Landlording Advice - Discrimination

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Landlording Problems - Discrimination

Q: We are looking for suitable tenants to rent our home. If we get multiple offers of interest, can we select the most proper tenant according to their source of income, reference, or job? We are a little hesitant to rent to a tenant who does not have an actual ''job'', but has other source of income coming in. I don't want to cross the ''discrimination'' line either.
Last question, what is a good way to estimate a monthly rental for a suite according to the area we live in? I just came across your website and I think it contains very valuable information, so thanks for that.
A: You are wise to get answers to your questions before you jump in the deep end. Renting out the most valuable asset you likely have isn't for the feint of heart, and it can quickly bring grief, stress and disaster when you don't know what you are doing and don't have access to experts. Consider this: despite this being a rising residential real estate market there are an astonishing number of people out there jumping in to the residential rental market because it looks like a quick and easy way to help with the mortgage. My best clients however are those that try it themselves - they simply don't have the expertise, resources or wherewithal to manage a rental property effectively. So, my congrats to you for going gently into the fray.
No, you can't discriminate against a person because of their source of income, nor for any ground found under the Human Rights Act or the Canadian Charter. As for estimating a rental rate, this gets extraordinarily complicated - quickly. I remember playing with a fishing reel when I was a boy; within seconds of getting the line out of the package it would be all tangled up, and I'd spend almost all my time trying to untangle the line when what I really wanted to do was fish, and couldn't. A similar thing happens to most people when they get tangled up in real estate investment calculations. Without a plan and a goal for what they actually want in a property all they get is instant confusion that involves hours and hours of trying to make things make sense. For instance: the financial return on a rental property can be calculated in dozens of ways - capitalization rates, net present value, rate of return before taxes, after taxes, gross income multipliers, cash flow, net operating income, debt coverage ratio, effective gross income, scheduled gross income, tax benefit, etc., etc. My personal favorite is the co-efficient of dispersion that I'd hear the assessors drone on about when I sat on the Property Assessment Appeal Board of BC. The term still puts me to sleep and causes my eyeballs to roll into the back of my head.
Once you set your goals and begin to entertain prospective renters it is critical that you verify the information they give you. The single greatest and most costly mistake I see landlords make is when they fail to screen and verify the tenant(s) and the information they've given.

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