Finding reliable tenants: How do I screen applicants effectively?
As a landlord, protecting your investment should always be top of mind. A good way to achieve that is to find a tenant that will pay rent on time and take good care of your rental property. That, however, can be easier said than done. Some landlords run into problem tenants who know how to manipulate the landlord and tenant relations rules in each province to cheat landlords out of several months rent. Some tenants have also been known to provide false letters of employment and have even created fraudulent credit reports. As a landlord, you have to choose carefully. Don’t ever let your guard down. It is better to have an empty unit for a month than end up with a tenant that doesn’t pay, damages the property, or both. After all, it isn’t much of an income property if it isn’t generating any income (or causing a loss).
To avoid these bad tenants, you should be taking the time to screen each potential tenant. That means creating a rental application that asks them important questions like how much they make and where they work. You should also ask for some references that you can call to verify the information they have given you, a letter of employment and permission to run a credit check. Take some time to chat with them and learn what they are like as people, and ask some specific questions about their job and their lifestyle preferences to ensure it is a good fit all around. After all, there are reasons that an apartment or neighbourhood might not be right for them, and if you can let someone with severe allergies know that the neighbors have dogs, you can potentially save both parties the trouble of a living arrangement that isn’t going to work out long term, and concentrate on finding someone who will be the right fit for your income property.
Be weary of tenants who seem too good to be true. It’s possible they have copied someone else’s credit report and given it to you. You should look into using your local landlord association as a resource. Often times if you become a member you can get discounts on things like running credit checks on potential tenants. That credit check, provided by a third party company like TVS or Equifax will provide a financial history of the person looking to rent your property. You can find out if they pay their bills onetime and also their dealings with former landlords.
Another way to find a tenant best suited for your rental property is to contact the potential tenant’s former landlords and learn about their character and rent-payment patterns. You may also want to ask them to provide a criminal record check.
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What not to do
Even though you may want to know every detail about the potential tenant to help you make an informed decision, you should make sure you aren’t asking questions that may cross the line. Human rights legislation in each province states you cannot select or refuse a tenant based on their race, place of origin, ethnic origin, religion, sex, age, sexual orientation, marital status, family status (e.g. children) or disability. Make sure you familiarize yourself with your respective province’s human rights code to find out more.
Most prospective tenants are honest and are looking for an apartment and landlord that will be a good fit and a good experience for all involved. While it is important to protect yourself, be mindful of coming across accusatory or paranoid in requests for background checks (particularly criminal record checks), as the vast majority are not out to scam rent, and many would be offended by the insinuation.