You’ve just listed your rental property, and the applications are pouring in. The inquiries and showings have been a huge success. You have more than one person who wants to sign a lease. Now what? You have to choose one.
Choosing the best tenant can feel overwhelming, especially when you have multiple qualified applicants. How do you decide fairly and effectively? This guide will walk you through a step-by-step process for objectively comparing applicants. This ensures you find the best fit for your property while staying legally compliant. We will discuss essential criteria. This is a reliable method for evaluating potential tenants.
The Pitfalls of Subjective Selection
When a landlord makes decisions based on personal feelings, they risk making a bad choice. This could lead to selecting a less-than-ideal tenant. Even worse, it could lead to accusations of discrimination. It is critical to have a clear, objective process to avoid these serious issues.
- Gut Feelings and Personal Bias
Relying on a “gut feeling” can be risky. This approach often introduces unconscious biases. An applicant might seem friendly or trustworthy during a showing, but this does not predict their reliability as a tenant. A landlord’s personal preferences, such as a preference for a certain profession or age group, can unintentionally lead to discrimination. Such biases are not a solid foundation for a business decision.
- Legal Risks of Discrimination
Canadian human rights laws are strict about housing discrimination. Landlords cannot refuse a tenancy based on protected grounds. This includes race, religion, family status, or disability. The Ontario Human Rights Code is an example. It prohibits refusing to rent to someone with children. A subjective selection process makes it difficult to prove a decision was not discriminatory if challenged. Objective criteria provide a defence. This is an objective way to screen for tenants.
- Inaccurate Assessment of Risk
A subjective review often fails to correctly assess the real risks. A landlord might favour an applicant with a high-paying job. However, they may miss a history of late payments or evictions. A person’s financial stability is more complex than their salary alone. The true risks are in their credit history and rental references, not in how a landlord perceives them.
- Inconsistent Decision-Making
Without a set process, decisions can vary from one applicant to another. This inconsistency can be seen as unfair. It may also weaken your position if a denied applicant brings a legal challenge. Applying the same criteria to every applicant ensures fairness and a consistent, defensible approach. You can consistently review tenants’ applications
- Undermining Professionalism
An inconsistent and subjective selection process shows a lack of professionalism. This can harm your reputation as a landlord. Professional property management involves fair, transparent, and data-driven decisions. Adopting a professional approach builds trust with potential and current tenants. Professional property management requires a system.
The Importance of a Standardized Screening Process
A standardized screening process is the backbone of effective and legal tenant selection. It provides a framework for evaluating every applicant on the same terms. It takes the guesswork out of the decision.
- Fair and Consistent Evaluation
A standardized process ensures that every applicant is evaluated against the exact same criteria. This removes personal bias. It ensures fairness. This approach is not about finding a favourite. It is about finding the most qualified applicant based on objective data.
- Reduced Legal Exposure
By using a consistent process, you can show that your decision was based on non-discriminatory factors. For example, if you deny an applicant due to poor credit, you can point to your written policy that all applicants must have a minimum credit score. This protects you from claims of discrimination.
- Improved Tenant Quality
A formal process helps identify the best long-term tenants. It focuses on important factors like payment history and stability. You are more likely to find a tenant who pays on time and respects the property. This lowers your risk of future problems. Use a standardized evaluation process for better outcomes.
- Efficient Use of Time
A clear process saves time. You know exactly what information you need from each applicant. You can quickly compare them without spending hours debating a decision. It streamlines the entire process from application to lease signing.
- Professionalism and Reputation
A clear and consistent screening process gives a professional impression. It shows that you are a serious landlord. This can attract higher-quality applicants. It builds trust and a reputation for fairness.
Key Objective Criteria for Comparison
When reviewing applications, it’s essential to focus on facts and data. These objective criteria provide a solid foundation for comparing applicants. They give you a real picture of a person’s ability to be a good tenant.
- Credit History and Financial Stability
A credit report provides a detailed view of an applicant’s financial behaviour. It shows their history of paying bills on time. A high credit score (e.g., above 650) suggests financial responsibility. A report will also list any bankruptcies or collections. The Canada Mortgage and Housing Corporation (CMHC) recommends that housing costs should not exceed 32% of an applicant’s gross monthly income. This is a solid guideline for assessing affordability. This is a core criterion for evaluating applicants.
- Employment Verification and Income
Confirming an applicant’s employment and income is crucial. You should request recent pay stubs or a letter of employment. This confirms their ability to pay the rent. A stable employment history indicates reliability. A quick call to the employer can verify the information. It’s a way to verify financial stability.
- Previous Rental History
Contacting past landlords is a key step. You can ask about their payment history, how they maintained the property, and their adherence to lease terms. Were they considerate of neighbours? Did they give proper notice before leaving? Be careful to verify that the person you call is a legitimate landlord and not a friend or family member.
- References
Personal references can offer valuable insights. These should be professional or personal, not from family members. Ask about the applicant’s character and reliability. Do they show up on time? Are they responsible? While subjective, a pattern of positive feedback across multiple references can build a picture of a trustworthy person.
- Review of the Application Form
The application itself is a source of information. Look for completeness and accuracy. Did the applicant provide all requested information? Any inconsistencies or omissions might be a red flag. For instance, if the employment dates on the application don’t match the resume or pay stubs, you should ask for clarification. This is a reliable tool for review.
A Step-by-Step Comparison Checklist
After collecting all the necessary information, use a checklist to compare applicants side-by-side. This ensures you do not miss any details and that you are consistent in your analysis.
- Create a Scoring System
Assign points to each key criterion. For example, a credit score above 700 gets 5 points, 650-699 gets 3 points, and so on. A reference from a previous landlord that states a history of on-time payments gets a full score. Someone with a stable, long-term job gets a higher score. Add up the points for each applicant to get an overall score. This is a method to rank tenants.
- Verify All Information
Do not take anything at face value. Call the employers listed. Call the previous landlords. Check references. The extra time spent on verification can save you from a major mistake. It’s a critical part of due diligence. The Canadian Landlords Association advises that thorough verification is the single most important part of the screening process.
- Review Application Details
Once you have the scores and verified information, review all documents again. Does everything make sense? Are there any gaps? For example, is there a year missing from their rental history? If so, why? Were they living with family? Ask questions to fill in any missing details.
- Consider the “Big Picture”
Look at the total package. An applicant with a slightly lower credit score but perfect rental references and a long-term job may be a better choice than someone with a great credit score but a shaky employment history. The goal is to find the best overall fit, not just the one with the highest score on a single item. This is a holistic review of tenants’ applications.
- Make the Final Decision and Notify Applicants
After you have all the information and have compared each applicant, it’s time to make a decision. Choose the applicant with the highest objective score. Then, notify the chosen applicant and send them the lease agreement. It is also good practice to notify the other applicants that they have not been selected.
Choosing a tenant is a critical decision. It is the beginning of a landlord-tenant relationship. It impacts your property and your financial security. By using an objective, standardized process, you remove the risk of personal bias. This ensures your choice is based on sound data. This approach is not just about finding a good tenant. It is about making a legally defensible and professional decision.
Adopting a checklist and a scoring system will streamline the process. You will be able to manage multiple offers with confidence. You can be certain you are selecting the best possible applicant. This approach protects you from legal trouble. It also helps you secure a reliable, long-term tenant. For professional guidance on tenant screening and property management, contact Rest East Property Management at (343) 880-EASY (3279).