Over the years, we’ve heard many a tenant horror story, usually from new landlords. When we’ve asked what their vetting process was, frequently we’re met with silence. Screening, simply put, is the most important part of your job as a landlord. Screening thoroughly is time consuming but saves you significant time and money spent on evicting bad tenants. Screening tenants predicts future behavior based on past behavior.
Maybe the squeaky clean professional who has lived quietly for two years falls off the wagon, and within a short time, you’re having to evict a nonpaying party animal. Or the nice polite single, hooks up with Ms. Bad News and all her friends, and neighbors want him out. Although you can follow all the steps and still end up with a dud, following a screening process greatly reduces your risks.
Here’s the 10 – step process we follow:
- Pre-screen tenants first over the phone. Ask them the questions you need to make a decision about whether or not they would qualify to live in your rental property. This pre-screening has saved us loads of time. Many times we’ve placed ads for a suite indicating the space is for 2 adults maximum, no pets, and we get phone calls from people with families of 8 with 3 pets. You don’t want to waste your time showing your property to people who don’t qualify.
- Have potential tenants fill out an application to rent. Municipal landlords and tenants associations have excellent applications for nominal costs. These organizations have had groups of lawyer’s craft landlord/tenant legal documents over the years, they’re current, legal and inexpensive. In Calgary – the Calgary Residential Rental Association (CRRA) has this form, and all of the leasing, move in, move out forms.
- The application should include work and landlord references dating back 3-5 years. Present and past landlords and employers provide a good snapshot of the character of your potential tenant.
- Call all the references. How do you ask the right questions during reference phone calls, and ensure you’re not just talking to their friends? That’s a whole other article! For a couple resources check out Are Your Tenants References Bogus? Another great resource is Mike Butler’s excellent book – Landlording on Autopilot.
- Run a credit report. There are a number of credit verification services you as a landlord can register with that will provide you with a credible credit report. Bear in mind you must have their written permission to run a report. You should keep this signed permission slip on file 2 years. Credit reports provide a more complete picture of the potential tenant’s pay habits. Again, that’s also a whole other article. But, in short, typically, if their credit score is poor, chances are that paying rent on time is not a top priority, and you’re better to let them go and continue your search. If they balk at having a report done – there are credit companies they can contact directly and the company can then provide you directly with a report devoid of their SIN number. If they still balk – there is usually a good reason, and its better to move on. Most adults understand that credit reports are common practice when moving to a rental property.
- Run a social media searches on potential tenants and their references. Facebook and LinkedIn will introduce you to your potential tenant, and provide valuable information on their lifestyle, friends and their families. My mother always used to say “tell me who you’re with, and I’ll tell you who you are.”
- Look at the application form objectively. Is this person or are these people a good bet to have in your property? Are their references good? Do they have a good credit score? Can they afford the rent? A good rule of thumb is rent shouldn’t be any more than 1/3 of net wages. Are they polite and respectful during the application process?
- Cry stories are usually a red flag. Yes, people do go through tough times, however, the people who have a litany of stories about why it’s everybody in the world’s fault for their bad luck – stay away.
- Documentation. Ask for a copy of government issued identification and a recent (30 day) pay stub for each potential tenant.
- Lastly – what is your gut telling you? Sometimes everything looks good, but for some reason, your spider senses are tingling – listen to them. Your sub conscious picks up on things much faster than your conscious.
One of the keys to success in any endeavour is to create, and stick to, a system. That means when you find a method that works, you repeat it. When you let your emotions take control and step out of your tried and true process, that is when you will get burned. Although no system is impervious, we find our risks are sufficiently mitigated by following these steps. In fact, the only times we’ve been burned is when we have not followed our system.
So, how do you prevent yourself from getting scammed by potential tenants?
In three words – screen them thoroughly.
To access our 5-Step Tenant Screening that will save you time, money and headaches click here.