negotiate your terms between you and your potential tenants. We’d help to negotiate the price, dates, and additional terms that might be of your interest with the potential tenants, and put them in the contract for you.
Summarizing the offers and packaging applicant’s documents for your review
After reviewing the documents and doing our screenings, we’d summarize the package, so you would just go through the results of the steps taken.
That would help you by saving your time. Plus, you won’t need an expertise in Landlord or Tenant or contracts or screening, all those things will be taken care of and you’ll see a summary to decide about the applicant.
Making sure the necessary paperwork and contracts are properly done and documented
After you decide about an applicant, we’d create the paperwork package, and review the offer, and write up the lease contract for you, and will send you to review and sign. We make sure that the necessary documents are filled and drafted and signed by all the parties. Voila!
Getting the deposit in a trust account to make sure the tenant is bound to the lease signed
In our brokerage we have a rigorously audited trust account system. After an agreement is made, our brokerage ( Biggest Royal Lepage Office in Toronto, Royal Lepage Signature Realty ) takes the deposit on your behalf and puts it in its trust account. Then you’d make sure that the tenant is bound by the lease agreement.
We’d make a list of the needed documents that a tenant needs for the ley exchange date and send it to them to be prepared before the key exchange date. Also we’ll accompany you on the closing date to make sure everything goes smoothly and the tenant provides all the proper items needed before releasing the keys.
* At this point we don’t offer inhouse property management services.