Top workflows for tenant screening and financial data analysis

Tenant screening may look different for each property management company or landlord, but risks exist either way. Tenant fraud is on the rise, which means having a good screening process is more important than ever for property managers, rental companies, and landlords.

Leasing a property successfully begins with finding trustworthy tenants. A tenant screening workflow is the process landlords use to secure, vet, and onboard these new tenants successfully. Having a workflow for tenant screening helps landlords to not only make sure their bases are covered when checking the tenant’s application, but also helps create a standardized process for approvals – critical for remaining  compliant with all relevant tenant laws. 

What does the ‘ideal tenant screening workflow’ look like? Here are some ideas:

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1. Start with pre-screening

Not all tenants will be open to a pre-screening process, but in competitive areas or buildings it may be worthwhile. Ensure that prospective tenant applications get off on the right foot by collecting information before you even show the unit. Legally, the types of questions you may ask as part of this pre-screening process will differ based on your location. However, using Ontario as a sample, a prospective landlord might ask:

• The tenant’s rental history so far 
• Permission to run a credit check or credit reference
• Name, address, birthday, or ID information for the purposes of obtaining a credit report
• General, non-specific questions about rental history, move-in date, pets, parking spaces, or a rough income estimate

Landlords in Ontario cannot ask for a tenant’s social insurance number, if they are on social assistance, or about their age, disabilities, religion, or sexual orientation.

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2. Employment letter and proof of income

Once a prospective tenant is ready to apply, start by requesting a verification of their employment and income. Documents like paystubs, employment letters, or bank statements can all indicate the tenant’s trustworthiness (and creditworthiness) when renting.

Proof of income is a step where landlords or property managers must be especially diligent. By looking at income details first, you’ll hopefully establish a baseline understanding of the tenant’s finances – and be able to spot discrepancies if something feels off.

For example, checking with a company’s posted phone line or directly with the HR team is a good idea for verifying tenant income, as it provides third party verification for these amounts. Once you’re satisfied with the income number, you’ll be able to compare it with the number on the pay stubs – and check to see if it, and the year to date income amounts, match.

Be on the lookout for mismatches between numbers such as an hourly or salaried wage, and the amount on the paystubs. Tax deduction limits (for example, maximum CPP) are also a feature fraudulent applicants can forget to amend.

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3. ID and credit score

Ask the tenant for multiple (usually two) pieces of identification. Not only should this identification match with the tenant’s work or income documents, it also allows you to pull a credit report yourself.

Information on the credit report (such as utility bills) can support the tenant’s prior rental history – if they said they have been renting for the last 7 years, but have only been paying utilities for 3, does this match the other information you’ve received from the tenant?
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4. Rental receipts, tax documents, or other referees

After collecting employment, credit, and income information, does something still seem fishy? Property managers or landlords may want to consider additional features on the rental application, such as proof of payment to the prior landlord (such as a rent receipt, copy of the cheque, or a screenshot of the etransfer), or tax documents (which would support income, ID, marital status, or even CPP maximums).

Finally, check in with the tenant’s prior landlord as a reference. With the full financial history of the tenant in mind, you’ll be able to assess whether the reference is true, and the tenant is who they say.

No matter how and where you conduct the tenant screening process, the important part is that you do! Tenant screening is more than just “gut feelings” or an eye for detail. A systemic approach to screening tenants ensures you find trustworthy applicants and protects your investment in the rental.