Tenant screening is a bizarre proposition. All too often property managers in low vacancy markets view it as a best practice for high vacancy markets and those property managers in high vacancy markets see it as the opposite. It’s not until property managers evict their first bad tenant that they understand the costs and time that go into the process and their risk tolerance drops off the map. Suddenly, best practices around tenant screening becomes a requirement instead of a nice to have in all markets.
One recent example from a property manager identified the following costs from a landlord tenancy relationship gone bad:
Lost Rent (leading up to the eviction, during and post) net of the damage deposit kept by the property manager |
3 months |
$3,000 |
Legal Fees (the case wasn’t a slam dunk eviction) |
3 weeks |
$750 |
Court Filing Fees (document filing and administration with Residential Tenancy Branch for Dispute Resolution) |
45 days |
$150 |
Bailiff (to remove tenant following dispute resolution) |
5 days |
$75 |
Locksmith (to change the locks as keys weren’t returned by tenant) |
1 day |
$150 |
Repairs (once access to rental unit was gained and removal of tenant’s property) |
2 weeks |
$1,075 |
Cleaning Fees (the unit required basic cleaning to carpets, bathroom, etc.) |
2 days |
$500 |
Property manager’s lost time at $20/hr |
5 days |
$800 |
Total costs of eviction |
3 months |
$6,500 |
Given the circumstances, the property manager in the above example viewed the costs as a best-case scenario by following the rules of the law. Some property managers elect to circumvent the rule of law by forcefully removing tenants. However, professional tenants understand that courts do not view these brut force evictions kindly and often default into rewarding the tenant. These forced evictions result in fees of almost twice as much to the property manager as following the legal process.
Assuming the above costs of $6,500 are customary and a bad tenant rate of 5%, the result is an average additional cost of $325 per tenant. What if all this can be avoided through proper screening techniques often under $25 per tenant?
Tenant Screening in Low Vacancy:
Tenant Screening in High Vacancy:
Tenant screening that considers more than a credit history is becoming the industry gold standard. Property managers embracing technology around social media scanning and psycho analytical behavioural profiles will take the cream of the crop while others will be left with what remains. Don’t fall behind the competition, knowledge is the key and the more you have upfront the more time, money & headaches you’ll save.