# landlord tenant selection methods



## Pluto (Sep 12, 2013)

I've had tenants for many years, and have done OK in tenant selection, but I'm always looking for ways to improve, as I have had the occasional issue. When I review all the tenants I've had, the only ones who presented problems in paying rent were ones who paid cash, as opposed to cheque. Not all who paid cash were problems, but everyone who paid by cheque, never had problems. Then one day I mentioned to my banker that some tenants insited on paying rent in cash, and I wondered why. He said some people are denied chequing accounts due to previously writing bad cheques. 

Then I wondered, if it is valid to ask an applicant if they plan to pay by cash or cheque, and weed out the cash payers.

Any thoughts?


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## Just a Guy (Mar 27, 2012)

Try email fund transfers. Unlike cheques, the funds have to be there in order to initiate the transfer. Plus it automatically creates a paper trail for both parties.


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## Westerly (Dec 26, 2010)

You can certainly ask, might even go as far as to ask how they feel about post-dated cheques (I try to get 12 at a time, though I'm not sure if I can legally insist on them.) Credit checks will also help to weed-out tenants with cash-flow problems. My biggest problems have been where I've ignored my 30 second first impressions / gut-feel.


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## Mortgage u/w (Feb 6, 2014)

I don't think that's an accurate generalization. I've had cash paying tenants who never missed a beat vs others who wrote NSF chqs. True, some clients will have their bank accounts closed due to numerous NSFs, however, I don't think anyone can be denied a bank account. Surviving without a bank account these days is a feat on its own. 

Like you said, don't ignore first impressions or gut-feel. And ensure tenant has a solid employment - obtain a history of at least 2 years. You want to ensure its stable and full-time. If they are part-time, self-employed, seasonal, work for family or you are unable to validate - STAY AWAY! 

Cash, CHQ, direct transfer.....what's important is that they pay. In my experience, the ones who don't pay usually have no income to start with - which reconfirms the importance of validating employment.


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## AirPro (Mar 31, 2014)

This may be a valid observation. While cash is usually King, many cash only people are this way for a reason and it's not because they run a corner shop. What % we're talking about, I'm not sure.

- Unlike cheques anyone with a basic bank account has access to email fund transfers i.e. you don't need any credit/overdraft facilities to use this feature
- email transfers can be cancelled before you get a chance to accept them. Yeah, I've had a tenant do this to me, it's there when he hits the send button on front of me and gone by the time I get home and attempt to complete the transfer.

You can ask for but can't insist on post dated cheques. I usually ask for a token deposit of $200 with their application. This is great opportunity to ask for a cheque just to gauge whether their bank trusts them with a cheque book or not. You can always reject their application and return the deposit if they insist on email transfer or cash at this point.


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## Just a Guy (Mar 27, 2012)

You should get a smart phone so you can process the funds right in front of them too...before they cancel the transaction.


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## Rusty O'Toole (Feb 1, 2012)

It is perfectly OK to set standards for your tenants as long as they are the same for everyone. In other words, you can insist on payment by check as long as you don't make any exceptions.

There are alternatives to checks and post dated checks. In fact they are phasing out checks. You might talk to your banker or someone in the property management business and find out how they handle payments these days. And how they qualify people for loans. It is not unreasonable to expect people to qualify to borrow your $250,000 house same as if they were getting a $25,000 loan.


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