Investing Basics

Get Familiar with Low-Income Tenants and the Benefits of Focusing on Them

Get Familiar with Low-Income Tenants and the Benefits of Focusing on Them
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Getting ready to rent out a new property? Chances are, you’re going to immediately turn down any prospective tenant unable to demonstrate evidence of stable, reliable income. After all, your primary objective is to make sure your rental generates income while occupied.

Table of Contents - Get Familiar with Low-Income Tenants and the Benefits of Focusing on Them

When screening a tenant with low or no regular source of income, it’s probably your first instinct to deny their application outright. But if they would be a desirable resident outside this one strike, you may want to reconsider the way you evaluate tenant qualifications. Often, it’s worth giving low-income prospects another chance if they appear highly qualified otherwise.

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It’s important to understand the different reasons why a tenant may currently have a low income or even know discernable income before you deny or approve their application. Often, taking the time to meet with a prospective tenant and discuss their situation with them can provide you with a clearer framework in which to make a final decision.

Types of low-income tenants

Any number of reasons can prevent people from demonstrating livable income. It’s important to consider the various types of low or no-income tenants you may encounter, and evaluate their financial situation in a wider context:


After retirement, most people live on a pension. This fixed income may look relatively low, but it’s also extremely stable in most cases. Additionally, senior residents are less likely to put significant amounts of wear and tear on your property. This means renting to pensioners is often highly desirable, despite their low income.


If you own a real estate asset near a college or university, chances are you’ll encounter students applying to rent at your property. If you have a student applying to rent, they probably won’t have any meaningful income. What they do have, are student loans. Most students are perfectly capable of paying their rent, using student loan money. With student rentals, it’s always smart to require a rent guarantor.

People with disabilities

Often, people with disabilities aren’t able to work regular jobs and might not be able to prove employment. Many people with disabilities do receive benefits from the social safety net. This means they’re perfectly capable of paying their rent, even if they’re not employed in a traditional career.


If your rental property is in a place popular with backpackers and travellers, there’s a chance you might have long-term travellers apply to rent your residence. Whether they’re simply visiting, working remotely or on a working holiday visa, nomad tenants may not be able to show employment within the local community. Despite this, they’re usually able to keep up with rental payments.

Social housing recipients

Renting to someone who receives social housing benefits may, on its face, seem risky. After all, if people receive social housing benefits, they’ve likely experienced some level of financial hardship. In reality, people who receive social housing benefits are among the most desirable tenants. Their ability to pay rent is largely shielded from external conditions.

Focusing on low-income tenants

Social housing programs in Canada vary from province to province. Most jurisdictions offer assistance to renters in one form or another.

In Ontario, there are two social housing programs beneficial to landlords: The Rent Supplement Component (RSC) and the Housing Allowance Component (HAC). The RSC is a government-issued stipend paid directly to compliant landlords to help them maintain affordability at their residences. The HAC, meanwhile, is issued to low-income tenants to assist them with monthly rent payments.

There are several benefits associated with participating in the RSC program, as well as renting to tenants participating in the HAC program. Here are just some of the reasons you may want to consider participating in a social housing program or rent to other low-income tenants:

Protection from financial hardships

When the government is assisting a tenant with their rent bill, they’ll likely be able to pay the full amount due, even if they lose their job or face another unexpected financial hardship. Even if they aren’t able to pay their share, you’ll still receive the amount the government kicks in.

Low vacancy times

Many people are on waiting lists to move into affordable housing. If you decide to participate in a social housing program, or if you simply want to offer your rental unit at an affordable rate to low-income tenants, you’re much less likely to experience long periods of vacancy at your residential units.

Respectful tenants

There are usually rules and stipulations tied to social housing benefits. Because of this, residents are especially conscious to maintain compliance with the programs at all times. When you opt to rent to social housing participants, you’re usually renting to respectful, considerate tenants.

Access to a larger tenant pool

You can access a significantly larger pool of prospective tenants when you decide you’re going to rent to low or no-income residents. You’ll unlock a large segment of the market with the potential to generate a significant amount of profit. This pool of renters is generally ignored by other real estate investors, primarily because of outdated stereotypes.

Timely payments

Depending on the type of social housing program, you’ll either receive rental payments through the government or from the tenants directly. In most cases, you’re guaranteed timely payments—especially when you’re receiving a subsidy directly from a governmental agency.

While renting to low-income residents may seem like a scary prospect to the uninitiated, savvy real estate investors understand low and no-income residents often make for some of the best possible tenants. You just need to look beyond their reported income.

Vet tenants on the bigger picture

If you’re using the narrow definition of income to make all of your application decisions, consider broadening the way you view prospective tenants’ unique financial situations. Looking at their situation holistically will help you develop better ways of screening potential residents. You’re more likely to end up with a good tenant and steady rent, even if your original screening criteria red-flagged someone.

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