Last week we talked about property management, primarily focusing on having a good maintenance plan. We talked about regularly scheduled maintenance, and teaching the tenants about their responsibilities. This week’s post is all about the tenants.
People often ask, “what’s the one thing that is most important about managing tenants?” We believe thorough tenant screening is critical. No one gets into our units without a phone screening, an in-person interview, and an application form—and that’s just the beginning. The real work for us truly begins when we think we’re looking at a potential tenant, and they fill out the application.
At this point, we ask to see their driver’s license. No license or no photo ID? No problem, but you won’t be living in one of our units. We ask for at least 2 previous landlord references, then we confirm those addresses and call those landlords. Here’s a not-so-fun fact: did you know that there is a website that allows people to create fake paystubs? Keeping this in mind, we ask for recent paystubs and/or to see their T4 to confirm their employer; but then we call the main switchboard, or whatever phone number is listed on the business’s website. Now we confirm that the work reference actually works there, and that the prospective tenant works there. Only then, do we actually attempt to speak with the work reference that the prospect provided. Occasionally we request an employment contract, or job letter from the employer—depending on the type of work the tenant does.
Okay, so now we know the tenant is who they claim to be, and they are gainfully employed. We ask all of our tenants for permission to do a credit check. This can confirm previous addresses, as well as providing us a rough idea of their money management habits. We are almost ready!
This is our final step in the screening process: documenting with photos and legal agreements. Now is the time to plan for a potential “worst-case scenario” where we might have to evict someone. We know we need a strong lease, and we know that extra proof is even better—so clients must initial beside each key point in the lease. We know we need to document the Move-In inspection—both with paper and with video. If a prospect resists this thorough documentation, even after we explain that it is to protect both parties, then again we part ways with the prospect.
We are potentially handing over the keys to an asset worth hundreds of thousands of dollars, so yes, that tenant must prove they deserve to live there. Once they are in, we will provide good service and maintain the property well—for as long as the tenant is respectful of the property/unit. But we would always rather have the unit vacant for a little longer, than hand over our investment property to someone who doesn’t meet our standards. Do we have a crystal ball? Nope! Does life sometimes cause hardships for people that we can’t predict? Of course! But like all the good landlords we know as friends, we make every attempt to screen hard at the beginning—protecting our financial dreams and goals.
