Finding the right tenant for your rental property is crucial for a smooth and stress-free landlord experience. One of the most important steps in this process is pre-screening tenants effectively. By carefully evaluating potential renters before they move in, you can significantly reduce the risk of future problems. To help you in this endeavor, we've compiled a list of five red flags to watch for when pre-screening tenants. These red flags can serve as early warning signs that may save you from future headaches.
1. Inconsistent or Unverifiable Income
One of the first things you should check when pre-screening tenants is their income. A reliable source of income is essential to ensure that the tenant can consistently pay rent. Be wary of applicants who provide inconsistent or unverifiable income information. Red flags may include frequent job changes, a significant gap in employment, or an income that doesn't meet the rental's requirements. Always ask for pay stubs, tax returns, or bank statements to verify their income claims.
2. Poor Rental History
A tenant's rental history can be a strong indicator of their future behaviour. When reviewing a prospective tenant's rental history, watch out for any of the following red flags:
- Frequent moves: Tenants who move frequently may not be reliable or may have issues with their previous landlords.
- Evictions: A history of evictions is a major red flag. It suggests a pattern of not fulfilling rental obligations.
- Late payments: Past instances of late rent payments can indicate a tenant's financial instability.
3. Incomplete or Inaccurate Application
The tenant application is your first insight into the potential tenant's responsibility and honesty. An incomplete or inaccurate application can be a red flag. Watch out for missing information, false details, or inconsistencies. If an applicant is not thorough with their application, it may indicate a lack of commitment or an attempt to hide something.
4. Negative References
Contacting an applicant's references is a crucial step in the pre-screening process. Speak with their previous landlords, employers, and personal references to gain insights into the tenant's character and reliability. Red flags to watch for include negative feedback from previous landlords or references who are reluctant to provide information. Positive references can provide peace of mind and help you make an informed decision.
5. Reluctance to Provide References or Consent for Background Checks
A trustworthy applicant should have no qualms about providing references from previous landlords or consenting to background checks. If they're hesitant or provide excuses, it's a cause for concern. Past behaviour is often a good indicator of future behaviour.
Pre-screening Tenants - Final Thoughts
Pre-screening tenants is a critical step in ensuring a successful and profitable landlord-tenant relationship. By keeping an eye out for these red flags—unverifiable income, poor rental history, incomplete or inaccurate applications, negative references—you can significantly reduce the chances of renting to problematic tenants. Remember that thorough tenant screening is a proactive measure that can save you time, money, and stress in the long run.
Pre-screening Tenants with Tenantcube
Tenantcube makes pre-screenng tenants as easy as 1, 2, 3. With our tenant screening application, you can send the same online rental applications used by property managers to your prospective tenants and collect all the information and documents required to make the right decision. Tenantcube also offers 1-click credit reporting within the application section when you need it. With a credit report to understand your tenant’s financial situation, the rental and employment history of the applicant, and a social media scan and public court record check, our reports empower you to understand your tenant's financial situation, the rental and employment history of the applicant, a social media scan, and a public court record check. Need even more assurances? Tenantcube also offers rent protections to ensure you're guaranteed rental income for up to 12 months or $60,000 per lease. Learn more about our rent guarantee protection.
FAQs on Pre-Screening Tenants in Canada
Q1: Can I discriminate against tenants based on their criminal history?
While you can consider an applicant's criminal history, you must be mindful of human rights legislation. The Canadian Human Rights Act does not specifically list "criminal history" as a prohibited ground for discrimination. However, some argue that discriminating against someone with a criminal record could indirectly discriminate based on other protected grounds, such as race, which would be illegal. Discrimination laws related to housing are also governed at the provincial level. The specifics of these laws can vary. For example, in Ontario, the Human Rights Code prohibits discrimination in housing on several grounds, including race, place of origin, and disability. Discriminating against someone because of a criminal record that has been pardoned is also prohibited.
Q2: What income-to-rent ratio should I look for in potential tenants?
In Canada, as in many other countries, the general rule of thumb that many landlords and property managers follow is the 30% guideline. This means that a tenant's monthly rent should not exceed 30% of their gross monthly income. In other words, the income-to-rent ratio should ideally be 3:1.
For example, if the monthly rent for an apartment is CAD 1,500, then the prospective tenant should ideally have a gross monthly income of at least CAD 4,500. However, In some high-demand urban areas like Toronto or Vancouver, where housing costs can be particularly high, many renters may find it challenging to meet the 30% guideline. In these regions, landlords might adjust their expectations, although the inherent risk also increases.
Q3: How do I perform a background check on potential tenants?
You can perform a background check through a reputable tenant screening service or a background check company. These services typically require the applicant's consent and will provide you with information on their criminal history, credit history, and rental history. Before you can run any background checks on a potential tenant in Canada, you need their written consent. This is crucial. Without their permission, running checks would be an invasion of privacy and could result in legal consequences.
Q4: Can I reject tenants based on a low credit score alone?
While a low credit score can be a red flag, it's not the only factor to consider. You should also look at other aspects of their application, such as income and rental history. In some cases, you may be able to work with tenants by requiring a larger security deposit or co-signer if their credit score is less than ideal.
Q5: How can I avoid discrimination when screening tenants?
To avoid discrimination, apply consistent screening criteria to all applicants and treat everyone equally. Familiarize yourself with federal and provincial laws in your area, and avoid asking questions related to protected characteristics, such as race, gender, religion, or family status, during the screening process. It's essential to follow the law and maintain fair and equal treatment of all applicants.