Help Your Tenants Successfully Prove Their Income With Documentation

A significant yet nuanced component of tenant screening is filtering out serious tenants from not-so-serious ones. One simple solution? Require tenants to prove their current income with proper documentation.

Tenant screening is a game of weeding out the non-committed renters while narrowing down to a select few qualified ones (not to mention eliminating the risk of renting to “professional tenants”). Understanding the renter’s financial situation and ability to pay rent is key, of course. But what happens when the renter is unable to show you their proof of income? As a general rule of thumb, if a renter cannot readily prove their income with documentation, chances are they’re also not prepared to pay you rent. We’ve compiled four reasons why your tenants may not be able to successfully prove their income and what you can do to help.

1. Breaking Down Technological Barriers

If any component of your tenant screening involves electronic documents or communication, certain groups may already be at a disadvantage. For low-income groups or the elderly, technological illiteracy is real and rampant. These tenants may have the funds in their bank account, but not know how to collect or forward the documents to you. For them, simply accessing mobile banking can be tough, let alone finding a way to send them to you. Being cognizant that people may not be technologically literate can go a long way, as this can be a real struggle for renters who genuinely want to (and are qualified to) rent.

If any component of your tenant screening involves electronic documents or communication, certain groups may already be at a disadvantage.

Thankfully, some technological barriers can be broken down, to an extent. Offer non-electronic, in-person opportunities for your tenants to show you their documents. Provide concrete suggestions. Direct them to their local bank to obtain the necessary documents. Teach them how to create an email account. Show them how to print from a computer. When you share your knowledge and resources with others, you offer a fair chance for all qualified tenants to apply.

2. Don’t Let Carelessness Create Consequences 

Einstein once said, “Whoever is careless with the truth in small matters cannot be trusted in important affairs.” Applied to the rental industry, renters who don’t care to show you their income documents, likely won’t care to pay you rent. In fact, they likely won’t care about maintaining your property or even a relationship with you. You can’t expect renters who are unable to perform a relatively small task to be able to execute a larger job; they should be enthusiastic and diligent during the screening process. So, if they don’t read instructions carefully or bother gathering the documents you need, this may just be a sign of their character.

“Whoever is careless with the truth in small matters cannot be trusted in important affairs.” – Albert Einstein

Throughout the screening process, communicate a sense of urgency and set expectations with your prospective tenants. Schedule viewings. Lay down deadlines. Require recent proof of income. See who’s taking the application process seriously, and filter out applicants who are passively shopping for rentals.

3. Respecting Our Cultural Differences

Many new-to-North America immigrants are unaware of how renting works and how competitive the rental industry is. Where they’re from, proof of income may not be an expectation that landlords have in assessing fit for property. For example, new immigrants may be used to different verification standards; for some, acceptance into a property may be based more on mutual trust and verbal contracts. Further, immigrants may also face language barriers and only have documents in a foreign language. These prospective tenants may not be fraudulent, lazy, or ignorant; they’re simply unaccustomed to providing proof of income as part of the rental application process.

These prospective tenants may not be fraudulent, lazy, or ignorant; they’re simply unaccustomed to providing proof of income as part of the rental application process.

Education, along with some patience, is key to helping new immigrants get the right documents. Communicate the importance of official, recent income documents in showing one’s ability to pay rent. Show some examples of North American income documents, learn about the verification standards they’re used to, and find a happy medium. Even consider offering translation services that can be used to facilitate communication and document support. After all, landlord-tenant relationships should be grounded on mutual respect and good rapport.

4. Dishonesty Costs – Defend Yourself

In some extreme cases, tenants may not provide their income documents because they can’t. Simple as that. These are tenants with ulterior motives, using legal loopholes to game the rental system. According to a study by Forrester Consulting, 97% of property management companies have experienced fraud in the properties they managed in the last two years. That’s a lot of fraudulent behaviour. When a tenant misrepresents themselves as worthy of trust, you not only run the risk of missed rent, but also property damage, eviction costs, and lawsuits. If your tenant can’t show legitimate income documents, it may be because they’ve been too busy evading the law and stealing money from landlords.

Protect your assets by conducting a rigorous tenant screening process, including criminal record checks, credit and reference checks. Take it a step further to ensure the tools you use, including the credit report and references the tenant provide, are legitimate. Cross reference your gut feelings on these tenants with verifiable and authentic documentation.

When a tenant misrepresents themselves as worthy of trust, you not only run the risk of missed rent, but also property damage, eviction costs, and lawsuits.

Documentation is Decisive

Good returns on your investments are important, and so is getting a clear understanding of your tenant’s financial situation and ability to pay rent. Helping your tenants to successfully prove their income with documentation might be the best assurance of rental success for both parties in the long run.

Learn how you can get a Naborly Report and NaborlyShield quote on your prospective tenants for free with Naborly.