Screening tenants is one of the most important tasks landlords are responsible for. Applications come in by the dozens for every apartment and it’s their job to sort through them, run the appropriate checks, hold interviews, and determine who will live in your properties.
As a result of this constant work, most landlords have a clear sense of what red flags they need to look out for when reviewing applications, but it’s important to realize that not all problems are equal and that individuals with “red flags” on their records may not be bad tenants.
A Rising Tide Of Evictions
The tenant screening process is always stressful, but due to the consequences of the COVID-19 pandemic, the situation is more fraught than usual. Both tenants and landlords face hardships, and Ontario is likely to see a spate of evictions in the coming months, since Landlord and Tenant Board has started to conduct online hearings for evictions.
How You Screen Matters
In addition to the issue of evictions – recent or not – landlords need to be smart about how they screen tenants because screening reports aren’t always accurate. In fact, since more landlords have shifted to using outside screening agencies to handle these tasks, the likelihood you’ll receive a misleading report is greater than ever.
Not so long ago, landlords did most of their tenant screening work on their own. They gathered applications, plugged social security numbers and other information into special databases, and gathered the results. Because this typically involved a certain amount of pre-screening, though, it was usually obvious if a report didn’t seem to correspond with an applicant.
Today, so much of the screening process is automated that landlords may know nothing about an applicant before they see a report, and with such a high error rate, this can lead to serious bias against tenants who are actually qualified. The takeaway: before you rule out a tenant based on a negative report, due your own investigation.
Be Discerning About Debt
Debt is another factor that can raise concerns about an applicant’s fitness, and with good reason; someone with a lot of debt is more likely to fall behind on rental payments than someone without debt. That being said, not all debt is made equal and there are some people with a lot of debt who still consistently pay their rent. So, how do you tell the difference?
First, know how to identify good debt. In particular, student loan debt – even when there’s a lot of it – is typically considered good debt and shouldn’t raise alarms. Payments are typically fairly low and can be adjusted based on the individual’s income.
Second, look at the applicant’s debt-to-income ratio. Someone may seem to have a lot of debt until you look at their income, and this can be an especially minor issue if they’ve chosen a lower-cost apartment than they might otherwise. It’s all about relative values and affordability. If they’ve had this level of debt for years and have always made their rent, though, it’s probably not worth worrying about.
What Not To Ignore
Perhaps the strangest thing about determining who to rent to and whose applications to decline is that the real warning signs tend to be more subtle. For example, talking to an applicant’s current employer – at least beyond income verification – isn’t necessarily part of the standard background check, but someone who gets a negative review from their employer is almost certain to be a bad tenant.
Similarly, someone who is remembered by past landlords for damaging property should be a hard ‘no.’ If they didn’t respect previous properties, then they probably will treat yours with the same disregard.
Finally, beware of applicants who lie on their applications or who don’t want you to run a credit check. It’s understandable that people can get nervous when looking for housing, especially in a tight market, but there’s a difference between anxiety and acting squirrely or being dishonest because they have something to hide.
Get Screening Support
As all of these considerations make clear, screening potential tenant applications is a big job, but it’s also an unavoidable part of owning rental properties – so what’s the solution? Given how error-prone automated systems are, you need a gate against wrongful reporting, and ACCL Property Management is here to help.
ACCL Property Management team has been helping landlords manage their rentals, from applications and screening to maintenance, eviction, and much more.
If you are looking to hire a Property Management company to manage your property then consider hiring ACCL Property Management. For free consultation, please email us at firstname.lastname@example.org or call us at 905-432-8961