Tips on Finding the Right Tenant for Your Laneway HouseMay 11, 2022
Getting your laneway house built might have felt like the hard part. From finding the right laneway house builders, navigating permits, and eagerly waiting through the construction period, now with the project done, you’re ready to move on to the next challenge. This means finding the right tenants.
We’ve all heard the horror stories of nightmare tenants and landlords whose hands are tied by miles of bureaucratic red tape, but the truth is, there are a lot of great tenants out there and you just need to know where to look.
Pricing Your Rental
The rental price is really important. Set your price too high, and you’ll significantly reduce your pool, set it too low, and reduce your income potential. Some homeowners also like to leave a little flexibility; sometimes, it’s worth asking for a little less to secure great long-term tenants.
When pricing your unit, you need to consider market conditions in your area for similar listings (i.e., number of bedrooms, furnished or unfurnished, and whether the unit includes heat and internet). Once you’ve come up with a realistic base price, you can begin to consider the other expenses related to your laneway house, such as mortgage amount, property tax, and maintenance. While the goal may be to generate a little passive income, try not to stray too far from rental prices in your area or you risk having your unit sit empty.
Place an Ad
You have a few options on how to get work about your laneway house out. You can work with a realtor and they will take care of showings and vet potential renters. This service can typically cost the equivalent of one month’s rent.
Alternatively, you can place an ad on places like Craigslist, Kijiji, or Facebook Marketplace. When designing your ad, make sure to include a ton of pictures not only of the unit but also any nearby points of interest. You are selling your laneway house so build some excitement. If you’re near a great school, shopping, or public transit, include those details.
Picking the Right Tenants
If you have priced your laneway house well in a tight rental market, you’ll have your pick of potential tenants. Here are a few tips on how to choose the right one.
Include some pre-screening questions
You can help narrow down your rental pool by including a few pre-screening questions in your ad as long as you don’t violate any provincial tenant discrimination laws. You cannot deny housing based on age, gender, race, religion, marital status, or family status. You can include your policies for pets, smoking, security deposit, and a maximum number of occupants.
As much as you may like a person, you should always ask for and check references from previous landlords, employers, and personal contacts.
Verify income and run a credit check
Don’t be shy about asking prospective tenants to verify their income. You are within your right to ask for verification through paystubs, redacted T4, or a letter of employment. You should also run a credit check on any tenant you are considering renting to. This service will cost around $50 but is well worth the cost.
Generally, a score above 700 indicates a good payment history. However, don’t completely disregard renters with a lower score if they can provide a good reason. New immigrants, for example, may not have had enough time to build their credit history.
Building a laneway house was a great investment, and now you are ready to earn your return!
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