Every landlord wants to find a great tenant who will respect their property, keep it clean and free from damage, and pay rent on time. A balanced and fair relationship between landlord and tenant can reduce stress, and make for a happier and healthier experience for both. However, the process of finding those great tenants isn’t quite as clear as many might think.
To find a truly good tenant, landlords need to use a combination of checks and balances, while also trusting their gut. Over-reliance on any one of these can lead to disaster, so it’s best to approach the tenant selection process by relying on a mixture of pragmatism and intuition. Here’s a few tips on how to achieve that.
CHECK THEIR RECORDS
As the old saying goes, “the proof is in the pudding.” When it comes to tenants, that comes in the form of background checks, credit checks, and referrals from previous landlords, all of which paint a picture as to who that tenant is. The results will speak for themselves, and if a tenant gets glowing reviews from the credit spectrum, right up to the landlord referral, chances are they’re a good fit.
That’s not always etched in stone, however. People change over time, either by circumstance or life experience, and not all tenants who start with a AAA record finish with the same result. It’s fine to have records and credit checks dating back a number of years, but pay close attention to the most recent entries. For instance, if a tenant had stellar credit for years, but shows signs of slippage in the modern era, it could be a sign that something has changed. Credit scores can fluctuate, but they should still remain in healthy territory. Sharp dips in their score can indicate poor purchasing decisions, a debt saddle, or employment problems.
Referrals require a bit of intuition. If you aren’t sure whether a referral is legit, try reaching out to the previous landlord over a phone call, and ask them detailed questions they may not have prepared for. Their answers will dictate whether they’re being honest about the tenant, or not. For instance, if a tenant has rented from a friend or family member in the past, their referral will most certainly be biased in their favor, which is hardly enough information to go on.
CRIMINAL BACKGROUND CHECKS
The last thing any landlord wants is a criminal living on their property. Therefore, it’s important to make sure that tenants have a clean record. That being said, sometimes people make mistakes in life, and it’s unfair to penalize a tenant for something they did a decade in the past. Many who make such mistakes attempt to course correct and get their lives back on track, and landlords can help in that regard.
However, if a tenant has a recent criminal conviction for, say, drug trafficking, it could be an issue. Your property could be used for anything from a drug den, to a dealer hangout. If the law is forced to step in, you could become pulled into some uncomfortable legal entanglements best left avoided. Bear in mind that you do have the right as a landlord to request a criminal background check, but the process requires permission, and can be lengthy.
Choosing a tenant with a criminal background requires a bit of intuition on the part of the landlord, and it’s best to trust your feelings. If you’re uncomfortable with such a tenant living on your property, you have every right to choose a tenant with a clean record.
INCOME AND DEPOSIT
Naturally, a tenant’s ability to pay rent depends on their level of income. This will factor into a credit check as well. For instance, a tenant with an outstanding debt-to-income ratio will be penalized with a lower credit score. However, a good credit score is not necessarily indicative of their earnings in the here and now. One can be unemployed and still retain a great credit score, which makes them unsuitable for tenancy.
Second, it’s never a good idea to take the tenant’s word for it when they provide you with a salary number. You can ask for a T4, bank receipt, record of employment, or a pay stub to verify that the tenant is being honest and upfront. Once you have a confirmed number to work off of, you can quickly calculate whether the tenant will be able to afford the rent you’re asking. Generally, tenants should set aside 30% percent of their monthly income to pay for rent, so bear this in mind.
Failure to check a tenant’s salary can lead to massive headaches, especially if they simply decide not to pay rent. Once that happens, the process of eviction can be lengthy, costly and time-consuming. Better to avoid the headaches before the tenant starts moving in.
PERSONALITY
They say “never judge a book by its cover,” but it’s also said that “you never get a second chance to make a great first impression.” Keep both of these philosophies in mind when judging a potential tenant. They may dress, look or act differently than you do, but that doesn’t mean they won’t be fantastic tenants who will look after your property, pay on time, and give you no hassle.
Alternatively, you can, and should judge other tenants based on specific criteria. Do they reek of cigarette smoke? If so, will they abide by your no-smoking policies? Are they rude and inconsiderate? If so, that may translate to unruly behavior that will annoy the neighbors, or create friction between yourself and the tenant. Human beings judge each other subconsciously, and landlords need to exercise both subjectivity and objectivity when deciding whether to green-light someone for tenancy.
CONCLUSION
The process of selecting tenants is not easy, but you can avoid a lot of issues and pitfalls, simply by adhering to the criteria mentioned above. That being said, even the most clever landlords can still miss a few cues, and end up choosing a bad tenant in the process.
Here at RentCore, we understand the process of selecting tenants better than anyone, and we have years of experience that gives us a unique edge. If you’re having trouble deciding on the right tenant, or you’re ready to begin the rental process and don’t know how to start, we’re always available to assist. Hiring a property management company like RentCore will give you peace of mind from the beginning of a rental contract, straight through to the end. Contact us today!