Posted October 23, 2022 | by Keaton Bessey, Managing Broker
TRY OUR PROSPECT AFFORDABILITY CALCULATOR
Best Answer: Thoroughly. After a prospective tenant has proven their ability to set a showing appointment, show up on time, ask good questions during the showing, and complete an application fully, you should complete the 6 following steps:
1) Income Qualification
Ensure the household's after tax monthly take home pay is 3 times the rent or more using a paystub or a T1/T4 tax form. Most paystubs will have the YTD (Year to Date) on them so you can do some simple math to figure out the average monthly income for the prospect.
Example: $2,000 per month home would require a $6,000 per month take home pay or approximately $100,000 per year gross income.
2) Credit Check
You can ask that a prospect provide their recent (should be within the month) credit check and history or you can visit https://www.tenantverification.ca/fees.html and purchase a "Equifax Credit Report" which will show you the prospect's credit score, open trade lines or credit lines, payment history, level of debt, and previous addresses among other information.
3) Court Search Online
Visit https://justice.gov.bc.ca/cso/esearch/criminal/partySearch.do and you can punch in the prospect's name (middle name helps here as well) to see if they have any current lawsuits pending which could effect their ability to rent your home if the lawsuit does not go their way. In many cases you cannot require a criminal record check as part of your application process as per the OIPC (Office of the Information and Privacy Commissioner) more information here: https://www.oipc.bc.ca/guidance-documents/2332.
4) Income Verification
Once you've confirmed income qualification using the items provided to you in step 1, you must verify these documents are accurate. A paystub can be verified by contacting the prospect's employer and asking some basic questions: "Does the prospect still work there and how long have they worked there?", "Can you confirm their level of income, hourly/annually/number of hours weekly/monthly?".
5) Landlord/Housing Verification
Everyone either rents, or owns the property they live in. Verify which is the case (renters, owners, living with family/friends who own/rent) and get the information needed to verify this. If the prospect is a tenant, get the contact information of their current Landlord, and call to verify they are their tenants, they pay rent in full and on time, would they rent to them again, have they caused any issues, are they easy to deal with, and if they have any other information they would like to provide. If the prospects own the home they live in or they live with family/friends who own, ask for a proptery tax or municipal utilities bill (water/sewer) showing the name of the family/friend on the bill and also call them to confirm the current living arrangement. In some cases, this person will be willing to "co-sign" the lease as well as an additional tenant to support the prospect's application.
6) Final Interview
Once the above is done and everything checks out, you should setup a final interview with the prospect to verify ID (Canadian government issued photo ID, or a work permit and matching foreign passport) as well as discuss logistics of the lease start date, deposit payment (email transfer is best, certified and instant), as well as go to go over the lease to finalize the deal.
Remember, a deal is not done unless a lease is signed and a deposit is paid with certified funds (email transfer, certified cheque, bank draft, or cash--provide a receipt). Until that is done, continue marketing and screening until the ink is dry on the lease and a deposit in sitting safely in your bank account.
*The above information is not to be relied on as legal advise. If you require professional or legal advise for your personal circumstances, please reach out to us for a referral, or consult with us for property management services.
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