# The tenants you get these days



## Rusty O'Toole (Feb 1, 2012)

I started in rental properties in the seventies, renting nice apartments to good solid working class tenants who on the whole, behaved themselves, kept their homes clean and paid their rent on time. Sure there were a few rotten apples but mainly good tenants.

Then they shut down the factories and sent all the good union jobs overseas. Meanwhile it became easier to get a mortgage and buy a house. The best tenants bought houses , and I ended up with a smaller pool of good tenants and a lot more bad ones.

So I sold the apartments and bought single family houses, figuring to reduce my profits but get a less troublesome class of tenants. Didn't work. After a few bad experiences, sold all but one rental house (which has a good tenant in it).

The trouble is I can't find any other investment as safe, that pays as well as rental properties. Now I am thinking of buying a few houses but am scared I am letting myself in for a never ending nightmare.

So, landlords tell me. Can you still find good tenants? How do you do it? Or has the country deteriorated to the point where they hardly exist anymore?


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## Just a Guy (Mar 27, 2012)

I suppose it depends on where you rent and how good your screening is.

Of the bad tenants I've had, I can't say I've ever been surprised by them. It probably had more to do with me allowing them to get in, knowing that I guessed they wouldn't be good originally but was willing to give them a chance, than it was from a bad pool of possibilities.

There are still a lot of good tenants out there, I've got a lot but they don't fall into any one category...there are good and bad in all of them. 

All that being said, there are plenty of people out there who can be a nightmare, the worst part of it is they think that they are in the right. Somewhere along the line entitlement became the new normal.

While screening is a must today, I still find talking to the potential tenants to be one of the more important parts of being a landlord. Look for lies, inconsistencies, or even embellishments...that is often a good warning sign. Some of my good tenants have included people who others wouldn't rent to because of their past...but they were honest about it with me and appreciated the fact that I gave them a chance, not that I would recommend doing this often.

The other thing is, you've got to be on top of things...when hey start to slide, jump on it and fix the issue. He longer it goes, the worse it can get. If they fix he issue quickly, they know you meant business and they'll be more careful in he future, if they don't get rid of the problem.

You also have to accept people for what they are, not what you want them to be. A student renter is not going to be the same as a young family, an immigrant, or a single divorced person...you can't hold them all up to the same standard. You need to set your expectations to meet the person you are renting to, in the area you are renting in. A luxury home has different expectations than an apartment. 

Sounds to me like you got spoiled with one type of renter and can't adjust to changing times or markets. If you were in business with a company, you probably would have shut down for similar reasons.


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## Rusty O'Toole (Feb 1, 2012)

I'm not one of your hit and miss guys. I keep on top of things, have good rentals in top condition but got burned out on dealing with tenants after 30 years and hired property managers. All the worst experiences were with tenants picked by professional managers. They always had an excuse which boiled down to 'it's not my fault that's all you can get nowdays'.

Before I shell out a few hundred thousand and commit to owning more rentals would like to know if they were telling the truth or not.

If it matters, the properties I am looking at are in Belleville Ontario.


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## Rusty O'Toole (Feb 1, 2012)

If you want to call it 'spoiled' that's ok with me. Are you saying you can't get good tenants anymore and you have to take what you can get? Because that is what I was afraid of.

By the way if you know of a safe investment that returns 8% to 10% a year in cash flow plus possible appreciation I would love to hear about it.


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## Just a Guy (Mar 27, 2012)

Ahhh, I think you hit the nail on the head when you mentioned property managers. I'm not a big fan of them. It's a fairly low margin business with many "temptations" out there to cut corners. I'm sure there are a few good property managers out there, but most of the ones I've worked with haven't met my expectations.

I've either had to train my own or done the work myself.

I'm not down on real estate at all, I've been actively adding to my holdings every year, so I agree it's very lucrative.

The only reason I say you were "spoiled" was because you mention you rented to factory workers, which don't really exist anymore. As I said, I rent to a wide variety of people and found good tenants with some work. I can't really afford to have many bad tenants as it would quickly eat up my time considering the number of places I own. 

It may be wise to hire a person to manage your properties and train them to do things the way you want. You also need to properly screen, or train any companies you hire. I've helped establish a couple of professional companies that now manage my properties.


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## Rusty O'Toole (Feb 1, 2012)

Boy wouldn't that be great. I could teach anybody to manage properties in a few lessons if I could find someone who was willing to listen. In 40 years I think I have met 2 people who would listen and then reluctantly. My brother finally listened after 30 years and now makes more money than I do. I would be thrilled to death to be able to hire anybody who is competent to do anything. Have been trying to hire a house painter since spring, have spoken to 8 painters who advertise they are looking for work, 1 got back to me with a quote for $5200 for a week's work for 2 men. Around here guys work for $15 an hour so that's $1200 for labor plus $500 for materials, plus $3500 profit. And I am lucky to get anybody at all.

I've given up on finding anybody who is willing to listen or is competent to do anything. I used to do everything myself, now at 65 am getting a little old for the hand to hand combat.


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## Rusty O'Toole (Feb 1, 2012)

My tenants weren't all factory workers but almost all had jobs. Now it is seldom to find an applicant with a steady job.


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## Just a Guy (Mar 27, 2012)

Yeah, I've been lucky to find people I could train. I've trained my realtors, property managers, contractors, and others. Makes life a lot easier. I wouldn't say it was a few lessons though, I spent years doing it. I found young employees of property managers who had potential. They knew what to do, but their companies paid next to nothing and demanded the moon, hence a high turnover on the ground troops.

After watching this turnover, I kept in contact with a bunch of ones I thought had potential. I encouraged them to think about going out on their own...a few decided to try it. I helped them out with advice and contracts. Turned out to be a win-win, plus I get a bit of preferential treatment having been there at the start.

Same with realtors. I find young guys who haven't turned into salesmen, train them to find me what I want, how I negotiate, etc. At first they may think I'm being rediculous, but then they see it works and they get steady commissions.

Nothing is ever fast in real estate, it's all about long term thinking. 

As for steady jobs, that reality hasn't existed since the 90's. What I look for is steady employment, people who are willing to do whatever it takes to survive...not the work/welfare types. I think Ontario got a lot of that attitude back when the ndp made it almost more profitable to not work.

On a side note, I think 65 is a tough time to get back into real estate...as I said before, And you probably know, real estate is a long term game. If you've got a bunch, adding is never that big a deal, but building up takes time.


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## Rusty O'Toole (Feb 1, 2012)

I wish I had a choice.


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## Just a Guy (Mar 27, 2012)

The market is near its peak, you don't have systems in place...if interest rates go up, you may be looking at severe losses. 

I've done well with my stocks, but my system requires crisis. Maybe short some hire party lenders. I just put an offer I. On a place that was appraised at 89k when it was bought two years ago, but went into foreclosure with over $130k of mortgages on it. Lenders are getting stupid out there.


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## Rusty O'Toole (Feb 1, 2012)

If I buy for all cash interest rates don't matter. Even if I want to sell, I can give the buyer a sweet deal by taking back a mortgage. So interest rates don't worry me. The signs are that all governments are so deeply in debt they can't allow interest rates to rise without killing themselves. That is supposed to prevent them from allowing rates to rise, but I don't have much faith in governments doing anything that makes sense.

To get back to the original question. How hard is it to get good tenants compared to say 20 years ago? And how do you qualify them? Assume a nice house in a good neighborhood, in top condition, with rent a little below the norm.


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## GoldStone (Mar 6, 2011)

Rusty O'Toole said:


> If I buy for all cash interest rates don't matter.


If you buy for all cash you might as well buy REITs. Diversify your holdings and stop worrying about tenants.

The beauty of investing in rental properties is mad leverage. If you are not employing leverage, the pain of dealing with tenants is not worth it. You can get the same cash yield from REITs.


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## Mechanic (Oct 29, 2013)

I hear ya on the renters. I bought a beautiful 500k 1 yr old home in 2008 in BC with a view to renting for some income and keeping for retirement. Have had 4 tenants, none took care of the place. 3 different property managers, paid for inspections, all were a joke. Wrecked appliances, dishwashers treated like garburetors and then I get billed for a plumber to unplug ? central vac driven into and I just get told it needs replacing, fence driven into, irrigation chewed by dogs, 1 small dog allowed and then they sneak in an extra huge dog and 2 cats. Hardwood floors destroyed....wear and tear, lol. Property managers return damage deposits. The RTB sides with tenants when you try to get them out. Maybe I should consider myself lucky that at least they paid the rent on time (well almost) but finally had enough, took possession and redid the place top to bottom and sold for less than paid for. ROI wasnt good but that was because I bought a nice place and figured I could get quality renters, lol. Driven like a rental. With interest rates so low, seems like all the good renters took advantage and bought places of their own.


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## Rusty O'Toole (Feb 1, 2012)

GoldStone said:


> If you buy for all cash you might as well buy REITs. Diversify your holdings and stop worrying about tenants.
> 
> The beauty of investing in rental properties is mad leverage. If you are not employing leverage, the pain of dealing with tenants is not worth it. You can get the same cash yield from REITs.


REITS can go down in value for reasons I can't control. I agree, REITs would be the ideal investment if they were properly managed but here we get back to the management problem.


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## Just a Guy (Mar 27, 2012)

It's hard to compare time periods...aside from historical bias, people's knowledge and experience is different.

First off, if you were lucky and got good tenants, then you think that times have changed and people are worse. If you made mistakes when you were younger, people today look better.

I really doubt much has changed over the years. There have always been bad tenants and there always will be. The same with good tenants. I'm sure my kids will all be good tenants, if they choose to be tenants, because they were brought up to work hard and be respectful...plus they've seen the landlord side of things.

Sure, times have changed, people don't have 20 year job security, but that doesn't mean they're bad. I've had tenants do majore renovations at their own expense.

I believe in the 90/10/10 rule, and always have 90% of tenants are good...hey may not be great, but only 10% of them are bad. Of those, 10% are REALLY bad. These numbers seem to hold out across my holdings.

In reality though, no one talks about the 90%, so the bad tenants seem to always be the norm.

Of course the rule also applies in reverse. Only 10% are great tenants and 10% of those are exceptional...who do major renovations at their expense.


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## Berubeland (Sep 6, 2009)

I would say that the rental market is vastly different than it was 20 years ago. There used to be a large pool of quality tenants and now there is a pool of people in transition to home ownership. I don't think in the current rental environment you can make a go of affordable housing. 

Belleville may have changed as well, what kinds of industry you have, what the local economy is like, who is in transition, all are points you need to take into consideration.


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## NorthKC (Apr 1, 2013)

As a former tenant, I see these problems a lot. Bad tenants in nice places, etc. What I've discovered is that the nicer apartments had a lot more screening.

Case in point, my first apartment had me speaking with the property manager personally (she was definitely one of the best ones out there), credit check, and employment letter. Well, she didn't need the employment letter as she personally knew my boss at the time so she knew exactly where to track me down if she had issues. At time, I didn't have any credit to my name (joy of trying to stay out of credit card debt in university) but I told her exactly what I had in my name at my previous place which was a security deposit for gas in my name, had the telephone and hydro in my name which I had ready with me but she felt comfortable enough. But the big thing was that I stayed in my previous place for 2 years which indicated stability. So, really, what made her accept me was the type of my job whom she knew my boss, my stable place of home, and my efforts to show proof that I had responsibility with the utilities. And I kept that up for the next 4 years. We still talk to this day 

Bottom line is if the tenant are making efforts to be accepted despite not having much to their names, it's a good tenant, generally which was confirmed by this woman. The places with bad tenants had landlords who didn't do all those screenings. The tenants who've stayed in multiple places over the years are the ones to watch out for.


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## sags (May 15, 2010)

Perhaps the shift from baby boomer home owners to baby boomer renters is starting to show an affect.

Most of the boomers I know who sold their homes are living in townhouse condos or luxury high rise apartments.

They aren't interested in cutting grass or shoveling snow and want to live in a better than average environment. Some want the swimming pools, spas, gyms,..........offered in some buildings or complexes.

I am not sure single family homes fits their rental needs.

Just wondering from the landlords on this forum who own rentals............who does the maintenance ?

Our landlord has their own maintenance staff and beyond doing the day to day work, they also keep an eye on units and report any wonky activity. (such as illegal bedrooms in the basement)

They "visit" the units every year to "replace the batteries in the fire alarms and the furnace filter"...........a valid excuse to look around all levels inside the units.

A tenant who isn't keeping their place up gets a "it has been brought to our attention "notice in their mailbox.


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## CalgaryPotato (Mar 7, 2015)

The problem is that Canada is a home ownership country. In Calgary for example, 70% of the homes are occupied by the owner. That is a huge number. Basically if you are a mature adult with a steady job, the odds are pretty good that you own your own home here. So who is in the other 30%. The very young (mostly single) adults, the financially less responsible, those who are broke... Of course there are a percentage of people who choose not to own for other reasons, but the odds aren't in your favor.


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## TomB19 (Sep 24, 2015)

Rusty O'Toole said:


> So, landlords tell me. Can you still find good tenants? How do you do it? Or has the country deteriorated to the point where they hardly exist anymore?


Yes, you can find good tenants but it isn't easy.

Find a professional organization that brings people to town and you have a potential pool of short term renters. I would not sign a lease for less than 1 year, or more than 2. I've got a professional group that brings people in for 2~3 years. I rent to them and they call me. Past tenants say good things about me because I have been excellent to them. The reason we bought the our last house is because someone called, needing a house, and we didn't have a vacancy so we purchased one and rented it to him.

The main thing is that you have to have good properties, if you want to rent to good people. If you've ever said, "That's good enough for a rental.", you are not likely to get good tenants. I've installed crown moldings, we decorate nicely, and we keep them *BRIGHT*. Those shitty basement lights are not going to make people feel good about your house. Install 4' fluorescent, lots of them, and install daylight balanced bulbs. Paint over those dark colors with something close to white. Bright, bright, bright. People should feel warm and safe, when the walk in.

Step 1 - find a good tenant
Step 2 - have a good property to show the tenant
Step 3 - build mutual respect with the tenant

Note 1 - Dump tenants at the first major sign of trouble. If they pay late but before the legal eviction date, roll with it until 45 days prior to the end of the lease and then give them notice to vacate at the end of the lease
Note 2 - No month to month
Note 3 - *Anything* that causes the tenant to feel less safe is low hanging fruit, in terms of tenant retention. That gate latch into the alley that has been broken for two years because you're too lazy to fix... is a major annoyance to them and will cost you a lot of money when the tenant leaves and you need to place someone in the house. Fix it promptly.
Note 4 - Take good care of your tenants. Treat them as you would like to be treated. If they don't respond in kind, send down the road at the end of the lease.
Note 5 - Never rent a property to someone you're unsure of because they are the "best that is available". You will regret it.
Note 6 - Install a dishwasher. There isn't a human alive who wants to do dishes. This is a huge rental magnet.



Rusty O'Toole said:


> REITS can go down in value for reasons I can't control. I agree, REITs would be the ideal investment if they were properly managed but here we get back to the management problem.


I completely agree with Rusty. I own both REITs and R-E directly. I'm happy with both and the current balance but, as my net worth grows, REITs are where the money will go.


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## Earl (Apr 5, 2016)

I'd like to think I was a good tenant for the few years I rented between the time I first moved out of my parents' home until I bought my own house, but there are a lot of bad landlords too. I had to move multiple times due to landlords selling their unit. During this time I also had to deal with realtors bringing prospective buyers to view the place, probably about 70-80 people viewed the place over the 3 month period it was on sale.

Being a tenant sucks, and being a landlord sucks. That's why I'm neither. I live in my own house, I answer to nobody and I have no responsibility to anybody. I invest in real estate through REITs, which I can liquidate with the click of a mouse button when I want.


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## mikep (Mar 13, 2017)

I like what Just a guy mentioned... "Look for lies, inconsistencies, or even embellishments"

I have a rental in a rough part of Hamilton and I've heard all kinds of stuff..
Sometimes I just keep my mouth shut and just look and see how many teeth they have in their mouth.
And if the topic of jail comes up.. automatic pass.. he's in jail.. he's coming out of jail.. he went to jail.. any of the above.. lol
If a single mom tells you 'she's gotta do what she's gotta do'.. don't ask her what it is that she does.. 

and then hopefully when you get home that evening you get an email that comes in from a nice sounding lady with perfect grammar..
then you ask for her phone number (because kijiji scrambles the email addresses now)
and use that phone number to search on facebook. 
more often than not it'll come up with that person's profile..

if she's got all her teeth, you can proceed to the next step showing her the place. 
Then I look for lies, inconsistencies, or even embellishments.

you don't have to play every hand you're dealt. just be patient and someone will come along who wants to move in there to be closer to their work


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