Renting out a Secondary Suite - The Basics to screening tenants.
Renting out a Secondary Suite
THE BASIC TO SCREENING TENANTS
Cold hard cash combined with a dash of common courtesy produces viable landlord- tenant relationships. Even so, a strategic screening is the homeowner’s best possible assurance that the incoming tenant will consistently pay the rent the day it’s due.
The Credit check, the most important part of the screening process, follows the pre-screening which takes place when the prospect calls to ask you about the apartment. That’s when you ask basic questions such as how many people will live in the unit, when do you want to move in, why are you leaving your current residence and have you given your landlord the proper two months notice.
“The credit check is crucial because it’s one of the few things that you can do to screen tenants without violating the human rights code and privacy regulations.”
The credit check is at the very core of tenant screening because unlike rental and employment references, the applicant can’t influence the facts. I you do a credit check; you can make an educated decision about the applicants without meeting them face-to-face. There is an unmistakable correlation between responsible credit and responsible tenants. Homeowners who accept tenants with poor credit histories may be taking a risk.”
Of course, many homeowners who rent suites in their homes rely primarily on their intuition when selecting tenants. Not surprisingly, Davises against it and suggest that their good tenants were the result of good luck rather than an ability to read people.
“They might be charming and highly presentable, but that doesn’t mean they manage their money well or that they pay their bills on time,” says Drouillard. “Eventually, your luck will run out and that bad tenant will cost you several months’ rents and untold stress”
Join a landlord association such as the Landlord Self Help Centre (landlordselfhelp.com) to more affordably access a variety of credit companies. Pay attention to what the credit check tell you about a person’s payment history and your decision-making process will be much more black and white. The cost per credit check may be as low as $10 and give the landlord the option of inputting the data online, then accessing the full report within seconds. Be sure to educate yourself how to interpret the facts and figures and give yourself time to familiarize yourself with each firm’s report format.
Be aware that while you can request the applicants’ social insurance numbers, the tenants may choose not to provide them. Particularly when applicants have very common names, (like “John Smith” for example), the social insurance numbers ensure the credit reports you pull in fact belongs to the John Smith who wants to rent your apartment. If your John Smith and another John Smith share identical birth dates there could be some confusion.
Some applicants may suggest that it’s not worth running a credit check, because they don’t have credit cards or loans. But you should still do a credit check to assess their payment history (e.g hygro, cable, internet, phone). If you’re dealing with young adults and students living away from home for the first time, you shold credit check their co-signers or guarantors.
When you schedule a face-to-face meeting to sign the lease, it’s time to do further due diligence. Ask for a pay stub or other proof of income to confirm that their earnings match those claimed in the application. You may request this only if you have done a credit check.
You will also want to see government issued photo ID from each tenant. As importantly, the applicants must also bring the last month’s rent in the form of a certified cheque, money order or cash. Remind the incoming tenants that the first month’s rent is due on the first day of the month in one of these formats. If you have a computer and internet access on site, the applicants could e-mail transfer the last month’s rent at that time.
A regular cheque is not acceptable because it will take at least five business days to clear and as importantly, the applicant/tenant can put a stop on it if they change their minds.
“The applicant isn’t fully committed until you have the cash equivalent of the last month’s rent,” says “You
need to keep showing that unit until you have a cash commitment and signed rental agreement.”
While the screening process involves significant time and effort, it helps you get great tenants- the kind that pay the rent on time and maintain your suite.
“You are relying on your tenants to pay you hundreds of dollars monthly and many thousands o f dollars every year,” says Dr The credit check is your best assurance they will stick to that part of your agreement.”