How to Screen Tenants for Rental Property in Canada

Whenever I’m teaching a group of real estate investors, one of the big questions that comes up is “how to screen tenants.”

For the most part – I leave this to my property management team.

But I don’t turn a blind eye either…

I still like to have a handle on my real estate business.

So I here are a few things I’ve picked up along the way…

How to Screen Tenants for Rental Property (Partial) Checklist

Before we get any further, this is not an extensive list.

It’s just MY personal (partial) list…

I’m just hoping it helps you create your own checklist 🙂

On that point, a suggested read:

The Property Management Toolbox written by my friend Quentin D’Souza. You can buy it here: http://www.theontariolandlordtoolbox.com/book-orders/

(no, I don’t get an affiliate fee – it’s just an awesome “tool”)

No more stalling, here’s my Tenant Screening Quick Tips:

• Know how long they are looking to rent. This may sound obvious, but if you don’t ask, you won’t know.

Why do you want to know?

You may be looking for a long term tenant and they are only looking for a few months. When they want to leave, or they won’t sign a year lease, it’s wasted everyone’s time.

Reviewing the Rental Application

• I personally avoid people who are moving in together for the first time.

Because there’s no history.

They may not adjust to living with each other – if one moves out, what happens to their half of the rent, will the other one “pick up the slack?”

So for me it’s just best to avoid them.

• Look at the previous addresses and how long they’ve stayed at each one.

Long term is your best bet.

If you see several moves one after another, there’s a good chance they’re being evicted and/or previous landlords have problems with them.

Do Some Tenant Surfing

GET PICTURE ID ( I ask for at least two pieces – back and front scanned and delivered )

Then I go to Mrs. Google and Mr. Facebook and check things out.

Are they extreme partiers?

Is there evidence of anything you’re uncomfortable with?

It’s your call.

Remember – DON’T discriminate or judge people based on superficial bias…but on the other hand, make sure you are protecting your investment by loaning it to people who will care as much as you do.

The Cash Alert

• When a tenant wants to pay cash for everything – it raises a red flag for me.

Sometimes they don’t even have a bank account – which could mean many things – including illegal activity… so they don’t want a paper trail.

So this is another reason where “chasing cash” could get us into trouble just because we want to rent the property.

Not good.

Avoid it.

PLUS – make sure you give RECEIPTS to everyone – if they say “it’s ok I don’t need them” – why not?

Quick Reviews on the Credit Report

• When you’re looking at their credit report (you DO pull a credit report right??) – look for payment history.
• If you see a few hits to their credit all around the same time, this suggests they’ve hit some “life snag”.

Could be loss of a job, divorce or something like that.

And it’s probably OK.

Even though their credit score sucks.

The point is, even though their credit score relates to someone who DOESN’T pay bills, they’re more than likely just going through a rough time and the “score” shouldn’t be your determining factor.

• While your looking at their credit report, be sure the employment listed matches the current or previous employment they’ve indicated on their rental app.

Sounds simple again – but you’d be surprised at how much we overlook.

• While I’m on the job subject, if they’ve recently CHANGED jobs, it may not be a great fit because they may not have steady income yet and may find it challenging to pay rent on time.
• If you see any collections between 3000 – 5000, it’s possible a previous landlord filed an eviction and/or a collection agency is after them.

One more thing I look for is the PERFECT tenant…

But I don’t mean that in a “good way”.

When someone’s life is perfect – it raises a red flag for me.

Because I know it’s a lie.

NOBODY has a perfect life.

I’d rather someone be totally cool and honest with me.

We catch a lot of “little lies” at the showings…

For example:

Us: “You know we’d like to keep this a smoke-free home right?”

Them: “for sure, I don’t smoke anyway”

That’s when my PM conveniently “forgot” a part of the app or something in their car to have a chance to walk by their car and have a peek inside to see all the cigarettes in the ash-tray.

🙂

Anyhoo, you get the idea

Some last things to be aware of: (again, these are just suggestions – not rules)

• If someone want’s to rent my unit 3 -seconds after they step inside because they “love it” it raises a red flag.
• If I’m nearing the last week or DAYS of the month and someone is willing to take it starting on the first of the month – it raises a red flag.

Why?

Because it means they’re desperate.

They’re looking to get into something quick – for whatever reason.

Maybe they were just tossed out.

Maybe they LEFT without warning.

It’s just something I avoid.

• And lastly – if someone wants to rent your place without even seeing it – over the phone – because “they trust you” – hmmm, what do you think?

Should you put that tenant in place or bite the “expense” of vacancy for another month to keep looking?

You know my thoughts – it’s a cost of doing business – a cost that will be FAR LESS than having a tenant come in that has to be expensively evicted.

So those are some of my personal thoughts and tenant screening checklists.

Do you have more ideas? What do your systems look like?

Let’s get a discussion going in the comments below!