Table of Contents - Improving renting for everyone (Landlord Credit Bureau) with Zac Killam
Dave Debeau [00:00:09] Hey everyone, this is Dave Debeau with another episode of the Property Profits Real Estate podcast, and today we've got a special guest. We always have a special guest, but today's guest is even more extra special in my mind, because Zac Killam is a real estate entrepreneur, is a lawyer, and he's involved in something that's very, very important for all of us who are a landlord. And he's part of a company called Landlord Credit Bureau. So, Zach, welcome to the podcast. And before we dove into a little bit about yourself and your background, why don't you tell us big picture? What is a landlord credit bureau and why is this? Well, in my opinion, something that's so important in the in the real estate industry.
Zac Killam [00:00:56] Thanks, Dave. Appreciate being here. And I would love to tell you about that. Yeah. So has existed since twenty twelve and its mission is essentially to improve the businesses and lives of landlords, property managers and responsible tenants. And so what it's doing, just like other credit bureaus such as Equifax or Trans Union, is we're bringing accountability and transparency and balance to our industry being the rental real estate industry.
Dave Debeau [00:01:26] All right, so, Zach, what need does the landlord credit bureau to fill because again, a lot of landlords out there kind of have the gist of it. But, you know, the challenge that a lot of small landlords have had over the years is they get a tenant from hell. And there seems like there's just no way to find out ahead of time if they're going to be a nightmare. You know, we've got we've got our hands tied legally when we can ask what we can as there's challenges with being accused of discrimination if we don't let certain tenants in. So it's really kind of tough for a lot of landlords to do proper due diligence on the people that they're getting into their multiple hundred thousand dollar assets as tenants. So how does how does this landlord credit bureau help in that scenario?
Zac Killam [00:02:19] Great. Great question, Dave. Thank you. So what we're doing is we are essentially a central repository of tenant records. So landlords are able to report there. They're registered to their tenants with us and then report their monthly payment habits. So did they pay on time? Did they pay late or did they not pay at all? Then in addition to that, they can share reviews about their experience with that tenant. And so then this is all forms part of the tenant resume where the tenant record, which is then accessible to future landlords when they're looking at an application to potentially rent out their unit to an individual.
Dave Debeau [00:02:52] Now, doesn't that open up the possibility for litigation if you've got a pain in the ass tenant this this late on payments or is damaging the property that pulled in all night and pulled a midnight move on or something like that? And you report that to the you know, the bureau and the tenant finds out, isn't there some some risk of them suing you for whatever?
Zac Killam [00:03:19] So the reason that we're able to do it is, is that the bureaus are governed by, of course, applicable privacy legislation federally and in the respective provinces. Now, federally, the legislation is called PEPITA, the Personal Information Protection Electronic Documents Act and then B.C. in Alberta, they actually have their own act called PIPA, the Personal Information Protection Act. And both of all three of those acts are very similar in that they allow landlords credit granters to report to bureaus if they're doing so for the purpose of collecting a debt. So an instance, of course, where that has caused much of damage, didn't pay the rent, moved night also for to investigate the breach of the agreement, as well as to prevent fraud, prevent and stop fraud. And all three of those things on their credit bureau helps our members with. So, of course, anybody could sue for anything, but they're not going to win. Yeah, OK, cool. And and maybe I can just follow up on that in in our history since twenty twelve and we have now about thirty four thousand landlord property manager members across Canada, the US, no one has successfully brought a privacy or any other action against our members or us for using their credit card.
Dave Debeau [00:04:32] All right. Very, very cool. So let's say I'm a small landlord. I'm interested in this. You know, it sounds like you've got a lot of people already involved in this, but obviously not, obviously. But I'm assuming you're still kind of the tip of the iceberg or correct me if I'm wrong, how how likely is it if I'm if I'm a member of the bureau that, you know, if I type in somebody's name, they're actually going to show up on there? Is it is it worked at what at what stage of general use is the whole bureau at this point? Because we know for for our own credit scores. Yeah. I mean, everybody every every single person in North America has a credit score for good or for bad. But how many tenants have their own, quote unquote, credit score with the bureau?
Zac Killam [00:05:26] Right. Right. Well, there are there are tens of thousands. But of course, that's across North America. Now, when searching our database, if the particular individuals record is not found, there's, of course, no no charge for that. But what we also do is enable the pulling of credit reports from the big bureaus like Equifax. So even if we don't already have a record for that particular individual in our database, we're still going to facilitate the pulling of the credit report so it will not be empty handed. But one note to touch on is the real major impact of what it's doing is it's really managing tenant behavior after they move in. So what I mean by that is we're enabling landlords to register a trade line on each of their tenants credit reports. So what this does is it is it impacts their credit scores on a monthly basis based on if they choose to pay their rent or not. And so personally, what I found is that over my course of being a landlord, landlord as well, that actually became a customer of the. Before joining as you and the reason I became a customer is that I've also, I should mention, being a tenant for for many years prior to becoming a landlord. So I personally understand the issues and the emotions that face both tenants and landlords in their relationship. And I looked at their credit bureau when I but I found that through a Google search and thought, this is brilliant, because what it's allowing is me to reward my good tenants. The tenants are just being responsible and just adhering to the terms of their contract, of which is the vast, vast majority. And it's enabling me to stop the delinquent tenants who are choosing to be doing. And so how it allows me to do that is by registering this trade line on their credit report with Equifax and Canada, trade lines have an impact upon your credit rating or your credit score, whereas a public record, which is what collection agencies report does, has no impact on your credit rating. It's just a notice. So we report in the same way as credit card companies do or other credit grantors, and it then has an impact on a monthly basis. So this is really exciting because I have lots and lots of wonderful tenants and many of whom have become lifelong friends as a result. And having been a tenant myself, I always wondered why am I not getting credit for this huge payment each month yet? I'm getting credit for paying my sixty five dollar. My cell phone line doesn't make a lot of sense from my standpoint. And so it changes that and enables us now to give credit to all these wonderful tenants, as well as encourage them to have a reason to keep paying on time and in full every month because now they're actually getting a benefit from it. But this is, of course, particularly relevant in jurisdictions where we have eviction freezes, citizen, and which where maybe the legislation is particularly tenant favored.
Dave Debeau [00:08:14] Now, I know that that makes a ton of sense. So is the carrot and the stick whole scenario, right. So so, hey, you know what? If you're if you're paying your rent on time, as you're supposed to, as is laid out clearly in our contract, which you have signed and I have signed, then you're going to be rewarded because we're going to we're going to report this positive behavior to the credit bureaus can help build up your your credit so you can do all the great stuff that people with good credit scores can do. On the other hand, if you screw up, if you choose not to pay and you choose to be delinquent, then it's going to affect your credit score negatively. And and that's going to hang around for quite some time. So, yeah, that's really smart. So, Zach, let me ask you this again from I'm just thinking from my own point of view is as a landlord. So let's say I'm kind of new to this whole concept and I'm in. Hoboken, British Columbia, middle of nowhere, small town kind of thing, and not a lot of people are doing the the whole landlord credit bureau thing, how would I get started knowing full well that most of my tenants probably aren't registered in the system yet? So let's say I join the landlord credit bureau. How does that kind of look? I've got a I've got a vacancy. I've got a few applicants that have come in. How would I make the best use of the bureau?
Zac Killam [00:09:39] Great. Great question. I haven't heard of that kind of B.S., incidentally. So as a landlord, you can get started immediately and you can actually register all of your existing tenants as well right from the get go. So there's a couple of different tracks which let's discuss. So the first one is say you have all great tenants and all of them part time every month, and you just want to do it as a benefit to help their credit score and also give them a positive tenant record with LCP that they're going to then use when they're applying for future places. So what you're going to do is you're going to log in and you're going to register those tenants. Then those tenants are going to get a email from us, welcoming them and letting them know of the benefits. And then they have
Dave Debeau [00:10:23] a quick question. Do you need their permission to put them in the system if they're already existing tenants?
Zac Killam [00:10:31] No, you do not need consent, but I'll bet I'll explain the particulars of that. So for the good tenant who always paid you on time and does know your debt, they're going to receive this email that welcomes them and invites them to opt in. So they're going to have the option whether they want to opt in or they don't want opt in if they choose not to. You as landlord can still have that record with LCP, but you're using it for your own internal purposes. Should they choose to opt in either by giving you consent or by giving us directly consent, then we can register that trade and start benefiting their credit report. Now, before any landlord in the future can search our database. Of course, they always have to have consent of the applicant or the potential tenant before they're allowed to look at these records the same way as you have to have consent. For example, a credit report now for the delinquent tenants to someone who is paying you later or owes you a debt. Under Pepita and Pippo, the acts I mentioned previously, you do not require consent under those exemptions. So the exemption to collect the debt, investigate the breach and prevent fraud. OK, so two tracks. Now, the third way is that we actually provide some legal clauses that for all landlords, whether the members are not free of charge and to be included in your application for tenancy and your lease. And these then are consent clauses and notification clauses. So they serve two purposes. One, they're telling the the tenants, you know, that they're going to be delinquent tenants, the serial ones you mentioned earlier, to move from place to place and continue to cause damages, not pay rent, because they know how to game the system. It's going to most likely cause them to not rent. So you're going to eliminate the headache right from the get go. And the second is then that you are, in fact, getting that consent. And it's always get to, of course, to get people's consent upfront.
Dave Debeau [00:12:14] Oh, yeah, most definitely. So let's just rewind a little second there. So for the good tenants that we're not having a problem with, we can register them and they can choose to opt in or or not. But if they don't opt in, then they are they still registered? Are you still doing this stuff or.
Zac Killam [00:12:32] It's it's not. So you're still going to you're still going to register them. You're still going to be recorded on a monthly basis. Their payment habits. It's just that it'll be for your own internal record keeping purposes. So we won't be sharing it. We won't be registered to trade. But now, at any point in the future, should they wish to opt in, then they can. And the record is there and it's it's fleshed out and beneficial to them. Conversely, if at any point in the future they decide to be delinquent and to stop Payneham. Now, you no longer require consent, so instantly that record is going to start reporting and trade lied on their credit report with that record,
Dave Debeau [00:13:07] OK, now that that makes complete sense, that awesome, awesome, awesome stuff. So, Zach, tell us a little bit about because I'm I'm sure all the landlords out there that aren't part of this already are thinking, hey, this is sounding really good. How does how does it work? What are the costs that are involved? And if people want to find out more and join up, what should they do?
Zac Killam [00:13:30] Absolutely. So go to Landlord Credit Bureau, Dossie, Canada, Dotcom and the US and it's free to sign up. You don't have to enter your credit card and you can use our our basic plan for free so you can actually start to enter your tenant records and and do some of the reporting. And then there is of course, a premium plan which has some additional features available to it, which is only twenty dollars a month plus 60 cents a tenant. So very, very inexpensive. And what we see is that for our members, we're reducing their delinquencies and their their debts by 30 to 50 percent. That's huge. So it's huge and wow. Yeah.
Dave Debeau [00:14:08] And it makes sense. I mean, this is this is really brilliant. I feel like a dummy because this is the first I'm really hearing about it.
Zac Killam [00:14:15] So that's my fault.
Dave Debeau [00:14:18] Thank you very much for sharing that, that's for sure. But yeah, I just I love the fact that it's a it's a carrot. It's a reward for your good tenants and it's a good kick in the ass for the not so good tenants that will hopefully get them on board. And if not, it'll help other landlords in the future avoid renting to these people if they're a complete nightmare, that's for sure.
Zac Killam [00:14:42] So, yeah, that's exactly it. And also, it brings some balance back to the relationship and that there is some rewards for the people who are just being responsible. Yeah. And, you know, when I first first moved out from my parents home, you know, first year university, the credit industry decided that I was only I was only worth giving a three hundred dollars credit card to. So that was my limit. And what can you do with three hundred dollars and credit? Not a ton. Well, that's quite a bit of beer. Very, very fair. And that is that is something I used it for it on occasion. But having said that, now as landlords we get to do something I give back. And so for that that young kid or that person who is new to the country, who is just trying to build their credit and as you said, get get access to all the great benefits of having a credit rating, we can assist them with that and we can help them do it much more quickly, because now they're not they don't just have the sixty five dollar cell phone bill on their credit report. They now have their twelve hundred dollars rent payment as well. So it's nothing but positive for everybody who is being responsible and just adhering to the terms of the agreement that they signed. And it's only the delinquent tenants who have intentionally decided to not pay. That, of course, don't like getting caught. And on that note, if you don't mind, I just want to mention in our current times with covid, which we're obviously a lot of people have been financially impacted, I really want to stress this is not a negative for people who are financially impacted by covid as long as they're communicating with their landlord, creating some sort of payment plan, partial payments per month over the next X number of months, this is still a benefit to those payment plans can be registered by their landlords with us, and therefore then they can still build a positive tenant record with their credit bureau and they can also still benefit their credit report, even though they're not paying the full amount, as long as they're adhering to the terms of their payment plan. Still positive, still going to increase their credit rating.
Dave Debeau [00:16:45] One more one question. Does this work for commercial tenants as well as private individuals?
Zac Killam [00:16:51] Not at this time, unless the individual has personally guaranteed or personally signed the commercialize, in which case,
Dave Debeau [00:17:01] which happens quite often as well.
Zac Killam [00:17:02] So it does. So in that case, then. Yes.
Dave Debeau [00:17:05] Excellent, Zach, great stuff. Congratulations. Good job. Keep up the good work there. And again, let's just put that out there again. If people want to connect with you or they want to find out more, where should they go?
Zac Killam [00:17:17] It is Landlord Credit Bureau in Canada and landlord credit bureau dotcom in the US.
Dave Debeau [00:17:23] Great, thank you very much. This has been very, very educational. I think it's an amazing service.
Zac Killam [00:17:28] So thank you, Dave. Appreciate you having me.
Dave Debeau [00:17:31] Yeah. All right. All right. Take care. We'll talk to you on the next episode. Bye bye. Well, hey there, thanks for tuning into the property profits podcast, if you like this episode. That's great. Please go ahead and subscribe on iTunes. Give us a good review. That would be awesome. I appreciate that. And if you're looking to attract investors and raise capital for your deals, that may invite you to get a complimentary copy of my newest book right back there. There it is, the money partner formula. You got a PDF version at Investor Attraction book, dot com again, investor attraction book, dot com ticker.