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Picture this – you are screening tenants for a new rental property you have just put on the market and as you are going through their applications, you find yourself stuck between multiple qualified tenants who appear to be excellent options. What do you do?
Well first of all, if you find yourself in this position you should take a moment to let out a sigh of relief. After all, having your choice between multiple qualified tenants is the best problem you could possibly have while screening for potential renters.
However, you will need to find a solution to decide who gets the unit, and who has to pursue new options. So, let’s take a look at what you should be looking for while screening potential qualified tenants and how you can tackle this situation.
So, if you are unsure how to choose between qualified tenants, let us help you look at it from the mortgage side in order to ensure you are making the best choice possible. To do so, simply book a free strategy call at the link below.
Tenant Screening is an Important Process
Tenant screening is one the most important steps in starting up a rental property. This is your opportunity as an investor to double check that a tenant is going to be responsible and accountable for their actions while renting from you.
However, it is also important to make sure that you are not asking any questions during your screening process that could be considered discriminatory. In Canada, property owners are prohibited from discriminating against tenants for any of the following factors under the Canadian Human Rights Act:
- Nationality or Ethnic Origin
- Skin Colour
- Sexual Orientation
- Gender Identity or Expression
- Marital Status
- Family Status
- Criminal History
While it is unlikely that you are planning to discriminate for any of these reasons, it is much safer to keep them off of your applications and out of your interviews so that your intentions cannot be misconstrued.
What To Look For While Screening Tenants
When you are screening tenants for your units, there are a few things you should primarily be looking for in order to gauge if a tenant is going to be a good fit for your property. The main things you need to screen for are:
Sufficient Income and Employment
One of the first things that you should be screening for when you are having your tenants fill out a rental application is income and employment. While it may not matter what your tenant does for a living, you should at least make sure that they are capable of paying the rent while sustaining themselves. If you find that a tenant is unemployed or is not making enough money to cover the rent while also taking care of themselves, you will probably need to decline their application.
A general guideline that people use to ensure that someone can afford the rent is to check if the rent is less than one third of their income. Of course, in today’s current economy the cost of living is very high so you may expect to see more applicants whose income is less than three times the rental price, so you will need to take that into account.
Healthy Credit Score
Another important thing you will want to look for with your tenants is a healthy credit score. This can be used to gauge their financial responsibility and their ability to rely on credit to pay their expenses reliably and responsibly in the event that they do find themselves facing financial hardships and cannot pay their rent through their normal income.
References and Rental History
Finally, you should ask for references from previous landlords and/or housemates in order to check that they are as reliable as they aim to appear on their application. You should ask if they took good care of their previous rentals, if they were able to pay rent on time consistently, and if they were responsible and accountable when things went wrong.
These may not be possible to obtain if the tenant applying for the rental is applying for their first apartment or rental. In this case you may want to ask for personal references from employers that can speak towards their responsibility and accountability – or conduct a more thorough interview with the tenant.
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What Should You Do If You Have Multiple Qualified Tenants?
If you have gotten through your screening process and you are having difficulty determining who is more qualified and will make a better qualified tenant for the unit, try to look at some outside factors such as who appears to need the rental more of who would have the better commute to work from your property.
At the end of the day, you should not feel bad when you reject one qualified tenant for another. After all, if their application was good enough for you to question which qualified tenant is the better fit, they should find another option quite easily.
Bonus: Offer Alternatives for Rejected Qualified Tenants
If you really want to find a solution to help an applicant who you had to reject for the unit, you can always try offering them an alternative. Perhaps they did not get the unit they initially applied for, but perhaps you might have another vacancy that they can fill instead? Or perhaps you might know another investor who has a unit available that you can refer them towards and vouch for their qualifications since you have already taken the time to screen them?
While the applicant may not take the options you offer, offering alternatives to qualified tenants you reject can occasionally help you hold on to great tenants you otherwise may have missed while pursuing another option.
Weighing Your Options is Hard – Let Us Help You
Much like choosing between qualified tenants can be difficult, choosing between mortgage lenders can be a challenge. However, by applying for your mortgage with our team at LendCity, our agents can take the burden of finding the best interest rates available off of your hands. That way you can focus on your other investments instead of worrying about applying to multiple lenders in order to secure the lowest available rates.