In competitive rental markets, property owners and managers have to go through piles of applications quite quickly and choose good and reliable tenants for each of their rental units.
Choosing good tenants is not an exact science, but there are factors that landlords can take into consideration to help them weed out the applications that are weak and the tenants that might be problematic.
One of the most important things that property managers should avoid, according to Carolyn Parella, the Insurance Executive Manager for Terri Scheer, is choosing tenants who are evidently trying to avoid signing any papers and leaving a paper trail. A tenant who does not want to sign a lease agreement, or other necessary documents, can be a problem in the long run.
For instance, a tenant who is going to conduct illegal business on the property will probably be willing to pay the rent many months in advance. He will also pay only cash and will avoid signing official documents.
Property managers will also reject tenancy applications if tenants are not happy about having their background or credit checks done. In order to prevent the real estate representative from doing these checks, the tenant will use false references or refuse to provide their contact details.
Speaking with previous landlords and finding out if the tenants were problematic or not is extremely important before accepting an application. Some of the most common issues that landlords will complain about are fake contact details, late or missed monthly rent payments, severe damage to the property, engaging in illegal activities on the property, etc.
It is essential for property managers to double check the applicants’ rental history by checking the national tenancy database. They can also check the public records to verify the tenants’ identities and whether they ever filed for bankruptcy or not. A bankrupt tenant is less likely to afford to pay the rent, especially if the property is expensive.
However, if a tenant has a negative mark in their tenancy database, that doesn’t always mean that you should reject them. Nobody’s perfect and people can have different conflicts with each other that can result in tenancy database negative marks. Sometimes it’s a good idea to ask the tenants what happened and why they were given that mark, perhaps they will answer with honesty and explain the situation.
Another thing property managers should observe is the tenant’s behaviour at the open house. If people are polite, well-behaved, and friendly, they are more likely to be good tenants. However, if some of the applicants are extremely friendly and you hit it off with them, that doesn’t mean that you shouldn't do the background and credit checks. It’s always good to have the same tenant screening process and not to skip any stage.
What property managers should steer clear of is if an applicant has a combination of red flags. There may be several things that point to the fact that this applicant is unlikely to pay rent on time (former landlord’s reference, bad credit history, no stable job), then they should definitely be rejected.
But how do real estate agents choose tenants and most importantly, what are the main reasons for rejecting a tenancy application? Here are some of the most common reasons why landlords, property managers, and property management companies reject potential tenants:
- Negative references from former landlords, or employers
- Having been evicted several times
- Moving too often
- Bad credit history
- No source of income
- Insufficient income
- Too much debt
- Changing jobs often
- Drug use
- Illegal activities and convictions
- Owning too many vehicles
- Too many people for the rental unit
Although landlords or property managers are not required by law to explain to potential tenants why their applications were rejected, it’s a nice gesture to send a follow up email stating why they were unsuccessful.