Guarantor agreement- why you would need one!

What is a guarantor agreement?
A guarantor agrees to pay the rent in case of default by the tenant.  You should have the guarantor complete an application and do a credit check to ensure that they can pay the rent and any other expenses as specified on the lease, in case the tenant does not pay.
Who would need a guarantor?
A student or any tenant that does not have any source of income to pay his rent.
Does it have to be notarized? NO.
If the guarantor agreement can not be signed in the presence of the landlord or his agent, it can be signed in the presence of a notary public or commissioner of oaths.
Here is a free sample that you can use just click on this LINK

CRA form - the one the government uses when you report your rental income and expenses

Here is the form that Canada Revenue Agency uses when calculating the income and expenses.  Print it off and use it as a guideline to know what kind of expenses are allowed.  If you drive, make sure that you keep track of your kilometers in the beginning of the year and take note of what it is at the end of the year.  Calculate how far the rental property is from your home and the number of trips that you take and you can deduct the expenses for running the car, gas, car wash, insurance, license renewal ( plates), depreciation, car payments, oil changes and any other expenses that you incur insofar as your car is concerned.
In addition your have all the regular expenses, mortgage, interest, ( only interest can be claimed in Canada), utilities, legal, office, accounting expenses etc.
This form will be a great outline for those of you who are just starting out.  If you have a specific question, feel free to post it on the blog and I will try and answer it asap.

How to improve your chances of collecting a bad debt from a tenant Part 1

• 1) Complete application.  Don’t settle for anything less than an application that is filled out completely!  Itsounds simple, but you would be amazed how many rental applications we see as a collection agency that arrive at our office half empty.  A partially filled in application will rob you of future income. 
• 
  

2)  A verified Social Security Number, previous address verification and three personal references are a must!

• The previous address and Social Security Number will help identify a debtor when he or she skips and is living elsewhere. 
• The three personal references could be instrumental in helping your collection agency find them and collect any money owed.
  
  

3)  Bank Accounts!

Make a photocopy of a prospect’s check, and the rent check every month. 

• That way, you will have the right information for recovery, and you may discover a secondary bank account or other changes crucial to collection. 
• If this person skips owing money, a record of their current back account numbers can spell the difference between successful collection and no collection at all
• 
  

4)Check Their Driver’s License.  Make a photocopy of the prospects’ driver’s license and Social Security card.  It is not uncommon for a bad ex-tenant to avoid a bad reference by claiming identity theft and saying he or she “never lived there”.  Copies of these documents will be crucial in identifying the debtor and collecting your money

5) Avoid the “Company Name” Scam.  If your prospect says “I would like to put the apartment in my company’s name,” your mind should hear “RED ALERT! “ It is a common scam for people with bad credit or rental history to try to rent under a company name to prevent you from running their credit. 

• It is often far more difficult to collect a debt from a company than it is from an individual. 
• Even if the ‘company’ exists, you must go through proper channels to bind it to the lease.  If you do write a corporate lease,  ALWAYS acquire the proper documentation to show the company is in good standing, and the person signing the lease is authorized to do so.
• 
  
• 6) Background Check Co-Signers.  One way to rent to someone with questionable credit or rental history is to require a co-signer. But avoid the common mistake of accepting a co-signer without checking their credit and rental history. It is crucial to collection to have the co-signer complete a rental application and sign an iron-clad agreement.  In fact, it is extremely important for every adult moving into the apartment to complete an application and sign the lease.  This gives you far more leverage and ability to collect any future debts
  7) Signed Move-In Statement.  Congratulations, you found a new tenant!  No need to walk through the unit – we’re all friends here, right?  Wrong!  For both your and your new tenant’s protection, walk through the unit with them before they move in.  Make accurate and legible notes about the condition of the unit. ”I wish I had a nickel for every debtor who says the apartment was cleaner when he moved out that when he moved in.” A signed Move-In Statement can prove him wrong
  
  
  
  

How to spot a nightmare tenant Part 4

1) Tenants that are not earning any income
 If you are going to rent to students or other non earning tenants, then get the guarantor  to sign and check them out to make sure they can pay the rent.  This could be their parents or a spouse.
2) Talk less and listen more
Learn to ask questions and listen to their answers and how they answer.
Instead of talking about the property and how wonderful it is, ask questions of the tenants and everything that you want to know about them.   At the beginning they are willing to provide as much information which later on may be more difficult to get
3) Do regular investigations of the property and let them know on the onset that you will be doing routine checks on the property.
4) Follow your process and do not deviate.  Do your checks, get them to complete the application --all of it and get that missing information. Take your time and follow through on all the reference checks and request proof of income.
5) Ask to see two pieces of ID and make one of them a driver's license so that the previous address should match what they gave you on the application.  Also their name and date of birth should match.
You's be surprised how many people do not give their true identity.

In the end it is your property and it is up to you whether you want to rent it or not. After all, if you son't do your homework first, you will end up with the big headaches.

How to spot nightmare tenants Part 3

How to avoid that nightmare tenant
1) Identify a good tenant on the first call.  Get their name, tel number and perhaps their email address.  If you can't call them back they've given you a fraudulent name and number.  Some people walk around with multiple ID's and names.  You don't want to know why they have multiple ID's.  AVOID THEM at all cost.  So how do you spot them.  Request two pieces of identification that has the same name and address on it. If they cannot produce two pieces of ID...........need I say more.
2) I need to move in right away.
Beware of the tenant that needs a place right away.  You don't get enough time to do any of the checks, landlord, reference, credit checks or verify any of the information that they supplied on the applicaiton forms. You may end up with a non -paying tenant and worse a squatter. If in fact you do encounter tenant that has a real problem and needs to find a place fast, you would have no problem getting copies of his paystubs, or any other documentation that you may require.
3) missing information on the application
- Request that information right away and watch their reaction and their reply.   No telephone number of their employer or landlord.  This might be a big hint that either they are no longer working there for their employer, and for the landlord, they probably may not want you to contact them for some reason.  If in doubt, throw the application out.
4)Is your tenant employed?
They may still be putting down the same employer even if they no longer work for them especially if they haven't found another job yet.   Check it out. Request a name of a supervisor and ask for this information right away, not after they move in or after they were approved. They may not be so forthcoming later.
5) Is the tenant self- employed.
 Request proof of income. Invoices are not enough as they do not show whether the tenant  has received these monties.  Bank statements to prove income is what you should ask for.
6) Every one of the tenants must sign, not just one of them.
You may end up with the tenant that signed leaving your property and the other with no lease signed staying.

How do you avoid nightmare tennants? Part 2

Nightmare tennants are not easy to spot.  They look like ordinary respectible people but if you do your homework you can minimize the likelihood of renting to a nightmare tennant.
 1) Get to know the tenant. Ask lots of questions.  Request copies of paystubs and make sure that they are recent paystubs and it has their name on it.  If the paystub is a few months old, chances are they are no longer working for them or not working as much.
2) Have them complete an application requesting the following information:
- the full name, date of birth, their social security number and address in the last  5 years.
- name, address and telephone number of their previous landlord
-amount of previous rent and why they are moving
3) Follow through on checking their answers.
-Call their last landlord and just to make sure that they are the landlord verify the address that their tenant lived in including their zip code/postal code.  If they can't tell you that then you know you are not talking to the landlord.
-Ask them why they are moving, if they paid the rent on time, the amount of rent that they paid. If there is hesitation or they can't remember, you know what that means
4) Have them sign the rental application on two separate spots.
-first spot- I hereby certify that the information provided is true and complete and that I have not witheld any information. I undertstand that the owner reserves the right to  reject this application. I have read and understand these conditions.
this should be signed and dated by the applicant and co-applicant.
-second spot: I/we hereby give irrevocable permission to the owner or their agent to obtain a consumer/credit report about me.us and to contact previous landlords to obtain information about  my/our previous tenancies and/or to contact agencies that provide landlord information, contact my references and take any necessary steps necessary to assess this rental application. I/ we also provide irrevocable consent to the Landlord or their agents to disclose information from my rental application and information arising from any tenancy between us to any third party for the purpose of contributing information on a database of tenant information to be used in providing consumer/credit reports.

Check out this website: it does credit checks on both Canadian and American tenants:  Membership is only $30 per year and you get two free credit checks with your membership.  (As of this publishing, these were the rates,  Please note that these rates are subject to change)  The website is Tenchek. They keep a database delinquent tenants as well. They will supply you with the Tenant application  which is a requirement.

5 of the worst nightmare tenants Part 1

1) The animal lover
    - They ask if animals are allowed, you say no and they tell you they don't have any.  ( an alarm bell should sound at this point).  When they move out, the place stinks and the carpet has all kinds of stains in it
2) The party animals
   - If you rent to students expect this.   Endless comings and goings.  Complaints from neighbours about noise at all hours of the night.  You let them know about the complaints but nothing comes of it. Eviction is the only solution
3) The chronic late payors
   -This type of tenant is always difficult to spot. They appear respectable and trustworthy on first inspection but a couple of months into the tenancy and the rent is a few days late and the chase to get paid starts. Eventually you get the money but then the next month it happens all over again and a different excuse every month.  The arrears start mounting up and your cashflow suffers and  and it becomes more difficult to pay the mortgage on the property.
4) The extended family
   These tenants are also difficult to identify. Everyone likes a strong family – but these tenants take it one step too far.

The tenant moves in, perhaps on their own, or perhaps with a partner. Everything seems fine; the rent arrives on time, and you hear very little from the tenant. Then, a couple of months later, a friendly neighbour calls you because they are concerned about strange comings-and-goings. They tell you it looks like there are new people living in the property.

At the end of the tenancy, it becomes clear that the tenant’s entire family had been living in the property. The living room has been converted into a bedroom; the carpets are completely worn through; various pieces of broken furniture are strewn around. It costs you more than the value of the deposit to clean up.

5) The bureaucrats
   These tenants are always the hardest to spot. They might be young professionals, or perhaps recent graduates. They know a bit about the law, and want to make sure everything is done by the book from the start.

At the end of the tenancy, though, you inspect the property and find that there is some damage to the furniture. Nothing too major, but enough to warrant making a deduction from their deposit.

You inform the tenants of this, and they immediately tell you that they will not accept the deduction. They take the case to adjudication through the Deposit Protection Service, and you are tied up in months of wrangling.

True excuses that tenants have used for not paying the rent

1) My wife got her period last night.
2) We had the money on Saturday and since you did not come on time,  we spent it.
3) I have to wait until my wife gets home to give you the rent. (  Later that day)  She came home but went out to visit her friends.  She spend her half of the money so now I have to wait another month before we give it all to you.
4) How do I know you are the real landlord? I don't remember talking to you.

If you live in Idaho.....

Here is a website to help out any landlords who live in Idaho.Just click on the link Idaho

Free Credit Report

Did you know that everyone is entitled to a free credit report. There are three bureaus that have your records: Equifax, Experian and TransUnion.

In Canada- Here is the link for the form to be completed together with the address to submit the form to: Equifax, and TransUnion ( As of April 17, 2009 Experian has discontinued providing credit reports for Canadians)

For the US - the links are as follows: Equifax and TransUnion and Experian

Remember, you are entitled to one free credit report per year. You can submit the application by mail and receive it within three weeks. If you want to see it online, then they may charge you a fee for this convenience.

Step 2: Form L1-Application to evict a tenant for non-payment of rent and to collect rent the tenant owes

Okay, so you have given your tenant the N4 termination notice  together with the amount he owes and he has 14 days to pay.  The termination date arrives and he/she does not pay. You cannot file this application until the day after the termination date in the Notice to End a Tenancy Early for Non-payment of Rent (Form N4). Your next step is to complete Form L1. As of today's date- June 18, 2011, the cost for filing the Form  L1 is $170.  You will need to have a copy of the N4 termination notice AND a  Certificate of Service. Basically the Certificate of Service  is a form that states  the date you delivered the  N4 Termination Notice , who you gave it to and how it was delivered-- either in person, by mail, etc.
You will also be directed to a check list on how to complete the L1 Form.  Follow the directions carefully.  If the board does not accept the application due to missing signature or information, you will have to refile it again.
IF YOU CLICK ON THIS LINK you will be directed to the web page: Form L1- how to evict a tenant for non-payment of rent and to collect rent due.  This is an 11 page booklet that explains how to complete the forms.  If you go to the Board office in person, they will be able to schedule a hearing while you wait.  you can request that the cost of the filing fee be charged to the tenant as well.
What is next? Step 3