Canada has a historically low rental vacancy rate of only 1.5%. Demand is so much higher than supply right now.That may make it more tempting than ever for landlords to avoid screening. Why bother vetting applicants when they're practically knocking down your door?The truth is it's more important than ever. You need to sort through the flood of applicants. It's the best way to find one you trust enough to live in a place you've invested time and money into.Read on to learn how to run a background check on a potential tenant.
Pre-Screen
If an ounce of prevention is worth a pound of cure, then an hour of pre-screening is worth at least two hours of screening. It's a time-saving process that lets you sort through all your applicants in advance. You'll only have to go through the full tenant screening process for the best ones.How do you pre-screen? Use a combination of time-saving methods.Highlight your requirements for aspects such as income in your listing. Tenants who can't meet them usually won't apply, leaving you with only the ones who can.Don't wait until the final hour to talk to them in person. Try a simple phone interview. Meet with them during a showing.It gives you a sense of how the tenant behaves and communicates with you. That's invaluable for developing a first impression of them.Gather Consent and Information
Obtain written consent before you begin a background check. It's a legal requirement, and failing to meet it could render the entire process pointless.That's why one of the best rental application tips is to include a section that lets you obtain consent. It should state your intention to perform a background check and explain what it will cover. Have the tenant sign it, and you've got the written consent you need.The application is also one of the first and most important tenant verification steps. Use it to gather basic identification information such as their:- Name
- Date of birth
- Social security number
- Previous address
- Landlord and/or employer references
Complete a Comprehensive Tenant Screening Process
More isn't always better in terms of renters. You need quality over quantity, and screening is the way to get it.A comprehensive tenant screening process means looking into as much of their background as you can. The more you know about them, the more you can be sure they're a quality tenant.Credit Checks
A credit check gives you insight into how financially responsible the tenant is. It gives you a snapshot of their:- Credit score
- Payment history
- Outstanding debts
Employment and Income History
Credit isn't enough to ensure a tenant can pay rent on time. Check that they have a steady source of income. Ask for verification from their employer. Look for recent proof of income, such as pay stubs or tax returns.Criminal Background Checks
A criminal background check looks into any convictions or pending charges.A criminal record doesn't have to automatically disqualify an applicant. They should all be judged on a case-by-case basis. The information from the criminal background check is still important. It ensures the safety and security of your rental.Rental History
History may repeat itself if you don't do a rental history check. What if you don't find out that a renter caused trouble, failed to pay rent, or was evicted from their last apartment? They may behave the same way in yours. Try to get references from their previous landlords. Talk to them to see what they thought about the tenant.Evaluate the Results
Explaining how to run a background check on a potential tenant is easier than explaining how to evaluate the results. Background checks follow a step-by-step process. Evaluation is a more personal affair.Compare the results against your pre-determined criteria. Eliminate the ones who don't meet your standards.Look for any red flags the screening process brought up. Any tenant with problems such as past evictions or late payments can be cut out.Beyond that, selecting a tenant is based on gut feelings. Go with who you feel will pay rent on time and treat your property and everyone in it respectfully.Maintain Legal Compliance
Legal compliance is one of the most important landlord responsibilities. It includes legally running background checks.Getting written consent is an essential part of the Personal Information Protection Act. Follow all its provisions to ensure you're not misusing information.Beware of unintentionally discriminating against a tenant during screening. That would mean violating the Human Rights Code. You cannot deny or accept them solely based on factors such as:- Race
- Color
- Place of origin
- Age
- Gender identity
- Sexual orientation
- Religion
- Source of income
Use Professional Background Check Software and Services
Reputable background check software is one of the best tools in the modern landlord's toolbox. It makes the time-consuming screening process more streamlined and efficient. You'll reduce your vacancies and get more quality tenants.Hiring a property management company is even better. They can take the screening process off your hands, but that's only the beginning. You'll have a helping hand with everything, including:- Marketing
- Maintenance
- Rent collection
- Financial reporting
- Legal compliance