Tips for Vetting Prospective Tenants

Tenant selection is one of the most consequential decisions a landlord will make. A great tenant pays rent on time, takes care of your property, communicates issues promptly, and stays for years. A bad tenant can cost you thousands of dollars in unpaid rent, property damage, and legal fees. The difference between a profitable and unprofitable rental property often comes down to the quality of the tenants you place in it.

I have learned through years of experience that thorough tenant vetting is not just a best practice, it is absolutely essential. Here are the steps and criteria I use when evaluating prospective tenants.

Require a Complete Application

Every prospective tenant should complete a written rental application that includes their full legal name, date of birth, current and previous addresses, current and previous employers, income level, and references from both current and previous landlords. The application should also include a signed authorization for you to conduct credit and background checks.

A prospective tenant who is unwilling to complete a thorough application is a red flag. Quality tenants understand that landlords need to verify their suitability and they are typically happy to provide the required information. Resistance to the application process often indicates something the applicant does not want you to find.

Verify Income and Employment

A reliable income is the foundation of a tenant’s ability to pay rent consistently. As a general guideline, I look for tenants whose gross monthly income is at least three times the monthly rent. This provides a reasonable buffer that reduces the risk of late or missed payments due to financial strain.

Always verify the income independently. Request recent pay stubs, a letter of employment, or tax returns. Do not simply take the applicant’s word for it. Contact their employer directly to verify their employment status and income level. For self-employed applicants, request copies of their most recent tax returns or financial statements.

Be cautious of applicants who claim high income levels but cannot provide documentation. Legitimate high income earners are typically able to produce pay stubs, tax returns, or bank statements upon request.

Run a Credit Check

A credit check provides valuable insight into a prospective tenant’s financial responsibility and payment history. It shows whether they have a history of paying their bills on time, how much debt they carry, and whether there are any judgments, collections, or bankruptcies on their record.

I do not necessarily require a perfect credit score. Life happens, and some otherwise excellent tenants may have experienced a temporary financial setback that impacted their credit. What I look for is the overall pattern. A generally responsible credit history with one or two blemishes is very different from a pattern of chronic late payments and defaults.

In Canada, you can use services like TransUnion or Equifax to run tenant credit checks with the applicant’s written consent. The cost is minimal and the information it provides is invaluable.

Contact Previous Landlords

Speaking with previous landlords is one of the most valuable steps in the vetting process. A previous landlord can tell you things that no credit report or application form will reveal. Did the tenant pay rent on time? Did they take care of the property? Were they respectful of neighbours? Did they give proper notice when they moved out?

Be cautious when speaking with a tenant’s current landlord, as they may be motivated to give a positive reference simply to get a problematic tenant out of their property. It is often more informative to speak with the landlord before the current one, who has no incentive to be anything other than honest.

Ask specific, direct questions. Rather than asking whether the tenant was good, ask whether they would rent to this person again. The answer to that question is usually very revealing.

Meet the Tenant in Person

I strongly believe in meeting every prospective tenant in person before signing a lease. This gives you an opportunity to assess their character, communication style, and overall demeanour. It also allows you to observe how they treat the property during the viewing.

Pay attention to whether the prospective tenant is punctual, respectful, and communicative. These behaviours during the application process are often indicative of how they will behave as a tenant. Someone who is late for the viewing, dismissive of your questions, or evasive about their circumstances is likely to be a challenging tenant.

If possible, observe how they interact with any current tenants or neighbours you may encounter during the showing. Their behaviour towards others can be very informative.

Trust Your Instincts but Follow Your Process

After years of managing tenants, I have developed a strong instinct for identifying potential problems during the application process. However, I never rely on instinct alone. Every applicant goes through the same standardized vetting process regardless of my initial impression. This protects you from both your own biases and from potential claims of discrimination.

It is essential to apply your screening criteria consistently and fairly to every applicant. In Canada, human rights legislation prohibits discrimination based on race, gender, religion, family status, disability, and other protected characteristics. Your screening criteria should be based on legitimate rental qualifications like income, credit history, and landlord references, and they should be applied equally to everyone.

At Dwell Logic, tenant vetting is one of the most important aspects of our property management process. Our thorough screening procedures are a key reason why our properties consistently have high quality, long term tenants. If you are struggling with tenant quality in your own portfolio, we are happy to share our approach.