Should you trust your credit score?
This was the title of (Season 47, Episode #3) of CBC’s Marketplace, and we have been featured in it.
Check out the full episode here: https://cbcgem.app/CN3N if you want to jump to our specific segment it starts at minute 11.
From a property management perspective Tenant Screening to ensure the right fit for your property is arguably one of the most important aspects of owning investment properties and maximizing investment returns. Ensuring the right tenant for your property includes:
- Running Credit Report on prospective tenants: Some applicants provide a copy of the free credit report they printed online, which doesn’t have a beacon score. It is extremely important as a Landlord to run your own credit report to ensure the accuracy of the information presented by applicants and to ensure the report is authentic and not tampered with. Why is the Credit Report important to most Landlords looking to rent a property? Well, for starters, it gives them an idea about the applicants paying habits and how conscientious they are with their finances if they had bankruptcies or collections agencies after them in the past. This information gives you a hint of what your financial relationship is going to look like with your prospective tenants.
- Previous landlords’ References: Calling the previous 2 Landlords will help you get an idea of the type of tenant the applicant is. We previously created a five-step guide to screening tenants:
Step 1: Initial contact / Pre-screening
Step 2: The viewing
Step 3: The rental application
Step 4: Due Diligence
Step 5: Trust your gut feeling
- Employer Verification: Tenants are usually required to submit an employment letter when applying to a rental property. It is imperative to call the current employer and verify that the applicant is currently employed there and verify their salary as well.
It is important when reviewing a potential tenant’s application to take all the information into consideration. Of course, even the most detailed reference screening check done is not a guarantee that you will have no problems with your tenant, but it surely helps to weed out troublesome tenants from the onset. As they say, an ounce of prevention is worth a pound of cure – we advocate this approach and have processes and procedures in place that have been fine-tuned over the years.
The real estate business is a nuanced field and if you don’t have many years of experience in this space you should trust your gut feeling. You have an expensive asset at stake and are about to embark on a long-term relationship. If it doesn’t feel right you are better off staying vacant than having issues with your tenant. However, the good news is that when you have a good tenants make sure you take care of them, and that investment in your tenants will pay off in the long term.
Hope you found this post helpful and best of luck with your real estate investing!