Whenever we work with tenant clients, we start off by having a heart to heart about how it works.

We’ve previously written about how landlords think and what they look for in a prospective tenant and the three questions they ask themselves.

This is a useful starting point for a tenant to understand the perspective of most landlords and if you haven’t read it, please do!  Today, we thought we’d get into how tenants can inadvertently make it very difficult to find a new rental property where the landlord wants them as tenants.

Below are the three biggest mistakes tenants make when looking for a new rental.  If you avoid these mistakes, you’re well on your way to making it easy to find a new place!

Mistake # 1 – You can’t afford that place.

One of the hardest parts of being an adult is balancing what you want against what you can afford.  This is particularly true when it comes to housing, both buying a place and renting a place.

On the buying side of things, we often have buyer clients who are approved for a mortgage (and monthly payment) that is more than what they’re comfortable spending.  This is a good situation, as it means they can buy a place under their approved mortgage limit and be comfortable with what it costs them each month.

The renting side of things is unfortunately often the other way.  Many tenants have a budget in mind that is feasible for their financial circumstances, but higher than the standard guidelines for rent to income ratios.

While it is not allowed to refuse a tenant on the grounds of a specific income to rent ratio, in practice many landlords follow the generally accepted rule of thumb where a tenant should not spend more than 30% to 40% of gross (before tax) income on housing costs.

The below chart has the “required” income based on monthly rent ranging from $1,500 to $5,000.

The green text columns are the annual, bi-weekly and monthly income needed at the 40% level, which is pretty much the lowest income a landlord would consider for the monthly rent in question.

The black text columns beside the green ones are the 30% level for the monthly rent.  Put the two together and you have the range that would likely be acceptable to a landlord for your income.

As of March, 2025, the average rent in the GTA is just over $2,700 per month.  We’ve highlighted that row in yellow in the chart above.  We can see that if a tenant can “afford” $2,700 a month for their rent, they need to make between $81,000 to $108,000 a year.  That’s $3,100 to $4,200 for the gross bi-weekly pay cheque, or between $6,200 to $8,200 a month.

If that seems like a very high income for that level of rent, you’re not alone in thinking so.  It is often a big surprise to tenants that a landlord thinks they can’t afford a place.  This is because tenants typically think that anything that is less than their monthly income is “affordable” to some extent.  This makes some level of sense as you can pay that rent each month based on your income.  There are of course, other significant expenses that people must pay for out of their income – food, transportation, personal needs and so forth.

With landlords looking to see someone spending 30% to 40% of their gross income on rent, and tenants willing to spend considerably more, you have the makings of a disconnect that causes problems.

If you’re a tenant setting your budget, set the number you’d be comfortable paying, that you’re confident won’t be an issue.  At the same time, find your income in the chart above to see what level of rent you’d be able to afford based on that 30% to 40% ratio.  If the number is similar, you’re in good shape to be able to show a landlord you can afford the place.  If the number you “qualify” for in the chart is much lower than what you need to spend in order to get the type of place you want, then be prepared to show the landlord how you will be able to pay the rent.

Mistake # 2 – You can’t live comfortably in that place.

The second biggest mistake that we see tenants make is applying for a home where the attributes of the home don’t match the needs of the tenant.

The most common example of this is where a number of people apply for a smaller rental where there doesn’t seem to be enough space.  This is a practical solution to the problem of affordability, where the rent being charged is too much for a single income, but possible for tenants who have multiple incomes amongst them.

Despite the property now being affordable based on the 30 to 40% ratio of rent to income, there is a disconnect between the size of the space and the number of people living there.  While a couple can live in a 500 sf space with a similar level of comfort as a single individual, if there are three adults, or additional children who are going to be living in the space, landlords are concerned about how this will be addressed.  Part of that concern has to do with wear and tear on the space from the additional tenants, but in some cases, it means changes to how the space was intended to be used.  A one bedroom unit with three adults applying to live in the space will likely see the living areas subdivided into sleeping areas.  Whenever a place is used in ways that are different to the intended use, accommodations are made to make it possible and they can cause damage to the unit.  If a bed is placed in a hallway, damage to walls will likely occur.  If a living room is converted to a bedroom and a bed located beside the kitchen, safety hazards can result.

It is illegal to charge a damage deposit in Ontario, so if you’re part of a tenant group that is trying to make a place affordable by having more people stay there, you need to be clear on how you’d respect the property.  Given tenants cannot offer a damage deposit, offering a higher rent than asked may be a way to provide the landlord peace of mind that any additional wear and tear won’t result in out of pocket expenses.

Mistake #3 – You don’t have a good (or any) track record.

The third big mistake that tenants make is underestimating the impact of not having a good – or any – track record for landlords to review.

The first aspect related to this is credit history.  Whether you’re a newcomer to the country, or just starting off into adulthood, a lack of credit history can be a challenge.  Landlords are always trying to assess whether a prospective tenant will be a responsible occupant of the property on a mid to long-term basis.  When there is a credit history showing responsible financial activity, with an accompanying good credit score, it makes landlords feel comfortable with the tenant.

While a limited credit history with no credit score is a challenge, it can be overcome by guarantors on the application who do have a lengthy credit history and a great credit score.  A much more substantial problem is for tenants who have made some poor financial decisions and have low credit scores as a result.  In such a case, we recommend tenants address the issue head on with their application, explaining how they got in that situation, and crucially, how it will improve.

Many tenants understand that a good financial track record is important, but they fail to realize that employment and rental history is also considered by a prospective landlord.

If you’re in a new role or industry, whether freshly graduated or simply in a new career, you need to be aware that landlords are uncertain as to whether you will continue to be employed in your current role.  This is somewhat unfair, as an individual employed for ten years at the same company can be fired the day after they start a new tenancy, but it is still an issue if you’re applying for a place after starting a new job.  In such cases, going above and beyond the typical job letter is important.  If you can provide a personal reference letter from your employer talking about your prospects in the career, that can go a long way to making a landlord feel comfortable.

Finally, a red flag for many landlords is a history of multiple rentals in a short term.  If you’ve stayed at your last three rental properties for a year at each, the question that arises is why you only stay that long.  If there were issues with the properties or the landlord that caused you to decide to leave, be cautious with sharing those complaints, as it can make you appear to be a demanding or unreasonable tenant.  If it was happening for reasons outside of your control, such as the landlords selling the property each time you were just getting settled in, share that story as part of your application.

When you are trying to find a new rental home, the above mistakes can make it very difficult to find a landlord willing to take you on as their new tenant.  While you cannot change aspects such as your current income, your family or your track record for credit, employment and tenancy, you can make efforts to address them directly with explanations.

If you need an agent to help you find your next home to rent, or you’re a landlord who wants a good tenant, then we’re here to help.  Get in touch with us to talk about the next steps!

We work with both landlords as well as tenants and we genuinely love when we connect good people together on a rental deal.  It can in theory happen on the buy and sell side as well, but the fear of whether both sides are being properly represented makes it challenging.

When it comes to rentals, however, a good tenant being connected with a good landlord is a win-win for both parties.

Just like the resale market, rental markets shift over time and it can go from being easy to rent a property, to being quite challenging.  Supply and demand play a big part, but unlike in the resale market, we see more consistency in the rental market as to when it is a good time to try to rent a property – and when it’s a bad time.

In addition, there are a number of factors play into why it can be difficult to rent a property out, and we wanted to share our experiences in that regard and also talk about the math for landlords as to when it is worth lowering the asking rent to get a quality tenant in the property.  This article is mostly focused on advice to landlords, so we give you our Key Landlord Takeaways at the end of each section.  Let’s get to it!

I’d love to move in the middle of winter.

When it comes to renting out properties, the absolute worst time to do it is the dead of winter.  A rental listing that comes up for rent on January 1^st is far more likely to sit on the market, vacant and with no income being received, than a unit that came on the market at any other time of the year.  While it is broadly true that sales slow down in January for resale homes as well, it is nowhere near as dramatic as what occurs in the rental market.

We think a number of factors influence why the rental market is slow in winter, including the joy of doing anything in a Canadian winter.  The timing of school ending and starting, traditionally a big impact on the rental market, is also months away.

Key Landlord Takeaway:  If you can avoid signing a lease that ends in January or February, do so.  While tenants have the right to continue a set term lease on a month to month basis, they also have the right to leave at the end of the lease, meaning you’re trying to rent out a property amongst the slush and snow. 

You’re perfect.  Can you move in tomorrow?

Most landlords don’t plan very far in advance when it comes to listing a property for rent.  This is partially due to the challenges with showing a place for rent that is still tenanted, and also due to the likelihood that the place may need some sprucing up to show well and command the highest rent.

As a result of this understandable approach, landlords go from receiving rental income to help pay expenses and the mortgage, to receiving no rent in the last month of the lease (when the deposit the tenant paid at the start of the lease is applied), followed by a period of no tenancy with no income, followed by realtor fees for the new tenancy.

Put it all together, and landlords are eager to get a new tenant in place to get the rental income flowing again.  While there are some circumstances where a great tenant is available to move in immediately, it is more often than not a red flag if a tenant is fine with a quick occupancy.  When we ask questions about the lack of notice they’re giving their current landlord, why they don’t have any furniture to move and so forth, the answers rarely fill us with confidence.

Key Landlord Takeaway:  Avoid the pain of vacancy by planning in advance to get the unit rented sooner rather than later.  A good agent can work with current tenants to minimize the disruption to them and they are actually often great advocates for a property if they enjoyed their time there.  We often advise our landlord tenants to push a bit higher on the asking rent during this period, with the commitment to spruce up the unit in the hopefully brief vacancy period between tenants.

But, I need to get more!

It’s time to touch on one of the more challenging aspects of renting a property out – the rental rate!  In many cases, the landlord has significant financial obligations and doesn’t own the property outright.  Mortgage payments, property tax, utilities (if included in the rent) – these are costs that the landlord has to pay for, ideally out of the rental income.

We’ve seen a number of examples during the recent rising interest rate cycle where landlords faced increasing costs at a higher level than they were permitted to raise rents.  In such circumstances, landlords have to contribute funds out of pocket to cover any deficit and we have had a number of clients who sold properties simply to stop “losing” money each month.  We put that in quotes because even with higher interest rates, each mortgage payment includes a principal component and as such, part of the payment is in essence a forced savings plan to build equity in the property.  Nonetheless, when you have to find money to deposit each month, it doesn’t feel like you own a property that is working out well for you!

While landlords will naturally want to optimize the rental income they receive, a change in supply or demand can result in properties sitting on the market.  While it can be tempting to hold the line and keep the same asking price until you get it, the math shows that can be the wrong approach.

Consider the example of a landlord who is renting out a property for $2,500 a month.  The tenant leaves and the landlord decides to hire our team to relist it at $3,000 a month.  If we get that rental rate, that’s $36,000 a year, which works out to about $99 a day.

We list the property on October 5^th, after the landlord does some minor cosmetic updates, and in the first week of the listing, a tenant applies who is great in every way except their budget.  They can only pay $2,800 a month, so they offer that, with a starting date of November 1^st.  While the landlord likes their profile and is fine with a November 1^st start, they don’t like the $2,800 per month.  That’s $200 less a month, which means, in their mind, they’re losing $2,400 a year.  They decline, the tenant goes away and the listing continues.

A few other applicants apply, but the landlord doesn’t like their credit history and income levels compared to the rent and declines to move ahead with them.  Weeks pass and we’re into late October before another good tenant offers on the unit.  This tenant offers the asking rent, but has to give notice to their current landlord, so they request a January 1^st occupancy.  We negotiate and they agree to take it December 15^th and have a period where they are paying rent on both places briefly.  The landlord is happy because they got the rental rate they wanted, but are less keen on the month and half of additional vacancy.

Which was a better option, the initial tenant at a lower rate, or the eventual tenant at the asking rate?

The initial tenant who was offering $2,800 with a November 1^st start would have seen the math work out as follows.

• October 1st to 31^st – Vacant, so the landlord “loses” $3,000 of their asking rent
• November 1^st – Occupied, so the landlord receives $2,800 for the next 12 months, which means they “lost” a total of $5,800 with this option.

The second tenant who eventually arrives is willing to pay the $3,000 but not until December 15^th, which means the math works as follows.

• October 1st to 31^st – Vacant, so the landlord “loses” $3,000 of their asking rent
• November 1^st to 30^th – Vacant, so there goes another $3,000.
• December 1^st to 15^th – Vacant, so add another $1,500 into the tally, which brings us to a total of $7,500 of “lost” income. The landlord received their $3,000 rental rate, so didn’t lose anything else by accepting a lower rate.

Compare the two and you see that taking the first tenant would have saved the landlord about $1,700 in income.  Obviously the amount of income received (or not received and “lost”) is dependent on how long it is vacant and the eventual rental rate received, but time and again we see a version of this scenario play out.

Key Landlord Takeaway:  Ask for the rental rate that you think the place is worth but be prepared to accept a lower rate for a quicker occupancy.  If you’re not getting any showings or applications, then lower your asking rate to get it sold.  Any perceived loss in income from lowering your rental rate or taking a lowered offered rental rate is quickly eaten up by vacancy periods.

We admire the landlord clients we work with as they are taking a real risk to try to build a property empire.  It can be quite challenging to make it work financially and many of our landlord clients are far from real estate moguls with hundreds of rental properties.  If you’re thinking about buying an income property and want to make sure the numbers work – or you’re a landlord who wants an agent on their side who understands how important it is to fill a vacancy – then get in touch with us!

It is quite surprising how many tenants as well as how many agents representing tenants don’t understand how a landlord assesses a rental application and decides whether they want to proceed or keep looking for a better fit for their rental unit.

Given that in Toronto, the average rents for one-bedroom and two-bedroom apartments are now both at record levels, it is very important information for any tenant looking for a new place to call home.  It’s equally crucial for landlords who may not have been following the best approach when choosing tenants and have since had less than stellar experiences.

Let’s review the current (July, 2022) rental market situation and then reveal the three top things that smart landlords look for in a tenant.

That is one tight rental market!

As of July 28, 2022, the condominium apartment rental market conditions have tightened dramatically when compared to a year ago.

Average rents for one-bedroom and two-bedroom apartments are now both at record levels, surpassing the previous peak in Q3 2019.   There were 13,203 condo apartment rental transactions reported through the Toronto Regional Real Estate Board (TRREB) MLS® System in Q2 2022 – down 11.4 per cent compared to Q2 2021.

The dip in rentals was not the result of waning demand, but instead a much more pronounced dip in the number of rental listings, dropping by almost 30 per cent year-over-year. With less choice, it was much more difficult for renters to get deals done.

This is not likely to be a temporary, short-term situation either, as higher borrowing costs keep some buyers out of the market (and remaining in the tenant market) and the GTA population continues to grow alongside a booming regional economy.  When you have consistent or even growing rental demand, with dropping rental supply, rental prices go up.

According to the latest TRREB data, average condo rents were up by double digits annually for all bedroom types in the second quarter. The average one-bedroom rent increased by 20.2 per cent year-over-year to $2,269. Over the same period, the average two-bedroom rent was up by 15.3 per cent to $2,979.

Whether you’re a tenant struggling to find a good place to rent or a landlord trying to decide among lots of interested applicants, it’s important to understand the most important factors in what makes a desirable tenant application.  Smart landlords look to find a tenant where the answer to the three most important questions is always the same – a definitive yes.

Question #1 – Can they afford the place?

While this seems like the obvious starting point for whether a tenant will be favourably considered by a landlord, it is in fact the number one reason why a tenant is told no to their application.

A generally accepted rule of thumb is that you should spend no more than 30% of your gross (before tax) income on your housing costs.  Some experts push that a bit to say up to 35% or even 40% but we have not encountered any credible sources that think spending more than that level of your income on shelter is sustainable.  All people need funds for other costs like food and clothing, as well as some discretionary funds.

We often tell landlords to use the 1/3 rule as an easy way of assessing a potential tenant.  If you have a unit where you’re asking rent of $2,400 per month and the tenant pays hydro and electricity of about $100 per month on top of that, the tenant has housing costs of $2,500 per month.  That’s $30,000 per year.  If the tenant makes less than $90,000 per year, you’re getting into a situation where they may not be able to afford the rent if some other unexpected expenses come up.  If everything else looks good, a smart landlord might still proceed, but if they make less than $90K and have some other issues with the application, you’re asking for trouble if you hand the keys over.

Question #2 – Do they have a good track record?

This question gets to the heart of whether the prospective tenant will be a responsible occupant of the property on a mid to long-term basis.  There are a number of ways in which a smart landlord can assess track record.

• What’s their credit score? A good credit score is established and maintained over a length of time by establishing financial commitments and living up to them.  A tenant who has had a car loan for five years and had paid on time consistently is a good indication they understand financial commitments and have the stability to live up to their obligations.
• Have they been a tenant at other properties for typical lengths of time (one year or longer) or have they moved around from short-term tenancy to short-term tenancy? While there can be valid reasons for such activity, it is often the sign of a bad tenant who is being evicted or leaves their rental to escape problems they are encountering.
• Is their employment record consistent or inconsistent and has it changed recently? Someone who makes good money at a job they have had for a long time is likely to continue to be able to live and act in a way consistent with their past behaviour.  A new job or role every couple of years is often accompanied with financial struggle and if they have just switched to a new role, it is worth considering how that might impact their track record moving forward.

A good track record isn’t necessarily a sign that they will continue to be responsible, consistent people moving forward, but it is certainly much preferred over someone with a spotty track record or no track record at all.

Question #3 – Do you feel comfortable with their overall package and approach?

This final question is more about following your gut.  A smart landlord (with an experienced agent on their side) can identify red flags in applications  and the approach being taken by the tenant or their agent that should cause concern.

A few questions that should clarify the situation are as follows.  If the answer isn’t yes to these questions, then think twice before you proceed.

• Did they provide all of the requested information in the application package? A tenant who applies but skips certain aspects of the process is either inattentive, disorganized, or trying to hide a potential red flag.  Regardless of the reason, if they can’t be bothered to follow the rules as established for the application, it does not bode well for them following the rules of the tenancy, such as payment on time, respecting condo rules, maintaining the property, etc.
• Does it seem (as far as you can tell) like they will continue to be reliable? It can be hard to be consistent and responsible when there are major changes in circumstances, so a smart landlord looks for recent or upcoming changes.  If the tenant was employed full-time with a salary but started their own business two months ago, the past history of financial responsibility may not continue.  If the tenant has a great credit score but has had a dozen credit checks performed by debt companies in the past three months, they may have encountered financial issues and are starting to build up debt that can cause financial issues moving forward.  While changes in a tenant’s life don’t necessarily mean their track record will sudden change, it is worth looking to see if the circumstances that allowed them to be a good applicant will continue to be in place once you hand over the keys.
• Are their expectations and questions reasonable? A prospective tenant who is asking for unusual actions on the part of the landlord (such as agreement to take rent payments in cash or provide a minimum of 48 hours notice for visits) can indicate they are not reasonable individuals who may have some unreasonable plans for their time at the property.  The reverse of this is true as well, and smart landlords look out for tenants who don’t care about things that most people would need to know.  A tenant who says don’t worry about having it cleaned after the prior tenant leaves, or who reacts to news of a temporary defect (such as AC needing to be replaced as it isn’t functioning) with no concern can also be red flags.  A good tenant, with good income and a good track record, has reasonable expectations for their rental and their landlord.  Be wary of a tenant who doesn’t seem to care about anything most people would want to know more about.

There is no simple formula for assessing how comfortable a landlord will be with a prospective tenant, but whether you’re looking at it from a landlord’s side or a tenant’s side, think about the big picture and whether there might be some less tangible causes for concern.

In tight rental market conditions, landlords have more choice and tenants have more difficulty securing a rental home.  If you’re a landlord, make sure you consider these three questions so that you’re choosing the best possible option amongst the applicants.  If you’re a tenant, likewise review these three questions and consider what you could do in order to best present yourself.

In either case, if you want to work with agents that understand the rental process and will work with you to get it done properly, don’t hesitate to get in touch with us.