REPOST: Your five-step guide to screening tenants

Finding the perfect tenant who wouldn't ruin the property, would always pay on time, or wouldn't give landlords any difficulty is a rigorous process. This Toronto Sun article provides a five-step guide to screening possible tenants.

Image Source: torontosun.com

The quality of your property management experience, including your net return, relies heavily upon the kind of tenants you have as residents. This is why it’s crucial to do a thorough screening when selecting tenants for your best chance at a right fit for your space. Here’s my 5-step guide to screening tenants.

1. Evaluating first contact: Rental candidates will contact you by phone or email for more information and to set up viewings.  This initial contact is a great opportunity to pre-screen would-be tenants. If you’re chatting by phone take notes throughout the process. Ask things like:

How long are they looking to rent? If you’re interested in a short-term lease, but they’re looking for something longer-term, identifying this mismatch now saves you both a wasted showing.

• When do they need to move in?
• How many occupants will be moving in and what’s their relationship to each other?
• Do they have pets?

2. The viewing: When you’re showing the unit to prospective tenants, treat this as an in-person interview. Before the showing review your notes from your initial contact. You’ll be covering many of the same questions in a different context and want to ensure the answers you get don’t diverge.  Some red flags to be aware of:

• Was the candidate late for the scheduled showing?  This tardiness might extend throughout your relationship if they become your tenant.
• What was their general attitude like? Did they find reason to complain about the property or seem easily put-off or putout? Were these annoyances used to negotiate a price reduction?

3. The rental application: Common information to request includes personal information (full legal name, a piece of identification, current address, phone and email address, and date of birth), residential history (contact information for landlords and previous home addresses), employment history (status of employment, supervisor contact details, income), financial obligations (outstanding debt or ongoing obligations such as alimony), personal references, and emergency contact information. Be sure to receive a potential tenant’s express consent to commence the due diligence process including for credit and criminal reference checks.

4. Due Diligence: As best you can, authenticate the reference information provided and assess the feedback you’re hearing from references.  Do a little investigative work by looking up phone numbers to ensure they correspond to the names and organizations you’ve been given. 

When calling a landlord start the conversation with “I’m calling about your rental unit”. If a friend has offered to stand in as a landlord reference, this question tends to be enough to catch them off guard. Typical questions for landlords include whether rent was paid on time every month and about damage to the unit above expected wear and tear.

For work references, ask employers about the length of the candidate’s employment and if this job is expected to continue. Run a credit check using a company that provides a credit score, even if the candidate has provided their own. This report helps you understand the candidate’s big financial picture including obligations and payment habits, allowing you to gauge whether rent will be paid on time.

5. Go with your gut: The property management business is a nuanced field and this is where experience pays off. In the absence of experience, go with your instincts on a candidate. You’re about to embark on a long-term relationship with a valuable asset at stake. Be confident in your decision, as a vacant unit is preferable to a troublesome tenant.

And once you’ve found your dream tenant, do nurture the relationship!

Follow this Applegate Property Management Facebook page for more tips on handling properties and tenants.

REPOST: How to spot bad tenants

Image Source: blogger.com

The private rented sector is becoming more and more competitive, meaning landlords could jump at any opportunity to fill their property. However, while most tenants are unlikely to cause any hassle, some will wreak havoc, meaning you need to be on the lookout for any bad apples.

According to a survey of 2,000 landlords - undertaken by AXA Insurance last year - 26 per cent of tenants fail to pay their rent on time, 15 per cent of participants had received complaints from neighbours because of excessive noise and ten per cent had experienced tenants disappearing in order to avoid paying rent arrears.

Ensuring that the right tenants move into your property can save you hassle down the line, such as the lengthy and costly eviction process. Some stick out like sore thumbs, so are easy to avoid, but others rely on deception and secrecy.

Here are some tips to help you avoid bad tenants.

Start with the advert

The first thing you should do is ensure the advert for your vacant property clearly states that prospective tenants will need to undergo background checks before they are handed the keys. Note that references will need to be verified and occupants will be expected to comply with specific rules, eg no smoking or no pets. This should help deter any untoward people from enquiring about your property.

Referencing checks

The research from AXA revealed that a staggering 38 per cent of landlords do not carry out checks on prospective clients, leaving themselves vulnerable to bad tenants. Referencing checks can provide a landlord with an idea of what to expect, such as if the potential occupier will pay their rent on time or if they could cause damage to the property. These checks will also reveal if the person has any criminal convictions or county court judgements against them for debt, which should give a landlord a clearer picture of the potential tenant.

Be wary of tenants who try and get around referencing checks, as this could be an attempt to keep their history hidden. It is likely that such a person would target landlords that have just entered the buy-to-let property market or private landlords that choose to work without the help of lettings agencies.

Wayne Mearns, from Belvoir Southend-on-Sea, told the Telegraph: "Tenants with untoward motives for securing a rental property will often target private landlords who find tenants themselves."

Guarantor

This may not be required in all cases, so use your initiative to decide if a guarantor will be needed or not. Tenants that work part-time or receive benefits or couples who apply for a joint tenancy may not be able to pay the rent if their situation changes, so in these instances it may be a good idea to give yourself added protection if issues regarding rent arise.

Deposit

Landlords should take a deposit, which generally equates to six weeks' rent. This provides the owner of the property with a degree of financial protection should any damage to the property occur or if the tenant absconds without paying their last month's rent. Deposits must legally be held in one of the government's three protection schemes until the tenant vacates the property.

Be on the lookout for any potential occupiers that ask you to forego the deposit, as it could be an indicator of a rotten apple.

Inventory

Taking an inventory will reduce the chances of a dispute happening when a tenant leaves a property. Write down what the house contains and make a note of any existing damage, taking photos as well. This means you have the evidence necessary to prove any missing items or new damage is the fault of the tenant.