As a property owner, properly screening tenants is a primary defense against facing a headache tenant or tenancy. You’re the gatekeeper, and you get to decide whether a prospective renter is qualified for taking up residence at your property.
You ideally want to find a tenant who intends to stay for a number of years, pays rent promptly and treats your home with care. What you may not want is a tenant who has a habit of house-hopping, takes grievance with paying rent, and treats your property like a college frat house.
Let’s go over the process, criteria, and timeframe for picking a suitable tenant.
Important Elements for Your Tenant Screening
As a landlord, you’ll want to screen for the following characteristics of a qualified renter:
- They’re financially responsible and capable of covering monthly rental payments
- They have positive relationships with neighbors, landlords, and employers.
- Former landlords are happy with the way the renter treated their home and tenancy.
Thoroughly screening a candidate is important, but you should be aiming to screen an application within 24 hours.
Why You Should Screen Rental Applications Within 24 Hours
In a highly competitive rental market such as Metro Vancouver, renters will face competition in being accepted for tenancy.
Renters will generally deploy tactics to see as many homes as possible, submit multiple applications, and get accepted for tenancy.
Because of the competitive market, a rental candidate will also be inclined to sign and accept a tenancy offer within 24 hours of receiving it.
As a landlord, your goal will be to screen prospective renters as quickly as possible so that you can extend an offer for tenancy. If you take too long to screen someone, you may lose out on a strong candidate who accepts tenancy elsewhere.
Faced with time constraints, you should have a strategy for screening tenants for your home.
Having a structured approach to tenant screening is important, and the following are four critical steps to include in your process.
Screening Step #1: Employment Records and Employer Reference Checks
You want to be sure that your future tenant has stable employment and can securely cover rental payments and day-to-day living expenses. You can verify employment through written records such as paystubs and official employment records. You’ll also want to speak with the applicant’s direct supervisor as additional verification of said employment.
A general rule of thumb is that a tenant’s monthly paycheck should cover monthly rent three times over.
But you should exercise care in looking over a candidate’s financial situation as a whole. Specifically, how a candidate handles their finances will be important to understand. The best way to check on the overall financial picture is from a credit check, a separate screening step as outlined below.
Screening Step #2: Historic Residencies and Landlord Reference Checks
Past behavior generally is a reliable indicator of how a prospective tenant may relate to their neighbors or you as the landlord. Ensure that you speak to at least one reliable landlord reference who can give feedback about how a candidate was as a tenant.
A quick note about references:
It’s a genuine concern that you’re speaking with reliable references. Ideally, you’ll want to talk with multiple contacts. Cross-referencing information, avoiding leading questions, and managing the conversation will be key in ensuring you get truthful answers about a prospective tenant.
Screening Step #3: Credit Report Check
As mentioned above, looking at a candidate’s overall financial situation is important in qualifying their financial suitability for renting your property.
A credit report essentially shows all current consumer credit or other debt carried by a candidate.
The report will have a credit score which is based on how well a candidate handles payments for their consumer debt. The more someone defaults on interest or principal payments, the lower their overall credit score.
If someone has a poor credit score, they may be living beyond personal means, and paying the rent may be a challenge.
Credit reporting agencies such as Equifax or Trans Union will provide a full credit report for a nominal fee. Other sources such as Credit Karma offer free reports, but the tradeoff will be their comprehensiveness.
You can request a credit report from an applicant or use one of the credit reporting agencies to obtain an updated report. If you run a credit check on someone, please note that you’ll need to secure personal information and express consent from the individual.
Screening Step #4: Public Court Records
By court records, we don’t mean criminal records. Checking on an individual’s criminal background is prohibited and against an individual’s rights from discrimination.
However, this doesn’t preclude you from checking on an applicant’s background relating to other matters such as civil litigation or lawsuits.
If a candidate faces a lawsuit against them, they may be liable to pay a claimant undisclosed sums of money. In this case, their financial stability will again come into question.
One Tactic to Help with Tenant Screening
Considering the steps to screen a tenancy candidate, you’ll want to ensure your screening process is as organized as possible.
A key way to ensure that you can collect the information you need is by setting a standard application form with information fields that all rental candidates need to fill out.
You can devise your own form, but we’ll share an [application template] that you can adopt.
How much time should you budget for screening a rental candidate?
Every step that we outlined above serves a purpose, and you’ll want to make sure to cover all steps to protect yourself as a landlord.
In an ideal world, you’ll have all information readily available and be able to speak with anyone you need to in quick succession.
However, in most cases, you’ll need to do some follow-up to make sure you’re able to do your due diligence.
Generally speaking, you’ll be looking at a timeframe of about 8 hours or longer to make sure you’re able to check all information and speak with all relevant parties.
Please do not overlook a thorough tenant screening process. Screening a tenant will take time; however, the cost of evicting a bad tenant will be far higher.
As a professional agency, we carry out standard screening procedures to ensure that our client’s homes are protected from bad tenants.
The best guarantee to managing a stress-free tenancy is finding a good tenant.
Using a professional agency to help you find a qualified rental candidate may be your best bet against taking in a bad tenant.
Most agencies will charge half of one month’s rent for tenant placement, which can seem a significant cost.
But you’ll need to decide if it’s worth your time and effort to host viewings for prospective renters, screen applications, and follow up on tenancy offers with rental candidates. Having a good tenant in place will also mean less time and costs with managing the tenancy down the road.
We would be more than happy to take care of the legwork and help you find a qualified tenant for your home.