June 06, 2012
Due Diligence During the Tenant Screening Process
As property managers, it’s one of the most important decisions you’ll have to make: Do we rent to this applicant?
Let’s face it, renting to the wrong people costs money, not only in lost rental income if they fail to pay, but also in labour-hours chasing after rent, repairs to property damage, and legal costs.
The best approach is to make an informed decision and do your due diligence when screening your prospective new tenants. Finding the right tenant can be challenging. It’s a balancing act between the narrow timeframe to get the unit rented vs. finding the best possible tenant who will pay their rent on time and not disturb other residents.
The basis of your tenant screening process rests with your application. In Canada, there are dos and don’ts of what you can safely ask on a rental form.
– Income, pay stub, employer’s name
– Who will be living in the unit
– If there are pets
– If they smoke
– References with contact information
– Permission for a credit check
– Their Social Insurance Number, as part of the process
– For a deposit
-Questions that are against your provincial Human Rights Code
– If more children are planned
– Sexual preference, marital status, religion, ethnicity, colour, race, origins, citizenship, age, gender, or disability
– If they will have visitors
Having a deposit in hand before you start due diligence will help to ensure that your applicant is a serious candidate and you can assure them that they will be automatically accepted once their background check is approved. With a deposit, the prospect is less likely to look elsewhere until they have been accepted or refused.
Once you’ve received a deposit cheque and obtained the completed application form, definitely take the time to verify the information that is provided.
If the applicant has granted permission, order a credit check from a credit bureau and examine their banking history. Though this may sound simple, reading and understanding the true meaning behind a credit bureau report can be confusing. You may need to seek additional guidance or education to understand what to look for and what elements are credit red flags.
With employment and income information, contact the HR department of the employer and ensure that the details provided on the application are accurate. You may wish to ask for a pay stub, to verify employer and earnings.
Speak to the applicant’s current landlord for information on their payment history, reliability and character. Depending on the length of time the person has been renting at their current location, you may choose to go back 2 or 3 landlords for a more complete profile.
See if your province has a registry or advocacy group that landlords can access for information about a tenant’s rental history, including evictions. If available, check court records for criminal convictions and any other publicly available information.
SAVE TIME, LOWER RISK
The due diligence process is time consuming and, if the applicant proves not to be right for your property, you have to start all over again for the next applicant. And, the longer applicants have to wait for due diligence to be completed, the more likely they will find somewhere else to rent.
One time saver is ApproveVista. This credit check and approval system calculates the parameters of the applicant’s credit status and tells you their ability to pay. And it does all of that in an instant!
No more phone calls or faxing. No more lost prospects due to delays in the screening process.
Combine ApproveVista with WebVista and ApplyVista for a complete end-to-end automated process.Watch the video to find out more about ApplyVista and how to save time, attract tenants and reduce your vacancies.